Monday, November 15, 2010

From Fluffy to Long-Term Goal: The APEC 21 Nations Aiming at a Free Trade Zone!

A promising regional forum to promote liberalization of trade and investment for Asia Pacific economies and corporations? But divisions ahead due to conflicting layers of economic development.

All participants owe a great appreciation to Mrs Fumiko Hayashi, the Mayor of Yokohama, impressive and self-educated businesswoman who turned politician. Without her experience the Yokohama summit would not have been possible. Even though, Minato Mirai transformed into a "citadel" last week. It operated 10.000 policemen and women within the luxury hotels and office buildings complex under an intense and sometimes Orwellian security plan which angered residents, tourists and local workers.

Results? Fastidious! The leaders of the 21 members "Asia Pacific Economic Cooperation" forum called for a "more concrete vision" toward creating a "comprehensive" regional free-trade agreement, without setting a target for achievement...

Now, the Apec 21 will work on building trade through regional groups including the Association of South East Asian Nations and negotiations such as the nowadays USA led TPP. Deep differences remain between the US and China over trade imbalances and currency distortions as seen during discussions. Remain unseen the details of application between an Apec favored by US against an Asean + ? Asian nations favored by China without the US.

A positive sign still was the bilateral meeting Japan China with the Chinese President Hu Jintao's acceptance of a meeting on Saturday evening with Prime Minister Naoto Kan which "apparently reflects Beijing's desire to alleviate anti-Japan feelings in the country and curb increased U.S. involvement in regional affairs, in particular in the East China Sea and the South China Sea" as Kyodo agency said.

A quiet tone comment from the only "statesman" style at the summit came from Hu Jintao, firm and determined compared to the "US salesman" Barack Obama, Hu emphasized that "the world recovery is neither firmly established nor balanced, and [that] there exist significant uncertainties."

For most leaders one option set for a future free trade agreement configuration of Asia pacific is that "It will be necessary to have future Apec nations leaders showing leadership" to handle the future domestic conflicts born from suppression of subsidies and social assistance to the poorer.

Yes this was one of the few surprising answers to questions or comments by VIPs' participants at the nevertheless interesting APEC Keidanren Summit held on Friday, whilst outside the Royal Park hotel, opponents to free trade agreement gathered, hundreds of farmers and activists demonstrated until Sunday and held seminars and marches, firmly and politely handled by 21.000 police forces.

On FTA, one of the most enthusiast speaker, ready to get rid of those who would oppose the principle, was the brilliant orator Chilean President Sebastian Pinera, president of great renown with the miners rescue, who attended with persuasive and ideological comments the APEC Keidanren Summit 12 November 2010. His statement was worth a small handful of dollars. Quotes:

President Sebastian Pinera
"it's time for leadership to take really full account of what is expected from them!"

"I think that... this new vision of growth that had emerged after the crisis, growth that will be balanced, inclusive, sustainable, innovative and secure can only be achieved if we really exert our leadership to push forward the free trade agreement in the Asia Pacific zone. Of course, there will be sectors that will oppose it. It has always been like that... We will have to oppose local interests. In the case of Japan for instance the agriculture sector represent I think 1.8% of the GNP and less than 3% of employment and therefore you can not guide your integration policy in only one sector. You can compensate that sector, that's a very good tool if the country as a whole will win because of the free trade agreement. It means that it can compensate the losers and still there will be something for the winners because if it is good for the whole country, it has to be possible to compensate the losers and that's a very good system you know to not block free trade agreements because some sectors are, will not be favorable to the agreement. It will always happen... because... what is the meaning of free trade? That you take full potential (inaudible) and therefore some sectors will have to grow faster than the others because of the free trade agreements and of course other sectors will have to grow at a slower pace and therefore I think that it's time for leadership to take really full account of what is expected from them which is to work for the benefit of the country as a whole and not to try to protect each and everyone because at the end of the day it is impossible. That's why I think that either if it is bilateral or multilateral or global like the Doha round, leadership in those countries will have to play in favor of the common and general interest. And they will have to face local interests and they can compensate them. That's why I think that if we are able to achieve I think before 2020 a free trade agreement in the whole Asia Pacific region which represents more than 60% of world GNP, we will pave the way for a successful Doha round. And I think the Doha round realizes it that if they don't do the job, we'll do for them... We'll have to address many new issues and actually the "Apec business advisory council" has produced a memorandum or a recommendation that is extremely useful for Apec leaders because there you can see many of the problems that will have to be faced by political leaders and in this I will emphasize that the help of the private sector will be crucial because I think this "Apec business advisory council" has always been in advance of political decisions. They have always taken the step forward before the political decisions and now they or yo are doing exactly the same. So I think we cannot stop a whole country because some sectors will not be favored by the free trade agreements but we can always compensate them in order to (inaudible) by which nobody's worst than what it was before but a lot of sectors can be better off".

