Leaders who oversee half the world’s economy pledged Saturday to avoid protectionism but shied away from any new proposals on the financial crisis because of somebody who wasn’t there: U.S. President-elect Barack Obama.
The 21 leaders endorsed last weekend’s agreement by major world economies to resist domestic pressures to protect industries, while ensuring that small and medium-sized companies have enough credit to stay afloat.
“We strongly support the Washington Declaration and will refrain within the next 12 months from raising new barriers to investment or to trade in goods and services (and from) imposing new export restrictions,” leaders of the Asia-Pacific Economic Cooperation forum said in a joint declaration.
They also pledged to reach agreement next month on the outlines of a World Trade Organization pact that collapsed in July after seven years of negotiations. Concern over the global financial crisis injected new urgency into the so-called Doha round of trade talks.
The leaders called for greater APEC participation in the International Monetary Fund and other multilateral lenders. Japan said last week it was ready to lend up to $100 billion to the IMF, but China has so far resisted entreaties to dig into its $1.9 trillion in reserves.
Leaders speak out against protectionism
Delegates said, however, that there was little incentive to propose more concrete action without the support of Obama, who takes office in January and did not send representatives to Lima.
“The next U.S. administration must assume leadership in a very firm manner — not just for Americans but for the whole world,” Mexican President Felipe Calderon said in a speech before heading into closed-door meetings that produced the resolution.
Even people who work for the White House’s outgoing occupant, George W. Bush, acknowledged that tough issues such as a stalled U.S.-South Korea free-trade agreement would likely have to wait.
However, Bush did attempt to persuade allies to secure a North Korea disarmament deal before he leaves office, pushing hard for a late, legacy-shaping win. The White House announced that all nations engaged in the showdown with North Korea would meet in China in early December.
That nudge in the process alone was a boost to Bush, whose government is eager to lock in an international agreement on how to accurately verify North Korea’s nuclear capabilities.
Leader after leader at Saturday's forum spoke out against protectionism, saying it would bring devastating consequences.
“Companies will go bankrupt and countless jobs will be lost, and poor nations and poor people will suffer the most damage,” South Korean President Lee Myung-bak told business executives.
Bush said nations must not respond to the crisis by “imposing regulations that would stifle innovation and choke off growth.”
“One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin,” he said.
Free-trade success stories
The leaders argued their case with free-trade success stories. Lee, former head of the Hyundai group, said open markets were central to boosting his nation’s per-capita annual income from $100 in the 1960s to $20,000 today. Canadian Prime Minister Stephen Harper said the North American Free Trade Agreement has tripled trade and created 40 million jobs.
But Nick Reilly, president of General Motors Corp. Asia-Pacific, said the leaders all will face intense pressure at home to protect their most vulnerable markets.
“The economies haven’t yet seen the full impact of unemployment hit. So domestically, the leaders are going to be facing that,” Reilly told The Associated Press.
Indonesia’s trade minister, Mari Pangestu, told the AP that some protectionist measures are inevitable in the coming year or two. The secret, she said, is to not make them open-ended.
“You will have to end up protecting particular groups,” Pangestu said in an interview, giving the example of the agriculture sector in Indonesia, which accounts for 60 percent of its 237 million people.
Canadian Prime Minister Stephen Harper alluded to the tough decisions ahead when he described his recent re-election in terms that could just as easily apply to Obama.
Getting elected these days, he said, “is like winning a vacation to the Caribbean during hurricane season.”