APEC ministers agree economic crisis far from over

AP News
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Posted: Nov 11, 2009 6:41 AM

Asia-Pacific ministers warned Wednesday that signs of recovery in the global economy are merely a respite, and future growth hinges on freer trade and improved social safety nets in Asia.

Finance and foreign ministers meeting in Singapore for this week's annual APEC meeting are mulling ways to keep economic recovery going once lavish stimulus spending ebbs, while tackling other regional security and political issues.

The forum culminates in a weekend summit of heads of state from APEC's 21 economies, including President Barack Obama.

The economic crisis is "by no means over," warned Singapore's foreign minister, George Yeo, urging nations to persist in opening markets wider.

"There is creeping protectionism now; that is very dangerous. It is a slippery slope, and if we're not careful, before we know it, all of us will be in a much more dire situation," he told reporters after hosting a breakfast meeting with foreign ministers.

The ministers agreed the economic crisis is in a respite, Yeo said, but recovery remains fragile.

U.S. Secretary of State Hillary Rodham Clinton urged fellow leaders to forge ahead with plans to combat global warming and to help push Myanmar's military regime toward greater democracy.

She called for calm in the aftermath of a naval skirmish Tuesday between North and South Korea, but said it would not scupper plans to send envoy Stephen Bosworth to Pyongyang to persuade the regime to return to six-nation nuclear disarmament talks.

But the main focus for the regional dialogue remained the economy, and APEC nations are looking to the U.S. to add heft to efforts to push for a global trade pact and help dismantle trade barriers to help along the recovery.

APEC was founded 20 years ago to promote greater trade and integration around the Pacific Rim. Its scope has since expanded to encompass a wide range of issues, and ministers Wednesday stressed the need for action on climate change, energy security and ensuring food security for the millions of vulnerable poor in the region.

Boosting exports is the "best ticket" to creating jobs, ending the recession and bringing massive deficits under control, said Thomas J. Donohue, president of the U.S. Chamber of Commerce.

"Expanding free trade across the Pacific can drive the global economic recovery, create badly needed jobs and advance economic and social progress in developing and developed countries alike," he told business leaders on the sidelines of the APEC meeting.

While Asia has 168 free-trade agreements, work on U.S. pacts with South Korea, Colombia, and Panama languish in Washington.

The Pacific Economic Cooperation Council, an APEC-affiliated think tank, urged in a report issued Wednesday for fundamental reforms to shift growth away from a dependence on exports to the U.S.

"U.S. consumers are not likely to drive world demand in the medium term, and the slack will have to be taken up in part by Asian consumption and investment," Peter Petri, a Brandeis University professor who coordinated a regional task force on the economic crisis, said in the report.

The think tank's survey of 400 business, government and expert leaders in the region found many convinced that the engines of growth are changing _ a trend long anticipated but accelerated by the relatively strong recent performances of developing Asian nations, especially China and India.

"They are very conscious that the U.S. is not going to be the growth engine for the foreseeable future, and they are thinking very hard of how to find other ways to generate growth," said Yuen Pau Woo, who coordinated the report.

Obama, visiting Asia for the first time since he took office in January, will be seeking to counter the perception of declining U.S. power.

The president wants "to send a message that the United States intends to deepen its engagement in this part of the world; that we intend to compete in this part of the world; and that we intend to be a leader in this part of the world," Jeffrey Bader, a National Security Council official, told reporters from Washington.

Still, with the U.S. economy growing at less than half the rate of China's 8.9 percent in the third-quarter, and consumer demand still languishing amid a so-far job-scarce recovery, Asia's pivotal role is evident.

"The engines of growth are shifting from the U.S. to Asia; from exports to domestic spending, especially on social priorities and from production of goods to production of services," Woo said.

Higher spending on social needs such as education, health care, services for the aging and welfare networks; freer trade in services, and policies to promote green technologies _ all can contribute, he said.

Devoting more to those resources would help rebalance the wide gap in U.S.-China trade, among other distortions, that helped bring on the crisis.

By boosting social spending, China and other Asian nations could help reduce the need among their citizens to scrimp and save to cover such costs, freeing them to improve living standards and spend more.

The report estimates that $300 billion of the $28.8 trillion in regional economic activity represents trade and other imbalances that need to be redressed.

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Associated Press writers Alex Kennedy, Matthew Lee and Jim Gomez contributed to this report.