HONOLULU (Reuters) — Leaders of major nations bordering the Pacific expect to make progress at APEC meetings this week on building a regional free trade area and a green initiative, steps that would help foster world economic growth unlike the tumultuous outcome of G20 summit.
Asia-Pacific countries are among the fastest growing in the world with 2.5 billion consumers accounting for 60 percent of global income, offering huge trade opportunities.
But discussions among APEC's 21 members on free trade have languished in recent years while the United States was consumed by the financial cleanup from the 2007-2008 credit bust and its military engagements in Iraq and Afghanistan.
China meanwhile has moved ahead with a series of multi-nation trade agreements throughout Asia and has flexed its military muscle in the South China Sea.
The APEC meetings, to be held from Nov. 9-13 in the city of U.S. President Barack Obama's birth, will give him an opportunity to relaunch the United States into the Asia-Pacific century as it confronts rising competition from China.
U.S. trade officials said they are close to agreeing on a green growth initiative, which would cut tariffs on environmental goods and services, such as solar panels and wind turbines, to help promote clean technologies.
But the primary U.S. initiative is the Trans Pacific Partnership, or TPP, a trade pact under negotiation among nine nations on the sidelines of APEC that would inject the U.S. into the heart of Asia's regional trade architecture and provide a counterweight to China. It also would allow Obama to say he is opening paths to new job creation.
Right now there are competing pathways toward achieving regional trade integration -- one revolving around China and other Asian nations; the other focused around the United States and TPP.
If the United States can secure a detailed outline for completing TPP talks, and attract Japan to join in, it would mark a resurgence of U.S. leadership in the region and set aside concerns that it could cede the area to China.
"We don't want to see an architecture of trade arrangements and political arrangements in Asia that draw a line down the middle of the Pacific," said Michael Green, senior adviser at the Center for Strategic and International Studies in Washington.
CHINA AND JAPAN
The U.S. is close to completing the broad TPP outlines with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.
Japan, the world's third largest economy, may announce this week it wants to join the talks. Prime Minister Yoshihiko Noda Noda has signalled he is keen to join the TPP talks to spur growth in a country with a shrinking and graying population. He will hold talks with Obama in Honolulu.
Japanese industries have urged the government to participate so as not to fall too far behind rival South Korea, but the farming lobby says it would devastate Japan's agriculture, which has long been protected by high tariffs.
Hisashi Yamada, chief economist at Japan Research Institute, said failure to join would be even worse. "Not promoting free trade agreements would be negative for the Japanese economy, which is already facing the hollowing out of industry," said Hisashi Yamada, chief economist at Japan Research Institute.
Peter Scherr, executive vice president for global government relations at JPMorgan Chase, said if Japan joins it would be a "major deal." It would elevate the U.S.-led talks and bolster APEC as a negotiating forum, signifying the importance of regional deals as an alternate path with the Doha round of world trade talks all but dead.
A breakthrough also would contrast with last week's G20 summit, where world leaders failed to offer any new remedies for reinvigorating a world economy still badly scarred from the financial crisis. The G20 meeting was subsumed by the chaos of the European debt crisis and trying to prevent a messy default by Greece.