Economic issues on Obama's Asia trip

(Reuters)

5 November 2010
President Barack Obama’s upcoming trip to Asia will be focused on efforts to open up
new markets for American goods and strengthen the US economy, administration
officials said.

Here are some economic items that will be on Obama’s agenda on the trip to India, Indonesia,
South Korea and Japan, which includes a G20 summit in Seoul and an Asia-Pacific leaders
summit in Yokohama.

The president leaves for India on Friday and returns to Washington on November 14. The trip
begins three days after the midterm congressional elections in which voters punished his fellow
Democrats for the sputtering US economy and high unemployment.

Global imbalances

Obama and his team will push hard during his

trip and especially at the G20 to limit “excessive imbalances” in the global economy by
encouraging countries such as Germany and China to boost domestic demand and reduce their
reliance on exports to fuel economic growth.

US officials warn that American consumers cannot remain the engine of growth for the world
economy and must save more. Obama is seeking to double US exports within five years.

“Many Asian economies in particular have strong potential to fuel domestic demand either
through domestic consumption in some cases, through major infrastructure investments in other
cases, and through both, in other countries,” Treasury Under Secretary for International Affairs
Lael Brainard told reporters at the White House.

“This provides important opportunities for America’s dynamic exporters, and it also boosts growth
more broadly.”

Currency

The US wish for China to let its yuan currency rise is well known. Obama will have a chance to
discuss the issue further when he meets with Chinese President Hu Jintao on the G20 sidelines
in Seoul.
Brainard said the United States wants more progress from emerging market economies on the
currency issue and urged them to cooperate so others would feel encouraged to move.

US officials say China holds the value of the yuan artificially low against the dollar to support
exports, adding to a massive trade surplus Washington would like to ease by getting Beijing to let
the yuan rise.

Unlocking Indian commercial potential

Despite its size, India is only the United States’ 14th biggest trading partner, and the White House
would like Obama’s three-day visit to Mumbai and New Delhi to be a step toward unlocking its
commercial potential, which could help ballast the rise of China.

The White House expects several commercial deals between US and Indian companies to be
finalized during the visit, and says it is making progress in ironing out existing obstacles to greater
trade between the two nations.

Obama will also speak at a summit of US and Indian business leaders in Mumbai.

Obama is not visiting India’s technology hubs Hyderabad and Bangalore, favorite targets of US
politicians who say offshoring jobs is partly to blame for high US unemployment.

Indian officials have protested a recent hike in US visa fees that is expected to hit India’s IT
industry, and proposed tax changes—supported by Obama—that would end breaks for US firms
that create jobs and profits overseas.

South Korea free trade agreement

Washington and Seoul signed a free trade agreement in 2007, but the deal has languished in the
face of opposition in the US Congress. Negotiators are putting “maximum effort” toward resolving
objections to the agreement before Obama arrives in Seoul on November 10.

One major sticking point is South Korea’s refusal to allow imports of all cuts of US beef,
irrespective of cattle age, lifting a restriction imposed after the discovery of mad cow disease in
the US cattle herd in 2003.

The United States also wants South Korea to do more to open its market to US automobiles.
Many US lawmakers complain the 2007 agreement does too little to change South Korean
regulatory and tax policies that have long kept US automobiles out of the Korean market.

Prospects for the pact could improve now that Republicans have won control of the House of
Representatives, because some of the stiffest opposition to the FTA came from Obama’s fellow
Democrats.

US trade with Asia-Pacific

On Obama’s first trip to Asia in 2009, he announced the United States would join with seven other
countries—Chile, Peru, Singapore, Australia, New Zealand, Brunei and Vietnam—to negotiate a
regional free trade agreement to be called the TransPacific Partnership.

Since then, Malaysia has joined the talks.

Other countries such as Japan and Canada have expressed interest in joining the negotiations,
but current members worry adding too many countries could complicate the goal of reaching a
high-quality “21st Century” pact to liberalize agriculture, manufacturing and services trade in the
region.

At the conclusion of the annual Asia Pacific Economic Cooperation forum summit in Japan on
November 13, the United States takes over leadership of 21-nation grouping for the next year.