Europe sidelined by newly rich Asia

Europe sidelined by newly rich Asia

By Pierre-Antoine Donnet

MANILA (AFP): Europe is in danger of being left out in the cold as the main club of Asia-Pacific nations gets richer by the day and moves towards creating the world's most dynamic free trade zone.

Asian nations were worried when the European community set up its single market in 1993. But now European governments are in turn concerned at the lost opportunities as they see the progress being made on the other side of the world, analysts say.

"Asia is going to generate half the world's growth, outside North America, in the next 10 years," said Kenneth Courtis, chief economist for Deutsche Bank Asia. "It is not very nice being excluded from a part of the world with such growth."

The accumulated gross domestic product (GDP) of the 18 countries in the Asia-Pacific Economic Cooperation (APEC) forum now comes to US$13,400 billion, 54 percent of world GDP. APEC countries' trade is worth $3,400 billion and most of the member nations have the fastest growing economies in the world.

APEC leaders who hold their fourth summit at the former U.S. military base at Subic Bay in the Philippines this weekend are to set the seal on an 'Action Plan' to deregulate trade and investment in the zone by 2020.

Their ultimate aim is to abolish tariffs, pull down non-tariff barriers and harmonize policy on competition and intellectual property rights.

Asia already has massive capital reserves, with six of the 10 largest capital exporters in the world rankings. "Not having a privileged access to this enormous reserve does not help life, especially when you have unemployment rates of 13 to 14 percent," said Courtis.

Many of the world's major infrastructure projects in coming years will be in Asia, and European companies are desperate to get at them.

According to Courtis, "a big European enterprise that does not get between 30 and 35 percent of its turnover in Asia over the next decade may remain a big enterprise, but only on a regional scale, and it will have no future."

APEC summits are also a major opportunity for bilateral political talks that give leaders the chance to close ranks on sensitive topics.

"Even on a political level, we are going to see Asia counting for a lot. In Europe we are a bit sleepy. We wake up all of a sudden and to be woken with a cold shower is not nice," said the Deutsche Bank analyst.

Not all experts take such a pessimistic view about Europe's chances however.

There was a lot of alarm among European leaders after APEC's creation in the late 1980s, according to one European diplomat, who is an expert on the group. But anxiety has gradually fallen over the years, he added.

The first Asia-Europe Meeting (ASEM) brought together heads of states from the 15 European Union states and 10 Asian nations in Bangkok in March. They will convene again in London in 1998.

APEC should also soon agree to let European experts take part in working groups on norms and standards, a crucial aspect for access to markets. Official approval is expected at Subic Bay.

The Asia-Pacific club has also promised other countries there will be no discriminatory practices, which would be against World Trade Organization rules anyway. Japan is particularly keen on not seeing the world trade cart upset.

But analysts say that even if APEC does not fall into deliberate discrimination, regional integration will undoubtedly create unseen complicity and commercial habits.

These will only bring benefit to the group's members: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, the Philippines, Papua New Guinea, Singapore, South Korea, Taiwan, Thailand and the United States.