APEC ministers face challenges over global trade imbalances+

KYOTO, Nov. 5 Kyodo -
Finance ministers from Pacific Rim economies will explore opportunities for
further cooperation in restoring the world economy and addressing massive trade
imbalances during a two-day meeting that began Friday in Kyoto.
The financial chiefs from the 21-member Asia-Pacific Economic Cooperation
forum, which accounts for more than half the world's gross domestic product,
are also expected to adopt a report on a growth strategy for the region before
submitting it later to the summit of APEC leaders.
''I believe that exploring how to achieve economic growth in this region is a
main topic,'' Japanese Finance Minister Yoshihiko Noda, who chairs the meeting,
told reporters before the meeting in Tokyo.
The ministers aim to compile a communique while agreeing on a range of issues
including economic policies for more balanced growth, sound fiscal management
at a time of aging populations and investment in infrastructure, Noda said.
APEC groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia,
Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the
Philippines, Russia, Singapore, Taiwan, Thailand, the United States and
Vietnam.
The meeting comes amid growing scrutiny of the health of some countries' public
finances and massive global trade imbalances, with the Group of 20, another
forum encompassing both advanced and emerging economies, struggling to set up
guidelines for capping its members' current account surpluses and deficits.
The measure, pressed for mainly by the United States, would force China and
other countries to rein in their trade surpluses.
Discussions at the two major groupings are overlapping to some extent, as APEC
includes several G-20 economies.
Although its agreements on any policy action are nonbinding, APEC has committed
itself to addressing the imbalances, urging member economies with external
deficits to support private savings and undertake fiscal consolidation while
requesting those with external surpluses to strengthen domestic sources of
growth.
APEC needs to take action that would help rebalance the world economy, Asian
Development Bank President Haruhiko Kuroda said.
''We cannot deny the importance of (strengthening) domestic demand and
consumption as well as of structural reforms,'' Kuroda told reporters ahead of
the meeting.
The ADB, along with the International Monetary Fund and the World Bank, will
make presentations on the economic outlook in the Asia-Pacific region.
Foreign exchange policy is expected to be a hot issue at the meeting.
Meeting last month in South Korea, G-20 finance ministers and central bank
governors vowed to ''refrain from competitive devaluation of currencies,'' amid
fears of a possible currency war, in which countries race to devalue their
currencies or control capital inflows as a way to boost exports and employment.
The current draft of the APEC ministers' communique does not make any direct
reference to currency policy cooperation, a source close to the matter said,
but added there is no doubt some members will make remarks on the topic.
The ministers could agree on the necessity of moving toward market-oriented
exchange rates that reflect underlying economic fundamentals, the source said.
China, which has been at the center of currency disputes, did not send its
minister to Kyoto and is instead represented by a deputy at the meeting while
the United States, raising pressure on Beijing to allow the yuan to appreciate
more rapidly, is sending Treasury Secretary Timothy Geithner to the ancient
Japanese capital.
Kuroda said capital flow controls are not favorable in the longer term, as they
could ''bring about (financial) market distortions.''
The APEC ministers will also discuss how to secure finances to enhance economic
growth, including in such areas as infrastructure, small and medium-sized
companies and tackling climate change, and will adopt on Saturday a ''Kyoto
Report on Growth Strategy and Finance.''
The report, which will compose policy steps to ensure more balanced and
sustainable economic growth in the region, will be submitted to the summit of
APEC heads of government scheduled for Nov. 13-14 in the Japanese city of
Yokohama.
==Kyodo
2010-11-05 22:25:12


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