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Nov 6, 2014 2:06 AM

Beijing wants APEC to push Chinese trade pact

The Associated Press

BEIJING (AP) China plans to use a meeting of Asia-Pacific leaders to promote a regional trade initiative at a time when progress on a rival U.S.-led trade deal has stalled, injecting a note of rivalry into an annual summit that aims for consensus.

The two-day meeting of 21 countries including the United States, Japan and South Korea is the first major international gathering in China since President Xi Jinping came to power. Starting Monday, the Asia Pacific Economic Cooperation meeting gives China, the world's second-largest economy, a platform to assert itself as a regional leader.

The proposal promoted by China, the Free Trade Area of the Asia Pacific, is part of an agenda that also includes talks on cooperation in environmental protection, energy efficiency and urbanization.

"We will reach important consensus" on the launch of the free trade process, said Foreign Minister Wang Yi at a news conference ahead of the gathering.

China's campaign for the initiative comes as Beijing tries to claim a bigger role in U.S.-dominated global trade, security and financial structures.

Last month, China and 20 other Asian nations launched a bank to pay for roads and other infrastructure, despite U.S. objections it is an unneeded rival to the World Bank. Beijing is providing most of the $50 billion in startup capital.

In May, Xi called for the creation of a new Asian structure for security cooperation based on a 24-nation group that excludes the United States.

Beijing worries Washington is pursuing a "strategy of containment" against China and sees a China-led trade pact as a way to gain influence, said Chen Bo, a trade specialist at the Shanghai University of Finance and Economics.

"China doesn't want to be led by the nose by the U.S.," said Bo. "The more they have in hand, the better their negotiating ability will be. Then people will want to join China, instead of China joining other countries."

China is the top trading partner for most countries in the region, from Australia to South Korea. Such countries want to promote commercial ties but are uneasy about Beijing's strategic ambitions, especially at a time when it is embroiled in territorial disputes with Japan in the East China Sea and with Vietnam and other Southeast Asian neighbors in the South China Sea.

The United States and some other governments believe China's trade initiative is at too early a stage to take up at APEC and will be a distraction, said New Zealand's trade minister, Tim Groser. But he said the proposal is the "big, sexy, formal centerpiece" of next week's meeting.

"China is the host, and a great power, and so we have to find something that's acceptable to China as well as the U.S.," said Groser in an interview.

Washington is promoting the Trans-Pacific Partnership in talks with 12 Asian-Pacific countries including Japan, Canada, Australia and Mexico. Few details have been released, but promoters say it would cut tariffs, open up trade in farm goods, strengthen protection of intellectual property and set standards for state-owned industries.

For now, the talks exclude China, despite its status as the world's biggest exporter.

Governments involved in the U.S.-led trade pact plan to meet to discuss it during APEC, according to Groser.

The agreement was proposed by Chile, New Zealand and Singapore in 2002 but Washington has taken the lead in promoting it since joining the talks in 2008. The governments missed a 2012 deadline and negotiations have stalled over objections to its proposed sweeping changes.

Japan is reluctant to open markets for autos and farm goods. Its trade minister, Akira Amari, said last month he saw "no prospect for an agreement on market access." South Korea is mulling whether to join the talks, which is making its farmers uneasy.

Non-governmental groups worry longer periods of patent protection sought by U.S. pharmaceutical companies might hurt poor countries such as Vietnam by slowing the release of lower-cost generic drugs.

Labor and other activists complain it might give corporations too much influence over official policy.

Analysts say members of the U.S.-led agreement might favor each other's goods, hurting China if it fails to join. A Washington think tank, the Petersen Institute for International Economics, says that might cost China up to $100 billion in lost potential sales.

The deal being pushed by China would include Southeast Asian nations, Japan and South Korea. It is meant to create a free-trade zone and resolve conflicts among overlapping trade agreements between pairs of countries.

Li Kui Wai, an economist at the City University of Hong Kong, said Asian governments are reluctant to declare support publicly for either of the China- or U.S.-led initiatives.

"Siding with one would mean upsetting the other," he said.

In May, APEC trade ministers agreed to form a panel led by Beijing and Washington to "kick off and advance the process" of the Chinese trade pact. They withheld support for more ambitious proposals, including a timeline calling for the agreement to take effect in 2025.


AP writers Louise Watt in Beijing and Nick Perry in Wellington, Youkyung Lee in Seoul and researcher Fu Ting in Shanghai contributed.


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