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UPDATE 3-APEC ministers urge free trade against crisis

Published 11/20/2008, 05:56 PM

(Adds China's commerce minister on Doha round, details)

By Maria Luisa Palomino and Terry Wade

LIMA, Nov 20 (Reuters) - Trade and foreign ministers from the United States, China and other economies around the Pacific Rim called on Thursday for new free trade deals as a way out of the global economic crisis.

The ministers' recommendations to avoid raising tariff barriers and to deepen economic integration among members of the Asia-Pacific Economic Cooperation, or APEC, trade group, will be presented to a summit of leaders at the weekend.

U.S. President George W. Bush and the leaders of the other 20 APEC economies, which together account for more than half of global output, are expected to use the summit to give another push to stalled world trade talks known as the Doha round.

"We insist that at these times of crisis we are against any protectionist sentiment and we reaffirm our commitment to opening trade and to investment," Peru's Foreign Minister Jose Antonio Garcia told reporters.

China, which joined India in holding up the most recent Doha talks in July, said it was open to fresh talks before the end of the year.

"At the same time, we do not want to hold a ministerial meeting without ample preparations, so we can avoid further trouble from too many Doha negotiations that lead people to lose confidence in the world economy," said Commerce Minister Chen Deming.

Nine members of APEC are also in the G20 group of leading economies that last week agreed to take fiscal stimulus measures to stave off a deep recession.

The ministers meeting in Lima said they supported recommendations from the G20 group, including more funds for the International Monetary Fund to support emerging economies, and reviews of major global banks.

But it is unclear what specific steps can be taken as Bush is in his last weeks in office, and U.S. President-elect Barack Obama may not make free trade pacts a priority.

According to the IMF, the only developed economy that will expand next year is Canada. Japan is in recession, and so are Italy, Germany and the wider euro zone.

Leaders from Japan, Canada and other Pacific Rim economies such as South Korea, Taiwan and Mexico will meet in Lima's fortified defense compound as thousands of police patrol the coastal capital to prevent an attack by leftist guerrillas, who launched a series of recent attacks in Peru's Andes.

TRADE AGREEMENTS

APEC has been accused in the past of moving too slowly at the regional level, so several countries were busy advancing bilateral or multilateral trade agreements.

Canada and aspiring APEC member Colombia are expected to sign a bilateral free trade agreement on Friday. Peru and China are expected to sign a trade pact by March.

Chinese President Hu Jintao is the first Chinese leader to visit Peru. He brought dozens of officials and business leaders with him, raising hopes for large Chinese investment in Peru and elsewhere in resource-rich Latin America.

Also, the United States, Australia and Peru said on Thursday they would start negotiations on a free-trade agreement with the so-called "P4" countries -- Singapore, Chile, Brunei and New Zealand -- a New Zealand official said on Thursday. It has been dubbed "P7."

"We're trying to work through the economic turmoil and this is part of the answer," said New Zealand Trade Minister Tim Groser.

Chilean Foreign Minister Alejandro Foxley said the seven countries should agree on the basics of a free-trade agreement by March, and then invite other APEC members to join.

But similar pledges in the past have not led to action, and critics say APEC should instead be focusing on the financial crisis.

"As the regional economy is buffeted by financial storms and sliding toward recession, how useful can this kind of broad dialogue be for the region?" wrote University of Hong Kong politics professor Richard Hu in a report for the Brookings Institution. (Reporting by Maria Luisa Palomino and Terry Wade; additional reporting by Randall Palmer in Ottawa; Writing by Fiona Ortiz; Editing by Paul Eckert and Anthony Boadle)

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