Hawaii - Obama's Pacific trade push gathers steam

US President Barack Obama's push to create the world's largest free trade zone spanning the Pacific gained momentum on Sunday as Canada and Mexico followed Japan into accession talks.

At a regional summit in his native Hawaii, Obama said harnessing the huge trade potential of the dynamic region was vital as he wooed countries from across the Pacific Rim into the US-led Trans-Pacific Partnership (TPP).

"Today we have got a chance to make progress towards our ultimate goal which is a seamless regional economy," Obama told the Asia-Pacific Economic Cooperation (APEC) forum, which accounts for more than half the world's GDP.

"I want to emphasize that the Asia-Pacific region is absolutely critical to America's economic growth.

"We consider it a top priority. And we consider it a top priority because we're not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful."

In another key priority for Obama, APEC -- which has 21 members including China, Japan and Russia -- pledged to remove barriers to green trade by limiting tariffs on environmental goods to five percent by the end of 2015.

Despite protests by China that the US agenda was overly ambitious, APEC members also made a non-binding promise to cut energy intensity -- the power used compared with the economy -- by 45 percent by 2035.

The TPP was once an obscure pact among four APEC members -- Brunei, Chile, New Zealand and Singapore. But Obama transformed it into the cornerstone of a US free trade drive with Australia, Malaysia, Peru, the United States and Vietnam now also in the talks.

Japan, the world's third-largest economy, committed to joining the negotiations on the eve of the summit. Mexico and Canada followed suit on Sunday with Canadian Prime Minister Stephen Harper telling reporters: "We are expressing our formal intention to join the Trans-Pacific Partnership."

The TPP, whose 12 interested parties account for almost 40 percent of the global economy and some 800 million consumers, would strike down tariffs and trade barriers and inject momentum to liberalization hopes bogged down by inconclusive talks in the Doha round.

The notable absentee is China, the world's second largest economy, and tensions over economic policy threatened to boil over as Obama and Chinese President Hu Jintao held talks in Hawaii on the sidelines of APEC.

The United States has not explicitly ruled out China's entrance into the TPP, but Secretary of State Hillary Clinton has linked the "21st century" trade agreement to fundamental values including openness and labor standards.

Obama, seeking re-election next year as many heartland Americans think they lost their jobs to lower-wage China, told Hu on Saturday that Americans were "impatient" for a change in Beijing's economic policy.

Washington says that China keeps its yuan currency artificially low to boost its exports and complains that Beijing is lax on intellectual property standards, penalizing US innovation.

Despite swirling optimism about the TPP, Obama has acknowledged that major obstacles must be overcome before a deal can be reached. Experts are skeptical that a US timeframe for a concrete pact in 2012 is realistic.

Some farm groups in Japan and the United States have voiced alarm that they would be swamped by global competition.

Obama also announced that Washington would consult China and Russia on new ways to pressure Iran over its nuclear program.

"We now have the situation where the world is united and Iran is isolated," Obama told a news conference, adding that his administration would have talks with the Chinese and the Russians in the next "several weeks."

Tension between Iran and its two principal foes, Israel and the United States, has risen since the release last Tuesday of a UN report saying there was "credible" evidence suggesting Iran's atomic program was being used to research putting nuclear warheads in ballistic missiles.

Obama and First Lady Michelle, in a stylish strapless dress topped with a pink sash, hosted a Hawaiian reception on Saturday evening on Waikiki Beach, in a rare informal opportunity for top world leaders.

But even with smothering security along the beach, one demonstrator managed to get through -- a popular Hawaiian recording artist who was enlisted to perform but, in a subtle protest, sang in support of the "Occupy" movement.

Obama scrapped the tradition of kitting out APEC leaders in local costume for the obligatory end of summit "family photo."

"I got rid of the Hawaiian shirts because I had looked at pictures of some of the previous APEC meetings and some of the garb that had appeared previously, and I thought this may be a tradition that we might want to break," he said afterwards at a closing press conference.

AFP

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