18 APEC Nations Endorse Plan for Pact to Cut Tariffs

A proposed global pact slashing tariffs on hundreds of billions of dollars’ worth of “information technology” products--such as computers and telecommunications equipment--won unanimous endorsement Saturday from 18 Pacific Rim nations.

The vaguely worded action, taken here at the annual summit of the Asia-Pacific Economic Cooperation forum, known as APEC, sets the stage for intense negotiations aimed at concluding such an agreement at a World Trade Organization meeting in Singapore next month.

If achieved, the pact would bring freer trade to rapidly growing key industries that already had $1 trillion in total global production last year.

Sharply reducing or eliminating tariffs on these items, including semiconductors and computer software, would boost the exports of many U.S. high-technology firms and could make a significant contribution to global economic growth.

While the APEC endorsement was short on specifics, acting U.S. Trade Representative Charlene Barshefsky described it as “an extremely important step.”

“What the United States sought from APEC . . . was the political will unequivocally to move forward and reach agreement at [next month’s meeting in] Singapore,” she said. “And that is what was achieved.”

The United States, Canada, Japan and the European Union have taken the lead in discussing an agreement that would eliminate tariffs on a wide range of information technology products by 2000. They have clashed, however, over exactly what products should be included and what the timing should be for partial steps before 2000. Negotiations under World Trade Organization auspices are ongoing in Geneva.

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In discussions here on what APEC’s position should be, several developing countries led by Malaysia indicated unwillingness to go along with such a tariff agreement. Malaysian International Trade Minister Rafidah Aziz stressed that any pact “must take into account the requests for flexibility from some members.”

The final wording in the APEC ministers’ joint statement was: “In recognizing the importance of the information technology sector in world trade, ministers endorsed the efforts at WTO to conclude an information technology agreement by the [Dec. 9-13] Singapore ministerial conference and urged all other members of the WTO to work toward that end.”

The issue is likely to be addressed again, possibly with slightly stronger language, in a declaration concluding a summit of top leaders, including President Clinton, to be held at Subic Bay on Monday.

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U.S. officials stressed that the reluctance of developing countries such as Malaysia to support as ambitious a pact as sought by Washington is not too big of a problem.

“Timetables are going to be negotiated,” said a senior U.S. government official who spoke on condition of anonymity. In the course of these negotiations, when other countries ask for exceptions, the United States “will be flexible,” he said.

Even an agreement with exceptions for some developing countries could be of significant value to U.S. high-technology industries, said Larry Ellison, chairman of Oracle Corp., a major U.S. software firm with about $1 billion in annual sales in Asia.

“Of course our industry wants to have it,” said Ellison, who was in Manila for an APEC-related business conference. “The United States would like to get rid of all tariffs by 2000. Other countries have legitimate concerns. We should arrive at an agreement by consensus. There’s got to be give and take.”

APEC’s economically diverse members are: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the United States.