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US and China tussle for trade dominance at APEC

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(Globalpost/GlobalPost)

The United States on Tuesday intensified its drive to clinch an ambitious Asia-Pacific trade pact by the end of the year, raising China's hackles at a regional summit in Indonesia.

The Asia-Pacific Economic Cooperation (APEC) event, at a five-star resort on the tropical island of Bali, was aimed at breaking down trade barriers among all 21 member economies amid the gloom of a faltering global economy.

Members of APEC, which groups just over half of the global economy, voiced concerns in a closing statement about its fragile state -- hours before the International Monetary Fund cut its forecasts for world growth this year and next.

"Global growth is too weak, risks remain tilted to the downside, global trade is weakening and the economic outlook suggests growth is likely to be slower and less balanced than desired," the APEC leaders' statement said

Clashing agendas by the United States and China overshadowed the gathering.

US President Barack Obama had to pull out of the APEC summit because of a deepening political and financial crisis in Washington, and several leaders in Bali expressed concern about the threat of a US debt default.

But, filling in for Obama, Secretary of State John Kerry pressed on with a full-court lobbying press to try to secure agreement on the "Trans-Pacific Partnership" grouping 12 APEC nations.

Significantly, the TPP excludes China. And Indonesia, Southeast Asia's largest economy, has stayed out.

After the APEC summit finished, Kerry convened a meeting of leaders of the 11 other TPP nations -- including Australia, Japan, Malaysia and Mexico -- in a bid to beat an against-the-odds deadline set by Obama for a deal by the end of 2013.

In a statement, the United States and its TPP partners said they were still aiming to clinch the deal in less than three months after making "significant progress" on a range of issues.

Kerry, in a meeting with US diplomatic staff working in Indonesia, said it was a "very strong meeting with very good results".

"And I promise all of you that your hard work and your devotion and commitment to this effort will pay off in the long run," he said.

Resistance grows

The United States has championed the TPP as setting "gold standards" to deal with complex changes to the 21st-century economy, such as how to police cloud computing and patents.

But China, and even some developing nations included in the TPP, have expressed concern that it will lay down trade rules mainly benefiting the richest countries and most powerful firms.

"China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties," President Xi Jinping said at the APEC business forum, which came after he oversaw tens of billions of dollars in trade deals on visits to Jakarta and Kuala Lumpur.

Xi's comments were interpreted in China's state-run media on Tuesday as direct criticism of the TPP.

"The Trans-Pacific Partnership, featuring confidential talks and the highest free trade standard beyond mere lower tariffs, is widely considered a new step for the US to dominate the economy in the Asia-Pacific region," the China Daily newspaper said in a front-page report on Xi's speech.

Indonesia also signalled its irritation at the US focus on TPP at the APEC summit, shunting Tuesday afternoon's meeting to a hotel outside the official venue.

"We mind, actually, and one of the reasons, at the very least, is we don't want any coverage that will overshadow APEC," an Indonesian government official told AFP.

On Tuesday Obama insisted his absence from the APEC event and a subsequent East Asia summit in Brunei would not hurt his drive for a larger US role in Asia, saying he expected no "lasting damage".

But his decision not to come to Asia has reinforced sentiment among some critics that his high-profile diplomatic, economic and military focus on the region, known as the "pivot", is in tatters.

Kerry was forced at APEC repeatedly to insist that the Asia-Pacific region remained a top priority, and he tried to wrest back the initiative on the trade front.

But analysts said Obama's no-show would not help the TPP, amid disputes over the US desire to expand market access, the protection of intellectual property and the influence of Asian state-owned enterprises.

"Over the past months, American negotiators have pushed hard for Asians to give into US interests in the TPP. Resistance has grown," Singapore Institute of International Affairs chairman Simon Tay told AFP.

"This would have been a good chance for Obama to personally push for the trade deal, which he cannot do if he is not present."

Indonesia and China are involved in plans for a rival free trade pact involving 16 countries around the region, which is being spearheaded by the Association of Southeast Asian Nations.

Negotiations for that pact, which excludes the United States, are expected to be discussed in Brunei this week while Obama is forced to watch events from afar.

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http://www.globalpost.com/dispatch/news/afp/131008/us-and-china-tussle-trade-dominance-at-apec-3