Political leaders and business representatives from the 21 member countries that comprise the Asia-Pacific Economic Cooperation (APEC) gathered in Lima recently for a meeting that wrapped up on November 23 with a rare degree of convergence on a handful of issues that have scarcely been touched at previous meetings of a similar nature. Several presidents were present, including China's Hu Jintao, Mexico's Felipe Calderón, South Korea's Lee Myung-Bak and US president George W. Bush, who all called for similar actions such as the importance of not responding to the global financial crisis with protectionism, of boosting public expense and of investing in infrastructure.
As opposed to prior crises, politicians and business representatives are deeply concerned this time that worldwide demand will ebb and cause a recession on the largest industrialized markets, eventually manifesting in a global recession that drags down the largest emerging economies like China, India and Brazil and, later, the rest of the planet.
APEC member countries represent 55% of the world's GDP.
As a sign that the call for free trade is not mere rhetoric, China and Peru announced at the meeting that the countries have reached an agreement to implement free trade between them. Peru and South Korea also announced that the two countries are in talks to reach a free trade agreement. In October, Peru signed an agreement with Canada and will soon put a free trade agreement into action that the South American nation signed with the US in 2007.
Despite the gravity of the situation, analysts and business representatives agree that, if managed properly, the crisis could begin to lessen toward the second half of 2009 as long as markets regain confidence and anti-cyclical policies are implemented cautiously in a way that prevents increased public expenditures from creating inflationary pressure and ensures control over fiscal deficits that are likely to crop up in some countries.
Almost all of the political leaders at the Apec summit pinned their hopes on infrastructure. Hu Jintao repeated an announcement he made several days ago regarding plans to invest between US$500-600bn in infrastructure works and housing, mostly to stimulate domestic demand. David Hale, one of China's most recognized specialists, feels that the Asian giant is in the perfect position to carry out the plan. It has enough financial resources and the technical and political capacity to do it, he said.
For his part, Felipe Calderón announced a US$50bn investment package for infrastructure. In Mexico's case, however, things are not coming together so smoothly. The bidding process for Puerto Colonet on the Baja California peninsula - one of the primary projects included in President Calderón's plan and calling for an investment of roughly US$5bn - has been delayed.
But beyond the works and projects that leaders in the Asia-Pacific region hope will revive their economies, a primary concern is the health of international trade. Incidentally, the policy that US president-elect Barack Obama adopts will be key. The Apec gathering was replete with messages for Obama and the Democratic party, warning against the tremendous risks the global economy will face if the new administration and Congress crumble under pressure by unions and other organizations that ask Washington to backtrack on some of the progress it has made over the last 15 years as it has expanded liberal free trade through agreements with several countries around the globe.
President Calderón simply warned that the only result US lawmakers would see from overhauling NAFTA (shared between Mexico, the US and Canada) and clamping down on the entry of Mexican products and services to the US would be a rise of illegal immigration to the north.
