International Business : SPOTLIGHT ON ASIA : Uncertainty Looms on APEC’s Horizon : Economy: Members disagree over removal of sensitive sectors from trade liberalization timetable.

For one young Hong Kong investment banker, the need for regional economic integration can be easily illustrated with an item in his well-worn leather briefcase. That is where he carries his passport, a bulky document overflowing with a dizzying array of rubber stamps.

At a recent trade meeting, he argued that the creation of an Asia-Pacific business visa that allows globe-trotting business people to move from country to country with ease would be a small, but significant, step toward improving the business climate in the world’s most rapidly expanding economic region.

Other things on his wish list: streamlined customs procedures and a regional investment treaty.

It is these kinds of concrete measures that business people agree the Asia-Pacific Economic Cooperation forum must put in place if it is to gain their support in its ambitious plan to raise the living standards of the Asia-Pacific region through increased economic integration.

They say next week’s APEC meeting in Osaka, Japan, is pivotal because the leaders of the 18 APEC member economies are supposed to approve a blueprint that includes concrete steps for removing trade barriers by the year 2020. Unless such action is taken, they fear the organization will become yet another grandiose global scheme whose ambitious goals are lost in bureaucratic red tape and political infighting.

APEC’s goals were not always so lofty. APEC was established in 1989 as a loosely-knit consultative group that would bring together officials from the Asia-Pacific region to share information and discuss ways they could work together to promote regional economic growth.

APEC’s champions--including former Australian Prime Minister Bob Hawke--argued that while their citizens might be competitors in the marketplace or diplomatic enemies, they would all benefit from removing obstacles to regional trade and investment. Those included such things as exorbitant tariffs, unnecessary government red tape and discriminatory investment policies.

Few questioned the potential payoff that could emerge from an aggressive dismantling of trade barriers in the APEC region, which already accounts for more than half of the world’s economic production, more than two-fifths of its merchandise trade and nearly two-fifths of its people.

But from the beginning, skeptics argued APEC would never move beyond a high-visibility talkfest, given Asia’s historic animosities, the huge variations in size and levels of development, and the diversity of language and culture.

Indeed, the obstacles to APEC’s creation were daunting. Some of these Asian leaders were longtime political enemies, the most prominent of which were the governments of China and Taiwan, which have been waging a bitter battle for control of China since 1949. And throughout Asia, there remained a legacy of mistrust left over from Japan’s military campaign during World War II.

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Some Asian leaders suspected APEC was a thinly disguised effort by Western countries to wrest control over this rapidly developing part of the world at a time when their military clout was waning. Malaysia’s Prime Minister Mahathir Mohammed, the leading critic of APEC, even proposed, without much success, creating an Asian-only group called the East Asian Economic Caucus.

To defuse these potential land mines, the founding members of APEC agreed to concentrate only on economic issues and make their decisions through consensus. They imposed linguistic constraints, calling the members of APEC “economies” instead of nations. That was because China and Taiwan do not recognize each other’s legitimacy and Hong Kong is a colony that will revert to Chinese control in 1997.

But even on the economic side, the gaps were huge because the region ranges from the world’s largest and most developed economies--the United States and Japan--to the tiny, oil-rich nation of Brunei. The problems of regional integration were intensified by the wide variation in government involvement in economic matters, from China’s market socialism to Hong Kong’s free-wheeling capitalism.

In the early years, APEC remained such a little-known commodity that one critic ridiculed it as “four adjectives in search of a noun.”

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But APEC moved from the sidelines into the limelight in November, 1993, when President Clinton, citing the growing significance of the Asia-Pacific region to the U.S. economy, hosted the first-ever summit of Asia-Pacific leaders in Seattle following an APEC ministerial meeting.

That November meeting, held on a wind-swept island in Puget Sound, was laden with symbolic significance but short on substance, although the leaders did produce a brief declaration of support for regional trade liberalization.

Observers agreed, however, that the meeting was an important milestone because it established a personal rapport among the Asian leaders and raised the pressure on APEC to move further and faster down the path toward trade liberalization.

As the officials ready themselves for next week’s APEC meeting, however, the efforts to translate this free-trade table-thumping into a concrete document with a timetable for action has gotten stalled again, this time over the politically charged issue of agricultural protection.

Japan, Taiwan and South Korea argue that sensitive sectors, such as agriculture, should be removed from the APEC trade liberalization timetable, which imposes earlier deadlines than were agreed upon in the global trade treaty overseen by the World Trade Organization. But the United States, Australia and Canada are among those who argue that granting any exceptions would threaten the entire APEC agreement by opening the floodgates for others to follow suit.

These rumors of discord do not sit well with business people like Nobuo Tateisi, the vice chairman of Japan’s Omron Corp. and a member of an APEC business advisory committee. During an interview in Los Angeles, he said APEC officials should listen closely to their business representatives or risk losing their support.

“We’re telling them to wake up and do something,” he said.

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Your Guide to APEC’s Forum

Japanese Prime Minister Tomiichi Murayama will host next week’s meeting of the Asia-Pacific Economic Cooperation forum in Osaka, which will also be attended by President Clinton. Here’s a look at the organization:

WHAT: An organization aimed at promoting regional trade and investment

WHEN: Formed in 1989 in Canberra, Australia

MEMBERS: Australia, Brunei, Canada, China, Chinese-Taipei (Taiwan), Chile, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Philippines, Singapore, Thailand, United States

POPULATION: 2.1 billion

COMBINED GNP: $13.2 trillion in 1993

TRADE: Represents 46% of world’s total merchandise trade

Source: National Center for APEC