Ambitious Plan Hailed As a Turning Point, But Problems Remain : Pacific Rim Shoots for Trade Area By Year 2020
International Herald Tribune
November 16, 1994
Steven Brull and Michael Richardson 

Asian and Pacific leaders agreed Tuesday to start immediate work on creating the world's largest area for free trade and investment, but many contentious problems will have to be overcome before the ambitious program takes effect "no later than the year 2020."

While the United States and other strong advocates of the liberalization plan hailed it as a historic turning point for the Asia-Pacific region, Malaysia announced a series of reservations, and China and Japan appeared wary of making new commitments to reduce tariff and nontariff barriers.

But President Suharto of Indonesia, who chaired the meeting in Bogor of leaders of the 18 members of APEC, the Asia-Pacific Economic Cooperation forum, said that he was "sure" the group could speed up its timetable.

In an eight-page "declaration of common resolve," the leaders said they were committed to "complete the achievement of our goal of free and open trade and investment" in the Asia-Pacific region no later than 2020.

They agreed that the pace of implementation would take into account the differing levels of economic development among APEC members, with the industrialized economies achieving the target by 2010 and developing economies by 2020.

APEC's diverse members include Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, South Korea, Taiwan, Thailand and the United States.

They account for around half of world production and 45 percent of global trade.

In an obvious message to Europe, the APEC leaders said that they were strongly opposed to building an inward-looking trading bloc.

Instead, they said their actions would be "a powerful impetus for further liberalization at the multilateral level to which we remain fully committed."

Prime Minister Paul Keating of Australia said that at current rates of growth APEC members will include seven of the world's most powerful economies by 2020 and account for 57 percent of global trade.

A study commissioned recently by the Australian government found that if free trade was applied by all APEC countries in 2010, it would generate additional economic activity worth more than $365 billion a year with the benefits widely distributed throughout the region.

The liberalization measures agreed by the APEC leaders were "basically win-win arrangements," Mr. Keating said.

"And that is why I think the developing countries are bringing their tariffs down unilaterally, removing nontariff barriers and being involved in trade liberalization in general."

Although they agreed to the declaration, China and a number of other East Asian members of APEC with relatively high levels of protection are clearly wary of being forced into an early round of region-wide tariff cuts that could cause serious economic, social and political consequences arising from large-scale restructuring and job losses.

President Bill Clinton hailed the accord as "especially good news for the United States and our workers" because under the agreement individual APEC nations "will have to tear down trade barriers to reap trade benefits."
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He said that the United States "already has the most open markets on Earth."
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"By opening other markets," he said, "our products and services become more competitive, and more sales abroad create more high-wage jobs at home."

Referring to Japan, China and other East Asian members of APEC who accounted for nearly all of America's $116 billion global trade deficit in 1993, Mr. Clinton said that "what we are doing in this agreement is opening the fastest- growing market in the world" to American and other exports.

He said that even after the multilateral trade liberalization deal that was signed earlier this year under the Uruguay Round of the General Agreement on Tariffs and Trade, tariffs on American automobiles in Malaysia, Thailand, Indonesia and the Philippines would still be between 30 percent and 60 percent compared with the U.S. tariff on autos of 2.5 percent.

In entering his reservations, Prime Minister Mahathir bin Mohamad of Malaysia said that his country was worried it would not be in a position to compete with the big economies in APEC.

"We will make our best effort," he said. "We'll try, but if by the year 2020 we find ourselves unable to compete, I don't think anyone should force us to open up our country to an invasion by powerful companies from the developed countries."
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President Jiang Zemin said that China endorsed regional trade and investment liberalization as a long-term objective.
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The group stopped short of making any commitment to start a region-wide round of negotiated cuts in protection.
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Mr. Clinton made it clear that he had high expectations of Japan, which takes over as chairman of APEC from Indonesia for the next year and will be host to the next ministerial and leaders' meetings in Osaka in the fall of 1995.
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"We'll meet again next year in Osaka," he said. "Meanwhile, we'll develop a detailed action agenda, a blueprint, for achieving our goal of free and fair trade, which I hope and believe will be approved when we meet in Osaka."
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Prime Minister Tomiichi Murayama of Japan said that as chairman of APEC Japan would "take a positive approach in the creation of an action agenda."

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