News Analysis: Peru APEC is opportunity to fight against protectionism
By Matt Burgess
SYDNEY, Nov. 18 (Xinhua) — The global economy is crying out for leadership to stem the opposition to free-trade, yet the stagnant economic recovery post-Global Financial Crisis is having countries implementing inward looking policies.
The dynamics of European Union post the United Kingdom’s referendum to leave the single market (Brexit) has created a global and regional integration challenge that’s filtering throughout the developed world.
Increasing protectionist rhetoric by members of Australia’s government — both ruling and opposition power brokers — as well as the looming Donald Trump presidency proves resistance to globalisation is gathering pace.
“That has got indirect impacts on the way APEC leaders are seeing the world,” Director of the Institute of Global Finance at the University of New South Wales Professor Fariborz Moshirian, told Xinhua earlier this month.
And of course there are other regional forces at play dictating whether APEC on its own can become a force for economic and financial integration, Moshirian said, noting the friction between the Regional Comprehensive Economic Partnership (RCEP) and the Trans Pacific Partnership (TPP).
“It’s a bit complicated… everyone is trying to create their own sort of bloc,” Moshirian said, adding it’s essentially a battle for “supremacy and control of trade and investment within the Asia Pacific region.”
Feasibility and cost-benefit studies of a free trade zone covering all APEC members, agreed as part of a proposed Free Trade Area of the Asia-Pacific (FTAAP) at the 2014 APEC summit in Beijing, are to be delivered at the Peru Summit.
The free trade zone encompassing the 21 APEC members, who currently account for over 50 percent of global GDP, should potentially be implemented no later than 2025 if agreements can be reached, just under 20 years after its original proposal by the United States.
With roughly 10-percent of national income traded, there is little risk for the United States if they pushed for FTAAP to be delayed, though they would risk isolating themselves in the Asia-Pacific.
Australia seeks to negate this, wanting to “capitalise on this moment in the global economy” though increased free-trade in the booming Asia-Pacific, but is consciences that the “impacts of change can be borne unevenly across the community”.
“Countries that have embraced open trade and investment policies have experienced, as we know, significant gains in income, employment and living standards,” Australian Prime Minister Malcolm Turnbull told the Business Council of Australia annual dinner on Thursday night, adding it has lifted billions of people out of poverty in the region.
“But we are living in a time where the pace and scale of change is without precedent in human history.
“Change is unsettling, and as people see things change around them, they are concerned they could be left behind. Weaker growth in incomes is feeding uncertainty, helping anti-trade sentiment find a foothold.”
Turnbull said the world has seen economies introduce the equivalent of five protectionist trade policies per week over the past year, the fastest pace since the Global Financial Crisis.
“Retreating from policies that have delivered us prosperity and opportunity is the wrong call,” Turnbull said.
But protectionism isn’t just about trade policies, it’s also the issues that influence trade.
Since the Global Financial Crisis, the developed world economies have been running extraordinarily loose monetary policy, some experimental.
It’s a bid to lower a country’s currency to make their exports more competitive. In effect, increase exports, decrease imports and spur the domestic economy, Moshirian said.
“But if everyone does it, it’s the same thing that happened in the great depression, and you suddenly slow down free trade,” Moshirian said.
The ideal solution to boost global trade, thus global growth is the failed World Trade Organization (WTO) Doha trade negotiations that stumbled because complex issues couldn’t be resolved. So, nations are now forming regional trade blocks, which are politically charged.
Pushing FTAAP is using APEC to its full capacity, minimising the smaller, politically charged trading blocs such as RCEP and TPP.
An agreement on the feasibly of FTAAP proves APEC is a rightful global leader in a region of dynamic change. It’s now time for APEC to pull together to agree to press the next stage, the Doha round.
“Frankly, my hope (is) that they can just not play politics, but rather be united for multilateral free trade,” Moshirian said.