Push for Pacific free trade bloc gains traction

[November 12, 2011]  HONOLULU (AP) -- Leaders working to forge a free trade bloc in the Pacific plan to announce an outline for achieving that goal at an annual Asia-Pacific summit this weekend, one of many initiatives aimed at fending off recession as Europe struggles to resolve its debt crisis.

U.S. Trade Representative Ron Kirk ended a meeting of regional trade ministers with praise for Japan's decision Friday to join negotiations on a U.S.-backed free trade arrangement that is viewed by many in the region as a basic building block for an eventual free trade zone encompassing all of Asia and the Pacific Rim.

The so-called Trans-Pacific Partnership is intended to complement other efforts to promote freer trade, and other countries can join if they are willing to meet the very high standards required, Kirk said.

The Asia-Pacific Economic Cooperation agenda has gained urgency with warnings from the European Union that its debt crisis could trigger a "deep and prolonged recession" next year. Such a recession would be felt sharply in the U.S., where growth is already anemic, and in Asia, which relies on Europe as a big market for its cars, clothing, consumer electronics and other exports.

But China, which some economists say is on course to overtake the U.S. as the world's biggest economy this decade, has been lukewarm about the Pacific trade pact.

Kirk said the ministers expect leaders of the countries involved in the so-called TPP to announce the broad outlines of a "high-standards, ambitious 21st-century trade pact."

"Of course, many of us believe that the Trans-Pacific Partnership can be the basis for a long-term APEC goal of a free trade area of the Asia-Pacific," he said.

At their summit, the leaders of the 21-member APEC forum also will endorse a range of "meaningful steps which will strengthen regional economic integration and expand trade," he said.

Such strategies include better food security, increased trade and investment in environmental products and services, better access to financing for small and medium-size companies, faster customs clearance and greater harmony in regulatory standards.

The aim is to make it "cheaper, faster, and easier to do business in the APEC region," according to a statement released by the ministers.

U.S. Secretary of State Hillary Clinton told the ministerial meeting that by agreeing on something as rudimentary as shared safety standards for televisions, countries in the region saw exports of TVs jump by nearly half in three years.

By removing barriers and bottlenecks that slow business, APEC members hope to re-energize growth at a time when the world economy most needs dynamism in the Asia-Pacific region to offset the malaise spreading from crisis-stricken Europe. At the same time they are working toward a broader agreement, countries are continuing to forge separate free-trade deals.

"In the coming 12 months there is quite a strong likelihood that things will go worse," Hong Kong's chief executive, Donald Tsang, told a gathering of business leaders on the sidelines of the APEC meetings. "Global performance will be dragged down and then there will be an awakening, I hope," he said.

Overall, given APEC's lack of negotiating power -- all decisions are by consensus -- prospects for major changes are slim. But over the years the group's incremental efforts have helped build support for closer economic ties and freer trade.

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.

On Friday, Vietnam and Chile signed a free trade agreement on the sidelines of the APEC meetings that will further boost the already thriving trade between the two in Chilean copper and steel and Vietnamese garments, rice and coffee.

Japan has announced no timetable for joining the trans-Pacific free trade group, only its intention to join, a senior Japanese government official said Friday.

But the inclusion of the world's third-largest economy would vastly expand the reach of the trade pact, which now includes the smaller economies of Chile, New Zealand, Brunei and Singapore. The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join.

To participate, Japan will have to eliminate tariffs on imports from all member economies -- a reciprocal move that its major manufacturers say will improve access to foreign markets and help keep the country from falling behind regional trading rivals.

Japan's trade minister, Yukio Edano, backed the decision to join and said his government was well aware of the challenges it will face. But he has argued that by delaying further, Tokyo would lose the opportunity to help shape the trading bloc from the start.

China, the world's second-biggest economy, has appeared tepid toward the plan, with an official saying in Beijing earlier this week that it might be "overly ambitious."

Asked its stance, Chen Deming, the trade minister, said China expected Japan to live up to earlier pledges to promote regional integration through various forms. Moves toward closer regional economic ties should be "open and transparent," he said.

"Up to now, we have not yet received any invitation. If one day we receive such an invitation we will seriously study it," Chen said.

Kirk emphasized that the trans-Pacific bloc is meant to be open, though it requires members to meet high standards for openness and free trade.

"You should not wait for an invitation," he said. "If they are willing meet the highest standard then any country is welcome to make the same decision the others have done."

[Associated Press; By ELAINE KURTENBACH]

Associated Press writer Jaymes Song contributed.

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