HONOLULU (Reuters) - Asia-Pacific finance ministers, increasingly alarmed by Europe’s failure to stem its debt crisis, will seek to forge a united front Thursday and call for more decisive action as they shore up their own economies against the fallout.
Talks paving the way for a weekend summit of the Pacific Rim — one of the world’s fastest-growing regions — are expected to be overshadowed by Europe’s escalating debt troubles that are sending shockwaves across the globe.
The annual gathering of the 21-member APEC — hosted this year by U.S. President Barack Obama in his native Hawaii — was being billed as an effort to make progress on building a new free-trade area and advancing a “green” technology pact, steps that could foster global growth.
But a summit agenda that promises trade benefits that could take years to materialise will offer small comfort to global markets, reeling over the crisis in the euro zone, where Italy has overtaken Greece as the prime threat to stability.
Senior officials laying the groundwork for talks among APEC finance and foreign ministers Thursday and a leaders’ summit Saturday expressed growing concern about Europe’s debt woes and agreed on the need to strengthen their economies against the potential spillover, a U.S. Treasury official said.
Finance ministers from the Asia Pacific Economic Cooperation group are also expected to keep pressure on China over its currency, the official said, signalling acquiescence to a U.S. push for appreciation of the yuan.
The issue has been a major source of tension between Washington and Beijing, which has become increasingly assertive in the region.
But the overarching concern at the summit will be getting Europe to put its fiscal house in order.
Australian Treasurer Wayne Swan urged unity among Asia-Pacific countries, saying every APEC economy had felt the “chill wind” of economic events in Europe as well as the United States, where the recovery has moved in fits and starts.
“This is a challenge for Europe, but we’ve all got a stake in the outcome,” he told reporters in Honolulu.
Just as last week’s G20 summit was overshadowed by the euro-zone contagion, that crisis will also loom large over high-level meetings in Honolulu — and the chances are low for any immediate steps that will reinvigorate the world economy.
Thursday’s round of ministerial talks among finance and foreign ministers will focus mainly on opening markets between Asia-Pacific countries, which have almost 3 billion people and account for 54 percent of global output.
Nine countries — the United States, Australia, New Zealand, Vietnam, Malaysia, Singapore, Brunei, Chile and Peru — are expected to say Saturday they have reached the broad outlines of a proposed Trans-pacific Partnership (TPP) trade deal. Japan may also join, giving the pact greater heft.
U.S. Secretary of State Hillary Clinton recently hailed the Obama administration’s bid to refocus on Asia as signifying the relaunch of what she called “America’s Pacific Century.”
For Obama, who is winding down the costly U.S.-led wars in Iraq and Afghanistan, the annual APEC gathering is a chance to reassert U.S. leadership in an economically dynamic region where China poses a growing competitive threat.
The TPP pact, a possible template for an APEC-wide trade zone, would help inject the United States into the heart of Asia’s regional trade architecture.
China has moved ahead with a series of multi-nation trade agreements throughout Asia and has flexed its military muscle in the South China Sea.
Chinese President Hu Jintao was among the first leaders due to arrive Thursday. Chinese officials have already expressed doubts about U.S. goals at APEC, including a green growth initiative that would cut tariffs on environmental goods and services, such as solar panels and wind turbines. Tensions were further raised Wednesday when the United States opened an investigation into whether China sells solar panels in the U.S. at unfair prices, irritating China. Its Commerce Ministry said the probe would jeopardize cooperation on energy issues.
Obama, who has called himself America’s “first Pacific president,” flies in Friday and will meet Hu on the summit sidelines where aides say he will raise U.S. concerns that Beijing has not done enough to let its currency appreciate.
While that could cause friction, the overarching concern among summiteers could well be what happens thousands of miles away in Europe, where debt-laden Italy appears on the verge of needing a bailout its euro partners cannot afford.
Christine Lagarde, head of the International Monetary Fund, told a financial forum in Beijing that Europe’s crisis risked plunging the global economy into a Japan-style “lost decade.”
Additional reporting by David Lawder, Stella Dawson; Writing by Matt Spetalnick; Editing by Kim Coghill