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Pacific Power

The Manila summit puts the free trade grouping on track

Pacific Power
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-0001-11-30T00:00:00+0553

LAST week’s Asia Pacific Economic Cooperation (APEC) summit in Manila marked a milestone of sorts in the 18 member group’s bid for free trade by the year 2020. However, some observers accused the summiteers of harbouring "hidden agendas", leading to an undercurrent of tension as a result of differences over the pace of economic liberalisation.

By all accounts the Manila Action Plan for APEC (MAPA), endorsed by the forum’s 18 leaders, was a major breakthrough in turning the Asia-Pacific region into the world’s largest free-trade area. But the biggest victor was US President Bill Clinton, who won approval for setting a target date of the year 2000 to eliminate all trade tariffs in information technology products. The US stands to gain from this proposal which it had been pushing for months. Free trade in information technology means the creation of more American jobs, and more mileage for Clinton back home in Washington, DC. As one observer said: "Clinton told the APEC heads, ‘it’s the economy all over again, stupid.’ And they bought his line." 

Not everybody in Manila was ecstatic about an accelerated target date of 2000. Malaysian Prime Minister Mahathir Mohammad had objected to hasty and time-bound trade liberalisation. But Clinton wasted no time in lobbying Philippines President Fidel Ramos. The two presidents felt that Malaysian Trade and Industry Minister Rafidah Aziz ought to meet with US Acting Trade Representative Charlene Barchefsky and reach a gentle compromise. Ramos, as the chairman of the November 24-25 summit, felt it was his responsibility to bridge the gap between Malaysia and the US.

It was a triumph for the US when the other APEC leaders agreed to support a Washington bid to conclude an information technology agreement at the World Trade Organisation meeting to be held in Singapore in December. The US wanted a deal that would cover a wide range of computers, software, memory chips and telecommunications, with the tariff phase-out starting next year and reaching completion in 2000. But at their pre-summit meeting, APEC heads gave the US proposal partial support, as many developing countries felt that their fledgling technology industries would be swamped by their US counterparts.

The behind-the-scenes lobbying revealed the conflicting hidden agendas pursued by the developed and developing countries. A Malaysian official said the developed countries attached great importance to their personal gains through free trade, whereas the developing countries were striving to protect their rights. He said the developed world had shown scant sympathy for the concerns of the developing world’s welfare.

Polemics aside, MAPA was a big success, given the unwieldy nature of APEC, whose key members are the US, Japan, China, Australia, South Korea, ASEAN and Canada. MAPA detailed how the more developed member nations would reduce trade tariffs gradually to zero by the year 2010, and set 2020 as the date for the poorer member states. (Vietnam is due to be inducted a member at the APEC summit in Kuala Lumpur in 1998. Membership for India and 10 other candidates remains frozen for the time being.)

 The action plan reaffirmed that APEC would remain a loose structure, rather than a formal, legal entity such as the European Union. And, instead of having the governments play a leading role in development, the action plan left the centrestage for the private sector in boosting trade and investments. Towards this end, the action plan called for the harmonising of customs and immigration procedures to speed up the movement of goods. It also showed some concern for the less developed states by improving their ability to compete through an economic and technical programme.

While a US aircraft carrier powered its way to a former US naval base at Subic Bay near la, where the summit was held, to provide security for Clinton, the summit took place in a region where peace has held after the end of the Cold War. Japanese Premier Ryutaro Hashimoto said: "This region is now embarking on a new era."

 Having set itself a daunting series of targets, APEC will now need to pull its weight. A Japanese official said that the group would need to put more substance into its words if it is to achieve the stated goals. Still, APEC leaders silenced critics who had cast doubts on its free-trade pledge made two years ago in the Indonesian city of Bogor. Now, with the Manila summit, APEC has shown that it is possible for a group of culturally and economically disparate states, bound by a tenuous link of their location on the Pacific Ocean, to actually work together. 

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