Asians Wary of Free Trade Zone
International Herald Tribune
October 6, 1994
Michael Richardson 

Protectionist forces may scuttle attempts to build a regional community based on free trade in goods and services as trade ministers from Asia-Pacific economies meet in Jakarta on Thursday.

Officials said some countries, including Japan, China and South Korea, were wary of accepting a fixed timetable for regional trade liberalization because that would deny national governments control over politically sensitive decisions affecting their economies.

Malaysia appears to be adamantly opposed to the plan, asserting that it could allow powerful states to dictate economic terms to smaller countries.

With the United States unable to take a firm lead in supporting the proposal as Washington battles to overcome resistance in Congress to the global trade accord reached in April, analysts say the push to open Asia-Pacific markets on a regional basis may be losing momentum.

Mickey Kantor, the U.S. special trade representative who was to lead the American delegation in Jakarta, pulled out at the last minute to battle opposition to the global trade deal in Congress. He will be represented by his deputy, Charlene Barshevsky.

Failure by the 17 members of APEC, the Asia-Pacific Economic Cooperation forum, to agree on a timetable for achieving free trade and investment in the region would weaken the group in its dealings with the more cohesive European Union.

It could also undermine efforts to extend the trade-liberalization gains made in the Uruguay Round of negotiations that were concluded under the auspices of GATT, the General Agreement on Tariffs and Trade.

APEC comprises the United States, Japan, China, Canada, Australia, South Korea, Taiwan, Hong Kong, New Zealand, Mexico, Papua New Guinea and the six countries in ASEAN, the Association of South East Asian Nations. They are Indonesia, Malaysia, the Philippines, Singapore, Thailand and Brunei.

Chile is due to become a full member of APEC in November, when ministers from the group hold their annual meeting in Jakarta followed by an informal summit meeting of leaders in Bogor, also in Indonesia.

APEC economies account for 50 percent of global production, 40 percent of the world's trade and 37 percent of its population.

To prepare for the November meetings, the trade ministers will consider Thursday a recommendation that APEC commit itself to a firm target for achieving free trade in the region, starting the liberalization program in 2000 and completing it by 2020.

The recommendation was made unanimously by a group of business leaders, economists and former officials who had been asked by APEC leaders in Seattle in November to present specific proposals for consideration in 1994.

In its recent report, the so-called Eminent Persons Group also proposed a phased introduction of free trade to take account of the widely varying levels of development among APEC members.

The group said the most advanced economies in the region, such as the United States, Japan, Canada, Australia and New Zealand, should achieve the free-trade target in 10 years.

They suggested that the newly industrialized economies - South Korea, Taiwan, Hong Kong and Singapore - should reach the target in 15 years, while developing economies led by China and Indonesia could take as long as 20 years.

The group also recommended that APEC members show their commitment to global trade liberalization by promptly ratifying the Uruguay Round agreement.

Some APEC officials tried to play down the significance of attempts in Congress to block U.S. ratification of the Uruguay Round accord. But some Asian officials said the delay in ratification was making it more difficult to forge a consensus on regional trade liberalization.

Ali Alatas, the Indonesian foreign minister, said any delay in implementing the Uruguay Round would hurt Indonesia and other developing countries.

"We must confess to being concerned with the possibility of a tardy and long drawn-out process" of applying the terms of the global deal, he said in a speech to the UN General Assembly in New York.

The most adamant opposition to an APEC-initiated program comes from Malaysia, which has called for East Asian economies to form their own consultative caucus to protect regional interests and promote free trade.

Mahathir bin Mohamad, the Malaysian prime minister, confirmed after meeting Mr. Suharto in Jakarta last month that he would attend the summit meeting in Bogor next month. Mr. Mahathir boycotted the first APEC summit meeting, conducted in Seattle by President Bill Clinton late last year.

But Mr. Mahathir said Malaysia did not want APEC to adopt a free-trade timetable or become a structured organization that held regular meetings.

"We would not like APEC overshadowing ASEAN or being directed by the more powerful members," he added.

In the face of Mr. Mahathir's objections, officials said it would be difficult for APEC leaders to achieve consensus on trade liberalization and a solid work program for the group.

Another lingering disagreement is whether any tariff cuts agreed by APEC should be extended to nonmembers without conditions in the interests of promoting broader free trade.

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