November 13, 2011
Nations Agree on Framework for Asia-Pacific Trade
HONOLULU—The United States and eight other nations agreed to the basic framework for an Asia-Pacific free-trade pact, President Barack Obama said on Saturday while vowing that the U.S. would engage heavily in the region on a range of issues.
"The United States is a Pacific power and we are here to stay," Mr. Obama said at a summit for business executives held on the sidelines of Asia-Pacific Economic Cooperation forum, a gathering of 21 regional economies. "There's no region in the world that we consider more vital than the Asia-Pacific region."
His comments are the latest—and highest-profile—declaration by the U.S. that it is pivoting some of its attention to the Asia-Pacific region.
The president chose to host the APEC summit in Honolulu, his boyhood home town, to emphasize his own Pacific ties, and said he'll be touting American interests as he travels in the region next week. After Hawaii he travels to Australia, where he'll announce a new, permanent American military presence, and to Indonesia for a regional summit on security issues.
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Administration officials argue that U.S. engagement in Asia holds direct benefit for Americans concerned with the economy, with potential to boost exports that support U.S. jobs. The engagement is also meant to counter China's influence in the region on both economic and security issues.
The crisis in Europe continued to cast its long shadow all the way to Hawaii. Mr. Obama on Saturday called for European leaders to do more to deal with their sovereign-debt troubles, though he also said he remains hopeful the global economy will bounce back stronger than before.
"I am cautiously optimistic we will get through this current crisis and we'll come out stronger over the next couple of years," Mr. Obama said at the CEO summit. He welcomed the progress made this week in Italy and Greece to move forward with government austerity plans, but said the broader European community must do more to fully solve the crisis.
"We're not going to see massive growth out of Europe until the problem is resolved, and that will have a dampening effect on the overall global economy," he said.
In working to strengthen ties to Asia, the most tangible sign of progress came with the announcement on "broad outlines" for the Trans-Pacific Partnership, or TPP, trade deal, which the U.S. has been negotiating for two years with Singapore, Chile, Australia, Peru, New Zealand, Malaysia, Brunei and Vietnam. Japan moved to join the negotiations on Friday and Canada has signaled interest as well.
U.S. officials say they hope others in the region will join, but cautioned they will have to sign on to high standards the initial group already has set. The talks cover trade matters and other issues such as regulatory cooperation; opportunities for small and medium-sized businesses; and standards for worker rights and the environment.
Former judge James Bacchus tells WSJ Asia editorial page editor Hugo Restall that the glass is half full when it comes to Beijing's WTO obligations.
The Trans-Pacific Partnership forms a key economic plank in Obama's push to demonstrate that the U.S. remains a dominant player in a region increasingly influenced by China. The talks are significant for the potential as a path to a future free-trade area with Asian and Pacific nations, a region that accounts for nearly 45% of global trade and incorporates some of the world's fastest-growing economies.
Mr. Obama said he was "confident we can get this done" and said the goal was to complete work next year.
The next step for Japan is to meet separately with all nine countries all in the TPP so they can assess whether the country is prepared to meet their standards. At the same time, negotiators will work on a parallel track to work to finalize a deal, said Mike Froman, deputy national security adviser for international economic affairs. Negotiators hope to have a legal text to review when trade ministers meet in the summer of 2012, he said.
Chinese officials suggested this week that they were waiting for an invitation to join the TPP talks. Speaking at the CEO Summit, Chinese President Hu Jintao acknowledged the U.S.-led talks on TPP were also a possible avenue for the country's trade goals.
But those comments weren't considered a serious signal of interest given that the pact seeks to strengthen labor standards, limit the role of state-owned enterprises and ensure market-driven innovation—conditions Beijing would find difficult to accept.
China has instead been pursuing an alternate path to integrate economies in the region centered on expanding a trade pact with the Association of Southeast Asian Nations, or Asean, an agreement that does not include the U.S.
Responding to questions on stage from Boeing Co. Chairman Jim McNerney at the CEO summit, Mr. Obama said he believes there can be "friendly and constructive competition" with China. But he added Beijing must "play by the rules" and said China's currency policy presents a disadvantage to U.S. workers.
"This is something that has to change," Mr. Obama said, noting that most economists see the yuan as undervalued. He said "the U.S. can't be expected to stand by if there's not the kind of reciprocity in our trade relations."
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