Top world leaders meet from Thursday to try to save their cherished free trade accords from feared extinction under US President-elect Donald Trump.

Here are three big factors looming over the Asia-Pacific Economic Cooperation (APEC) summit from Thursday to Sunday in Lima, Peru.

Trump effect 

Trump has cast uncertainty on the postwar world order with his vows to tear up or renegotiate international free trade agreements in order to protect US jobs.

Donald Trump. Photo: Michael Vadon.

This particularly concerns the 21 members of APEC, which account for nearly 60 percent of the global economy and 40 percent of the world’s population.

The world will look 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.

Economists expect Trump to make protectionist moves that they say may strengthen his country’s economy in the near term but could threaten global growth.

He may impose punitive tariffs on powerful trade partners such as China and revise key free trade deals with countries such as Mexico that rely on the US market, the Institute of International Finance said.

“If such measures materialize, trade tensions would certainly increase, with trade war a possible worst case scenario,” it said in a report.

Outgoing US President Barack Obama sought to “rebalance” trade towards deals with Asia and the Pacific.

US President Barack Obama and his Chinese counterpart Xi Jinping. Photo: Wikicommons.

But Trump has rejected Obama’s signature trade initiative in the Asia-Pacific region, the Trans-Pacific Partnership (TPP), as a “terrible deal.”

Asia-Pacific security 

As well as taking aim at free trade, Trump has questioned the US role as the “policeman of the world.”

Allies such as Japan and South Korea are worried Trump will cut back the US military, economic and diplomatic presence in the region.

They fear that could leave them exposed to a dominant China and belligerent North Korea.

Trump has caused concern in the region by suggesting Japan and South Korea get nuclear weapons to defend themselves.

He has embraced Russian President Vladimir Putin, widely mistrusted by Obama and his allies.

The summit officially opens Thursday evening. Obama, Putin and China‘s President Xi Jinping are each scheduled to give addresses on Saturday. The leaders hold their key meeting on Sunday.

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

APEC leaders. Photo: Wikicommons.

On the campaign trail, Trump insulted Mexican immigrants as “criminals” and “rapists.” He vowed to build a border wall with Mexico to keep out illegal migrants and threatened mass deportations.


China will meanwhile be pushing its own proposed trade deals to gain an edge over the United States in the battle for regional influence.

“The economic landscape in the Asia Pacific is changing rapidly, with Chinaincreasingly taking a regional leadership role,” wrote Rajiv Biswas, Asia-Pacific chief economist at research group IHS Global Insight.

China was pointedly excluded from the 12-member TPP. But due to Trump’s refusal to endorse the deal, Biswas said, “the TPP agreement has shifted from being a lame duck to a dead duck.”

Instead, China proposes an APEC-wide Free Trade Area of the Asia-Pacific (FTAAP) and a 16-member Regional Comprehensive Economic Partnership (RCEP), which includes India but not the United States.

In Asia, where free trade has helped lift millions of people from poverty, strong appetite for such deals means they will likely move ahead with or without the US.

Australia’s trade minister, Steven Ciobo, told the Financial Times on Wednesday his country is keen to get on board with the Chinese-backed proposals now that TPP looks doomed.

“Any move that reduces barriers to trade and helps us facilitate trade, facilitate exports and drive economic growth and employment is a step in the right direction,” he said.


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