Expert Voices on the APEC 2021 Ministers Responsible for Trade Meeting
Since the Asia-Pacific Economic Cooperation (APEC) forum was established in 1989, its members have worked to reduce trade barriers, increase cooperation, and accelerate regional economic integration. APEC 2021 is being hosted virtually by New Zealand, which has designated the year’s theme as “Join, Work, Grow. Together.” With the Ministers Responsible for Trade Meeting scheduled for June 5, NBR asked experts from our network to comment on various members’ economic priorities and desired outcomes from this year’s meeting.
Victoria University (New Zealand)
Faced with travel restrictions during the Covid-19 pandemic, New Zealand as the hosting country made the decision early on that the several hundred meetings of officials, businesses, ministers, and leaders at the June 2021 APEC meeting would need to be done in a virtual format. A focus of this year’s meeting has been on the control of Covid-19 and economic recovery in the Asia-Pacific. Although East Asia and Australasia generally controlled the spread of the virus early on, while North and South America failed to do so, all APEC economies have been affected by the pandemic.
There has been much discussion about how to limit the rise of economic nationalism and trade restrictions and ensure efficient trade and distribution of personal protective equipment and vaccines. The Policy Support Unit of APEC has also suggested a number of specific actions to limit the spread of Covid-19 and enhance economic recovery. However, in practice it can be difficult to reach agreement around the APEC table when there are political tensions about the source and speed of the virus, problems with its suppression, and arguments about vaccines. So far the United States is the region’s biggest user of vaccines, while China and Russia are the biggest vaccine exporters.
Apart from the Covid response, several hundred projects are underway. For the last three decades, APEC initiatives have been guided by the Bogor Goals promoting “free and open trade and investment by 2020.” Last year in Malaysia, leaders agreed to a new Putrajaya Vision for “an open, dynamic, resilient and peaceful Asia-Pacific by 2040.” This broad guideline needs an implementation plan, which New Zealand is working on.
In addition to this overarching objective, New Zealand has several focus areas for the 2021 meeting:
- Economic growth in the Asia-Pacific has traditionally been driven by regional trade. Since the global financial crisis, trade growth has weakened, economic nationalism and trade tensions have risen, and trade volumes fell for the first time during the pandemic. Most APEC economies (especially smaller ones) are looking to revive trade growth, albeit in different patterns (e.g., through the relocation of labor-intensive production out of China, some limited reshoring into the United States, and more secure access to key materials in supply chains).
- There are concerns that trade and globalization are not benefiting all populations, as spotlighted by recent populist trends. Under the heading of “inclusive trade,” APEC is exploring the question of how to spread the benefits of free trade more evenly. Of particular interest to New Zealand is promoting indigenous peoples’ economies, though this goal will not resonate with all 21 member economies.
- One key way to spread trade benefits is through increased digitalization. A number of APEC initiatives are now underway to harmonize regional digital platform connectivity, set cybersecurity standards, and establish protocols for data ownership and privacy. APEC has around 100 million small and medium-sized enterprises, and if even a small proportion can gain digital exposure to international market opportunities, this could be a major event.
On June 5, the trade ministers of the APEC economies will meet in the virtual space hosted out of studios in Wellington, and they will review progress on all these initiatives.
Alan Bollard is a Professor in the School of Business and Government at Victoria University in New Zealand. From 2013 to 2018, he was Executive Director of the APEC Secretariat in Singapore.
Centre for Multilateralism Studies, RSIS
Held annually since 1996, the Ministers Responsible for Trade meeting is one of the key mechanisms of APEC to push forward trade and investment liberalization and uphold the multilateral trading system. Issues discussed on this platform vary, ranging from public-private partnership and technical collaboration.
