Nusa Dua (Indonesia) (AFP) – The United States on Tuesday intensified its drive to clinch an ambitious Asia-Pacific trade pact by the end of the year, raising the hackles of a newly assertive China 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.
But clashing agendas by the United States and China overshadowed the gathering of leaders, as well as preceding meetings by their trade chiefs.
U.S. President Barack Obama had to pull out of the APEC summit because of the deepening political and financial crisis in Washington, and several leaders in Bali expressed grave concern about the threat of a U.S. debt default.
But, filling in for Obama, Secretary of State John Kerry pressed on with a full-court lobbying press 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 “agreed that negotiators should now proceed to resolve all outstanding issues with the objective of completing this year a comprehensive and balanced regional agreement”.
The “next-generation” pact would take “into account the diversity of our levels of development”, but feed into broader pacts that have been mooted, such as an APEC-wide agreement, the statement said.
Obama’s decision not to come to Asia for APEC and the subsequent East Asia summit in Brunei has reinforced sentiment that his high-profile diplomatic, economic and military focus on the region, known as the “pivot”, is in tatters.
Kerry was forced at APEC to repeatedly insist that the Asia-Pacific region remained a top priority, and tried to wrest back the initiative on the trade front.
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,” Chinese 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 U.S. 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 U.S. 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, when asked why the TPP countries had been told to meet elsewhere.
Analysts said Obama’s no-show would not help the TPP, with disputes already mounting over the U.S. desire to drive through improvements in market access and protection of intellectual property.
“Over the past months, American negotiators have pushed hard for Asians to give into U.S. interests in the TPP. Resistance has grown, rather than any sense of partnership,” 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,” he said.
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.
The APEC members, which group just over half of the global economy, voiced concerns in a closing statement about its fragile state.
“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 leaders’ statement said.
AFP Photo/Dita Alangkara