WEBVTT - How APEC Become a Battleground for US-China Influence

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This past weekend, the

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<v Speaker 1>Asia Pacific Economic Cooperation Summit, better known as APEX, wrapped

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<v Speaker 1>up in Kyoungju, South Korea. The annual gathering, which began

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<v Speaker 1>as a way to promote free trade and cooperation across

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<v Speaker 1>Asia Pacific, was largely overshadowed by ongoing trade tensions between

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<v Speaker 1>its two biggest member economies, the US and China.

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<v Speaker 2>I think going into this we had a distinct impression

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<v Speaker 2>that this was going to be the Trump show, even

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<v Speaker 2>though he actually didn't intend to actually go to the

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<v Speaker 2>meetings at all.

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<v Speaker 1>Adam Fair is Bloomberg's senior geoeconomics analyst for Asia Pacific.

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<v Speaker 2>His meetings occurred before the official summit began, and yet

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<v Speaker 2>his presence and US policy kind of loomed large over

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<v Speaker 2>the entire meeting. Despite President Ches's opportunity, which he did

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<v Speaker 2>take advantage of to kind of rian placed China at

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<v Speaker 2>the center of a more stable global trade arrangement, President

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<v Speaker 2>Trump and the United States and the tariff conversation kind

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<v Speaker 2>of remained at the center of all discussions.

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<v Speaker 1>During his five day tour of Asia, President Trump stopped

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<v Speaker 1>in Malaysia and Japan, before a World Win one day

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<v Speaker 1>visit to South Korea. He held several high profile bilateral meetings,

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<v Speaker 1>including a summit with President She. So many right the whole,

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<v Speaker 1>so many meetings great for our country with literally hundreds

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<v Speaker 1>of billions trillions of dollars come into a country. As

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<v Speaker 1>Air Force one lifted off from the city of Busan,

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<v Speaker 1>the sleek Hong Chi limo carrying President She rolled in

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<v Speaker 1>and with Trump gone, she stepped into the spotlight.

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<v Speaker 3>President She being there the whole time.

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<v Speaker 2>The fact that China will host the next APEC summit

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<v Speaker 2>gave him an opportunity to kind of continue to hammer

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<v Speaker 2>the message that China is the more stable and better

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<v Speaker 2>partner for countries looking for clear economic gains in the

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<v Speaker 2>near future, and that unlike the United States, they will

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<v Speaker 2>follow through their commitments. They can be seen as reliable.

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<v Speaker 1>This is the Big Take Asia from Bloomberg News. I'm Wanha.

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<v Speaker 1>Every week we take you inside some of the world's

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<v Speaker 1>biggest and most powerful economies and the markets, tycoons and

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<v Speaker 1>businesses that drive this ever shifting region. Today, on the

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<v Speaker 1>show Beyond the Trump, she spotlight what got overshadowed at

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<v Speaker 1>APEX and as countries try to balance open trade with

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<v Speaker 1>national security. How are they navigating rising tensions between the

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<v Speaker 1>world's two largest economies without picking sides. The Trump she

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<v Speaker 1>meeting last week dominated headlines and overshadowed the APEC summit

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<v Speaker 1>that followed. Bloomberg's Adam Ferrer says, it's a reflection of

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<v Speaker 1>a broader shift in how these multilateral forums are perceived.

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<v Speaker 2>The reality is that APEC and these other large multilateral forums,

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<v Speaker 2>I think of the G twenty as well, have been

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<v Speaker 2>losing significance as a major mover of policy. And that's

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<v Speaker 2>not just a symptem of the Trump administration. It's been

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<v Speaker 2>happening for the better part of the past decade, as

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<v Speaker 2>we've seen divergence in the objectives and policy goals of

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<v Speaker 2>the largest participants.

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<v Speaker 1>APEC has nearly four decades of history. It's twenty one

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<v Speaker 1>member economies span the Pacific Rim and include global powerhouses

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<v Speaker 1>like the US, China, Japan, and Australia. Together, they account

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<v Speaker 1>for nearly sixty percent of global GDP and half of

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<v Speaker 1>world trade. And while apex's founding mission breaking down trade

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<v Speaker 1>barriers and promoting economic cooperation is increasingly challenged, Adam says

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<v Speaker 1>the forum still plays an important role.

