A View to the East

It's been an interesting few weeks in many economic and political venues, but for this issue we turn our focus to the East—Eastern Europe and the Far East. The occasion this weekend, in particular, was the Asia-Pacific Economic Cooperation (APEC) forum in Vietnam.

World leaders gathered there to reinvigorate efforts to establish a free trade and investment agreement among APEC members. Achieving such a pact will require opening up agriculture markets, reducing farm subsidies, and cutting industrial tariffs. It will apparently also require still more discussion.

APEC's 21 member economies reportedly account for nearly half of global trade, 40% of the world's population, and 56% of the world's gross domestic product. They include countries on both sides of the Pacific Ocean and either side of the Equator.

U.S. President George W. Bush arrived at the meetings with somewhat less political clout, following a strong showing by Democrats in the recent election, though U.S. economic clout is still well respected. In a pre-conference speech, Bush encouraged Asian leaders to consider establishing a Free-Trade Area of the Asia-Pacific. He later met with China's President Hu Jintao and with Russian President Vladimir Putin.

Hu said close communication with Bush has "vigorously promoted China–U.S. relations." To illustrate that point, he noted that U.S. exports to China increased 35% in the first seven months of 2006.

In previous talks, the United States and Russia had agreed in principle on a bilateral trade pact that brought Russia closer to becoming a member of the World Trade Organization (WTO). Representatives of both countries met during the APEC summit to complete the trade agreement.

According to the U.S. Department of State, "The agreement addresses increasing access to Russian markets for U.S. agricultural products, industrial goods, and services such as telecommunications, banking and securities, and insurance. It also seeks to ensure Russia's enforcement of intellectual property rights and anti-piracy legislation."

However, "Russia must complete all of its bilateral market-access agreements with individual countries before it can begin the multilateral negotiations necessary for its accession to the WTO. If signed, the pending agreement with the United States would allow the United States to work in close collaboration with Russia and other trading partners to help Russia complete its Protocol of Accession and Working Party Report, documentation necessary for WTO acceptance," the State Department notes.

"If Russia is admitted to the WTO, U.S. businesses, farmers, and industries will only reap the benefits of Russian WTO membership if Congress first grants Russia permanent normal trade relations (PNTR)."

Russia has also become increasingly interested in furthering economic ties with the East. According to Associated Press reports, "Asia, and in particular energy-hungry China, presents a deep and liquid market for Russia's myriad raw materials. As well as oil and gas—which at present are exported almost exclusively to Europe—Russia can boast minerals, chemicals, ores, pulp and paper and timber. Since Soviet times, Asia has also been important for Russia's arms industry: China is Russia's No.1 client and Moscow has sent military exports to Malaysia and Indonesia."