APEC leaders to push for new global strategy to reduce economic imbalances
By: VIJAY JOSHI
Associated Press
11/07/09 9:05 PM EST
SINGAPORE — President Barack Obama and other Asia-Pacific leaders, meeting at a summit this week, will push for a new global strategy to reduce the crippling imbalances in the world economy blamed for the severe financial crisis.
Obama and 20 other leaders of the Asia Pacific Economic Cooperation forum also are expected to pledge a phase-out in fossil fuel subsidies blamed for encouraging wasteful consumption and undermining efforts to combat climate change.
The APEC summit on Nov. 14-15 comes amid fears that the small economic recovery in the U.S., Germany, Japan and elsewhere will fizzle out by the middle of next year once pent-up investment demand has run its course and consumption drops.
Ahead of the summit, officials and ministers from APEC countries will hold meetings starting Sunday to discuss the financial crisis, climate change and to review APEC's unfulfilled goal — made in Bogor, Indonesia in 1994 — to achieve free trade and investment among developed members by 2010.
The Bogor goal "is a benchmark to measure ourselves against, and if we have not quite achieved all of it, well, I think we have to encourage ourselves to go further," Singapore Prime Minister Lee Hsien Loong told reporters.
The talks this week will form the basis of a joint declaration by APEC leaders. A draft, prepared by officials for ministerial review, says the leaders will pledge to maintain the massive economic stimuluses provided by several governments "until a durable economic recovery is secured."
"Looking beyond supporting the recovery, we recognize the necessity to develop a new growth paradigm," said the draft declaration obtained by The Associated Press.
"We cannot go back to 'growth as usual.' We will put in place a comprehensive long-term growth strategy that supports more balanced growth," said the declaration.
The imbalance refers to the high rate of savings in China and elsewhere in Asia and the Middle East, which flowed to the West and ended up as easy loans for consumers, allowing them to live beyond their means and promoting rapid growth without a solid foundation.
This also prevented the borrowing countries from saving even as they ran big trade deficits. Meanwhile, Asia and the Middle East were hardly spending, running current account surpluses and huge currency reserves.
Economists say that leaving this imbalance unresolved will spark another crisis, and that Asia must save less and spend more.
"We must start to gradually unwind the global macro imbalances, which were at the root of the (financial) crisis," said Lim Hng Kiang, Singapore's minister for Trade and Industry.
The propsed APEC declaration said the region's growth agenda should focus on boosting opportunities for all segments of society and strengthening social resilience through well-designed social safety nets to help the most vulnerable members tide over downturns.
The APEC region is highly diverse, ranging from the impoverished Papua New Guinea to the United States, the world's biggest economy, worth US$ 13.8 trillion.
With 2.7 billion people, about half of them in China, APEC accounts for more than 40 percent of the world population and more than 53 percent of the world GDP.
The declaration is expected to reiterate an old call for reducing greenhouse gas emissions to 50 percent below 1990 levels by 2050. But it also recognizes that the timeframe for peaking "will be longer in developing countries," an apparent concession to China.
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Associated Press writer Jim Gomez contributed to this article.
