A post by Joanne Thornton
November 13, 2017
In their speeches at the APEC CEO summit in Vietnam last Friday, the American and Chinese leaders enunciated strikingly different visions of past and future trade relations in the Pacific region and beyond. US President Donald Trump underscored that henceforth the United States will eschew multilateral deals and instead will pursue mutually beneficial bilateral relationships—and he implicitly encouraged others to do the same. In contrast, Chinese President Xi Jinping promoted ever-stronger regional and global economic linkages, with China pulling the train.
To the dismay of many, Washington appears to be abandoning the global trade project that it once led, and Beijing stands ready to become the standard bearer. If Xi’s ideal is realized without American participation, US-based companies will face a serious competitive disadvantage.
Yet multi-country agreements are not getting any easier to accomplish, and the future is unclear. It remains to be seen whether the TPP-11—now called the “Comprehensive and Progressive Agreement for the Trans-Pacific Partnership” or CPTPP— will be completed, let alone entered into effect; although there appear to be few outstanding issues. Meanwhile, the conclusion of RCEP—an “Indo-Pacific” initiative, has taken much longer than intended.
Will Donald Trump’s disaffection for the legacy system prove to be more widely shared than we realize, and China’s dream less so? Or will Asian countries prefer larger collective, inclusive arrangements to a multiplicity of smaller ones? Time will tell.
For now, this brief note is aimed simply at marking the important differences in the American and Chinese game plans as outlined in Da Nang. To that end, here are a few contrasting quotes.
Countries were embraced by the World Trade Organization, even if they did not abide by its stated principles…. They ignored the rules to gain advantage over those who followed the rules, causing enormous distortions in commerce and threatening the foundations of international trade itself…. We can no longer tolerate these chronic trade abuses, and we will not tolerate them.
Over the last few decades, economic globalization has contributed greatly to global growth. Indeed, it has become an irreversible historical trend….
We should uphold multilateralism, pursue shared growth through consultation and collaboration, forge closer partnerships, and build a community with a shared future for mankind.
I will make bilateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade. What we will no longer do is enter into large agreements that tie our hands, surrender our sovereignty, and make meaningful enforcement practically impossible…. We know it is in America’s interests to have partners throughout this region that are thriving, prosperous, and dependent on no one.
We should … fully implement the Beijing Roadmap, move toward the FTAAP and provide an institutional underpinning for growing an open economy in the Asia-Pacific…. We will speed up negotiations with partner countries on the concluding of free trade agreements and investment treaties, … work for the speedy conclusion of RCEP negotiations, and endeavor to establish a global network of free trade areas…. Interconnected development is the best way to achieve mutual benefit and win-win outcome.
We are calling on the World Bank and the Asian Development Bank to direct their efforts toward high-quality infrastructure investment that promotes economic growth…. We are also committed to reforming our development finance institutions so that they better incentivize private sector investment in your economies, and provide strong alternatives to state-directed initiatives that come with many strings attached.
The Belt and Road Initiative… has a clear focus, which is to promote infrastructure construction and connectivity, strengthen coordination on economic policies, enhance complementarity of development strategies and boost interconnected development to achieve common prosperity…. I am confident that the launch of the Belt and Road Initiative will create a broader and more dynamic platform for Asia-Pacific cooperation.
President Trump at the APEC CEO Summit is a link to the text of this November 10 speech by President Donald Trump as it appears on the White House website.
President Xi at the APEC CEO Summit is a link to the text of this November 10 speech by President Xi Jinping as it appears on the Xinhua website.
Joanne Thornton is Vice President of the Global Business Dialogue and a Managing Director of Policy Connections International LLC.
© 2017, Global Business Dialogue, Inc.