APEC Summit Wraps Up in Vietnam, Looking to Next Steps for Trade and Integration Agenda
Leaders of the 21 Asia-Pacific Economic Cooperation (APEC) member economies concluded their 25th annual meeting in Da Nang, Vietnam, on 11 November. Preceded by several weeks of technical, thematic, and sectoral officials’ negotiations, business discussions, and a ministerial-level meeting, the final summit aimed at formulating a broad vision for future economic integration in the region.
The Da Nang Declaration, entitled “Creating New Dynamism, Fostering a Shared Future,” broadly reaffirms the long-standing commitment to APEC’s mission of supporting sustainable economic growth and cooperation in the Asia-Pacific. This year’s final statement also included some notable differences in language and coverage relative to past iterations.
“Within a year since our last meeting in Peru, we have witnessed changes more rapid and complex that we expected,” said Vietnamese President Tran Dai Quang, the chair of the leaders’ meeting. “This requires APEC to uphold its leadership in finding new drivers for growth, trade, investment, connectivity, and in finding ways to ensure that the benefits of globalisation and economic integration are equally distributed.”
“APEC has shown its dynamism, adaptability, and flexibility towards changes,” he added, highlighting the progress achieved through the APEC cooperation model so far, as well as its future potential.
Amid the current challenges, officials say that APEC continues to provide a valuable platform for discussions on regional and global matters. “Where else can you go in the world and hear from the leaders from more than half of world’s economies, well nowhere,” said Alan Bollard, the Executive Director of the APEC Secretariat, to the CGTN news agency.
APEC is a decades-old regional platform that promotes free trade and investment in the Asia-Pacific and now numbers 21 economies among its ranks, which collectively account for about 60 percent of global GDP. APEC operates as a forum where member economies participate through dialogue and make non-binding decisions on a consensus basis.
A multi-pronged agenda
APEC’s agenda has grown over the years, and is now governed by four high-level working committees, a number of sub-committees, and some working groups, where officials discuss a vast array of technical questions, ranging from industry dialogues to gender issues.
At the APEC Leaders’ Week, the coalition usually issues a final declaration, which is traditionally preceded by a ministerial statement that hints at where the leaders’ document will be headed. This year, the ministerial text was delayed as negotiators worked to find common ground on wording and substance – reportedly due to differences of opinion with the US.
The final leaders’ declaration includes pledges to take action across various fields, including fostering regional economic integration; ensuring “quality” growth; preparing workers for changes wrought by the “digital age”; and developing an “inclusive, accessible, sustainable, healthy, and resilient APEC community by 2030,” referring to the UN’s Agenda 2030 for Sustainable Development. It also devotes several paragraphs to different aspects of international trade.
On trade, the document still mentions long-standing APEC pledges, including the fight against protectionism and their “standstill” commitment to avoid introducing new restrictive measures between now and 2020. It also reiterates past pledges to support open trade, and recognises the importance of the multilateral trading system under the World Trade Organization (WTO).
The text also refers to APEC’s role in backing a multilateral system based on rules, which is also “free, open, fair, transparent, and inclusive.”
They also pledge to cooperate “to improve the functioning of the WTO, including its negotiating, monitoring, and dispute settlement functions, to adequately address challenges facing the system, bringing benefits to all of our people and businesses.”
The leaders’ statement also makes reference to trade enforcement, along with fostering a more welcoming investment climate, and actions relating to boosting services competitiveness and harnessing the gains from an increasingly digitalised economy, while noting that this will require “appropriate regulatory and policy frameworks.”
While the ministerial and leaders’ meetings always take the spotlight, the process to reach that point is far more complex, observers say, involving multiple meetings of APEC officials in varying configurations.
“APEC, above all, is a year-long process, not a simple leaders’ meeting. The substance is done over the course of literally hundreds of meetings through the previous ten months,” said David Dodwell, Executive Director of the Hong Kong APEC Trade Policy Group, in an interview with Bridges.
Dodwell pointed out that APEC’s two main strengths are bringing people together for exchanging best practices, along with providing capacity building support. This work can then feed back into member economies’ policymaking efforts domestically.
“After the meetings the officials will go back to their local discussions and come up with some policies that are endogenous, internally created, rather than imposed. The process of that reform is much less controversial, much better embedded, but also from a political point of view may not be visible,” he said.
Visions for trade
Aside from the leaders’ declaration itself, another highly-anticipated aspect of this year’s APEC meetings were speeches by the US and Chinese presidents at a related summit of regional business leaders.
Speaking at the APEC CEO summit, US President Donald Trump outlined his vision for Washington’s interactions with the region, telling the audience that the US would no longer tolerate “chronic trade abuses.” He also reiterated past concerns over trade enforcement, stating that the WTO “can only function properly” if all members respect its rules.
Trump also reiterated past grievances over trade imbalances, calling it “not acceptable” and criticising alleged trade rule-breakers. “Such practices, along with our collective failure to respond to them, hurt many people in our country and in other countries,” he said.
“From this day forward, we will compete on a fair and equal basis. We are not going to let the United States be taken advantage of anymore. I am always going to put America first the same way that I expect all of you in this room to put your countries first,” Trump said.
He also said that he would be willing to work with regional partners towards “mutually beneficial commerce,” including through bilateral trade accords.
For his part, Chinese President Xi Jinping gave a speech to CEO summit leaders highlighting openness and collaboration on the international economic stage.
“Over the last few decades, economic globalisation has contributed significantly to global growth. Indeed, it has become an irreversible historical trend,” Xi said, according to a transcript published by Xinhua. “In pursuing economic globalisation, we should make it more open, more inclusive, more balanced, more equitable and more beneficial to all.”
