Pact Speeds Up Reduction of Asian Trade Barriers

Vowing not to be defeated by the financial crisis sweeping Asia, a group of Pacific Rim officials meeting here Saturday agreed to speed up the reduction of trade barriers.

Ministers representing the United States and 17 other members of the Asia-Pacific Economic Cooperation forum, which is holding its annual meeting here, said the agreement is an important reaffirmation of the importance of free trade, coming at a time when financial instability from Bangkok to Seoul has bolstered protectionist sentiments.

Speaking in Denver on Saturday before heading to the Vancouver summit, President Clinton urged Americans to consider Asia’s economic crisis a domestic concern because “our economic strength is increasingly tied to theirs.”

Clinton endorsed a new international mechanism for providing support to troubled economic partners in Asia that was drafted in Manila last week in preparation for the summit.

The United States agreed with 13 other countries on a framework for bolstering faltering economies in Asia. The International Monetary Fund will play a central role, but the nations involved agreed to supplement IMF resources.

“I’ll be working with the other leaders in Vancouver to advance this framework for action,” Clinton said.

The public got a taste of the connection between the world’s economies last month when the U.S. financial markets experienced several chaotic days of unstable stock prices, largely because of the economic troubles in Asia.

Clinton--who elevated APEC to an annual summit of national leaders during his first year as president--made it clear that against that turbulent backdrop, the fifth session of the 18-nation group will have a different thrust than previous meetings.

“One of our top priorities there will be strengthening and stabilizing Asia’s financial markets so that their economies and ours stay on the right track,” Clinton said.

Making a case for why Americans should care about Asian economies, Clinton noted that the United States has fought three wars this century in Asia and that U.S. troops “still stand guard for freedom” on the Korean peninsula.

The future of the United States also depends on economic stability in the region because almost one-third of American exports go to Asia, he said.

“With such deep stakes in the region, our security and our economic interests must go hand in hand,” he said.

The United States has historically been one of APEC’s most aggressive promoters of market-opening measures. But this year, the president comes to this Canadian port city under a cloud, having failed earlier this month in his campaign to get “fast-track” authority from Congress to negotiate future trade agreements.

APEC, which was formed during a time of dramatic growth in Asia, faces its biggest test this year with the collapse of stock and currency markets throughout the region--a nose dive triggered by a buildup of debt, weakened banking systems and lax government supervision.

Before leaving Seoul for the Vancouver meeting, South Korean President Kim Young Sam, whose beleaguered government was forced to request a $20-billion bailout last week from the IMF, warned South Koreans that they face “bone-cutting” measures.

Observers agree that APEC’s credibility as a global economic player depends on whether its diverse membership can agree on concrete measures to address the financial turmoil sweeping Asia while still making progress on liberalization of trade, APEC’s mandate.

The APEC officials here said the tariff reduction package agreed on in Saturday’s ministerial meeting should be considered progress because it represents a general agreement to open markets further and faster.

Previously, APEC had set a goal of free trade in the region by 2010 for developed countries and 2020 for developing countries.

APEC members will begin negotiations next year to determine how they will reach the goals, with each country setting its own timetable for action in 1999.

A spokesman for the Japanese Foreign Ministry said Saturday that his government agreed to the market-opening package, despite concerns about the effect on its domestic fish and wood products industries, because it recognizes the need “not to lose the momentum of trade liberalization,” given the economic crisis in Asia.

Iritani reported from Vancouver and Shogren from Denver.