US-China trade tension should not overshadow APEC’s role in offering a safe space for testing out bold ideas
As Chinese and US negotiators try to hammer out a trade deal ahead of the March deadline, officials from both countries who are assigned to the Asia-Pacific Economic Cooperation forum will be flying to Santiago, Chile, to begin the first cluster of Apec meetings this year.
Until recently, bilateral matters have not concerned Apec, which is a multilateral forum that limits itself to matters of economic cooperation, is non-binding, has no dispute-settlement system and affords each of the 21 members equal standing through a consensus-based system. If, say, two members have a problem with each other, they take it outside, without bothering the forum with it, even if these two members happen to be the two biggest economies in the world.
But the Apec Economic Leaders’ Meeting held in November attracted some negative attention because, for the first time since Apec leaders started meeting 26 years ago, it did not release a joint declaration signalling unanimous agreement in every area of cooperation.
Many people interpreted this as a manifestation of the trade dispute between the US and China taking over, with tension from the bilateral meeting room spilling over into normally benign proceedings. News analysts wondered if Apec has outlived its usefulness or if it has ceased being an economic cooperation forum, having been thrown unwillingly into the arena of superpower rivalry.
Such speculation does not have merit. Apec continues its work on addressing the emerging and evolving issues surrounding the global trading system and its member economies.
Nevertheless, many of the good outcomes of the meetings last year have been overshadowed, such as the formation of a group to facilitate multilateral discussions on regulating the digital economy in the Asia-Pacific region. This is an initiative that is obviously timely, which shouldn’t be delayed and will require less open rivalry and more amicable relations between members to produce results.
While rivalry may have arguable merit elsewhere, it should have no place around the Apec table, which is valued by its members as a safe place to identify common problems and jointly address them.
In a setting where rules are binding, and competition is the norm, players may too often second-guess altruistic solutions and one-upmanship may pervade. But because its outcomes are non-binding, there is less hesitation to float new ideas in the Apec forum and these may then be tested. Good ideas are eventually taken up by economies unilaterally, or graduate to being part of binding agreements.
A good example of how this plays out was an agreement among all Apec members, adopted in 2012, to lower the tariffs on environmental goods, which has helped the renewable energy industry to flourish in the Asia-Pacific, especially in economies such as China.
The idea has since been adopted by the rules-based World Trade Organisation as the Environmental Goods Agreement, with almost 50 member countries participating.
Every year, Apec is hosted by one of its members, which takes on much of the logistical weightlifting, provides leadership in terms of policy direction, and acts as chair for a year. It is fortunate that Chile has volunteered to take on the role in 2019. It is one of the most open economies in the world, having negotiated many free-trade agreements with a multitude of countries. Chile is experienced in liberalisation and in ensuring that the economic benefits accrue to its people.
If the friction between Beijing and Washington continues well after March, Santiago could well prove itself to be an honest broker in making sure Apec’s work on economic integration, inclusive growth and sustainable economic development – which will benefit not just the citizens of China or the US, but of the whole region – is not overshadowed again.
Dr Rebecca Santa Maria is executive director of the Asia-Pacific Economic Cooperation, or APEC, forum