APEC 2021 matters: If we didn’t have it, we’d have to create it

OPINION: Last December, New Zealand began its year-long role as host of APEC 2021, marking the milestone with a pōwhiri display on Wellington’s waterfront.

Unfortunately, the traditional Māori welcome was one of the few physical events at this year’s international trade summit, restricted to a largely virtual conference by the Covid-19 pandemic.

Although the virus has prevented the bustling meetings and side room chats that typically grease the wheels of international trade, this year’s APEC was as important as ever.

In the age of Covid, nationalism, and protectionism, crucial work on free-trade agreements and multilateral cooperation will be vital during a turbulent global recovery.

Apec 2021 looks and feels markedly different to the last event hosted by New Zealand back in 1999. But despite the logistical challenges, Aotearoa and 20 other economies, including China and the United States, had a unique opportunity to work through climate change, the regional Covid response, supply chain issues, and many other trade challenges.

After chairing a virtual meeting of Apec leaders in July, Prime Minister Jacinda Ardern hailed the summit as an opportunity to “build better and emerge from this crisis more inclusive, more sustainable and more adaptable than ever”.

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As the summit of ministers, senior officials and leaders enters its last few months, why does Apec matter? Was it still relevant? Are trade deals signed at the conference? And does this intergovernmental forum have a future in an increasingly polarised world?

Asia-Pacific Economic Cooperation nations represent nearly 3 billion people across the Pacific Rim, from global superpowers such as China to fast-growing economies such as Indonesia and Vietnam.

Together, the diverse group of Apec nations account for 40 per cent of the global population. With a combined GDP of $US45 trillion, they represent 60 per cent of global GDP. The group’s economies grew by 2.3 per cent per annum between 2011 and 2016, outstripping the rest of the world, which contracted by more than 1.6 per cent over the period.

Apec economies have enjoyed a resurgent year. The Apec region recorded a 6.1 per cent increase in economic growth in the first quarter of 2021, rebounding from a 2 per cent decline during the first three months of a Covid-ravaged 2020, according to a report by the Apec Policy Support Unit.

Apec was devised in 1989 by former Australian Prime Minister Bob Hawke to facilitate free trade across the Pacific. The multilateral group has retained its global importance in the decades since, despite the growing prevalence of bilateral deals and smaller alliances, such as the Quad, comprising the United States, India, Australia, and Japan.

Apec provides a voice for smaller economies dependent on the international rules-based system, free trade and cooperation, such as New Zealand. It remains a vital forum for smaller nations to engage with great powers and large economies.

“You’ve got some of the most vibrant economies in the world within the 21 members,” says Robert Patman, a professor of international relations at Otago University. “The Indo-Pacific region, largely encapsulated by Apec, accounts for 60 per cent of the world’s population. It is the engine of the global economy.”

According to Patman, New Zealand has an opportunity to accrue “international capital” gained from its pandemic response: “It’s a chance to build on a growing international reputation.”

Apec also provides a chance for nations to unthaw diplomatic relations. Russia, banished from the G8 group of wealthy economies, will engage in dialogue with western nations during Apec. The US and China will come together following a turbulent period of conflict and protectionism in recent years.

Apec arrives at an opportune time, alongside a host of other key international summits.

The 2021 United Nations Climate Change Conference, or COP26, explored a reduction in global emissions, new technologies to reduce climate harm, and support for developing economies to reduce emissions and cope with climate change. Each of these issues are vital at Apec.

In late November, the World Trade Organisation will host its 12th Ministerial Conference in Switzerland, providing WTO member states with a chance to accelerate and work through free-trade agreements.

Academics and trade experts insist Apec remains relevant and say this year’s conference comes at a pivotal time for international relations.

Charles Finny of government relations consultancy Saunders Unsworth, says the virtual event offers nations a chance to explore urgent issues.

“The fact that we have got these world leaders meeting face-to-face on screen, not just once or twice in a year, is really powerful at a time when we need to deal with the Covid-19 pandemic and the supply chain disruptions flowing from that.”

“You can’t put a dollar value on it, but it is really powerful,” Finny adds. “As the old saying goes, if we didn’t have Apec, we’d have to create something like it. There are some really big issues that do need to be discussed at a global systemic level, and the timing is good.”

Ensuring that medical equipment, vaccines, antiviral medicines and personal protective equipment are available for developing economies will be a central issue during Apec 2021 as nations attempt to navigate through the rest of the crisis.

The threat of rampant inflation amid supply chain constraints, labour market tightness and closed borders will also be a key issue for Apec countries to explore over the remainder of the summit, demanding a considered approach as economies look to combat rising prices.

Apec nations will also need to work together on customs rules and quarantine rules to ensure that trade is as easy as possible in a challenging time. Lowering costs and improving efficiencies will be at the forefront of discussions.

Finny says the ability to bring nations with different ideologies together at the same table shouldn’t be underestimated. Australia and China have engaged in a bitter trade dispute in recent years, deepening political divisions in the Apec region.

“There are a number of tensions in the region,” Finny adds. “The fact that we’ve got these leaders talking to each other, admittedly with others in the room, is actually really positive, and will hopefully lead to a reduction in tensions.”

Apec tends to be a starting point for trade agreements. While we might not see transformative deals announced at the virtual event, Finny predicts progress will be made on trade and climate issues.

He hopes “we can have an Apec agreement to keep supply chains open. And an agreement not to use trade as a coercive mechanism”.

“If we get something like that, that would be really powerful,” he says.

Patman believes New Zealand’s role as host provides smaller nations with a vital opportunity to have their voices heard in a world dominated by two major powers.

“The United States and China tend to assume that the region is dominated by binary concerns, their concerns. New Zealand as a small player, will give a voice to a rather different perspective; that the middle powers, the smaller powers, have a much bigger role to play in international politics.”

As a small country, New Zealand is dependent on the international rules-based system, Patman says. He believes it is more important than ever to maintain those rules.

“In recent years, we’ve seen an erosion of rules as great powers have tried to assert themselves, largely unsuccessfully. Apec may be a way of trying to reaffirm the importance of the rules-based order and tackle issues collectively.

“Some issues can only be tackled collectively, such as Covid-19. The pandemic may turn out to be a good building block for international cooperation,” he adds.

The Otago professor believes the world’s most challenging issues, notably climate change, require a multilateral response. New Zealand is well-placed to lead those discussions during Apec, he says.

“Most of the problems facing Apec members, indeed, all members of the international community, do not respect borders. Climate change is a looming danger. And it doesn’t respect boundaries. Although it’s developing more slowly than Covid-19, it is probably much more dangerous than a global pandemic.

“The prime minister has spoken about the necessity of international cooperation,” Patman adds. “The fact is, countries can’t solve these problems on their own. Out of self-interest, they have to cooperate.”

This story was produced as part of a publication in partnership with APEC 2021.