Tensions loom as Obama meets Asian leaders

PHNOM PENH (Reuters) - In his first meeting with a Chinese leader since his re-election, U.S. President Barack Obama said on Tuesday Washington and its chief economic rival must work together to "establish clear rules of the road" for trade and investment.

His comments on the final leg of a three-day Southeast Asian trip follow a U.S. election campaign in which China was repeatedly accused of unfair trade practices and illustrate the work ahead in a region already simmering with tension over territorial disputes involving Beijing.

"It is very important that as two of the largest economies in the world that we work to establish clear rules of the road internationally for trade and investment," Obama told Chinese Premier Wen Jiabao before an East Asia Summit of Asia-Pacific leaders in the Cambodian capital Phnom Penh.

During the U.S. election campaign, Obama was denounced by his rival Mitt Romney for being "a near-supplicant to Beijing" on trade matters, human rights and security issues. Obama accused Romney of shipping U.S. jobs to China when he was a businessman.

In Asia, those trade tensions overlap with friction over Chinese sovereignty claims that surfaced on Monday at a Southeast Asian leaders' summit. In July, a foreign ministers meeting of the Association of Southeast Asian Nations (ASEAN) failed to agree on a communiqu? for the first time ever because of the row.

"I'm committed to working with China and I'm committed to working with Asia," Obama said. China and the United States had a "special responsibility" to lead the way on sustained global growth, he added before the meeting was closed to media.

Wen highlighted "the differences and disagreements between us" but said these could be resolved through trade and investment.

Obama's visit to Cambodia, the first by a U.S. president, underlines an expansion of U.S. military and economic interests in Asia under last year's so-called "pivot" from conflicts in the Middle East and Afghanistan.

The Philippines, Australia and other parts of the region have seen a resurgence of U.S. warships, planes and personnel, since Obama began shifting foreign, economic and security policy towards Asia late last year, unnerving Beijing.

Japanese Prime Minister Yoshihiko Noda said mounting Asian security problems raise the importance of the U.S.-Japan alliance, a veiled reference to tensions over Chinese sovereignty claims and maritime disputes.

"With the increasing severity of the security environment in East Asia, the importance of the Japan-U.S. alliance is increasing," Noda told Obama.

STRAINED TIES

Beijing claims the South China Sea as its territory based on historical records, setting it directly against U.S. allies Vietnam and the Philippines. Brunei, Taiwan and Malaysia also lay claim to parts, making the row one of the biggest security threats in the region.

The area is thought to hold vast, untapped reserves of oil and natural gas that could potentially place China, the Philippines, Vietnam and other claimant nations alongside the likes of Saudi Arabia, Russia and Qatar.

Sino-Japanese relations are also under strain after the Japanese government bought disputed islands known as Senkaku in Japan and Diaoyu in China from a private Japanese owner in September, triggering violent protests and calls for boycotts of Japanese products across China.

China says both disputes involve sea-lanes vital for its economy and prefers to address conflicts through one-on-one talks. But the subject is expected to feature later on Tuesday at the East Asia Summit, which also includes leaders from ASEAN, India, South Korea, Australia and New Zealand.

ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

"HOW CAN THERE BE A CONSENSUS?"

On Monday, Noda challenged efforts by summit host Cambodia, a staunch China ally, to limit discussions on the South China Sea. Cambodia had said Southeast Asian leaders had agreed not to internationalize the row -- a claim that was strongly disputed by Philippine President Benigno Aquino.

"How can there be a consensus? A consensus means 100 percent," said Philippine Foreign Minister Albert del Rosario. "It was translated into a consensus without our consent."

Aquino raised the possibility of finding an "alternative route" to discuss the issue with countries outside the 10-member ASEAN. That would likely involve the United States, one of its closest allies, which has said it has a national interest in freedom of navigation through the South China Sea.

ASEAN on Sunday agreed to formally ask China to start talks on a Code of Conduct (CoC) aimed at easing the risk of naval flashpoints, according to Surin. But Wen played down the need for urgent action in talks on Sunday night with Cambodian Prime Minister Hun Sen.

Late on Monday, Obama and Southeast Asian leaders launched a trade initiative known as the U.S.-ASEAN Expanded Economic Engagement, which is aimed at smoothing a path for Asian nations to link up with the Trans-Pacific Partnership, a pact the United States is negotiating with 10 Asian countries and the Western Hemisphere, the White House said.

The Trans-Pacific Partnership excludes China until it undertakes significant economic reforms.

(Additional reporting by Mark Felsenthal, Stuart Grudgings, Prak Chan Thul and James Pomfret, and Jutarat Skulpichetrat; Writing by Jason Szep; Editing by Raju Gopalakrishnan)

Source: http://news.yahoo.com/asia-tensions-loom-obama-meets-japan-china-leaders-054612574.html

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