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Common ground to be found

Released at: 08:41, 03/12/2017 APEC Viet Nam 2017

Common ground to be found

Photos from apec2017.vn

Despite existing disagreements among and between members, leaders of APEC economies will try to bolster consensus on regional issues at the APEC Summit.

by Ha Nguyen

Finally, Mr. Bui Thanh Son can rest more easily for now, as the Leaders’ Week of the Asia-Pacific Economic Forum (APEC) 2017 is set to get underway on November 6. As Vietnam’s Head of Senior Officials for APEC 2017, the Deputy Minister of Foreign Affairs has suffered some sleepless nights since APEC 2017 in Vietnam began earlier in the year. “I’ve had many sleepless nights,” Mr. Son acknowledged. “It took a lot of time and effort by both the Secretarial Board and myself to compile the agenda. But now we can say that, as host, Vietnam is ready for APEC 2017.”

His endeavors since the beginning of the year reflects Vietnam’s bid to bring all 21 APEC members closer together, especially given the current global context of rising protectionism and anti-globalization. By its nature, APEC is a regional multilateral-platform with diverse political systems, social and cultural institutions, and levels of economic development, and finding consensus on major regional issues, especially in trade, is anything but straightforward, according to analysts. “The Asia-Pacific is facing the same pressure from sluggish trade as the rest of the world,” said Mr. Ling Dequan, an Associate at Xinhua Agency’s Global Studies Center in Beijing. “The bloc needs to resolve the threat of division for regional economic cooperation.”

Challenging times

APEC 2017 is undoubtedly taking place at a time when a wide range of difficulties are challenging regional leaders, who are also experiencing a tough time at home. Since the US withdrew from the Trans-Pacific Partnership (TPP) - a deal in which most APEC members placed high hopes for better trade within the region - no one can say for certain whether the trade pact will survive without immediate change, both in timeline and core content. APEC, meanwhile, is ultimately an economic organization with the goal of boosting market access and reducing trade barriers. “The big issue for APEC leaders now is reducing barriers to trade and investment,” agreed Mr. Murray Hiebert, Senior Adviser and Deputy Director for the Southeast Asia Program at the Washington-based Center for Strategic & International Studies (CSIS). “It must also address the challenges facing increased space for the digital economy, because a number of APEC economies are seeking to restrict the digital economy and force the localization of data.”

A major concern for most APEC members is how to advance the goal of achieving further trade and investment liberalization in the Asia-Pacific region through the Free Trade Agreement in Asia and the Pacific (FTAAP) at a time of rising anti-globalization and protectionism, according to Professor Carl Thayer, Emeritus Professor of the University of New South Wales at the Australian Defense Force Academy. “Allied to this, APEC members will be concerned to maintain the relevance of their organization at a time of challenges raised by competing initiatives such as the Regional Comprehensive Economic Partnership (RCEP) and China’s Belt and Road Initiative, as well as US President Donald Trump’s shift away from multilateralism to bilateralism in trade,” he said. APEC members, he noted, need to commit to implementing the Lima Declaration on the FTAAP by developing multi-year work plans setting out key milestones.

In addition, the major challenges to trade facilitation and economic development are protectionist sentiment in countries experiencing low rates of growth and resistance to new and higher standards, as embodied in the now-in-limbo TPP, according to Professor Thayer. “These higher standards include an emphasis on liberalizing services, protection for intellectual property rights, greater emphasis on opening up to e-commerce and digital trade, and women’s empowerment,” he said. “APEC members need to completely support the WTO agreement on trade facilitation to lower costs by improving how the global supply chain functions and eliminating non-trade barriers.”

Effective links for trade and investment among its member economies is perhaps one of the prime weaknesses of APEC, according to some analysts, given the fact it has strong economic momentum, accounting for about 41 per cent of the world’s population and 57 per cent of global GDP. “It lacks an effective trade liberalization mechanism among member economies to tap into such potential,” said Mr. Ernest Bower, President and CEO of BowerGroupAsia. After the US withdrew from the TPP, China and Japan have been separately pushing for the RCEP and the “TPP-11” to drive regional trade and investment, though it is unclear when these efforts may bear fruit, according to Mr. Bower. Hence, “APEC members should think deeply about the possibility of a high-standard and inclusive framework for economic integration across the region, which was already initiated with the endorsement of the FTAAP in 2014,” he recommended. “APEC should also reform and invite the three ASEAN countries who are not yet members - Cambodia, Laos, and Myanmar - along with India.”

