[asia-apec 265] Promises, Promises

[daga]

Promises, Promises
by Rigoberto Tiglao in Manila and
Michael Vatikiotis in Bangkok

Far Eastern Economic Review
December 5, 1996

Wind-breakers on Blake Island, Indonesian batik in Bogor, day jackets in
Osaka, and now barong-tagalogs - the formal attire of the Philippines. It's
a familiar photo: 18 heads of state lining up together, smiling from ear to
ear and waving to a phalanx of photographers. The only difference seems to
be their outfits and the backdrop.

The ritual group photos might imply that nothing much about the Asia-Pacific
Economic Cooperation forum has changed except for the clothes. And that
wouldn't be far wrong. Though Philippine President Fidel Ramos closed the
Apec summit in the Philippines insisting thast the forum had moved "from
vision to action," even that action was heavily hedged.

The trade barriers Apec was designed to lift are still in place, and there
was no move towards setting the agenda for a new round of trade negotiations
under the World Trade Organization. Indeed, Apec continues to disappoint
those who hoped the world's most dynamic economies would act collectively
and decisively to stimulate global trade liberalization. Meanwhile, as the
member-countries' leaders -- and perhaps more importantly, their
bureaucracies -- get to know each other better, Apec is fast becoming the
political animal its detractors feared it would.

Nearly everyone nodded politely over Washington's proposal for an
Informational Technology Agreement, which would erase tariffs on computers
and software by 2000. Apec leaders called for the conclusion of such an
agreement by the World Trade Organization ministerial conference in
Singapore in December that would "substantially eliminate tariffs by the
year 2000" while recognizing the need for "flexibility" in negotiations
currently underway in Geneva. 

But the wording fell short of the ringing endorsment the United States,
which accounts for about 60% of the $1.8 trillion generated by the computer
industry each year, wanted. Opposition came from China, Malaysia and Chile,
with Thailand in the background. "While we can accept the ITA deadline, we
need flexibility," Malaysian Prime Minister Mahathir Mohamad told the media
after the summit. Singapore Prime Minister Goh Chok Tong called the wording
"ambiguous," and said he doubted the WTO would conclude a technology agreeement.

But in other areas the Apec ministers' discussions are leading to concrete
actions which, if they won't lift tariff barriers, will at least facilitate
trade. Apec countries agreed in Manila to harmonize tariff categories by the
end of this year and customs-clearance procedures by 1998. "The cost savings
for companies doing a lot of trade work here will just be in billions,"
claims Christopher Butler, chairman of the Apec committee on trade and
investment.

Individual tariff-cutting plans submitted by each country were supposed to
demonstrate Apec's commitment to action. But most of the plans were mere
briefs on current programmes which member countries have been undertaking
either unilaterally or as part of their economic reforms or for with GATT's
Uruguay Round.

Interestingly, China, with the highest tariff levels among Apec countries,
claimed it had reduced its average tariff from 35.9% to 23% and committed
its action plan to reduce its average tariff to 15% by 2000, or just about
the Philippines' present 1996 level. On the other hand Taiwan's average
tariff will be reduced by a miniscule amount by 2000, to 7.9% from 8.6%.

Four of the seven high-tariff Asian countries did not even quantify their
plans. Indonesia's was not a plan but a vague declaration: "Tariffs will be
progressively reduced to reach the Apec goal by 2020."

The Philippines submitted the boldest plan, reducing tariffs to 5% by 2004
from the present average of 15.6%. "As host, it is our responsibility to
move Apec forward," Ramos said in a pre-summit interview. But he added: "The
Philippines, among all Asean countries, seems to have the most powerful
lobby groups able to change government policies in midstream."

Those groups include Filipino workers protesting against the tariff cuts
that they feel undermine their job prospects. At Apec, the Ramos
administration managed angry protests quite cleverly, keeping them around 20
kilometres from the summit site itself.

Against a disappointing backdrop, questions about Apec's usefulness find
some resonance. But analysts say that Apec may be evolving into something
more than just a tariff-cutting workshop. Political and security issues,
though technically not for discussion, lurk in the background.

"The ultimate aim of Apec is to create a sense of community," says Rodolfo
Severino, a senior diplomat tipped to be next Asean secretary-general. "And
that in a sense will contribute to regional security."

But Asian member-states, specifically the Asean countries are strongly
opposed to what they see as U.S.-led moves to broaden the Apec agenda and
shift the central focus from Asia. Says Carolina Hernandez of the University
of the Philippines: "Asean is unlikely to support an initiative that makes
it yield a larger degree of control over the [Apec] agenda."