US to press economic cooperation in Asia-Pacific

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By MATTHEW PENNINGTON
The Associated Press
Wednesday, March 9, 2011; 6:38 PM

WASHINGTON -- The United States will lead efforts for economic cooperation and lifting trade barriers in the Asia-Pacific region, Secretary of State Hillary Rodham Clinton said Wednesday.

Clinton said economic engagement with Asia will be key to America's recovery from the global slowdown, and that common rules on trade and investment would benefit the whole region and help lift people from poverty.

But there are plenty of obstacles on the path to that goal. The U.S. International Trade Commission reported Wednesday that China's "indigenous innovation" policies aimed at promoting technology developed or patented locally could pose a greater threat to American businesses than its undervalued currency.

Clinton was speaking at a preparatory meeting in Washington for the Asia Pacific Economic Cooperation summit of 21 regional economies the U.S. will host in Hawaii in November.

It will be the first time the U.S. has hosted the annual APEC conference since 1993, and comes as the Obama administration makes a major push, also on the diplomatic and security fronts, to step up its engagement with the region.

Clinton described the U.S. as a "Pacific power," and said it "is determined not just to re-engage but to lead."

Despite the economic clout of its members, which include China, Russia, Japan, South Korea, and Australia and account for more than half of global output, APEC has often been derided as a talk shop.

Clinton said the U.S. would push the organization to deliver "useful, tangible results" and build upon a vision voiced by APEC leaders meeting in Japan last year for stronger and deeper regional economic integration.

She said nations have made strong progress in removing trade tariffs, but numerous "non-tariff barriers remain." She said governments needed to do more to tackle intellectual property theft and adopt common standards applying to everything from manufactured goods to buildings, and so make it easier to do business across borders.

She also referred to the problem "indigenous innovation" - a particular bone of contention with China, which is introducing a web of policies that aim to cultivate its domestic technology and know-how.

Karen Laney, acting director of operations at the ITC, said Wednesday that China often sets technical standards slightly different from widely accepted international ones, such as for wireless internet or third generation mobile telecommunications, which foreign companies then have to adopt to sell their products in China.

Laney said Chinese government procurement policies, a market worth an estimated $88 billion to $200 billion annually, also favor Chinese firms, particularly in high-tech sectors. A number of provinces and municipalities have compiled procurement catalogues of preferred products for government agencies, and almost no products from foreign companies are listed.

According to an ITC report, only two of the 523 products in the catalog for Shanghai were from foreign-invested companies.

U.S. companies generally are "more concerned about indigenous innovation policies going forward than currency manipulation," Laney told a congressional hearing.

In January, China promised to de-link indigenous innovation from government procurement.

Rep. Ed Royce, R-Calif., chairman of the House Foreign Affairs subcommittee on terrorism, proliferation and trade, told the hearing that China "has a history of promises made, promises broken."

"China is looking to move its economy from `Made in China' to `Designed in China' and is playing hardball to do it," he said.

There is considerable anxiety in the United States itself over the economic rise of Asian economies, particularly China's, and the impact it has had on the U.S. manufacturing sector. With U.S. unemployment still officially at around 9 percent, some lawmakers are calling for punitive action against China for allegedly undervaluing its currency to benefit its exporters.


© 2011 The Associated Press

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