China Pushes Pacific Trade Pact as US Resists

China is increasingly expected to push for a trade agreement binding a wide swathe of the Pacific Rim, including the US, when it hosts a forum of major Asia-Pacific economies in November, but a real deal may be hard to secure as Washington is likely to resist, according to analysts.

The anticipated push for the Free Trade Area of the Asia-Pacific (FTAAP), covering all 21 members of the Asia-Pacific Economic Cooperation (Apec) forum, wouldeven if unsuccessful – earn Beijing goodwill from other Pacific Rim countries because it would be proposing action to cut export costs, they said.

“It should be high on the agenda especially given [US President Donald] Trump’s anti-international trade position and his constant tariff threats,” said Chen Zhiwu, chair professor of finance at the University of Hong Kong.

The FTAAP accord, which would bind China, the US, Russia and numerous Asian manufacturing powerhouses, was introduced to the Apec agenda 20 years ago but has lain largely dormant due to geopolitical rivalries and protectionist policies.

China was willing to use the idea’s 20th anniversary “as an opportunity to promote the coordinated development of regional economic and trade rules”, Chinese Vice Minister of Commerce Li Chenggang was quoted as saying in May.

Officials from China were trying for an “agreement to implement” a deal at this year’s Apec forum, member country Indonesia’s official Antara news agency reported inAugust.

Apec members normally make decisions by consensus rather than majority votes.

“Trump basically in his first term already couldn’t accept any free trade agreements, so I don’t see any possibility to have one with Apec countries,” said Liang Yan, a professor of economics at Willamette University in the US. “Trump really wants to use tariffs as an economic tool and for geopolitical reasons.” Trump opposes multilateral trade deals and last year slapped tariffs of more than 100 per cent on imports from China.

The US president would oppose an Apec deal partly on concern that China could “use” the other countries in the pact as “stepping stones to export goods to the US”, Chen said. The Ministry of Commerce in Beijing said that Apec ministers in January had “in-depth discussions” about the trade area. Months later, it adopted a “Beijing road map” to help achieve it, according to a ministry statement. China, the trade area’s key proponent for years, could use its Apec host role in 2026 to spearhead the issue, said Jayant Menon, a visiting senior fellow at the ISEAS – Yusof Ishak Institute in Singapore.

The area was proposed to align two-way and multi-country free trade agreements that had expanded after a collapsed round of World Trade Organization talks in 2006. Tariff cuts and market liberalisation are common hallmarks of the deals – including two that already bind China to the giant Southeast Asian trading bloc.

Chinese President Xi Jinping said at an Apec Economic Leaders’ Meeting last year that the group should help the pan-Asian Regional Comprehensive Economic Partnership trade pact and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership deal “align with each other and progress together so as to inject impetus into the development of the FTAAP”.

China would welcome the trade area to “counterbalance the pressure and the rhetoric” from the US and Europe against Chinese export practices, Chen said, adding that any agreements of this scale would allow Chinese exporters, a backbone for the world’s second largest economy, to ship at lower costs.