Pacific Rim ministers meet to push free trade

Ministers of Pacific Rim economies whose resilience helped power the still-fragile global recovery met Wednesday to seek ways to push ahead with free trade goals despite conflicts over currencies and trade.

The trade and foreign ministers are polishing a declaration for this weekend's summit of the Asia-Pacific Economic Cooperation forum that is expected to take steps toward a sprawling Pacific-wide free trade zone that would encompass more than half the world's economic output.

Meanwhile, leaders of the Group of 20 major industrialized and emerging economies, including President Barack Obama and Chinese President Hu Jintao, were heading to South Korea for a two-day summit that begins Thursday. About half of those leaders will travel on to Japan for the APEC gathering.

The back-to-back Asian summits convene at a time of unusually harsh friction over currency and monetary policies. Tensions over territorial disputes are also straining relations between Japan and neighboring China and Russia.

The biggest threat to the recovery is not a renewed bout of financial woes, but a failure of cooperation, warned a report issued Wednesday as the APEC ministerial talks got under way.

Debt troubles in Europe, weak U.S. growth and tensions over trade are clouding the global outlook and contributing to an "unprecedented crisis atmosphere," said the report by the Pacific Economic Cooperation Council, an APEC advisory group.

"The biggest risk to growth was identified as weakness in the U.S. economy," said the report, compiled from a survey of 400 regional opinion leaders. "If growth continues to lag and external imbalances are not addressed, the risks of trade protectionism will rise."

China announced Wednesday that its trade surplus surged to $27 billion in October — the latest evidence of a troubling lack of progress in resolving chronic imbalances in trade, savings and investment. The figures are likely to add pressure on Beijing over its currency controls and trade policies as global leaders gather at both summits.

The report urged leaders to give a real boost to reforms needed to ensure more balanced, sustainable and equitable growth, as they review their progress toward APEC's unfulfilled goal, set in 1994, of achieving free trade and investment among developed members by 2010.

Opening Wednesday's meetings, Japanese Foreign Minister Seiji Maehara said that given APEC members' role in driving the global recovery after the 2008 financial crisis, its 21 members must continue liberalizing trade.

"The presence of the Asia-Pacific region in the global economy is expanding, so I want to proceed with discussions in order to build an increasingly free trade structure," Maehara said.

The PECC report urged that China and other countries with large surpluses do more to boost their own demand — for example by loosening foreign exchange controls, improving social services to enable families to spend more on other things — and by reducing export incentives.

APEC is expected to move toward creating a massive trade zone dubbed the Free Trade Area of the Asia-Pacific, or FTAAP, that would encompass all 21 economies, from Chile to China and Canada to New Zealand, according to a draft of the final statement obtained by The Associated Press.

If realized — something experts say will be difficult given APEC's diverse membership — such a free trade zone would encompass 44 percent of global trade.

Lowering trade barriers for everything from food to automobiles can boost growth — but could also hurt farmers in countries like Japan and South Korea, where agricultural products are protected by high tariffs.

Members of APEC, founded in 1989 as a consensus-based forum to promote regional integration, are debating whether to give the group power to negotiate free trade pacts, Japanese officials say.

Some members are reluctant to move in this direction. Indonesia, for example, views breaking the stalemate in talks in the World Trade Organization as a more urgent task.

Still, support has grown for a regionwide free trade zone that might harmonize a slew of bilateral and regional agreements. One building block of that plan is a U.S.-backed free trade agreement called the Trans-Pacific Partnership. It now includes only four small economies — Brunei, Chile, New Zealand and Singapore — but the U.S., Australia, Malaysia, Vietnam and Peru are in talks to join them.

Japan has also expressed an interest in joining the TPP despite strong opposition from its farmers, several hundred of whom gathered in Tokyo on Wednesday for a protest rally.

"In many ways, Japan has fallen behind the wave of freer economy," Japanese Prime Minister Naoto Kan said Tuesday. "I think it's time to steer once again toward opening the country."


Associated Press writers Malcolm Foster and Jim Gomez in Yokohama and Mari Yamaguchi in Tokyo contributed to this report.