Aloha APEC shifts focus from debt to trade

HONOLULU (AP) - Asian-Pacific leaders gathering in warm, sunny Honolulu this week will be searching for ways to kickstart faster growth through freer trade, moving on from the gloom over European debt that prevailed days earlier at the G20 summit in chilly Cannes.

In an era of debt crises and protests over inequality, the role of the annual Asia Pacific Economic Cooperation summit may turn out to be just as much about confidence building as it is about combating protectionism.

The leaders of the 21 regional economies "do see freer trade flows as critical to growth and jobs," said Charles Morrison, president of the East-West Center, a think tank in Honolulu.

"The main contribution APEC can make in the short-run is to restore the feeling that the leaders, ministers and central bankers of the major economies are indeed working closely together," he said.

APEC's activities encompass a wide range of issues, including climate change, energy and food security, and politics. But the spotlight in Honolulu will be on its original mission: promoting growth through trade and closer economic ties among Pacific Rim nations from Chile to China.

For President Barack Obama, the Aloha APEC, as the event is being dubbed, is a chance to spotlight progress on re-energizing exports, while pushing for a major Pacific rim trade pact.

The U.S. recently clinched long-sought free trade pacts with South Korea, Colombia, and Panama - agreements that if ratified will bring to 20 the number of countries that have free trade agreements with the U.S.

Such arrangements are potentially worth billions to American exporters, and thousands of new jobs. Despite a recent surge in exports, the U.S. share in Asian international trade has fallen 9 percent since 1990 as other nations have set trading agreements among themselves.

Europe's debt troubles remain a concern, with talks Wednesday among deputy ministers focusing on how that may affect the global outlook and on the need for willingness to act to counter those headwinds, said a senior U.S. Treasury official.

Officials agreed on the need to push ahead with reducing trade gaps, especially through flexible management of exchange rates. China's willingness to make that commitment both in Cannes and in Honolulu could encourage similar moves by other Asia-Pacific economies, he said.

Prospects for major progress in Hawaii on establishing a Pacific-wide free trade zone, encompassing more than half the world's economic output, remain unclear.

The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join the bloc, called the Trans-Pacific Partnership, which already brings together the smaller economies of Chile, New Zealand, Brunei and Singapore.

Bringing onboard other big regional powers such as Japan and China, the world's third and second-largest economies, would vastly expand the bloc's scope and impact.

But Japan's debate on joining the TPP, sidetracked by the March 11 earthquake and tsunami disaster, remains in limbo, with the ruling party split. Prime Minister Yoshihiko Noda is expected to hold a news conference in Tokyo where he may announce a decision before leaving for APEC.

Supporters view membership as a way to revive Japan's sagging economy, enabling it to better tap into Asia's dynamism, but politically influential farmers say that cutting tariffs - the duty on imported rice, for example, is 778 percent - would destroy them.

Such moves are risky for other countries as well.

"It's very difficult for countries to make concessions on significant sectors like agriculture or things like that in an environment where there's not enough to go around in the first place," Patrick Chovanec, an associate professor at Tsinghua University's School of Economics and Management in Beijing.

"In this environment, when the world's gone through the worst contraction since the 1930s, it's actually pretty miraculous that everybody's not at each other's throats over trade. That is something of an accomplishment," he said.

China, which has not been invited to join the Pacific trade pact, says Washington's goals are overly ambitious and run the risk of requiring concessions that might not take into account regional disparities in development.

Despite qualms over the pace and scope of any push for a regional free trade bloc, the 20,000 business and political leaders meeting in Hawaii appear to share a general consensus over the region's potential - and need - to compensate for malaise in the U.S. and Europe.

"Our goal for the meetings is to build a commitment for practical policies that will strengthen the global recovery," Charles Collyns, the U.S. Treasury assistant secretary for international finance, told reporters at a briefing Monday to preview the meetings.

"The dynamic emerging markets must play a bigger role in bolstering global growth," he said.

The share of exports in the U.S. GDP has risen to 14 percent from 11 percent over the past few years, the highest share in over 200 years, helped by the rebound from the global crisis, a weak U.S. dollar, strong growth in China and South America as well as by policy.

But so far, the export boom has not provided the oomph needed to make a significant dent in unemployment, partly because most growth has been concentrated in sales of corn and soybeans, coal and other resources, rather than in more labor intensive manufacturing, said Ed Gresser of the Progressive Policy Institute in Washington, D.C.

"The export sector has done really well, but the general economy hasn't," he said. "In farm areas there are jobs, but in the cities and suburbs we still have 14 million out of work."


Associated Press writers Marty Crutsinger in Washington, Christopher Bodeen in Beijing, Malcolm Foster in Tokyo and Jim Gomez in Manila contributed.

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