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TRADE TALKS IN THE PACIFIC : Some Participants Are Cool to Free-Trade Pact : Reaction: Malaysia's Mahathir says he won't be bound by deadline. China's Ziang is also less than enthusiastic.


JAKARTA, Indonesia — While the industrialized nations of the Pacific region exulted Tuesday over an agreement to set up the world's largest free-trade area within 25 years, not everyone went home happy.

Malaysian Prime Minister Mahathir Mohammed said that his country will make its best effort to remove trade barriers by 2020, as spelled out in the accord, but that it does not feel bound to meet the deadline.

"If by the year 2020 we find ourselves unable to compete, I don't think anybody should force us to open up our country to an invasion by powerful companies from the developed countries," said Mahathir, who boycotted last year's meeting. He added that other small Asian countries share his views.

Mahathir issued a statement saying Malaysia "will only commit to undertaking further liberalization on a unilateral basis at a pace and capacity commensurate with our level of development."

Chinese President Jiang Zemin, whose government had previously expressed reservations about meeting a deadline, also appeared to be interpreting the agreement loosely.

Jiang said China endorses the liberalization of trade as a long-term goal, but he stressed that such liberalization should "be implemented in a phased and gradual manner."

Under the compromise adopted Tuesday by 18 leaders at the summit meeting of the Asia-Pacific Economic Cooperation forum, members of the group have until 2020 to create "free and open trade." Industrialized countries such as the United States have to meet the goal by 2010, while developing countries such as Indonesia have until 2020. The statement does not define what "free and open" actually means.

Another non-specific aspect of the agreement is what defines an industrialized economy--for example, where the newly industrialized nations of Taiwan, Hong Kong, Singapore and South Korea, the so-called Asian tigers, fall in the spectrum.

Officials said the definitions were left deliberately vague so that officials meeting over the next year can help nail down more explicit timetables before the next leaders meeting in Osaka, Japan.

Hong Kong's financial secretary, Sir Hamish Macleod, who represented the British territory at the talks, said he found parts of Tuesday's communique "frankly a bit weak" because it does not use tough language to prevent new trade barriers from being erected.

But he said Hong Kong will have no trouble meeting the 2010 deadline for industrialized countries.

Among the happiest leaders at the meeting was Australian Prime Minister Paul Keating, because Australia was one of the countries that advocated the idea of APEC from the beginning. Australia is keen to be seen as a part of Asia, and Keating said the agreement will mean $7 billion and 70,000 jobs for Australia each year.

"It's a triumph for Asian trade, a triumph for the world trade system and a triumph for Australia," Keating told a news conference. He said there was a sense of "restrained euphoria" among the participants.

Keating hinted that the group of economic leaders had to bend the rule of consensus to get a decision for a deadline for free trade. He said the members practiced "a flexible consensus" and wouldn't accept the view that one dissenting voice would be able to veto an agreement, a reference to Mahathir's opposition.

The Malaysian leader has been pushing a separate concept he calls the East Asian Economic Caucus, which would stand as a counterweight to the North American Free Trade group and the European Union. In Mahathir's view, the group should not include the United States, Australia or New Zealand, as does APEC.

Diplomats said Indonesian President Suharto provided the momentum necessary to persuade doubters like Malaysia and China to agree to the communique even though they had reservations about certain aspects of the deal.

"We have set the course and the direction of future economic cooperation in the Asia-Pacific region in particular and the world in general," Suharto said.

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