WASHINGTON (AFP) — Succumb to political pressure for protectionism or use trade as a tool to inject economic growth to a faltering US economy? This is the dilemma facing president-elect Barack Obama as he charts US trade policy for the Pacific rim.
As leaders of the Asia-Pacific Economic Cooperation (APEC) forum meet in Lima, Peru this week to renew their vows to guard against protectionism, Obama prepares to inherit a massively deficit-ridden economy reeling from its worst financial crisis since the Great Depression.
Amid the turmoil, the first Democratic leader to enter the White House in eight years is under pressure to ignore free trade agreements his predecessor George W. Bush's administration signed with key allies, for the benefit of American workers.
While the lame duck Bush is expected to assure leaders of the APEC economies that the United States will continue to press for free trade and reject protectionism, their thoughts will be on Obama's trade strategy for a region that accounts for nearly half of global trade.
"The incoming president will face more political pressure for protectionism than any other US chief executive since 1930," said outgoing US Under Secretary of Commerce Christopher Padilla ahead of the November 21-23 APEC summit.
"How president-elect Obama responds to this pressure will define the course of the global economy -- and America's economic identity -- for a generation," he said.
It is not clear whether Obama will give a push within the APEC forum to a Bush administration-initiated plan to forge a free trade area of the Asia-Pacific stretching from China to Chile.
Although leaders at the APEC summit in Sydney last year agreed to "examine the options and prospects" for the ambitious plan, Japan and China and several other economies have given lukewarm backing, APEC officials said.
Another Bush initiative in APEC which the Obama administration has to consider is a tariff-busting agreement which Washington wants to forge with Singapore, New Zealand, Chile and Brunei.
Negotiations for the United States to join the "Comprehensive Trans-Pacific Strategic Economic Partnership" agreement have been slated for March.
In the face of concerns over Obama's trade agenda, his advisors say he wants to give emphasis to both regional and multilateral trade negotiations.
The new US leader may also steer the APEC grouping to its central focus of trade and investment liberalization.
"Perhaps APEC could be recommitted to trade liberalization and trade integration as its central focus -- rather the security," one advisor said, referring to Washington's emphasis on security in forum deliberations after the September 11, 2001 terror attacks.
"We have pretended to use it for security partly because we weren't in other organizations that might afford a good opportunity," the advisor said, speaking on condition of anonymity.
Obama's advisors are confident of his expected participation in a key East Asian summit comprising leaders of the 10 ASEAN states -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- as well as Australia, China, India, Japan, New Zealand and South Korea.
Although the Bush administration had refused to sign ASEAN's non-aggression pact, whose ratification is mandatory for a seat at the East Asian summit, it has relentlessly pursued a free trade agenda in the Pacific rim.
It has forged or implemented free trade agreements with 17 countries, including Australia, Singapore, South Korea, Colombia and Peru.
Obama, who is strongly backed by trade unions, however opposes pacts signed with Colombia and South Korea, which together with one signed with Panama are currently awaiting Congressional approval.
He also wants to renegotiate the key North American Free Trade Agreement (NAFTA), saying he wants to protect US jobs.
The Korean deal, the biggest to be forged since NAFTA 15 years ago, gives US carmakers too little access to the South Korean market, Obama argued.
The president-elect's top priority is to get the US Congress, convening for a post-election lame-duck session this week, to set the stage for an economic stimulus plan needed to create growth and boost jobs.
Bush told his successor last week that he might support the plan if Obama and Democratic lawmakers dropped their opposition to the pending free-trade deals, according to news reports dismissed by aides to the leaders.
"As we act in concert with other nations, we must also act immediately here at home to address America's own economic crisis," Obama said.
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