Latin America Advisor

A Daily Publication of The Dialogue

What Should Latin America Take Away From APEC 2018?

Chilean President Sebastián Piñera, pictured arriving for summit meetings in Papua New Guinea last weekend, will host next year’s Asia-Pacific Economic Cooperation summit. // Photo: APEC. Chilean President Sebastián Piñera, pictured arriving for summit meetings in Papua New Guinea last weekend, will host next year’s Asia-Pacific Economic Cooperation summit. // Photo: APEC.

The leaders of the Asia-Pacific Economic Cooperation, or APEC, met last weekend in Papua New Guinea. Most of the 21 APEC members come from Asia and the Pacific, with the addition of Russia, United States, Canada, Mexico, Chile and Peru. Within Latin America, four others—Colombia, Costa Rica, Ecuador and Panama—have applied for membership. What are the top takeaways from the 30th APEC summit? To what extent have ongoing tensions over global trade changed APEC’s agenda this year, and how have recent developments influenced the organization’s goals and relevance in the near- and longer-term? How important has APEC become for the Latin America region?

John Maisto, former U.S. ambassador to Venezuela, Nicaragua and the OAS: “The APEC summit was supposed to have continued the long-established pattern of providing a platform for leaders of the Asia-Pacific region to advance ‘rules-based’ trade and investment arrangements and promote cooperation on transnational issues that affect everyday people in the world’s largest and most dynamic area. That did not quite happen. The summit ended in disarray with no joint statement due largely to the clash between China and the United States over trade. APEC’s consensus-based structure is meant to promote innovative thinking to serve as an incubator for progress that other organizations and councils can then shape into more formal regional or international agreements. This support for policy work in widely diverse areas, including trade, health, transportation, resilience in the face of natural disasters, energy, women’s empowerment, cleaner oceans and marine resource sustainability is APEC’s underlying contribution to regional progress. The 2018 Summit reinforced APEC’s indispensable role in these areas and more. Though there was no joint communiqué, those objectives remain—and are central to Latin American interests. This year, the summit also served as the latest regional multilateral forum at a time when key members have shown increased interest in dealing bilaterally, as the current U.S. administration has on trade agreements and the Chinese have on approaches toward a code of conduct and resource development particularly in the South China Sea and beyond. As one of three major international meetings this month, including the ASEAN Summit in Singapore and the G-20 in Buenos Aires, the Papua New Guinea APEC Summit served as a uniquely valuable forum to take on the shared interests of its 21 members from the Americas across the Pacific to the hubs of Asia. All of this is a challenge for the three Latin America members and the four more that have applied for APEC membership, each from the Pacific Rim of the Americas. The open, bilateral/multilateral development U.S. model versus the China-centric Belt and Road approach will continue to compete in the Asia-Pacific. How Latin American countries benefit from each (or don’t) will be the centerpiece of the 2019 APEC Summit in Chile.”

Mikio Kuwayama, managing director at the Japan Association of Latin America and the Caribbean: “At a time of heightened risks, the 21 APEC economies convened at the summit to coordinate policies for improving Asia-Pacific connectivity and deepening economic integration. However, disagreements on two contentious issues between the United States and China spoiled the meeting. One was on the rules of global trade. China insisted that the U.S. authorities correct their ‘America First’ policy, calling it a breach of the multilateral trading system, while the United States stressed the need for WTO reforms to put Chinese ‘trade-distorting’ practices in conformity with that system. The other was related to the new rule-making on ‘quality’ infrastructure development commensurate with the fiscal sustainability of borrower countries, putting in spotlight the rivalry between the China-led Belt and Road Initiative and the Free and Open Indo-Pacific Strategy led by the United States, Japan and Australia. Amid confrontational exchanges between the two superpowers, for the first time in the summit’s 26-year history a joint communiqué was not issued. Despite this turn of events, APEC will continue being recognized by Latin American countries as a useful consultation forum and an incubator of ideas. For example, the foundational principle of the Pacific Alliance is ‘open regionalism,’ a concept original to APEC. It emphasizes not only liberalization, trade facilitation and economic and technical cooperation, but also the building of regional capacity to respond to the needs of next-generation trade and investment issues, such as global value chains (GVCs), small- and medium-sized enterprises’ participation in GVCs and market-driven innovation policies, among others.”

