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ASIA-PACIFIC: More Public Spending to Ward Off Panic

Ángel Páez

LIMA, Nov 23 2008 (IPS) - With a call to the world not to allow fear and desperation to take over as a result of the economic crisis, Peruvian President Alan García closed the 16th summit of Asia Pacific Economic Cooperation (APEC) leaders Sunday.

Addressing the leaders of the forum’s 21 member economies, dressed for the occasion in alpaca wool ponchos, García said the meetings were fruitful because they discussed actions “to beat the crisis.”

The most important resolutions were the promotion of measures to foment public spending to combat the recessive effects of the crisis and the renewal of trade liberalisation, to fight protectionism.

“We have assumed our responsibility towards the world. We are going to beat the crisis with the help of the governments, the people and business to keep humanity from falling into panic, depression and uncertainty,” said García.

“This has been an anti-crisis summit,” he added.

The summit’s final document, the Lima Declaration, sums up the state of mind of the leaders in the face of the world situation since the real estate bubble burst in the United States, triggering the current global financial crisis.

“The current global financial crisis is one of the most serious economic challenges we have ever faced. We will act quickly and decisively to address the impending global economic slowdown,” says the declaration.

“We welcomed the monetary and fiscal stimulus provided by APEC member economies and will take all necessary economic and financial measures to resolve this crisis, taking the necessary actions to offer hope to those most in need,” it continues.

The 21 APEC members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the United States and Vietnam.

As expected, the document calls for a resumption of negotiations for the freeing up of world trade. “Our resolve to address the deteriorating global economic situation, and support a prompt, ambitious and balanced conclusion to the WTO Doha Development Agenda (DDA) negotiations, is outlined in a separate statement issued at this meeting,” says the document.

The two day summit was held at the central army base in Lima amidst extremely tight security, with snipers posted atop nearby buildings, overflights by police helicopters and a warship and coast guard vessel anchored off the Pacific coast near Lima.

Two Peruvian air force MiG-29 fighter planes were also on standby.

The APEC leaders committed themselves to strengthen multilateral financial institutions and to fight protectionism and encourage free trade, in order to curb the impact of the imminent global recession.

“Our goal of free and open trade and investment in the Asia-Pacific region will be achieved through a series of unilateral reform measures combined with bilateral, regional and multilateral liberalisation,” says the declaration.

Over the next 12 months, the APEC members are to dismantle various protectionist devices.

García applauded that aspect as one of the key achievements of the summit.

“We are going to avoid and denounce protectionism wherever it appears, because we believe that the fundamental instruments for development, employment and assistance to the needy are production and free trade,” he said.

In the view of Economics Professor José Oscátegui at the Pontifical Catholic University of Peru, the anti-protectionist discourse is contradictory because some of the APEC member economies belong, precisely, to the “protectionists’ club.”

“It is likely that many of the countries that signed the Lima Declaration will not fulfil the commitment to dismantle protectionist measures to confront the economic crisis, because economies like those of the United States and the Russian Federation are protectionist,” Oscátegui told IPS.

“Maybe the aim is to get countries like Peru to lift their restrictions and open up their markets, so that we will buy their products. But that would not be good for our country. It’s important to remember that we haven’t yet seen the tail end of the crisis,” said the economist.

APEC was created in 1989 to help build a Pacific “community of nations,” enhance dialogue and understanding among the nations and peoples of the region, increase commercial and technological exchange, and encourage cooperation on a range of common problems, by means of mechanisms like free trade agreements.

The member economies agreed in 1994 that the industrialised members would meet the goal of free and open trade by 2010, and the developing members by 2020.

But APEC decisions, which are adopted by consensus, are non-binding.

No one expected the APEC summit to come up with a magic formula against the crisis. Peruvian Foreign Minister José Antonio García Belaúnde said that “we have shared our assessments and analyses of the situation, and a few policies have been defined. We have taken a look at the problems and their causes, and we have organised to deal with the situation. But we weren’t going to come up with a real solution here.”

Questions related to economic development and its impact on the environment were also discussed.

“We are worried about global warming and climate change,” said García. “We are not going to sacrifice our historical responsibility with respect to the next generations just because of the current urgent financial problems.”

The summit also took up Australia’s proposal to adopt carbon capture and storage systems with the aim of reducing the concentration of carbon dioxide, the main greenhouse gas, in the atmosphere, as well as a Mexican initiative aimed at financing the fight against climate change.

“We recognised the value of conservation, sustainable forests management and land use practices and enhancement of carbon stocks in forests and agricultural soils for carbon sequestration in the global response to climate change,” says the declaration.

The follow-up of the agreements reached in Lima will take place in Singapore, which will host the 2009 APEC meetings.