Apec leaders vow to fight protectionism
Meeting fails to mention currency distortions
November 16, 2009
By Shamim Adam Singapore
Pacific Rim leaders have agreed to fight protectionism while refraining from mentioning currency distortions that contribute to such actions, backing China's stance as critics increase calls for the yuan to strengthen.
The 21-member Asia-Pacific Economic Co-operation (Apec) group said structural reforms were necessary to unwind global imbalances, without detailing specific changes, according to a statement at the conclusion of the summit yesterday.
The leaders, including US President Barack Obama and China's Hu Jintao, met in Singapore. After the meeting, Obama was to travel to China, where he aims to defuse tensions over US duties on Chinese imports.
The lack of any Apec commitment to ending currency controls by China without a floating exchange rate, signals that most of Asia would not join the US in pressing for a stronger yuan.
"China's got big issues of its own and certainly doesn't want to move on the currency. It's concerned about some protectionist rumblings from the US," said Stephen Roach, Morgan Stanley's Asia chairman. "The ultimate verdict is that there's no major breakthrough on any of these large global issues."
Asian central banks have accelerated dollar purchases this year to stem gains in their currencies that made their exports less competitive than China's.
Indonesia's rupiah has jumped 11 percent against the yuan in the past six months, South Korea's won 9.2 percent and the Indian rupee almost 7 percent.
The US has ceded economic influence in much of Asia to China in a region that contains sea lanes vital to world commerce, as well as coal, oil and other commodities.
China's trade with the Association of Southeast Asian Nations (Asean) has jumped almost twentyfold since 1993 to $179 billion (R1.3 trillion), with its share of total Asean commerce rising to 10.5 percent from 2 percent. The US portion during that period fell to 12 percent from 17 percent, according to Asean statistics.
"Since it is China's growth that has been contributing to recovery in other economies, it's not in their interest to risk lowering China's growth," said Simon Tay, the chairman of the Singapore Institute of International Affairs.
Mexican President Felipe Calderon suggested the US had become more protectionist and less engaged internationally since the September 11, 2001, attacks.
Chinese officials at Apec also condemned barriers to trade. Hu said China had not foreseen the number of protectionist acts that would occur this year.
A US trade commission on November 6 ruled that Chinese glossy paper and phosphates were harming domestic producers. A day earlier, the US imposed preliminary duties of as much as 99 percent on certain Chinese steel pipe imports. Obama in September imposed tariffs on Chinese tyre imports.
According to an analysis by Mark Williams, an international economist at research group Capital Economics, WTO members were "on course to launch a record number of investigations against Chinese imports this year". - Bloomberg
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