TRADE tensions could undermine the region’s economic growth, but there is still time to prevent any irreversible damage to the regional economy, the Asia and the Pacific Economic Cooperation (Apec) Policy Support Unit said on Thursday.
Should protectionism continue, this could increase costs for businesses and consumers, as well as lead to lower wages and job losses across the Apec region. This is due to the high integration of production and supply chains in Apec, the Unit said in a statement.
“We are not yet at a point of no return. There is still room to avoid potentially damaging shocks due to escalating tariffs and other trade restrictions,” Apec Policy Support Unit Director Denis Hew said.
However, he added, “this will require sustained efforts to achieve policy solutions that ensure robust and inclusive trade flows.”
Since January 2018 China and the United States have been increasing tariffs against each other. The US imposed an additional duty of 25 percent on $50 billion worth of imports from China.
Tariffs for $34 billion worth of the goods took effect last Friday, July 6; while higher duties envisioned for $16 billion worth of products are up for review.
China, for its part, plans to impose additional tariffs on $50 billion of American goods, including beef, poultry, tobacco and cars.
However, the Apec Policy Support Unit said the recent gains in the lowering of tariffs could cushion the impact of any recent increases in tariffs.
“The buildup of tariffs is at an early stage and follows decades of tariff lowering in Apec,” Hew said.
“It may take time for the knock-on effects to become more apparent among the region’s economies, though a sudden and dramatic tariff expansion could change all that.”
Apec said the average tariffs in the region fell to 5.5 percent in 2016, from 16.9 percent in 1989, when the Apec was created.
This progress has boosted trade-driven growth, which is on pace to increase 4.1 percent this year and next before consolidating to 4 percent in 2019.
Apart from these, Apec said the broad-based growth being experienced by the region could make it easier to move forward with protectionist actions without fear of repercussions.
In order to ensure that the region’s trade gains are sustained, the Apec Policy Support Unit recommended deepening market integration and modernizing trade agreements.
These must be accompanied by efforts to modernize trade negotiation, adoption and potential expansion of new regional undertakings.
“There is a legitimate need for policy to go further to enable more people to capitalize on trade and realize greater inclusive growth in the Apec region,” said Emmanuel San Andres, an analyst with the Apec Policy Support Unit.
“The best way to level the playing field is to lower, not raise, trade barriers that
hurt the poor and vulnerable the most,” San Andres concluded. “Giving people the capability to access growing economic opportunities and leveraging new technologies for the benefit of all—this is the future of inclusion in Apec and beyond.”
Trade and sectoral officials from the 21 Apec member- economies will convene in Port Moresby, Papua New Guinea, from August 4 to 20 to address parallel trade challenges, as well as new avenues to improve business and work force participation in trade through technology.