Pact Speeds Up Reduction of Asian Trade Barriers

Vowing not to be defeated by the financial crisis sweeping Asia, a group of senior Pacific Rim officials meeting here Saturday vowed to press forward with market-opening measures and threw their support behind a proposal to establish a financial support plan for their troubled region.

Ministers representing the United States and 17 other members of the Asia-Pacific Economic Cooperation forum, which is holding its annual meeting here, also pledged their commitment to meet a Dec. 12 deadline for a global financial services agreement being negotiated by the World Trade Organization.

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.

Secretary of State Madeleine Albright and her Asian counterparts called their Saturday statement a reaffirmation of the importance of free trade, coming at a time when financial instability from Bangkok to Seoul has bolstered protectionist sentiments.

“We should not retreat, we should not look inward, we should not create a wall,” Canadian International Trade Minister Sergio Marchi told reporters at the conclusion of Saturday’s ministerial meeting. “That is a message that will give greater stability to the marketplace.”

Speaking in Denver before heading to the Vancouver summit, President Clinton also endorsed the proposed international mechanism for providing support to troubled economic partners in Asia. It was drafted by 14 deputy finance ministers in Manila last week in preparation for the summit.

“I’ll be working with the other leaders in Vancouver to advance this framework for action,” said the president, who will hold bilateral meetings with his Asian counterparts today and Monday and attend the APEC leader’s summit on Tuesday.

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The plan, which would support the programs already offered by the International Monetary Fund and the World Bank, would establish a supplemental “credit line” to help out economies in trouble and a stepped-up financial monitoring system.

The need for such a program was reinforced Friday when South Korea, the world’s 11th-largest economy, was forced to seek a $20-billion bailout from the IMF after its stock and currency markets went into a tailspin.

Before leaving Seoul for the Vancouver meeting, South Korean President Kim Young Sam warned his people that they will face “bone-carving pain” in the coming months.

Clinton--who elevated APEC to an annual summit of national leaders during his first year as president--made it clear that the fifth session of the 18-economy group will have a different thrust than previous meetings given the ongoing crisis in Asia.

“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.

The president also urged Americans to consider Asia’s economic crisis a domestic concern because “our economic strength is increasingly tied to theirs.”

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.

Making a case for why Americans should care about Asian economies, Clinton recalled that the United States has fought three wars this century in Asia and that U.S. troops “still stand guard for freedom” in the Korean peninsula. America’s future also depends on economic stability in the region because almost one-third of U.S. exports end up in 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.

Observers agree that APEC’s credibility as a global economic player depends on whether its diverse membership seriously addresses the financial turbulence sweeping Asia while still making progress on liberalization of trade, APEC’s mandate.

Critics protesting outside the Vancouver center where the conference is being held also urged APEC to address the negative effects of trade liberalization, including environmental damage and worker abuse. The ministers said they would hold an APEC meeting in the Philippines next year to address women’s issues.

Previously, APEC had set a goal of free trade in the region by 2010 for developed countries and 2020 for developing countries. On Saturday, the APEC senior ministers endorsed a plan to move toward early liberalization in nine sectors: environmental goods, fish and fish products, toys, forest products, medical equipment, the energy sector, gems and jewelry, chemicals and telecommunications.

The Canadian government, the host of this year’s meeting, had hoped the group would establish deadlines for the lowering of those barriers. Instead, the APEC ministers agreed next year to pinpoint specific steps they can take to reach their goal of faster trade liberalization in those sectors, with each country establishing its own timetable for action in 1999.

Hiroshi Hashimoto, a spokesman for the Japanese Foreign Ministry, said his government was particularly concerned about the effect of the market-opening package on its fisheries and forest products industries. But he said Japan agreed to support the plan because it recognized the need “not to lose the momentum of trade liberalization.”

But a top Mexican official said his government was not going to participate in the “voluntary” process because it did not agree that lowering barriers in specific areas was the best strategy for achieving a more open economy.

Iritani reported from Vancouver and Shogren from Denver.