The APEC Summit Aftermath

The APEC Summit held in Beijing this month, and more specifically the two days of leaders’ meetings on the 11th and 12th, have been the major preoccupation of regional foreign affairs writers this month. Now that the dust has begun to settle, it is worth reflecting on the significance of this year’s summit, and whether it will have any lasting impact on the larger Asia-Pacific region. 
In fact, the lion’s share of media attention was focused on the bilateral meetings on the sidelines of the summit, particularly Japanese Prime Minister Shinzo Abe and his ability to hold brief and somewhat informal talks with his country’s estranged regional neighbors. Despite talk of a possible Northeast Asian reconciliation, the true measure of success will be the extent to which the region reverts to the status quo, and how quickly that process occurs. It may well prove that progress on free trade prove to be the most lasting outcomes of the summit.

Bilateral Meetings

The potential for a meeting between host Chinese President Xi Jinping and Abe was a topic of considerable speculation for several months prior to the summit. Despite Abe publicly and repeatedly expressing interest in a meeting, Xi appeared to be holding out over two key issues: the dispute over the Senkaku/Diaoyu Islands and Japan’s recent nationalist tendencies, the latter most notably embodied in visits by high-level officials (including Abe himself) to Yasukuni Shrine, which memorializes 14 Class A war criminals. However, a joint statement on the Friday before the meeting seemed to cloak the issues in a blanket of ambiguity, simply acknowledging “the emergence of tense situations in recent years in the waters of the East China Sea,” while recognizing “political difficulties” that should be faced in the “spirit of squarely facing history,” which could be interpreted as a reference to Yasukuni.

That paved the way for an actual meeting the following Monday, although what ultimately transpired left much to be desired. A brief photo opportunity showed a somewhat eager Abe reaching out to engage Xi in at least small talk, while for his part Xi appeared not to speak, and to even break eye contact soon after Abe spoke. The respective countries’ leaders and media sought to spin the meeting immediately after, with Abe saying they “need each other,” and that the rest of the world is “expecting to see an improvement [in] the relationship.” In contrast, official Chinese media such as the People’s Daily and Global Times sought to downplay the meeting, showing photos of the two together much further down than Xi’s pictures with other leaders, and insisting that the meeting came “following a request from Japan” and was done “out of courtesy.”

Abe was also able to meet with South Korean President Park Geun-hye, although only informally during a dinner party. While their brief interaction was more cordial, and also important as it was only the second time the two have met, there was no indication that a more formal meeting is being considered. Still, they apparently “agreed to encourage dialogue between senior diplomatic officials.”

Much more important were the meetings between Park and Xi, and a 90-minute talk between Abe and Russian President Vladimir Putin. The meeting on Monday between the South Korean president and Chinese leader resulted in a statement shortly afterward from Seoul’s presidential office that the two had finally reached an agreement to sign their long-negotiated FTA, following significant headway made during Xi’s visit to South Korea in July. This is one of the more important bilateral news items to emerge from the summit, as it links the region’s biggest economy with one of the most technologically advanced, neither of which incidentally is currently part of the U.S. led Trans-Pacific Partnership (TPP) FTA negotiations.

Putin and Abe also held a very friendly visit on Sunday, despite Japan’s current sanctions on Russia over Moscow’s involvement in the Ukraine crisis. While the two sides agreed to renew plans for Putin to visit Tokyo sometime next year (in order to address their own dispute in the Kurils) after they were cancelled this fall, the meeting as well as progress on any bilateral issues are unlikely to happen until the situation in Ukraine stabilizes. For the Russian president there was still a healthy ray of sunshine from the summit, as China and Russia agreed to a second major route for Russian gas from the west, after their earlier agreement in May for an eastern route. This new route could help Moscow further remove itself from dependence on European customers, particularly as the Ukrainian crisis draws out and the U.S. moves ahead with plans to make Western Europe part of its new shale gas market.

Free Trade

China has scored a clear victory in being able to direct this summit’s attention toward its Free Trade Area of the Asia-Pacific (FTAAP), despite the U.S. publicly stating its concern that such an agreement would draw the regional focus away from other FTAs, most notably the TPP, which the U.S. is still hoping to finalize in the near future. While the FTAAP is technically an FTA, it is less concerned with reducing trade barriers between countries and more focused on “reducing conflict among overlapping trade agreements between pairs of Asia-Pacific economies,” according to an Associated Press report. An APEC joint statement said the 21 economic members agreed to realize the FTAAP as soon as possible, drafting a roadmap for the FTA and submit a progress report by 2016, albeit without indicating a deadline for the actual agreement.

Early in the summit, the U.S. ruled out any “major announcement” on the TPP during the meetings. The major sticking point continues to be Japan’s automotive and agricultural markets, and even the U.S. trade representative admitted that no agreement will be reached before the end of this year.

Perhaps the most important and immediate trade agreement for the U.S. reached during the summit was a bilateral one with China. As part of the WTO’s Information Technology Agreement (ITA), which stipulates that all related tariffs must be eliminated, the two countries have agreed to remove trade barriers on what could amount to $1 trillion in technology-related products in 200 different categories, a move that could create 60,000 U.S. jobs. However, what may prove to be the most important part of this agreement, as described by Forbes’ John Brinkley, “is that this agreement will serve as a test of China’s willingness to play by the rules,” as it is a wide-ranging WTO agreement that could bring Beijing into investment treaties of much greater complexity and scope.

Regional Relations

Happy pronouncements are one thing; sustaining them is quite another. Some initiatives seem sure to move forward, like the China-South Korea FTA or the roadmap for the FTAAP, either because of the favorable risk-benefit profile (China-ROK FTA) or the inherently limited nature of the goal (FTAAP).

A second tier of agreements that are perhaps less certain include Putin’s trip to Japan next year, a second natural gas pipeline between China and Russia, and the U.S.-China IT trade agreement. These agreements are either inhibited in some way by more important strategic considerations, like Putin’s visit, or are complicated by a multitude of changing factors, like the potential pipeline, which could be affected by issues such as the price of natural gas, security implications along the western route (presumably through China’s restive Xinjiang province), or Russia’s strategic calculus on whether or not to shift a substantial portion of its exports away from Europe.

Those agreements that are the least likely to see a sustained commitment involve Japan. The degree of diplomatic effort required to bring about even these very limited and informal meetings has not translated into a commensurate declaration on all sides to at least systematically continue talks. At best, this summit represents a shift back to neutral for Japan’s relationships with China and South Korea, which – and not to undersell that achievement – merely underscores how far they have deteriorated in recent years. Until high-level meetings between officials once again become a regular event, or in the case of Sino-Japanese relations, a hotline is established between their militaries in the East China Sea, there is scant evidence to suggest that relations won’t quickly revert to where they were just a few months ago, before Abe began his Northeast Asian charm offensive.