Issue of EC Access Complicates Asia's Free-Trade Efforts 
International Herald Tribune
October 21, 1994
Michael Richardson 

As pressure increases for new measures to liberalize trade in Asia and the Pacific, countries in the region are divided over how to structure a free-trade arrangement in relation to Europe.

Most want any lowering of tariff and nontariff barriers to be on a nondiscriminatory basis so that the benefits would be available to all nations, not just members of APEC, the Asia-Pacific Economic Cooperation forum.

In an interview Thursday, Ali Alatas, Indonesia's foreign minister, said he thought that "the overwhelming view" among APEC countries was that "the operating principle of APEC must remain open regionalism."

This would preclude moving "toward anything that would even be a semblance of a closed shop or a closed trading bloc," he said.

However, some APEC countries - including the United States, Australia, Singapore and South Korea - want access to a giant Pacific free-trade area to be made conditional, at least for European countries, officials and analysts said.

Such a move would force the European Union to make equivalent cuts in import barriers if it wanted free access for its exports to fast-growing APEC economies that already account for 50 percent of global production and 40 percent of the world's trade.

The issue, which is regarded as highly sensitive by trade policymakers in Europe and elsewhere, will be discussed at a meeting in Indonesia next month of leaders of the 18 APEC countries.

On a recent visit to Australia, Peter Sutherland, the director- general of GATT, the General Agreement on Tariffs and Trade which supervises the global trading system, warned that it would be "extremely dangerous" if APEC adopted any regional trading arrangements that discriminated against nonmembers.

He made it clear that such a move could provide impetus for development of two giant trade blocs centered on Europe and the Pacific, undermining efforts to liberalize trade worldwide.

A senior European official said a Pacific free-trade zone "encompassing several continents, two major trading powers and the most dynamic economic area of the world on an exclusive basis must be considered discriminatory, at least by those excluded."

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

Chile is due to become the 18th member of APEC in November, when ministers from the group hold their annual meeting in Jakarta followed by an informal summit meeting attended by President Bill Clinton and other leaders in Bogor, also in Indonesia.

On Saturday, a group of business executives from APEC members delivered a report to President Suharto of Indonesia that called for free trade and investment liberalization in the region by 2002 for developed economies.

Mr. Suharto will chair next month's summit meeting. The report was requested by APEC leaders when they held their first meeting nearly a year ago.

APEC "must produce concrete results this year in order to sustain its role as a policy forum which will guide the growth of the Asia-Pacific region," said Bustanil Arifin and Les McCraw, the co-chairmen of the group that produced the report.

Mr. Arifin heads PT Berdikari, a state-owned Indonesian company. Mr. McCraw is chief executive of Fluor Corp. of the United States.

On a visit to Australia last month, Goh Chok Tong, Singapore's prime minister, said that Singapore and the United States preferred to see some conditionality attached to Pacific trade liberalization.

Analysts said that Australia and South Korea also supported such a position.

Mr. Goh said he would have no problem in giving unconditional benefits to the developing countries but would have some difficulty in giving something away to Europe. The EU, he added, "must reciprocate in some way."

Mahathir Mohamad, the Malaysian prime minister, said he was concerned that APEC might become a trade bloc and be used as "a counterbalance" to the EU.

"A free-trade zone means discriminating against people outside the trade zone, and that is a trade bloc," he said. "We would not like to see that happen, because we want to be free to trade with anyone we wish."

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