▶ Policy shifts post-US election could result in challenges or adjustments for the APEC, especially if they diverge from its economies’ priorities or add uncertainty to initiatives aimed at regional trade frameworks.

▶ Middle-powers within APEC are likely to become pivotal actors in contributing to APEC’s goals by taking on greater leadership roles in consensus building for initiatives related to inclusivity, sustainability, and digital transformation.

▶ APEC may need to adapt and reinvent itself to ensure sustained cooperation and stay relevant in the wake of US policy shifts and the changing focus of regional players that end up engaging in alternative trade arrangements with non-APEC economies.

The Asia-Pacific Economic Cooperation (APEC) 2023 progressed with the critical goals of inclusivity, sustainability, digital transformation, and collaboration (development of guidelines for disaster preparedness, food security, and energy transition policies to address climate change). The recent APEC 2024 Summit saw Peru continuing these priorities, namely, getting the APEC countries to make progress on specific initiatives, including a renewed focus on sustainability. Clearly, the goals of APEC still reflect the language of the contemporary trade discussion.

That said, the process and outcomes of APEC summits, however, hinge on the political landscape of the United States (US), which significantly influences APEC's directions and priorities, among others (APEC’s own consensus-based decision-making and non-binding nature of commitments). Biden’s approach to trade policy in terms of strengthening coordination on technology export controls with key stakeholders, considered somewhat narrow and defensive [1], followed by the incoming Trump’s skepticism about networks and partnerships is going to further complicate US’s role in the region and its support for the APEC’s original core mission of regional economic integration.

Importantly, Trump’s economic security policies, such as possible tariffs on imported goods (including those from China), and deepening industrial policy to constrain Beijing’s access to sensitive high-tech may lead to renewed US-China (a critical relationship within the APEC group) trade tensions [2], create divisions within APEC, complicate consensus building on key issues and ultimately strain multilateral cooperation within APEC. Arguably, while the US-China trade tensions may continue to dominate sideline discussions, they undoubtedly will challenge some broader APEC goals, especially regarding digital economy advancements and environmental sustainability – such as the Just Energy Transition Principles.

In reality, the progress of the APEC 2024 summit post-U.S. elections will most likely play an even more significant role in shaping economic and policy alignments across the Asia-Pacific [3]. For example, more countries are continuously being drawn into the Chinese orbit through the latter’s aggressive investments in large-scale regional infrastructure. The latest of which is Beijing’s $1.3 billion investment in the Chancay deep-water port to extend China’s reach (trade routes and connectivity) in Latin America.

APEC in the Wake of US Policy Shifts

Anticipation of further protectionism and US’s turn away from multilateralism can either bolster or hinder APEC's cohesiveness and progress.  In the context of the latter, it could lead to a reassessment of some initiatives underscored in the APEC 2024 summit, influencing the levels and nature of cooperation and potentially slowing implementation.

If Washington leans towards unilateralism, member economies with strong trade ties with the US are likely to recalibrate their overall trade and investment strategies.  This includes diversifying economic partnerships that are not just limited to Chinese initiatives like the Peru Chancay port project mentioned above and the Belt and Road Initiative (BRI), but also involving other non-traditional alliances within the Global South. For example, Malaysia is already considering leveraging the APEC forum to strengthen ties with Peru [4].

With impending restrictions to access the US market, middle-powers in APEC, like Australia and Japan, are also likely to take on a proactive stance and mobilize other regional alliances for trade and investments [5], independent of the US. It may also inadvertently push the APEC economies to seek alternative trade arrangements, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) [6], or with other non-APEC economies.

APEC 2024 therefore may become a platform where member economies evaluate responses to evolving US policy stances while attempting to sustain cooperative regional progress on trade and investment goals​. Any divergence of US policies from the APEC goals, will in fact leave a bigger leadership space for middle-powers [7] to play a larger role in sustaining the forum’s momentum in consensus-building for driving regional initiatives.

For example, as a founding member of APEC, Australia has exemplified leadership in paperless trade, economic empowerment of women and Indigenous Peoples, and renewable energy initiatives. A case in point is the agreement on Principles for the Interoperability of Electronic Invoicing Systems in the APEC Region, which was in fact, proposed by Australia and is considered a fundamental component of moving ahead with digital trade in APEC 2023.

APEC and the Outlook for Resilience

The intersection of US economic policies with APEC’s goals, the US-China trade tensions and the alliances forged by members in diverse trade arrangements, particularly with non-APEC economies will underscore the forum’s relevance and role in adapting to these shifting global dynamics. Ultimately APEC may need to reinvent itself to ensure resilient cooperation after 31 years of APEC summits (journeying from the first summit in Seattle in 1993).

While resilient cooperation is likely to persist in APEC given the economic interdependence among its members, sustained resilience will depend on managing the above-mentioned challenges while advancing specific initiatives. APEC will remain a relevant platform so long as it focuses on what works and moves ahead with leveraging its strengths in those areas.

Some areas for future focus by APEC, which are also considered practical, include the further facilitation of digital trade (recognition of digital signatures, digital authentication, and digitization of customs procedures), sharing best practices and capacity-building initiatives (digital literacy, SMEs and gender empowerment, etc.), and governing artificial intelligence (AI) where there has been minimal progress in APEC 2023 [8], among others.

[1] https://www.brookings.edu/articles/how-will-biden-and-trump-tackle-trade-with-china/

[2] https://www.aljazeera.com/news/2024/11/17/at-apec-2024-chinese-leader-xi-tells-biden-hes-ready-to-work-with-trump

[3] https://www.atlanticcouncil.org/blogs/new-atlanticist/bidens-first-presidential-visit-to-south-america-comes-too-late-and-with-china-gaining-momentum/

[4] https://www.thestar.com.my/news/nation/2024/11/16/apec-2024-anwar-advocates-for-global-south-non-traditional-alliances-for-equitable-growth

[5] https://eastasiaforum.org/2024/11/17/trump-proofing-economic-security-in-asia/

[6] https://www.aspistrategist.org.au/thirty-years-of-apec-summits/

[7] https://ari.nus.edu.sg/app-essay-huong-le-thu/

[8] https://www.hinrichfoundation.com/research/article/digital/apec-digital-economy-and-trade/