US trade policy

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• NOVEMBER 14, 2009, 7:53 A.M. ET

U.S. Signals Shift on Asia-Pacific Trade

By TOM WRIGHT and JONATHAN WEISMAN

SINGAPORE --The Obama administration said it would start talks aimed at joining a little-known trade pact between several Asia-Pacific economies, a sign Washington is responding to criticism from some world leaders and U.S. business groups that it has moved too slowly to foster trade ties in the region.

But it was unclear whether U.S. interest in the Trans-Pacific Partnership bloc – which currently comprises Singapore, Chile, New Zealand and Brunei – represents a significant change in policy for the Obama administration, which put new trade deals on hold earlier this year as it reviews its trade policies amid rising protectionist rhetoric at home.

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US President Barack Obama waves from the steps of Air Force One after his arrival at Paya Lebar Air Base in Singapore, where he is to participate in the annual Asia-Pacific Economic Cooperation summit.

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It's also far from certain the Obama administration will be willing to expend the political capital at home needed to carry the talks to fruition.

Although touted by free trade advocates, the combined size of the four economies in the pact is smaller than Belgium's economy. Moreover, Washington has a number of much-larger trade deals, including with South Korea and Colombia, that have been negotiated but are blocked by opposition from the U.S. Congress and are potentially much more significant for the U.S. economy.

The announcement by President Barack Obama during a speech in Tokyo, though, was welcomed by Asian leaders and U.S. business groups who were looking for at least some concrete sign his administration embraces free trade. Some Asia-Pacific leaders have ex pressed hope the Trans Pacific Partnership could someday form a stepping stone to a wider free trade agreement in the Asia-Pacific region, which accounts for half of the global economy.

Mr. Obama, who moved on to Singapore late Saturday to participate in the annual Asia-Pacific Economic Cooperation summit, said in his Tokyo speech that the U.S. will be "engaging with the Trans Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement."

A U.S. trade official said Mr. Obama's announcement effectively meant the U.S. planned to kickstart talks that were put on hold in March amid the trade policy review. Faced with likely opposition from Congress, the Obama team will first take its plan to join the Partnership to lawmakers to work out sticking points in advance of any formal accession talks, the official said.

U.S. Trade Representative Ron Kirk, in Singapore for the APEC meetings, echoed this, saying any deal would be done "in close consultation with U.S. Congress."

Some House members noted the inclusion of Vietnam - which along with Australia and Peru are also interested in joining the Trans Pacific Partnership – might complicate talks.

Two key Democrats on trade issues, House Ways and Means Chairman Charles B. Rangel of New York and Michigan Rep. Sander Levin, chairman of the Ways and Means trade subcommittee, issued a statement welcoming the discussions but warning that Vietnam, a Communist-run country with minimal worker rights, "presents a challenge" to the U.S.

Other leaders were more optimistic. "President Obama's decision to participate in the TPP negotiations is right for American jobs, right for American exporters and right for the American economy," said Senate Finance Committee Chairman Max Baucus. "By opening these key markets for American exporters, the United States shows it has a new blueprint on trade focusing first and foremost on the needs of America's businesses and America's workers."

Other nations, including Singapore and Australia, also praised the announcement. Australian Trade Minister Simon Crean said the U.S. participation is a "significant statement of its intent to the Asia-Pacific region. Importantly, it provides the critical mass essential for this initiative to go forward." The first round of talks about expanding the group will take place in Australia early next year, he added.

A theme of this year's APEC meeting -- an annual gathering of leaders from 21 Asia-Pacific nations including China, Australia and Mexico -- has been the perceived failure of the U.S. to push free trade while faced with opposition from a number of U.S. trades unions and lawmakers that are concerned it doesn't benefit U.S. workers.

On Saturday, Mexican President Felipe Calderon criticized the Obama administration for failing to open its borders to Mexican trucks as required under the North American Free Trade agreement.

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"Protectionism is killing North American companies," Mr. Calderon said at a business event on the sidelines of the APEC summit. "The American government is facing political pressure that has not been counter-acted."

Other U.S. business leaders, while welcoming Mr. Obama's statement, said they would have liked to see a more definitive statement that the U.S. was joining the Trans Pacific Partnership.

"They are moving in the right direction but this is not as strong as we would have liked to see," said Tom Donohue, president of the U.S. Chamber of Commerce, who is in Singapore to push for closer trade ties between Asia and the U.S. Mr. Obama, he said, is likely to face opposition from elements of the Democratic Party to complete any deal.

The Chamber points out that there are over 160 free trade agreements in Asia today, many involving China. The U.S. has only two bilateral trade agreements in the region, with Singapore and Australia. Although U.S. exports to Asia-Pacific increased 63% during the past five years, U.S. share of the fast-growing region's trade declined by three percentage points as other countries expanded their presence, according to the Office of the U.S. Trade Representative.

Mr. Obama, on his first trip to Asia which will also include China and South Korea, also said his administration would work out the issues that are currently blocking the U.S.-South Korea trade pact. The agreement was signed in 2007 but Congress has refused to ratify it, saying it wants better access for U.S. carmakers to sell their products in Korea.

"We also believe that continued integration of the economies of this region will benefit workers, consumers and businesses in all of our nations," Mr. Obama said in Tokyo. "Together, with our South Korean friends, we will work through the issues necessary to move forward on a trade agreement with them."

The Trans-Pacific Partnership was signed in 2005 by New Zealand, Chile, Singapore and Brunei, whose main exports include dairy goods and computer chips. The U.S. initially signaled its interest in joining the bloc last year.

—Patrick Barta contributed to this article

Write to Tom Wright at tom.wright@wsj.com and Jonathan Weisman at jonathan.weisman@wsj.com