[R-G] APEC leaders won't raise trade barriers for the next year

[Anthony Fenton]

http://www.canada.com/topics/news/world/story.html?id=3bcf95cf-d908-4ce2-af70-989482987a42
APEC leaders won't raise trade barriers for the next year

David Akin
Canwest News Service

Saturday, November 22, 2008

Leaders of 21 economies of the Asia-Pacific Economic Cooperation  
( APEC) gather in Peru where they are pressing for World Trade  
Organization (WTO) action.
CREDIT: ALEXANDER NEMENOV/AFP/Getty Images
Leaders of 21 economies of the Asia-Pacific Economic Cooperation  
( APEC) gather in Peru where they are pressing for World Trade  
Organization (WTO) action.

LIMA, Peru - APEC leaders have agreed not to raise any new trade  
barriers for the next 12 months, a key goal of Prime Minister Stephen  
Harper in his discussions here and with other world leaders over the  
last several weeks.

Harper warned world leaders at the Asia Pacific Economic Cooperation  
forum here that the Great Depression that began in 1929 was not caused  
by a stock market crash - but was a result of bad decisions made by  
governments and policy-makers, one of which was shutting down borders  
to trade in order to protect domestic jobs.

In a Saturday speech to about 1,000 chief executives of companies from  
the 20 Pacific Rim countries that make up APEC, Harper called on  
governments to increase spending, maintain open trading relationships  
and support financial institutions and struggling industry sectors.

"The world is entering an economic period unlike, and potentially as  
dangerous as, anything we have faced since 1929," Harper said. "Now is  
the time for opening doors, not erecting walls."

Harper said that the Great Depression was caused by governments around  
the world letting banks fail, allowing deflation to run rampant and  
trying to balance their books at all costs, even if it meant raising  
taxes and slashing public spending.

"These are mistakes the government of Canada will not make," Harper  
said.

Hours earlier, at a Friday news conference, Harper promised his  
government would take "unprecedented fiscal actions if they are  
necessary" to stimulate economic growth and ease tightened credit  
conditions.

"The colossal crisis facing the world today is an opportunity to  
recommit ourselves to the principles of cooperation and openness in  
the international economy," Harper said Saturday.

As a symbol of his commitment to that principle, Harper and Colombia  
President Alvaro Uribe signed a free trade deal Friday that opens new  
markets for Canadian beef, pork, potatoes and other products in the  
South American country. Though negotiations for that deal were largely  
concluded last summer, Harper held up the agreement as an example of  
the kind of lowered trade barriers that could spur economic growth and  
investment.

Senior executives from several Canadian companies that have business  
interests in South and Central America are at the APEC summit to  
support Harper's work. Donald Lindsay, the chief executive of mining  
giant Teck Cominco Ltd. of Vancouver, and John Manzoni, CEO of  
Talisman Energy Inc. of Calgary, were among that group.  
Representatives of Barrick Gold Corp. of Toronto, SNC-Lavalin Group  
Inc. of Montreal and the Vancouver Board of Trade also travelled to  
Lima this weekend.

APEC members include Canada, the United States, China, Japan and  
others. Collectively, APEC members account for more than half of the  
world's economic activity.

In his speech, Harper also seemed to criticize those countries, such  
as the United States and the United Kingdom, that have partially  
nationalized their financial institutions by taking out ownership or  
equity stakes in major banks.

"Better government regulation of financial institutions, not financial  
institutions run by the government, is the solution to the financial  
crisis," Harper said, with Scotiabank CEO Rick Waugh sitting next to  
him on the stage. That line was one of two in his 15-minute speech  
that brought a loud round of applause from the business audience.

Harper also said that Canada believes in a flexible exchange rate,  
even if it results in some short-term pain for certain sectors.

His officials said this line in his speech was not addressed to any  
one country - but there has been pressure on China, an APEC member, to  
'free' its exchange rate. China keeps its exchange rate artificially  
low, which helps make Chinese products relatively cheaper than  
products from other countries.

But that policy, which has helped make China one of the world's  
biggest economies, has left most countries, including Canada, carrying  
a huge trade deficit with China. If China let its exchange rate float  
in response to global economic conditions, as Canada does, its  
currency likely would become more expensive.

That would have the effect of making goods made in Canada and  
elsewhere relatively cheaper for Chinese customers. If China boosted  
its imports in that way, it could have the effect of stimulating  
export-dependent economies such as Canada's.

Harper had a one-on-one meeting with U.S. President George W. Bush  
before his speech. Among other things, the two leaders talked about  
the Detroit-Windsor Bridge and Canada's concerns regarding new product  
labelling laws.

Harper was also to have private meetings Saturday with the leaders of  
Peru and New Zealand.
© Canwest News Service 2008