APEC Leaders Debate Approach to Trade Tensions, WTO Issues at Port Moresby Summit

22 November 2018

Leaders from 21 Asia-Pacific Economic Cooperation (APEC) economies wrapped up their annual summit this past weekend in Port Moresby, Papua New Guinea, tackling a host of subjects relating to regional connectivity and economic integration. However, disagreements on trade between the US and China prevented leaders from endorsing a joint communiqué by the meeting’s close, in a notable first for the group. 

This year’s meet in Papua New Guinea had as its theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” with trade and cooperation topping the agenda. Other topics for consideration included the digital economy and e-commerce, along with how to ensure that businesses of all sizes can benefit from a more open and secure online environment. 

Papua New Guinea's Foreign Minister Rimbink Pato, who led the ministers’ meeting prior to the leaders’ level discussions, highlighted the digital economy as a valuable area for more in-depth consideration, while noting current limitations in connectivity and accessibility. 

"We need to look at how reforms can be progressed to ensure that infrastructure development includes accessibility to the digital economy and e-commerce,” the foreign affairs official said, according to comments reported by Xinhua. 

The APEC economies account for nearly half of international trade flows, according to statistics from the coalition’s secretariat, and include smaller economies such as Papua New Guinea to economic giants like China and the United States. 

US, China spar on communiqué language, amid evolutions in trade arena 

The APEC meeting comes at a time of heightened tensions among major players on trade, and alongside continued warnings from international organisations that economic growth is slowing down, with the Organisation for Economic Co-operation and Development (OECD) downgrading this week its global GDP forecasts for 2019.

The talks in Papua New Guinea also came on the heels of recent advances on two mega-regional accords in Asia-Pacific region that have been named as possible pathways to a Free Trade Area of the Asia-Pacific (FTAAP), and which proponents say could re-energise trade policymaking efforts and provide a valuable show of support for the rules-based trading system. 

For example, leaders of the 16 countries involved in the Regional Comprehensive Economic Partnership (RCEP) have said that the negotiations are in the final stage, and could be wrapped up in the coming year. Meanwhile, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will take effect by the end of this year.

While the FTAAP is still several years away from formal, dedicated negotiations, and potential participants differ over the approach and scope of such an accord, the recent advances in other regional initiatives that could serve as precursors for this wider project have stoked renewed interest in these discussions. The FTAAP subject has been on the APEC agenda for several years, and APEC economies have set a 2020 deadline for analysing how existing or forthcoming regional deals could serve as “pathways” to a FTAAP.

However, as the APEC talks drew to a close, media reports emerged that US and Chinese officials were at odds over how to phrase the trade-related section of the final communiqué, particularly on WTO issues, to the point where a joint declaration from the meet proved impossible. Officials did note, however, that this does not detract from APEC economies’ deep appreciation for the WTO and the potential benefits from modernising it. 

"Many leaders flagged their support for WTO for a strengthened role of the organisation and of course this a general recognition that we might work together to improve its functioning on the basis of preserving the core values and basic principles of the organisation," Wang Xiaolong, Director general of China's Department of International Economic Affairs, told reporters. 

The challenges, however, were in the details and approach in wording the trade section of the communiqué. For example, Washington had reportedly wished to raise concerns in the declaration over the functioning of the WTO’s dispute settlement branch, as well as include a reference to some members’ “unfair” trade practices. 

US Vice President Mike Pence, who represented Washington in Papua New Guinea, referred specifically to trade tensions with China in his prepared remarks. 

“They begin with trade practices, with tariffs and quotas, forced technology transfers, the theft of intellectual property. It goes beyond that to freedom of navigation in the seas, concerns about human rights,” he said. He also cautioned that the US "will not change course until China changes course." 

In turn, Chinese President Xi Jinping argued that “intellectual copyright protection should not be used to increase the technology divide,” noting efforts that Beijing is making to improve the business climate for foreign companies, including by ramping up enforcement efforts involving intellectual property rights. 

Other areas where Pence and Xi expressed diverging views included China’s Belt and Road Initiative (BRI), an expansive infrastructure-building project that could span over 60 countries once completed. Pence raised concerns over what participation could mean for poorer countries’ debt levels, while Xi argued that the project would not fuel “debt traps” and would be designed to serve the international community’s needs. 

US, China talks to be continued at G20 Summit 

US President Donald Trump is due to meet with Xi in just over one week, during the annual G20 leaders’ summit in Argentina. Trump has lately suggested that the US and China may be close to reaching an accord that could de-escalate trade tensions, though assessments vary from experts and other officials over whether this objective is feasible, at least in time for the G20 meeting. 

“China wants to make a deal. They sent a list of things they are willing to do, which is a large list and it is just not acceptable to me yet. But at some point I think that, we are doing extremely well with respect to China,” he told reporters last week. 

ICTSD reporting; “APEC ministerial meeting highlights "inclusiveness" as priority to boost prosperity,” XINHUA, 15 November 2018; “VP Mike Pence and Chinese President Xi Jinping threw verbal jabs at each other in dueling speeches at Asia-Pacific Economic Cooperation summit,” BUSINESS INSIDER, 17 November 2018; “There are no winners in a trade war, Xi Jinping tells Apec summit as he urges leaders to defend globalisation,” SOUTH CHINA MORNING POST, 17 November 2018; “Apec summit fails to agree on statement amid US-China spat,” THE GUARDIAN, 18 November 2018; “Donald Trump says US is ‘doing extremely well’ with China but that he still can’t accept trade war deal yet,” SOUTH CHINA MORNING POST, 17 November 2018, “APEC 2018: Regional meeting ends in disarray as leaders fail to reach consensus on communique,” ABC, 18 November 2018.

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22 November 2018
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