According to Professor Thayer, APEC leaders must reject protectionism and step up the pace of reform by adopting higher standards designed to facilitate trade at a time of structural reform, such as services and digital trade. “This will not be easy,” he added. “It means a commitment to opening up economies on the basis of national work plans with putative deadlines.”
Such matters have presented Vietnam with a number of headaches, according to analysts, as world leaders descend upon Da Nang. While Mr. Hiebert believes that one of the challenges for the host is to ensure that leaders of all 21 APEC economies actually attend the Summit, Professor Thayer said Vietnam will use the opportunity as Chair of APEC 2017 to host official visits to Hanoi by China’s President Xi Jinping and US President Donald Trump. “This will not be a particularly tough time for Vietnam because there is growing convergence between Beijing and Washington on how to deal with the nuclear threat in North Korea and how to settle differences over bilateral trade,” he said. “Vietnamese diplomacy has always been adept at playing off differences and convergences in the material interests of major powers. As a result, both China and the US will see it is in their interest to support Vietnam’s autonomy and role as a positive contributor to regional security.” But he believes that major breakthroughs, if any, will need to secure consensus among APEC members and that national reforms and adherence to higher international standards are necessary to implement these priorities and to set putative deadlines to work towards full implementation. “Individual countries must publicly commit themselves to attain these goals,” he said, adding that Vietnam should lobby for financial and other support to advance its own national development.

Balancing global connections

This will be the second time within a year or so that Air Force One has touched down in Vietnam, this time bringing President Trump to Da Nang and then Hanoi, where he will pay an official visit. While China’s President Xi will also pay an official post-Summit visit, Mr. Hiebert said that all eyes will be on President Trump as he attends his first APEC Summit since taking office in January. “After he pulled out of the TPP and threatened to pull out of the US-South Korea Free Trade Agreement, APEC members will look to President Trump’s speech at the Summit for clues on how the US will engage with the Asia-Pacific region,” he said.

One of the key objectives for President Trump during his upcoming trip to Asia is to demonstrate the US’s continued commitment to leadership in multilateral institutions and regional architectures, according to Mr. Bower. Besides APEC, the President is also attending the US-ASEAN Summit in the Philippines and visiting other key allies, including Japan and South Korea, and also making an important stop in China. “The Trump administration’s policy approach so far suggests that North Korea and terrorism are likely to be highlighted as priorities in his visit, given the escalating nuclear threat from Pyongyang and the spread of ISIS forces in some ASEAN countries,” Mr. Bower said.

What do ASEAN countries who are also APEC members expect from the US and Vietnam at the APEC 2017 Summit? Some analysts believe that ASEAN plays an important role in APEC, as the two blocs’ memberships share significant overlaps. But Vietnam has become a leading strategic force in ASEAN, and many other ASEAN countries appreciate its bold positions on the East Sea and related security issues, according to Mr. Bower. “ASEAN wants President Trump to participate and make a convincing case that the US remains anchored in Asia based on a foundational economic interest that will be the long-term basis for continued American security engagement in the region,” he elaborated. “ASEAN will look to the US and Vietnam to advance their shared interests and ensure China joins with other Asia-Pacific countries in abiding by international rules and norms.”

Clearly, this is also a time for the host to balance its relations with global powers, since four of the 21 APEC members are strategic and comprehensive partners. “Vietnam understands well the importance of maintaining a balanced network with its key partners and has done a very good job in doing so,” said Mr. Bower. In reality, Prime Minister Nguyen Xuan Phuc’s visit to the US last May, the first White House visit by an ASEAN leader during the Trump administration, underlined the two countries’ shared mutual interests and continued build-up of strategic trust. Regarding China, “while bilateral relations with Vietnam hit a low point over oil exploration disputes this summer, diplomacy has recovered some ground,” according to Mr. Bower. “Vietnam continues to perform ‘dynamic balancing’, and this will be a full-time job for its leaders and diplomats over the next several years.” 

For his part, Professor Thayer said that Vietnam’s hosting of the APEC Summit for the second time illustrates the importance of its longstanding policy of diversifying and multilateralizing its external relations. “Vietnam will be able to demonstrate that the country is a strong and positive contributor to regional and global security,” he said. “In turn, it can solicit further support from APEC’s more advance economies to promote its development goals.” While Mr. Bower said that Vietnam’s pragmatic foreign policy approach is likely to keep the country in balance despite an increasingly complex international security and economic environment, Mr. Ling Dequan from Xinhua Agency’s Global Studies Center puts high hopes on the host and its theme for the APEC Summit 2017. “I think Vietnam will be smart and be able to push all APEC members, especially the four powers - China, Russia, the US and Japan - to maintain the overall situation of good cooperation in the Asia-Pacific region, making use of APEC’s theme of ‘Creating New Dynamism, Fostering a Shared Future’ and making a major contribution to the new phase of economic cooperation in the Asia-Pacific region,” he said.

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