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Abe fails to bridge U.S.-China divide at APEC summit

by Satoshi Iizuka

Kyodo

Prime Minister Shinzo Abe failed at the Asia-Pacific Economic Cooperation forum to bridge the deep U.S.-China trade divide, with the discord meaning no joint declaration was issued for the first time in the gathering’s history.

The focus of the two-day regional economic summit that ended Sunday in Papua New Guinea’s capital was whether the 21 member economies could reach a consensus over how to combat the creeping protectionist tendencies among certain APEC members.

Peter O’Neill, prime minister of the host country Papua New Guineaand chair of the gathering, hinted that the discord between U.S. Vice President Mike Pence and Chinese President Xi Jinping over trade led to the declaration being aborted.

The United States demanded that the declaration refer to a need for drastic reforms at the World Trade Organization because the body does not restrain China’s “market-distorting practices,” including intellectual property violations, according to a source close to the negotiations.

Japan is seeking to address China’s use of such trade practices in line with the United States, but is attempting to do so while still opposing President Donald Trump’s “America First” trade policy, which puts priority on bilateral agreements rather than multilateral frameworks, including APEC.

In the meeting on Sunday, Abe expressed Japan’s concern over the escalating U.S.-China trade war, saying that “restrictive trade measures and countermeasures based on protectionism are expanding across the world.”

Pundits point out that Abe is seeking to maintain the Japan-U.S. alliance as a foundation of Japan’s foreign policy, while avoiding excessive conflict with China, Tokyo’s biggest trading partner. Washington and Beijing have been engaged in a punitive, tit-for-tat imposition of tariffs on hundreds of billions of dollars of each other’s imports.

In a gesture that positioned Japan alongside the U.S. rather than China, Abe touched on the hot-button topic of a “free and open Indo-Pacific” region at a news conference Friday in Darwin, Australia, ahead of the APEC summit.

“Japan, Australia and the United States completely share a vision of a free and open Indo-Pacific based on the rule of law. We are partners having a willingness and the ability to aggressively contribute to peace and prosperity in this region,” Abe said

The policy Abe advocated in 2016 is aimed at boosting Japan’s ties with countries from Asia to Africa that share universal values such as democracy, the rule of law and freedom of navigation, an apparent counter to Beijing’s muscle-flexing in the South China Sea.

The vision, backed by the U.S., is also aimed at developing “quality infrastructure” based on the four pillars of openness, transparency, cost-effectiveness and the fiscal soundness of recipients, and it intends to facilitate the flow of people and goods within the region.

Abe spoke on Japan’s aspirations during the APEC summit in an apparent effort to show an alternative to Xi’s much-touted cross-continental “One Belt, One Road” infrastructure initiative, which has been criticized for leaving recipient countries with massive debts that have led to them giving up control of key infrastructure, such as ports.

While keeping in step with other countries on the Indo-Pacific initiative, Abe has also worked since earlier this year to forge economic ties with Beijing against the backdrop of the unfolding trade war between the world’s two largest economies.

During his trip to China last month — the first official visit to the country by a Japanese leader in nearly seven years — Abe agreed with Premier Li Keqiang to create a new framework to jointly move ahead with infrastructure projects in third countries.

Ryosuke Hanada, a research fellow at the Japan Institute of International Affairs, a Tokyo-based think tank, said Abe’s actions show Japan’s free and open Indo-Pacific policy is not necessarily an initiative aimed at containing China.

Although Beijing may view Japan’s push as a challenge to its attempt to hold maritime supremacy, in economic terms the Indo-Pacific policy and the One Belt One Road initiative share the same objective — developing regional infrastructure — they take different approaches, said Hanada, who is well-versed in Japanese foreign policy.

On Thursday, APEC ministers adopted new guidelines on the quality of infrastructure development and investment, with all 21 economies, including China, agreeing to take into consideration recipients’ ability to pay back loans for such funding.

Meanwhile, political commentator Norio Toyoshima pointed out differences between Tokyo and Washington on economic issues, including Trump’s push for a bilateral trade agreement and Tokyo’s preference for multilateral approaches.

If Trump is to win another four-year term as president in two years, he needs to bolster his electoral standing at home by securing diplomatic wins. A divided Congress, as a result of the recent midterm elections, will also prove a challenge.

Therefore, he is stepping up pressure on Japan to strike a bilateral trade deal on goods and services, despite an agreement by the two counties in September to begin negotiations on goods only, to reduce the trade imbalance with Japan, Toyoshima said.

He noted that all eyes will be on the Group of 20 summit in Argentina later this month, where Trump is expected to meet face to face with Abe on the sidelines of the leaders’ session.