Obama, Leaders Agree on Pacific Trade Outline

By Julianna Goldman and Margaret Talev - Nov 13, 2011 10:21 AM GMT+0700
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Barack Obama, president of the United States. Photographer: Yuri Gripas/Pool via Bloomberg

President Barack Obama said a commitment by eight other nations to join the U.S. in forging an Asia-Pacific trade accord within the next year is evidence that “American leadership is still welcome.”

Obama announced today that the officials agreed on a blueprint that will lead to drawing up a formal Trans-Pacific Partnership in the next 12 months, a deal that could create a model for expanded trade with more Asian countries.

Obama also said he would continue to press for reforms to address an undervalued Chinese currency that undercuts U.S. businesses as well as protections for intellectual property at his meeting today with Chinese President Hu Jintao while at the Asia-Pacific Economic Cooperation forum in Honolulu.

Obama is playing host to the APEC summit and will travel on to Australia and Indonesia, a trip that underscores renewed focus on Asia after a decade dominated by wars in Iraq and Afghanistan. The outreach is spurred by the rising commercial importance of the region and by China’s mounting economic and military power.

In the U.S. there are times when “we question our influence around the world,” Obama said in remarks directed to U.S. voters while attending a meeting with international chief executive officers. “But the news I have to deliver for the American people is American leadership is still welcome.”

Welcomed Re-engagement

He said he is “encouraged by the eagerness of countries to see the U.S. re-engaged in this region.”

Japanese Prime Minister Yoshihiko Noda, who met privately with Obama, told reporters through a translator that he welcomed the renewed U.S. emphasis on the region.

Boeing Co. Chief Executive Officer Jim McNerney, who moderated the discussion with Obama, said expansion in Asia is “a huge opportunity for job creation here in the United States.”

One of the key advances Obama sought to deliver while in Hawaii was an agreement on the framework for the Trans-Pacific Partnership agreement. The current talks involve Australia, Chile, Peru and Singapore, all of which already have separate free-trade agreements with the U.S., as well as Malaysia, New Zealand, Vietnam and Brunei.

Two-way trade between the U.S. and those eight nations totaled $171 billion last year, compared with $457 billion with China, $181 billion with Japan and $88 billion with South Korea, according to the U.S. Commerce Department.

July Deadline

Malaysian Prime Minister Najib Razak said countries involved in the U.S.-led TPP talks are setting July as a deadline for reaching an agreement.

“It is a very ambitious deadline because of the enormous amount of work that needs to be done,” Najib told reporters today in Honolulu. “There is a need to be flexible in our approach and to be realistic in terms of what can be achieved and accepted.”

Obama said taken together, the eight member economies would be America’s fifth largest trading partner.

“With nearly 500 million consumers between us, there is so much more that we can do together,” he said.

Noda, rebuffing opponents of the trade deal within his own party, said before the APEC summit started that he aims to join the negotiations.

China, South Korea, Russia and Canada may be added to the negotiations later. U.S. Trade Representative Ron Kirk said yesterday that the accord isn’t intended to be “a closed clubhouse.”

Pacific Power

Obama told the CEO summit that the U.S. “is a Pacific power and we are here to stay.” He said the TPP can become “the seed of a broader set of agreements” in the region.

One of the main meetings today on the sidelines was the session between Obama and Hu, leaders of the world’s two biggest economies.

Obama said at the CEO summit that the current valuation of the yuan puts U.S. businesses at a disadvantage and ultimately will hold back China’s growth. The U.S. “can’t be expected to stand by” without getting reciprocity with China on differences over currency, trade and protection of intellectual property, he said.

Before starting his meeting with Hu this afternoon, Obama said cooperation between the U.S. and China “is vital” for global security and growth.

Rebalancing

The agenda for their meeting includes “how we can continue to rebalance growth around the world, emphasize the importance of putting people back to work and making sure that the trade relationships and commercial relationships between our two countries end up being a win-win situation,” Obama said.

Hu said the Asia-Pacific region can be a base for continued cooperation.

One of the biggest sources of friction is China’s currency valuation, which the U.S. said is being kept too low, driving up trade imbalances.

China’s yuan dropped 0.05 percent this week to 6.3424 per dollar, snapping a two-week advance. Exports increased 15.9 percent in October from a year earlier, less than the 16.1 percent economists surveyed by Bloomberg forecast, data showed Nov. 10.

Lawmakers in the U.S. are pressing the Obama administration to take a stronger stand on China’s currency. The U.S. Senate approved a bill last month that would let manufacturers seek duties on Chinese imports if they prove they were harmed by manipulation of the yuan. It faces opposition in the Republican- controlled House, where Speaker John Boehner of Ohio has called the measure “dangerous” and said it “poses a very severe risk of a trade war.”

To contact the reporters on this story: Julianna Goldman in Honolulu at jgoldman6@bloomberg.net; Margaret Talev in Honolulu at mtalev@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net