At the Asia Pacific Accord Summit, host nation Papua New Guinea accused Chinese officials of intimidation. The Chinese officials were escorted away. For first time in 29 Years, APEC Fails to Issue a Communiqué
A summit of world leaders ended in acrimony Sunday with the host nation accusing Chinese officials of threatening behavior and differences between the U.S. and China preventing delegates from reaching a consensus on trade, security and investment.
Chinese officials demanding a meeting with Papua New Guinea’s foreign minister forced their way into his office Saturday and had to be escorted away by police after a confrontation, according to two senior officials from the host country. China denied the incident happened, dismissing the accounts as “malicious rumors,” and local police didn’t respond to a request for comment.
The midlevel Chinese officials had sought the meeting to voice their unhappiness with the draft language of a proposed statement, an official briefed on the episode said.
For the first time in the summit’s 29-year history, officials ended two days of meetings without issuing a communiqué, with Papua New Guinea’s leader delivering only his summary of failed talks. “You all know who the two big giants in the room were, so what can I say,” Prime Minister Peter O’Neill told reporters.
A senior Trump administration official said Sunday that the dispute largely came down to a single proposed sentence: “We agreed to fight protectionism including all unfair trade practices.”
China wouldn’t agree to that language, believing it amounted to a “singling out” of Chinese trade practices, the U.S. official said. All other 20 APEC nations favored including the language in the final communiqué, the official said.
Meaningless Statement
Ironically, the statement that caused this incident is innocuous. In prior years, nations agreed to similar statements while doing nothing about it for decades. The US, EU, and China are all guilty of stupid tariffs and unfair trade practices.
Typically these summits end with a bunch of infighting over agricultural tariffs with the US saying it would end agricultural tariffs if the EU would.
That’s a safe position by US protectionists because France would never agree to end agricultural tariffs, and France holds an effective EU veto.
You First
You first is precisely why these summits are a waste of time. No country is willing to lead the way.
As I have stated many times, a good trade agreement can be written on a napkin with a crayon:
“Effective immediately, all tariffs and all subsidies on all goods and services are eliminated.” The first country to do that, regardless of what any other country does, would be an enormous winner.
Tariffs are Insane
Note that Alan Greenspan Says Trump’s Tariffs are “Insane” and He’s Right.
China doesn’t play fair? So what?
Please consider Reflections and Reader Comments on Free Trade: “China Doesn’t Play Fair!”
Mike “Mish” Shedlock
Greenspan
Globalization unfairly favors the advantage of mobile CAPITAL continue to exploit labor anywhere in the World. The global wage worker including those in USA, is at the receiving end of this policy, favored by top1%, Us mulriNationals and the Wall St.
Asset managers like Mish in control huge capital prefers the status quo. Basically it is the Capital vs hapless wage worker (labor). I also has realized the advantage as a global investor. But let’s call a spade, a spade! Rest is hogwash!
I reread the 2016 post and the reference to the 500 underwear workers losing their jobs raises an important issue. Does the outsourcing of low and mid skill jobs to other countries make competition for those jobs stronger in the US, thereby depressing wages?
Wages for roughly the bottom 80% of wage earners have stagnated since the 1970s, which coincides with the era of trade liberalization and globalization. Since the 1970s virtually all income gains have gone to the top 20% of wage earners, with most of that going to the top 1%. Many workers, correctly or not, connect the two issues. Are the issues unconnected? Telling workers they don’t understand how much they benefit from free trade is not going to pacify disaffected people who have struggled economically for decades.
It also appears the highest earners benefit twice from free trade: First, they have access to cheaper imported goods. Second, competition among workers displaced by freer trade keeps wages down for other goods and services consumed by wealthier people. Even if that assessment isn’t correct, I think it sums up what many workers think is happening.
Perfectly stated. Free trade and offshoring as currently practiced screws 80% of people and benefits 20% of the people and the economy is kept going and consumption levels are kept up through massive debt increases for governments, states, cities, companies and consumers and goosed by massive real estate bubbles and creating “wealth” by doubling, tripling and quadrupling real estate prices.
Dumbed down electorate thinks they are richer despite having more debt since the value of their house or apartment is higher on paper and even the fact their children can no longer afford to buy a house or apartment and many are even forced to live at home because rents are so high does not open their eyes.
When asset prices inevitably deflate, the debt will remain and someone will need to take the losses. I guess we can always follow Japan into decades of stagnation by not dealing with the debt. It is interesting how people forget that increases in the price of their house make it harder for younger people to enter the market. I often think about it with respect to my son, and he’s only 12.
“Since the 70s” coincides with the end of Bretton Woods, hence completely unconstrained money printing. That’s it.
It’s not just that the gains have gone to the “top 1%.” It’s that those “top 1%” are largely, and increasingly, in the so called “financial sector.” Or if not there directly, that their gains have been arrived at primarily by way of increases in financial asset values: Stock options, real estate, stocks and bonds. All the work of The Fed.
