Apec’s ‘elephant in the room’

As business leaders and politicians discussed the major economic issues facing the world at Apec’s annual CEO Summit, there was an unignorable “elephant in the room”, as one moderator put it.
Donald Trump’s name was rarely mentioned by the speakers, yet the potential impact of his second term in power was clearly on the minds of those in Lima’s Gran Teatro Nacional.
Two of the more clear-cut discussions of Trump came at opposite ends of the spectrum.
JPMorgan chief executive Jamie Dimon was on Friday ruled out by Trump as a member of his administration – “I wish the president well…I haven’t had a boss for 25 years and I’m not about ready to start,” Dimon responded when asked on stage about the incoming president’s decision – but he nonetheless offered praise about the potential for the new administration to tackle a “stifling” regulatory environment.
“A lot of bankers are dancing in the street because they’ve had successive years and years of regulations, a lot of which stymied credit, and you could have kept the banks equally safe but had them do more credit.”
Presenting a more pessimistic view was former Chilean finance minister and economist Andrés Velasco, who said: “We are moving into a more protectionist world led by the United States, no question about it – and for the countries in this room, countries of the Pacific Rim, countries in East Asia, countries in Latin America, that is not very good news.”
The potential consequences of Trump’s win have also loomed large in the agendas of the New Zealand ministers laying the groundwork for Prime Minister Christopher Luxon’s arrival in the country on Friday afternoon (NZT).
Foreign Minister Winston Peters was in Lima at the end of a week-long tour of Latin America that included stops in Mexico and Chile – the former waiting nervously to see how Trump’s campaign rhetoric of a hardline approach at the border and tariffs of up to 75 percent translates into formal policy.
But speaking to Newsroom, Peters argued both countries were relatively well-positioned given their pre-existing trade agreements with the US – something New Zealand lacks.
“Our purpose, of course, is to learn as much as we can, as fast as we can, to ensure that we, sometime soon, are in a far better arrangement ourselves with the United States.”
New Zealand’s failure to secure an exemption from the steel and aluminium tariffs imposed during Trump’s last term might seem a worrying omen for any chance of special treatment this time around, but Peters said the Government intended to take an approach based not on “hopeless optimism” but logic and reason.
“I cannot forecast any of those things, other than to say that one way to make sure that you do not have a successful outcome is not trying to get a better outcome – and we’re not going to make that mistake … we’ll leave no stone unturned to try and get ourselves there.”
The foreign minister was quick to offer his congratulations to Trump’s secretary of state nominee, Florida senator Marco Rubio, and said he and others had made an effort to build contacts and ensure New Zealand was not caught off-guard by the outcome of the election.
“That has got to be, in our view, of help to us, not dealing with unfamiliar faces, but meeting a lot of faces that we have dealt with before and over a long period of time.”
Trade Minister Todd McClay was also taking a glass-half-full approach, telling Newsroom that while the global trading environment was marked by concern about growing barriers and tariffs, there were still “big opportunities” for countries like New Zealand.
“With all that’s been going on this year and the WTO not being able to achieve as much as anybody would like, we’ve still got two trade deals up [with the United Arab Emirates and the Gulf Cooperation Council] … we continue to engage with India, and the relationship is warming, and it’s constructive…
“As long as we’re nimble and we are standing up for the values that are important to New Zealanders, but we’re also being respectful to other trading nations, there will be opportunities to trade more and do deals.”
Two of the other trade agreements signed by McClay this year are part of the Indo-Pacific Economic Framework – an initiative first launched by outgoing US president Joe Biden in mid-2022, whose fate is now uncertain given Trump’s fierce criticism of the framework.
McClay said it was too early to render judgment on the potential consequences of scrapping the US framework, but New Zealand’s trade balance with other nations was a factor in its favour.
“There are very few countries where we sell more than we buy … and that’s the thing about trade: if it’s balanced and it’s mutually beneficial and it’s respectful, then there’ll always be opportunities. When it gets out of that balance, that one side is too reliant upon the other, then that’s where sometimes domestic industries have concern.”
Members of the Apec Business Advisory Council (ABAC), which provides a business voice to world leaders on the major issues of the day, are among those waiting to see how Trump’s policies play out.
Anna Curzon and Brett O’Riley, two of New Zealand’s ABAC representatives, told Newsroom stability and certainty were the most important factors for businesses adjusting to Trump’s presidency, or to any other political changes.
“In my experience, whenever there’s friction, there’s innovation, so businesses are actually pretty resilient,” Curzon said. “We’re talking amongst ourselves, we will come up with solutions, whatever is thrown at us – but the sooner we can get that clarity, even if it’s really bad news, the better.”
O’Riley said it was too early to know which of Trump’s campaign promises would be turned into government policy or regulations, while New Zealand’s trade volumes had actually increased the last time he was in office.
Both remained positive about Apec’s role in the Asia-Pacific despite the swirling protectionist headwinds, with Curzon working on regional economic integration and O’Riley having been involved in the ‘Greener Trade Framework’ to streamline trade in environmental goods and services.
There will be a glimmer of good trade news on Saturday (NZT), when McClay and New Zealand formally sign the Agreement on Climate Change, Trade and Sustainability – a four-nation deal with Costa Rica, Iceland and Switzerland setting out trade rules for climate and sustainability, and designed to expand like the CPTPP as other countries express interest.
Such smaller-scale deals are likely the best (and perhaps only) way forward, at least while the Asia-Pacific and the wider world figures out how Trump will approach the next four years.