APEC roundup,
Asia-Pacific leaders are calling for vigilance against protectionism as economic growth slows in parts of the region and completion of a 12-nation trade pact looks set to be delayed further.
Asia-Pacific Economic Cooperation economies must also improve infrastructure to spur trade and investment, Indonesian president Susilo Bambang Yudhoyono said in a speech in Bali Sunday to about 1,000 business executives before the start of the APEC leaders summit. In Malaysia, Prime Minister Najib Razak said the year-end deadline for the Trans-Pacific Partnership (TPP) may not be met.
Policy-makers are seeking to boost their economies via new markets for goods and services as an uneven global recovery and volatility in financial markets constrain growth. China’s increased economic presence may support trade for the region, even as its territorial spats with some Southeast Asian countries and its greater military assertiveness cause concern.
Countries should be on guard against protectionism, such as requests from companies to protect certain industries, Singapore prime minister Lee Hsien Loong said.
“Every business lobbies their government in order to look after their interests,” Mr. Lee told company officials in Bali yesterday. “It is important to maintain that public support for openness and integration because unless you have that — if we all close ourselves up, or even hinder the process of trading and doing business with one another — I think we are just going to make things worse for all the countries.”
Global growth will probably be slower and less balanced than desired, as the world economy is too weak and “risks remain tilted to the downside,” trade and foreign ministers from the 21-member grouping said in a statement Oct. 5.
A slowdown in China and India is reverberating across the region with the Asian Development Bank forecasting expansion at a four-year low in 2013, putting pressure on policy makers to bolster their economies. The Group of 20 countries repeated their concern last month that stimulus pullback in developed nations may prove damaging to global markets.
Since the start of the global financial crisis, governments have been pressured to support exporters, said Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore.
The number of trade actions seen at the World Trade Organization is evidence of tensions, he said.
“It’s a function of the difficult external environment and competition is on the rise,” Mr. Varathan said. “but at the same time, we are seeing more trade agreements being negotiated. Policy-makers realize that more trade agreements result in a bigger pie to share.”
TPP governments are seeking momentum during the bali meetings on the pact as concessions sought by countries hinder progress in completing negotiations. The accord, which involves countries such as the U.S., canada, Australia, Japan, Malaysia and Vietnam, would link an area with about $28-trillion in annual economic output.
Malaysia’s Mr. Najib said yesterday the end of 2013 deadline is a “very tight time line” and leaders will discuss if it is feasible. U.S. Trade representative Michael Froman said Oct. 5 the “finish line is in sight” and TPP officials are trying very hard to complete the deal this year.
“With markets struggling to emerge from a devastating global recession, we need the jobs, growth and economic opportunity a free trade agreement could provide,” Jay Timmons, president of the Washington-based National Association of Manufacturers, and Phil O’reilly, chief executive of business New Zealand, said in a joint commentary on TPP. “With every month that passes without a deal, we miss vital chances to boost trade and investment.”
While finishing the accord this year may be “ambitious,” it is important to set deadlines and trade agreements should have high standards, U.S. commerce secretary Penny Pritzker said in an interview with bloomberg Television in bali yesterday.
All the TPP countries are members of APec, set up in 1989 to advance free trade and investment in an area that accounts for half of the world’s total gross domestic product and 45% of global commerce. china, the second-biggest economy among APec members, isn’t a member of the TPP talks.
“TPP is an open architecture,” Ms. Pritzker said. It is trying to set a standard and once that’s in place, “other economies and countries are welcome to become a partner,” she said.
APec ministers said Saturday they will recommend their leaders extend through the end of 2016 a commitment to combat protectionist measures and roll back such policies that exist.
“We reaffirmed our commitment to keep markets open and to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing WTO-inconsistent measures in all areas, including those that stimulate exports,” the ministers said.
canada’s prime minister, Stephen Harper, said the rise of Asian economies is one of the dominant realities of the 21st century and western governments are going to have to make smart policy choices in order to keep up.
“We need to develop more and better infrastructure as an essential element for our connectivity,” Mr. yudhoyono said on Saturday. “This will of course help not only to facilitate trade and investment, but also boost job creation.”