APEC Leaders Seek December Doha Accord to Relieve Global Crisis

By Bill Faries and Shamim Adam

Nov. 24 (Bloomberg) -- Leaders of 21 Pacific Rim nations said the world financial crisis may force a breakthrough on a global trade deal that’s been stalled for seven years, and warned against protectionism as they headed home from a summit in Lima.

With a slowdown pushing countries into recession from the U.S. to New Zealand, heads of state of the Asia-Pacific Economic Cooperation forum concluded two days of meetings yesterday, saying a preliminary agreement may be reached next month in World Trade Organization talks known as the Doha Round. The negotiations began in 2001.

“This crisis may turn into an opportunity for world leaders to resolve the Doha Round,” Kazuo Kodama, spokesman for Japan’s Foreign Ministry, told reporters in Lima after the summit ended.

Still, the annual APEC meeting failed to produce specific new proposals to ease the crisis, and leaders said their free- trade ambitions may rest on bilateral efforts or actions by individual countries. The leaders lent their support to a Nov. 15 statement from the Group of 20 developed and emerging economies, which encouraged interest rate cuts and fiscal stimulus to foster growth.

“The current global financial crisis is one of the most serious economic challenges we have ever faced,” the leaders said in a statement issued at the summit’s conclusion. They pledged to “take all necessary economic and financial measures to resolve this crisis.”

Pushing Doha

APEC has been a consistent cheerleader for the WTO talks. After a breakdown at a summit in Cancun, Mexico in 2003, the Asia-Pacific leaders were the first group to call for a resumption of negotiations. In 2006 they said that the Doha Round was their top priority, and again last year they urged their trade ministers to strike a deal.

So far they haven’t, as talks intermittently break down over issues such as developed countries subsidies for agriculture and emerging economies’ barriers on financial services.

Still, negotiators “surprised themselves” with the amount of progress they made in Geneva in July, U.S. Trade Representative Susan Schwab said in an interview on Nov. 21. “The question remains whether the rhetoric” supporting a trade deal “will be matched by reality,” she said.

No date has been set for the next WTO meeting in Geneva in December.

The global economic slump has prompted central bankers and governments to cut lending rates and announce spending packages and tax cuts designed to sustain growth. The APEC leaders urged resistance to rising protectionist sentiment that could lead to higher trade and investment barriers.

Global Forecast Lowered

The International Monetary Fund this month lowered its global economic growth forecasts and predicted the first simultaneous contraction in the U.S., Japan and Euro region in the post-World War II era. APEC leaders, in a separate statement that Kodama and Canadian Prime Minister Stephen Harper later backed away from, said the crisis could be over by mid-2010.

“Our leaders tried to send out a positive message, a message of confidence,” Kodama said when asked about the timetable. “We don’t know but we hope that before or within 18 months the global economy will recover.”

Harper said Canada may be the latest nation to have entered a recession, joining the rest of the members of the Group of Seven industrialized nations, and that the government is willing to run a “short-term” deficit to stimulate the economy.

“We have to be pragmatic and not ideological when we find ourselves in situations that are not usual,” Harper told reporters yesterday.

To contact the reporters on this story: Bill Faries in Lima at wfaries@bloomberg.net; Shamim Adam in Lima at s adam2@bloomberg.net