In a blow that may not come as entirely surprising for some of the smaller countries involved, the ongoing trade war between the US and China entirely overshadowed the Asia-Pacific Economic Cooperation (APEC) forum held in Papua New Guinea (PNG) this year. The participating countries failed to agree on their usual closing statement.
Having sent US Vice President Mike Pence to the summit in his place, President Donald Trump had already made the US’ priorities clear as he remained at home to battle a crisis over wildfires in California. His stand-in faced a raft of questions over how his country plans to help ameliorate some of the problems in trade causes by the tariff disagreements.
China’s movements in the Pacific were also on the table, as both itself and Australia appear to be in the middle of a contest for control in the Asia-Pacific region. Both sides have held diplomatic talks recently, but this has not stopped either country from confirming strong levels of investments in some of the smaller Pacific countries with the hopes of wooing them in exchange for military cooperation and financing infrastructure changes.
The US has confirmed that it is wary of how China is making inroads in this area and has more strongly allied itself with Australia as both countries look to find ways to stop China from pressing ahead so strongly with its Belt and Road Initiative (BRI) and various economic agreements.
Given that the countries participating in the APEC meeting accounted for over half of both GDP and levels of world trade, it was not shocking that so much interest centered on how the world trade picture is likely to alter because of the current trade disputes.
Trump also refused to join the Association of South East Asian Nations (ASEAN) for talks earlier in the year, and he pulled the US out of the Trans-Pacific Partnership (TPP). His standoff approach has the potential to alienate the US from many of these talks in the future. However, Pence has been clear in his thoughts that the US wants to form a greater commitment both at home and abroad for clearer trade that benefits both sides and does not affect jobs.
He said he wants the region that the APEC represents to facilitate a place where “sovereignty is respected, where commerce flows unhindered and where independent nations are masters of their own destinies.” Pence added that the US is taking steps to “protect our interests and promote shared success.”
While the countries involved in the APEC summit, excluding the US and China, have adopted the TPP, China has decided that it wants in on the action by proposing the Free Trade Area of Asia Pacific (FTAAP), which is also set to include countries such as India, Australia and New Zealand.
With China in position to assume a level of control that is more in line with its national interests, many will intensely watch the US’ response. The latter announced a $60bn funding pot earlier in the year to benefit developing countries in the Pacific.
Given that US allies are now finding themselves without key support on a strategic level, the floor is clearly open for China to operate. The exact way that this might play out is yet undecided, but until all sides agree, China is set to dominate talks such as those at APEC.