Business urges Obama get off trade sidelines in Asia

U.S. President Barack Obama answers questions during an interview with Reuters in the Oval Office at the White House in Washington, November 9, 2009.

WASHINGTON (Reuters) - U.S. business groups on Monday urged President Barack Obama to use his upcoming trip to Asia to join talks on a regional free trade initiative and to set the stage for long-delayed congressional approval of a free trade pact with South Korea.

"We are standing on the sidelines while Asian nations clinch new deals," Thomas Donohue, president of the U.S. Chamber of Commerce said in a statement.

"It's time to see action from Washington to expand trade with Asia in order to create jobs and avoid drawing a line down the middle of the Pacific," he said.

Obama heads to Asia on Thursday on a four-nation tour that begins in Japan before heading to Singapore for the annual summit meeting of the Asia Pacific Economic Cooperation forum and finishing with stops in China and South Korea.

In a pre-trip interview with Reuters on Monday, Obama said boosting exports was a crucial part of his economic agenda.

"It is particularly important for us when it comes to Asia as a whole to recognize that in the absence of a more robust export strategy, it is going to be hard for us to rebuild our manufacturing base and employment base," Obama said.

He also said U.S. manufacturers had "legitimate concerns" about their ability to sell their goods into China and that he would raise the issue of the value of that country's currency when he meets with Chinese leaders next week in Beijing.

U.S. business groups fear the United States could be left on the outside as China, Japan, South Korea and the 10 members of the Association of Southeast Asian Nations accelerate efforts toward regional economic integration.

There also is widespread dismay in Asia over Obama's lack of engagement on trade issues, said Fred Bergsten, president of the Peterson Institute for International Economics.

At a time when Asian nations are aggressively signing free trade agreements with each other and the European Union and sewing up a regional economic bloc, "the U.S. is screwing itself -- there's no other way to put it -- by being inactive is this area," he said.

U.S. Trade Representative Ron Kirk said last week Obama would not send a two-year-old free trade agreement with South Korea to Congress for a vote until Seoul makes more concessions to open its markets to U.S. autos and other exports.

Kirk said his office was developing proposals to give to South Korea on those points and that Obama and South Korean President Lee Myung-bak would discuss the pact's status when they meet in Singapore and in Seoul.

Obama, now in his tenth month in office, also has not decided whether to join the Transpacific Partnership by negotiating free trade deals with New Zealand and Brunei Darussalam and joining them to existing U.S. free trade pacts with Chile, Singapore, Australia and Peru.

Business groups hope Obama, after hearing first hand the region's efforts toward regional integration, will decide to move more aggressively on the trade front.

"We just cannot afford to be on the outside, looking in at Asia, which is where both trade and trade agreements are growing the fastest in the world," said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

A group representing U.S. banks, insurers, express deliverers and service industry companies also urged Obama to allow the United States to join talks on the Transpacific Partnership, which it said would provide "a much-needed response to the proliferation of trade agreements in the Asia Pacific that exclude the United States."

Passage of the U.S.-Korea trade pact would also boost U.S. exports and jobs by eliminating many trade and investment barriers that American companies face in South Korea, said Bill Toppeta, chairman of the Coalition of Service Industries and president of MetLife International (MET.N).

If nothing else, Obama should use his Asian trip to lay out a clearer vision of his plans on trade, said Derek Scissors, a research fellow at the Heritage Foundation.

"A statement from the president that 'this is what America's policy on trade is going to be' -- that's what Asia is looking for, because the driving factor in America's relationship with Asia is economics," Scissors said.

(Editing by Philip Barbara)