APEC trade team failure criticized

JAKARTA (JP): APEC meetings encountered their first hurdle here yesterday when the Committee on Trade and Investment (CTI), facing opposition from the United States, failed to adopt a draft on a set of non-binding investment principals.

"As far as the U.S. delegation is concerned, they are not able to join the consensus because of their reservations to three items," said CTI chairman Sun Joun Yung, the Assistant Minister for Economic Affairs at the Korean foreign ministry.

Speaking at the final meeting of the CTI at the Jakarta Convention Center yesterday, Sun told journalists that the United States had been the lone antagonist in the committee's failure to adopt the proposed 12 principals.

APEC (the Asia Pacific Economic Cooperation) groups Australia, Brunei, Canada, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the United States. Chile, to be a full member on Friday, participated in the meetings.

The CTI was established a year ago to facilitate matters related to such issues as small and medium enterprises and trade policy.

Citing Nancy Adams, the chief U.S. delegate on the CTI, and her reasons for objecting to the proposal, Sun commented: "She said that she has no authority to accept the package as a whole."

Leaving the meeting room, Adams herself shook off all questions and refused to give any explanation as to why the U.S. stood in contrast to the other 17 members.

"We have done all we can. The only thing we can do at this point is to submit it to the Ministerial Meeting through the SOM (senior officials meeting)," Sun remarked on the failed debates that began last Saturday.

The three-day SOM is due to begin today under the chairmanship of the director general of foreign economic relations of the Indonesian Ministry of Foreign Affairs, Wisber Loeis.

The Ministerial Meeting will be followed by a one-day APEC economic leaders meeting at the Bogor Presidential Palace, 60- kilometers south of here, on Nov. 15.

Objections

U.S. objections on three of the 12 non-binding investment principals concern national treatment, performance requirement as well as repatriation and convertibility.

The national treatment principle deals with the right to equal treatment for foreign and domestic investors.

The principle of performance requirements concerns the obligations imposed on foreign investors in regard to such things as the use of local components and the employment of local laborers.

The repatriation and convertibility principle regulates issues concerning the limitation of foreign investors to send foreign currencies abroad.

The other nine principals deal with issues on investment incentives, dispute settlement, avoidance of double taxation, investor behavior and removal of barriers to capital export.

At first, Sun would not elaborate on the American objections saying only that the United States was seeking more liberalized conditions for those three items.

However, when pressed further, he revealed that in the issue of performance requirements, the United States demanded that all requirements be fully eliminated.

On the repatriation and convertibility, a number of delegates told The Jakarta Post that the United States, and also initially Canada and Japan to some extent, wanted the transfer of funds related to foreign investment to be free from restrictions of local laws.

The CTI's failure in adopting the investment principals could to some extent jeopardize the success of the Ministerial Meeting because it was expected that the endorsement of the principals would be one of the highlights of the ministers accomplishments.

"I'm not sure whether the officials of the SOM will come to a full consensus," said Sun, conscious of the fact that a preceding investment group meeting last Friday flopped on the same issue.

Nevertheless, an Indonesian delegate at the meetings, Hartanto Reksodiputro, the director of foreign trade relations for the Ministry of Trade, seemed to play down the disagreements, describing them as differing perceptions.

"We think it can be resolved very soon," Hartanto said.

He also commented that there was also no need to seek a hurried conclusion on this matter at the CTI level, pointing to the SOM and the Ministerial Meeting as possible avenues.

Sun himself concurred with Hartanto and held out some faith saying that when the ministers "pack for home," hopefully a consensus will have been reached. (mds)

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