Brexit and Trump won't torpedo Asian cooperation
Participants at this month’s Apec summit in Lima agreed that continuing pursuit of the proposed Free Trade Area for Asia and the Pacific (FTAAP) should be a priority. photo: REUTERS
Despite growing anti-globalisation sentiment reflected in the Brexit vote, and Donald Trump’s vow to pull the US out of the Trans-Pacific Partnership (TPP) the moment he assumes the presidency, Asia Pacific countries are pressing ahead with many other regional plans.
There has been no indication suggesting that regional economies would pull out of arrangements that have already been made, said Alan Bollard, executive director of the Asia Pacific Economic Cooperation (Apec) secretariat.
“Certainly, we are all aware of the anti-globalisation popular feeling that has led to some of the movements in Europe and Brexit, and we saw some aspect of that in the US election as well,” he told Asia Focus in a telephone interview from Singapore.
“We are very aware that there are some popular [strains of thought] which would not automatically accept the benefits of globalisation.
“But we have not seen the core part of that in East Asia because the European situation has been particularly impacted by [a few] factors, [whereby] a lot of European countries feel they have lost national sovereignty to the EU and are worried about long-term migration. We have not really had either of those two phenomena in the East Asian region.”
Common approaches established among Asia Pacific countries on infrastructure development and services trade, such as a common standard for e-commerce and movement of digital data, are examples of how these countries remain committed to fostering further economic integration, he added.
Proposed by China, the Asian Infrastructure Investment Bank (AIIB) also reflects a common interest among Asian and some non-Asian countries alike. With 57 member countries globally, the bank started operations late last year.
And despite geopolitical tensions in the background, Dr Bollard said Apec also serves as a platform for member countries to improve economic cooperation and policymaking without drifting into a political debate. He cited the proposed Free Trade Area for Asia and the Pacific (FTAAP) as an example.
The 21 Apec members, led in this case by the US and China, have been working on the FTAAP study for two years. They are analysing potential economic and social benefits and costs, as well as pathways toward a free trade area (FTA).
“That has been the glue that has kept together quite a different clique of big and small economies [as well as] developed and developing markets because we do have a common interest about what we can get from that, [which] will continue,” said Dr Bollard.
In his view, is too soon to conclude that a Trump administration would embark on heavy-handed protectionist policies in line with his bellicose campaign rhetoric. Even if it did, he said, it is hoped that the new US government would continue to take a soft approach toward globalisation by collaborating with institutions such as the World Trade Organization and Apec
And despite Mr Trump’s professed dislike of how the TPP undermines American interests, global trade is not expected to slow down, though trade protectionism warrants greater concern as such policies could disrupt trade flows, said Dr Bollard.
“They [the 12 signatory TPP countries] might consider renegotiation, other members without the US might consider pushing ahead, or they might just leave it for a while [since] it does not expire [and] they can reactivate it in the future,” he said. “But they might also want to use the FTAAP study as a sort of plan B moving forward.”
Moving ahead with the FTAAP was one of the priorities agreed on at the 2016 Apec Economic Leaders’ Week held from Nov 14-20 in Lima, Peru. Participants including Barack Obama and Xi Jinping declared support for initiatives focused on advancing regional economic integration, supporting small business modernisation, and updating infrastructure development progress.
Apec leaders have generally given their support for several years to the TPP, but it is possible that countries involved with the TPP could turn toward the Regional Economic Comprehensive Economic Partnership (RCEP) instead, said Dr Bollard.
“It is possible that partners might look at secession on TPP and decide they can bring [the RCEP] to a conclusion, but it would have to be a reasonably high-quality agreement, not just signing off on what already exists,” he said.
But the RCEP negotiations have been proceeding slowly, and participants have to consider how India, as a non-Apec member, could see things from a different perspective, said Dr Bollard.
The RCEP involves the 10 Asean member states plus six key trading partners — China, Japan, South Korea, India, Australia and New Zealand.