On Wednesday, November 10, 2010, a few days prior to the 18th APEC Economic Leaders’ Meeting of November 13 and 14, 2010, 3000 farmers and fishermen protested Japan’s plans to initiate discussions to join the Trans-Pacific Partnership (or “TPP”). The farmers and fisherman were not getting down with TPP. APEC, or Asian-Pacific Economic Cooperation and trade forum where the Japanese government, in sharp contrast, will hopefully join the TPP, and is comprised of 21 Member Economies which are: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; and Viet Nam. The 18th APEC Economic Leaders’ Meeting where leaders of the 21 nations meet in Yokohama located in the eastern Kanagawa Prefecture, Japan, comes the day after the G20 Summit in Seoul, Republic of Korea ended. With the goal of supporting sustainable economic growth and prosperity in the Asia-Pacific region, APEC is the premier Asia-Pacific economic trade forum established in 1989 ””to further enhance economic growth and prosperity for the region and to strengthen the Asia-Pacific community.” Since inception, APEC’s total trade has grown 395% while GDP in purchasing power parity for the APEC region has tripled.
President Barack Obama was in attendance at the 18th APEC Economic Leaders’ Meeting today and has already held a bilateral meeting with the Prime Minister of Japan, Naoto Kan, with regard to the TPP and opening up the Asia-Pacific Rim to American exports thereby creating more jobs in America. President Obama also welcomed Japan’s interests in the TPP. As reported by CNN’s Kyung Lah in Yokohama, the TPP is “the NAFTA of East Asia.” The CNN correspondent further stated that although one of the topics at the meeting is trade, all eyes are upon the results of the meeting as China’s growing rise in economic power is “casting a shadow over all of APEC.” “Even if Japan decided to sign on to the TPP tomorrow, you also can not have any sort of free trade zone that would be significant without considering economic superpower in this region which is China….” The outcome of the 18th APEC Economic Leaders’ Meeting should prove to be one that is at least ”interesting,” if no solutions are reached similar to the outcome of the G20 Summit in Seoul.
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Reuters reports in an article entitled G20 Finds Common Ground Opposing Fed that the Fed announcement to purchase 600bn in treasuries does not share in the ideal of the members sharing common ground in terms of responsibilities toward the global economic recovery, fearful that the Fed move will cause large capital inflows into countries like China and Brazil and make their exports less competitive.
Although these arguments at face value are good arguments, if thought about with rationale for more than just a second any validity is thrown like money from a helicopter. First, because the Fed is not a government entity and this is not government stimulus. Contrary to popular belief, the Fed only shares a common mission with the U.S. government in it’s recent announcement to purchase treasuries and that is to hopefully stimulate the economy and put Americans back to work.
Another very important factor is that the Sino-US trade imbalance has been growing for almost a decade and the deliberately manipulated currency of China, who maintain tight currency controls, is a leading factor. Notwithstanding the fact that introduced as congressional testimony for years running, the US government has failed to take action declaring China a currency manipulator before the WTO, an action that could ignite cold war style sentiments between the two largest economies of the world.
Finally, leading the global recovery are precisely China, Brazil and even Germany, the countries that complain about the Fed announcement the most, countries that while experiencing high levels of GDP growth do not appreciate the Fed effort of elevating the US out of a stagnant or stalled recovery.
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President Barack Obama, notwithstanding the news that Minnesota Republican Michelle Bachmann slammed the Obama India visit due to the approximate cost of $200mn per day, started the weekend off on a positive note in India where NDTV reports that:
20 deals have been signed between the US and India worth $10 billion and these are expected to create over 50,000 jobs in the US. The deals range from gas and steam turbine engines to oil and gas equipments.
Aviation giant Boeing has got an order for thirty three 737s from Indian carrier Spice Jet. The deal is pegged at $2.7 billion and is likely to add 12,000 US jobs. The company has also reached preliminary agreement on the sale of C-17 engines. That transaction is valued at more than $4 billion and is likely to support 22,000 jobs.
Global engineering firm, General Electric is likely to get the contract for 100 engines to power India’s indigenous Light Combat Aircraft (LCA). The $800 million deal will lead to 44, 000 jobs in the US.
Hard to believe that Michelle Bachmann having recently won her re-election campaign couldn’t understand the enormous benefits associated from the Obama India trip where trade deals were sealed worth $10bn making the initial investment for travel and security purposes of an entourage of hundreds of people at only $200mn per day well worth even a greater cost in the presence of near double-digit unemployment and an anemic economy. Minnesotans may want to rethink Ms. Bachman’s recent re—election if she cannot reasonably come to the conclusion that creating 50,000 jobs through a $10bn trade deal while strengthening foreign policy and bilateral ties with an emerging super economy is worth the money spent.
Not surprisingly, when Michelle Bachmann was asked by CNN to identify specific cuts in the federal budget that she would support, she refused to identify any. Refused, or couldn’t? Apparently, Michelle Bachmann doesn’t want Americans to have opportunities.
On behalf of Headline Reviews, have a great weekend.
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