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November 16, 2016

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Trump to cast a shadow over free-trade talks

TOP world leaders meet this week to chart a future for free trade in a world upended by Donald Trump’s victory in the US presidential election.

Chinese President Xi Jinping, US President Barack Obama, Japan’s Shinzo Abe and Russia’s Vladimir Putin will be among the leaders in Lima, Peru for the annual Asia-Pacific Economic Cooperation summit which opens tomorrow and runs to Sunday.

APEC summits, which gather leaders from 21 Pacific Rim economies, are meant to forge unity on free trade in a region that accounts for nearly 60 percent of the global economy and nearly 40 percent of the world’s population.

But this year’s event may be unlike any other, coming on the heels of Trump’s shock win in the November 8 election.

Trump has unleashed deep uncertainty about the postwar world order with his attacks on free trade, immigration and the US role as “policeman of the world.”

By successfully tapping the anger of working-class whites who feel left behind by globalization, Trump has amplified a sense of malaise that began in June with Britain’s “Brexit” vote to leave the European Union — another shock victory for a populist politics of disillusionment with an increasingly borderless world.

President-elect Trump will not be at the APEC summit, but he may well be the dominant presence in the room.

“I think APEC will be about two things — huge questions about what a Trump presidency will mean for trade and work on all non-US pathways forward to advance free trade,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore.

“The US has apparently chosen to hunker down, raise barricades and return to a glorious past of splendid isolation.”

It risks being an awkward summit for Obama, who will wrap up his final foreign tour as president in Peru after stops in Greece and Germany.

Obama, who campaigned against Trump as “unfit” to succeed him, must now reassure colleagues that a Trump presidency will not, in fact, spell disaster.

Leaders will be looking for signals about the future of Obama’s much-vaunted “rebalance” to Asia and the Pacific.

American allies such as Japan and South Korea are worried that the Republican president-elect will cut back the US military, economic and diplomatic presence in the region.

Trump has already caused concern in the region by suggesting that Japan and South Korea get nuclear weapons to defend themselves, and warmly embracing Putin.

The Latin American leaders in the room, including Mexican President Enrique Pena Nieto, will also be looking nervously to the new US administration.

On the campaign trail, Trump had vowed to build a border wall with Mexico to keep out illegal migrants and threatened mass deportations.

Obama’s signature trade initiative in the Asia-Pacific, the Trans-Pacific Partnership, meanwhile, faces near-certain death.

Trump has called the proposal a “terrible deal.”

China will be pushing its own proposed trade deals: the APEC-wide Free Trade Area of the Asia-Pacific and the 16-member Regional Comprehensive Economic Partnership, which notably includes India but not the United States. Both are seen as giving China an edge for regional influence.

‘Strong statement’

The very future of free trade will be up for discussion in Lima, according to many analysts.

The world will be looking to the summit for “a strong statement” to counter Trump’s anti-trade arguments, said Eduardo Pedrosa, secretary general of the Pacific Economic Cooperation Council.

“The evidence is not that strong that free trade is responsible for taking away jobs from countries, but that’s how people feel and you have to deal with that perception,” he said.

Trump’s win means that free trade is “in trouble,” said Robert Lawrence, a trade expert at Harvard University.

Not only is the US role in promoting economic integration “severely compromised,” he told reporters, but American protectionism could now become a brake on world trade.

“Trump trade policy, if it proceeds as advertised, is going to be very disruptive,” he said.


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