For Thailand, the upcoming meeting is crucial in the following ways. First, the focus on regional economic recovery matches the country’s economic priority of bouncing back from the adverse effects of the Covid-19 pandemic. The virus has dealt a big blow to the Thai economy. As Bangkok battles the third wave of infections, the Ministry of Finance slashed its 2021 growth prospect from 2.8% to 2.3%. Also, the tourism sector, which accounts for around 12% of the nation’s GDP, witnessed a revenue loss of $37.5 billion in 2020. APEC constitutes a platform for members to exchange ideas and jointly coin practical solutions to weather the pandemic. Because Thailand’s trade with the other APEC economies encompasses 71.9% of its total trade, a more liberalized, resilient, and sustainable Asia-Pacific helps the country better recuperate from the damages caused by the Covid-19 pandemic.
The gathering also can help Thailand better prepare its economy for the post-pandemic “new normal.” Covid-19 has changed consumer behavior. Tourism is a case in point. Due to the virus, people have become more risk-averse. As a result, vacationers now avoid crowded destinations and opt for less well-known getaways. A pressing question regarding leisure travel in the new normal is how to strike a practical balance between public health and tourism. Thanks to APEC’s nonbinding nature, participants at the Ministers Responsible for Trade meeting can raise and explore policy ideas more candidly than in other venues. For instance, they can exchange suggestions for devising a regional modality for information sharing among the entities involved in tourism. These elements in the future could develop into new standards and regulations facilitating international travel in the Asia-Pacific in the post-pandemic era.
Finally, the outcomes of this meeting, and APEC 2021 in general, can enable Bangkok to better set the direction of regional economic cooperation in its own role as APEC chair. Thailand will assume the position of chair from December 2021 to November 2022. It is considering advancing collaboration in several realms, namely trade and investment, digitalization, inclusive and sustainable development, well-being in the Covid-19 era, and food security. As more details need to be worked out, Bangkok’s participation in this and other APEC meetings can help the country formulate its agenda as chair next year.
Kaewkamol Pitakdumrongkit is Deputy Head and Assistant Professor of the Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, in Singapore.
Appleton Luff International Lawyers
Vietnam has actively participated in APEC as part of its reintegration into the world economy, a process it has undertaken faster than any other country in recent memory. Since the United States ended Vietnam War–era sanctions in 1994, Vietnam has rapidly progressed from milestone to milestone. First, by joining ASEAN in 1995, Vietnam was able to benefit from increased trade and investment with its neighbors through the ASEAN Free Trade Area and ASEAN’s free trade agreements (FTAs) with China, Japan, South Korea, India, and Australia–New Zealand. A few years later, in 2000, Vietnam normalized trade relations with the United States. The country continued to deepen its integration into global and regional trade architectures, joining the WTO in 2007 and signing trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018, FTAs with the European Union in 2019 and the United Kingdom in 2020, and the Regional Comprehensive Economic Partnership (RCEP) in 2020. In less than 30 years, Vietnam has caught up, and in some ways surpassed, its ASEAN neighbors in economic development and trade integration.
Yet the terms of trade and investment for Vietnam have also changed during those 30 years. At the outset, rejoining global supply chains was relatively straightforward as multilateral and regional economic integration efforts progressed in Asia. By 2016, these efforts had morphed into the Trans-Pacific Partnership (TPP) and RCEP. The two initiatives had different scopes, speeds, and ambitions, but many hoped that APEC would eventually smooth over these differences to the benefit of all.
The United States’ withdrawal from the TPP in 2017 ended those hopes. Although the CPTPP salvaged the agreement for the other signatories, the Trump administration would not present viable alternatives. None of the promised bilateral FTAs with the United States ever materialized, other than modest trade agreements with Japan and other countries. Moreover, the Trump administration could not resolve whether its overall priority was attracting Asian allies to counteract the influence of China or reshoring supply chains back to the United States. The former goal would have been better served by offering economic incentives (like FTAs) to Asian partners, whereas proponents of the latter worldview felt that a stronger U.S. economy—along with U.S. security guarantees—would be incentive enough for Asian partners to work with the United States.
In the meantime, Vietnam and other Asian countries turned to the RCEP, the CPTPP, and European partners to advance economic integration efforts. Heightened U.S.-China trade tensions benefited Vietnam, as manufacturers moved operations there from China. However, the increased U.S. trade deficit with Vietnam also brought greater scrutiny, such as the U.S. Treasury Department’s investigation of the country’s currency policies.
