hen Chilean President Sebastian Piñera announced he was cancelling the annual meeting of Asia-Pacific Economic Cooperation (APEC) in Santiago in November, as well as the UN climate summit known as COP25 in December, it cast a stark eye on the realities of hosting global summits in challenging times.

“This has been a very difficult decision. We understand perfectly the importance of APEC and COP for Chile and the world, but we have based our decision on common sense,” Pinera said. “A president needs to put his people above everything else.”

Chileans have flooded in the streets of Santiago since October, in what initially began as action against a metro fare hike, and has since blossomed into protests on the country’s vast financial and social inequality. More than a dozen people have been killed, hundreds have been injured, and thousands have been detained in what is the country’s worst unrest since the end of the Pinochet dictatorship in 1990.  Initially ordering a state of emergency that allowed the Chilean military to patrol the streets, Piñera's more recent attempts at appeasement have ranged from new social welfare packages to a shuffling of leadership. But as the protests show no sign of abating, and UN investigators arrive in-country to probe allegations of abuse, many Chileans are calling for Piñera's resignation, and a new constitution.

"Given the difficult circumstances that our country has experienced, the President has decided to cancel the APEC Summit 2019, to be held in November, to concentrate the efforts of the Government to fully restore public order, citizen security and social peace, and promote the New Social Agenda," Foreign Minister Teodoro Ribera said in a statement.

It marks a stark departure from the promise of the Chilean APEC year, which began in November 2018 in Papua New Guinea.

Founded in 1989, the forum's modern 21 "member economies" of APEC include Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States and Viet Nam.

These APEC members take turns hosting annual meetings, chairing the annual Economic Leaders' Meeting, selected ministerial meetings, senior officials’ meetings, the APEC Business Advisory Council, APEC Study Centers Consortium, and serving as APEC chair for their host year. This annually rotating presidency begins in December per annum, for the following calendar year.  

In addition to its 21 members, three official observers participate in APEC; the Pacific Economic Cooperation Council (PECC), the Association of Southeast Asian Nations (ASEAN) Secretariat, and the Pacific Islands Forum (PIF) Secretariat. The APEC Secretariat is based in Singapore.

Collectively, APEC members represents 60% of the world’s GDP and nearly 40% of the global population. Unlike other regional trade associations, commitments to reducing barriers to trade and investment made via APEC are non-binding, based on consensus, and designed to foster open dialogue. Each member's vote holds equal weight. Collectively, their stated goals are to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative, and secure growth and by accelerating regional economic integration.

Similar to hosting an Olympics, hosting APEC also gives Chile the opportunity to showcase its unique national assets, ranging from cultural to natural, to economic, to the wide array of international guests attending the various meetings.

Chileans have flooded in the streets of Santiago since October, in what initially began as action against a metro fare hike, and has since blossomed into protests on the country’s vast financial and social inequality. More than a dozen people have been killed, hundreds have been injured, and thousands have been detained in what is the country’s worst unrest since the end of the Pinochet dictatorship in 1990.

A Steady Hand Required

As 2019 host, Chile was expecting more than 20,000 people to participate in more than 200 APEC forum meetings throughout the country by the end of their presidential year. These gatherings would have included working group meetings, workshops, committees of High Representatives, and an assorted of other meetings of academics, executives, and government officials. A country's hosting duties culminate in November with the Leaders Summit, where, in keeping with the forum's tradition, the head of state closes the year and the next country's leader, in this case, Prime Minister Mahathir Mohamad of Malaysia, opens their host year.

2019 is the Latin American country's second hosting go-round; the first was in 2004. Chile joined APEC in 1994. Through its membership in APEC, Chile has signed 16 trade agreements with other APEC member economies, fifteen of which are already in force. Those include Australia; Canada; China; South Korea; USA; Hong Kong-China; Japan; Malaysia; Mexico; Peru; P4 (New Zealand, Brunei, Darussalam, and Singapore); Thailand; and Vietnam. The 16th agreement, with Indonesia, was signed in 2017 and is pending approval. Additional free trade agreements with China, Canada, and South Korea are in the midst of being updated, and one with the Philippines is currently being considered.

As the host member, Chile sets the agenda, priorities and deliverables for APEC throughout the year. For APEC 2019, Chile determined four priority areas to be the focus of their presidency, and for all member economies. They were presented in December 2018 at the Informal Meeting of High Representatives (ISOM), which was the beginning of the APEC's Chilean presidency. They're also responsible for navigating the tensions between member economies.

However, in 2018, for the first time in the forum's history, there was a lack of consensus on a joint communique, a fallout from the ongoing trade war between the United States and China. This conflict between two of the world's largest economies have created tensions and alliances within APEC, and altered the forum's more idealistic founding notions. U..S. President Donald Trump and China's President Xi Jingping had teased the idea of signing an interim trade agreement during the forum in Santiago. As host, Chile was expected to facilitate that signing.

"Frictions between the big economies are nothing to celebrate—they’ll likely cost the global economy hundreds of billions of dollars—but the fact that windows are still open for negotiations is," said Dr. Rebecca Fatima Sta Maria, Executive Director, APEC Secretariat, Singapore. "It’s when they’ve stopped talking to each other that we should be worried."

Sixty percent of Chilean imports, and seventy percent of their exports, are with APEC members. Chile holds the majority market share of salmon to the United States, and they are the largest suppliers of blueberries, nectarines, and avocados to China.  

"Chile’s success reflects APEC’s record of excellent growth over the past 30 years. The region’s GDP has more than quadrupled since 1989. This growth has been slowing down of late," said Dr. Sta Maria. "The slowdown can be attributed in part to uncertainties brought about by trade tensions and barriers, tariff hikes and counter measures. These are policies that will continue if left unchecked. If so, they may have an impact on supply chains and increase the prices of goods, affecting incomes and jobs."

Looking ahead

As 2019 host, Chile also faces another challenge, one which they will hand off to Malaysia at year's end; the deadline for meeting the so-called Bogor Goals established in 1994, after the annual meeting in Bogor, Indonesia. These goals call for "the long-term goal of free and open trade and investment in the Asia-Pacific.” The deadline envisioned twenty-five years ago? “No later than the year 2020.”

Twenty-five years later, a trade war between two of its largest economies has all but ensured those goals won't be fully realized. However, significant progress has been made in several of the Goals' recommendations, including consistency with World Trade Organization policies, a lowering of regional tariffs, non-discrimination across member economies, and the ability to adapt to various members' levels of development. As Chile prepares to hand off hosting responsibilities to Malaysia at the end of an unconventional year, it will no doubt be at the top of the agenda for 2020.

Molly McCluskey
Molly McCluskey is an international investigative journalist and Editor-at-Large of Diplomatic Courier. Follow her on Twitter @MollyEMcCluskey.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.