Bridges Weekly Trade News Digest • Volume 12 • Number 40 • 26th November 2008
APEC Leaders Vow ‘Urgent’ Action on Financial Crisis, Call for Doha Conclusion
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The leaders of 21 Pacific Rim economies pledged last week to “act quickly and decisively to address the impending global economic slowdown” and said they would impose no new barriers to trade in the face of the crisis.
The heads of members of the Asia Pacific Economic Cooperation forum, known as APEC, convened for their annual two-day meeting in Lima, Peru last week. Together, these nations - which include Australia, China, Japan, Russia and the US - account for 55 percent of the world’s gross domestic product and 49 percent of world trade.
An APEC declaration released on Sunday described the global financial crisis as “one of the most serious economic challenges we have ever faced.”
But the Pacific Rim leaders also expressed confidence that their economies could ride out the financial turmoil.
”We are convinced that we can overcome this crisis in a period of 18 months,” they said.
But not all APEC leaders were confident with that timeline, which fits calculations made by the International Monetary Fund. The IMF has forecast that developed economies will register growth of barely 0.1 percent in 2009, but that the world will emerge from the crisis in 2010.
”I think it would be premature to speculate on that kind of timeline,” Canadian Prime Minister Stephen Harper said, reported Agence France Presse.
To help mitigate the crisis, the APEC leaders ordered their trade ministers to kick start the stalled Doha round of trade talks at the WTO, which negotiators are now trying to conclude before the end of the year. “We are committed to reach agreement on modalities next month,” they said in a statement released on the global economy, referring to the current push for a framework accord that must be finalised before a deal to lower tariffs and subsidies can be put in place.
”A prompt, ambitious and balanced conclusion to the World Trade Organisation - Doha Development Agenda negotiations would deliver substantial improvements in market access and reduce market-distorting measures in global agricultural trade,” they said.
The APEC statement outlined several other measures to be taken, but stopped short of suggesting specific new proposals to combat the financial crisis. These included adding more regulation and supervision of the financial sector and developing more effective standards of corporate administration. The leaders also encouraged the International Monetary Fund, which has strong focus on market surveillance, to strengthen its collaboration with other international financial institutions.
APEC also backed the statement made by G-20 leaders on 15 November, in which leaders from 20 economic powers - nine of which were also represented in Lima - vowed to support a world trade deal and work together to fight back from the current downturn (see Bridges Weekly, 19 November 2008, http://ictsd.net/i/news/bridgesweekly/34105/). In line with the G-20’s conclusions, APEC leaders pledged to refrain from constructing new barriers to trade or investment over the next year.
And while APEC operates on the basis of non-binding commitments, the group’s members seem committed to the idea that freer trade can help resolve the financial crisis by driving global growth, creating new jobs, and reducing poverty. But, they warned, closing borders to foreign goods and investment will only worsen the situation.
Outgoing US President George W. Bush, attending his final APEC summit, called for a renewed commitment to support free trade and shun protectionism. “It is also essential that governments resist the temptation to overcorrect by imposing regulations that would stifle innovation and strangle growth,” he said.
But some analysts speculate that concrete action will most likely take place only when President-elect Barack Obama enters office in January.
The declaration also addressed progress toward the creation of a Free Trade Area of the Asia-Pacific (FTAAP), the goal towards which step-by-step liberalisation commitments are ultimately building.
”We noted advice from ministers that while an FTAAP would likely be of economic benefit to the region as a whole, there would also be challenges in its creation,” the leaders said in the statement.
APEC was established in 1989 as a forum to facilitate economic growth, cooperation, trade and investment in the Asia-Pacific region. According to the 1994 Bogor Goals, APEC members are working towards an Asia-Pacific free trade area by 2010 for industrialised economies and by 2020 for developing economies.
The Pacific Rim leaders also tackled structural reform, improved food security for the region, the promotion of corporate social responsibility and capacity building, combating terrorism and corruption, addressing disaster risk reduction, and confronting the issues of climate change, energy security and clean development.
APEC’s 21 member economies are: Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the US, and Vietnam.
The APEC leaders’ statement on the state of the global economy is available here, and the annual leaders’ declaration is available here.
ICTSD reporting; “Asian leaders vow to ‘overcome’ financial crisis in 18 months,” AGENCE FRANCE PRESSE, 24 November 2008; “APEC leaders seek December Doha accord to relieve global crisis,” BLOOMBERG, 24 November 2008; “APEC: Global crisis can be overcome in 18 months,” ASSOCIATED PRESS, 23 November 2008.
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