November 22, 2016

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TSG IntelBrief: APEC’s Shifting Landscape

On November 19 and 20, world powers gathered at the 24th summit of the Asia-Pacific Economic Cooperation (APEC) forum in Peru for the first major multilateral summit since the U.S. presidential election. President-elect Trump’s victory signifies the high water mark of a wave of populist sentiment that is resoundingly anti-free trade, and skeptical of international institutions. In the context of the election, the meeting marked an opportunity for countries to take stock of the future of free trade and to assess the new opportunities of a shifting geopolitical landscape.

Heading into the summit, the U.S. faced the decreasing prospects of its signature geo-economic initiative in the region, the Trans-Pacific Partnership (TPP). The TPP was heralded as the economic component of the United States’ strategic rebalance to Asia, which was itself a recognition of the region’s rising geopolitical importance. However, the election of Donald Trump reflects growing protectionist sentiment in the U.S., calling into question America’s long-term commitment to the deal, as well as free trade in Asia more broadly. Asian countries are beginning to adjust their expectations accordingly; APEC’s statement at the end of the summit noted the bloc’s desire to promote free trade, while stating that APEC would seek a larger trade deal in deference to Beijing that would include China, unlike the TPP.

The prospective decline of U.S. geo-economic power in Asia—coinciding with a massive increase in Chinese economic initiatives abroad—could have major strategic implications in the coming decades. While the U.S. may be stepping back from economic integration, China has advanced several geo-economic initiatives, such as the ‘One Belt, One Road’ initiative, meant to solidify and expand its strategic position in Asia. Thus, the mood surrounding the APEC summit reflected the growing perception that American economic retrenchment could see U.S. predominance in Asia challenged by China’s expanding geo-economic power. 

Despite APEC’s economic focus, the summit was also an opportunity for countries to explore new political positions in a rapidly changing strategic landscape. In a significant sign of cooperation with the Organization for Petroleum Exporting Countries (OPEC), Russian President Vladimir Putin announced that Russia would be willing to join OPEC members in freezing crude oil production at current levels. While the resulting higher oil prices would have direct benefits for the Russian economy, the arrangement could also facilitate warming relations between Russia and traditional U.S. allies in the Middle East, where there is growing uncertainty over U.S. commitment to its traditional alliances in the region. For its part, Moscow sees the prospect of diminished U.S. engagement in the Middle East as a strategic opportunity. Moscow has already been expanding its relations with Egypt—a decades-long American ally—to new heights, and the agreement over oil production may present an opportunity to begin a similar process with Gulf countries. 

In addition to the summit, there are other indications of the growing strategic reach of China and Russia beyond their traditional spheres of influence. Turkish President Recep Tayyip Erdogan hinted this week that his country might reconsider its long-held dedication to joining the EU, possibly in preference of a competing military-political alliance spearheaded by China and Russia, the Shanghai Cooperation Organization. Such a move would see one of NATO’s most powerful members step further away from its historic alignment with Europe, which has seen unprecedented strain over the refugee crisis and Erdogan’s repressive post-coup crackdown. 

In the Middle East and the Asia-Pacific regions, economic power and strategic influence operate in zero-sum correlation. For decades, U.S. military and political alliances have coupled with free trade initiatives to underpin an international system that favored U.S. interests and regional stability. If the U.S. is to maintain its strategic foothold in these regions, the Trump administration will have to reconcile domestic concerns over the economic benefits of globalization with the strategic dividends of free trade.

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