Trade integration and APEC

APEC’s recognition of trade as an accelerant to global economic recovery merits close attention

Ministers and leaders of the Asia-Pacific Economic Cooperation (APEC) met in Bangkok, issuing a joint statement that built on the strengths of three key priorities in the Asia-Pacific. These included the advancement of trade and investment, reconnecting the region “in all dimensions,” and propelling APEC towards “balanced, inclusive and sustainable growth.” As one of the few very dominant groupings in Asia with a big say in trade integration and regional connectivity, APEC’s recognition of trade as an accelerant to global economic recovery merits close attention.

First, a desire to promote comprehensive free trade undertakings is a step in the right direction for developing economies. Concrete reference points, such as the Beijing Roadmap on progressing Asia-Pacific’s Free Trade Area (FTA), confirm that the grouping’s post-COVID recovery strategies are big on integration. Such momentum arrives at a time when APEC’s key member states, chiefly China and the United States, are also keen to advance that sense of economic stability in the Asia-Pacific. This has been an expectation for long, and is helped by the recent diplomatic consensus between Washington and Beijing to setup guardrails in their relationship.

By prioritizing broad-based participation from within the 21-member group, free trade takes precedence over undue security considerations. That is a commendable departure from some of the other types of consensus witnessed in the Group of Seven (G7). It is also in the interests of APEC economies to give full play to what has been described as “growth-focused structural reform” in a region. Given the Asia-Pacific region’s position as a melting pot for investment, sustainable technologies, and trade-oriented security, a growth-first approach to trade integration is likely to score gains within APEC and beyond.

Limited attention to these free trade priorities risk exacerbating economic recovery woes, rather than addressing them. This is why leaders’ agreement on “realising the full potential” of societies is a sign of a more inclusive approach to economic growth. Consider the fact that APEC leaders focused on a rare Ukraine war consensus this time, given the war’s outsized bearing on existing fragilities in the global economy. Among those fragilities lie those that resonate closely with the developing world’s current and future challenges: constraints on growth, intensifying inflation, disruptions in supply chains, heightened energy and food insecurity, as well as elevated financial stability risks. All of these have been rightly identified by all states in unity, indicating an ironclad consensus when it matters.

More importantly, there is no desire from APEC to position itself as some forum for deliberating security issues when its principal objective is to drive trade, market and regional economic support. For this reason, recent talks appear to be marking a valuable departure from the likes of the Quadrilateral Security Dialogue (QUAD), which exercises containment and economic incentives in equal measure. To the contrary, by tying the economic relevance of the Ukraine war to APEC’s “Open, Connect, Balance” theme, there is a broad appetite to welcome cooperative economic integration in Asia-Pacific.

The 2022 APEC Leaders’ Declaration should also be remembered for its commitment to bringing down barriers to trade connectivity at a time of rising global divisions. “We recognize the power of digital transformation in facilitating and reducing barriers to trade and unlocking exponential growth, including through nurturing the interoperability of digital systems and tools across the region,” said the leaders in the Declaration.

That interpretation has global merits. First, it is no secret that the role of digital transformation in connecting markets across Asia has been increasingly evident. Advantages of digital economy support have been felt as far as the Association of Southeast Asian Nations (ASEAN), an influential 10-member Southeast Asian grouping with productive trade and diplomatic ties with Beijing and Washington. Thus, keeping APEC’s digital economy roadmap front and center plays to historic strengths in the region. More deeply, this makes it easier for APEC to evolve into a model of digital integration that can inspire trade-driven stability elsewhere in the world. A world increasingly divided by blocs, ideological groupings, and great power rivalry needs a forum that blends cooperative tendencies into a win-win trade and economic connectivity consensus. The 2022 APEC meeting, hosted by Thailand, delivers on the merits of that very objective.

Given how the APEC region accounted for about 2.95 billion in population in 2021 (38% of the global population), it is imperative for the consensus on “innovative and inclusive economic growth” to be prolonged into next year. Washington is set to serve as APEC’s host next year, and it would serve the interests of Asia-Pacific and other powers if the U.S. can manage its economic relationship with China responsibly. That would be a key test for Washington and its commitment to trade inclusivity, given that APEC has no desire to endorse Washington’s deliberate resistance to China’s peaceful rise on the world stage. Coexistence is necessary.

All told, the view from Bangkok this week is clear: let this 21-member grouping of regional economies place trade integration priorities where they belong.

The writer is a foreign affairs commentator and recipient of the Fulbright Award