Leaders Talk Big, Move Cautiously At APEC Summit

THE M&M's on sale in the subway stations of this bustling Japanese city make it clear that a lot of trade is already taking place in the Asia-Pacific region.

An American product, these M&M's are made in Australia and packaged for sale in Indonesia, Japan, Malaysia, and Singapore - as the back of the wrapper plainly says.

Nonetheless, leaders of the 18 nations belonging to the Asia-Pacific Economic Cooperation (APEC) forum, meeting here yesterday, promised to make it even easier for companies to sell products and invest in each other's countries. APEC links countries that already produce half the world's economic output.

APEC's commitment to achieving free trade and investment in the region is only a year old, so the organization is still a forum for promises rather than concrete achievements.

But the behind-the-scenes bureaucrats know how to talk big. APEC documents read like brand names in a toy store: The leaders here agreed to an "action agenda," vowed to carry out "action plans," and announced "initial actions."

At the same time, the Osaka sessions demonstrated that this nascent international organization is increasingly becoming an important political forum. The United States and China, for example, smoothed their often-troubled relationship, repeating a rapprochement that took place at an APEC meeting in Seattle two years ago.

The M&M'S are a good illustration of why APEC exists and where it is going.

Joan Spero, US undersecretary of state for economic affairs, acknowledged that Mars Inc., the maker of M&M's, is doing well in Asia. But she says that the company has had some difficulties selling its goods in other Asian countries and that APEC could help eliminate those problems by harmonizing product standards and testing. "What government has to do is remove barriers and to facilitate the work of business," she says.

The existing level of trade indicated by the M&M's wrapper, says C. Fred Bergsten, an American economist who has played a leading role in APEC, is also "what's driving APEC.

"It's this multinationalization of economic transactions that really compels the governments ... to catch up with industry, improve the climate, reduce impediments further, [and] make it possible for people to do this in every sector and cheaper," he says.

Toward that end, the leaders yesterday announced a series of "initial actions" toward freer trade and investment that include proposed cuts in tariffs and promises of deregulation. Their "action agenda" outlines areas in which to implement measures to boost trade and investment beginning in 1997.

Meeting in Indonesia last year, the leaders agreed to achieve free trade by 2010 for developed member countries like the US and Japan, and by 2020 for developing nations, such as Mexico, Papua New Guinea, and Thailand.

APEC's proponents say it is a trade organization with a unique character: Group dynamics and peer pressure will encourage member countries to liberalize and deregulate "voluntarily." In order to win the participation of a diverse group of nations, it has had to enshrine "flexibility" and adopt an Asian consensus-oriented style.

AS an indication of how this system will work, this year's "initial actions" were disappointing. Malaysian Prime Minister Mahathir bin Mohamed observes, "It is quite clear that every country is taking credit for things they have already done," rather than instituting new measures.

China offered some notable steps, promising to cut 4,000 tariffs by an average of 30 percent. But Chinese officials acknowledged that the move had as much to do with another group - the World Trade Organization (WTO) - as with APEC. The US and other countries have opposed China's membership in the WTO until it adopts economic reforms, and officials said the tariff cut was an attempt to win international support for its WTO membership.

Countries join APEC with a variety of motives, not all of them economic. The South Koreans are in APEC partly because they want to guarantee access to the markets of Japan, China, and the Southeast Asian economies. They also see APEC as an institution that can force other trade bodies, such as the European Union, to keep markets open to Asian goods and investment.

But a third reason, says Kim Kihwan, a South Korean economist and adviser to his government on trade issues, is that it helps keep the US involved in Asia. "The US won't stay without significant economic opportunities," he says.

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