APEC mulls trade op­tions in Trump era

Sum­mit host Peru warns of threats to free trade

Kuwait Times - - BUSINESS -

LIMA: Lead­ers of Pa­cific rim na­tions scram­bled to find new free trade op­tions yes­ter­day as a loom­ing Don­ald Trump pres­i­dency in the United States sounded a pos­si­ble death knell for the Trans-Pa­cific Part­ner­ship (TPP). Af­ter lower-level meet­ings, US Pres­i­dent Barack Obama, Chi­nese Pres­i­dent Xi Jin­ping, and Rus­sian Pres­i­dent Vladimir Putin were due to ar­rive at the Asia-Pa­cific Eco­nomic Co­op­er­a­tion sum­mit that brings to­gether lead­ers whose economies rep­re­sent 57 per­cent of global gross do­mes­tic prod­uct.

While cam­paign­ing for the pres­i­den­tial elec­tion which he won, Trump la­beled the TPP a job-killing “dis­as­ter” and called for curbs on im­mi­gra­tion and steeper tar­iffs on prod­ucts from China and Mex­ico.

Though Obama cham­pi­oned the TPP as a way to counter China’s rise, his ad­min­is­tra­tion has now stopped try­ing to win con­gres­sional ap­proval for the deal that was signed by 12 economies in the Amer­i­cas and Asia-Pa­cific, but ex­cluded China. With­out US ap­proval the agree­ment as cur­rently ne­go­ti­ated can­not come to fruition. China’s Xi is sell­ing an al­ter­nate vi­sion for regional trade by pro­mot­ing the Bei­jing-backed Regional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP), which as it stands ex­cludes the Amer­i­cas.

The Obama ad­min­is­tra­tion said China would be happy to take over the United States’ role as global free trade pro­moter. “We see peo­ple around the ta­ble here right now talk­ing about if the TPP does not move for­ward then they’re go­ing to have to put their eggs in the RCEP bas­ket,” US Trade Rep­re­sen­ta­tive Michael Fro­man told jour­nal­ists. Fro­man said that RCEP would not have la­bor and en­vi­ron­men­tal protections that are writ­ten into TPP. Mex­ico, Ja­pan, Aus­tralia, Malaysia, New Zealand and Sin­ga­pore, how­ever, aim to con­tinue with TPP with or with­out the United States, Mex­ico’s Econ­omy Min­is­ter Ilde­fonso Gua­jardo said. “We de­ter­mined that our coun­tries will press ahead with this agree­ment in­de­pen­dently of what Wash­ing­ton de­cides,” Gua­jardo said of the trade deal on Mex­i­can ra­dio.

DIF­FI­CULT TO EX­CLUDE US

Alan Bol­lard, the APEC sec­re­tar­iat’s ex­ec­u­tive di­rec­tor, said it was pre­ma­ture to write the TPP off, and that ex­clud­ing the United States could prove dif­fi­cult. “Ac­tu­ally there were con­ces­sions given to the US in those ne­go­ti­a­tions that they may not want to sign up to with­out the US in it,” he said in an in­ter­view. “With­out the US, it does change the eco­nom­ics of the whole thing quite a bit.”

The 21 mem­bers of the (APEC) sum­mit have fin­ished a study for a regional free trade area but will not dis­cuss it un­til the next an­nual sum­mit in Viet­nam, Peru­vian Trade Min­is­ter Ed­uardo Fer­rey­ros said. Both the TPP and RCEP were seen as path­ways to­ward an APEC-wide agree­ment. Though most were care­ful not to crit­i­cize Trump di­rectly, lead­ers at APEC, which ends to­day, uni­ver­sally warned of the dan­gers of turn­ing away from glob­al­iza­tion and free trade. “To any­one who wants to pro­pose pro­tec­tion­ism I suggest that you read the his­tory books about the 1930s,” Peru­vian Pres­i­dent Pe­dro Pablo Kuczyn­ski said. Sun Xiao from China’s Cham­ber of In­ter­na­tional Com­merce blamed un­equal dis­tri­bu­tion of free trade’s ben­e­fits for ris­ing pro­tec­tion­ism, and sug­gested it would be dif­fer­ent un­der Chi­nese lead­er­ship. “If there was a big­ger role for China we would pro­mote the prin­ci­ple of joint par­tic­i­pa­tion and shared ben­e­fits to en­sure free trade ar­range­ments can ben­e­fit all,” he said.

GROW­ING HOS­TIL­ITY

The US pres­i­den­tial elec­tion is a sign of grow­ing hos­til­ity to free trade that threat­ens the global econ­omy, the pres­i­dent of Peru warned Fri­day as he opened an Asian-Pa­cific sum­mit hosted by his na­tion. Pres­i­dent Pe­dro Pablo Kuczyn­ski told del­e­gates gath­er­ing in Lima for the Asia Pa­cific Eco­nomic Co­op­er­a­tion Fo­rum that global trade al­ready stopped grow­ing in the last two years and would get much worse if na­tions close off their economies. “It is fun­da­men­tal that world trade grow again and that pro­tec­tion­ism be de­feated,” Kuczyn­ski said.

