A vendor displays bags at a clothing and souvenir store in Nusa Dua, Bali, Indonesia. Policy makers are seeking to boost their economies via new markets for goods and services as an uneven global recovery and volatility in financial markets constrain growth.
Asia-Pacific leaders are calling for vigilance against protectionism as economic growth slows in parts of the region and completion of a 12-nation trade pact looks set to be delayed further.
Policy makers are seeking to boost their economies via new markets for goods and services as an uneven global recovery and volatility in financial markets constrain growth.
Leaders from the Asia-Pacific Economic Cooperation member countries are meeting in Bali this week to discuss ways to boost their economies as an uneven global recovery and volatility in financial markets constrain growth.
At stake at the summit is progress on the Trans-Pacific Partnership trade deal, as Malaysian Prime Minister Najib Razak said the year-end deadline for completion may not be met and warned some areas of the talks are cause for “great concern” for his country. The accord, which involves countries such as the U.S., Australia, Japan, Malaysia and Vietnam, would link an area with about $28 trillion in annual economic output.
“Some are witnessing protectionism in some economies,” Indonesia Trade Minister Gita Wirjawan told Bloomberg Television in Bali today. “The spirit of fighting against protectionism is highly up there in the past couple of days. That’s basically one of the biggest variables of success for the spirit of multilateral trading system going forward.”
Countries should be on guard against requests from companies to protect certain industries, Singapore Prime Minister Lee Hsien Loong said.
“Every business lobbies their government in order to look after their interests,” Lee told company officials in Bali yesterday. “It is important to maintain that public support for openness and integration because unless you have that -- if we all close ourselves up, or even hinder the process of trading and doing business with one another -- I think we are just going to make things worse for all the countries.”
“I think some are witnessing protectionism in some economies,” Indonesia Trade Minister Gita Wirjawan told Bloomberg TV today. “But I think the spirit of fighting against protectionism is highly up there in the past couple of days. That’s basically one of the biggest variables of success for the spirit of multilateral trading system going forward,” Wirjawan said.
Indonesia is still evaluating whether to join the TPP talks, he said.
Global growth will probably be slower and less balanced than desired, as the world economy is too weak and “risks remain tilted to the downside,” trade and foreign ministers from the 21-member grouping said in a statement Oct. 5.
A slowdown in China and India is reverberating across the region with the Asian Development Bank forecasting expansion at a four-year low in 2013, putting pressure on policy makers to bolster their economies. The Group of 20 countries repeated their concern last month that stimulus pullback in developed nations may prove damaging to global markets.
Since the start of the global financial crisis, governments have been pressured to support exporters, said Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore. The number of trade actions seen at the World Trade Organization is evidence of tensions, he said.
“It’s a function of the difficult external environment and competition is on the rise,” Varathan said. “But at the same time, we are seeing more trade agreements being negotiated. Policy makers realize that more trade agreements result in a bigger pie to share.”
TPP governments are seeking momentum during the Bali meetings on the pact as concessions sought by countries hinder progress in completing negotiations. The accord, which involves countries such as the U.S., Australia, Japan, Malaysia and Vietnam, would link an area with about $28 trillion in annual economic output.
Japan took too long to join the TPP negotiations, Hiromasa Yonekura, chairman of Japan’s Keidanren business lobby group, told the APEC CEO summit yesterday.
Since joining, Japan’s negotiators have done “rather a good job,” he said. While a latecomer, Japan can “contribute to progress on the TPP negotiations quite well.”
Malaysia’s Najib said yesterday the end of 2013 deadline is a “very tight time line” and leaders will discuss if it is feasible. U.S. Trade Representative Michael Froman said Oct. 5 the “finish line is in sight” and TPP officials are trying very hard to complete the deal this year.
“With markets struggling to emerge from a devastating global recession, we need the jobs, growth and economic opportunity a free trade agreement could provide,” Jay Timmons, president of the Washington-based National Association of Manufacturers, and Phil O’Reilly, chief executive of Business New Zealand, said in a joint commentary on TPP. “With every month that passes without a deal, we miss vital chances to boost trade and investment.”
While finishing the accord this year may be “ambitious,” it is important to set deadlines and trade agreements should have high standards, U.S. Commerce Secretary Penny Pritzker said in an interview with Bloomberg Television in Bali yesterday.
All the TPP countries are members of APEC, set up in 1989 to advance free trade and investment in an area that accounts for half of the world’s total gross domestic product and 45 percent of global commerce. China, the second-biggest economy among APEC members, isn’t a member of the TPP talks.
“TPP is an open architecture,” Pritzker said. It is trying to set a standard and once that’s in place, “other economies and countries are welcome to become a partner,” she said.
APEC ministers said Oct. 5 they will recommend their leaders extend through the end of 2016 a commitment to combat protectionist measures and roll back such policies that exist.
“We reaffirmed our commitment to keep markets open and to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing WTO-inconsistent measures in all areas, including those that stimulate exports,” the ministers said.
Sixty-eight percent of chief executive officers in the Asia-Pacific region plan to increase investments next year, with China, the U.S. and Australia among top destinations over the next three to five years, a PricewaterhouseCoopers report released at APEC showed.
“We need to develop more and better infrastructure as an essential element for our connectivity,” Yudhoyono said yesterday. “This will of course help not only to facilitate trade and investment, but also boost job creation. APEC needs to tackle inefficiency in the supply chain. We have to make it easier, cheaper, and faster to conduct trade in goods and services across borders.”