Asia-Pacific leaders pledged Sunday to bolster their economies and lower trade barriers as they seek to prop up global growth and shield themselves against fallout from Europe's debt crisis.
With U.S. President Barack Obama securing wider than expected agreement on the makings of a pan-Pacific trade pact, the 21 members of the Asia-Pacific Economic Cooperation summit turned to the challenge of countering what they called significant downside risks to the world economy.
That followed an appeal by Obama, seeking to reassert U.S. leadership to counter China's expanding influence around the Pacific Rim, for a commitment to expand trade opportunities as an antidote to Europe's fiscal woes.
It is a time of uncertainty for the global economy, the summit's final communique said, with growth and job creation weakened not only by the euro zone crisis but by natural disasters like Japan's devastating earthquake and tsunami.
These challenges have only strengthened our commitment to cooperation as the way forward, the leaders said after talks in Honolulu. We recognise that further trade liberalization is essential to achieving a sustainable global recovery in the aftermath of the global recession of 2008-2009.
The communique expressed a firm resolve to support the strong, sustained and balanced growth of the regional and global economy -- a clear reference to U.S. concerns about a huge trade deficit with China's export-driven economy.
In another bow to U.S. pressure, APEC committed, albeit in somewhat vague terms, to reducing tariffs on environmental goods and services, even though China had resisted the idea. APEC also committed to support clean energy.
Differences persist over currencies and trade -- a point hammered home by U.S.-China tensions at the summit -- and the question remains how far leaders will be able to go in turning promises into action when they return home.
Many, Obama included, will face resistance to opening markets further to foreign competition.
But the biggest problem on the Asia-Pacific horizon is Europe, where fiscal turmoil centered in Italy and Greece is sending shockwaves worldwide.
Without a solution to the euro zone crisis, the world economy could be swept into a downward spiral of collapsing confidence, weaker growth and fewer jobs, International Monetary Fund chief Christine Lagarde said at the APEC summit.
This would affect all nations and so we all have a stake in resolving that crisis.
PROGRESS ON REGIONAL PACT
Obama declared U.S. engagement in the Asia-Pacific region -- which accounts for more than half of the world's economic output -- as absolutely critical to America's prosperity.
By harnessing the potential for expanded trade with the world's fastest-growing region, Obama hopes he can create U.S. jobs to help him through a tough reelection fight in 2012.
We are not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful, he said.
Obama's drive towards a pan-Pacific free trade zone -- the signature U.S. achievement of the summit -- got a boost when Canada and Mexico said they were interested in joining talks now under way among nine countries.
Japan, the world's third-largest economy, said earlier it would like to join. The Philippines was discussing the matter, U.S. officials said.
Obama's trade agenda has gained momentum with the added interest in the talks for a free trade zone that would outstrip the market size of the European Union. For Japan, such a deal faces political obstacles at home.
But there was little promise of immediate economic dividends as such trade deals often take years to take effect.
Obama is seeking to assure allies of a U.S. pivot as China flexes its economic and military muscles in Asia and beyond. But leaders may doubt whether Washington can avoid being distracted by economic woes at home and foreign policy priorities like Afghanistan, Pakistan and Iran.
The outlook for the Asia-Pacific region remains clouded by the threat of the euro zone's contagion. Also, expansion is slowing down and inflation-wary Asian leaders do not necessarily want to rev it back up.
(Reporting by Reuters APEC team; Additional reporting by Chris Buckley and Judy Hua in BEIJING; Writing by Matt Spetalnick and Emily Kaiser; Editing by John O'Callaghan)