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US and Asia Pacific nations plan trade pact by 2012

November 14, 2010

The United States and eight other Pacific Rim nations aim to forge a free-trade pact before President Barack Obama hosts an APEC summit in Hawaii in a year, Chile's president said Sunday.

Leaders of the nine nations met for the first time Sunday at a summit in Japan to discuss the so-called Trans-Pacific Partnership (TPP) pact which would oblige members to scrap tariffs and other trade barriers.

The group did not include China -- the world's number-two economy and biggest exporter -- which favours negotiating trade reforms in alternative forums that include only Asian economies and not the United States.

"The goal we set out today in a meeting with President Obama is that before the next APEC meeting in November in Honolulu we will have the TPP in force, and that is a very demanding task," said Chile's President Sebastian Pinera.

"So we'll have rounds of negotiations, the first in New Zealand and the second in Chile," he said, speaking on the sidelines of a wider summit of the 21-member Asia Pacific Economic Cooperation (APEC) forum.

He said that the nine countries "will hopefully be ready before we celebrate the upcoming APEC summit in Honolulu".

The fresh push was launched as APEC, often derided as an ineffectual talk shop, conceded it had failed to reach its goal set in 1994 to remove trade and investment hurdles for developed members by this year.

Obama, who was on an Asia tour after bruising mid-term election losses, hailed the benefits of free trade Saturday, saying that "with every one billion dollars we sell in exports, 5,000 jobs are supported at home".

The White House said at Sunday's meeting that "the leaders noted that, with the negotiations well underway, TPP is now the most advanced pathway to Asia-Pacific regional economic integration".

"They also reiterated their goal of expanding the initial group of countries out in stages to other countries across the region, which represents more than half of global output and over 40 percent of world trade."

For now the TPP has just four signed-up countries -- Brunei, Chile, Singapore and New Zealand -- but five others are in talks to join the group: the United States, Australia, Malaysia, Peru and Vietnam.

Japan's Prime Minister Naoto Kan attended as an observer, and South Korea has reportedly indicated interest in joining, as has Canada.

In the meeting, which included Australian Premier Julia Gillard and Singapore Prime Minister Lee Hsien Loong, the leaders "reaffirmed their objective of negotiating a high-standard agreement", said the White House.

APEC host Japan has deferred a decision on joining TPP by six months amid strong domestic opposition over fears free trade would badly damage the country's highly protected and inefficient farm sector.

Kan, who has said he supports joining the TPP, warned that "opening up the country will entail pain and suffering", even as protesters rallied outside the tightly guarded summit venue in Yokohama near Tokyo.

Simon Tay, chairman of the Singapore Institute of International Affairs, said Japan would benefit from joining TPP but that the government should only act when it has domestic consensus and is fully committed.

"Now with America on board, the negotiations since last year have already been very lively and now nine countries are on board," Tay said.

"Frankly it's still quite a small raft and America is already a very large person. The last thing we actually need now for the negotiations to be progressive is for Japan to also come on board and sort of wobble, because of agriculture and other issues.

"To get them on board -- when they are uncertain -- too quickly would actually ruin the TPP for the rest of us."

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