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<v Speaker 2>The value seems to really be in the convening function, right,

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<v Speaker 2>bringing together leaders from a very diverse set of economic

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<v Speaker 2>powers and providing an avenue for them to engage with

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<v Speaker 2>key market leaders in business as well, that you don't

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<v Speaker 2>get to do every day, and particularly for some of

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<v Speaker 2>the smaller economies, there's nothing like it. APEX also unique

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<v Speaker 2>in that Taiwan, as a major economy, is invited, and

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<v Speaker 2>while it is not represented at a leader level, it

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<v Speaker 2>is there and has the opportunity to hold many bilateral

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<v Speaker 2>meetings with senior officials and leaders across the world, which

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<v Speaker 2>is incredibly important for it.

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<v Speaker 1>During his Asia tour, President Trump struck a warm tone

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<v Speaker 1>with US allies and partners. He danced with performers at

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<v Speaker 1>a welcome ceremony in Malaysia and wrapped his arm around

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<v Speaker 1>Japan's Prime Minister Senai Takichi during his speech. That was

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<v Speaker 1>a stark contrast to months of tariff threats, rusing trade

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<v Speaker 1>battles and America First rhetoric.

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<v Speaker 2>I think there's deep scars with many US allies, and

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<v Speaker 2>that includes NATO, that includes Japan and Korea with how

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<v Speaker 2>they've been treated in this trade war. Korea is a

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<v Speaker 2>good example, Korea maintained not only an alliance with the

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<v Speaker 2>United States, but a free trade agreement with the United States,

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<v Speaker 2>and what they found when they entered these negotiations with

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<v Speaker 2>the White House was that was worth basically nothing. But

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<v Speaker 2>at the same time, now sitting here after APEC, after

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<v Speaker 2>President Trump and President ejmy Jung sat down and actually

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<v Speaker 2>agreed to finalize their trade agreement, you do land in

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<v Speaker 2>a slightly different place than I think we expected, which

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<v Speaker 2>is that President Trump has actually elevated Korea and Japan

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<v Speaker 2>and the EU to some extent as preferred partners in trade.

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<v Speaker 2>But not only just in trade, but in terms of

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<v Speaker 2>bringing the key industries and investment into the United States

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<v Speaker 2>that's necessary for his vision of reindustrializing and bringing manufacturing

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<v Speaker 2>back in those key industries that are going to determine

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<v Speaker 2>the future for the United States.

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<v Speaker 1>It wasn't that long ago, just in September, really, when

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<v Speaker 1>the US raided a Hyunda plant in Georgia and they

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<v Speaker 1>detained hundreds of CREA nationals. It was a deeply embarrassing

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<v Speaker 1>episode for Korea. Then, of course Trump was in Korea

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<v Speaker 1>making nice. What kind of messaging does that send to

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<v Speaker 1>other Asian countries.

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<v Speaker 2>So the raid at the Hyndei facility, I think caught

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<v Speaker 2>everyone off guard, and particularly those in Soul in regard

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<v Speaker 2>to how they would be treated by the United States,

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<v Speaker 2>and not only just how their nationals would be treated,

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<v Speaker 2>but how the individuals they are sending to the United

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<v Speaker 2>States session do the work to build out these massive investments.

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<v Speaker 2>The fact that even they are not immune from the

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<v Speaker 2>other priorities of the administration, which is to push back

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<v Speaker 2>on immigration or a legal immigration as they see it,

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<v Speaker 2>you know, it raised real questions about what the intent

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<v Speaker 2>is that the United States and what their willingness is

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<v Speaker 2>to actually prioritize these partnerships. And so while I think

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<v Speaker 2>Trump's demeanor and approach to partners and allies on this

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<v Speaker 2>series of meetings certainly is helpful to address the problem

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<v Speaker 2>and remind them that the US does see them as important,

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<v Speaker 2>it certainly doesn't solve it.

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<v Speaker 1>Then there's Trump's decision to skip the APEX summit altogether

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<v Speaker 1>and meet with key Asian leaders one on one instead.

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<v Speaker 1>Adam says it may not be a deliberate snub, but

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<v Speaker 1>the message it sent was clear.

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<v Speaker 2>I think the staff would say that folks should be

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<v Speaker 2>very happy that Trump showed up at all, and that

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<v Speaker 2>his arrival in South Korea, the fact that actually he

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<v Speaker 2>also went to Malaysia some element of the East Asia

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<v Speaker 2>Summit were a better than expected deliverable from President Trump

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<v Speaker 2>in terms of his willingness to travel a very long way,

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<v Speaker 2>and it is having just done those flights.

