Pacific Leaders Pledge Free Trade by 2020

By PAUL RICHTER

Nov. 16, 1994 12 AM PT

TIMES STAFF WRITER

BOGOR, Indonesia —

Leaders of 18 Pacific Rim countries formally committed themselves Tuesday to dismantling all trade barriers within the next 25 years, but last-minute objections from two nations showed how fragile their alliance remains.

After a six-hour meeting at the opulent summer palace of Indonesian President Suharto, the leaders of the Asia-Pacific Economic Cooperation forum ended their summit by pledging that their industrialized members will drop all barriers by the year 2010 and that developing countries will do so by 2020. President Clinton, who last year began pushing the group toward such commitments, said the move should broaden trade and investment, bringing a harvest of benefits for all concerned, including average Americans.

“This is good news for the nations of our regions, and especially good news for the United States and our workers,” said Clinton, who has made the creation of trade groups a major foreign policy objective.

The agreement came on the sixth day of a nine-day Asia trip by Clinton that today brings a state visit with Suharto. Clinton has promised to raise the issue of Indonesia’s poor human rights record at the session. Meanwhile, Secretary of State Warren Christopher will meet with Indonesia’s Human Rights Commission, a government agency.

Although Tuesday’s trade agreement is broad and non-binding, the countries hope it will create momentum to hasten the trend toward free trade within a group that includes half the world’s population and 40% of its trade.

Experts called it remarkable that such a diverse group of nations--which includes the United States and Japan, Brunei, Mexico and China--could even agree on common goals.

But complications raised by South Korea and Malaysia in this scrupulously scripted event suggested that the compact could rapidly become bogged down in questions about the schedule on which the barriers will come down and about who will qualify for special benefits.

Last weekend, South Korean officials were secretly pushing for a quicker elimination of trade barriers and for assurances that theirs would not be classified as a developed country. Suharto, host of the event and key advocate of the program, resolved the issue by putting off--for now--questions of which nations fall into which category.

But the questions are likely to resurface quickly in the months ahead as officials begin to develop a map for the nations’ movement toward freer trade.

Later Tuesday, at a news conference in Jakarta, the Indonesian capital, Chinese President Jiang Zemin seemed to stake out his nation’s position when he flatly declared, “China’s the biggest developing country.”

American officials, for their part, were arguing that the question was not vital because the rapid pace of development makes it impossible to know which nations should still be classified as developing in 15 years. So far, it is clear only that the United States, Japan, Canada, Australia and New Zealand will be considered developed.

More basic objections to the agreement were raised by Malaysian Prime Minister Mahathir Mohammed. He joined the declaration only after enumerating in the formal session what an Administration official said was a “series” of reservations about the plan.

Mahathir, who fears that the group may become a tool for U.S. domination in the region, said he is worried about the ability of small countries to compete in such a program. He said he is also reluctant to commit future leaders of his country to the plan.

Administration officials acknowledged that Mahathir, who boycotted last year’s meeting, may decide to drop out entirely next year. But with Malaysia accounting for only about 1% of the group’s economic output, officials said Mahathir’s withdrawal would not be a fatal setback.

Also surfacing before the plan’s approval were questions about whether concessions to developing nations would make the pact a handy target for free-trade foes preparing to attack the General Agreement on Tariffs and Trade, the huge world trade proposal now before Congress.

Some Administration officials, and some outsiders, have argued that the Asian deal could make the Administration vulnerable to charges that it is giving away too many benefits to U.S. trading partners. Critics of the GATT agreement say the Administration is too easily surrendering national sovereignty in its provisions for new international trade rules.

“There’s been nervousness all over about this,” said a senior Administration official. But the official said the Administration believes that Clinton can show the public that the system is fair.

Clinton and other officials made the case that both sides will be making concessions. Because they have further to go, this argument goes, developing nations will actually take bigger trade-liberalization steps than will industrialized countries.

Clinton gave the example of auto import tariffs. They constitute 30% to 60% of a car’s price in Malaysia, Thailand and the Philippines, but only 2.5% in the United States. Thus, while the developing countries will have longer to bring their barriers down, those barriers have farther to fall.

“No country will get more in benefits than it gives,” Clinton said. “No free riders.”

Suharto had prepared carefully to make the APEC summit a public relations coup, even going so far as to have a celebrated Indonesian designer of batik garments tailor open-collared shirts for each leader attending.

This morning, Clinton arrived at the Istana Merkada Palace for a state visit with Suharto and a day of other meetings that may test how well Clinton can balance human rights concerns with his desire to create stronger commercial ties with Indonesia.

After an arrival ceremony at the palace, Clinton met Suharto to discuss trade and security concerns, and to lay out his views about Indonesia treatment of minorities, organized labor and the press.

Later, Clinton was to talk to an audience of business people about U.S. concerns, including human rights, as Secretary of State Warren Christopher met with the government human rights commission and other U.S. officials talked to local human rights organization.

The members of APEC are the United States, Canada, Mexico, Chile, Thailand, Malaysia, Singapore, Indonesia, Brunei, the Philippines, Australia, New Zealand, South Korea, Japan, China, Taiwan, Hong Kong and Papua New Guinea. At China’s insistence, Taiwan was represented here only by a trade official.

Strengthening Trade Relations

The 18 member nations of APEC:

1. U.S.

2. Canada

3. Mexico

4. Chile

5. China

6. Thailand

7. Malaysia

8. Singapore

9. Indonesia

10. Australia