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)