By Linda Sieg and Tim Kelly YOKOHAMA, Japan, Nov 13 (Reuters) - Asia-Pacific leaders begin talks on Saturday on freeing up trade in the region, a day after a sometimes rancorous G20 summit papered over differences on how to keep a fragile global economic recovery on track. The 21 Asia-Pacific economies, nine of whom including the United States and China also belong to the Group of 20 major economies, are set to urge policies for balanced growth and start work on a vast free trade area in the fast-growing region. But the aftertaste of rifts exposed at the G20 summit in Seoul, where leaders agreed to set vague "indicative guidelines" measuring economic imbalances, but left details for later, could linger at the gathering of the 21-member Asia-Pacific Economic Cooperation (APEC) forum in Yokohama, south of Tokyo. "If we don't get this right, it's my view that we will see currency wars, we'll see retaliatory action taken that will be bad for economic growth, that would have unintended consequences and would be bad for integration in the region," New Zealand Prime Minister John Key told a meeting of Asia-Pacific business executives in Yokohama on Friday. Washington's relations with Beijing have been strained by U.S. complaints that China's yuan currency is undervalued, while Beijing has argued the U.S.
Federal Reserve's easy-money policy is aimed at weakening the dollar to boost exports. Regional security tensions could also cloud the effort to forge communal goodwill. Host Japan is at odds with China over disputed isles in the East China Sea near potentially vast oil and gas reserves, and Tokyo's relations with Moscow chilled after Russian President Dmitry Medvedev visited an island claimed by both countries. APEC trade and foreign ministers agreed on Thursday to extend a freeze on fresh protectionist measures, which they first adopted at the height of the 2008 financial crisis, for another three years. They also urged a conclusion to the long-stalled Doha round of free trade talks by the end of next year. "We can't give up on the Doha round," Chilean President Sebastian Pinera told the business meeting. "It's time now for an end game. We must achieve this end game by the end of next year." APEC for the first time is championing a collective growth strategy, emphasising balanced and sustainable growth, an elusive goal when the global economy is split between cash-rich exporters and debt-burdened importers. "Given the possibility of slowdown and uneven global recovery with substantial challenges and risks, regional integration can only evolve on the basis of sustainable growth models," Vietnamese President Nguyen Minh Triet said in a speech Friday. The leaders will pledge to take concrete steps to create a vast Free Trade Area of the Asia-Pacific (FTAAP) in the region, home to 40 percent of the world's population and 53 percent of global economic output, by building on existing pacts. An Asia-Pacific free trade area would link the world's top economies with some of its fastest-growing ones such as Indonesia, Thailand and Mexico. Businesses have long urged a single pact for the Pacific rim, where scores of small FTAs have been agreed, to simplify a plethora of standards and rules. But whether the group, which until now has shunned formal negotiations, will move toward making any trade deal legally binding, remains in doubt, although some say doing so is vital. "A non-binding agreement is like giving a kiss on the phone; it's nice but far from the real thing," said Alejandro Jara, deputy director general of the World Trade Organisation (WTO). One of the "building blocks" for the FTAAP is a U.S.-led initiative called the Trans-Pacific Partnership (TPP) that would link nine nations. Japan has said it wants to start talks on the TPP, but has run into fierce opposition from the politically powerful farm lobby. (Additional reporting by Tim Kelly and Yoko Kubota; editing by Bill Tarrant and Sanjeev Miglani) ((firstname.lastname@example.org; 81-3-6441-1887; Reuters Messaging: email@example.com)) Keywords: APEC/ (If you have a query or comment on this story, send an email to firstname.lastname@example.org) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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