At Hanoi Meet, Asia-Pacific Ministers Debate Future Trade Integration Paths

24 May 2017

The past weekend saw ministerial meetings of multiple configurations in the Vietnamese city of Hanoi, as officials discussed the future of various trade-related initiatives in the region.

The main event was the trade ministers’ meeting of the Asia-Pacific Economic Cooperation (APEC) forum, a regional coalition of 21 economies. The event was the first since Robert Lighthizer was confirmed as US Trade Representative (USTR) earlier this month under the Trump administration. (See Bridges Weekly, 18 May 2017)

The Hanoi meeting reportedly saw countries debate how to address topics such as protectionism, the definitions of free and fair trade, and the sources of trade distortions – a series of issues that has emerged in trade and finance ministers’ meetings of other country groupings throughout the year, particularly in light of the new US leadership’s trade agenda.

“APEC provides a great opportunity to focus energy on the barriers to its stated objective of free and open trade – a goal that cannot be met without tackling trade-distorting measures that have led to massive US trade imbalances in the region,” said Lighthizer in a statement following the discussions.

Officials from the 21-country coalition ultimately signed off on a set of “trade actions” on various trade-related topics, from facilitating trade and reducing trade costs, to making progress on their efforts to create a “roadmap on the internet and digital economy.” While many of the sections are similar to the May 2016 trade ministers’ statement from their meeting in Arequipa, some sections have not been included in this year’s version, such as last year’s section on fossil fuel subsidy reform.

The trade actions document released this weekend also does not refer specifically to the commitment reaffirmed by leaders in Lima last year to “resist all forms of protectionism” and the debate over globalisation and the “emergence of protectionist trends.”

Other topics raised in the “trade actions” document last weekend included pressing countries that have not yet implemented tariff cuts on an agreed list of environmental goods to do so. It also calls for making “further progress on the work plan on advancing the Lima Declaration on FTAAP,” referring to the 2016 annex which reaffirmed the countries’ commitment to developing a Free Trade Area of the Asia-Pacific. (See Bridges Weekly, 12 September 2012 and 24 November 2016)

Separately, Vietnam’s Minister of Industry of Trade, Tran Tuan Anh, released a chair’s statement summarising the discussions held in Hanoi. That same statement included a qualifier saying that it represented “un-unified but prevailing views of APEC economies.”

Media reports indicate that the US was unable to sign onto this statement, which was why it was released on behalf of the meeting’s chair. The statement includes longstanding language on resisting and rolling back protectionist measures, among other pledges.

“We reaffirm our commitment to keep our markets open and to fight against all forms of protectionism by reaffirming our pledge against protectionism through a standstill commitment that we agreed to extend until the end of 2020 and to roll back protectionist and trade-distorting measures. At the same time, we need to ensure a level playing field in order to enjoy the benefits of trade,” said the chair’s statement.

The US reportedly had pushed back specifically against language on protectionism, among other areas, with Lighthizer telling reporters that Washington is instead aiming for a discussion on how to foster freer, fairer trade.

“Our view is that we want free trade, we want fair trade, we want a system that leads to greater market efficiency throughout the world,” said Lighthizer, according to comments reported by Reuters. The US trade chief has particularly raised concerns over addressing “unfair” practices by trading partners and gaining better markets for American exports overseas – issues raised by other officials in the administration.

WTO Director-General Roberto Azevêdo was also on hand during the Hanoi meetings, giving an address to APEC trade ministers on the preparations for the WTO’s next ministerial conference, being held in Buenos Aires, Argentina, in December.

“The dynamics in the Asia-Pacific region illustrate how cooperation at the regional level can have a significant impact – including for the wider multilateral trading system,” said Azevêdo.

“However, even if all regional agreements could be completed tomorrow, we would still need an effective and well-functioning WTO. Almost none of the global trade challenges we face today would be easier to solve outside of the multilateral system,” added the WTO chief.

TPP-11 to prepare options for November meet

Meanwhile, trade ministers from the Trans-Pacific Partnership (TPP) countries pledged to come up with options for bringing the agreement into force, with senior officials to prepare a slate of alternatives ahead of the APEC leaders’ meeting scheduled for 10-11 November in Danang, Vietnam.

“The ministers agreed on the value of realising the TPP’s benefits and to that end, they agreed to launch a process to assess options to bring the comprehensive, high quality agreement into force expeditiously, including how to facilitate membership for the original signatories,” said the joint ministerial statement released on Sunday.

The TPP-11 ministerial meeting was held on the sidelines of the APEC trade ministers’ gathering. The group has been mulling how best to proceed with the TPP, given the US’ withdrawal from the agreement earlier this year. To that end, that group already met in March in Viña del Mar, Chile, and also held a senior officials’ meeting in Toronto, Canada, in preparation for this week’s discussions. (See Bridges Weekly, 9 February 2017 and 4 May 2017)

The original TPP signatories included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam – as well as the United States. While some countries in the group have already ratified the TPP, such as New Zealand, others have not, with the group said to still be debating whether to ratify the agreement as it stands or whether to revise it in order to account for losing the US.

Along with pledging to put together this “assessment” in time for the November APEC leaders’ meeting, the TPP-11 ministers also referred to the prospect of bringing on additional countries into the trade agreement.

“The ministers also underlined their vision for the TPP to expand to include other economies that can accept the high standards of the TPP,” they said.

RCEP: “substantial conclusion” this year

Ministers representing another Asia-Pacific initiative known as the Regional Comprehensive Economic Partnership (RCEP) also met in Hanoi this past weekend to take stock of their efforts to conclude a 16-country trade agreement.

The RCEP project was formally launched in 2012, and negotiators have held 18 rounds to date, with the latest round being held from 2-12 May in the Philippines. The agreement brings together the 10 members of the Association of Southeast Asian Nations (ASEAN) and their free trade agreement (FTA) partners, namely Australia, China, India, Japan, New Zealand, and South Korea.

Previous targets for concluding the RCEP talks have passed unmet. However, the group has said repeatedly in recent months that they hope to clinch a deal this year, which would include areas like goods and services market access, investment, intellectual property, dispute settlement, and competition rules, among others.

“The ministers noted that the substantial conclusion of the RCEP has been identified as a priority deliverable in this milestone year of ASEAN’s 50th anniversary. The ministers noted the necessity of significant progress and committed to work together to this end,” said a joint media statement issued on 22 May.

The statement also referred to areas where the RCEP talks have seen the most progress, along with hinting at which areas still remain sticking points in the negotiations to come.

For example, the RCEP chapter on economic and technical cooperation, as well as the chapter on small and medium-sized enterprises, have both been finalised. However, on market access, the statement suggested that “more work is required to improve offers that have been tabled to date.”

ICTSD reporting; “APEC Trade Ministers Omit Protectionism Pledge in Statement,” BLOOMBERG, 21 May 2017; “Disagreements surface over China-backed trade deal,” REUTERS, 22 May 2017; “U.S. and Pacific Rim countries at odds in heated trade meeting,” REUTERS, 21 May 2017.

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