U.S. looks to Asia in new economic order
U.S. looks to Asia in new economic order
By Jean-Louis Santini
WASHINGTON (AFP): The United States struggled to stay ahead
of the pack in 1994 and into the new century by promoting
multilateral and regional ties as a buffer to the growing
economic might of Europe and Asia.
The keystone of U.S. policy aimed at liberalizing world
trade was when the representatives of 124 countries gathered in
Geneva at the start of the year to end years of difficult talks
by signing the Uruguay Round in the General Agreement on Tariffs
and Trade (GATT).
That landmark agreement opened up hitherto protected sectors
such as services and agriculture, slashed tariffs by 38 percent
and will engender US$200 billion in additional trade worldwide
over the next ten years.
On the regional level, the United States was active on two
fronts -- Asia and the Americas.
The North American Free Trade Agreement (NAFTA) grouping the
United States, Canada and Mexico was born in January and in
December at the Summit of Americas in Miami, 34 countries pledged
to establish a free trade zone by 2005 stretching from Alaska to
Argentina.
The U.S. administration was also a motivating force in the
summit of the Asia Pacific Economic Cooperation (APEC) forum in
Jakarta when 18 countries including powerhouses Japan and China
agreed to set up a free trade zone in the region by 2020.
With 800 million inhabitants, the Americas account for 29
percent ($6.8 trillion) of global industrial production and 17
percent ($1.2 trillion) of world trade.
The APEC countries with 2.08 billion inhabitants account for
52 percent ($12.2 trillion) of world industrial production and 41
percent ($3.1 trillion) of world trade.
This new-found U.S. faith over the last few years in the
merits of regionalism reflects the U.S. economy's difficulties in
maintaining its leading edge in the world economic system, said
Jagdish Bhagwati, an economics professor at Columbia University.
In the three decades that followed the end of World War II,
the United States reigned supreme over the world economy,
accounting for 50 percent of industrial production and with
healthy trade surpluses.
The current situation is a pale shadow, with U.S. industrial
production cut back to 25 percent of the whole and with
chronically bad trade deficits, notably with Japan and China.
At the same time, the economic and social integration of
Western Europe has spawned a giant rival which currently accounts
for 40 percent of world trade and 28 percent of industrial
production.
The specter of "Fortress Europe" has convinced the United
States that it needs to foster its own free trade zones with its
own geographic peers.
The end of the Cold War and the dissolution of the Soviet
Union also removed a key binding factor in trans-Atlantic ties of
the last 50 years.
The same historic developments left an imprint in the
Pacific where countries like Japan, reliant on U.S. military
muscle, are now less inclined to bend to pressures from
Washington to open their domestic markets.
The Clinton administration has made it clear that its
priority in Asia is to finally slash its stubborn bilateral trade
deficit with Japan, which topped $60 billion in 1993.
These are the barriers forcing the United States to look
elsewhere in Asia and in the Americas to redress the situation.
"We are not abandoning our efforts with Japan because we
can't allow the world's second-largest economy to have sanctuary
markets," said U.S. Trade Representative Mickey Kantor.
"But when we look at the numbers we saw where the action is
and it's in our own hemisphere and in Asia outside of Japan," he
said.
U.S. exports to Japan are forecast to increase by 70 percent
to $88 billion by 2010, but for the rest of Asia the increase
will be much bigger at 163 percent to $248 billion.
For Latin America, the growth of U.S. exports will be
similarly explosive and are forecast to reach $232 billion in the
same period.