APEC's pledge to free trade pleases Clinton

APEC's pledge to free trade pleases Clinton

By Antonio Kamiya

WASHINGTON (Kyodo): The political pledge made this week in Indonesia by leaders of the Asia-Pacific Economic Cooperation (APEC) forum should be music to Washington's ears. President Bill Clinton, for one, was exuberant.

Even before the ink dried on the Bogor declaration that committed the political leaders of the 18 APEC members to achieve "free and open trade" in the region by 2020, the U.S. president was already counting the potential gains for the American economy.

Speaking at a postsummit news conference in Bogor, Clinton laid out visions of U.S.-built automobiles filling the streets of Malaysia, Thailand, Indonesia, the Philippines and other APEC member countries.

As trade barriers in Asia tumble, the U.S. president surmised, American cars will be more affordable to the increasingly affluent Asian masses.

"That means for an autoworker in Detroit or Toledo a more secure job and factories with more workers," Clinton said as he sought to translate the APEC summit into a job-placement event for his U.S. audience.

To U.S. trade experts, however, the vision of free trade in Asia goes beyond U.S. cars on the Asian streets.

The prospect of phenomenal economic growth in Asia, which now accounts for just 29 cents in every dollar the U.S. earns from exports, has become an allure that corporate USA can't resist.

"Asia will continue to grow significantly, probably two or three times faster than Europe, and probably twice as fast as the United States over the next decade or so," says Robert Manning, a trade expert with the Progress Policy Institute, a Washington- based think tank.

As growing economies in Asia are expected to pour US$ 1 trillion over the next decade to build road networks, airports and telecommunications systems, Washington is sure that U.S. firms are competitive enough to grab a sizable chunk of the business, once they are allowed to operate unimpeded.

From the U.S. perspective, moreover, trade liberalization in APEC involves little U.S. pain.

The reason, Clinton says, is simple: "Our nation already has the most open markets on earth. By opening other markets, our products and services become more competitive," he told reporters in Bogor.

At issue, U.S. trade experts say, is not the goal of free trade but how to get there.

While the Bogor declaration sets two target dates for trade liberalization in APEC -- 2020 for developing countries and 2010 for industrial countries, some U.S. analysts say the U.S. should "lock in" whatever free-trade progress is made in Asia.

Skepticism is growing in Washington on whether the new Republican-dominated U.S. Congress will give Clinton blanket legal authority to negotiate free-trade agreements.

"We may have hit the high-water mark on free trade sentiment in the Congress,'' says Thomas Mann, director of Brookings Institution's government studies program.

Part of the problem, Mann observed, is that the newly assertive Republican Party has undergone changes in its outlook.

Instead of being the bastion of free trade, Mann said the "America-first" wing of the party "is gaining strength and joining Democratic protectionists."

The sheer ambition of APEC leaders to press for "free and open trade" in a vast geographical region that is home to a hotchpotch of politically and culturally diverse countries casts doubt on the realism of the entire enterprise.

"APEC's decision to include Mexico and Chile among its members, while excluding Russia, India, Vietnam and Burma reveals profound ambiguity about where the Pacific community begins and ends," wrote Manning and Paula Stern, a fellow trade expert at the Progress Policy Institute, in the latest issue of the Foreign Affairs journal.

Instead of a sweeping drive toward free trade in APEC, Stern favors a more pragmatic, "block by block" approach to resolving trade problems.

Stern, former chairwoman of the U.S. International Trade Commission, says APEC should focus on what she calls "achievable, concrete results on an immediate basis."

Examples: gaining greater access to all telecommunications markets in the region, mutual recognition of regulatory standards on testing of chemicals, standards on toys, health care equipment, and harmonization of tariff classifications.

"Harmonization of tariff classifications is not a very sexy item for a lot of folks, but it is the bread and butter of trade for every would-be exporter trying to penetrate the various markets in these (Asian) countries," Stern says.

Despite such misgivings, some U.S. economists believe that the U.S. has the political muscle and market size to get its view and its way across.

Almost all the Asian countries, despite diversification of their trade pattern, still depend on the U.S. market for a quarter to a third of all their export earnings.

"Continued access to the U.S. market is of critical importance to Asian countries," says U.S. economist Fred Bergsten, chairman of a panel of trade experts from APEC countries that provided the blueprint which served as the basis for the Bogor declaration.

Besides having launched the first APEC summit in Seattle last year, the Clinton administration can count on the summit process to provide the political stimulus to achieve its free trade goals.

Said Clinton at the Bogor news conference: "We will meet again next year in Osaka. Meanwhile, we'll develop a detailed action agenda, a blueprint for achieving our goal of free and fair trade which I hope and believe will be approved when we meet in Osaka.