Less euphoric about APEC's Osaka summit
Less euphoric about APEC's Osaka summit
The distracting domestic political agendas of the United States and Australia have brought a new sober reality to the notion of economic cooperation in the Asia-Pacific. Stephen Leong analyses the issue.
Japan is in a quandary over APEC. As host to the November Osaka meetings, pressure on Tokyo to lead in crafting a bold Action Agenda for APEC to achieve the target dates of 2010 and 2020 for trade liberalization in the Asia-Pacific region began almost immediately after last year's Bogor summit. The U.S., in particular, has frequently reminded Tokyo that, as chairman, it must demonstrate leadership to move the wide regional grouping further along and in step with the earlier two milestone events at Seattle and Bogor which, respectively, announced the vision of a Pacific Community and the creation of free trade in the region by the year 2020.
The advanced Western countries, keen to open markets in East Asia, are taking advantage of the euphoria arising out of the APEC jamborees at Seattle and Bogor to strike while the iron is still hot.
For the United States and Australia, domestic agendas weigh heavily in their approach to APEC. The Clinton Administration, clearly aware of 1996 as an election year, must score in the APEC negotiations in Osaka. Having lost so badly in the mid-term elections in 1994, thus ushering in a Republican majority in Congress, Democrats are keen to reverse the situation in 1996. President Clinton himself, against strong odds not to follow his predecessor as a one-term president, wants his negotiators to achieve substantially in trade and investment liberalization within APEC for the benefit of the American economy and the Democratic Party.
While the earlier car-parts dispute, and current Kodak-Fuji film and air freight services problems with Japan, are bilateral issues in which the U.S. has resorted to unilateral action (including threatening the use of the Super 301), APEC provides an excellent opportunity for the U.S. to use multilateral pressure on Japan. Washington is going all out to ensure that it succeeds in achieving "comprehensiveness" in the Osaka Action Agenda for free trade in the region for all sectors by the years 2010 and 2020.
The pressure by the U.S. within APEC on Asian economies (such as China, South Korea, Taiwan and especially Japan as APEC chair) to open up their sensitive agricultural sectors is strongly supported by Australia. Canberra's stand on "comprehensiveness" and achieving APEC's objectives by the target dates are also indicated by the domestic need to shore up the Keating government for elections, widely expected early next year.
With an increasingly confident conservative opposition determined to replace the present ruling Labor Party and a recent stinging comment by Australia's global media tycoon Robert Murdoch that the nation's economy is a "disgrace", Mr. Keating's government is striving hard to bolster its domestic image. Australian Trade Minister Bob McMullen has commented that it would be "inconceivable" that "an Australian Prime Minister would agree to an action agenda excluding agriculture". Australia is, therefore, only too pleased to join hands with the U.S. to stand firm on "comprehensiveness" in the APEC Action Plan.
While China, South Korea and Taiwan, together with Japan, are keen to exclude the sensitive agriculture sector from the APEC Action Agenda, Japan, as the world's second economy and APEC host, feels the brunt of criticism for not wanting to open its farm market wider. Although Tokyo realizes that pressure has been building up throughout the year, it still hopes that it will be able to protect its politically sensitive sectors. Some concessions had already been made at the Uruguay Round of GATT negotiations on the importation of foreign rice. However, Japan's ruling coalition is also anxious about elections which, as in the case of Australia and the U.S., will take place next year.
Having strong ties with farm lobbies, Japan's Liberal Democratic Party wants to ensure that the opposition coalition will not have a cause celebre enabling it to return to power. The fact that even the U.S. has sensitive sectors such as maritime services and textile (having refused to liberalize them in the Uruguay Round) is no consolation to Tokyo because it knows only too well that Washington and Canberra desperately want a "down payment" for liberalization of trade and investment at the Osaka meetings. If the issue remains deadlocked, Tokyo can expect a last-ditch onslaught at the ministers' meeting so that Clinton and Keating will indeed have something to look forward to when they arrive in Japan for the unofficial summit.
For ASEAN countries such as Thailand and Malaysia, since Bogor last November, the road to Osaka has almost been a case of deja vu. In attaching "observations" and "reservations" to the Bogor Declaration, Thailand and Malaysia urged a gradualist approach for APEC. They were the only two countries which were willing to attach their frank views to the Bogor Declaration. Although Japan and South Korea very likely had some reservations, they did not express them as forthrightly.
Like Japan, Seoul is now balking at the notion of "comprehensiveness" in terms of including its agricultural sector in the Action Agenda. Although it is understandable that both Japan and Korea (and for that matter even China and Taiwan) have strong reservations about the inclusion of the sensitive agriculture sectors for "comprehensive" liberalization, as called for in the Bogor Statement, they should have indicated their desire for exclusion or for flexibility from the very beginning, perhaps even at Bogor. Western countries would not have placed high hopes on Osaka in this case.
The dose of realism and diversity injected by Malaysia could have been enhanced by countries like Korea and Japan. Instead, these two chose to go along with the U.S. and Australia, the prime movers of APEC, only now to be regarded as not-so-keen promoters of free trade.
What then could be expected at the Osaka meeting? As the Clinton and Keating administrations are keen to achieve concrete results within APEC this year for greater market access for their businesses and to strengthen their domestic positions for elections in 1996, their representatives will not let up on "comprehensiveness" in the APEC blueprint for liberalization. For Japan and the others, while having to concede to this demand, they will strongly argue for flexibility so that "differential treatment" for specified sensitive sectors with varying time- frames will be accepted. This is a reasonable compromise. It is the only way to break the impasse in the Action Agenda.
Osaka will indeed be different from both Seattle and Bogor. It will be far less euphoric. Pressing domestic agendas and failure to heed APEC's great diversity are reasons for the change in sentiment towards the regional grouping. It is not surprising that it took only a short while after Seattle and Bogor for this to happen. For APEC to progress more smoothly, it is important to remember the lessons which Osaka will undoubtedly yield.
Dr. Stephen Leong is Director of the Center for Japan Studies at the Institute of Strategic and International Studies (ISIS) in Kuala Lumpur, Malaysia.