KL warns of consequences of APEC free trade plan

KL warns of consequences of APEC free trade plan

JAKARTA (JP): Malaysian Prime Minister Mahathir Mohamad
yesterday warned developing countries, regardless of their
weaknesses, that liberalizing the economy could end with them
being dominated by industrialized states.

Mahathir was commenting on the declaration made by leaders of
the 18-member Asia-Pacific Economic Cooperation (APEC) forum on
Tuesday to dismantle trade and investment barriers by 2020.

Mahathir, who took part in the APEC meeting in Bogor, pointed
out that APEC comprises countries with various development stages
from budding economies, with an annual income per capita of
US$500, to powerhouses of almost US$30,000 per capita.

"We just want to draw attention to the weaknesses of the
developing economies. The level (of development) is such that
they won't be able to compete," he said.

When announcing the agreement after chairing the informal APEC
economic leaders meeting, Indonesia's President Soeharto said the
goal of free and open trade would be completed by 2020.
Industrialized APEC members would complete the process by 2010.

Although Mahathir endorsed the Bogor declaration, later on
Tuesday his delegation issued a statement stating that it has
some reservations on a number of issues in the document. The
statement pointed out that the declaration is not binding on
members.

Mahathir said it is Malaysia's view that developing countries
have the handicap and need to take measures to defend themselves
from being totally dominated, in particular with regard to the
telecommunications industry, banking and insurance.

"They will move to our country and then our own industries
will be totally pushed aside. So we are asking for some
flexibility for developing countries to protect their economies
so they are not totally dominated by the industrialized
countries," he said.

To illustrate the complexity of the problem, he said if
Malaysia can maintain its growth at an average seven percent, its
annual per capita income would increase from $2,000 at present to
$16,000 in 2020.

"But as you know, some developed countries now have per capita
income of almost $30,000. Even if they stand still, we would be
still far behind them," he said.

Disparities

Mahathir said that "lots of people" participating in Tuesday's
APEC economic leaders meeting shared his reservations. They were
worried about the conspicuous economic disparities among member
economies.

"Now, how do you get everybody to work together, to a
timetable? It is very difficult. It's like asking an express
train to arrive at the same station together with a freight train
which travels at 10 miles an hour" he said.

He said Malaysia could accept the Bogor Declaration but with
"reservations" on the agreement, noting that the targets were
only indicative dates and non-binding on member economies.

Insisting that APEC should remain a consultative forum, he
reiterated his stance that Malaysia would only commit itself to
further trade liberalization at a pace and capacity equal with
its level of development.

Mahathir brushed aside worries that his reservations on the
Bogor declaration would harm Malaysia-Indonesia relations.

"I don't think it hurts (the relations). Our reservations do
not mean we are opposed to the declaration," he said. "We simply
want to draw the attention of developing countries like Indonesia
to the possible consequences." (pan)