Clinton's Asian trip

Clinton's Asian trip

President Bill Clinton's theme of putting the economy first
takes him to Indonesia this week for the second annual Asia-
Pacific Economic Cooperation summit meeting. APEC is an 18-member
group of Pacific Rim countries that includes China and Japan. On
the agenda is a proposal to create by 2020 the world's largest
free-trade and investment zone -- a dramatic symbol of America's
tilt toward soaring opportunities in Asia and away from the
enervated economies of Western Europe.

Clinton pushed NAFTA, the accord with Mexico and Canada,
through Congress over the opposition of important Democratic
constituencies. He also signed, along with more than 100 trading
partners, the General Agreement on Tariffs and Trade -- which
Congress will vote on after the elections.

An APEC accord is an enticing next step. APEC members account
for about half of the world's economic output; yet the U.S. share
of trade and investment in the group is falling. A trade
agreement would guarantee fair access, a key to U.S. growth.

An APEC trade accord could boost the economies everywhere
along the Pacific Rim. It could also nudge countries outside the
region toward more open trade and investment agreements: after
the United States embraced NAFTA, Western Europe got serious
about negotiating GATT. And by tying Asia and the United States
closer together, an APEC trade agreement would help to defuse
political tensions.

Yet for all its promise, an APEC accord, like other regional
trade pacts, could be worrisome. By granting preferential market
access to members it would discriminate against exports from non-
members. The proponents of an APEC accord propose to mitigate the
threat in two ways: by knocking down trade and investment
barriers left standing by GATT and by offering APEC trade
benefits to non-members willing to live by the same rules.

An unresolved issue is how to proceed. Paula Stern and Robert
Manning, two former U.S. trade officials affiliated with a
Democratic think tank, call for an incremental approach.

Free trade among countries at different states of economic
development would be difficult to define, let alone achieve. Ms.
Stern and Manning want to select a few modest goals over the next
couple of years. For example, APEC could start immediately to
formulate protection for foreign investors, adopt common customs
procedures and open access to telecommunications markets.

A few quick victories could undermine protectionist opposition
in Congress. That is important because Congress has so far
blocked Clinton's request for "fast track" status for future
trade negotiations -- the procedure by which Congress agrees to
vote on a trade proposal quickly and without amendment. Clinton
needs "fast track" if he is to secure the trade agreements called
for in his economic strategy.

Not everyone in APEC is thrilled by the prospect of free
trade. Some, like Malaysia, are afraid of close involvement with
the United States, partly because they fear the squabbles over
human rights and other issues that have marked U.S. relations
with Japan and China.

China has threatened to fight the proposal, perhaps as a way
to bargain for early admission to the new World Trade
Organization that will oversee international trade rules.

The United States and other supporters of free trade will have
to fight hard to get APEC to move toward free trade. But the
United States imports more from Asia than the rest of the world
combined. It sells more than 30 percent of its exports to Asia.
Clinton is headed in the right direction.

-- The New York Times