Steep road to Osaka

Steep road to Osaka

Issues that the Bogor APEC forum brushed over may come back to haunt Asia-Pacific leaders when they meet in Japan later this year. Martin Khor reports for Inter Press Service.

PENANG, Malaysia: The next meeting of the Asia-Pacific Economic Cooperation forum is still seven months away, but member-countries are already scrambling to prepare for it.

This is because the specifics of a free trade plan struck in Bogor, Indonesia last November are expected to be hammered out at this year's meeting in Osaka, and analysts predict clashes between one side led by the United States and the other headed by Malaysia.

Part of the problem is that most APEC economies have hardly had the time to do the sophisticated task of calculating the pluses and minuses of trade liberalization -- especially since the `region' within which this process will take place includes developed economies such as that of Japan and the United States.

And now there are rising fears among analysts and activists in APEC developing economies that there would be moves in Osaka to extend `free trade' to `free trade area', and `non-binding' commitment to `legally binding' agreement.

APEC groups together Japan, South Korea, Hong Kong, Taiwan, China, Malaysia, Indonesia, Brunei, Singapore, the Philippines, Thailand, Mexico, Chile, Papua New Guinea, Australia, New Zealand the United States and Canada.

Last November, the leaders of the 18 APEC member economies meeting in Bogor adopted a declaration calling for the establishment of free trade among themselves by the year 2010 for developed nations and 2020 for developing countries.

At the meeting, the U.S. played the most active role in pushing for a free trade area to be set up, and for liberalization of trade, services and investments.

But some of the developing countries led by Malaysia were alarmed by the rapid rate at which APEC was being institutionalized and being moved along the road toward a free trade area.

At Malaysia's insistence, the Bogor Declaration included an annex that said the target dates for liberalization were not legally binding. Kuala Lumpur has argued that trade liberalization should be done unilaterally, commensurate with each country's development level and capacity.

In the last few months, however, the U.S. has proved to be as tenacious as Malaysia regarding its stance on where APEC should be headed.

At a WorldNet dialogue session in February in Kuala Lumpur, the U.S. coordinator for APEC, Sandra Kristoff, made it clear her country will push hard for the acceptance of the liberalization datelines.

She said Washington's understanding of the Bogor Declaration was that the forthcoming Osaka meeting should have an ambitious and bold action agenda to speedily launch the free trade plan.

"We have to be bold," Kristoff said. "While we agree that the agenda for trade liberalization must be balanced, we cannot mistake balance with timidness. (The year) 2010 is our goal. Some nations may need longer and can take until 2020."

She added that this 15-25 year period allowed "plenty of room for pragmatism".

But to many analysts, the pace of APEC's progression itself has been astonishing. Initiated by Australia, the grouping started in the late 1980s supposedly as an informal and unstructured gathering of economies.

By 1993, leaders of the member-economies gathered in Seattle for the forum's first meeting. Months after, a report by APEC's Eminent Persons Group had a proposal for a free trade area in the Asia-Pacific.

The Bogor Declaration deliberately left out details due to the reservations of countries like Malaysia and China.

The implications for the developing economies within APEC are enormous, especially since the Uruguay Round of the General Agreement of Tariffs and Trade (GATT) expanded the concept of free trade to include not only trade in manufactures, but also in agriculture and services.

It now also covers the granting of intellectual property protection to transnational companies, a measure that many activists say is protectionist and goes counter to the principle of liberalization.

Analysts point out that countries like the U.S. have instruments that they use to attain extra trade concessions.

One example of these measures is the so-called Super 301 that the U.S. has either applied or threatened to use on countries such as China, Thailand, India, Brazil and even Japan, all of which Washington deemed to have inadequately complied with the requirements of U.S. firms.

Indeed, there lurks a suspicion that APEC may be used to get Asian countries to make concessions in trade, services, investments and intellectual property, beyond those made through the Uruguay Round.

Some Asian governments are also wary that Washington is keen to get APEC off the ground as a regional free trade arrangement and be a counterweight to the European Union, which is currently the largest and most powerful regional economic bloc.

Some analysts say the APEC process can be seen as parallel to how Washington brought the Americas into its orbit.

First, there was the North American Free Trade Agreement (NAFTA). This led to a larger liberalization process involving almost all South American countries, whose leaders attended a meeting with U.S. President Bill Clinton at Miami last December.

APEC, experts argue, would bring the Asia-Pacific countries concerned closer to the U.S. circuit, thus giving U.S. firms a headstart over Europe.

But the U.S. scoffs at such charges, and Kristoff during the WorldNet dialogue denied that the United States was trying to push APEC to move faster than any of its members could handle.

She told a panel that included representatives from Malaysia, Japan and South Korea: "Nothing in the U.S. posture suggests we are trying to take NAFTA and extending it westward across the Pacific."

-- IPS