US president tells Asia-Pacific summit of business leaders that surplus economies must focus on currency reform.
|The Japanese prime minister, Naoto Kan, left, is waiting for his country to warm to free trade [AFP]|
Leaders from the world’s top three economies and some of its fastest-growing have pledged to start work on a vast regional free trade area linking commerce in the Asia-Pacific region.
The US, China and Japan – the world’s three largest economies – joined with the rest of the 21-member Asia-Pacific Economic Co-operation (Apec) in embracing free trade and renouncing competitive currency devaluations during a four-day meeting of the group in Yokohama, Japan, that came to an end on Sunday.
But the grouping’s members appeared to have failed to reach consensus on the details of how to achieve their principal goals, such as establishing a Free Trade Area of the Asia-Pacific (FTAAP).
Indeed, as the nations’ leaders began to make their way home, signs of discord over how best to ensure global recovery were already becoming apparent.
Hu Jintao, the Chinese president, said during a speech on Sunday on the sidelines of the summit that uncertainties remain about the global recovery and that “trade protectionism” has recently risen noticably.
China and the US also continue to disagree over the factors exacerbating a massive trade imbalance between the two countries.
Both sides argue the other has an undervalued currency.
The US says this gives Chinese exporters an artificial advantage in overseas markets and drives up the US trade deficit, while China criticises the US Federal Reserve’s stimulus policy of creating money to buy up assets and unfreeze the US economy, which the Chinese say has flooded their markets with cash and driven up inflation.
But Ma Zhaoxu, the spokesman for the Chinese Apec delegation, said on Sunday that China was satisfied with the forum, according to the Xinhua news agency.
For his part, Naoto Kan, the Japanese prime minister, gave warning during a speech on Sunday that removing trade barriers from his country’s economy would mean “pain and suffering,” even as he promised that “Japan will be opening up”.
Japanese farmers, especially those in the country’s treasured rice industry, fear the expansion of the regional free-trade treaty known as the Trans-Pacific Partnership – an expansion favoured by the US and others – because new rules could provide Japanese buyers with access to cheaper agricultural products from abroad.
“The average age of Japanese farmers is nearly 66 years old,” Kan said.
He said he was seeking to “engage younger generations in helping more people consider careers in agriculture”.
Japan has placed a nearly 800 per cent tariff on rice imports and a 250 per cent tariff on wheat imports, according to the AFP news agency. Those would disappear under an expanded free-trade agreement.
In a declaration released on Sunday, Apec pledged to take “concrete steps” toward establishing the FTAAP, but did not describe what steps they might be.
The statement praised its members’ economic development. Between 1994 and 2009, total trade grew 7.1 per cent, while the “simple average applied tariff” fell from 10.8 per cent in 1996 to 6.6 per cent in 2008, it said.
The statement noted that Apec economies, like many others, are still recovering from the three-year-old global financial crisis. It also raised environmental issues and said that Apec members need to address the “urgent priority” of climate change.
The statement also emphasised improving supply chains across the Pacific. It called for a 10 per cent improvement by 2015 in terms of a reduction in the time, cost and “uncertainty” in moving goods.
Apec, founded in 1989, accounts for more than half of the world’s total commerce. It includes fast-growing economies in Latin America, including Chile and Mexico.
The Yokohama meeting came on the heels of the summit of G20 advanced and emerging countries in Seoul, South Korea, which produced a vague agreement that gave little sense of a united approach to preventing further economic crises.
Though Apec’s mandate does not specifically include security issues, the final statement also included a reference to the need to implement counterterrorism financing. Territorial tensions between China and Japan were also visible.
Kan met Jintao and Dimitry Medvedev, their Russian counterpart, in a bid to soothe ties frayed by territorial rows.
Russia and Japan both claim the four islands that Russia calls the Southern Kuriles and Japan has named the Northern Territories, and Medvedev upset Japan when he visited the islands for four hours on November 1. Earlier, a China-Japan feud flared up in September over islands in the East China Sea that are claimed by both countries and are near potentially vast maritime oil and gas reserves.
The Japanese and Russian foreign ministers agreed to improve ties, but in a sign strains remained, Medvedev urged Japan to abandon its “emotional stance” on the issue and talk business instead.
China-Japan ties have soured since Japan detained the captain of a Chinese fishing boat that collided with Japanese patrol boats near the disputed islands, risking fallout for trade and investment links between Asia’s two biggest economies.
A Japan official called the 22-minute meeting a “big step towards improvement”, but domestic media were less enthusiastic.
The Yomiuri newspaper said the chat had simply avoided the “worst-case scenario” of yet another snub by China.