Japan overshadowed by China, U.S. at APEC

Japan overshadowed by China, U.S. at APEC

By Eugene Moosa

MANILA (Reuter): Japan took a backseat to China and the United States at an annual Asia-Pacific summit and gave itself only a passing grade for its own performance.

Japan had three aims at this year's Asia-Pacific Economic Cooperation (APEC) gathering -- pushing the role of the private sector, coordinating export credit agencies to boost infrastructure and drafting rules to protect foreign investment.

But Japan, which won kudos for steering last year's Asia- Pacific Economic Cooperation summit in Osaka, garnered only limited support for its initiatives, once again failing to match its economic power in the region with diplomatic clout.

Its performance was a stark contrast to that of the United States, which announced a breakthrough exchange of summits with China and won a key concession on information technology trade.

"Taking on a leadership role is a difficult task at APEC, since we all (APEC members) are striving to achieve consensus," one senior Japanese government official said after the talks. "It is too much to say Japan should perform as an undisputed leader," he said.

The summit had no trouble agreeing to Japan's first aim, that the private sector needed to be involved in APEC plans to achieve borderless trade in the region by 2020.

Japan was also able to reassure APEC members concerned that export credits, called trade insurance in Japan, were a form of subsidy. Export credit agencies help businesses manage the risk of investing in emerging markets, much of it in infrastructure. A statement stressing the benefit of such services found its way into the declaration issued after the summit in Subic Bay.

But Japan failed to win support for rules to protect foreign investment, mainly because of developing countries' fears that uncontrolled investment could harm their industries, Japanese officials said. Japan is a major investor in the region, having shifted much of its manufacturing to cheaper locations in Asia.

Investment protection was only vaguely referred to in the summit declaration: "We direct our ministers to intensify work in 1997 on...enhancing the environment for investments."

"This is just 70 percent for Japan," said a senior Trade Ministry official of Japan's success in pushing its objectives, characterizing this as a passing grade.

Japan took a backseat in efforts to convince APEC members to clearly back a U.S. proposal on an Information Technology Agreement (ITA) that would scrap tariffs on computers and related goods by the year 2000.

The declaration called for an agreement to "substantially eliminate" tariffs by 2000, but, taking account of concerns among developing countries, recognized a need for "flexibility".

Japan also came up against stiff resistance to having China's proposed entry into the World Trade Organization (WTO) clearly mentioned in the declaration, although the statement called for speeding up the WTO membership process for all aspirants.

China had sought clear APEC backing for its proposed entry into the global trade body.

Prime Minister Ryutaro Hashimoto also failed to win support for a Japanese proposal to include discussions on drugs and weapons trafficking in APEC talks. Some leaders were supportive, Japanese officials said, but many said APEC was primarily an economic and not a crime-fighting forum.

Asked about Japan's future role in APEC, Hashimoto was vague, saying Tokyo would "do its best" to achieve the forum's aims of trade and investment liberalization and economic cooperation.

"I know this is a vague reply but we will strive for these policies in various bilateral and multilateral settings," Hashimoto told a post-summit news conference.