Apec’s economic mission splintered by geopolitics

THE Asia-Pacific Economic Cooperation organisation (Apec) was created at the end of the Cold War to promote the region’s integration. Yet, the consensus-driven body is increasingly riven by geopolitical and geoeconomic splits.

While Apec’s 21 economies – which include seven Asean states, Brunei, Indonesia, the Philippines, Malaysia, Singapore, Thailand and Vietnam – now collectively represent nearly two-thirds of global gross domestic product and half of world trade, this week’s summit in South Korea is set to expose its fractures.

The consensus-driven approach is creaking amidst intra-forum squabbles. This is no big surprise given that it is a disparate group with an approximately three billion population across the Pacific Rim from Chile to Russia and Thailand to Australia that includes the world’s largest economies, but also much smaller, poorer nations such as Papua New Guinea.

Geopolitical fissures are a major complication. Recent divisions include those over the Ukraine conflict which has split the region with, for instance, the US, Australia, Canada, Japan, South Korea and New Zealand supporting Kyiv.

Trump-Xi bilateral is the key highlight

The highlight of the Apec events will not be any bold new multilateral initiatives to drive further economic integration. Instead, it is the big bilateral between US President Donald Trump and Chinese counterpart Xi Jinping.

Trump initially threatened to cancel the meeting, their first face-to-face since the pandemic, over the new Chinese measures on critical minerals. But on Sunday (Oct 26), US Treasury Secretary Scott Bessent said that negotiations between the two sides have created a landing zone for a renewed deal between the superpowers.

However, an agreement is still not certain. Trump may be in a combative mood saying that the first topic on his agenda will be fentanyl to boost pressure on Beijing to curb drug trafficking and crack down on Latin American drug cartels. Much may depend upon how much Xi wants to see a deal in the face of Trump’s threat of potential additional 100 per cent tariffs on Chinese imports to the US.

The Apec subplots: US, South Korea and China

Outside of the big US-China bilateral, there will be multiple Apec subplots. These include South Korean relations with the US and China, Canadian relations with the US, and the outside possibility of a Trump meeting with North Korean leader Kim Jong-un.

These subplots have a common theme which reflects Trump’s big goal during the trip. According to the White House, this is to “further reshape the global economic order and secure more investments that will create high paying jobs and advance the reindustrialisation of America”, including critical mineral agreements.

On the South Korea-US front, the two sides are seeking to finalise a vexed framework tariff agreement from Jul 30. Problems have emerged in recent months with the deeper details of the deal and Kim Yong-beom, South Korean presidential chief of staff for policy, has hosed down prospects for a big breakthrough this week, following his recent visit to Washington. One of the items yet to be agreed is the US insistence that South Korea make direct, up-front investments of around US$350 billion in the US economy.

Trump is likely to hammer home this message not only in his bilateral with South Korean President Lee Jae Myung, but also in his keynote address on Wednesday to the Apec chief executive officer forum which will see hundreds of global business leaders attend, including Nvidia CEO Jensen Huang, SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman.

Trump’s visit follows tensions between Washington and Seoul last month after more than 400 South Korean workers were arrested, detained and deported at a Hyundai-owned plant in the US state of Georgia as part of an immigration crackdown. Hyundai has spent billions on the factory, in part, to try to help realise Trump’s vision of a manufacturing renaissance in America.

China’s wider agenda in South Korea

Xi will also seek to bolster bilateral ties with South Korea. This will be his first visit to the country since 2014, where soon after, Beijing and Seoul agreed to a trade deal that took effect in 2015.

While this week will probably not see a big bilateral breakthrough, both sides want to prepare groundwork for driving enhanced cooperation. Key elements of this agenda include digital and green economy partnerships, supply chain stability, and specific, wider enhancements to the trade agreement.

Interestingly, Xi is seeking to meet with Canadian Prime Minister Mark Carney too about boosting China-Canada ties. This comes after Trump abruptly ended tariff talks with Ottawa. This in response to a TV advert by Ontario province which has footage of ex-US president Ronald Reagan slamming tariffs. Trump asserts this is a Canadian bid to “illegally influence” the US Supreme Court which will adjudicate soon on whether he has the power to set tariffs unilaterally.

The North Korea wild card

Perhaps the biggest wild card of the next few days is the outside possibility of a Trump-Kim meeting. While this prospect is being downplayed by the US president, North Korea’s Reunification Minister Chung Dong-young said there is a “considerable” chance of it happening. One reason indicating that a “surprise” visit may happen is that Seoul has, reportedly, temporarily suspended tours in parts of the Demilitarised Zone separating the South and North.

Trump met Kim three times during his first presidency but, amid high hopes, Pyongyang’s nuclear and wider weapons programmes have only grown. Only last week, North Korea fired suspected short-range missiles which flew about 350 km.

Moreover, in the five years since Trump last met Kim, Pyongyang has aligned more closely with Moscow supporting Russian President Vladimir Putin’s Ukraine gambit. This closeness was shown last month in Beijing when Kim was with Putin and Xi at a major Second World War anniversary military parade.

Taken together, these geopolitical tensions will continue to challenge the Apec consensus model. Moreover, the Trump presidency’s disruptive tariff agenda is now amplifying these growing geoeconomic strains.

The writer is an associate at LSE IDEAS at the London School of Economics