By Eva Cheng
The US government's push to open up Asian markets was dealt an embarrassing blow at the summit of the 21-member Asia Pacific Economic Cooperation (APEC) in Kuala Lumpur, which closed on November 18.
Meeting for the sixth time — and after numerous working meetings of its various lower bodies — the annual APEC summit again failed to achieve much more than rhetoric. The summit communiqué is a hotchpotch of wishes and generalities to cover up what the meeting failed to achieve.
Most APEC members don't want "free trade". They've been dragging their feet on the US-led agenda to open their markets, which have been made much more vulnerable by the global economic crisis that began in mid-1997.
Struggling to keep its economy afloat, the Japanese government refused to "fast-track" the opening of two sectors — forest and fish products — out of a list of nine sectors, dubbed Early Voluntary Sectoral Liberalisation (EVSL), which was agreed to in principle last year in Vancouver. Members were to confirm their commitments at Kuala Lumpur, with a concrete timetable for implementation.
Apart from John Howard, basking in Washington's shadow, not one single APEC member has expressed serious objection to Tokyo's position. They clearly would have done otherwise had they been really keen about the "fast-tracking" program.
Protection battles
APEC members, now 21 after the November admission of Russia, Vietnam and Peru, agreed in their 1994 summit to open to "free" trade and investment by 2010, or 2020 for developing nations.
A mutual opening of markets always hurts the weakest competitors most. In this case, that means the underdeveloped economies, handicapped by a huge technological gap and other colonial legacies. Many Asian countries were dealt a severe blow by the economic crisis, making protection of their domestic markets a matter of utmost importance for their capitalists.
The US has been pressing other members to lower their tariffs long before the ultimate deadlines. But on the eve of the 1995 summit, requests for exemption or other concessions flooded in — from at least Japan, China, South Korea, Taiwan and Singapore — while Malaysia declared any APEC "requirements" as merely voluntary.
(APEC's remaining members are: Brunei, Hong Kong, Indonesia, Papua New Guinea, Philippines, Thailand, Canada, Chile, Mexico and New Zealand.)
Despite the 1996 claim of Philippines President Fidel Ramos that APEC was moving "from vision to action", the tariff-cutting plans submitted by members that year were only symbolic, consisting of commitments previously made elsewhere.
Already a few months into the Asian crisis, at the 1997 Vancouver summit Washington managed to get members to agree to the EVSL. Finalising the implementation schedules was to be the highlight of this year's summit, but Tokyo's refusal to take part in two essential sectors blew the whole thing up.
Other members have too much to lose if economies like Japan, the world's biggest after the US, get exemptions.
As a fig leaf, the EVSL — which, apart from fish and forest products, also covers energy, chemicals, environmental goods and services, toys, jewellery, telecommunications and medicines — will now be referred to the World Trade Organisation (WTO), which will negotiate these issues next year.
WTO
Passing the buck to the WTO on such an essential matter defeats the original purpose of APEC.
The WTO superseded the General Agreement on Tariffs and Trade (GATT) in 1995 as the world body through which the imperialist powers impose trade controls on other countries (essentially opening their markets) and police their implementation.
The GATT operated by way of rounds of negotiation in which countries — mainly Third World countries — were pressured or blackmailed into submission. Resistance during the Uruguay round was exceptionally strong: it dragged on for nine years.
By the time the Uruguay round concluded in 1994, the need for a more efficient mechanism was evident. In January 1995, the WTO replaced the GATT, not only as a "negotiating" forum, but covering a much broader scope.
It expanded to include sensitive areas such as textiles and clothing, agriculture, services, intellectual property and trade-related investments, and installed a concrete mechanism to police implementation.
Under WTO rules, there are deadlines on meeting commitments, and violation can attract damaging punitive sanctions. However, membership of the WTO is a near necessity because not joining can deprive a country of the possibility of exporting to most of the world.
Technically a product of Tokyo's initiative when created in 1989, APEC was sucked into Washington's orbit when the US hosted its first summit in Seattle in 1993, giving it a high-profile existence ever since.
Bending the rules
Had the WTO worked according to plan, there would be little role for APEC in helping to push "free trade". However, because of the enormous interests at stake, most Third World countries still tirelessly seek ways to circumvent the WTO rules or to stay out of it.
The WTO has 133 members, well short of the World Bank and the International Monetary Fund's memberships of more than 180.
Circumvention of WTO rules was rampant, for example, on agricultural products.
"Bound composite import tariffs" were defined for all products — by adding tariffs to the equivalent of non-tariff barriers during 1986-88 — and capped at those levels, from which future cuts are to be measured.
Developed countries are to cut the unweighted average of their composite tariffs by 36% over six years (24% and 10 years for Third World countries) in equal instalments.
But because the composite figures are unweighted, members could minimise tariff cuts for sensitive imports, and they have. According to a study quoted in the Asian Development Bank's 1997-98 annual report, the stated base levels "may have been" overstated in many cases by 61% by the European Union (EU) and 44% by the US.
The report goes on: "... final bound tariffs slated to take effect in 2000 can on average be 63% greater than actually existing tariffs for the EU, and 77% greater for the US".
The result is, says the report: "The scheduled reduction in bound tariffs is unlikely to lead to significant trade liberalisation".
Conflicts within the imperialist camp further undermined the WTO. On agricultural subsidies, for example, the US initially wanted to eliminate all subsidies but was forced to moderate them to 75% for domestic subsidies and 90% for export subsidies. Meanwhile, the EU refused to accept any restriction on agricultural subsidies.
No agreement
The farce over the rules on agricultural products only gives a flavour of the intense battles that are still going on in other areas that the WTO tries to police.
On the basis of an APEC consensus, further arm-twisting at the WTO would be made easier. The Kuala Lumpur summit failed to provide such a consensus, however.
US President Bill Clinton's absence wasn't the cause of its failure. At the time of his 11th-hour decision not to attend, there was no hope of Japan conceding on the two controversial sectors and no hope of the plan taking off.
However, there are signs of attempts to add new functions to APEC, mostly triggered by the economic crisis. Australia sought the summit's endorsement of proposals to improve economic control of Asian countries and set up task forces to investigate ways to improve the management of world capital flow, while Malaysia wanted it to back an agreement to regulate short-term capital flows.
Australia's vague proposals were easy enough to accept, and APEC did. But Malaysia's suggestion would disrupt the "normal" functioning of world capitalism too much, apart from hitting speculators. It was rejected.
The US and Japan used APEC to announce a US$10 billion fund — Asian Growth and Recovery Initiative — for Asia's troubled economies. But it was a farce.
At the November 17 press conference at which it was announced, none of the US or Japanese officials could clarify where the money would come from, nor where exactly it would go.
They conceded that part of the fund would come from a Japanese initiative previously announced, and therefore was not new resources. They added: "You will have to get used to a little fog around the numbers ... We will have to engage in discussion now to design the detail."
The main "detail" in all such arrangements is who wins and who loses. Agreement on that is a very long way off.