APEC de­fends trade against Trump tide

Asia to nar­row trade fo­cus as pro­tec­tion­ism rises

Kuwait Times - - BUSINESS -

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

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