APEC highlights 'fundamental challenges' in global trade as tariffs overshadow meeting

By Jihoon Lee

SEOGWIPO, South Korea, May 16 (Reuters) - The Asia-Pacific Economic Cooperation group adopted a statement on Friday that cited "fundamental challenges" facing the global trading system, but stopped short of discussing a joint response to U.S. tariffs looming large over its meeting.

The annual gathering is the first major multilateral trade gathering since U.S. President Donald Trump's announcement of sweeping tariffs that hit more than half of the 21 members of the bloc with U.S. import duties in excess of the 10% minimum.

"We are concerned with the fundamental challenges faced by the global trading system," APEC members said in the joint statement.

They also said they remained committed to APEC as the main forum for regional economic cooperation and addressing the economic challenges facing the Asia-Pacific region.

The statement expressed support for the continued role of the World Trade Organization, while noting its shortcomings.

"We recognise the importance of the WTO to advance trade issues, and acknowledge the agreed-upon rules in the WTO as an integral part of the global trading system."

The statement also said that "the WTO has challenges and needs meaningful, necessary, and comprehensive reform to improve all its functions, through innovative approaches, to be more relevant and responsive in light of today's realities".

The Trump administration views the WTO as a body that has enabled China to gain an unfair export advantage and has recently moved to suspend U.S. funding to the institution.

Kim Yong Jin, a management professor at Sogang University in Seoul, said the joint statement reflected U.S. claims "they are at a disadvantage under WTO, and that needs to be fixed."

APEC warned at the start of the meeting that exports from a region that accounts for around half of world trade would slow sharply this year as a result of the U.S. tariffs.

Earlier on Friday, some diplomats from member countries had expressed doubts the group would even be able to adopt a joint statement, although they said South Korea Minister for Trade, Cheong In-kyo, had pushed hard for some consensus.

"There was new momentum created through these meetings to overcome a difficult situation ... as APEC urged a trans-regional effort to break through uncertainties engulfing the global economy," Cheong told a briefing.

In February, a Group of 20 meeting of finance ministers and central bankers in Cape Town failed to agree a joint communique after top officials from several countries, including the United States, skipped it.

Cheong said there was no "official" discussion about a joint response to U.S. tariffs, despite pressure from some members for such talks.

"From our standpoint, it is difficult to jointly respond because each country is in a completely different situation," he said.

APEC is a non-binding regional economic forum established in 1989 to facilitate deepening ties in the Asia-Pacific region, with the United States, China, countries in Latin America and Southeast Asia, as well as Hong Kong and Taiwan among its member economies.

BILATERAL MEETINGS

For many of the member economies, the attendance of U.S. Trade Representative Jamieson Greer raised the stakes of the conference held on South Korea's Jeju Island, ahead of a leaders' summit scheduled later in the year.

On the first day, many, if not all, of the representatives had or sought a meeting with Greer, according to host country officials.

Greer met China's Vice Commerce Minister Li Chenggang on Thursday, less than a week after their first face-to-face talks in Geneva on May 10-11, where they agreed to significantly lower tariffs for 90 days.

Beijing's commerce ministry spokesperson, He Yongqian, told a press conference that China was always open to discussing economic and trade relations with the United States through offline communication, but gave no details on the substance of the latest talks.

According to a statement from the ministry, China's Li said at the APEC meeting that in recent years individual economies had implemented so-called reciprocal tariffs, which provoked global trade frictions and strong dissatisfaction and opposition from many trading partners.

Greer also spoke with South Korea's Industry Minister Ahn Duk-geun, three weeks after Seoul and Washington held their opening round of trade talks, and ministers from Malaysia and Taiwan, yielding optimism that further talks would lead to reduced tariffs.