The Biden administration is faced with the same dilemma of whether to prioritize building an Asian coalition to counteract the influence of China or restoring U.S. economic competitiveness. Yet, even though these priorities are competing, they are not incompatible. The United States would be better served by a nuanced policy that reinstates trade agreements as an incentive for U.S. allies and accepts that supply chains will necessarily involve significant roles for Asian suppliers. The question will be whether U.S. domestic concerns will inhibit the Biden administration’s ability to pursue trade agreements with Asian partners. If so, the administration risks presenting the same inconsistent and unattractive policies to the region as its predecessor, albeit in different packaging.
The June 2021 APEC meeting thus offers a lens to view the Biden administration’s approach to the region. It is premature to expect a formed policy from the administration so soon after taking office. However, Vietnam and other APEC partners may be able to discern the general outlines of its policy. Hopefully, that policy will reflect a better balancing of these competing priorities, and thereby give the region hope for the United States to play a stronger, more engaged role in all aspects of regional cooperation.
Edmund Sim is a Washington-based partner with Appleton Luff International Lawyers. He has advised various ASEAN members and the ASEAN Secretariat on regional economic integration and trade disputes.
South Korea will be one of the 21 member economies participating in the Ministers Responsible for Trade meeting, led by New Zealand under the theme of “Join, Work, Grow. Together.” The country will be represented by Trade Minister Yoo Myung-hee.
A high priority for the South Korean government will be cooperation on Covid-19 vaccine distribution. The meeting will take place less than a month after the Biden-Moon summit. Amid concerns that the shortage of vaccine supply could delay the government’s goal to achieve herd immunity by this fall, President Moon Jae-in is expected to raise the issue of vaccine cooperation with President Joe Biden through a “vaccine swap” or the creation of “an Asian vaccine production hub” in South Korea. He has further stated his ambitions for South Korea to become a “global production hub, [which] would greatly help boost vaccine supplies both at home and abroad.”
South Korea is expected to continue to support cooperation on trade in essential goods and the facilitation of travel amid the pandemic by lowering barriers. It submitted the “Proposal to Review Measures Facilitating Essential Movement of People across Borders” in 2020 for discussion at the APEC Committee on Trade and Investment on the “voluntary exchange of information” to facilitate the essential movement of people. South Korea is also reportedly looking to introduce a global Covid passport for vaccines authorized by the World Health Organization to facilitate international travel. Moreover, Ambassador Seong-ho Lee, the senior official deputy minister for economic affairs, emphasized the importance of facilitating the essential movement of goods and people to minimize supply chain disruptions during the first APEC Senior Officials’ Meeting in March 2021. South Korea will therefore continue to support multilateral cooperation in these areas.
South Korea also will continue to welcome efforts to tackle shared challenges in the digital and environmental space to promote inclusivity and sustainability for post-pandemic recovery. The Moon administration in 2020 introduced the Digital and Green New Deals to create jobs and foster an inclusive economy in the post-pandemic era, which is in line with APEC’s objective to increase “inclusion and sustainability for recovery.” In addition, South Korea is in the process of negotiating a digital trade agreement with Singapore and exploring the possibility of joining the Digital Economy Partnership Agreement. As Vice Minister of Foreign Affairs Lee Tae-ho stated during the APEC meeting in November 2020, South Korea is expected to continue to play an active role in digital trade issues, including privacy and consumer protection.
On the environment, South Korea announced its goal to become carbon neutral by 2050 and is expected to support multilateral efforts to promote sustainability. President Moon stated during the U.S.-led Leaders Summit on Climate that the country “will end all public financing for new overseas coal-fired power plants” and increase the production of renewable energy. As South Korea further implements the Korean New Deal and hosts the Partnering for Green Growth and the Global Goals (P4G) summit in late May to support sustainable growth, the government is expected to support efforts for multilateral cooperation on carbon reduction, renewable energy, and sustainability.
Tami Overby is a Senior Director with McLarty Associates. She has 21 years of experience living and working in Seoul, including 14 years as president of the American Chamber of Commerce in Korea.