Obama makes free trade push at start of APEC meet

YOKOHAMA, Japan (AFP) – US President Barack Obama made a push for free trade in the Asia-Pacific at the start of a regional summit that threatens to be overshadowed by tensions between its biggest economies.

Pitching a free-trade pact that would group countries on both sides of the Pacific, Obama said on Saturday that "the security and prosperity of the American people is inextricably linked to the security and prosperity of Asia".

The US president said that seven of America?s 15 top trading partners were now members of the Asia Pacific Economic Cooperation (APEC) forum, whose 21 member economies are meeting in the Japanese port city of Yokohama near Tokyo.

With an eye to his domestic audience, which this month delivered him a mid-term electoral drubbing, Obama added that "with every one billion dollars we sell in exports, 5,000 jobs are supported at home."

While a key aim of APEC is to liberalise the free flow of goods, sharp divisions over trade have created tensions that surfaced at an earlier G20 summit in South Korea, especially between the United States and China.

Both economies accuse each other of artificially driving down their currencies in order to make their goods more competitive abroad, and China has rejected a US proposal to take steps to reduce its huge trade surplus.

Stressing the point again, Obama said that "countries with large surpluses must shift away from an unhealthy dependence on exports and take steps to boost domestic demand.

"No nation should assume that their path to prosperity is simply paved with exports to America."

He said that the United States, which hosts next year's APEC summit in Hawaii, wants to pursue the Trans-Pacific Partnership (TPP), a proposed free trade zone that now includes Brunei, Singapore, Chile and New Zealand.

The United States, Australia and three other countries are now in talks to join the grouping, which would eliminate most tariffs and other trade barriers and is seen as a vehicle towards a much wider Pacific Rim treaty.

APEC host Japan has delayed by six months a decision on whether to join TPP talks, amid opposition from farm groups who fear cheap rice imports.

Japanese Prime Minister Naoto Kan admitted his country was "lagging behind" in trade liberalisation, as rival South Korea pushes trade pacts with the United States and European Union, but pledged that "Japan will be opening up".

While the United States and China, the world's number one and two economies, have sparred over currencies and trade, political and territorial disputes between key players also threaten to overshadow the APEC summit.

Without mentioning communist-ruled China, Obama stressed that democracy is "the most effective form of government the world has ever known".

"It will always be true that when leaders are accountable to their people, their people are more likely to prosper," he said.

Casting a shadow over the APEC summit is a bitter row between Japan and China sparked by Japan's arrest of a Chinese fishing trawler captain in a disputed part of the East China Sea two months ago.

There were no announced plans for formal talks between Kan and Chinese President Hu Jintao, whose government launched a series of sharp diplomatic protests and punitive economic measures in the spat with Japan.

As right-wing groups planned anti-China rallies on Saturday, Japan deployed more than 20,000 security personnel to lock down the summit venue on the Yokohama waterfront.

In a further headache for the host nation, Japan has also been embroiled in a territorial dispute with Moscow after President Dmitry Medvedev made the first trip by a Russian leader to one of four disputed Pacific islands.

The China-Japan row has, meanwhile, helped to reaffirm a 50-year-old US-Japan alliance that has been strained by a dispute over a controversial US airbase on the southern island of Okinawa.

The row that led to the downfall of Kan's predecessor Yukio Hatoyama has eased since, but still lingers.

Obama, in comments to a Japanese newspaper published Friday, stressed the need for stable ties among the United States, Japan and China, and called for the two Asian giants to resolve their "outstanding differences".