US president Barack Obama has announced the outlines of a plan to create a trans-Pacific free trade zone.US president Barack Obama has announced the outlines of a plan to create a trans-Pacific free trade zone at the Asia-Pacific Economic Co-operation (APEC) summit in Hawaii. Obama said the trade zone could serve as a model for the region and for other trade pacts, increasing U.S. exports and helping to create jobs, a top priority in the fastest growing region in the world. Such a free trade area would have 800 million consumers and almost 40 per cent of the world economy and would be largest trading zone in the world, bigger that the European Union, which is responsible for only one quarter of the world’s wealth. Much of the work by Obama and other leaders at the summit of the 21-member Asia-Pacific Economic Cooperation forum was aimed at fostering freer trade and closer cooperation to help fend off recession as Europe struggles to resolve its debt crisis. By removing barriers and bottlenecks that slow business, APEC members hope to re-energize growth at a time when the world economy most needs dynamism in the Asia-Pacific region to offset the malaise spreading from crisis-stricken Europe. At the same time they are working toward a broader agreement, countries are continuing to forge separate free-trade deals.
China, the regional economic giant which is set to overtake the United States as the world's largest economy this decade, is reportedly lacking enthusiasm on the pact, however, with officials describing the proposal as "overly ambitious". China's reluctance to endorse such a plan likely reflects its wariness of being drawn into what has become a U.S.-led initiative, even though the current TPP membership includes only Chile, New Zealand, Brunei and Singapore. The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join. Chinese President Hu Jintao, in a speech to business leaders on the sidelines of the summit, reiterated China's support for an earlier-proposed APEC-wide free trade zone. On Friday, the country's trade minister, nonetheless, said Beijing would seriously consider joining the TPP if invited.
The Trans-Pacific Partnership (TPP), by promoting free trade, could spur global economic growth. With Europe moving toward recession, a fast-growing Asia-Pacific region could be an engine for faster global economic growth. Forecasts of the International Monetary Fund have said that Asia is expected to grow 8% next year, about four times faster than the United States. The outline for the free trade pact announced by Obama and other leaders pledges to work toward eliminating tariffs and other barriers to trade and investment, facilitating trade and other business, harmonizing regulatory standards, aiding small and medium-size companies and contributing to development and poverty relief. Japan, the world's third-largest economy, has also signalled that it wants to join the negotiations on the Trans-Pacific Partnership, and the Obama administration hopes other nations will be wooed as well. In all, 21 APEC countries account for about 44% of global trade and make up some 40% of the world's population.
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