APEC defends trade against Trump tide
Asia to narrow trade focus as protectionism rises
LIMA: Asia-Pacific leaders are expected to send a strong message in defense of free trade yesterday as they wrap up a summit that has been overshadowed by US President-elect Donald Trump’s protectionism. The broad consensus at the Asia-Pacific Economic Cooperation (APEC) summit, which features some of the world’s most powerful leaders on both sides of the Pacific, is that free trade is a force for good. But the assembled leaders-US President Barack Obama, China’s Xi Jinping, Russia’s Vladimir Putin, Japan’s Shinzo Abe and others-are under pressure to defend that view against a rising tide of populist, anti-globalization sentiment in the United States and Europe.
The summit in Lima, Peru was to be briefed on the state of the world economy by International Monetary Fund chief Christine Lagarde. A draft seen by AFP praises open markets, denounces protectionism and warns that curbing free trade will slow the ongoing recovery of the world economy.
But it is a far cry from the fiery language and visceral appeals Trump used on the campaign trail to whip working-class supporters into a frenzy. The brash billionaire’s attacks on free trade deals and vows to cut back the US role as “policeman of the world” are causing jitters in the Pacific Rim.
Trump has vowed to kill Obama’s signature trade initiative in the region, the Trans-Pacific Partnership, or TPP-an arduously negotiated 12-country agreement.
He campaigned against the proposal as a “terrible deal” that would “rape” the United States by sending American jobs to countries with cheaper labor.
In a Pacific region hungry for trade, that has left even longtime US allies looking to a once unlikely place to fill the void: China, which was excluded from TPP.
China’s Xi has set himself up as the anti-Trump at this week’s summit, defending open markets and offering leadership on alternative free trade agreements to rival TPP. That has all made it an uncomfortable summit for Obama, who is facing awkward questions from allies about the future of US policy in his last foreign visit as president.
Despite attacking Trump as an unfit successor during the campaign, Obama urged the world to give the president-elect time to get his feet under the desk. “How you campaign isn’t always the same as how you govern,” he told a townhall meeting of young Latin Americans in Lima, defending democracy even as he admitted it can be “frustrating.”
Xi, meanwhile, warned that Trump’s win has created a “hinge moment” in US-China ties, as he held his final meeting with President Obama Saturday. Obama described the relationship between the two leading economies as “the most consequential in the world.”
Washington and Beijing compete for influence in the Asia-Pacific. During a vitriol-filled campaign, Trump frequently took a combative stance against China, blaming Beijing for “inventing” climate change and rigging the rules of trade.
It is unclear whether there is any future for the arduously negotiated TPP. Some experts say Trump’s attacks on the agreement and his Republican allies’ control of Congress mean it is dead in the water. Others say the deal-making real estate mogul could negotiate a number of changes and then claim credit for turning it around. As alternatives, China is backing a free trade zone across APEC-a 21-member group that accounts for nearly 40 percent of the world’s population and nearly 60 percent of the global economy. It is also pushing a 16-member Regional Comprehensive Economic Partnership (RCEP) that excludes the United States.
Fast-growing Asia-Pacific economies will strike more trade deals among themselves as opposition grows in Europe and the US to globalization, analysts say, warning the West will lose out as the dynamic region powers ahead.
The most high-profile victim of recent protectionist sentiments has been a major US-led trans-Pacific deal, which is as good as dead after the shock American election victory of Donald Trump this month. The Trans Pacific-Partnership (TPP), an agreement of 12 Pacific Rim economies, was the economic plank of President Barack Obama’s “pivot” to Asia, and notably excluded China as the US sought to combat Beijing’s rising influence. But it is just the latest accord to run into trouble amid growing protectionism in developed economies, where globalization is increasingly regarded as a bogeyman responsible for sending jobs abroad and eroding living standards.
A proposed deal between the European Union and the US is now unlikely to be signed after Trump’s win, while a trade accord between the EU and Canada took seven years to complete and was nearly torpedoed by resistance from a tiny Belgian region. Given such problems, much of Asia where economies have generally enjoyed robust growth in recent years and are heavily dependent on exports-will be looking with trepidation at potential accords with the West, analysts say.
‘Focus on regional deals’
“The result of having the US and Europe turn inward is that Asia will focus on regional agreements,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore. “The global system will not function if the US blocks action and the EU remains stymied.”
The immediate effect will be to give China a free hand to push its own favored regional accords, a heavy blow to Obama, who had hoped the TPP would allow the US to write the region’s trade rules before Beijing got there. At a meeting of the 21member Asia-Pacific Economic Cooperation (APEC) group in Peru this week, Chinese President Xi Jinping took the opportunity to urge support for two potential accords it is backing.
These are an APEC-wide deal, and a 16nation agreement whose members include Southeast Asian countries and India, but notably excludes the United States.
In reality, myriad small-scale trade deals had already mushroomed in Asia in recent years as efforts to forge truly global accords through the World Trade Organization proved difficult. According to a study carried out by APEC and released at this week’s meeting, 145 trade deals existed between the group’s members as of December last year, at least 30 of which had been struck since 2008.
The US election of Trump-who repeatedly railed against trade accords and dubbed the TTP a “terrible deal”-combined with rising opposition to free trade elsewhere is likely to accelerate that trend, experts said. “If the US significantly alters its trade policies with Asia... this could catalyze greater intra-Asian trade liberalization initiatives,” said Rajiv Biswas, Asia-Pacific chief economist with IHS Global Insight. Rising protectionism has alarmed supporters of free trade, who feel that it is being scapegoated in many developed nations as an increasingly squeezed middle- and working-class seek something to blame.
LIMA: US President Barack Obama (right) with China’s President Xi Jingping (left) and members of their delegations, during their meeting as part of the Asia-Pacific Economic Cooperation (APEC) in Lima yesterday.—AP