Saturday, November 22, 2008

Bush, APEC Urge Freer Trade at Summit

Sources:
Bloomberg - APEC Ministers Reject 'Protectionism' Amid Crisis
Washington Times - APEC Summit to Take Up Trade Barriers
AP - Bush Urges Countries to Avoid Protectionism


Heads of state of the Asia-Pacific Economic Cooperation (APEC) group are meeting this weekend in Lima, Peru and calling for continued liberalization of trade during the global economic crisis. APEC includes economic giants such as the United States, China, Japan, Canada, Russia, and South Korea and represents over half of world GDP.

The APEC meeting comes just a week after heads of state from the G20 group met in Washington. APEC leaders are expected to affirm the principles that emerged from the G20 meeting, such as increased financial regulation and economic stimulus measures.

However, the APEC meeting will also be a rejection of protectionism and a reaffirmation of free trade policies. U.S. President George Bush stated that the goal of freer trade should not be abandoned because of the global economic downturn. One of Bush's legacies as U.S. President has been his fervent support of free trade initiatives. When Bush entered office, the U.S. had three bilateral free trade agreements. Now there are 14, with Bush unable to get Congress to pass three more free trade deals with Colombia, Panama, and South Korea.

The APEC call for free trade comes toward the end of the moribund Doha Round of free trade negotiations. The Doha round began in 2001 and was geared toward reducing agricultural subsidies and tariffs on industrial goods. However, Doha has widely been seen as a failure, with the U.S. and Europe unable to agree on cuts in their agricultural subsidies without certain guarantees from developing countries such as India.

One potential initiative is an APEC free trade agreement. There is already a free trade subgroup within APEC callled the P-4, which consists of New Zealand, Chile, Singapore, and Brunei. The U.S., as well as Australia and Peru, have signaled interest in joining the P-4.

Any agreements on free trade, whether bilateral or multilateral, will likely have to wait until U.S. President-elect Barack Obama takes office. Obama has opposed the pending U.S. bilateral trade agreements and has even called for a re-negotiation of NAFTA. It is therefore unclear the role the Obama administration will take in global free trade negotiations.

Discussion:
1. Many developing countries have been hit by the economic crisis when investors from wealthy countries pulled their investment money out of emerging markets. Should global trade policy make a distinction between unrestricted flows of investment capital and free trade in goods and services?

1 comment:

Peruvian Cuisine said...

Bush and many other leaders are indeed gathering in Peru. The 2008 APEC has been a relative success, since there are no big announces on how to solve the global crisis. The only highlights of the event: the Free Trade Asociations between many countries and the peruvian potato exposition - since Peru is one of the most important gastronomy centers of the world.