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APEC countries agree to launch massive new free-trade zone

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In their “Yokohama Vision,” APEC leaders said, “[T]rade and investment liberalization and facilitation will continue to be APEC’s core objective. We have agreed that now is the time for APEC to translate FTAAP from an aspirational to a more concrete vision.” But that consensus – in fact a reaffirmation of an agreement reached by the body’s finance and foreign ministers last week – could not hide serious differences over economic policy and territorial claims.

President Obama returned to Washington Sunday after a 10-day, Asia-wide trip that culminated in a failure to close the gap with China over exchange rates.

Beijing has resisted pressure to allow its currency, the yuan, to rise and to make other adjustments that would help US exporters gain a foothold in the world’s second-biggest economy.

China has responded in kind, accusing the US of turning to quantitative easing to keep the dollar artificially low in an attempt to make its exports more competitive.

Chinese President Hu Jintao offered little comfort to Obama, whose standing at home after a disastrous showing in the midterm elections will not have been helped by the currency fudge in Yokohama.

“Advanced economies have to cope with serious unemployment problems, while emerging-market economies are confronted with asset price bubbles and inflationary pressure,” Mr. Hu said.

The APEC leaders did, however, pledge not to resort to “competitive devaluation” of their currencies. “Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates,” they said. “These actions will help mitigate the risk of excessive volatility in capital flows facing some emerging markets.”

Territorial disputes

Much of the bilateral chatter that characterizes APEC summits focused on the territorial disputes.

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