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Pacific Rim leaders meet, seeking unity on trade

KAPOLEI, Hawaii (AP) — Asia-Pacific leaders held their annual summit Sunday, having claimed progress on a U.S.-backed free trade bloc that received praise from American businesses and labor, but drew a less enthusiastic response from China and Russia.

The balmy weather for the gathering at a resort on the west side of the island of Oahu contrasted with pessimism over the economic outlook expressed by many attending the summit. With Europe again on the brink of recession, Asia’s vital role as a driver of global growth is gaining even greater urgency.

In a rare tangible achievement from the annual Asian-Pacific Economic Cooperation summit, President Barack Obama, said Saturday he was optimistic that work on the American-backed trade pact, dubbed the Trans-Pacific Partnership with the U.S. and eight other countries, could result in a legal framework by next year.

For the U.S., the initiative is seen as a way to break through bottlenecks and open new business opportunities.

“An important step to unlocking global economic growth will be expanding trade in the Asia-Pacific, and the TPP holds this key,” said Thomas Donohue, president of the U.S. Chamber of Commerce, an influential business lobbying group. He urged the group to move quickly in drawing up a timeline that is “comprehensive, enforceable, and makes room for new entrants.”

The United Steelworkers Union also welcomed the news.

“The USW appreciates the administration’s aggressive outreach on ways that the TPP could support manufacturing and create jobs in the U.S.,” the labor union said in a statement.

APEC joins 21 economies, both huge and tiny, rich and poor. As always, the divergence between rich and developing economies — and between the U.S. and China — was apparent.

Asked about U.S. trade friction with China in an appearance at the business summit, Obama exhorted Beijing to “play by the rules,” citing controls that keep China’s currency, which is know as the yuan or renminbi, undervalued as a good example. He also cited lax enforcement of protection of intellectual property rights, favoritism toward state-run enterprises and other issues that have long dogged trade relations between the world’s two leading economies.

The APEC leaders began their summit still not yet agreed on terms for freer trade in environmental goods and services, another of Obama’s priorities for the annual gathering.

Speaking Saturday ahead of a meeting with Obama, Chinese President Hu Jintao reiterated his government’s insistence that APEC respect the choices made by its members “to independently pursue green growth on the basis of their resource endowment, stage of development and capacity.”

China, which some economists say is on course to overtake the U.S. as the world’s biggest economy this decade, also has appeared unenthusiastic about the Pacific trade pact, describing the plan as “overly ambitious.”

Its reluctance to endorse the proposal likely reflects wariness about being drawn into what has become a U.S.-led initiative that encroaches on its own sphere of influence in Asia. China also has commitments to rival free trade blocs in East and Southeast Asia.

In a speech Saturday to a business conference alongside the summit, Hu urged progress instead on reaching a long-stalled agreement in the World Trade Organization — a goal the APEC leaders are certain to endorse once again on Sunday.

After 10 years of costly and so far fruitless talks, trade diplomats now say the original targets set for the round are beyond reach because of unbridgeable differences between the United States and major developing countries such as India, China and Brazil.

The push for the so-called TPP, billed as a building block for an eventual regionwide free trade zone, likewise is likely to underscore rifts between the richest APEC economies and the developing members.

The group now includes only four smaller, relatively affluent economies — Chile, New Zealand, Brunei and Singapore — but the U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join, and Japan said it hopes to as well.

U.S. officials have said all are welcome to join, while indicating that its high standards would pose a challenge to countries whose economies are not fully open. That would likely include Russia, which still is lobbying hard for WTO membership, and China, which has staked out large sections of its economy for protection from foreign competition.

Asked his opinion, Russian President Dmitry Medvedev struck a neutral stance.

“I do not understand what will be the result of this club when it starts operating,” he said. “As for now it’s kind of an interesting project. We’ll wait and see what it will be like.”

Obama welcomed a decision by Japan, the world’s third largest economy, to join negotiations for the free trade area. But he acknowledged it will be a challenge, given strong opposition from the country’s politically influential farm lobby.

“I don’t underestimate the difficulties of this because each member country has particular sensitivities, political barriers,” he said. “For Japan, for example, in the agricultural sector, that’s going to be a tough issue for them.”

APEC’s lack of negotiating power — all decisions are by consensus — means prospects for major, immediate changes are slim, though over time its incremental efforts have helped build support for closer economic ties and freer trade.

One of the highlights of the closed-door meeting will be a “family photo” later in the day, an annual ritual that in the past has sometimes involved colorful shirts or other local fashions. The big question Sunday was whether the leaders would don tropical themed “Aloha” shirts or perhaps opt for a more subdued theme involving leis.

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