APEC Summit 2023: What Does It Mean for the Region?

186

Global attention turned to San Francisco, last week, as the leaders and representatives of the Asia Pacific rim gathered in, to attend the 35th annual Economic Leaders’ Meeting of the Asia Pacific Economic Cooperation (APEC). The 21 member economies and observer economies discussed how to navigate the contemporary challenges of the current economic world with innovative and inclusive solutions to advance free, fair, and open economic policies that benefit all. In alignment with the forums’ trade and economic priorities, the leaders mainly talked about how to better spur trade and economic growth across the Pacific region and bring more transparency and accountability, most importantly sustainability, in the global trade arena.

The summit ended with acceptance of the “Golden Gate” declarations with agreements like the APEC declaration to reform the WTO, their commitment to work for climate change, enhance the renewable energy capacity through policies and intention to net zero greenhouse gas emissions/carbon neutrality by or around mid-century, commitment to implement the Food Security Roadmap–2030 and achieve agriculture sustainability, commitment to create an inclusive, open, fair and non-discriminatory digital ecosystem for business and consumers.  The high-level sideline meetings, however, grabbed the global attention most, rather than the main summit, as the Chinese president Xi Jinping met with US president Joe Biden and Japanese premier Fumio Kishida, after a year, in midst of volatile bilateral relations with the parties. These meetings also produced some discussions and agreements that promise to de-escalate the bilateral tension and global trade concerns, to some extent.

A Glimpse on APEC

The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum with twenty-one economies on both sides of the Pacific. The group’s stated aim is to enhance prosperity through regional economic integration and leverage the growing interdependence of the Asia-Pacific. Established in 1989, APEC has been a proponent of reducing trade tariffs, fostering free trade, and promoting economic liberalization. The member economies, collectively home 3 billion people (almost 40% of the world’s population), contribute to nearly half of global trade and over 60% of the world’s GDP. An interesting fact of the grouping is its unique membership criteria, that allows independent economic entities to participate as a member, without being a nation, i.e. Hong Kong and Taiwan, in spite of being part of China. It operates on the basis of non-binding commitments with decisions taken through commitments and consensus undertaken on a voluntary basis.

The APEC Summit 2023

This year’s APEC summit unfolded in an unprecedented global scenario. Despite decades of trade based on free trade principles, low tariffs, and profit maximization, numerous countries and companies now grapple with challenges in a volatile global economy marked by the highest inflation in decades. The Russia-Ukraine war and Israel-Hamas conflicts have introduced new financial risks, while advancements in technologies like AI and automation disrupt traditional business operations, posing a threat to employment. The lingering effects of the COVID-19 pandemic have exposed vulnerabilities in the supply chain, and environmental concerns such as climate change have intensified natural disasters. The strained bilateral relations between the U.S. and China, coupled with Western sanctions on Russia for invading Ukraine, further contribute to the deterioration of the global economic and trade landscape. Against this backdrop, the APEC summit took place under the theme of “Creating a Resilient and Sustainable Future for All”.” The United States successfully hosted the APEC economic leaders’ week from November 12–17, with different meetings chaired by various US secretary and President Biden chairing the “Leader’ meeting.”

Key Outcomes

The summit endorsed the “Golden Gate Declaration”, as tradition, a consensus-based outcome, aimed at advancing APEC’s ambitious sustainability and inclusion objectives. While the declaration primarily addressed economic matters such as WTO reform and contemporary trade challenges, discussion topics and high-level sideline meetings delved into pressing global issues, including the Israel-Hamas conflict, Russian aggression in Ukraine, and the Taiwan issue. Despite non-binding outcomes in the declaration, taking the form of pledges and commitments, there were visible divisions among participant leaders.

The most important part in the declaration, perhaps, is the forum’s announcement on WTO reform, emphasizing improvement in all functions, including a well-functioning dispute settlement system accessible to all members by 2024. With such a declaration the forum reaffirmed a commitment to a free, open, fair, non-discriminatory, transparent, inclusive, and predictable trade and investment environment, encouraging member economies to adopt Principles on Inclusivity and Sustainability. To this end, the declaration also underscores its commitment for economic integration in the region, with the ultimate aim of working on establishing and working on the Free Trade Area in the Asia-Pacific.

Addressing climate challenges, the forum recognized the need to accelerate efforts toward a clean energy transition, aiming to triple global renewable energy capacity by 2030 , utilizing the latest scientific developments, with the overarching goal of achieving net-zero carbon emissions by the mid-century. Additionally, commitments to food security included upholding the Food Security Roadmap-2030 and pledging to make the agri-food production system more resilient, innovative, and sustainable. The declaration also pledged to sustainably manage agriculture, forestry and marine resources with emphasis on prevention and reduction of food loss and waste to ensure food security.

The other discussion topics also made headlines. While the declaration saw no accord on Russia’s invasion of Ukraine, the chair’s statement acknowledged the adverse impact of the war on human suffering and the fragile global economy. Just like other contemporary global events, Russian president Vladimir Putin also did not attend the meeting, as he faces the international criminal court arrest warrant, and Russia was represented by deputy prime minister Alexei Overchuck, someone outside the US sanction list.

The Israel-Hamas war was also into the discussion topic, bringing out differing views from the leaders. The leaders were totally bifurcated on the issue. Malaysia, Brunei and Indonesia wanted the inclusion of the message for immediate humanitarian truce in Gaza, as adopted in the joint Arab-Islamic summit in Riyadh, earlier this month. However, the inclusion could not happen because of objections from a few other countries, as they questioned the discussion of geo-political matters in an economic forum. Interestingly– China, Russia, the US and Australia– are four of the countries who did not mention either of the conflicts in their final joint communique.

Perhaps the most important outcome of the summit came from the sideline meetings, as Joe Biden and Xi Jinping held their first face to face meeting in a year to stabilize the relation. The cooperation between the world’s two largest economies was badly needed as their frosty relations and trade war spilled all over the world, especially small nations facing grappling challenges. They discussed the trade tariff, the issue of Taiwan, the turmoil in the Middle East and the climate issue. Both parties even reached some agreements like they agreed to reinstall direct military to military communication, agreed to work together on climate front ahead of the COP-28 summit and the Chinese president assured Biden that he would take action against the fentanyl producers in China. Amidst the volatile global economic condition, the meeting and agreement shows signs of de-escalation of tension in near future.

Xi’s meeting with Japanese premier Fumio Kishida, after almost a year, was also significant, as the complexities of China-Japan relations far exceeds that of US-China ties. Beijing and Tokyo pledged to moderate their animosity to seek mutually beneficial relations and “coexist peacefully”. Although Xi reminded his Japanese counterpart of their commitment on Taiwan, Japan lobbied for withdrawal of the export ban on Japanese fishes, imposed after the incident of contaminated water release of Fukushima nuclear power plant into the sea. The ban has heavily affected fish export, as China is the biggest destination of Japanese Susi fishes.

The main gathering was completely overshadowed by the sideline meetings, however the declarations and pledges that the Pacific Rim leaders made, undoubtedly promise to make the world a better place. As the forum became the platform of one of the most anticipated meetings between the two biggest economies, the world has witnessed a rare cooperation among the frosty rivals. Overall, the summit has provided a meeting place and agendas to interact in the certain times of the world marked by mistrust and rivalries.

– Wahid Uzzaman Sifat is a Research Intern at the KRF Center for Bangladesh and Global Affairs (CBGA).

[Read Full Briefs as a Pdf]