US Needs a Martial Arts Approach to Asia Policy

THE end of the cold war and the explosion of global trade have changed United States policy priorities, perhaps permanently. Until only a few years ago, economic interests played second fiddle to the overriding need for military security and stability in our political relationships. Today the situation is reversed; exports and pressure for global competitiveness are largely calling the tune. The world is still a dangerous place and global stability is essential. But the shift in priorities is clear.

In this new environment, no region of the world is more important to the US, or merits more attention, than Asia. Excluding the US and Japan, economic growth in the Pacific will average 5.8 percent this year. Growth in key Asian countries such as Malaysia (8.1 percent), Thailand (8.1 percent), and Singapore (9.8 percent) is even higher. Reflecting this, the US conducts more than 40 percent of its trade with Asia, 50 percent more than with Europe. Exports to Asia support more than 2.3 million US jobs.

Within the region, China stands out for both its size and potential. With more than 1 billion people and annual growth rates averaging 10 to 13 percent, it has a market of potentially vast proportions. Chinese imports have already grown 25 percent in each of the last two years. In one area of special importance to the US - commercial aircraft - China may soon become the world's single largest market, with 39 new airlines spending almost $90 billion on 1,200 new planes by 2010. According to the World Bank, ``Greater China'' - the economic zone encompassing China, Hong Kong, and Taiwan - is poised to become the world's fourth major ``growth pole'' after the US, Europe, and Japan.

Asia's economic future looks bright, but what could happen to dim it? Economic retrenchment or political instability in China; a military confrontation on the Korean Peninsula; or a global economic slowdown or protectionism in its key markets. But the biggest uncertainties at the moment stem from US trade policy.

In China, the administration is threatening to cut off most-favored-nation (MFN) trading rights if China's leadership doesn't clean up its human rights record. Its newest idea - to penalize only state-owned companies and exempt private ones - only deepens the potential morass, injecting US policy into micro-levels of China's economy and creating onerous administrative burdens. Nor are such half-measures likely to have any real effect on Chinese behavior.

In Southeast Asia, the administration has threatened to withdraw trading privileges over those countries' domestic labor practices.

In Japan, pressure is being placed on a weak but reformist government to either accept numerical targets for imports or face trade sanctions. If successful, this policy will undermine the prospects for reform and deregulation by strengthening the hand of Japan's conservative trade bureaucracy. It flies in the face of our commitments to free trade and to resolving disputes through the new World Trade Organization, and offends other exporting nations, such as Australia, who see negotiated US market shares coming at their expense. All this in exchange for a marginal effect on the bilateral trade balance.

Under normal circumstances any one of these issues would pose problems. But the simultaneous pursuit of aggressive, unilateral trade policies throughout Asia is compounding the situation. The result is a potential rupture in US-Asian relations that could undercut US business and America's political leadership.

The Clinton administration seems caught between two policy worlds: the old, in which US economic and political primacy allowed it to direct the internal as well as foreign policies of its partners; and the new, in which the shared security concerns caused by Soviet power have diminished, economic interdependence imposes costs and constraints, and prosperous and confident partners abroad demand and expect respect. By raising the profile of economic goals and lending active support to bodies such as the Asia Pacific Economic Cooperation forum and the General agreement on Tariffs and Trade, President Clinton seems to embrace the new; but by conducting trade policy based on threats and prescriptive political intervention, he is wedded to the old.

Clearly, the pillars of Mr. Clinton's Asia policy - expanding trade and promoting democracy - have not been integrated and are now in direct conflict. By playing to home constituencies such as labor and by conducting a policy geared to single issues (human rights, labor, import targets) the administration's approach seems more ad hoc than strategic. The result: policy disarray.

Today's Asia is no longer just a pool of cheap labor. Nor is it an area of poverty and weak, instable governments. Increasingly, it is an area with strong economies, rising middle classes, and incipient political change. It is also an area increasingly conscious of its own identity and success.

Clinton is right to focus on Asia as a key to the economic future of the US. The challenge is to maintain American political leadership, to support continued evolution toward more-open, civil, and democratic societies, and to ensure that US business is positioned to benefit from Asia's dynamic economic development. Mixing objectives - by tying trade to human rights - threatens jobs and exports and undermines confidence in US leadership.

As the world's only superpower and the prime repository of its democratic values, our leadership is essential. But the administration would do well to take a lesson from Asian martial arts. Sometimes direct force is less effective than leveraging your opponent's momentum to your advantage. New forces are stirring throughout Asia - market reform, trade liberalization, and a middle class that is demanding more responsive government and new economic options. We should use those forces to further our objectives. If America wants to influence Asia's development and participate in its economic success, our policies must be clear and our goals consistent.