U.S. Expects Asia Trade to Spur Global Growth : Pacific Rim: President Clinton will meet with heads of state to focus on the vast potential of East Asia’s economies.

As leaders from around the Pacific Rim gather here this week, the Clinton Administration will seek to focus the attention of U.S. industry on the potential bounty from increased ties to the rapidly growing economies across the ocean.

“The Pacific Rim has had the fastest rate of growth for the past 30 years and by the year 2000, (East Asia) will surpass North America in market size,” Laura D’Andrea Tyson, chairman of the Council of Economic Advisers, said recently in a talk here previewing the fifth annual meeting of the Asia Pacific Economic Cooperation, which begins today with ministerial meetings.

President Clinton, who arrives later in the week for meetings with heads of state, will talk of his expectation for a world economic renaissance sparked by East Asian growth, says Sandra Kristoff, director of Asian affairs at the National Security Council.

But the meeting of the 15 APEC nations is unlikely to make progress toward easing a major headache for America: the huge trade deficits the United States maintains with Asia’s giants, Japan and China, at a time when America is spending scarce dollars to pay for security in the region.

On a more modest level, APEC could make a contribution to American exports. The publicity generated by the conference is expected to increase American awareness of the vast potential of the Asia-Pacific market. The Department of Commerce estimates there are 30,000 American businesses offering products and services that they could market overseas but do not.

While firms from Japan, Taiwan and South Korea are steadily increasing their investments in Asia, U.S. companies have pulled back in recent years. Officials hope to reverse that trend.

One concrete achievement American industry leaders say they expect to result from the conference is approval of APEC’s proposals to standardize and computerize customs clearance procedures. By doing this, the group hopes to speed paperwork and reduce corruption, an irritant to companies doing business in countries such as Indonesia.

“We are interested in any activity that will streamline trade relations between U.S. and Asia,” says Dennis Fill, chief executive of Advanced Technology Laboratories, a Bothell, Wash.-based producer of ultrasound diagnostic equipment. The company’s sales in Asia have grown 20% to 30% while sales in other markets have dropped or remained flat.

Warmer ties as a result of summit meetings between the United States and countries like China could also help, business leaders say. “People involved in trade will be more comfortable about investing in China,” says J. H. Jerry Zhu, managing partner for the Shanghai office of the Seattle-based law firm Davis Wright Tremain.

There will also be an effort to strengthen copyright laws. Weak enforcement of the laws--or the absence of them altogether--in some APEC nations are major problems for American high-tech and entertainment companies.

Charles Stevens, Microsoft’s general manager of worldwide business strategy, estimates that as much as 95% of the Microsoft software in use in Asia is pirated. With better controls, he figures Microsoft could quickly triple its current $700 million in Asian sales.

With many developing countries relying on personal computers to modernize industry, Microsoft sees enormous growth potential in Asia. Sales in Asia account for only 15% of the company’s current sales overall, but its sales there are growing by 60% a year compared to about 30% growth in the rest of the world.

But past efforts to change the “rules” of trade, as APEC is seeking to do, have had only a limited impact.

Take Japan. The country has had strict copyright protection laws for years. The problem, says Stevens: “The Japanese don’t like to prosecute. There is this partnership between government and business.”

And the major gulf dividing the United States and its Asian allies, which APEC cannot address, is a fundamental difference in approaches to trade.

In the U.S., consumer demand and business response shape economic decisions. In Asia, governments shape markets in a strategic effort to promote high-tech business and develop high wage jobs at home.

Seattle-based Boeing Co., for example, has a thriving trade in Asia. Boeing, a high-profile corporate host at APEC, likes to point out that Japan Air Lines is its largest customer for jumbo jets, that Malaysia has the largest fleet of Boeing 737s and that China is its fastest-growing new market.

What Boeing doesn’t talk about are the deals it makes to defend its Asian market share. Major portions of the Boeing 767 and the soon-to-be-rolled out Boeing 777 are being built in Japan to satisfy the Japanese government’s desire to build an aerospace industry.

To assure a stream of orders from China, Boeing had to agree to procure some of its plane parts in China.

“These deals hurt our trade balance, they hurt our standard of living and they hurt our economies,” says Michael Borrus of the Berkeley Roundtable on International Economy.

No one questions the importance of trade with Asia. It is these rapidly growing economies that will be the big spenders of the decade. The United States produces much of what Asia needs. But U.S. companies often find themselves losing bids to Japanese companies backed by fat government aid grants. And America’s consumer product companies face barriers in countries like Korea and China where governments are actively trying to discourage consumption.

“What China wants to buy, the U.S. doesn’t want to sell,” says Zhu. “What the U.S. wants to sell, like cosmetics and sodas, China doesn’t want to buy.”

While there is a flourishing trade among Asian countries, it is a trade filled with thousands of deals that reflect the industrial policies of each country more than they do the dynamics of free trade. The Japanese build cars in Malaysia as a condition of selling them there. Thailand requires investors to export a major portion of their production.

The Clinton Administration has hinted for some time that it will be less tolerant of such inequalities in its trading relationships. And American officials may use the occasion of APEC to outline a more forceful trade policy on the part of the United States.

“Asia has to realize that it is the American market that made the Asian miracle possible,” says Tyson. “It is important that we open the Asia Pacific as much as we can.”

But longtime observers of Asia like Tyson know that Asian governments take a long time to make small changes.