Us Has Largely Abandoned Its Apec Vision

The Treasury is in the process of acquiring new authority to prohibit outward investment to China and may use CFto carry out that role.

Under the Biden administration, theTrade Representative, Secretary of Commerce and Secretary of the Treasury have
spent more time restricting commerce
than removing barriers. Indeed, the strongest point of continuity between the Biden and Trump administrations is trade and investment policy.

Former president Donald Trump loudly, and Biden softly, both regard globalization as bad for the United States. They see no benefit in lowering tariff and non-tariff barriers that keep foreign products out ofmarkets. Nor do they applaudfirms that invest abroad. For Trump, tariffs are a beautiful thing. His campaign for a second term promises higher tariffs.

For Biden,“Buy America”, reinforced by genersubsidies, paves the path to prosperity. As well, Biden has amplified Trump's policy of making trade policy the junior partner of security policy in the geopolitical contest with China.

The currentpolicy posture doesn't leave much room for constructive engagement in APEC. But there has been no lack of APEC meetings during 2023. Starting with the December 2022 kick-off, the United States has
hosted 15 meetings
with ministers and senior officials to prepare for the heads of state meeting in San Francisco.

Topics covered include finance, central banking, transportation, food security, disaster management, health, energy, women and the economy and trade. No doubt a great deal of useful information has been shared on national practices and policies.

But none of the preparatory meetings during 2023 laid the groundwork for fresh national commitments to promote closer economic ties within APEC. The landmark 1994 APEC meeting in Indonesia declared the
famBogor Goals
–“the long-term goal of free and open trade and investment in the Asia Pacific ... no later than the year 2020.”

At the time,president Bill Clinton enthusiastically praised the Bogor Goals. Times have now changed. With the onset of US-China geopolitical conflict, and withdoubts about globalization, the Bogor Goals no longer feature as the APEC centerpiece.

For those APEC members that still
welcome global engagement , trade and investment negotiations have long migrated to other forums. Indeed, many APEC members have come to see its role as a“sandbox” to float proposals, leaving actual negotiations to other bodies. Multiple bilateral free trade agreements have entered into force between APEC members.

Fresh regional agreements have been forged between ASEAN members, between China, Japan and South Korea and in North America, where the North America Free Trade Agreement has been updated and renamed the United States–Mexico–Canada–Agreement.

In addition to these bilateral and regional agreements, mega-regional groupings such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) have emerged. In short, policy action on the underlying principles of the Bogor Goals has decisively moved from APEC to the CPTPP and RCEP.

Instead of joining the CPTPP (as intended by president Obama), the Biden administration has launched the Indo-Pacific Economic Framework, largely focused on social goals, with a hint ofsecurity guarantees, rather than trade and investment liberalization. IPEF is no substitute for CPTPP.

If the next administration in Washington reverses the misguided Trump/Biden agenda of trade and investment restrictions, the world could end up with two FTAAPs - one centered on China within the RCEP framework, the other on the United States within the CPTPP framework.

In their own spheres, each mega-regional could implement the Bogor Goals. The majority of APEC countries would, of course, want to join both the China-centred RCEP and the United States-centred CPTPP. Business leaders would welcome that outcome as the best possible solution to the prolonged US-China geopolitical conflict.

But more likely than not the next administration in Washington will follow the restrictive Trump/Biden agenda on trade and investment. While China is pursuing a regional trade policy, thehas shown at APEC that it has no competing vision.

The unfolding scenario will likely lead to a single mega-regional group within the RCEP framework – centered on China, joined by most APEC countries. That would be a major diplomatic and economic loss to the United States, and an almost fatal blow to the
liberal international economic order .

Gary Clyde Hufbauer is Senior Fellow at the Peterson Institute for International Economics.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.