The Peru­vian leader cited the US elec­tion, though he did not specif­i­cally men­tion Pres­i­dent-elect Don­ald Trump, who pledged to over­haul US trade pol­icy and tear up trade agree­ments such as NAFTA or the pro­posed Trans-Pa­cific Part­ner­ship, or TPP.

Kuczyn­ski, a US-trained econ­o­mist and for­mer in­vest­ment fund man­ager who took of­fice this year, also cited the vote in June by Bri­tain to leave the Euro­pean Union as ev­i­dence that “pro­tec­tion­ist ten­den­cies are tak­ing over” in the world. “And for any­one who wants to pro­mote protection I suggest they read an eco­nomic his­tory of the 1930s,” he said, a ref­er­ence to the Great De­pres­sion that many ar­gue was ag­gra­vated by pro­tec­tion­ist poli­cies. Chris­tine La­garde, man­ag­ing di­rec­tor of the In­ter­na­tional Mone­tary Fund, also touched on the US and Bri­tish elec­tions as she called for ac­tion to ad­dress ris­ing eco­nomic in­equal­ity that has ac­com­pa­nied in­creased global trade.

“The so­cial and po­lit­i­cal con­se­quences are now be­com­ing all too ap­par­ent,” she told an au­di­ence at the Univer­si­dad del PacÌ­fico af­ter an ap­pear­ance at APEC. “Vot­ers in the United States and the United King­dom, for ex­am­ple, have sent clear sig­nals of con­cern about mi­gra­tion, trade and tech­no­log­i­cal change.”

APEC has brought more than 1,000 del­e­gates from 21 coun­tries, rep­re­sent­ing nearly 40 per­cent of the world’s pop­u­la­tion, to Lima for a fo­rum aimed at eas­ing global com­merce. US Pres­i­dent Barack Obama was ex­pected to ar­rive late Fri­day for his last in­ter­na­tional sum­mit be­fore leav­ing of­fice in Jan­uary. Also ex­pected were Chi­nese Pres­i­dent Xi Jin­ping and Rus­sian Pres­i­dent Vladimir Putin.

Obama had been ex­pected to pro­mote the TPP, which would have in­cluded 12 mem­bers of APEC but not China. That trade pact is now con­sid­ered po­lit­i­cally dead be­cause of Trump’s vic­tory. The Chi­nese pres­i­dent is ex­pected to seek sup­port for an al­ter­nate agree­ment backed by his coun­try that would in­clude all 21 coun­tries in the or­ga­ni­za­tion.

But not all coun­tries were ready to throw in the towel on the TPP. Mex­i­can Fi­nance Min­is­ter Idel­fonso Fajardo said he met with of­fi­cials from five other sig­na­to­ries to the pact Aus­tralia, Malaysia, New Zealand, Ja­pan and Sin­ga­pore - on the side­lines of the sum­mit and they agreed to forge ahead re­gard­less of what the new US ad­min­is­tra­tion de­cides.

Kuczyn­ski and Ja­pan’s Prime Min­is­ter Shinzo Abe later is­sued a state­ment say­ing they would work to see that the treaty goes into ef­fect. “Both lead­ers agree that the TPP is not only im­por­tant geopo­lit­i­cally and in terms of trade, but also for the sta­bil­ity and pros­per­ity of the Asia-Pa­cific re­gion as a whole,” it said. It’s un­clear if they’ll suc­ceed. Un­der terms of the TPP agree­ment signed this year in New Zealand, the vast free trade agree­ment can only be im­ple­mented if it is rat­i­fied by at least six coun­tries that ac­count for 85 per­cent of the com­bined gross do­mes­tic pro­duc­tion of the 12 TPP na­tions. APEC min­is­ters, meet­ing ahead of the lead­ers’ sum­mit, en­dorsed a study of the Chi­nese-backed plan and called for fur­ther talks in a joint state­ment is­sued Fri­day that also echoed con­cerns about pro­tec­tion­ism. “Faced with ris­ing skep­ti­cism over trade and stag­nated trade growth, we re­it­er­ate our com­mit­ment to build an open econ­omy in the Asia-Pa­cific,” it said. — Agen­cies

— AFP

LIMA: US Pres­i­dent Barack Obama (left) waves next to Peru’s Vice Pres­i­dent Mercedes Araoz on upon his ar­rival at Jorge Chavez In­ter­na­tional Air­port in Lima to at­tend the Asia-Pa­cific Eco­nomic Co­op­er­a­tion (APEC) Sum­mit yes­ter­day.

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