Trade
Has the United States abandoned APEC’s vision?
Author: Gary Clyde Hufbauer, PIIE
On 15–17 November 2023, US President Joe Biden will host 21 APEC leaders in San Francisco. But not all invited heads of state will attend the gala event. Facing criminal charges, Russian President Vladimir Putin will almost certainly stay home in Moscow. Other presidents and prime ministers may be compelled to tend to urgent domestic business.
Both Biden and Putin skipped the November 2022 APEC meeting in Bangkok, enabling Chinese President Xi Jinping to steal the show. One headline event in San Francisco could be the Biden–Xi bilateral meeting, unless a fresh eruption of US–China disputes keeps Xi in Beijing.
Another headline could be a Biden meeting with Indian Prime Minister Narendra Modi. India has been trying to join APEC since the institution was founded in 1989, but has been blocked first by its own protectionist policies and more recently by China. Now that the United States and India are steady geopolitical compatriots, Biden might invite Modi to side meetings in San Francisco that coincide with the APEC agenda.
Apart from these headline meetings, what accomplishments might leaders announce? Last year as host, Thailand revived the bold concept of a Free Trade Area of the Asia Pacific (FTAAP). The US agenda for APEC 2023 has nothing so ambitious. The theme announced in December 2022 is ‘Creating a Resilient and Sustainable Future for All’ — noble words but devoid of concrete goals and measurable mileposts.
The US State Department serves as the United States’ lead agency for APEC matters, but other departments exert greater control over trade and investment policies. The US Trade Representative and the Commerce Department share the trade turf, while the Secretary of the Treasury chairs the powerful Committee on Foreign Investment in the United States which monitors inward investment. The Treasury is in the process of acquiring new authority to prohibit outward investment to China and may use CFIUS to carry out that role.
Under the Biden administration, the US Trade Representative, Secretary of Commerce and Secretary of the Treasury have spent more time restricting commerce than removing barriers. Indeed, the strongest point of continuity between the Biden and Trump administrations is trade and investment policy.
Former president Donald Trump loudly, and Biden softly, both regard globalisation as bad for the United States. They see no benefit in lowering tariff and non-tariff barriers that keep foreign products out of US markets. Nor do they applaud US firms that invest abroad. For Trump, tariffs are a beautiful thing. His campaign for a second term promises higher tariffs. For Biden, ‘Buy America’, reinforced by generous subsidies, paves the path to prosperity. As well, Biden has amplified Trump’s policy of making trade policy the junior partner of security policy in the geopolitical contest with China.
The current US policy posture doesn’t leave much room for constructive engagement in APEC. But there has been no lack of APEC meetings during 2023. Starting with the December 2022 kick-off, the United States has hosted 15 meetings with ministers and senior officials to prepare for the heads of state meeting in San Francisco. Topics covered include finance, central banking, transportation, food security, disaster management, health, energy, women and the economy and trade. No doubt a great deal of useful information has been shared on national practices and policies.
But none of the preparatory meetings during 2023 laid the groundwork for fresh national commitments to promote closer economic ties within APEC. The landmark 1994 APEC meeting in Indonesia declared the famous Bogor Goals — ‘the long-term goal of free and open trade and investment in the Asia Pacific … no later than the year 2020’. At the time, US President Bill Clinton enthusiastically praised the Bogor Goals.
Times have now changed. With the onset of US–China geopolitical conflict, and with US doubts about globalisation, the Bogor Goals no longer feature as the APEC centrepiece.
For those APEC members that still welcome global engagement, trade and investment negotiations have long migrated to other forums. Indeed, many APEC members have come to see its role as a ‘sandbox’ to float proposals, leaving actual negotiations to other bodies. Multiple bilateral free trade agreements have entered into force between APEC members. Fresh regional agreements have been forged between ASEAN members, between China, Japan and South Korea, and in North America, where the North…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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