APEC can turn into a trade bloc: Analyst

APEC can turn into a trade bloc: Analyst

JAKARTA (JP): The Asia Pacific Economic Cooperation (APEC)
forum may turn into a trade bloc if its member economies cannot
adopt the principles of the most favored nations (MFN) in its
trade liberalization program, an expert warned yesterday.

Suhadi Mangkusuwondo, a member of the APEC Eminent Persons
Group, said at a seminar here yesterday that some of the
developed member economies, particularly the United States,
prefer a preferential trade liberalization scheme to the MFN
provision.

When other economies follow the principle of the preferential
tariff reductions to the MFN, Suhadi said, they automatically
make the APEC forum a free trade area, which under article 24 of
the World Trade Organization, needs a special free trade
agreement.

"However, it will be difficult to make the APEC forum a free
trade area because it involves 18 economies with very different
levels of development," Suhadi said at the seminar, hosted by the
Center for Strategic and International Studies.

Indonesia, however, has repeatedly stressed that APEC should
remain an open regional forum. It should not lead to the creation
of a new trade bloc.

Suhadi noted that if APEC economies cannot settle the issue of
either the MFN or the preferential treatment, it will be
difficult for each member to come up with their own action plans
at the next APEC ministerial meeting in the Philippines later
this year.

Under the Osaka Action agenda, agreed at the APEC leaders'
last meeting in Osaka in November, each member is asked to submit
its action plan at the next APEC meeting in the Philippines, with
a view for implementation to begin in January 1997.

"We have a lot of homework for the Manila meeting... And it
seems to me that the Indonesian government is still cool and calm
when the Manila meeting is almost upon us," Suhadi said.

Unilateral action

Meanwhile, Soemadi D.M. Brotodiningrat, chairman of the
Indonesian delegation to the APEC Senior Officials Meetings,
noted that Indonesia is currently preparing its unilateral action
agenda. However, he declined to mention if Indonesia will submit
the agenda at the Manila meeting.

Suhadi said that if most APEC economies cannot submit their
action plans this year, it means that the APEC forum will be
unable to accelerate trade liberalization. Consequently, it will
adopt the time frame of the World Trade Organization, which is
MFN in nature.

"If this is the case, then there will be no trade
liberalization under the APEC forum. There will be only trade and
investment facilitations, along with development and technical
cooperation among member economies," Suhadi said.

Economist Mari E. Pangestu disagreed with Suhadi, saying that
although not all the members can come up with their action plans,
the next APEC meeting can still help accelerate trade and
investment liberalization in the region.

She noted that three or four members coming up with their
action plans by the next APEC meeting will be enough as they will
give ample "contagious" promptings to other members.

When explaining the "contagious" promptings, Marie said that
if four economies come up with their liberalization programs,
other economies will be likely to follow suit as they will also
try to secure their market shares and competitive advantage in
the international market by liberalizing their economies. (rid)