China cautious about APEC free trade zone

China cautious about APEC free trade zone

BEIJING (Reuter): China signaled its caution yesterday about plans for a free-trade zone in the Asia-Pacific region, while Australia was confident on the achievement of a radical deal to create such a zone at next month's APEC leaders summit in Indonesia.

Meanwhile, U.S. business leaders and trade officials geared up in Washington on Thursday for the summit, focusing on new ways to pay for huge projects in telecommunications, power and roads in Asia.

Asked about Australian statements that an upcoming meeting of the Asia-Pacific Economic Cooperation (APEC) forum could strike a deal on establishing a free-trade zone by 2020, China's foreign ministry said in a statement that more specificity was needed.

"As a long term goal, China approves of trade liberalization in the Asia-Pacific region," the statement said.

"But APEC members must come to a common understanding of the meaning and implications of trade liberalization and of the principles of promoting trade liberalization at the same time as or before deciding on the goal."

Beijing believes these principles must include all countries in the region giving each other unconditional and long-term Most Favored Nation (MFN) trading status, the foreign ministry said.

China also wants the differing levels of economic development to be respected, ensuring that poorer countries do not lose out if tariff barriers come down.

"That is to say, the development of APEC must take into full account the actual conditions of economic development of its members and of their diversity, and to respect the principle of progressing in an orderly fashion," the foreign ministry said.

Australian officials struck a much more optimistic tone yesterday, saying they were now confident a radical deal to create a free-trade zone within the Asia Pacific region before 2020 could be struck at next month's APEC leaders summit in the Indonesian city of Bogor.

An APEC adviser's group has already recommended the 17-member forum consider a phasing out of trade barriers within the region starting in 2000 and ending for all countries in 2020.

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

The grouping collectively accounts for 40 percent of world trade and up to half of the world's total production.

Chairman

At a meeting of APEC trade ministers last week, APEC chairman, Indonesian President Soeharto, told the ministers he was hopeful the Bogor meeting would produce a fundamental agreement on trade liberalization.

Australian officials said Soeharto's strong endorsement of moves to free up trade was a key factor underpinning confidence a deal can made.

Soeharto's influence as the senior leader of the Association of Southeast Asian Nations (ASEAN) grouping would bring some of the less enthusiastic smaller nations into line, they said.

Malaysia, a close neighbor of Indonesia and a member of ASEAN, has been the most outspoken critic of APEC, cautioning against a rapid development of the forum and warning that the United States could become too influential.

But Malaysia's Prime Minister Mahathir Mohamad is seen as unlikely to snub Soeharto and reject a free-trade deal.

In Washington, U.S. business leaders and trade officials held a closed-door meeting to discuss projects that can be done in Asia under an APEC scheme.

At the meeting hosted by top Clinton administration trade officials including U.S. Trade Representative Mickey Kantor and Commerce Secretary Ron Brown, the business leaders said they want more help from multi-lateral banks with financing Asian projects.

The problem is that these financial institutions are more accustomed to lending to governments rather than private concerns, said Joan Spero, Under-secretary of State for Economic Policy.

"The multi-lateral development banks are not comfortable yet and not familiar enough yet with lending to these new kinds of public-private sector entities," Spero said after the meeting ended.

Thursday's gathering was part of the run-up to a meeting of the APEC forum set for Nov. 11-12 for foreign and finance ministers and Nov. 15 for national leaders including President Bill Clinton in Indonesia.

Winston Lord, Assistant Secretary of State for East Asian and Pacific Affairs, said Clinton would go into the APEC meeting with a long-building momentum based on improving relations with various Asian nations.