APEC leaders see trade as shield to Europe crisis

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By Matt Spetalnick and Laura MacInnis

HONOLULU (Reuters) - Asia-Pacific leaders pledged on Sunday to bolster their economies and lower trade barriers as they seek to prop up global growth threatened by Europe's debt crisis.

Fresh from a rare success over agreement on the outlines of a regional trade deal, the 21 nations at the Asia-Pacific Economic Cooperation summit addressed the immediate challenge of safeguarding themselves against the fallout from Europe.

That followed an appeal by President Barack Obama, seeking to reassert U.S. leadership to counter China's expanding influence around the Pacific Rim, for a commitment to "bring our economies closer" and expand trade opportunities across the economically dynamic region.

It is a "time of uncertainty" for the global economy, the summit's final communique said, with growth and job creation weakened not only by Europe's fiscal crisis but by natural disasters like Japan's devastating earthquake and tsunami.

"These challenges have only strengthened our commitment to cooperation as the way forward," the leaders said after talks in Honolulu. "We recognize that further trade liberalization is essential to achieving a sustainable global recovery in the aftermath of the global recession of 2008-2009."

The communique expressed a firm resolve "to support the strong, sustained and balanced growth of the regional and global economy" -- a clear reference to U.S. concerns about a huge trade deficit with China's export-driven economy.

In another bow to U.S. pressure, APEC committed, albeit in somewhat vague terms, to reducing tariffs on environmental goods and services, even though China had resisted the idea.

Differences persist over currencies and trade and the question remains how far leaders will be able to go in turning promises into action when they return home to resistance to opening markets further to foreign competition.

PROGRESS ON REGIONAL PACT

Obama declared U.S. engagement in the Asia-Pacific region -- which accounts for more than half of the world's economic output -- as "absolutely critical" to America's prosperity.

By harnessing the potential for expanded trade with the world's fastest-growing region, Obama hopes he can create U.S. jobs to help him through a tough reelection fight in 2012.

"We are not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful," he said.

Obama's drive toward a pan-Pacific free trade zone -- the signature U.S. achievement of the summit -- got a boost when Canada and Mexico said they were interested in joining talks now under way among nine countries.

Japan, the world's third-largest economy, said earlier it would like to join. The Philippines was discussing the matter, U.S. officials said.

Obama's trade agenda has gained momentum with the added interest in the talks for a free trade zone that would outstrip the market size of the European Union. For Japan, such a deal faces political obstacles at home.

Obama is seeking to assure allies of U.S. reengagement as China flexes its economic and military muscles in Asia and beyond. But leaders may doubt whether Washington can avoid being distracted by economic woes at home and foreign policy priorities like Afghanistan, Pakistan and Iran.