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<v Speaker 3>It is a very long way to meet with leaders.

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<v Speaker 2>But I think the reality is it does align very

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<v Speaker 2>well with how Trump has been approaching his engagements globally,

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<v Speaker 2>both in the White House and abroad.

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<v Speaker 3>Is his objectives come first.

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<v Speaker 1>Now, Adam, you've served across both of Biden and Trump administrations,

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<v Speaker 1>how would you characterize the US economic and diplomatic strategy

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<v Speaker 1>here in Asia. I mean, it seems as if it's

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<v Speaker 1>changing the region and diplomacy and relationships dramatically.

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<v Speaker 2>Well, the last part is certainly true. I think it

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<v Speaker 2>is helpful though, to remind ourselves that trade has been

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<v Speaker 2>an increasingly complicated issue for US efforts and diplomatic efforts

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<v Speaker 2>in the Indo Pacific. And that's not new to the

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<v Speaker 2>Trump administration, even in the Biden administration, which set out

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<v Speaker 2>a very clear policy objective in the New Pacific, basically

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<v Speaker 2>putting allies and partners first, seeking to compete with China

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<v Speaker 2>where it was necessary, but cooperate where possible. Even there

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<v Speaker 2>because of the kind of this shifting and growing economic

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<v Speaker 2>nationalism that we saw in the United States and across

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<v Speaker 2>the globe, Biden administration was unable to move forward with

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<v Speaker 2>any substantive trade agenda. Throughout all four years of its administration.

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<v Speaker 2>There were efforts, lots of efforts from countries in the

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<v Speaker 2>region to try and convince the United States to rejoin

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<v Speaker 2>the Transpecific Partnership, a trading agree that had actually been

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<v Speaker 2>built very much by the Obama administration, but that was

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<v Speaker 2>completely off the table. The big difference though, that we

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<v Speaker 2>see this time around with President Trump. He views the

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<v Speaker 2>entire world and this key part of the world through

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<v Speaker 2>one lens and one lens alone, and that is trade,

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<v Speaker 2>and not only trade overall, but really through trade balance, right,

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<v Speaker 2>and only goods, not goods and services, where the United

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<v Speaker 2>States is far more competitive. And so with that he's

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<v Speaker 2>kind of put aside the history, both good and bad,

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<v Speaker 2>with countries.

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<v Speaker 3>In the region.

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<v Speaker 2>And as he said multiple times, he asked them for

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<v Speaker 2>their best offer. Right, give me your best offer, and

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<v Speaker 2>we will send back a deal for you. To sign

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<v Speaker 2>and that's been his approach. And in some ways that's

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<v Speaker 2>understandable for some leaders in the region who kind of

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<v Speaker 2>get the desire for the United States to take a

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<v Speaker 2>more nationalistic approach similar to some of them, But at

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<v Speaker 2>the same time, it's antithetical to how the United States

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<v Speaker 2>has approached its alliance relationships in the region for the

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<v Speaker 2>past decade, where it saw a broader strategic importance to

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<v Speaker 2>the relationship even when there were maybe negative or unequal

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<v Speaker 2>parts of the relationship, potentially on trade and on economics.

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<v Speaker 1>After the break with Trump gone, China steps in. How

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<v Speaker 1>are smaller economies responding and what is China's growing influence

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<v Speaker 1>mean for the region's future. That's next Donald Trump back

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<v Speaker 1>in DC.

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<v Speaker 3>It's she's imping stage right now.

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<v Speaker 2>He's going to be meeting with Mark Karni of Canada,

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<v Speaker 2>meeting with Sanai Takaiji of Japan.

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<v Speaker 1>He'll be giving a speech over the weekend. President. She

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<v Speaker 1>took center stage at the APEX summit, appearing in nearly

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<v Speaker 1>every photo and headline. After holding talks with regional leaders

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<v Speaker 1>and delivering a speech calling for stables, supply chains, and

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<v Speaker 1>open trade. She arrived at the welcome dinner shoulder to

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<v Speaker 1>shoulder with South Korean President Eugenie, ladies and gentlemen, the

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<v Speaker 1>leaders and spouses on the twenty one AID pack Nember Economy.

