APEC trade team failure criticized

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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