Asian leaders seek to trim down Western trade ties

Asian leaders seek to trim down Western trade ties

Japan moots the formation of an East Asia Community

Asia-Pacific leaders, on Sunday, called for regional-wide free trade and other measures to reduce dependence on the United States and big Western markets as Asia leads the way out of the global economic downturn.

Japanese Prime Minister Yukio Hatoyama urged Asian leaders to keep up fiscal and monetary stimulus measures even as their economies show mounting signs of recovery, saying there was “no room for complacency” and that the job market was still “dire.”

“At the moment the global economy is showing signs of recovery, mainly in Asia,” Hatoyama told the closed-door East Asia Summit of 16 Asia-Pacific leaders in the Thai town of Hua Hin, according to Foreign Ministry spokesman Kazuo Kodama. Hatoyama found tentative support from his Asian counterparts for a proposed regional community inspired by the European Union that would account for nearly a quarter of global economic output.

“I think my long-term vision of forming an East Asia Community was largely welcomed by participants,” Hatoyama told reporters. The bloc, however, would take more than 10 years to create and may include some sort of regional currency, he added.

Thai Prime Minister Abhisit Vejjajiva said Asia clearly needed a new growth model leaning less on big Western trading partners and more on Asia-wide trade pacts. The global financial crisis, he said, bore this out. “The old growth model, where simply put we have to rely on consumption in the West for goods and services produced here, we feel will no longer serve us as we move to the future,” Abhisit said.
Asia’s leaders also agreed it was too early to end government spending and other measures designed to get Asia back on its feet, said Indian Prime Minister Manmohan Singh, at the helm of Asia’s third-biggest economy. “The world’s eyes are on Asia as the region which can lead the global economic revival,” he said.

Tough task to integrate

But there were signs that integrating Asia’s wildly divergent countries -- from the economic powerhouses of Japan and China to the hermit state of Myanmar and impoverished regions of Southeast Asia — is easier said than done.

Thailand, the world’s biggest rice exporter, and the Philippines failed to reach agreement over import tariffs that could derail a trade pact at the heart of Southeast’s bid to build an economic community by 2015.

A free-trade pact in Southeast Asia, a region of 570 million people, calls for Philippine rice import tariffs to be cut to 20 percent from 40 percent by Jan. 1, and then be progressively cut further. But Manila says the tariffs should stay at 35 per cent.

There were other ways to propel the region’s budding economic recovery, said Asian Development Bank President Haruhiko Kuroda, urging Asian leaders to keep stimulating domestic demand along with regional demand to become less dependant on the US market.

“A rebalancing of the sources of growth in Asia is a very important challenge,” he was quoted by a Japanese official as saying. Japan’s idea for an East Asian Community would encompass Japan, China, South Korea, India, Australia and New Zealand, along with the 10-member Association of South-East Asian Nations (Asean). Leaders from all those states joined Sunday’s talks.

Australian Prime Minister Kevin Rudd pushed another idea for a new, separate forum of Asia-Pacific nations to respond to regional crises -- from natural disasters to security scares and economic meltdowns. His idea includes the United States.