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<v Speaker 1>The display of camaraderie was part of She's effort to

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<v Speaker 1>position himself as a champion of free trade and regional cooperation.

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<v Speaker 1>Bloomberg's Adam Ferrer says this comes in the wake of

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<v Speaker 1>Trump's latest trade war, which is hit manufacturing economies like Vietnam, Malaysia,

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<v Speaker 1>and Indonesia that rely heavily on the US market. But

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<v Speaker 1>China's pitch isn't without its own complications.

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<v Speaker 2>While China, I think, has made hay of this situation,

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<v Speaker 2>has tried to demonstrate themselves, as we've talked about already,

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<v Speaker 2>as a more stable and reliable partner, they also come

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<v Speaker 2>with a huge amount of baggage to start with. Right

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<v Speaker 2>we saw recently with these threats on export controls that

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<v Speaker 2>China is also willing to take extreme actions, extra territorial

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<v Speaker 2>action to try and limit the flow of goods that

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<v Speaker 2>they don't want moving to any individual company or country,

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<v Speaker 2>depending on their own interests and their ability to leverage

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<v Speaker 2>that if they want, And that's a real threat for

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<v Speaker 2>countries and companies that produce electronics around the world, and

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<v Speaker 2>particularly in Southeast Asia. Simultaneously, China's manufacturing power and the

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<v Speaker 2>size of their exports are a real threat to domestic

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<v Speaker 2>industry throughout the region, not only prior to this trade war,

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<v Speaker 2>but now with the United States erecting this trade wall,

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<v Speaker 2>we are seeing the diversion of goods, and while we

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<v Speaker 2>can't be certain that it is all diversion, export figures

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<v Speaker 2>from China in the last quarter showed a twenty seven

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<v Speaker 2>percent drop in exports to the United States, but somehow

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<v Speaker 2>still an eight percent increase in exports overall, and that

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<v Speaker 2>means much more goods are flowing to Europe, Southeast Asia, Africa,

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<v Speaker 2>and for that to be pulled into the market, someone

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<v Speaker 2>else has to lose. And so the question becomes how

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<v Speaker 2>long can that go on before these local markets have

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<v Speaker 2>to put up their own trade barriers to try and

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<v Speaker 2>limit China's role and access to the region.

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<v Speaker 1>And I think to that point, many APEC countries are

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<v Speaker 1>caught between this need to maintain open trade and also

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<v Speaker 1>feeling the pressure to safeguard national security. How do you

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<v Speaker 1>see countries like South Korea, like Vietnam, or Australia navigating

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<v Speaker 1>these tensions, especially as they try to avoid choosing sides

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<v Speaker 1>right between the US and China.

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<v Speaker 2>To start with, I think there is deep confusion among

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<v Speaker 2>leaders around the world, and particularly the Asia Pacific, about

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<v Speaker 2>what US priorities on national security really are right now.

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<v Speaker 2>What is the US policy towards China, What is the

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<v Speaker 2>US policy in the Indo Pacific. We don't even have

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<v Speaker 2>the formal policy documents yet, right we don't have the

0:13:40.200 --> 0:13:43.240
<v Speaker 2>National Security Strategy or the National Defense Strategy, which gives

0:13:43.520 --> 0:13:45.719
<v Speaker 2>some hints of what the United States is trying to do.

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<v Speaker 2>Because at the end of the day, it really seems

0:13:48.360 --> 0:13:51.280
<v Speaker 2>that President Trump is viewing the world through the same lens.

0:13:51.520 --> 0:13:54.360
<v Speaker 2>It's not Asia first, it's trade first, and it's his

0:13:54.520 --> 0:13:58.240
<v Speaker 2>version of trade. And so with that, we've seen big

0:13:58.320 --> 0:14:01.200
<v Speaker 2>changes on this question of national security, particularly when it

0:14:01.240 --> 0:14:04.559
<v Speaker 2>comes to things like export controls. These are tools that

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<v Speaker 2>were put in place to restrict the flow of advanced technology,

0:14:07.720 --> 0:14:11.760
<v Speaker 2>particularly to China, under the guides of national security and therefore,

0:14:12.080 --> 0:14:14.160
<v Speaker 2>in principle, as the United States had said in the

0:14:14.160 --> 0:14:16.719
<v Speaker 2>first trun administration and did say in the Biden administration,

