Asia-EU summit to address global economic problems(update)

  • Business
  • Monday, 04 Oct 2010

BRUSSELS: European and Asian leaders, including Malaysian Prime Minister Datuk Seri Mohd Najib Tun Abdul Razak, will seek common ground on ways to fix and regulate the global financial market but will likely be bogged down by such issues as market restrictions and trade surpluses during three days of summits.

Monday kicks off with the opening of the two-day Asia-Europe ASEM summit and will be followed up with bilateral EU summits with China and South Korea on Wednesday.

Chinese Premier Wen Jiabao already set the tone of proceedings during his visit to debt-laden Greece this weekend, vowing to double trade in five years and promising to buy Greek bonds when Athens returns to international markets.

"The European Union is China's biggest trading partner," Wen said Sunday. "Relations between the two sides have reached an unprecedented level. Both are irreplaceable partners."

Overall, the 48 nations from the two continents represent about half the world's Gross Domestic Product and 60 percent of global trade. but, instead of Europe driving the summits, the emergence of China as a new trading juggernaut has somewhat turned the tables on the biennial meetings.

Last week, the International Monetary Fund said that Asian and Latin American economies were doing well but prospects for some European countries, including Greece, remain uncertain.

Wen insisted however that mutual help was the only way ahead. "Cooperation can help both sides significantly. They do not have any fundamental clashes of interests. Both sides have a stake in rebuilding the international financial system."

Besides the economy, the summit could also be hijacked by an Asian bilateral issue as China and Japan continue a diplomatic row following the arrest of a Chinese fishing boat captain whose trawler collided with Japanese patrol vessels near disputed islands.

"It is important to thoroughly explain the stance of our country," Prime Minister Naoto Kan said of his plans at the summit.

Since the incident in the East China Sea, Beijing has suspended ministerial-level talks with Tokyo and postponed talks on jointly developing undersea gas fields. Japan released the captain last weekend, but Beijing then requested an apology — prompting Japan to demand China cover damage to the patrol boats.

The European Union proposed new measures to keep government debt in line last week and earlier outlined measures to better control international banking and financial trade. Several Asian nations have already welcomed such measures. Many of the issues will taken up again when the Group of 20 nations meeting in Seoul, South Korea, on Nov. 11-12.

It does not mean economic discord will be kept at bay this week.

Many Western nations have complained that China keeps its currency undervalued to give its exporters an unfair price advantage on international markets while at the same time China closes off its markets, keeping European businesses out.

"Business leaders are increasingly concerned about the deteriorating business climate for foreign companies in China," wrote Philippe De Buck, the head of the confederation of European business BusinessEurope.

Wen countered that "Europe's exports during the crisis have declined to other countries, but seen a substantial increase to China alone ... It may appear that there is competition between Europe and China, but in reality there is more cooperation than competition," Wen said.

On Wednesday, the EU leaders and South Korean President Lee Myung-bak will sign a free trade pact that will slash billions of dollars in industrial and agricultural duties, despite some countries' worries that Europe's auto industry could be hurt by a flood of cheaper cars.

The deal — the first such pact between the EU and an Asian trading partner — will come into force on July 1, 2011. - AP

Meanwhile Bernama reported from Brussels that Malaysia's Prime Minister Datuk Seri Najib Tun Razak has expressed the hope that the two-day Eighth Asia-Europe Meeting (Asem) Summit starting on Monday, will "refocus Europe's attention on Asia".

He said Asia and Asean are where growth would probably come amid an air of pessimism in the United States and nervousness in Europe.

"Despite the fact that there is somewhat a gloom in terms of what is happening elsewhere, I personally do not believe that there will be a double-dip recession.

"But, it will be a period of moderate to slow growth, in the United States and Europe.

"Barring unforeseen developments such as these, we will probably move along in a kind of global environment where most of the growth will be generated from our part of the world, in Asean and Asia," he said in his speech at an Aidilfitri dinner hosted by him for Malaysians in Belgium and Luxembourg on Sunday night.

He also said that Malaysia was keen to launch free trade agreement talks with the European Union (EU) as well as with other major markets.

"We hope to be able to get more of the EU's focus on our part of the world. We need more investments, more capital inflow into Malaysia.

"We also have to make Malaysia increasingly attractive, to have our share of investments and capital inflow," he added.

Najib is expected to launch the Malaysia-EU FTA negotiations on the sidelines of the Asem Summit, tomorrow.

Bernama also reported that Malaysia will call for fairer world trade at the Eighth Asia-Europe Meeting (Asem) Summit here, as well as better financial supervisory and governance, as the way forward for the global economy, Prime Minister Datuk Seri Najib Tun Razak said.

Fair trade should be free of protectionism while a more effective governance will create balanced development and spur global recovery, the prime minister said.

Speaking to Malaysian journalists in Brussels, Najib said Malaysia would also call for more effective regional and inter-regional cooperation.

"The lesson learnt from the global crisis requires us to rationalise our fiscal and financial policies, so that what we do collectively, will be more effective than if we did it individually.

"The world financial architecture should therefore be revamped in a holistic and comprehensive manner," he explained.

Najib, who arrived here late Sunday afternoon, will speak at the first plenary session of the two-day summit this afternoon.

On the call for stricter regulatory supervision, Najib said, it is important to put in place, pre-emptive measures to prevent a crisis that could cause the collapse of financial institutions and affect the world financial system.

"We should give due attention to this because we cannot afford to see a crisis affecting financial institutions, or a sovereign debt crisis, which hampers global recovery," he said, adding, countries should ensure such a crisis did not plunge the world into a double-dip recession.

Stricter supervision is required, particularly in the secondary financial market, which Najib said has no previous regulatory functions and was among the contributing factors to the crisis last year.

Najib said Malaysia would also stress the need to proceed with regional and bilateral free trade agreement negotiations because, "this is something which can help countries like Malaysia." He said:

"We are a major trading nation and anything that can help us open the market for a better opportunity, will have a positive impact on our economy."

On the inclusion of Australia, New Zealand and Russia into Asem this year, Najib said it showed that the grouping subscribed to open regionalism.

"Australia, New Zealand and Russia are members of the East Asia Summit, so, it won't be something awkward for them to be also involved in Asem," he added.

The inclusion of the three countries will increase Asem's membership to 48.

Asem, established in 1996, is the main platform for dialogues and engagements between Asian and European leaders on various topics.

Najib said that at the Asem Summit, he would also update Asian and European leaders on the latest developments in Malaysia, particularly on the government's initiatives to transform the economy such as through the New Economic Model.

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