Agitation in the Pacific. Would patchwork agreements anger US trading partners?

IN Australia, a government official complains about second-class treatment for one of America's closest allies. In South Korea, a pro-American politician finds that he gets more votes by keeping his mouth shut when it comes to relations with the United States.

In Hong Kong, a government official worries about the trade policies being bandied about by an American presidential candidate.

And in Japan, a trade negotiator grumbles that the US is taking out on his country its own inability to compete in world trade markets.

Those are the dissonant sounds coming from the Pacific Rim.

While the US is preoccupied with presidential primaries, Central America, and the Middle East, some of America's most important allies and trading partners in this vital region of the world are feeling increasingly alienated.

Recent visits to Australia, Hong Kong, South Korea, and Japan found senior government officials troubled, not only by US trade policies, but also by what they see as growing regionalism in American dealings with Pacific states.

There is deep concern that the US, frustrated by international efforts to reach comprehensive trade agreements, might fashion a patchwork of agreements with individual trading partners, to the detriment of some Pacific nations.

Worse, in the view of some diplomats, US efforts to ``punish'' Asian nations with large trade surpluses with the US - Japan the chief among them - could lead to an economic slump throughout Asia.

These developments have sparked worries - and resentment - even among America's staunchest allies in the region.

Australia: `second-class friends'

``There's an expression that has been going around Australia for a few months,'' says an Australian Foreign Ministry official: ``We're first-class allies of the US, but we appear to be second-class friends.''

Australia and the US are direct competitors in the Japanese market for coal and beef. Australian officials are concerned that US pressure on the Japanese to drive down their huge trade deficit with the US will lead to preferential trade agreements between the two countries that could shut Australia out of the lucrative Japanese market.

South Korea

Dong Ik Lee, director general for trade affairs in the South Korean Foreign Ministry, says his country is also feeling heat from the US, as American trade negotiators press for the Korean cigarette, beef, and insurance markets to be opened to US competition.

That's causing a backlash in his country, says Mr. Lee, especially among Korean farmers, who have traditionally supplied the country's beef needs.

By 1989, he says, 96 percent of the Korean market will be opened to out side competition. But even that pledge, he says, doesn't seem to satisfy the US.

Kim Kihwan, president of the Ilhae Institute, a South Korean think tank, says, ``I don't think there are many people who question the legitimacy of the pressure. The politicians are just asking for a little time.''

South Korea is preoccupied with its own transition to democracy and the coming summer Olympics, he says.

``At this particular stage, we are politically least equipped to deal with these political difficulties,'' he says.

But US negotiators ``expect us to open our markets overnight,'' says Mr. Kim, adding, ``There are a lot of things that can't be done overnight. It's an approach that's bound to lead to frustration.''

It's already led to a backlash in Korean politics, says David Pong, a member of the National Assembly.

``Those who, like me, are calling for two-way trade with the US are being called traitors,'' he complains. ``If I keep my mouth shut, I get one-third more votes.''

Hong Kong: feeling secure

Hong Kong, like other countries in Asia, has recently lost certain trade concessions by the US that could make some of its exports more expensive in the American market.

Nevertheless, Hong Kong officials aren't complaining; the Hong Kong economy is booming. Unemployment was only 1.8 percent last year, and the country is even suffering from labor shortages.

The Hong Kong dollar rises and falls in tandem with the US dollar. Despite the American currency's precipitate plunge in recent months, Hong Kong has no plans to cut itself loose from the US greenback.

``We can live with the present situation quite easily,'' one government official says.

Even the prospect of a new US trade bill - which could change some of the ground rules for America's trading partners - is not unsettling.

``Our general feeling is, we can live with a sensible trade bill,'' says Piers Jacobs, financial secretary in the Hong Kong government.

Still, he concedes, ``Mr. Gephardt worries me.''

Mr. Gephardt is, of course, Democratic presidential candidate Richard Gephardt, who has been campaigning on a promise to end trade inequities with America's trading partners. Asian nations have been one of Gephardt's favorite targets.

Japan: important role in Pacific

Throughout the Pacific, there's a recognition that an overhaul of US trade policies is probably inevitable, given America's staggering trade deficits. A number of Pacific nations blame the US for failing to get its own federal deficit under control. But a number admit that America's principal trading partner in the Pacific - Japan - needs to alter its own behavior.

``There's a growth of arrogance in their [Japanese] relations, especially their economic relations, within the region,'' says Ross Babbage, a senior research fellow at the Strategic and Defense Studies Center of the Australian National University.

Japan has a critical role to play in securing the Pacific, Dr. Babbage notes. Since 1979, he says, there has been a substantial - and continuing - buildup of Soviet maritime and military capability at Cam Ranh Bay, in Vietnam. ``There is no doubt it has expanded Soviet political influence in Southeast Asia,'' says Australian Defense Minister Kim Beazley.

Mr. Beazley, for one, favors pressuring Japan to build up its own military capability - in certain limited, clearly defined ways - to counter the Soviets.

``I think [the US] ought to put pressure on the Japanese to massively improve their submarine fleet,'' he says.

That kind of talk causes shudders, not only among some of Beazley's countrymen, but especially in Asian nations farther north.

San Yong Park, deputy foreign minister of South Korea, says a major Japanese military buildup would spark a negative reaction in his country.

``We are all aware of the sensitivity of this issue. We are all aware of the unfortunate history,'' Mr. San says, referring to Japan's brutal military occupation of the Korean Peninsula.

Jiro Hagi, director of the defense planning division in Japan's Ministry of Defense, acknowledges these sensitivities.

``It is a fact that these countries were under occupation. Therefore, they tend to have a fear about Japan's buildup of its armed forces.''

But, he says flatly, ``We have no intention at all to engage in any military conduct outside of the immediate vicinity of Japan. We have no intention and no capability.''

Mr. Hagi notes that Japan has had a policy prohibiting its defense spending from exceeding 1 percent of its gross national product. When the defense budget crept slightly above that mark last year - to 1.004 percent - it sparked howls of protest from government critics.

Still, as Japan's gross national product expands, so does its defense spending. Hagi points out that his country already spends about $20 billion a year on defense, including about $3 billion to support US military bases in Japan.

Makoto Kuroda, Japanese vice-minister for international trade and industry, complains that Japan is now being pummeled for its success, but that some of the factors in the US trade deficit are beyond Japan's control.

He notes, for example, that while the American trade deficit with Japan, measured in yen, has been steadily dropping recently, the dollar has fallen so sharply that the deficit, measured in the US currency, is still rising.

``We criticize Americans because they don't recognize the existence of the outside world. They live on dollars,'' Mr. Kuroda says.

Besides, he says, if American industries want to export more to the Pacific, they will simply have to become more competitive.

``We are not in a position to force Japanese businessmen to buy. If the quality is high and the price is good, we can't prevent them from buying,'' he says.

``If [the US] really wants to see your exports increase, your industries should make the [necessary] investments,'' he concludes.

Nevertheless, there's a growing acknowledgment in the Pacific that US patience is growing short.

Kazuo Ogura, deputy director general of the economic affairs bureau of Japan's Ministry of Foreign Affairs, says, ``I think there is a real danger that the world is going to face a kind of regionalism.''

If that happens, he says, ``I don't know what Japan is going to do.''

You've read  of  free articles. Subscribe to continue.
QR Code to Agitation in the Pacific. Would patchwork agreements anger US trading partners?
Read this article in
QR Code to Subscription page
Start your subscription today