Malcolm Turnbull says governments must restore faith in open markets.

Malcolm Turnbull has warned of a new wave of protectionism as governments respond to communities in revolt.

Malcolm Turnbull walking in Lima, Peru before the APEC summit. Pic: Kym Smith

Malcolm Turnbull has warned of a new wave of protectionism sweeping the globe as governments and political leaders respond to communities in revolt over falling living standards and a “magnified” fear of being left behind.

In a blunt assessment of a rapidly shifting political and economic landscape in the wake of the US election result, the Prime Minister will tell an APEC CEO summit in Lima, Peru today that governments need to act to restore community faith in open markets.

Mr Turnbull has also made a rare concession that economic “innovation”, a word that formed the centrepiece of his own election platform, could create anxiety for many people who are concerned about keeping their jobs or increasing their salary.

Without making any direct reference to the election of Donald Trump on an isolationist and protectionist platform, Mr Turnbull nevertheless warned that going back to a world of tariff barriers was not a “ladder” to climb out of a growth hole but a “shovel” to dig it deeper.

“The first thing is that we must acknowledge that open markets, and the opportunities they bring, can have negative impacts in parts of our communities,” he is expected to tell the summit.

“This feeling of being left behind is only magnified in a world where global growth has continued to disappoint and growth in incomes is modest.

Mr Turnbull noted that growth rates in the APEC region had dropped below the global average for the first time in 15 years.

“It’s probably no coincidence that we’ve seen an accompanying rise in protectionism across the globe not just in populist rhetoric but also in practice,” he is expected to say.

“WTO members put in place more than 2,100 new restrictions on trade since 2008.

“This is the wrong tool for the job. Protectionism is not a ladder that gets us out of a growth trap but a shovel that digs us deeper.”

The Prime Minister’s address to the CEO summit will reflect a growing realisation by the Turnbull government that the Trump phenomenon signals a broader global disconnect and not one simply isolated to the US.

It will mark his first official engagement in Lima when he arrives today for the annual meeting of the 21 nation Asia Pacific Economic Community, where he will also meet with Barack Obama for the last time as US President.

Mr Turnbull’s message is that governments should not use this political disruption as an excuse to retreat from economic reform and trade liberalisation.

The non-treaty forum will seek to push for further trade liberalisation across the Asia Pacific region under the shadow of President-elect Trump’s protectionist threats to withdraw the US from the 12-nation Trans Pacific Partnership free trade agreement, which represents almost a third of the world’s GDP and $27 trillion in annual trade.

The Prime Minister is expected to hold the majority of other official bilateral meetings with our closer regional neighbours including Vietnam and Malaysia — both member nations of the TPP — and the Philippines

All three are interested parties to the territorial dispute in the South China Sea.

China is expected to flex its muscles during the two-day APEC forum as it pushes for its own regional free trade zone with an eye on its own strategic ambitions in the region with the likely collapse of the TPP from which it was excluded.

Mr Turnbull will tell the business summit of 1200 CEOS — including JP Morgan’s Australian CEO Sir Rod Eddington, Wesfarmers’ Robert Milliner and Rio Tinto executives — that the private sector needs to partner with the government to shape community response to rapid technological change.

He will say that innovation is not a threat but a lever for opportunity and warn that protectionism — framed as populist policy to protect domestic jobs — in fact hurts those on lower and middle incomes the most as it raises the price of goods.

He will urge business not to leave ordinary people on the sidelines.

Mr Turnbull also addresses the issue of an increasingly angry and disconnected voters, claiming that it isn’t just governments but corporations that need to rebuild trust with the community.

And that begins with them paying their fair share of tax.

Mr Turnbull will urge APEC member not to abandon trade reform and liberalisation in the face of global uncertainty and low growth.

An official communiqué from APEC raised the same concerns calling on the meeting to “reinvigorate globalisation and trade policy”.

“(Leaders) are intent on countering slowing global demand and rising scepticism of trade’s ability to deliver equitable benefits for the region’s three billion people.”