BALI, Indonesia (AP) — Fighting protectionism and pushing through difficult reforms are critical to the global recovery as the world’s biggest economies struggle with their own internal obstacles to growth, Asia-Pacific leaders gathered for an annual summit said Sunday.
With U.S. President Barack Obama bogged down in the domestic drama over the national budget and government shutdown, national leaders at the annual Asia-Pacific Economic Cooperation forum were watching to see how the biggest economies fare. Obama canceled his trip to the APEC meeting on the Indonesian resort island of Bali because of the budget impasse.
“Obviously we prefer a U.S. government which is working to one which is not,” said Singapore’s Prime Minister Lee Hsien Loong. “It’s a very big disappointment to us that President Obama is unable to visit.”
The 21 nations and territories that make up APEC range from tiny Brunei to the U.S. and China, the world’s two biggest economies. They have great disparities in wealth and economic development but combined the grouping accounts for more than 3 billion people and over half of global GDP. A two-day CEOs conference is being held alongside APEC, resulting in an influx of private jets. Bali’s governor Made Mangku Pastika said many are being parked at other nearby Indonesian airports to avoid congestion on Bali.
Lee pointed to the U.S. budget battles, Europe’s lingering financial crisis, China’s reform challenges as its breakneck expansion slows and Japan’s effort to emerge from more than two decades of stagnation as key risks to global growth.
“America has to continue to be engaged in this region, because it plays a very important role that no other country can replace. Not China. Not Japan. Not any other power,” Lee said.
Indonesia’s President Susilo Bambang Yudhoyono urged the more than 1,200 business and political leaders in Bali to do more to counter the economic headwinds confronting developing countries by dismantling barriers to trade and investment.
Trade deficits, capital flight and weakening currencies threaten to undo progress among developing economies in the region against the backdrop of a fragile and uneven global recovery.
His call to guard against pressures to raise trade barriers was consistent with a draft of the APEC leaders’ declaration, seen by The Associated Press, which is set to be released at the end of the summit.
“APEC is in the ideal position to help the recovery of the global economy,” said Yudhoyono, emphasizing the importance of preventing protectionism and opening markets further to maximize prosperity.
“First and foremost we need to do our part to prevent protectionist policies and continue on our path of trade liberalization and maximize the well-being of our citizens,” he said.
Reductions in tariffs over the past 25 years have yielded nearly $59 billion in savings for businesses, said Yudhoyono, whose own country is struggling to protect gains that have made the world’s largest Muslim country a rising economic power in the region.
New Zealand’s prime minister John Key, known as a vigorous advocate of free trade, said leaders discussed the challenges of convincing their countrymen and women of its benefits. He said industries that are protected by tariffs have to go through “adjustments” when trade is freed but the broader benefits, which can include lower prices for consumers and higher productivity for businesses, “speak for themselves.”
Indonesia’s trade minister Gita Wirjawan said there are grounds to think that people believe more in the existence of UFOs than the benefits of free trade. For developing countries particularly, where some industries lack the competitive sophistication of those in rich countries, it is easier to argue for free trade when there are visible signs of its benefits such as factories and jobs, he said.
The APEC summit also offers Indonesia a chance to showcase its own progress and possibly attract foreign investment it needs to help modernize its roads, ports, and other infrastructure.
Yudhoyono said Indonesia’s recent troubles with a weakening currency and inflation were transient.
“We are convinced this is a short-term challenge. Indonesia will remain a land of opportunity and growth,” he said.
“As the chief sales person of Indonesia incorporated, let me urge you to take advantage of our opportunities,” Yudhoyono said, pointing to a potential $1.8 trillion in business prospects in a wide array of businesses by 2030.
APEC members are hoping to reach agreement on at least some reforms that might help break a logjam in world trade talks ahead of a WTO meeting in Bali in December.
“The economic turmoil of recent years and recent uncertainties in financial markets show just how much the global market matters to us,” said Wishnu Wardhana, CEO of Indonesian energy company Indika and chair of a CEO forum being held alongside APEC.
AP Business Writer Stephen Wright and Associated Press writer Niniek Karmini contributed.