US bid to strengthen free-trade agreement

The US has warned that the eurozone is adding to the urgency in the Asia-Pacific region – now the strongest driver of world growth – for more effective trade regimes to help spur job creation and for reforms to ensure financial resilience.

After a meeting of finance ministers of the 21-member Asia-Pacific Economic Co-operation forum, US Treasury secretary Timothy Geithner said yesterday: “We are all directly affected by the crisis in Europe.

“But the economies gathered here are in a better position than most to take steps to strengthen growth in the face of these pressures.”

The European Union has warned that the 17 countries that use the euro could slip into “a deep and prolonged recession” next year as the debt crisis that has already engulfed Ireland, Portugal and Greece has shown alarming signs of spinning out of control.

A European recession would be felt sharply in the US and in Asia, which relies on Europe as a big market for its cars, clothing, consumer electronics and other exports.

“Growth and job creation has weakened in the region, particularly in advanced economies,” the Apec ministers said in a statement that cited “heightened downside risks for the global economy.

“Such risks need to be addressed decisively to restore confidence, financial stability and sustainable growth.”

The Apec ministers discussed ways to re-energise economic growth and create jobs through nuts-and-bolts measures such as investment in infrastructure and reforms aimed at providing more access to financing for the poor.

The US and eight countries supporting a regional free trade pact, the Trans-Pacific Partnership, meanwhile met on the sidelines of the Apec gathering and agreed to work toward forging a broad outline for the plan.

The Pacific trade pact known as the TPP now includes Chile, New Zealand, Brunei and Singapore – all relatively small economies. The US, Australia, Malaysia, Vietnam and Peru are negotiating to join.

The US recently clinched long-sought free-trade pacts with South Korea, Colombia, and Panama – agreements that if ratified will bring to 20 the number of countries that have free-trade agreements with the US.

Bringing onboard other big regional powers such as Japan and China, the world’s second-largest economy, would vastly expand the bloc’s scope and impact.

The finance ministers’ statement included a call for exchange rate flexibility.