US–China Divisions Leave APEC Leaders Unable to Reach Consensus on Communique

November 18, 2018 Updated: November 19, 2018

Divisions between the United States and China set off an unprecedented event at the Asia-Pacific Economic Cooperation (APEC) summit, when leaders at the regional forum failed to issue a joint statement for the first time since 1993.

Papua New Guinea Prime Minister Peter O’Neill said on Nov. 18 that the sticking point was over whether the Leaders’ Declaration should include mention of potential reform of the World Trade Organization (WTO), Reuters reported.

China wouldn’t agree to the inclusion of the reference to WTO blaming a country for unfair trade practices, an unidentified diplomat involved in the negotiation told Reuters.

In September, the United States, Japan, and the European Union agreed to work together to reform ineffective WTO rules that enabled unfair Chinese trade practices. U.S. President Donald Trump has cited Beijing’s unfair trade practices as the main reason for slapping tariffs on a total of $250 billion worth of Chinese goods in the ongoing Sino–U.S. trade war.

Trump was represented by Vice President Mike Pence at the APEC summit.

Speaking in Papua New Guinea on Nov. 17, Pence criticized China’s unfair practices, including tremendous trade barriers, quotas, forced technology transfer, intellectual property theft, and industrial subsidies on an unprecedented scale—all of which contributed to a $375 billion trade deficit with the United States last year alone.

The division between the two countries goes beyond trade practices and references to the WTO. In the span of two days from Nov. 17 to Nov. 18, Pence and Chinese leader Xi Jinping traded remarks about their countries’ differing policies in the region.

On Nov. 17, Pence, in an indirect reference to China’s “One Belt, One Road” (OBOR, also known as Belt and Road) initiative, stated: “We don’t drown our partners in a sea of debt. We don’t coerce or compromise your independence. The United States deals openly, fairly. We do not offer a constricting belt or a one-way road.”

OBOR, first announced by Beijing in 2013, seeks to build Beijing-centered land and maritime trade networks by financing infrastructure projects throughout Europe, Asia, Africa, and Latin America. However, Beijing’s initiative has been criticized for burdening developing countries with massive loans that they can’t pay off. This “debt trap” has already occurred in South Africa, Kenya, Sri Lanka, and the Maldives.

Pence spoke of how the United States’ plan in the region, the Indo-Pacific strategy, differs from OBOR, as it includes for example freedom of navigation in the South China Sea. Additionally, Pence welcomed China’s involvement in the American strategy, if Beijing were to “respect its neighbor’s sovereignty; embrace free, fair, and reciprocal trade; uphold human rights and freedom.”

Trump first brought up his Indo-Pacific strategy during an Asia trip in November 2017. In July, Secretary of State Mike Pompeo announced $113 million in infrastructure investments in the Indo-Pacific region.

China’s state-run daily, the Global Times, lashed out at Pence’s remark in an editorial published on Nov. 17, calling it “nothing new,” while defending OBOR as a development plan “warmly received by a large number of countries.”

Xi, speaking prior to Pence’s speech on Nov. 17, defended the country’s OBOR initiative. He said the initiative was neither “designed to serve any hidden geopolitical agenda,” nor “a trap as some people have labeled it.”

Sri Lanka handed control of its strategic Hambantota port to China in December 2017 after it was unable to pay back $6 billion in loans and converted the debt into equity.

On Nov. 18, in another speech, Xi openly stated Beijing’s ambitions in the Pacific. He said that “efforts are required to turn our connectivity blueprint into reality and extend our connectivity network to every corner along the Pacific shores,” referring to OBOR.

Sending a message that it would face off with China’s increasing influence in the Pacific, the United States announced on Nov. 17 that it will join with Australia to build a naval base on Papua New Guinea’s Manus Islands, according to Reuters.

On Nov. 18, the United States, Australia, New Zealand, and Japan agreed on an electricity project in Papua New Guinea that promises to boost electricity access to 70 percent of the local population, up from the current 13 percent.

“We don’t want to see a repeat in the South Pacific of the kinds of risks that we saw in Sri Lanka or other parts of the Indian Ocean, where China’s infrastructure and development assistance had negative consequences,” Rory Medcalf, head of the National Security College at Australian National University, told the English-language Japan Times for a Nov. 18 article.

With additional reporting by Sunny Chao.

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