Asia-Pacific Group Calls for Open Trade

Threat of regional trade blocs spurs APEC's development

FIFTEEN nations of the Pacific rim, representing about half the world's markets, officially organized themselves into an economic group yesterday, while also warning other regions not to close their borders to trade.This giant grouping, known as Asia-Pacific Economic Cooperation (APEC), has gained momentum since first proposed in 1979 by Australia in response to the possibility that the European Community and the emerging North American free-trade zone might develop into regional blocs. One purpose of APEC is to prevent other regions from "drifting toward inward-looking" trade policies, said President Roh Tae Woo of South Korea, host to APEC's ministerial meeting. As a sign of its potential role in a post-cold-war system, APEC's first official act was to issue a joint resolution, calling for urgent and successful conclusion of the Uruguay Round talks, which are aimed at further opening world markets. The admission of China, Taiwan, and Hong Kong as members this week boosts APEC's significance. The original 12 members are the United States, Canada, Japan, South Korea, Australia, New Zealand, Indonesia, Malaysia, Thailand, Brunei, Singapore, and the Philippines. "These are the giant economies," says Indonesian Foreign Minister Ali Alatas. "They are committed to the Uruguay Round, and we can call them up on it in Geneva." But since APEC was formed in part as a defensive measure in case the world breaks up into regional blocs, its future course depends much on the trade talks. "Until we see the shape of the Uruguay Round, it's difficult to see what these 15 economies can do," said a senior Canadian official. A global choice must be made, said President Roh, on whether regional economic groups will be open or closed. APEC's members said the Uruguay Round was "the most critical economic issue facing the international community," and that all nations should "show necessary flexibility" by the end of the year. The statement is "punchy and meaningful," said US Secretary of State James Baker III, and will provide impetus to the 108-nation negotiations. Japan and South Korea, which do not want the trade talks to force open their protected rice markets, went along with the APEC statement reluctantly. Until this Seoul conference, APEC was a loosely defined, yearly gathering of the region's ministers, who groped for a collective economic identity. But in a declaration, the group laid out "terms of reference" and became more institutionalized despite differences in geography, history, and ideology. The 15 nations, with about 2 billion people, have had an economic output that has expanded six-fold in the past two decades, with intraregional trade having risen 12-fold in the same period. "Absorbing China [into APEC] will take some time," said Barbara McDougall, Canada's secretary of state for external affairs. "But there's a feeling that APEC is moving faster than expected." The move to strengthen APEC has all but ended Malaysia's proposal to create an East Asian economic group that would exclude the US, Canada, Australia, and New Zealand. While the US opposes this idea, Japan has not ruled out endorsing it. Mr. Baker criticizes the idea of an Asia-only bloc as "drawing a line down the Pacific," calling it a subregional grouping that would undermine the larger APEC. "America's future lies across the Pacific," Baker told APEC ministers emphatically. Any post-cold-war system requires US engagement in the Pacific. Despite APEC's progress, the group remains divided over whether its primary goal is to liberalize regional trade, as the US seeks, or to follow a Japanese line of creating a regional "division of labor," with each nation taking on certain economic roles. Japan has tried to be low-key in APEC to prevent fears that it might dominate the group, even as it is slowly dominating the region economically. Still, it came to Seoul with the largest delegation and was granted permission to prepare a study in the coming year on the economic links within the region. Also Japan has moved ahead with a project in which hundreds of business managers in Asia are being trained in Japanese management techniques. Many issues within APEC were put off in next year's meeting in Bangkok, including whether to set up a permanent office. At present, APEC's leadership is rotated between host nations. The US will host APEC in 1993, followed by Indonesia in 1994. Japan and Canada are competing for the 1995 meeting. Because APEC presently includes the world's most dynamic economies, several Latin American nations are eager to join. But having just added three new members, APEC wants to delay any further expansion. It has also been careful to avoid overshadowing the region's most successful sub-group, the six-nation Association of Southeast Asian Nations, which has slowly built up a 20-year record of economic and political cooperation. ASEAN, say US officials, is the core of APEC; some ASEAN nations would like to have every other APEC meeting in one of its members' capitals. One spinoff of the APEC meeting was the historic arrival of Chinese Foreign Minister Qian Qichen in South Korea. The two nations are inching toward mutual recognition and plan to sign a trade agreement soon. During the three-day conference Mr. Qian was constantly asked to persuade North Korea to open up its nuclear processing facilities to international inspection. Qian said that any pressure on North Korea would only be "counterproductive" and he appeared reluctant to endorse a new US proposal for the region's major powers to talk jointly about North Korea's alleged attempt to produce a nuclear bomb. Baker is expected to arrive in Beijing today for further talks.