Pacific trade pact gets boost from US neighbors

By Elaine Kurtenbach

Associated Press

Published: Sunday, Nov. 13 2011 7:00 p.m. MST

Canadian Prime Minister Stephen Harper and Australian Prime Minister Julia Gillard lead the group of APEC leaders away from a group photo during the Asia-Pacific Economic Cooperation Summit in Kapolei, Hawaii on Sunday, Nov. 13, 2011.

Charles Dharapak, Associated Press

Enlarge photo»

KAPOLEI, Hawaii — A U.S.-backed plan to forge a Pacific free trade bloc got a big boost Sunday when leaders of Canada and Mexico joined Japan in expressing support for a deal that has received a cool reception from China, the region's rising power.

The news was a coup for President Barack Obama, who made progress on the pact one of his top priorities for the Asia-Pacific Economic Cooperation summit being held in his home state of Hawaii. It comes after Japan, the world's third-biggest economy, said Friday that it wants to join the nine nations already involved in talks on what has been dubbed the Trans-Pacific Partnership.

The balmy weather for the annual APEC gathering at a resort on the west side of the Hawaiian island of Oahu contrasted with deepening pessimism over the economic outlook as the leaders sat down for a day of talks on how to spur growth and create jobs. With Europe again on the brink of recession, Asia's vital role as a driver of global growth has gained even greater urgency.

IMF Director Christine Lagarde attended the summit, briefing the APEC leaders on the latest developments in Europe. The International Monetary Fund will play a key role in coming months in overseeing efforts by Italy, and other ailing economies that use the euro common currency, to rein in debt.

Europe's quandary is among the wide range of issues that the Asia-Pacific leaders were tackling in their one-day meeting.

"Now it's time to get down to work, and we have much to do," Obama said in opening the summit. "Our 21 economies — our nearly 3 billion citizens — are looking to us to bring our economies closer, to increase exports, to expand trade and opportunity that creates jobs and economic growth. That's why we're here."

Canadian Prime Minister Stephen Harper said his country must look to the East to ensure markets, especially for its energy exports. "That will be an important priority of this government going forward," Harper said before meeting with Obama on the sidelines of the 21-member APEC summit.

The U.S. Trade Representative, Ron Kirk, welcomed the overtures from Canada and Mexico about joining the so called TPP, issuing a statement calling them America's "neighbors and largest export markets."

But China, which some economists say is on course to overtake the U.S. as the world's biggest economy this decade, has appeared reluctant to endorse the Pacific trade pact, likely wary of being drawn into what has become a U.S.-led initiative that encroaches on its own sphere of influence in Asia. China also has commitments to rival free trade blocs in East and Southeast Asia.

The TPP group now includes only four smaller, relatively affluent economies — Chile, New Zealand, Brunei and Singapore — but the U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join.

U.S. officials have said all are welcome to come on board, while indicating that the agreement's high standards would pose a challenge to countries whose economies are not fully open. That would likely include Russia, which is close to gaining long-sought membership of the World Trade Organization, and China, which has staked out large sections of its economy for protection from foreign competition.

Obama has said he is optimistic that work on the American-backed trade pact could result in a legal framework by next year.

For the U.S., the initiative is seen as a way to break through bottlenecks and open new business opportunities. Many in APEC see the emerging deal as a building block for a free trade area that eventually encompasses all of Asia and the Pacific — covering half the world's commerce and two-fifths of its trade.

"The Asia Pacific region is absolutely critical to America's economic growth. We consider it a top priority. And we consider it a top priority because we're not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia Pacific region is also successful," Obama told his fellow APEC leaders at Sunday's meeting.

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