That’s where the money went. The Fed stole it from workers (via debasement), and handed it to those closest to the Fed. Compared to that, nothing else that has happened since 1971 even registers in terms of importance. Not China, not Islam, not the end of the cold war, not trade. Nothing. That’s the magnitude of that gigantic experiment in pure, undifferentiated theft.
The upside is; end that, and virtually all problems are solved over night. Again, no need to throw tantrums about China nor Scary Muslim Virgins. Just End the Fed, and The West’s not so bad again.
You’re certainly correct the timing also coincides with the financialization of the economy and a full fiat currency. In your view, is ending or greatly restraining the Fed to perhaps lender of last resort activities the only answer or at least part of the answer? I doubt the current state of affairs is sustainable.
Trumps tariffs are not insane when looked at from the viewpoint of the economic losers of the last 40 years, which is why they play politically to his base. I think workers would be far less concerned with trade if they felt they had access to other decent paying stable jobs.
“I’m sure great suffering will result from lack of yet another communique”
Yes, I was extremely heartbroken and almost in tears.
“I don’t understand why you keep mentioning Greenspan he’s a proven idiot”
There are all kinds of proven idiots. Paul Krugman comes to mind. But sometimes I agree with him. For example, I sided with Krugman against the hyperinflationists.
It is as rare for someone to be always wrong as it is always right. Greenspan had a particularly useful talent.
The more people believed him the more likely he was to be wrong. Very useful!
The worst set of people are those randomly right or wrong.
Greenspan is a 1% ter. No credibility! Creator of the dot com bubble!
Clearly globalization has failed. Trade has never been free. Because the system is based on an exchange of fiat currencies and unlimited credit supplies deficits can never balance. Worse, without a “world” government to police unfair practices, fraud and favoritism are inevitable. Under such conditions free trade inevitably goes the way of the unregulated banking industry; benefiting the “executives” by any means at the expense of the people who rely on it.
Banking executives benefit specifically from banking being regulated. Not from it being un-so. Rent seeking is never sustainable, sans government privilege. Hence, the solution is always to revoke such privilege. Always. Without any exception ever.
There is a lot more to “free trade” than simply no tariffs. E.g., how does Comparative Advantage work to maximize returns for everyone when one side has strict environmental rules and the other side does not?
Two of the big questions the Unilateral Zero Tariff crowd need to answer are (1) How does access to cheap Chinese goods help the consumer who can no longer consume because his job was outsourced to China?, and (2) How are non-tariff barriers addressed in a Zero-Tariff world?
” Comparative Advantage work to maximize returns for everyone when one side has strict environmental rules and the other side does not?”
By letting the side who prefers money for gambling (and/or food for basic sustenance) over healthy lungs, build stuff that the side whose preferences trend opposite, could otherwise not afford.
No different from San Franciscans not particularly wanting a nuke plant next door unless they get paid a million a year per person for it, benefiting by having less squeamish neighbors down the coast producing electricity for them.
I don’t understand why you keep mentioning Greenspan he’s a proven idiot responsible for significant economic damage to the US economy. He has no credibility, even a broken clock is correct twice a day. Again as this summit points to the Chinese are predators and intent on obtaining economic and military dominance over the world. You want to help them in this endeavor? Did we help the Russians during the cold war the same way? Free trade in theory works but there are variables as pointed out innumerable times in these blogs. I don’t understand why everyone who is anti Trump trade agenda is hell bent on helping the Chinese subjugate the world. Granted there are probably better ways for Trump to approach the issue like getting together with other world powers and trading partners in a concerted effort to force them to play fair. But the way I see it its pay now or pay way more later when they have us under their thumb.
USA has been used and abused by China, Japan and EU when it comes to trade by using non-tariff barriers for years.
Also China has had much larger tariffs on products where USA has had lower tariffs for same products.
So Obama and G.W. Bush before were clearly incompetent when it comes to trade or just in the pocket of large multinational companies that benefited from offshoring production to China.
Tariffs that level the playing field are a good thing.
There should also be environmental parity and wage level parity and workers rights parity tariffs towards China in addition to Trump’s tariffs since China uses slave wages, environmental destruction and no worker rights as a competitive advantage against USA and EU
I’m sure great suffering will result from lack of yet another communique…. Lack of communiques are, after all, what the world is suffering from ….
The Chinese sensitivity suggests they know they are rumbled by all the attendees. It hit the mark. They protest a little too much.
““We agreed to fight protectionism including all unfair trade practices.”
China wouldn’t agree to that language, believing it amounted to a “singling out” of Chinese trade practices, the U.S. official said. All other 20 APEC nations favored including the language in the final communiqué, the official said.””
Trump back pedals on tariffs,beijeng will walk all over him the way they did obama,sure he’ll pull some face saving bs like that nafta fiasco and pretend he’s reached a “deal”…but as usual the smoke n mirrors pretend nonsense won’t fool anyone.