Power vacuum in the Asia Pacific
The Asia Pacific Economic Council (APEC) held the first extraordinary leadership meeting in its history on Friday as the region recovers from the pandemic after the biggest economic and political shock since the Second World War.
As 2021 APEC chair, New Zealand’s highest priority is leading the region’s response to the worst health and economic crisis in living memory, with 1 million deaths and about 81 million jobs lost. Some progress was made, with the 21 leaders pledging to work to expand sharing and manufacturing vaccines. However, the meeting also showed that APEC’s consensus approach is creaking.
It is the US-China rivalry that could most impede APEC, given their competing ambitions to shape the regional order.
The Biden team is aware of the Chinese juggernaut being mobilized by Xi Jinping in the form of the Belt and Road plan, plus the Regional Comprehensive Economic Partnership (RCEP) and the proposed Free Trade Area of Asia Pacific (FTAAP). These schemes have assumed new importance for Beijing since the inception of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which the Obama team championed but which was rejected by Trump.
Xi has said that FTAAP and RCEP do not “go against existing free trade arrangements,” but at the heart of the debate on these issues are contrasting US and Chinese visions to shape the regional order. Beijing’s push for Belt and Road, RCEP, and FTAAP provide a non-US alternative model for economic integration shaped by Beijing with its interests center stage.
And it is in this context that the Biden team is beginning to set out its own stall for shaping the regional order. The Trump team did take some initiatives during its four years in office, but there appeared to be no overarching plan to bring them all together in a powerful strategy.
History points to what may now be needed to fill this vacuum. In the post-war period, the US has undertaken a global institutional building project on a largely bipartisan basis, at least until the election of Trump, to encourage the growth of democracy and open markets across the world.
From 1945, US administrations helped create and nurture key bodies that exist to this day from the UN, to the IMF and World Bank. Inspired by this success, the administrations of George H.W. Bush and Bill Clinton sought to respond to the collapse of Soviet communism by encouraging creation of a range of economic institutions including the World Trade Organization.
But with Trump pulling the plug on US participation in CPTPP, and disparaging other institutions such as the WTO, a vacuum now exists that either the US or others will fill. And the danger for Washington is that irresistible momentum could now build for a regional architecture, including RCEP and Belt and Road, and FTAAP, which allows Beijing to assume the upper hand, damaging US influence not just with local allies but possibly well beyond too.