Pacific Meeting, NAFTA Keep Free Trade Moving

Next on the administration agenda: finalizing a global trade treaty

By , Staff writer of The Christian Science Monitor

PRESIDENT Clinton comes out of the weekend with two trade touchdowns - and the potential for more.

In Seattle, top leaders from East Asia's fast-growing economies agreed with Mr. Clinton to pursue closer transpacific cooperation. At the same time, the Senate approved the North American Free Trade Agreement (NAFTA), following the House of Representatives' lead.

Today, United States and European trade negotiators meet in Washington in an effort to complete by Dec. 15 a worldwide free- trade accord, the long-stalled Uruguay Round of the General Agreement on Tariffs and Trade (GATT). Success here would be a game-winning touchdown.

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Although no big breakthroughs came in the Pacific leaders meeting here, experts say, it represents a significant step forward for the president, given the huge potential for increased trade in the region.

``The fact that it [was] held means he has succeeded,'' says Richard Baker, senior fellow at the East-West Center in Honolulu. That the meeting strengthened the impetus for a GATT accord was a welcome bonus.

For the first time, the annual meeting of the Asia-Pacific Economic Cooperation (APEC) forum was attended by top leaders, not just foreign and economic ministers - a key sign that Clinton is gaining in his effort to strengthen the four-year-old group.

The motive is simple economics: APEC nations account for half the world's economic output. Liberalizing trade with them could add many US jobs and reduce the $95 billion US trade deficit with its Asian partners. ``This meeting is about the jobs, incomes, and futures of the American people,'' Clinton said.

The next challenge for APEC is transforming the group from primarily a discussion group to a policymaking body. But this is not likely to happen quickly, given some members' worries about too much US influence in East Asia. Malaysian Prime Minister Mahathir bin Mohamad, for example, chose not to attend the summit.

There are also concerns in the US that an Asian free trade zone may cost American jobs. During his visit to Seattle, Clinton was clearly trying to assuage some of the concerns about free trade. He pledged new programs to help displaced workers and argued that only in an expanding global economy, based on open trade, could US living standards begin to rise again.

Significant steps were taken in the last few days:

r The leaders, meeting Saturday in a native-American-style longhouse on forested Blake Island, underscored their commitment to APEC by agreeing to attend next year's meeting in Indonesia and to convene a finance ministers' meeting on economic policy, as is done regularly by the Group of Seven industrial powers.

r Mexico and Papua New Guinea were added as members, joining Australia, Brunei, Canada, China, Hong Kong, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and the US. Chile will be admitted a year from now.

r Leaders called for quick completion of a strong GATT accord, saying agricultural trade should not be left out.

r A private-sector ``eminent persons group,'' reporting to APEC ministers, advocated that the organization set a timetable for achieving free trade in the region. Ministers welcomed the report, but discussion is needed to determine how far and how fast to go. Some members, worried about getting bound into a European-style bureaucracy, bristle at the idea of changing the ``C'' in APEC from ``Cooperation'' to ``Community.'' ``This is incredibly rapid progress for an organization,'' Mr. Baker says.

APEC bills itself as a purely economic organization, which allowed all the leaders present on Blake Island, including those from Taiwan, Hong Kong, and China, to stand on the same platform, despite political tensions.

The day before the leaders' summit, the White House also pursued its trade offensive on a bilateral basis in meetings with Japan and China, which have the largest trade surpluses with the US.

But Clinton's meeting with Chinese President Jiang Zemin, the highest level contact between the two powers in five years, yielded no immediate fruit. The US demanded concessions soon on trade issues, such as opening Chinese markets and protecting intellectual property rights.

Despite increasing official contact between the two countries, the US shows no sign of retreat on human rights issues such as freeing political prisoners. ``Significant overall progress'' must be made well before next spring, when China's most-favored-nation trade status comes up for review, Secretary of State Warren Christopher says.

An unconciliatory Mr. Jiang argued against US interference in China's internal affairs, leaving Clinton grim-faced in a photo session after the 90-minute meeting.

But the two sides are being pulled together economically: The US is China's largest export market, and China is the fastest-growing market for American goods. Jiang said this weekend represented a ``new and good beginning'' to US-China relations. David Bachman, a University of Washington China expert, says it would have been politically embarrassing for China to make immediate concessions. But he adds that some ``unilateral'' human rights gesture is likely within a few weeks.

As with China, no deals emerged from talks with Japanese Prime Minister Morihiro Hosokawa. Clinton apparently gave Mr. Hosokawa some breathing room to finalize the political reforms he has undertaken. The two agreed to meet in February to try to reach deals on opening Japanese markets to outside competition in specific industries. Meanwhile, Japanese newspapers reported yesterday that Hosokawa plans two steps desired by the US: allowing rice imports and cutting income taxes to stimulate the economy.

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