Asia-Pacific nations agree to move quickly to open markets in up to 15 economic sectors

By Laura Eggerston, The Globe and Mail, Monday 12 May 1997

The Asia-Pacific countries have transformed their trade group from a chat club into a powerhouse that will sidestep the World Trade Organization and set the agenda on opening global markets to goods and services.

By the end of a three-day meeting in Montreal on Saturday, the 18 members of the Asia-Pacific Economic Co-operation forum had agreed to try and eliminate global tariffs for as many as 15 new economic sectors, ranging from automobiles to environmental technology.

The significance of this meeting is that APEC has decided it should play the critical catalyst role on sectoral opening, U.S. Trade Representative Charlene Barshefsky said on Saturday.

APEC members, which include Canada and the United States, account for about half the flow of goods and services around the world. Although APEC is a voluntary organization that reaches non-binding decisions by consensus, it will now take on greater prominence in the world trade scene.

Members have decided to move quickly to identify specific products and services for which they can eliminate duties and quotas, instead of waiting for another interminable round of negotiations on global free trade at the World Trade Organization.

The products and services chosen are closely driven by the private sector, through a business advisory group.

One of APEC's key features [is] its close collaboration with business on the trade agenda, federal Trade Minister Art Eggleton said at the close of the meeting Saturday.

Once a significant number of APEC countries have agreed on the outline of a deal, negotiations can be moved to the WTO—the more unwieldy trade watchdog, which has 130 member countries. The last group of global negotiations, known as the Uruguay Round, took seven years to complete.

WTO agreements are binding and subject to dispute settlement. The United States and Canada have been pushing for APEC to gain more prominence because they believe it's easier to get deals among a smaller group of countries which are large enough to carry enough weight to intervene on the world scene. The Asia-Pacific nations have set a deadline for free trade among them -- 2010 for the developed countries and 2020 for developing nations.

Politically, the U.S. administration has been criticized in Congress and by right- wing Republicans such as Pat Buchanan for surrendering sovereignty to the WTO. Drafting trade deals under APEC—a less-visible, less-structured organization—would remove some of the political heat.

It's a question of efficiency, Ms. Barshefsky said about using APEC as a vehicle for the critical first negotiations. We have to be practical and APEC must show results.

Senior APEC trade officials, who are meeting this week in Quebec City, will now begin examining the 15 new sectors for which ministers think they can reach quick agreements.

Besides automobiles and environmental technology, they include chemicals and pulp and paper products. Not all 15 will end up with agreements, officials cautioned.

Renato Ruggiero, director-general of the WTO, praised APEC for its valuable energizing role in economic relations.

As the Asia-Pacific region becomes more and more important in the world economy, so the impact of what you decide in APEC assumes a greater global significance, he told the Montreal conference.

The first of the new initiatives is likely to be an expanded agreement on information technology. About 40 countries representing 93 per cent of the $1- trillion (U.S.) world trade in computers and software agreed earlier this spring to end tariffs on the goods.

The APEC ministers now want to create an information technology agreement that would add more countries and expand the range of products covered by the deal. That should further lower the costs of hardware and software and other products such as cash registers, photocopiers and automated teller machines.

The Montreal meeting and a leaders' summit that Canada is slated to host in Vancouver in November are also expected to accelerate talks toward a deal on financial services, which would eliminate restrictions that now make it difficult for banks and insurance companies to operate globally. Countries have a Dec. 15 deadline to reach that deal.

Washington scuppered the last attempt to reach a deal on financial services by pulling out, saying that other countries' offers were not enough to justify opening the U.S. market. Ms. Barshefsky made it clear that the United States wants countries to open their banks and institutions to majority foreign ownership and to branch banking. She also emphasized that if Latin American and Asian countries don't improve their offers by mid-July, the United States will withdraw again.

Such a deal could have widespread implications for Canadian institutions, leaving them open to mergers or takeovers if current regulations that prevent individuals from owning more than 10 per cent of the shares were to be changed.

Critics of the global trade organizations are worried that the new acceleration by APEC is being driven by multinational corporations without regard for environmental harm, labour standards or human rights.

Demonstrators in Montreal pointed to the imprisonment in Indonesia, an APEC country, of top trade unionist Muchtar Pakpahan.

This is a move by our government to fast-track world free trade, Maude Barlow of the Council of Canadians said yesterday in an interview from Ottawa.

The council is concerned that deals reached through APEC will not be subject to the same scrutiny as those negotiated through the WTO or, previously, the North American free-trade agreement.

There's no agreement that has to be signed [at APEC], it doesn't have to go to the legislatures. Most people don't have the faintest idea that it exists, Ms. Barlow said.

Organizations including the Canadian Labour Congress, Amnesty International and the Council of Canadians will attempt to keep social and rights issues high on the agenda in Vancouver by holding parallel conferences there in the fall.

But Mr. Eggleton rejected the idea of discussing the issues in Vancouver or Montreal.

There are other forums to discuss that, where there are people knowledgeable in those areas, he said. This is a trade forum.

The other APEC countries are Australia, Brunei, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, South Korea, Taiwan and Thailand. Together, they produce almost 60 per cent of the world's gross domestic product and account for 46 per cent of merchandise trade.