Fran O'Sullivan: US mess a talking point at Bali summit

President Barack Obama. Photo / AP

Barack Obama made the right call to stay in Washington to try to resolve the political impasse over the need to raise the United States' debt ceiling instead of flying to Bali for the Apec leaders' summit.

It is unfathomable that a nation that prides itself on its democratic ideals, capitalistic prowess and business leadership has dug itself into such a gigantic mess.

The US Government - and particularly the political ferals that have blindly knee-capped the Obama Administration's budget measures to notch up a narrow political advantage - should be mightily embarrassed at the glaringly obvious high-level governance failure within what (for now) remains the world's only super-power.

In Bali, Chinese leader Xi Jinping has been relatively benign in his public comments on the United States' predicament. But Xi has also made the most of public opportunities to emphasise the point that it is China that will continue to be the driver of regional growth in the Asia-Pacific. And why wouldn't he?

Top Chinese trade official Yu Ping bluntly said it was more important that Obama should stay home than come to Bali.

But from Beijing the signals have been totally direct.

The foreign ministry has made the point that China is the United States' biggest foreign creditor and warned the US it must move without further delay to approve an extension of the nation's borrowing limit before the Government runs out of cash.

Several leaders at Apec have had a dig at the United States political governance system and the shortfalls that have led to the Obama Administration being hamstrung.

But the Apec leaders who spoke publicly at the adjoining chief executives' summit in Bali also stressed the negative consequences for Asia-Pacific growth and overall financial stability if Obama could not restore order.

There is a sense that irrespective of the United States' current situation, the Asia-Pacific nations were all in the same soup.

US business people I talked to in Bali tended to shrug their shoulders over the impasse. But the embarrassment was writ large on their faces.

Just 15 years ago, the boot was solidly on the other foot at Apec. Senior US politicians and business leaders openly chastised Asian leaders over the "crony capitalism" they alleged had contributed to the East Asia financial crisis. Five years earlier, barely disguised shots were fired at the Mexican leadership over that nation's currency crisis.

Back then the business summits sported sessions where Western players would lecture Asian and Latin American attendees on the need for them to adopt US governance norms. The US business leadership present here this time knows it would be laughed out of school if it took to the lecture circuit.

Three themes have dominated this year's chief executives' summit.

First: Obama's absence, which has caused many to openly speculate that the global power shift from the United States to China has ramped up.

Second: the growing realisation that the big two regional trade negotiations - the Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) - will ultimately prove to be the significant building blocks for a free trade area of the Asia Pacific (FTAAP) which unites all 21 Apec economies.

Third: the need for Apec leaders to put their combined shoulders to the wheel to ensure the December World Trade Organisation ministerial meeting in Bali unlocks the stalled Doha Round.

It is important that the US does retain a strong role in the Asia-Pacific. But the trends are remorseless.

This column was filed before the outcome of yesterday's meeting of TPP leaders present in Bali, which was chaired by John Key in Obama's absence.

But Indonesia needs some soul-searching as it gears up to host the WTO meeting.

Newspaper headlines here loudly proclaim the message by Indonesia's leadership that protectionism is out. In fact it is alive and well, as New Zealand's beef exporters know to their cost.

The NZ Government hasn't made any political hay from the event. But on August 31, the United States Trade Representative's Office announced New Zealand had joined a WTO dispute against Indonesia over its protectionist measures on beef imports.

"Consultations with Indonesia earlier this year failed to resolve our concerns with Indonesia's unjustified and trade-restrictive import licensing system," said US Trade Representative Michael Froman.

"To the contrary, although Indonesia has revised its measures, they continue to pose a serious impediment to US agricultural exports.

"Accordingly, the United States is submitting a revised consultations request addressed to Indonesia's most recent measures. I am also pleased that New Zealand, which is similarly harmed by Indonesia's restrictions, has decided to join the dispute by filing its own request for consultations."

The issue was tabled during Key's visit to Indonesia last year.

But subsequent talks between Trade Minister Tim Groser and Indonesia's outgoing Trade Minister Gita Wirjawen did not break the impasse.

Wirjawen - now a candidate for his country's presidency - is obviously playing to Indonesia's domestic interests.

That's why the WTO remains important to New Zealand as the world's rules-based trade organisation. But the TPP - once cemented - will add icing to the trade cake.