Pacific Rim ministers discuss oil prices
Pacific Rim ministers discuss oil prices
Associated Press, Seogwipo, South Korea
Pacific Rim finance officials kicked off two days of talks on Thursday focusing on the economic threat of high oil prices, China's currency system and efforts to reach a new global trade agreement.
Finance ministers or their deputies from the 21 member economies of the Asia-Pacific Economic Cooperation forum are meeting on South Korea's southern Jeju Island ahead of APEC's annual summit meeting in November. The head of the International Monetary Fund and Asian Development Bank are also participating.
The meeting's stated themes are capital movements among APEC members and financial opportunities in aging societies. But with crude prices still near record highs and the total impact of Hurricane Katrina unknown, oil is a major topic.
"Ever-soaring oil prices are also pressing hard against most APEC member economies, thus clouding the growth forecast of the Asia-Pacific region," South Korean Finance Minister Han Duck-soo said in a speech to fellow ministers.
Indonesia, one of the economies hardest hit by the rise in oil prices because of government subsidies to keep fuel affordable, said it was readying measures to drastically cut subsidies by between 50 percent to 60 percent in October or November.
The government and parliament are discussing the issue, but cuts will be made "for sure," JB Kristiadi, secretary general of the ministry of finance, said on the sidelines of the meeting.
The rupiah fell to a four-year low last week on worries about the country's fiscal situation, forcing the central bank to raise interest rates. The currency has recovered slightly since then.
U.S. Deputy Treasury Secretary Robert Kimmitt, who held talks with officials in Beijing this week, said China's currency system is expected to be on the agenda with discussions likely to be reflected in the ministers' joint statement to be issued Friday.
China ended its policy of linking the yuan to the U.S. dollar on July 21, adopting a slightly more flexible system based on a basket of foreign currencies and allowing the yuan to appreciate about 2 percent against the dollar.
Kimmitt, sitting in for U.S. Treasury Secretary John Snow, reiterated to reporters that the action was a "significant step," but added that the United States expects China to achieve "greater flexibility over time."
IMF Managing Director Rodrigo de Rato said in an interview with Dow Jones Newswires that the issue of "global imbalances" was also being discussed at the meeting.
That term is generally meant to include the U.S. fiscal and current account deficits and large trade surpluses in other countries such as China and Japan.
The ministers may also discuss what APEC economies can do to aid efforts to hammer out a new global trade pact that would slash subsidies and reduce tariffs, with emphasis on freeing up agricultural markets for poorer countries, at a World Trade Organization meeting set for December in Hong Kong.
The so-called "Doha Round" of global trade talks -- named after the Qatari capital where they were launched in 2001 -- is already well behind an original December 2004 deadline. The round is supposed to address the concerns of developing countries.
APEC, launched in 1989, has set as its main goal boosting trade among its members, with the ultimate aim of establishing a free trade area by 2020.
Geographically diverse APEC includes global heavyweights like the United States, Japan, Canada and China as well as other significant economies such as Indonesia, Mexico, Russia and South Korea. Representing a total population of about 2.8 billion, APEC accounts for nearly half of global trade.
South Korea is hosting this year's APEC government leaders' Nov. 18-19 summit in the southern port city of Busan. U.S. President George W. Bush and other leaders are expected to join.
APEC also includes Australia, Brunei, Chile, Hong Kong, Malaysia, New Zealand, Papua New Guinea, Peru, the Philippines, Singapore, Taiwan, Thailand and Vietnam.