A Low Profile In The Pacific Rim

Go quietly. That's the message U.S. President Clinton should take with him as he prepares to jet off to Osaka, Japan, to join 13 other Pacific Rim heads of state for this year's meeting of the Asia-Pacific Economic Cooperation (APEC) forum. This is a critical meeting, with APEC about to prepare a formal program to dismantle trade barriers by the year 2020. Any heavy-handed efforts to break open politically sensitive markets can only backfire on the U.S.

The truth is, APEC is split between North Asia and Southeast Asia on the issue of free trade. Japan, Korea, and China all want to keep agriculture, primarily rice, protected and off-limits in the negotiations. Thailand, Indonesia, the Philippines, and other Association of South East Asian (ASEAN) countries that are big rice exporters want these markets open. Just on trade interests alone, the U.S., as a significant rice and agricultural goods exporter, should side with the ASEAN countries. As the most open of all Pacific Rim countries, it should push for free trade on principle as well.

But more is at stake than rice. APEC is opening its markets quickly, without formal agreements. Tariffs are falling, the financial sectors are being liberalized, and telecom and power monopolies are being opened to local and foreign investors.

It is unfortunate that Japan, with the second-largest industrial economy in the world, refuses to take the lead in promoting free trade in Asia. But that doesn't mean that the U.S. should then take a public role in banging heads. It is better for Clinton to side quietly with ASEAN countries in their efforts to export more to Japan, Korea, and China. It is better to keep the focus on opening markets much more important to U.S. industry--autos, insurance, high-tech gear, banking, capital goods, communications equipment, etc. It is in these areas that reciprocity should be requested and granted.

Before it's here, it's on the Bloomberg Terminal.