After Pledges at Asia Summit, Europe Faces Cost
International Herald Tribune
March 5, 1996
Alan Friedman  

European leaders went into last weekend's Bangkok summit conference hoping they could tiptoe around human rights, promote exports to Asia and enhance their presence in the region.

But the eventual cost of launching the dialogue with Asia may prove higher than anyone in Europe has imagined, and most notably when it comes to Asian demands that Europe open its markets.

"Europe has to be ready to match the kind of market-opening measures already agreed as targets by Asia and the United States," said Renato Ruggiero, director-general of the World Trade Organization in Geneva.

In a telephone interview on Monday, Mr. Ruggiero stressed that "whatever the short-term costs,

the opportunity for Europe to open its markets in order to have Asian markets completely open is much greater than the risk."

In Bangkok, European leaders with an eye on forging broader political and economic ties in the region were careful to avoid any public criticism of the human rights records of any of their Asian counterparts. Yet, the idea of providing instant trade liberalization in response to Asian demands is at first glance not a prospect that sits particularly well with Europe's mercantilist roots and traditions.

On Monday, with the "feel-good summit" of European and Asian leaders having just pledged cooperation in numerous areas, including trade, Jacques Calvet, the outspoken Peugeot chief and current president of the European Automobile Manufacturers' Association, let loose a flood of protectionist and anti-Asian rhetoric.

While President Jacques Chirac of France was still toasting the new spirit of cooperation in Bangkok, Mr. Calvet was warning in an interview with The Wall Street Journal that Japanese carmakers are "preparing a new offensive." He also criticized the inroads made in the European market by South Korean car companies.

South Korea, in turn, had only just initialed a cooperation agreement with the European Union that was still being hailed by Sir Leon Brittan, the EU's trade commissioner.

In Bangkok, Asian leaders warned Europe against taking advantage of any trade liberalization moves that might be agreed at the meeting next autumn in the Philippines of the Asia-Pacific Economic Cooperation group, which includes the United States. The APEC nations are seeking to eliminate tariff and other trade barriers around the Pacific Rim by 2020.

Prime Minister Mahathir bin Mohamad of Malaysia also noted that Europe should offer tariff reductions and improve its anti-dumping procedure in exchange for its access to low-cost labor in Asia.

In a telephone interview Monday, Sir Leon tried to play down any differences, stressing instead that while Europe would watch to see what happens at the APEC meeting, "we are not going to be persuaded into doing what we don't want to do by Dr. Mahathir or anyone else."

Sir Leon did, however, acknowledge that "we will have to see what they come up with in the Philippines meeting." He said, "We are going to look at the total picture, including tariff and nontariff market access measures, and then we shall see if it is appropriate to go further."

EU officials will have a chance to discuss trade issues even sooner, when, in an initiative agreed at the Bangkok meeting, they meet their Asian counterparts in Brussels this July.

In 1994, the then 12 member nations of the EU had a combined $44 billion trade deficit with the 10 nations that were represented at the Bangkok summit meeting — Brunei, China, Indonesia, Japan, Malaysia, the Philippines, South Korea, Singapore, Thailand and Vietnam. The United States, also in 1994, had a $117 billion deficit with the same Asian nations. On Monday, Ambassador David Aaron, the U.S. delegate to the Organization for Economic Cooperation and Development, said that Washington would welcome the idea of new trade liberalization measures from Europe in response to Asian requests.

"When we moved to give APEC some real substance," Mr. Aaron said, "the Europeans were anxious that we were going to create some closed trading bloc. Now they are seeing that we are trying to create a virtuous circle in which we are competing to liberalize our markets as opposed to closing them up. And we have said all along that we hoped APEC would contribute to global liberalization."

For his part, Mr. Ruggiero, said, "I really hope the European government heads came back with the full awareness that in Asia this is an historical moment. The U.S. and Asian countries have already settled on their goal, a full free trade area that would cover 50 percent of world trade by the year 2020. Now Europe has to be ready to match this goal."

Copyright © 2006 The International Herald Tribune