The Cost of Maintaining APEC’s Relevancy

By Madelavina Melhan

The spike of tariffs imposed by the United States has resulted in global trade instability. Many scholars consider the nature of these tariffs to be protectionist because it heavily restricts foreign markets and disregards fair trade dialogue. Such policies are against the principles and goals of the Asia-Pacific Economic Cooperation (APEC). Considering this decision was initiated by the United States, a founding member of APEC, the general public questions the organization’s commitment to its founding beliefs. Amidst growing geopolitical tension and poverty in the Asia Pacific region, APEC's role in promoting peace through cooperation has never been more critical.

In 1989, 12 states within the Asia-Pacific region established APEC as a platform to promote economic growth and peacethrough cooperation. Decades later APEC continues to be a prominent platform for dialogue, capacity building, and as a foundation of economic cooperation within the Asia-Pacific region. A few of its achievements include the Free Trade Area of the Asia Pacific (FTAAP), capacity building, and re-committing states to free and trade principles.

APEC has played an important role in its member states’ economic growth. In the case of Indonesia, APEC has conducted a total of 358.62 billion USD worth of trade. APEC has also aided Japan with 74% of their exports. Similarly, APEC once contributed to more than half of the United States total trade revenue. Additionally, APEC is actively supporting 4.8 million jobs in the United States. Acknowledging these contributions and the interdependent nature of trade, the United States has pushed various initiatives under APEC and supports the promotion of its principles.

Currently, the United States’ official document continues to reaffirm its commitment to free and fair trade. However, its present action towards international trade seems to suggest otherwise. After being elected as president, Donald Trump began imposing high tariffs less than a month into office. Although tariffs are a common part of trade, the severity of these tariffs are beyond anything seen in history. At the moment, Brazil is its highest recipient with a 50% tariff on specific goods. Consequently, Brazil’s GDP is expecting a 1% downturn while 100,000 Brazilians are at risk of losing their job. The effects of these tariffs are significantly more impactful to developing states within the Asia Pacific region, who conduct trade with the United States more frequently. The previously imposed tariff to Thailand has hinderedThailand to grow beyond 2%, despite expecting 4% of GDP growth this year.

President Trump’s imposed tariffs are inherently unpredictable. He suggested imposing a 130% tariff to China in November 2025. Simultaneously, president trump has lowered his tariff to Thailand from 36% to 19% to 0% in less than half a year. Not only does this create instability in the global market, but trade dependent states, who are the most vulnerable to trade changes, such as Singapore, are experiencing fluctuation in business confidence. People might consider this rapid changes in tariffs as an act of economic coercion.

Unfortunately, in recent years APEC has seemed to be struggling to attain similar success as before and its members lack the same dedication as it did in APEC’s early stage. The United States cited the need for high tariffs in the interest of state security and reducing trade deficit, showing a lack of trust on APEC’s mechanism to solve these issues. Regardless of purpose, it is perplexing to consider a founding member of APEC would impose high tariffs on a global scale without prior dialogue, especially since it goes against the foundational beliefs of APEC. It should be noted that APEC did host a dialogue centered around protectionist policy, but it has not addressed the United States' sudden decision. Although APEC never had any binding decision making power, the negative effect of tariffs towards other member states should have prompted a formal discussion. Its silence raises questions about APEC’s ability to address challenging matters.

In light of rising protectionist policy, growing tension and distrust in APEC’s capability, the multi-national organization needs to establish new safeguard initiatives to maintain its relevancy. These frameworks should honor APEC’s established structure which values state sovereignty and orient towards economic discussion. Ideally this will come in the form of a consultation mechanism that is dedicated to discussing future trade policies.

Acknowledging the importance of state sovereignty, this initiative urges discussion to focus on radical shifts in international trade policy. An example of cases that would warrant consultations are sudden volatile spikes in tariffs, drastic changes in import quota, and other strong cross border trade impacts. These meetings will not produce any binding decision, but act as a recommendation consultation platform with the hopes of fostering discussion and prior awareness of potential economic policy decisions that may heavily impact member states' domestic economy. Pairing these meetings, an additional emergency meeting may be implemented in cases where states are experiencing severe negative impact from other member states' sudden implementation of undiscussed protectionist policy. It is with great hope that if such frameworks are implemented in APEC, it will remain a relevant platform that actively promotes free and fair trade.

As global market instability continues to grow, intergovernmental organizations that promote economic cooperation and trust must take an active role. As of status quo, APEC remains a prominent organization in promoting regional economic cooperation. Beyond that, APEC’s advocacy towards free and fair trade serves as a vital reminder amidst ongoing trade wars and rising protectionist policy.