By Andrew Hammond
The Asia Pacific Economic Council (APEC) held the first extraordinary leadership meeting in its history, Friday, as the region recovers from the pandemic, its biggest economic and political shock since World War II.
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, including 1 million deaths and some 81 million jobs lost. Prime Minister Jacinda Ardern therefore sought Friday to promote an inclusive, sustainable and resilient recovery, as countries including Indonesia, Thailand and Australia face new waves of infections.
Some progress was made with the 21 leaders pledging to work to expand the sharing and manufacturing of vaccines. However, Friday also showed that APEC's consensus approach is starting to creak with wear: no big surprise given that it is a disparate grouping that includes the world's three largest economies ― the United States, China and Japan ― but also much poorer nations, such as Papua New Guinea.
Even before the corona crisis, that consensus model had been strained, with the group unable to agree on a communique at its 2018 meeting, driven by differences between China and the U.S. Moreover, while the body agreed in June to review trade barriers and expedite the cross-border transit of vaccines and related goods, it stopped short of a broader commitment to remove tariffs, which New Zealand had been pushing for.
Ardern's efforts to promote a pan-APEC approach are being undercut by not only U.S.-China squabbles, but also the attempts of wider forums, such as Group of Seven (G7) and the Group of 20 (G20), to influence this agenda.
It is the U.S.-China bilateral rivalry, however, that could most impede APEC, given the competing ambitions of those two nations to shape the regional order. Underlining the diplomatic battle for influence, which the pandemic has intensified, the White House pre-briefed in the run-up to Friday's talks that it intended to serve "as an arsenal of vaccines for the region," while China said it had already supplied developing countries with more than 500 million doses.
Yet, the pandemic is far from the only flashpoint impeding APEC. This point was highlighted, just as Friday's meeting concluded, when Washington announced sanctions on seven mainland Chinese individuals over the crackdown on democracy in Hong Kong.
This announcement highlights the much bigger battle in play, with the Biden team pre-briefing that it would use the forum to demonstrate its commitment to a free and open Asia-Pacific. What is being referred to here is the nascent U.S. strategy to shape the regional order, including the Quadrilateral Security Dialogue (Quad) of Australia, India, Japan and the United States.
As the Biden team flexes its muscles, it 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 was rejected by Trump.
Xi has said that the FTAAP and RCEP do not "go against existing free trade arrangements," however, at the heart of the debate on these issues are contrasting U.S. and Chinese visions to shape the regional order and cement their influence in it. Beijing's push for the Belt and Road, RCEP, and FTAAP provides a non-U.S. alternative model for economic integration, shaped by Beijing, with its interests at center stage.
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 begin making some initiatives in its four years of office, however, there appeared 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 United States 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, U.S. administrations helped create and nurture key bodies that exist to this day, from the U.N., to the International Monetary Fund and the World Bank. Inspired by this success, both the administrations of George H.W. Bush and Bill Clinton sought to respond to the collapse of Soviet Communism by encouraging the creation of a range of economic institutions, including the World Trade Organization.
Yet, with Trump pulling the plug on U.S. participation in the CPTPP, and disparaging other institutions such as the WTO, a vacuum now exists that either the U.S. or others will fill. And the danger for Washington is that irresistible momentum could now build for a regional architecture ― including the RCEP, Belt and Road and FTAAP ― that allows Beijing to assume the upper hand, damaging U.S. influence not just with local allies, but potentially well beyond too.
Andrew Hammond (andrew.korea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.
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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, including 1 million deaths and some 81 million jobs lost. Prime Minister Jacinda Ardern therefore sought Friday to promote an inclusive, sustainable and resilient recovery, as countries including Indonesia, Thailand and Australia face new waves of infections.
Some progress was made with the 21 leaders pledging to work to expand the sharing and manufacturing of vaccines. However, Friday also showed that APEC's consensus approach is starting to creak with wear: no big surprise given that it is a disparate grouping that includes the world's three largest economies ― the United States, China and Japan ― but also much poorer nations, such as Papua New Guinea.
Even before the corona crisis, that consensus model had been strained, with the group unable to agree on a communique at its 2018 meeting, driven by differences between China and the U.S. Moreover, while the body agreed in June to review trade barriers and expedite the cross-border transit of vaccines and related goods, it stopped short of a broader commitment to remove tariffs, which New Zealand had been pushing for.
Ardern's efforts to promote a pan-APEC approach are being undercut by not only U.S.-China squabbles, but also the attempts of wider forums, such as Group of Seven (G7) and the Group of 20 (G20), to influence this agenda.
It is the U.S.-China bilateral rivalry, however, that could most impede APEC, given the competing ambitions of those two nations to shape the regional order. Underlining the diplomatic battle for influence, which the pandemic has intensified, the White House pre-briefed in the run-up to Friday's talks that it intended to serve "as an arsenal of vaccines for the region," while China said it had already supplied developing countries with more than 500 million doses.
Yet, the pandemic is far from the only flashpoint impeding APEC. This point was highlighted, just as Friday's meeting concluded, when Washington announced sanctions on seven mainland Chinese individuals over the crackdown on democracy in Hong Kong.
This announcement highlights the much bigger battle in play, with the Biden team pre-briefing that it would use the forum to demonstrate its commitment to a free and open Asia-Pacific. What is being referred to here is the nascent U.S. strategy to shape the regional order, including the Quadrilateral Security Dialogue (Quad) of Australia, India, Japan and the United States.
As the Biden team flexes its muscles, it 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 was rejected by Trump.
Xi has said that the FTAAP and RCEP do not "go against existing free trade arrangements," however, at the heart of the debate on these issues are contrasting U.S. and Chinese visions to shape the regional order and cement their influence in it. Beijing's push for the Belt and Road, RCEP, and FTAAP provides a non-U.S. alternative model for economic integration, shaped by Beijing, with its interests at center stage.
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 begin making some initiatives in its four years of office, however, there appeared 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 United States 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, U.S. administrations helped create and nurture key bodies that exist to this day, from the U.N., to the International Monetary Fund and the World Bank. Inspired by this success, both the administrations of George H.W. Bush and Bill Clinton sought to respond to the collapse of Soviet Communism by encouraging the creation of a range of economic institutions, including the World Trade Organization.
Yet, with Trump pulling the plug on U.S. participation in the CPTPP, and disparaging other institutions such as the WTO, a vacuum now exists that either the U.S. or others will fill. And the danger for Washington is that irresistible momentum could now build for a regional architecture ― including the RCEP, Belt and Road and FTAAP ― that allows Beijing to assume the upper hand, damaging U.S. influence not just with local allies, but potentially well beyond too.
Andrew Hammond (andrew.korea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.
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