APEC leaders unlikely to reach agreement on free trade region
JAKARTA (JP): APEC leaders are unlikely to reach agreement on the establishment of a Pacific free trade area at their meeting in Bogor south of here in November due to unavoidable discrepancies among members.
"Developed members of APEC will likely push for the establishment of an institutionalized free trade area in the Asia-Pacific region but the developing members will oppose such a proposal," executive director of the Center for Strategic and International Studies (CSIS) Hadi Soesastro said in a gathering with staff members of The Jakarta Post here yesterday.
Hadi, who is closely involved in the preparation of proposals for the second leadership meeting of the Asia Pacific Economic Cooperation (APEC), said that the Pacific free trade area he referred to as "Pafta" will be discriminatory in nature and against the principles of the General Agreement on Tariffs and Trade (GATT).
The chairman of APEC's Eminent Persons Group (EPG), C. Fred Bergsten of the United States, delivered the group's report to President Soeharto late last month, calling for comprehensive free and open trade in the region by the year 2020.
The EPG's 42-page report outlines the initiative of a trade liberalization program among members beginning in the year 2000 with a completion deadline of 10 years for industrialized countries, 15 years for newly industrializing nations and 20 years for developing nations such as Indonesia.
APEC groups the United States, Mexico, Japan, Taiwan, South Korea, China, Hong Kong, Australia, Papua New Guinea, New Zealand and Canada along with the six members of the Association of Southeast Asian Nations (ASEAN) -- Thailand, Singapore, Malaysia, the Philippines, Brunei and Indonesia, which currently chairs the forum.
Institutionalization
Hadi explained that developed members of APEC will most likely insist on the institutionalization of APEC to make it possible for the forum to formulate the modality of the free trade scheme.
"But ASEAN countries, particularly Malaysia and Indonesia, will surely oppose the institutionalization of the forum, which will be against their consensus," he said.
ASEAN's Kuching Consensus requires its members to preserve the association's collective identity and cohesion in facing APEC.
"Furthermore, some ASEAN members will oppose the U.S. intention to use APEC as a tool to force the European Union (EU) to open up its market," Hadi said.
He said Indonesia and some other ASEAN countries actually want APEC members to reduce their tariff barriers gradually in line with the development of their own economies. The tariff reduction, in line with GATT principles, should benefit not only the APEC members, but also non-member countries.
However, Bergsten apparently believed that such a method of tariff reduction will not attract the United States to follow because it will allow EU countries to get a "free ride" on the APEC's liberalization scheme, he said.
If other countries are not allowed to get a free ride, it will mean that tariff reduction will be effected only for APEC members and that such a scheme will be discriminatory and against GATT principles, Hadi said. (fhp)