0:14:17.000 --> 0:14:19.520
<v Speaker 2>they're non negotiable, right These are things that the United

0:14:19.560 --> 0:14:22.720
<v Speaker 2>States has to do for its own defense, and that

0:14:22.800 --> 0:14:25.520
<v Speaker 2>it expects partners and allies to do if they wish

0:14:25.600 --> 0:14:28.720
<v Speaker 2>to be part of the broader US tech ecosystem. But

0:14:29.200 --> 0:14:31.440
<v Speaker 2>here in the trade negotiations with China, we saw the

0:14:31.520 --> 0:14:35.520
<v Speaker 2>United States theoretically willing to back away from entity listings

0:14:35.840 --> 0:14:38.840
<v Speaker 2>and lots of conversations at senior levels over the past

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<v Speaker 2>several months about not moving forward with new export controls

0:14:42.280 --> 0:14:44.600
<v Speaker 2>to limit damage in the broader trade relationship.

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<v Speaker 1>She held mylateral meetings with Japan's new leaders in Iakichi

0:14:50.000 --> 0:14:52.680
<v Speaker 1>and Kennedy's Prime minister. What do you think China was

0:14:52.680 --> 0:14:54.760
<v Speaker 1>trying to signal through these engagements?

0:14:55.240 --> 0:14:57.760
<v Speaker 2>So at the top line, I think China saw an

0:14:57.800 --> 0:15:01.760
<v Speaker 2>opportunity again to demonstrate that it is a more stable

0:15:02.040 --> 0:15:04.840
<v Speaker 2>and different type of partner than the United States is

0:15:04.840 --> 0:15:08.360
<v Speaker 2>presenting itself as now in twenty twenty five. But that said,

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<v Speaker 2>I think particularly Canada and Japan, each one is unique

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<v Speaker 2>in their bilateral relationship. President she did actually meet with

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<v Speaker 2>Prime Minister Ishiba last year at APEC, and this year

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<v Speaker 2>we had this unique opportunity of Takaichi, the new Japanese

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<v Speaker 2>Prime Minister, having just been sworn in, and so meeting

0:15:25.640 --> 0:15:28.200
<v Speaker 2>with her was not unusual, And the fact is that

0:15:28.520 --> 0:15:32.040
<v Speaker 2>it was an incredibly frosty meeting from all observations, and

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<v Speaker 2>I think we didn't see any signs that the relationship

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<v Speaker 2>is moving in a particularly new or positive direction between

0:15:37.440 --> 0:15:41.640
<v Speaker 2>the two and the messaging from She and Takaichi seemed

0:15:41.680 --> 0:15:44.760
<v Speaker 2>to demonstrate that, with She kind of emphasizing that Japan

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<v Speaker 2>needed to take the correct approach to dealing with China

0:15:48.000 --> 0:15:51.000
<v Speaker 2>to recognize their power and interests, and Takaichi, who is

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<v Speaker 2>seen as a hardline conservative, not sounding off in that direction,

0:15:54.320 --> 0:15:58.800
<v Speaker 2>but in fact defending Japan's interests while understanding that China

0:15:58.840 --> 0:16:01.920
<v Speaker 2>remains a major economic power and a major economic partner

0:16:01.920 --> 0:16:05.800
<v Speaker 2>for Japan. On Canada, their relationship with China has been

0:16:05.840 --> 0:16:09.880
<v Speaker 2>incredibly fraught now going back to twenty seventeen twenty eighteen,

0:16:10.040 --> 0:16:12.640
<v Speaker 2>and so Mark Karney presents a new opportunity for China

0:16:12.680 --> 0:16:16.520
<v Speaker 2>to reset relations with Ottawa, and so I think that's

0:16:16.520 --> 0:16:17.360
<v Speaker 2>what we saw there.

0:16:17.440 --> 0:16:19.600
<v Speaker 3>But he's got a really big task ahead of him.

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<v Speaker 2>The United States makes up more than sixty percent of

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<v Speaker 2>overall trade for Canada, and even if he were to

0:16:25.600 --> 0:16:28.280
<v Speaker 2>double trade with China, or triple shade with China, you'd

0:16:28.280 --> 0:16:31.520
<v Speaker 2>still be overly reliant in the United States and be

0:16:31.840 --> 0:16:35.320
<v Speaker 2>held in that domain, and so US interests, particularly security interests,

0:16:35.360 --> 0:16:37.160
<v Speaker 2>could really undermine that relationship.

