APEC leaders to give global trade talks a gentle push

APEC leaders to give global trade talks a gentle push

KUALA LUMPUR (Reuters): Asia Pacific leaders meeting in Brunei next week are expected to declare their support for a new round of global free trade talks but shy away from listing specifics they want on the agenda.

And such caution about commitments may be typical of the November 15-16 Asia Pacific Economic Cooperation summit meeting in the tiny oil-rich sultanate, expected to draw U.S. President Bill Clinton, Japanese Prime Minister Yoshiro Mori and Russian President Vladimir Putin among others.

Rising oil prices, globalization, regional free trade arrangements and liberalization of e-commerce services are some of the issues on the agenda when the leaders of the 21 APEC members meet.

In all those areas agreement on broad principles may be easier to reach than consensus on concrete policy steps considering APEC's diversified membership, which stretches geographically from Russia to Chile and economically from Third World Papua New Guinea to Japan and the United States.

Certainly the drive for a fresh round of World Trade Organization (WTO) global trade liberalization talks will be soft-pedaled, analysts say.

APEC members account for 60 percent of global gross domestic product and 45 percent of world trade.

Many are still recovering from the Asian financial crisis in the late 1990s and several like Malaysia are wary of the risks posed by globalization, so APEC is unlikely to move too fast on free trade.

"It will be a sort of a symbolic declaration. But I don't think they will agree on the specifics to be included in the new round," Kyung Tae Lee, the incoming chairman of the APEC's economic committee, told Reuters by telephone from Seoul.

WTO members failed to launch a new global liberalization round in Seattle last December amid a backlash of violent protests.

"I think to date much emphasis has been placed to help in building a consensus to launch a new round of WTO. We will continue to press for it as early as possible," said Lawrence Greenwood, a senior U.S. State Department official for APEC.

In contrast, Malaysian Prime Minister Mahathir has pledged to talk about the adverse impact of liberalization on poorer nations.

"Many (developing countries) are worried about effects of globalization...whether it is good or bad for developing countries. It may be good for them (developed countries) but bad for us," Mahathir said last week.

Malaysia has asked ASEAN Free Trade Area (AFTA) members for more time to lower tariffs on cars, a move that angered Thailand, which harbors grand plans for its auto industry.

Mahathir will not be the only leader at the meeting less than totally enthusiastic about rapid liberalization.

"The South Korean President Kim Dae-jung will put emphasis on the darker side of globalization exemplified by the digital divide and income disparity," said Lee of APEC's economic committee, who is also the president of the Korean Institute of International Economic Policy.

The APEC leaders are also likely to address the proliferation of bilateral trade agreements, which some analysts say poses risks to multilateral trading arrangements.

"The focus will be on sub-regional trading arrangements and their proliferation and how to ensure that they are consistent with APEC and WTO," said Jesus Estanislao, a coordinator at the Pacific Economic Cooperation Council (PECC).

But Greenwood welcomed bilateral free trade arrangements among APEC members, saying they were building blocks for a stronger multilateral trading system.

Greenwood also said APEC will focus on measures to take advantage of recent gains made in information technology to improve efficiency and productivity in the region.

The immediate problem of volatile crude oil prices threatens to steal some of the limelight even as the leaders lock horns on longer term issues like trade liberalization.

APEC is expected to attempt to work out measures to reduce vulnerability to rising oil prices which threatens to blunt recovery in many Asian economies, officials said.

"I think that is a very important issue for most of the APEC economies as many countries are importers and are hard hit by rising oil prices," Lee said.

Some APEC members such as Brunei, Indonesia, Malaysia, Mexico and Russia are big oil producers and stand to gain from the recent surge in prices to their highest level in 10 years.

APEC's Energy Working Group has recommended cooperation among members to promote alternative energy sources and oil security.

"However, we are looking at couple of things on the supply side and one of them is a program to help educate and promote stockpiling regimes in the region," Greenwood said.

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