The Canadian trade minister, playing with words and nuances, hard to translate for the interpreters into Japanese, appeared as witted but also as a "fundamentalist" of free trade agreements by taking reference with the deal set between EU and Canada.

How did they see it?

For IMF chief Dominique Strauss-Kahn: "Everyone thinks that others should make more effort than oneself, China's efforts to switch its economy towards domestic demand will not happen in five minutes but it must be done as soon as possible. Strauss-Kahn added that it is also necessary for the developed countries to make efforts to modify their own deficits. "Everyone has their job to do at home." [Afp]

Fact! During the G20 Seoul and Apec Yokohama, USA was under criticism for threatening nations' economic stability by flooding money into the global market and does not want imports at any price as president Obama stated while China is "preparing its own gift to the world economic recovery: its large market with a call to foreign talents and investments" as president Hu stated in Yokohama Keidanren's Apec CEO Summit.

Not a smile while the water falls behind the scenes when Japan Prime minister Kan and China President Hu met for 20 minutes on the sidelines of Apec summit

Crucial period for China...

Stephen Roach, Morgan Stanley's non-executive chairman of Asia, wrote that the next five years would be a crucial period for China. The 12th Five-Year Plan would be a turning point for China's economic development as well as the world's. China, with a population of 1.3 billion, is moving quickly on the track of urbanization, which stood at 46.6 percent at the end of last year. The room for expansion promises a huge potential in domestic demand. "The transformation of China's economic growth pattern would make China more sustainable, which is desirable for the world," said Martin Wolf, chief economics commentator of the Financial Times.

Tight security during Chinese president Hu Jintao speech

What else does the local press writes about the summit? "The Apec 2010 of Yokohama was also highlighted by a series of protests and demonstrations by those working in the agricultural industries, particularly Japan's fragile rice industry, reliant on high import tariffs, which now faces eradication, should Kan move forward heedlessly."

Indeed! Joining the TPP is opposed by the Japanese ministry of agriculture, forestry and fisheries and by Nokyo, the association for agricultural cooperations, whose chairman has declared the TPP will mean the destruction of Japanese agriculture, others expecting to join as more trade competition is expected ending into a chaotic landscape "of winners and losers, those ones ready to organize in unions " with the risk of being ruined by the liberalization policies as a straightforward VIP said to the crowds during discussions, crowds apparently under anesthesia. But outside the Yokohama Apec Summit, anger was manifested and contained by police forces.

One last thing, the local media, Japanese, were exclusively allowed to attend meetings and do all interviews they wished while most of the foreign media represented in Japan were rejected from interviews and contacts at the Intercontinental, and, parked in a rather sterile Pacifico International Media Center which became a concealed cemented box, for lots of people, and not all of them genuine journalists, with some cable TV rolling on a few selected events. But there was an expresso coffee machine, waters and cookies, offered generously to those passing by or to keep the eyes opened on the event. Still, as one fellow journalist foreign colleague put it blankly: "There is no news here and we can't meet anyone except bureaucrats." Of course you need to be a cleaver fox during such summits, I commented, all mildly. Fortunately, prime minister Kan's final press conference was opened to all, as decided by organizers. 3 Q for the local media, 3 Q for the foreign media 1 German, 1 Singaporean, 1 British.

Next Apec meeting in 2011 in Hawaii.

NB: The TPP, TransPacific Partnership, was set by Singapore, Brunei, Chile and New Zealand in 2006, and suddenly supported by US president Obama a year ago. Since, others are trying to join: Malaysia, Australia, Peru, Vietnam. TPP aims at economic partnership agreement, same path as EU fundamentals without the political unification project that European Union realized not without difficulties.

Sources: Agencies, IMC, MOFA, METI, YouTube, Reporter's Notes and sources.

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