Officials from 21 Pacific Rim economies, including the U.S., China and Japan, began meetings Sunday that could move the region toward a bold goal — creating a Pacific-wide free trade zone.
The Asia-Pacific Economic Cooperation meetings this week in Yokohama, just south of Tokyo, will culminate next weekend in a summit bringing together President Barack Obama, Chinese President Hu Jintao, Japanese Prime Minister Naoto Kan and 18 other leaders.
But the APEC meetings are being held against a backdrop of tension over currencies and territorial disputes that could undermine the summit's harmony. Finance ministers from the Asia-Pacific region agreed Saturday at a separate meeting in Kyoto to avoid using their currencies as trade weapons and embrace steps to shrink global trade gaps.
Promoting free trade and regional integration will be the main focus of this week's meetings.
According to a draft of APEC's final communique obtained by The Associated Press, the leaders will agree to take "concrete steps toward realization of Free Trade Area of the Asia-Pacific (FTAAP)" encompassing all 21 members around the Pacific.
Some members, such as Indonesia and the Philippines, are cool to the idea. And experts say it may be unrealistic given APEC's diverse membership, which ranges from impoverished Papua New Guinea to behemoths China and the United States. Also, APEC is not a negotiating body, so any trade pact would have to occur in a parallel forum.
The draft sets no timeframe for achieving such a Pacific-wide FTA. But as a building block toward that goal it points to the Trans-Pacific Partnership, a free trade agreement that the U.S. and four other nations — Australia, Malaysia, Vietnam and Peru — are negotiating to join. The TPP currently consists of four small economies: Brunei, Chile, New Zealand and Singapore.
Japan, worried that it is falling behind regional rival South Korea in forging free trade deals, is intensely debating whether to join the TPP talks. Business leaders have urged Tokyo to do so, but farmers fiercely oppose the move out of fear that a flood of cheap agricultural imports would wipe them out.
In a policy paper released over the weekend, the Japanese government signaled a greater openness to free trade deals than under previous administrations, which had strong ties to the farming lobby.
Tokyo said in the paper it was redoubling its efforts on free trade pacts, aiming to restart suspended trade talks with South Korea, seeking new trade deals with other nations, and pledging to do more to open up its economy — all to boost its sagging economic prospects.
"Japan's status is gradually declining," the paper noted. It said Japan needs to deepen ties with emerging economies to ensure future growth.
"Recognizing this, the government of Japan is absolutely resolved to 'open up the country,'" the paper said, adding that it would draw up an action plan by next October to reform its agricultural sector.
While the APEC meetings' agenda will focus on promoting trade and investment, political issues are sure to crop up in meetings between foreign ministers and leaders on the sidelines later this week.
Myanmar's elections on Sunday — the first 20 years — were sure to generate some reaction. Obama, while traveling in India on Sunday, told university students that the vote was "anything but free and fair."
Tensions over territorial disputes are also bubbling between host Japan and two of its big neighbors, China and Russia.
Ties between Tokyo and Beijing are their worst in several years since Japan arrested — and then released — a Chinese fishing boat captain who collided with two Japanese patrol vessels off disputed islands in the East China Sea in September. The leak of a purported video of the collisions on YouTube on Friday could further inflame emotions in both countries.
Beset by disputes with Beijing and Moscow, Kan is hoping for a strong show of unity during his weekend meeting with Obama in Yokohama, where the two will likely reaffirm their countries' security pact, which marks its 50th anniversary this year and obliges the U.S. to respond to attacks on Japanese soil.
However, there are no firm plans for Kan to meet with either China's Hu or Russian President Dimitry Medvedev.
This year's APEC meetings will be overshadowed some by the Group of 20 summit in Seoul, South Korea, on Thursday and Friday. That meeting, which brings together major rich and emerging economies, including Brazil, India and Saudi Arabia, is set to tackle global imbalances and sustaining fragile global growth.
About half the G-20 leaders will also attend the APEC summit.
During the week, developed member economies the U.S., Japan, Canada, Australia and New Zealand will be measured in their progress toward achieving free and open trade and investment by 2010 — this year — as set by APEC leaders in Bogor, Indonesia, in 1994.
Under the so-called Bogor Goals, developing economies had until 2020 to meet that goal, but eight other members, including South Korea and China, have asked that they be evaluated as well.
APEC, which started in 1989, represents 44 percent of global trade and 53 percent of global gross domestic product.
Associated Press writer Jim Gomez in Manila contributed to this report.