Nations must rein in stimulus spending, ensure stable growth and strengthen financial systems to ensure a thriving, prosperous global economy in the post-crisis period, Asia-Pacific finance and trade officials said Thursday.
Finance ministers from the Asia-Pacific Economic Cooperation forum’s 21 member economies huddled Thursday in Singapore to discuss the pressing challenge of finding ways to sustain growth and encourage free trade at a time of fragile economic recovery.
The weeklong forum culminates in a weekend leaders’ summit weekend that includes President Barack Obama, Chinese President Hu Jintao and Japanese Prime Minister Yukio Hatoyama, among others from Pacific Rim nations.
Restoring growth potential, withdrawing stimulus packages and meeting the region’s massive infrastructure needs are key challenges facing the world economy after the crisis subsides, said a joint statement due to be released by the finance ministers.
A draft of the statement, obtained by The Associated Press, also called for freer trade and warned against resorting to protectionism. The ministers agreed that flexible exchange rates and interest rates are “critical” for allocating resources efficiently, it said.
“We are committed to supporting open trade and investment to advance Asia-Pacific and global prosperity and growth ... and (we) will actively resist protectionist measures,” the proposed statement said.
The ministers also commit to strengthen financial supervision and regulations to prevent excess credit growth, blamed for the biggest financial crisis the world has seen since the 1930s, the draft said.
New Zealand Finance Minister Bill English told reporters New Zealand is gradually withdrawing stimulus and new spending in 2010.
“We are pulling back from pumping money in,” he said. “The concern is that the U.S. needs to keep stimulating their economy because it’s in a pretty bad shape. We are in a better shape, we can afford to pull back and get a more balanced recovery so that the private sector can get up and running, providing new jobs.”
English said the impact of the weak U.S. economy has been cushioned by robust Asian economies, especially China.
“We are on the road to recovery but there are going to be a few bumps along the road,” he said.
A main focus for the regional dialogue remains efforts to create an Asia-Pacific free trade area, which would account for about half the world’s exports and imports if it becomes reality.
Some ministers expressed optimism that Obama would support the plan given the deadlock in World Trade Organization talks.
But the plan is still some years away because of reluctance among some members, especially in Southeast Asia, to sign on to an agreement that would be dominated by the U.S.
“I think it’s a vision that any region could aspire to but whether or not it will be achievable and when” remains to be seen, said Surin Pitsuwan, the secretary-general of the Association of Southeast Asian Nations.
“There are many, many ideas floating around ... but we have to move very, very incrementally and carefully,” he said.
APEC was founded 20 years ago to promote greater trade and integration around the Pacific Rim. Its scope since has expanded to encompass a wide range of issues, including climate change, energy security and food security for the millions of vulnerable poor in the region.
In a significant breakthrough, APEC government officials agreed that leaders should discuss abolishing trade restrictions on food. The plan was recommended by the APEC Business Advisory Council, or ABAC, a council of regional business leaders.
ABAC says free trade in food would allow APEC members to use one another’s strengths to produce the best and cheapest food for all.
“We have finally got to an agreement with officials that this should go on at a very high level dialogue ... we are also calling for rules to make leaders end export controls,” said John Denton, an ABAC official.
If the plan takes off, Thai rice could be imported in any amount by any APEC member. Currently, many countries, including the Philippines, Japan and South Korea, restrict rice imports to protect their farmers.