Last night, I was interviewed by Ticky Fullerton on the Lateline Business show about this weekend's APEC Summit to be chaired by President Obama. 

While the APEC summit will not solve, or even seek to solve, the world's current desperate problems, promoting free trade and investment in the Asia-Pacific region is a good thing for economic growth over the medium term.  And also now that the region is in a state of intense strategic rivalry between the US and China, it is also a good thing that all leaders from both rims of the Pacific get together.  While interests may differ, in the end no-one benefits from conflict.

The interview can be seen at the following link, which also provides a written transcript:

http://www.abc.net.au/lateline/business/items/201111/s3360806.htm

Here are the main points from the interview:

At this weekend's Hawaii APEC Summit, a broad framework for a "Trans-Pacific Partnership" will be agreed upon by 9 of APEC's 21 member economies.

Although the TPP started as an agrement between four small economies, Brunei, Chile, New Zealand and Singapore, it is now being strongly promoted by the US, and other countries like Australia, Malaysia, Peru and Vietnam have jumped on the band wagon.

The idea of the TPP is to have a high quality agreement that goes deeper than normal trade agreements, and deals with issues like intellectual property, investment, government procurement and so on.  This means that countries like China are not yet ready for the TPP.   

While the TPP is unlikely to do anything to address the world's current economic problems, it promises to improve the conditions for open markets and prosperity and economic growth over the medium term.

It's also important because it signals that the US is now active again in trade policy, after the first two years of the Obama administration when there was no work at all on trade.  The recently signed free trade agreement between the US and Korea is another sign that Obama is serious about trade.

Keeping the ball rolling on trade liberalisation is important, because since the global financial crisis exploded, there has been an outbreak of protectionism.  Much of this is "murky protectionsim".  One example is that the US has eliminated tax on a special type of domestic beer, but not taken the tax off the equivalent imported beer. Of course it's a trick to protect local products.

Turning to sovereign debt issues, Europe's problems were created by Europe and should be solved by Europe.  Since we are all affected by this, we should all pitch in a little to help.  But expectations that China would make a major contribution are unrealistic.  China will contribute just a little.  It is easy to forget that China is still a poor country with a GDP per capita of just $4,000 a year.  And if China did make a major contribution, strings would be attached, like the expectation of going soft on things like human rights. 

For Australian businesses, where are the most exciting opportunities in Asia?  Australia of course is fully focused on selling natural resources to Asia and that's a good thing. But the big story in Asia is in fact the rise of Asia's middle class.  Depending on how you count it, there are hundreds and hundreds of millions of Asia's emerging middle class. That is a great market for Australian entrepreneurs.

One important problem in China is unsafe food and other products.  High quality and safe food products represent an important market niche for Australia.