Forging a Pacific Rim Community

In what may be a historic event, Secretary of State James Baker, U.S. Trade Representative Carla Hills and Commerce Secretary Robert A. Mosbacher will join this week in Canberra, Australia, with foreign and economic ministers of 11 Asian and Pacific nations--Japan, Korea, Canada, Australia, New Zealand, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. They will discuss opportunities for regional economic cooperation in the Pacific Basin.

This is intended to be the first in a series of annual meetings that could lay the groundwork for the most significant regional economic institution to emerge since the European community.

Effective multilateral consultation--let alone real cooperation--in the Pacific region has long been shackled by historic suspicions among nations and economic divisions between the northern and southern regions. Now, however, the time seems right for the establishment of a new vehicle.

Bilateral trade disputes, led by the seemingly endless sparks of U.S.-Japan friction, have caused the Pacific nations increasing discomfort. The newly industrialized economies--the so-called Four Tigers of Asia--have emerged as economic powers. And the 1992 economic integration of Europe has stirred the collective consciousness of the Pacific Basin.

What should come out of this conference?

Trade and investment issues will rightly dominate this first meeting. Virtually all negotiations on these matters today are bilateral. The results have become too sadly predictable: The United States issues a list of demands, centered on greater market access. The smaller economy, whether Japan, Korea, Taiwan or whoever, resists and fights to narrow the agenda. The U.S. team finally agrees to a lesser list and soothing rhetoric. Both sides are angry and dissatisfied. The Americans feel unfairly treated and never reach the elusive “level playing field,” while the Asian side is seen at home to be giving in to U.S. pressure, fomenting nationalistic anti-Americanism.

A forum of major Pacific economies can help break this vicious cycle. The central issue of greater market access to Japan, for example, is not unique to Americans. It is shared by all of Japan’s trading partners. Perhaps the most pervasive problem--and one that is uniquely difficult to deal with--is the Japanese distribution system. Whether the imported goods are consumer electronics from Korea, processed food from the United States or light machinery from Taiwan, all find the traditional relationships and government regulations among the manufacturers, wholesalers and retailers of Japan to be a nearly impenetrable conundrum.

While this issue is atop the current Structural Impediments Initiative agenda between the United States and Japan, few hold out hope for dramatic early changes from this purely bilateral effort. But if the analysis, solutions and agreed mechanisms are joined multilaterally, the needed internal steps in Japan will be more palatable domestically. There will not be a perceived caving in to the big brother across the ocean. The smaller economies will no longer fear a separate bilateral deal cut at their expense.

Win-lose bilateral fights can be replaced by win-win consensus solutions. And what is true for market access can also be applied to intellectual property rights, agricultural subsidies and the other hot spots on today’s contentious trade menu.

Lack of respect for intellectual property rights, for example, can detune the engine of technology transfer that has been so crucial to the economic dynamism of the Asia-Pacific region. One thing that video pirates from Hong Kong, software copiers from Korea or brand-name watch cloners from Taiwan have in common is the sad ability to force withholding from their economy of access to the best products and technologies available. If you can’t protect your ideas and products, there will be no sale. No protection equals no sales equals no markets. All sides lose. But it takes all sides working together to avoid this beggar-thy-neighbor result.

The U.S. delegates should also attempt to broaden the scope of the conference beyond trade and investment issues to include transportation, telecommunications, energy, environment, uniform standards for customs and tariffs and coordination of aid to the region. Problems abound in these areas.

In transportation, for example, to facilitate the region’s growing interdependence, major improvements are necessary in port facilities, airline capacity and technological infrastructure. Rational energy planning even at a national level would clearly benefit from regionwide access to data on projected energy supply and demand. Plans for coal development in the western United States or in Australia may be strongly impacted by nuclear construction projects in Japan. A common data base may even permit a common approach to energy conservation. Such problems, of course, cannot be solved at Canberra, but they cannot even be taken up until the nations have the will and the wisdom to come together.

The Pacific nations will also benefit from a cooperative effort to protect the region’s environment. Pressing problems--such as offshore drilling, oil spills, depletion of the ozone layer and disposal of hazardous waste--can only be solved if individual countries pool their talents and resources to seek creative solutions.

The way to judge the success of the Canberra conference is how well it begins to build the foundation for a Pacificwide institution along the lines of the Organization of Economic Cooperation and Development, but without the stigma of a “rich man’s club” or a suffocating bureaucracy.

If Baker and his colleagues emerge from Canberra having contributed to an agreement on principles for future economic cooperation, then their mission must be termed an unqualified success.

In the words of Benjamin Franklin at the signing of the Declaration of Independence: “We must all hang together, or assuredly we shall all hang separately.”