Rising protectionism, the top risk to growth–PECC survey

Da Nang, Vietnam—Increasing protectionism was seen as the top risk to growth of the Asia-Pacific region, according to the Pacific Economic Cooperation Council (PECC) annual survey of opinion leaders released on Tuesday, as 21 economies gather in Da Nang this week for the Asia-Pacific Economic Cooperation (Apec) summit. Lack of political leadership and slowdown in the Chinese economy were second and third risks to growth.

“Against the backdrop of concerns over rising protectionism, arguments for regional economic integration efforts and emphasis on pathways to achieving the Free Trade Area of the Asia Pacific [FTAAP] and support for the multilateral trading system become even more pertinent. They provide stability, certainty, and a sense of forward momentum,” PECC
Cochairman Don Campbells aid.

Despite the United States pulling out of the Trans-Pacific Partnership (TPP), according to the economic modeling studies mentioned in the report, the implementation of the TPP-11 (TPP without the US) could boost the output or GDP of the 11 remaining economies by 3 percent.

In comparison, estimates suggest that the Regional Comprehensive Economic Partnership (RCEP) could raise the real average GDP of the participating economies by 1.9 percent, should all import tariffs be eliminated.

However, particularly for the smaller economies in the region, the real gains will happen less through the improved access to external markets and more significantly by reducing the nontariff measures (NTMs) and by addressing domestic regulation reforms, according to the report.

About 65 percent of the Asia-Pacific policy community surveyed thought that RCEP would likely be completed in two to five years. About 49 percent thought that TPP-11 would be completed in two to five years, while 21 percent said it would never materialize, and another 21 percent remained uncertain. On the likelihood of the US rejoining the TPP, 20 percent said yes, while 26 percent said not likely. Over 51 percent of North American respondents thought that the US would rejoin the TPP under a different name.

“FTAAP is a strategic choice for long-term prosperity of the Asia-Pacific region. It will provide institutional guarantee for our region’s open economy. There are several pathways and initiatives under-way that can effectively complement each other toward eventual realization of an FTAAP,” said Amb. Tang Guoqiang, cochairman of PECC.

“In addition to the TPP and RCEP, the Belt and Road Initiative, which links the two ends of the vast Eurasian continent, will contribute to keeping up the momentum on globalization. These regional economic integration efforts will help each economy maximize their own growth potentials while the entire Asia-Pacific region would essentially benefit,”he added.

The “State of the Region 2017-2018” report of PECC was released on Tuesday on the sidelines of Apec Senior Official and Ministerial Meetings ahead of the summit. The report includes the results of a survey of over 700 regional policy experts on key developments and challenges that the Asia Pacific as a region is facing.

The survey panelists were selected based on their expertise and direct involvement or influence on regional policy-making, coming from government, business and civil society.

According to the PECC survey, the top 5 priorities that the Apec leaders should address in Da Nang are:

  • Promoting sustainable, innovative and inclusive growth through the Apec growth strategy;
  • The emergence of anti-globalization and anti-trade sentiments;
  • Progress toward  the Bogor Goals and the FTAAP;
  • Improving economic financial and social inclusion in the region; and
  • Climate-change cooperation.

Apec can address the emergence of doubts about the benefits of globalization by complementing its work on trade with an equally robust work on social policies, such as education, social safety nets and
labor-market policies.

“As the Bogor Goals expire in 2020, Apec is expected to continue taking on broader range of agenda in addition to the traditional trade-focused approach. Going forward, it is crucial that Apec priorities be more people-focused and stay well aligned to the global Sustainable Development Goals,” said Eduardo Pedrosa, secretary-general of PECC and coordinator of the report.

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