This Isn't Your Usual Clinton Gabfest

The setting is vintage Bill Clinton. On Nov. 20, the President and the leaders of 14 Pacific Rim economies will gather in a rustic lodge on Puget Sound's tiny Blake Island not far from Seattle to ponder their joint destiny. No suits or conference tables allowed. Instead, the host plans for everyone to relax in easy chairs to let the conversation flow and ideas bubble up.

It would be easy to dismiss this global gabfest--the first Asia-Pacific Economic Cooperation (APEC) meeting attended by heads of government--as just another Clinton policy forum. But the conclave signals a major shift in how the U.S. views itself in a new world: Europe was the focus of U.S. policy in the 20th century, but Asia will increasingly dominate in the 21st. "Asia is probably going to be the most dynamic part of the world in the decades ahead, and we want to be there," says National Economic Council Director Robert E. Rubin.

The timing of the APEC meeting couldn't be more delicate. It comes on the heels of the vote on the North American Free Trade Agreement on Nov. 17. If Congress spikes NAFTA, Clinton's grand hopes for the Asian confab could collapse in its wake.

That would spell disaster, since future prosperity depends more on expanding trade with the booming economies of Asia than on preserving links to sluggish Europe. "We must get actively involved in Asia," says Jerry R. Junkins, chairman and CEO of Texas Instruments Inc. "We really have no choice. If we don't, we'll lose competitive position to those countries that do." Indeed, APEC--whose Asian members include China, Japan, the Four Tigers, and the members of the Association of Southeast Asian Nations (ASEAN)--already has a combined gross domestic product of $14 trillion, nearly equal to the $15.7 trillion GDP of the Group of Seven. By 2000, APEC will be larger than the G-7 and will dominate U.S. trade. According to DRI/McGraw-Hill, 40% of U.S. foreign commerce will by then be with Asian-Pacific nations, twice that with Europe.

Clinton wants to ensure that U.S. companies have easier entree into those markets than they do now. His goal is to come away with a commitment to develop a blueprint for achieving an open market within a decade. APEC foreign ministers plan to meet for two days in advance of their leaders to move in that direction. They will ratify proposals for common standards and regulations in such industries as telecommunications, tourism, and aviation. But as persuasive as Clinton can be, no one expects the 15 APEC members to reach a consensus quickly. One rump APEC group led by Malaysian Prime Minister Mahathir Mohamad fears U.S. domination over Asia and would prefer an all-Asian trade caucus that excludes the U.S., Canada, Australia, and New Zealand. Mahathir is likely to boycott the Seattle summit. And beneath the expected bonhomie at the conference, Tokyo and Washington are vying for stakes in Asia.

What's more, Washington will have to shift its trade approach if it hopes to win concessions. As the economic clout of the region grows, U.S. influence could wane. Trade experts worry that the traditional U.S. strategy of unilaterally demanding open markets and threatening sanctions may lose its sting as these countries become economically independent. However, the U.S. still acts as a guarantor of the region's security. That role will have increasing allure as jitters about possible regional conflicts grow. Indeed, even as the demise of the Soviet Union has eased fears of a nuclear showdown in Europe, anxieties are mounting in Asia over North Korea's effort to develop nuclear bombs. Moreover, Washington is becoming more worried about the potential military clout of China as it blossoms into an economic superpower.

But Clinton has to balance strategic concerns against growing pressure from such companies as American Telephone & Telegraph Co. and Boeing Co., which want to keep relations cordial in the world's hottest market. China is expected to supplant Japan as the world's No. 2 economy within the decade.

Clinton clearly has an ambitious agenda for the APEC meeting, maybe even pie-in-the-sky. But for all his foreign policy miscues, when it comes to confronting economic challenges, Clinton can be single-minded and convincing. Witness his performance at the G-7 economic summit in Tokyo last July. The APEC meeting will be a similar opportunity for Clinton. But this time the guests may be a tougher sell, and the stakes for the U.S. much higher.