APEC Cuts Vague Deal On Tariff Reductions
International Herald Tribune
November 16, 1998
Michael Richardson 

Asian and Pacific nations patched together a free-trade compromise Sunday in an attempt to defuse a confrontation between Japan and the United States and prevent the region's only organization for economic cooperation from suffering a major loss of credibility.

Ministers of the Asia-Pacific Economic Cooperation forum, or

APEC, including those of Japan and the United States, said they had agreed to refer to the World Trade Organization a controversial proposal to speed up the removal of tariffs on nine types of widely traded products. The trade is worth more than $1.5 trillion

The two-day meeting was dominated by disagreements over the pace and scope of trade liberalization against the backdrop of recession in many East Asian countries. At the end, the ministers said they would be "working constructively" in the World Trade Organization to gain wider backing for the fast-track plan in 1999.

But the vagueness of the compromise and President Bill Clinton's decision to skip a meeting of APEC leaders Tuesday and Wednesday, because of the Iraq crisis, left serious doubts about the organization's ability to provide strong leadership and solutions to economic troubles in the region.

Vice President Al Gore will attend the APEC summit meeting instead of Mr. Clinton, just as he did in 1995 when Mr. Clinton offended Japan by staying away from the APEC meeting in Osaka in order to deal with a domestic budget stand-off with the U.S. Congress that had forced a partial government shutdown.

The unity of the organization was further strained Sunday by some bitter exchanges over human rights and the treatment of the former deputy prime minister and finance minister of Malaysia, Anwar Ibrahim.

After spending just 24 hours in Malaysia, Secretary of State Madeleine Albright cut short her visit Sunday night to return to the United States and focus on Iraq — but not before delivering a parting human rights rebuke to the APEC host country.

Describing Mr. Anwar as dedicated to "democracy and a market economy," Mrs. Albright met with his wife to show U.S. support for her husband, who was dismissed and detained on charges of corruption and sodomy after falling out with the Malaysian prime minister, Mahathir bin Mohamad, over political and market reforms.

Mr. Anwar has denied the charges and asserted that he was beaten by police after his arrest.

The trade compromise reached by the ministers barely disguised the fact that they had failed to complete a "fast-track" agreement as requested by the previous APEC leaders' meeting, in Vancouver, British Columbia, a year ago.

The United States, strongly supported by a number of other members, had sought agreement in Kuala Lumpur on the so-called Early Voluntary Sectoral Liberalization plan, which could then be taken to the World Trade Organization to become a binding global pact.

APEC's members account for more than 55 percent of world trade. But Japan — the world's second largest economy after the United States — refused to eliminate tariffs in all nine sectors at the APEC meeting, saying that two areas, forestry and fisheries, were politically sensitive.

The U.S. trade representative, Charlene Barshefsky, put the best face on the compromise, saying that it "reaffirms APEC's leadership role in shaping and advancing the global trade agenda."

But she added that there was "still work to do to complete global agreements in these sectors next year, and, in particular, Japan will need to participate constructively in the WTO process in 1999, as we have all agreed."

Analysts said that the deal was based on the hope that as the Japanese economy picked up and more countries made offers to join the fast-track plan in the World Trade Organization, Tokyo would agree to take part in all nine sectors.

The Australian trade minister Tim Fischer, who wanted an accord finalized in Kuala Lumpur, said the compromise had been reached after "fierce" debate.

"This is not the very best way forward, but it is a way forward," he added.

The foreign minister of Thailand, Surin Pitsuwan, said, "Rather than break down here, it keeps the momentum going."

Japan will not cut tariffs on fishery and forestry products under the agreement, a Japanese Foreign Ministry official said.

"We were able to protect our interests at APEC," the official said. "But the pressure will come on again in the WTO."

The APEC members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the United States and Vietnam.

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