0:16:38.800 --> 0:16:41.640
<v Speaker 1>President Trump wrapped up his Asia tour with a one

0:16:41.680 --> 0:16:45.280
<v Speaker 1>year trade truce with China. Under the deal, Beijing will

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<v Speaker 1>suspend new export controls on rare earth elements, resume purchases

0:16:49.480 --> 0:16:52.600
<v Speaker 1>of US soybeans, and work harder to curb the flow

0:16:52.640 --> 0:16:56.720
<v Speaker 1>of fentanyl into the US. In return, Washington will reduce

0:16:56.800 --> 0:17:00.480
<v Speaker 1>tariffs on Chinese goods and delay as sanctions plan that

0:17:00.560 --> 0:17:03.800
<v Speaker 1>would have hit more Chinese companies. With the Trump she

0:17:04.040 --> 0:17:07.160
<v Speaker 1>spectacle at APEX still fresh, I asked Adam what he'll

0:17:07.200 --> 0:17:10.000
<v Speaker 1>be watching to gauge the real impact of this truce

0:17:10.359 --> 0:17:12.240
<v Speaker 1>and what it means for regional stability.

0:17:14.040 --> 0:17:18.200
<v Speaker 2>I think one of them is whether the Chinese will

0:17:18.240 --> 0:17:20.439
<v Speaker 2>live up to the deal. And one of the big

0:17:20.560 --> 0:17:24.560
<v Speaker 2>issues there is purchases of US agricultural goods. If we

0:17:24.920 --> 0:17:27.520
<v Speaker 2>look back to Trump's first term, Trump actually signed a

0:17:27.600 --> 0:17:30.240
<v Speaker 2>very similar deal with China under the Phase one Trade

0:17:30.280 --> 0:17:33.720
<v Speaker 2>Agreement that called for China to make huge purchases of

0:17:33.840 --> 0:17:37.200
<v Speaker 2>US agriculture and energy. Two again to try and offset

0:17:37.240 --> 0:17:40.480
<v Speaker 2>this trade and balance, and due to a variety of factors,

0:17:40.480 --> 0:17:43.040
<v Speaker 2>one of which very much being COVID, China didn't live

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<v Speaker 2>up to those purchases.

0:17:44.560 --> 0:17:46.000
<v Speaker 3>We also really need to look.

0:17:45.840 --> 0:17:47.960
<v Speaker 2>Out as to what the United States is saying and

0:17:48.000 --> 0:17:52.000
<v Speaker 2>doing related to Taiwan. Chi Jimping and the Chinese system

0:17:52.000 --> 0:17:54.120
<v Speaker 2>have made very clear that Taiwan is not the only

0:17:54.240 --> 0:17:56.840
<v Speaker 2>part of China, and more importantly, that the issue itself

0:17:57.000 --> 0:17:59.680
<v Speaker 2>is not negotiable. And so the question becomes where the

0:17:59.720 --> 0:18:02.440
<v Speaker 2>United States actually does continue down the trend that they

0:18:02.440 --> 0:18:05.679
<v Speaker 2>have right now, where they have quietly supposedly delayed arm

0:18:05.760 --> 0:18:09.679
<v Speaker 2>shipments potentially stopped present Live from entering the United States

0:18:09.680 --> 0:18:12.640
<v Speaker 2>for a transit on his way to another meeting. Whether

0:18:12.680 --> 0:18:15.679
<v Speaker 2>we see that kind of new approach which would worry

0:18:15.840 --> 0:18:18.959
<v Speaker 2>very much Typeay, or we see the United States return

0:18:19.119 --> 0:18:23.040
<v Speaker 2>to more traditional approach of supporting TYPEY militarily and speaking

0:18:23.160 --> 0:18:25.560
<v Speaker 2>up in defensive type pay, which could anger Beijing and

0:18:25.680 --> 0:18:28.000
<v Speaker 2>lead to a re escalation in the trade and conflict.

0:18:36.240 --> 0:18:39.040
<v Speaker 1>This is the Big Take Asia from Bloomberg News. I'm

0:18:39.040 --> 0:18:42.440
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0:18:49.640 --> 0:18:52.119
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