While New Zealand was sorting out its new Government, the alphabet soup which is trade got a good stirring in San Francisco.  This was APEC Leaders’ week, the annual gathering of Leaders, Ministers, business people and other stakeholders from the 21 economies of the Asia Pacific region.  It is a week full of oratory, powerpoint and protest.  This year it was also two steps forward and one (big) step backwards on trade.

A Perfect Excuse for a Conversation

Banners on display around San Francisco proclaimed that APEC was going to be EPIC!  The city had been tidied up and was clearly keen to burnish its Asia Pacific credentials. Leaders of the world’s two largest economies sat down together and had what appears to have been a civilised conversation – one which may not have solved all the problems between them, but which hopefully re-instated more constructive governance at the highest level and calmed the nerves of the wider region.   Later in the week Leaders from all 21 APEC economies issued their “Golden Gate Declaration” which contained all the right words on sustainability, inclusion and the digital economy and even committed them to boosting support for the World Trade Organisation (WTO) and steps towards the Free Trade Area of the Asia Pacific (FTAAP). Don’t hold your breath for the latter – APEC is after all voluntary and non-binding, but better to have these references irather than not at all.

The Declaration was welcome from the perspective of business leaders from the APEC Business Advisory Council (ABEC), including New Zealand’s own Rachel Taulelei, Anna Curzon and Brett O’Riley, supported by Stephane Honey (as well as yours truly).  They have been working all year (since Auckland in February) to offer advice and recommendations on similar themes.  In San Francisco ABAC wrapped up its work programme for the year under American leadership and prepared to present its final report to Leaders.  With leadership from Brett O’Riley and Stephanie Honey, the meeting also adopted a statement of views for the forthcoming COP28, reflecting the increasingly urgent need for the global community to address what ABAC sees as the “urgent existential challenge of our age”. 

Roll up for a review CPTPP

In the margins of APEC, a meeting was held of the Joint Ministerial Commission for the now 12-economy CPTPP.  Ministers agreed to initiate a general review of the Agreement which will not be complete until mid 2025.  There’s little doubt the Agreement needs updating to take account of developments since negotiations were finally concluded in 2016.  What this means for the six economies including China who have formally applied to accede to the Agreement is not entirely clear.  (Your correspondent offered some thoughts on the latter when he spoke to a roundtable on China and CPTPP in Shanghai in October).

The need to both modernise and expand CPTPP was a point made stongly in the first ever CPTPP Business Dialogue, an ABAC NZ initiative which brought together six Ministers and a large number of business representatives from ABAC as well as others attending the APEC CEO Summit.  In remarks by Anna Curzon the business support for new accessions was made clear:  “We hope progress can be made on securing these memberships – on the basis of course that all applicants can demonstrate their ability to meet the high standards of the Agreement.  We hope that all candidacies may be considered in this light, without prior judgements being made about suitability”.

IPEF – three up, one down

If the score card for APEC and CPTPP from San Franscisco was largely positive, the outcome for IPEF – the Indo Pacific Economic Framework – was mixed at best.   IPEF is the US-led initiative to foster greater economic co-operation the region.  IPEF is not a traditonal trade agreement in that it does not encompass market access, but brings together 14 economies including New Zealand and India, but deliberately excluding China.   Last May the conclusion was announced of the IPEF Supply Chain Pillar, which was duly signed in San Francisco.  Two other pillars – one on decarbonisation and one on anti-corruption – were also declared to have been “substantially concluded”.  The trouble came with the fourth pillar – Trade – when the US abruptly announced it was not ready to conclude despite there being, as we understand, a deal on the table.  Unfortunately the forces of protectionism in the United States proved themselves too strong to allow even a modest deal to go forward, one which could possibly have provided some gains for trade liberalisation and regulatory co-operation.

While governments are bravely saying that negotiations to conclude the Trade pillar will carry on, it is hard to see this being any easier to conclude in 2024, an election year in the US. A lot had been made of the opportunity to conclude the full suite of IPEF instruments in San Francisco.  As a result the ability of the US to deal effectively in the trade space has been severely called into question.  While it is too early to write off the initiative completely – Supply Chain may yet deliver some useful results – IPEF has been shown to be built on rather shaky pillars.  After San Francisco, where to next for US economic engagement in the region?

This post was prepared by Stephen Jacobi, Executive Director of NZIBF, who traveled to San Francisco for the ABAC meeting.

The Golden Gate Declaration can be found here.

The terms of reference for the CPTPP review can be found here.