The 30th Asia Pacific Economic Cooperation (APEC) Summit recently took place in Papua New Guinea. There was a unique occurrence this time – it marked the first instance since APEC’s inception when a joint communique failed to be issued. This resulted from a lack of consensus among members concerning trade and security issues. Every country, except China, was in agreement with the joint statement.
The Mutual Confrontation between the US and China at APEC
The US fired shots at China’s Belt and Road Initiative (BRI), branding it as a “constricting belt” and a “one-way road”. The US urged nations to lend their support but also cautioned smaller countries about falling into a potential “debt-trap” by China. The US warned that such debts could compromise sovereignty. China, on the other hand, defended the BRI, reiterating that there is no geo-political agenda behind it and it’s not an exclusive club nor a trap. The Chinese also criticized the “America First” policy of the US, arguing that erecting barriers and cutting ties can be a short-sighted approach that’s bound to fail.
The Impact of Trade War: Global Economy & Institutions
The discord between the US and China at APEC underscored the potential hazards of their ongoing trade war. Such a trade war could severely affect the Pacific Rim economy. Because of this ongoing tariff war, the International Monetary Fund has had to downgrade its global growth outlook for both 2018 and 2019. If this continues, it may impact global supply chains and shrinking trade volumes could force companies to look for new trading routes and partners.
Additionally, the authority of multilateral rule-making bodies like the World Trade Organisation (WTO) and APEC may be diminished. This could lead to the substitution of consensus-based approach – established post World War 2 – with an interlocking system of bilateral trade treaties.
| Established | Members | India Membership |
|---|---|---|
| 1989 | 21 | Non-member |
About Asia-Pacific Economic Cooperation (APEC)
APEC was started in 1989 with the main objective to support sustainable economic growth and prosperity in the Asia-Pacific region. The 21 member economies of APEC house around 2.8 billion people and represented roughly 59% of world GDP and 49% of global trade in 2015.
The founding members include Australia, Brunei Darussalam, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States. Over the years, membership has expanded to include China; Hong Kong, China; Chinese Taipei, Mexico and Papua New Guinea, Chile, Peru, Russia, and Vietnam.
During the Bogor, Indonesia summit in 1994, APEC set the Bogor Goals of “free and open trade and investment in the Asia-Pacific by 2010 for industrialized economies and 2020 for developing economies.”
Despite India’s request for membership and initial support from the United States, Japan, Australia, and Papua New Guinea, officials have not permitted India to join citing that it does not border the Pacific Ocean as all current members do. However, India was invited to act as an observer for the first time in November 2011.