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TRADE TALKS IN THE PACIFIC : NEWS ANALYSIS : Vagueness, Distant Target Date Raise Doubts on Accord : Trade: Proponents say 2020 isn't as far away as it sounds. Skeptics contend that nothing in the agreement keeps nations from retaining barriers.

November 16, 1994|JIM MANN | TIMES STAFF WRITER

JAKARTA, Indonesia — It seems a historic step for the countries of the Pacific region to promise to move toward free trade by the year 2020.

But how far-reaching is the new trade pact?

There are at least two reasons for some skepticism about the impact of what President Clinton and the leaders of the Asia-Pacific Economic Cooperation forum--including Japan, China, South Korea, Canada and Australia--pledged to do Tuesday.

The first is that, for now, the agreement represents a promise with nothing behind it. There are no methods for enforcing free trade. If one country wants to preserve its trade barriers, none of the other Pacific nations can do anything about it. A defiant leader can merely come up with his own adaptation of the old line "How many divisions does the Pope have?"

The other problem, of course, is that 2020 is a long way off. It was relatively easy for the leaders to pledge to eliminate trade barriers by that time, because few if any of them will be in office 26 years from now.

Indeed, some American critics have argued that setting such a distant target date could actually hamper the process of reducing trade barriers now.

"If (APEC) doesn't break any new ground and becomes instead a kind of comfortable base for saying, 'Oh well, we promise that we're going to get something done in 2020, so hang in there and don't beat up on us bilaterally . . . and certainly don't build any more on the North American Free Trade Agreement and allow any other countries in,' then you're not moving the process along," Paul Stern of the Washington-based Progressive Policy Institute said in a recent speech.

Those who first proposed the year 2020 believe the goal is, by itself, important.

"It's not quite as long off as it sounds," C. Fred Bergsten, director of the Institute for International Economics and a member of the APEC advisory group that first set the 2020 target, told one Washington audience last month. ". . . Moreover, we felt that in practice, the actual achievement of the liberalization would almost certainly occur much faster than the negotiated target date."

On Tuesday, President Clinton compared the goal of Asian-Pacific free trade by 2020 to President John F. Kennedy's statement in 1961 that he wanted the United States to send a man to the moon in a decade. In both cases, an Administration official said, visionaries set a target "not knowing at that time whether or not that goal could be achieved. But the goal itself propelled the effort."

There are also disagreements about the extent to which the 2020 target date is good for the United States.

Bergsten insists that it is. "All of the countries in the region, outside North America in particular, have lots of trade barriers, and we don't have very many," he says. "So moving to totally free trade in the region means an enormous competitive gain to the United States."

But then, there is the problem of that long lead time. It could make APEC, one critic suggested, "a red flag for protectionists in the United States."

"Here we are. We're going to deal with the two largest pools of cheap labor in the world, China and Indonesia, and they don't have to reciprocate (by lowering trade barriers) for 10 or 15 years. They can just run up surpluses," said Robert Manning, another senior fellow at the Progressive Policy Institute.

"It (the 2020 date) could have a very counterproductive, unintended consequence."

The best argument on behalf of the deadline is that it forges at least some new economic links, however weak, between the United States and Asia.

"We could never walk away from the Asian market," Clinton said at a news conference. "We should be walking towards it, in terms that are fair."

The strong American support for APEC over the past five years has been based on the fear that the nations of East Asia might move to form their own intra-Asian trade bloc--one that might include Japan but leave out the United States.

Malaysian Prime Minister Mahathir Mohammed, in particular, has been pushing for an intra-Asian grouping, which could turn into a trade bloc dominated by the Japanese yen. APEC--first proposed by Australia and then backed by the United States--includes Canada, New Zealand, Mexico and Chile, all nations that are outside Asia but that border on the Pacific.

In setting the date far in the future, the United States succeeded in keeping everyone's attention focused on APEC--the larger, more inclusive grouping. But in order to do so, it had to agree to that date.

The reality is that for now at least, Asian governments are leery of doing anything stronger than setting the vague goal of free trade by 2020.

Many Asian countries are afraid of "additional pressure from the United States to reduce trade barriers too quickly, as well as pressure (from America) about national policies dealing with such sensitive areas as human rights, intellectual property rights and the environment," said the East-West Center of Honolulu in a recent study.

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