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Asia-Pacific’s resilience to be tested

By Patrick Burnson, Executive Editor
October 17, 2013

Asia-Pacific Economic Cooperation (APEC) forum leaders met in Bali, Indonesia this month to build upon the progress made so far by the World Trade Organization (WTO) to reduce tariffs in the region’s least developed countries. The promising theme was “Resiliant Asia-Pacific, Engine for Global Growth.”

One would assume that United States’ leadership in this effort would be supremely evident, but that hardly proved to be the case. In fact, we barely showed up. With the government shutdown still underway, President Obama stayed in Washington, sending Secretary of State John Kerry instead.

The message was not lost on President Susilo Bambang Yudhoyono of Indonesia, who noted that the talks risked collapse: “We are now at the 11th hour to put the negotiating function of the WTO back on track.”

Many trade analysts feel that the Obama administration has another agenda, however. It has been championing the controversial Trans-Pacific Partnership, (TPP) – a group of 12 countries comprising what would be the largest trade deal in the world. Government analysts say this could generate an estimated $28 trillion per annum in goods and services.  To put that in perspective, consider that The North American Free Trade Agreement (NAFTA) – currently the largest trade area – produces an estimated $17 trillion.

Only one major problem, though. The TPP does not include China. Understandably, that huge player has proposed its own trade grouping – the Regional Comprehensive Economic Partnership.

TPP advocates say “good luck with that,” noting that their trade agreement would be a platform for economic integration and government deregulation for nations surrounding the Pacific Rim and facilitate free trade to counter China’s financial influence. The negotiating parties include Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. Japan also announced its intention to join the agreement last spring.

Because the TPP is intended as a “docking agreement,” other Pacific Rim countries could join over time, and the Philippines, Thailand, Colombia, and others are already expressing interest.

So where does that leave APEC? Analysts agree that the WTO’s influence is on the wane, and stands little chance of advancing if the U.S. does not show greater interest in the cause.

Chinese President Xi Jinping and the U.S Secretary of State say they would both work with countries to boost investment and trade. Kerry also seeks to offer reassurance that the U.S remains committed to its “Asia pivot” – one of our government’s central foreign policy initiatives

This comes at a time when the Asian Development Bank has revised its regional forecast to a four-year low in 2013, reflecting economic contractions in China and India.

Meanwhile, APEC leaders look to shore up trade ties and economic volatility threatens emerging markets. Indeed, President Yudhoyono is stridently calling for growth that is sustainable and inclusive.

“In view of the scarcity of our finite resources, we agreed to cooperate in enhancing regional food, energy and water security,” he says. “This effort is also aimed at responding to the challenge of population growth and the adverse impact of climate change. At this Bali Summit, we began to look at this matter in a holistic manner.”

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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