A vacuum in the Asia Pacific region

The Asia Pacific Economic Council (APEC) held the first extraordinary leadership meeting in its history on Friday as the region recovers from the pandemic after the biggest economic and political shock since the Second World War. 

As 2021 APEC chair, New Zealand’s highest priority is leading the region’s response to the worst health and economic crisis in living memory, with 1 million deaths and about 81 million jobs lost. Prime Minister Jacinda Ardern therefore sought to promote an inclusive, sustainable and resilient recovery as countries including Indonesia, Thailand and Australia face new waves of infections.

Some progress was made, with the 21 leaders pledging to work to expand sharing and manufacturing vaccines. However, the meeting also showed that APEC’s consensus approach is creaking; no big surprise ina disparate grouping that includes the world’s three largest economies — the US, China and Japan — but also much poorer nations such as Papua New Guinea.  

Even before the coronavirus crisis, that consensus model was strained, with the group unable to agree on a communique at its 2018 meeting, driven by differences between China and the US. Moreover, while it agreed in June to review trade barriers and expedite the cross-border transit of vaccines and related goods, it stopped short of the broad commitment to remove tariffs that New Zealand was pushing for. 

Ardern’s efforts to promote a pan-APEC approach are being undercut, not only by US-China squabbles but also by the attempts of wider forums such as the G7 and G20 to influence this agenda.  

It is the US-China rivalry, however, that could most impede APEC, given their competing ambitions to shape the regional order. Underlining the diplomatic battle for influence that the pandemic has intensified, the White House briefed in the run-up to Friday’s talks that it intended to serve “as an arsenal of vaccines for the region,” while China said it had already supplied developing countries with more than 500 million doses — this despite Ardern saying Friday’s meeting had “moved us beyond vaccine nationalism.”

The pandemic is far from the only flashpoint impeding APEC. This was illustrated, just as Friday’s meeting concluded, when Washington announced sanctions on seven Chinese individuals over the crackdown on democracy in Hong Kong. 

In the post-war period, the US has undertaken a global institutional building project on a largely bipartisan basis, at least until the election of Trump, to encourage the growth of democracy and open markets across the world.

Andrew Hammond

This highlights the much bigger battle in play with the Biden team briefing that it would use the forum to demonstrate its commitment to a free and open Asia-Pacific. What is being referred to here is the nascent US strategy to shape the regional order.

As the Biden team flexes its muscles, it is aware of the Chinese juggernaut being mobilised by Xi Jinping in the form of the Belt and Road plan, plus the Regional Comprehensive Economic Partnership (RCEP) and the proposed Free Trade Area of Asia Pacific (FTAAP).  These schemes have assumed new importance for Beijing since the inception of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which the Obama team championed but which was rejected by Trump.  

Xi has said that FTAAP and RCEP do not “go against existing free trade arrangements,” but at the heart of the debate on these issues are contrasting US and Chinese visions to shape the regional order and cement their influence in it. Beijing’s push for Belt and Road, RCEP, and FTAAP provide a non-US alternative model for economic integration shaped by Beijing with its interests center stage. 

And it is in this context that the Biden team is beginning to set out its own stall for shaping the regional order.  The Trump team did take some initiatives during its four years in office, but there appeared to be no overarching plan to bring them all together in a powerful strategy.    

History points to what may now be needed to fill this vacuum. In the post-war period, the US has undertaken a global institutional building project on a largely bipartisan basis, at least until the election of Trump, to encourage the growth of democracy and open markets across the world. 

From 1945, US administrations helped create and nurture key bodies that exist to this day from the UN, to the IMF and World Bank. Inspired by this success, the administrations of George H.W. Bush and Bill Clinton sought to respond to the collapse of Soviet communism by encouraging creation of a range of economic institutions including the World Trade Organization.  

But with Trump pulling the plug on US participation in CPTPP, and disparaging other institutions such as the WTO, a vacuum now exists that either the US or others will fill. And the danger for Washington is that irresistible momentum could now build for a regional architecture, including RCEP and Belt and Road, and FTAAP, which allows Beijing to assume the upper hand, damaging US influence not just with local allies but possibly well beyond too. 

• Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics