[asia-apec 126] Early Blueprints for APEC

[daga]

Early Blueprints for APEC:
Leaked drafts show little action in action plans

by Alejandro Reyes
Asiaweek
October 4, 1996

In Osaka, the talk was of an "action agenda." This year in Manila, it's all
about "action plans." In November, the Asia-Pacific Economic Cooperation
(APEC) forum holds its annual ministerial and informal leaders' meetings in
the Philippines. Last year, the 18 members each submitted "downpayments" or
initial measures to open their economies further to trade and investment.
Each pledged to come to the 1996 conference with an action plan, specifying
just how it would meet the APEC-wide goal of free trade and investment by
2010 for developed members and 2020 for developing ones.

But as APEC has gotten down to the nitty-gritty of who lifts what tariff
when, reality has tempered the initial zeal. Recently, drafts of each
member's action plan current to Aug. 22 were released to the press by the
Manila-based People's Forum on APEC, a group of non-governmental
organizations that is planning a fringe conference. The documents bear the
stamp of the APEC Secretariat in Singapore, but People's Forum organizers
will not say how they were obtained. The final action plans will not be
released until after the Nov. 22-25 APEC meeting.

Judging by the draft proposals, the heady days of big-picture pronouncements
that marked the Seattle and Bogor summits are definitely gone. In 1993, U.S.
President Bill Clinton scored a PR coup when he convened an informal meeting
of his counterparts. In Indonesia the following year, the decision to adopt
the 2010/2020 timetable stole the show. Osaka in 1995 moved the process a
step further, while the behind-the-scenes leadership in APEC was shifting
from the U.S. and Australia to the Asian core.

This year's proposals for the various plans contains a few specifics.
Korea's list, for example, says that by the year 2000 it will allow
foreigners to take up to a 33% share in telecom suppliers, except for Korea
Telecom which will be limited to 20% overseas ownership. But there is no
timetable for further liberalization. China says that by 2000 it will
"reduce the simple average level of tariffs to some 15%," but over the
longer terms it says only that it will "further reduce the level of tariffs.
The proposals, of course, could be beefed up in coming weeks. Beijing, for
example, surprised many at the end of last year's APEC meetings when it
announced a package of sweeping tariff reductions.

"Most Asia countries want APEC to remain faithful to the original vision of
it as simply a loose forum for consultation on technical economic issues,"
says Walden Bello, a University of the Philippines professor who chairs the
People's Forum. "They don't favor a free trade area because, by committing
themselves to eliminate all trade restrictions and bring down tariffs to
zero, they would lose the flexibility of using trade policy for larger
developmental objectives." The American vision, Bello arugues, is to create
a free trade area "via collective, comparable and binding liberalization
plans, with fixed schedules."

Nancy Adams, the U.S. trade representative for APEC Affairs, says, "The U.S.
market has for years taken a huge portion of the world's exports, and
efforts will continue to be necessary to pursue similar access in other
markets." The U.S. plan is part of those efforts. For example, items under
the "objective 2010/2020" column are often accompanied by the phrase "free
and open trade in the APEC region." Washington is offering to bring down
average tariffs for most products to 3.5% by the year 2004 from 4.9%. And
the Americans are promising that slightly more than half of its imports will
be tariff-free.

Problems could arise when Washington demands the same in return. "American
trade policy is driven by an unhealthy obsession with reciprocity," says
Jagdish Bhagwati, professor of economics at New York's Columbia University.
Asks one Western diplomat in Singapore: "Would the U.S. really be willing to
open its economy in 2010, ten years before China opens its market fully?" In
a speech last week in Singapore, Bhagwati spoke skeptically about APEC and
regional trade initiatives. "What we have now is what I call a spaghetti
bowl phenomenon, where discrimination cuts through the world trading system
the way it cut through it in the 1930s." The only way to move toward free
trade is globally, through the World Trade Organization (WTO), he argued.

Still, the resistance of APEC's Asian members to Washington's agenda is a
positive development, Bhagwati reckons. "Asian members refused to play along
with the intellectual lazy drift to preferential trade agreements of the
U.S. Asia is now providing the leadership that the U.S. has relinquished on
the issue. But that is, perhaps, as it should be, now that the Asian nations
have come of economic age." Over the long term, however, if the WTO gets
moving, Asia and the rest of APEC will have to decide whether APEC itself is
worth the bother.