Trade policy analysts commented to Bridges that the Trump administration’s focus on bilateral accords may not receive the easiest welcome from regional private sector actors.
“We have to do a lot of work from a business point of view to demonstrate to the Trump administration that business sees no benefit in bilateral agreements at all. At least plurilateral, and ideally multilateral, forms of liberalisation are those that bring economic benefits to our societies,” said Dodwell.
Jean-Pierre Lehmann, Emeritus Professor of International Political Economy at IMD and a visiting Professor at Hong Kong University, commented to Bridges that some of the US’ interest in pursuing other avenues aside from the multilateral framework pre-dates Trump, given past struggles to advance trade rule-making in the WTO context.
Yet the Trump administration’s focus on bilateral accords could face challenges moving forward, Lehmann said. “It’s very difficult to envisage a world that would be composed of bilateral trade agreements,” he told Bridges.
Broader regional perspective
Over the past several decades, trade liberalisation initiatives have blossomed across the Asia-Pacific region, creating a plethora of overlapping free trade agreements (FTAs) and institutional structures. The recent developments with respect to country blocs, particularly the Trans-Pacific Partnership Agreement (TPP) and the Regional Comprehensive Economic Partnership (RCEP), have drawn significant scrutiny for what this might mean for wider regional economy.
The 11 remaining TPP members are close to concluding a final deal to advance the accord, following the US’ withdrawal earlier this year. Meanwhile, the 16-country RCEP coalition confirmed on Tuesday 14 November that talks will need to continue into 2018, while also releasing an outline of the agreement’s planned chapters.
The TPP and RCEP have both been looked at as potential complementary pathways towards clinching a larger regional accord, known as the Free Trade Area of Asia-Pacific (FTAAP).
Official documents from the APEC meetings this year reflect traditional topics for this forum, such as attaining the Bogor Goals of free and open trade and investment in Asia-Pacific and realising the FTAAP. On the latter, the leaders’ statement includes a reaffirmation of past pledges “to advance in a comprehensive and systemic manner the process toward the eventual realisation of an FTAAP to further APEC’s regional economic integration agenda.” It also calls for additional efforts and work programmes that could pave the way for a “high quality” negotiating process going forward.
Observers note that progress in practice towards the FTAAP have been slow-going over the past several years, as member economies debate how best to approach the issue.
“There is the broad 2025-type vision that the FTAAP is the ultimate objective, and a lot of discussion here in APEC was about the best pathways to achieve that vision,” said Dodwell.
Meanwhile, the 10-member Association of Southeast Asian Nations (ASEAN) is celebrating its 50th anniversary this year, and has set certain milestones in that respect. Chandran Nair, the founder and CEO of the Global Institute for Tomorrow, noted that ASEAN could take an even greater role in regional economic integration, subject to certain advances.
“We should be focusing on developing our institutions, rather than creating more and more legal structures that apply to geopolitical narratives. There is so much work ASEAN could do in the framework of economic cooperation, ASEAN should focus fundamentally on improving its institutions, and on cooperation between ASEAN members,” he said.
Pamela Mar, director on sustainability of the Fung Group, argues that while trade agreements are beneficial for the region, their implementation is essential. “Countries work so hard to negotiate these agreements and have a big celebration after the agreement is signed, as if the work is done. Implementation is crucial, but often drags on or is incomplete. So they should put some more effort in this after it is signed,” she told Bridges.
Sustainable development perspective
Historically, APEC had a focus on sustainable development issues, including the landmark developments in 2011 and 2012 where leaders signed off on a list of environmental goods that would be subject to tariff cuts by 2015. (See Bridges Weekly, 12 September 2012)
The topics that drove most of the attention over the recent years, however, were not always mentioning sustainability explicitly, analysts say.
This year’s final declaration reflects a goal of advancing economic, financial, and social inclusion. Along with the reference to the 2030 Agenda for Sustainable Development, the official documents stress the importance of achieving quality employment and equal pay for equal work, increasing financial literacy, sustaining income growth for all members of society, and developing health systems.
“It is a challenge to link growth, trade, and sustainable development. I don’t think that at a practical level much has been achieved as of now. The institutions that we have were adapted to the 20th century and are not adapted to the 21st,” said Lehmann.
In Nair’s view, the fundamental challenge to advance sustainable development objectives in the region is the need to adapt past economic models accordingly. “We cannot adopt the mainstream economic models without understanding the resource constraint of moving forward, particularly in the next 25-30 years,” he told Bridges.
Trade and investment are still crucial for inclusive growth, as they create jobs, according to Mar. However, she also noted that current development models in Asia need to adapt to new economic realities.
“Now labour intensive manufacturing is no longer a sure bet,” she told Bridges. “The whole supply chain is under pressure to improve performance, and [bring] more technology up to date, and that puts a lot of pressure on workers. So, there is a huge need to not only create jobs, but also transition the workers so that they can actually survive in the digital environment.”
ICTSD reporting; “Trump attacks countries ‘cheating’ America at Apec summit,” THE GUARDIAN, 10 November 2017; “Trump’s tricky talks: five world leader meetings to watch at the Apec summit,” THE GUARDIAN, 10 November 2017; “China’s Xi preaches ‘openness’ and ‘cooperation’ after Trump comes out swinging,” CNBC, 10 November 2017; “Apec summit: Trump and Xi offer competing visions for trade,” BBC NEWS, 10 November 2017; “APEC to embrace new trends in economic development,” CGTN LIVE, 9 November 2017; “APEC ministers publish joint statement after wrangling over language,” REUTERS, 11 November 2017.