Margaret Myers, director, and Ricardo Barrios, associate, of the Asia & Latin America program at the Inter-American Dialogue: “APEC summits in recent years have largely been a forum for political posturing between China and the United States, as each pursues a dominant position in the Asia-Pacific region while advancing different visions of global trade. Papua New Guinea was no different. However, whereas the 2016 Summit in Lima was a resounding soft power win for China, it’s hard to say that either China or the United States improved its international standing during this year’s proceedings. China was accused of ‘barging in’ to the Papua New Guinea foreign minister’s office when tensions were at a high. And Vice President Pence, who represented the United States at the summit, was overly critical of the Belt and Road Initiative, which many APEC countries view positively, albeit not entirely without risk. From the vantage point of Washington, at least, U.S.-China tensions also overshadowed the summit’s agenda, which as in previous years was focused on promoting economic growth and trans-Pacific integration. APEC, along with the TPP-11, are thought to be critical platforms for further integrating LAC’s three APEC members—Chile, Mexico and Peru—in the Asia-Pacific regional architecture, although concrete gains from this year’s event weren’t immediately evident. However, as the host of next year’s summit, Chile will find itself in a prime position to draw attention to Latin America as a valuable partner and investment destination.”

Won-Ho Kim, professor at Hankuk University of Foreign Studies in South Korea: “The APEC Leaders Meeting saw the worst disaster since its foundation. The trade war and strategic rivalry between the United States and China overshadowed the whole agenda of APEC, without seeking any opening to resolve their conflict. This unfortunately adds to the already lost momentum for its original goal of open regionalism. It may further jeopardize the almost 30-year long efforts of regional integration in the Asia-Pacific, in which the United States had high political, strategic and economic stakes, as seen in the history of its construction in the late 1980s. The apparent U.S. retreat in recent years from the multilateral and regional schemes combined with China’s aggressiveness with its own Belt and Road Initiative, not to mention the region-wide Regional Comprehensive Economic Partnership’s progress, significantly suggest the nature of the future politico-economic architecture of the Asia-Pacific region. If APEC falls into a new arena of China-led open regionalism in the medium term, it will not only be a big loss to United States, but also an embarrassment to the rest of the region. Several Latin American economies’ interest in joining APEC comes at a really awkward time, although it must be welcome in order to contribute both to their own development and APEC’s future.”

Richard E. Feinberg, former director of the APEC Study Center at the University of California, San Diego: “Created in 1989 as a Japanese and Australian initiative, the Asia-Pacific Economic Cooperation Forum was born of the post-Cold War optimism that deepening economic ties among its members could engender not only increased prosperity but also trans-Pacific cooperation across a widening range of issues. Over the years, APEC has expanded its scope from trade and investment to the promotion of inclusive development and the combatting of transnational security threats. But such large, multilateral institutions are built upon an understanding that broad consensus among disparate members requires focusing on issues where agreement is within reach and eschewing combat over more contentious matters where differences are too great to be bridged within the fragile confines of a purposefully loose diplomatic framework. Thus, for the Trump administration to carry its increasingly aggressive anti-China crusade into the heart of APEC is to strike a severe blow at the institutional underpinnings of APEC. For most of APEC’s 21 members, the strident anti-Chinese rants of Vice President Mike Pence—singularly lacking in international experience and diplomatic finesse—sound condescending and ingenuous. Imagine the United States labeling international lending as ‘imperialist exploitation’! The respected Singaporean publication The Straits Times commented: ‘Xi opened a Beijing-funded boulevard, while Pence talked of a 400-year old King James Bible in the PNG parliament that he had played a role in bringing to the country.’ Pence’s ineffectual representation at APEC mirrored his performance earlier this year at the Summit of the Americas in Lima, where his dire warnings of Chinese imperialist pretensions elicited an amused disbelief from the sophisticated Latin American audience.”

The Latin America Advisor features Q&A with leaders in politics, economics, and finance every business day. The publication is available to members of the Dialogue's Corporate Program and others by subscription.

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