Monthly Newsletter - November 2008

The streets of Lima were brought to a standstill from the 20th to the 23rd of November as several world leaders gathered in the Peruvian capital for the annual APEC summit. Twenty-one countries from the Asia-Pacific region – which channels almost half of world trade - were represented in a series of meetings that were held to discuss political and economical issues affecting the region. Amongst the leaders who participated were Chinese President Hu Jintao and United States President George W. Bush in what may be his last international excursion as president.

The leaders were accompanied by an enormous entourage of followers, composed of leading businessmen, industry groups and researchers amongst others. Around 900 delegates came from the USA, 500 from Japan and 300 from China, filling up hotels across the city. Other countries involved were Australia, Brunei, Canada, Chile, South Korea, the Philippines, China’s Hong Kong, Indonesia, Malaysia, Mexico, New Zealand, Papua New Guinea, Russia, Singapore, Thailand, Chinese Taipei and Vietnam, all providing the conference with a record 3600 delegates. At their heel have been around 2,600 local and foreign journalists who have occupied the International Media Center in Lima to provide coverage of the summit to worldwide audiences.

The focuses of the summit largely reflected issues that were discussed during the meeting between G20 countries the weekend before. The topic that dominated proceedings was the financial crisis that is currently gripping the global economy and what steps APEC countries should make in order to fix ailing credit markets. It was widely agreed that multilateral co-operation should underpin combating the crisis and that “quick and decisive” action should be made to re-energize lending and spending.

In a joint statement read by Peruvian President Alan Garcia the leaders proclaimed “We have already taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth and promote investment and consumption,” and that they will “…continue to take such steps, and work closely, in a coordinated and comprehensive manner, to implement future actions.” An ambitious target of just 18 months was set by Garcia as a date for when the crisis could be resolved, though this opinion was not shared unanimously. The Prime Ministers of Australia and Canada held their reservations.

The issue of trade liberalization was high on the agenda as a solution to the crisis. President Bush stated that emerging markets such as China should be given more representation in organizations such as the World Bank and the IMF, acknowledging the “dramatic shift from west to east” embodied by China’s dramatic economic growth. He advocated free trade between these countries as a necessary measure to cure financial woes. The countries pledged not to raise new trade barriers and regulations; a move which Bush argued would “stifle innovation and choke off growth” despite problems caused by lack of regulation on Wall Street. There was also a unanimous call for a positive breakthrough to be made in the Doha round of trade talks next year.

For Peru, disappointment has been voiced over President Bush’s failure to make clear what schedule will be adopted for implementing a free trade deal that had been agreed with the Andean nation regardless of his apparent commitment to such deals. On a different note for the Peruvian economy, the summit has seen a significant trade deal signed with China. This will give Beijing more access to raw materials such as copper, zinc and iron ore and is an indication China’s growing influence in the continent. Peru will also be able to export much of its produce to China. However, it is feared by manufacturers and small businesses in Peru that the country will be flooded with cheap Chinese goods, undermining their productivity and profitability.

Overall, the hosting of the summit has been a success, with wide agreement across the board about how the financial crisis can be solved by co-operation within the APEC realm. President Garcia - taking centre stage at the end of the summit - was adamant to let observers “know that this crisis will be overcome by all of us.”

By
Simon Ross-Gill

If you have any questions regarding his article, please write to him at simon@peruforless.com.

Sources:
BBC (1)
BBC (2)
Bloomberg
Financial Times
The Telegraph
The Times
Voice of America
Xinhua

PAST NEWSLETTERS:

• Newsletter October 2008
• Newsletter September 2008
• Newsletter August 2008
• Newsletter July 2008
• Newsletter June 2008
• Newsletter May 2008
• Newsletter April 2008
• Newsletter February 2008
• Newsletter January 2008