U.S. - ASIA/PACIFIC TRADE
NOVEMBER 25, 1996
On the last of a 12 day tour of the Pacific Rim, President Clinton posed for photographs in Manilla with some of the 18 leaders of the Asia-Pacific Economic Cooperation Forum (APEC). On Sunday, all had signed an agreement to "substantially eliminate" tariffs on computers and telecommunications equipment by the year 2000.
JIM LEHRER: We start with the Asia story. Over the weekend, President Clinton and leaders of Asian countries held two days of meetings that covered both trade and politics. Our coverage begins with some background from Margaret Warner.
A RealAudio version of this NewsHour segment is available.
November 21, 1996: Margaret Warner talks to a panel of experts about President Clinton's Asian-Pacific tour and it's possible ramification for international trade relations.
Browse the NewsHour's Asia Index for additional information.
MARGARET WARNER: President Clinton's first big trip since his re-election was to Asia. And today he wrapped up a week of visits in the region with a stop in Thailand. He was in Bangkok, joining the king of Thailand in celebrating that ruler's 50th anniversary on the throne. Mr. Clinton came to this booming Southeast Asian capital after a weekend summit in the Philippines with other leaders of the Asia Pacific Economic Cooperation Forum known as APEC.
They met at the former U.S. Navy base at Subic Bay, now a bustling free trade center that has attracted more than a billion dollars in overseas investment. As has become customary at these sessions, the final photo opportunity featured the regional leaders sporting native shirts of the host country. In the Philippines, these shirts are called barongs. The APEC leaders gave qualified endorsement to a somewhat watered-down version of a U.S. call to eliminate tariffs on information technology by the end of the century.
PRESIDENT CLINTON: I'm especially pleased that today the APEC leaders endorsed the early completion of an information technology agreement, which would cut to zero tariffs a vast array of computers, semiconductors, and telecommunications technology by the year 2000. These products are to the 21st century what highways and railroads were to the 19th century.
MARGARET WARNER: They also took some steps to advance their goal of creating the world's largest free trade zone by the year 2020. That goal was set at the 1994 APEC summit. If realized, it would embrace more than 2 billion people throughout today's 18-member nations and possibly more. Before the multilateral APEC sessions on trade, President Clinton held a series of side meetings with the political and military powers of the region, the leaders of Japan, South Korea, and China. Mr. Clinton's session with Chinese President Jiang Zemin yesterday was their fourth since the President came to office in 1993, promising a tougher line on Chinese human rights practices and its ongoing crackdown on dissidents.
Sunday's session also followed a particularly tense year in U.S.-Chinese relations, especially over the issue of Taiwan. The U.S. Navy sent ships through the Taiwan Straits last March, after the Chinese mounted military exercises there. But yesterday, the U.S. and Chinese presidents discussed efforts to improve relations between their countries. They agreed to hold reciprocal state visits over the next two years. Vice President Gore will visit China too next year. The two presidents also discussed trade issues and China's bid to join the World Trade Organization, but these bilateral trade issues and the regional ones discussed at the APEC summit will take years of negotiations to resolve.
MARGARET WARNER: For more on the APEC part of the story, we're joined now by Bruce Stokes. He's a senior fellow at the Council on Foreign Relations and a contributing editor at the National Journal. Welcome. What is your assessment of what really was achieved at this summit?
BRUCE STOKES, Council on Foreign Relations: Unfortunately, Margaret, not very much. We, as you reported, had an information technology agreement among the various APEC nations. Unfortunately, what they did is they agreed to set this as a goal to have substantial reduction by the year 2000, assuming there could be some flexibility around that goal. And they would take that statement to the Singapore ministerial in December, where all the trade ministers in the entire world meet.
MARGARET WARNER: And that is the World Trade Organization meeting.
BRUCE STOKES: That's the World Trade Organization meeting. What the U.S. had hoped to get out of this meeting was a much more definitive call to eliminate all tariffs by the year 2000 on information technology products. That would have been very beneficial to the United States. For example, semiconductor tariffs in the Philippines or Thailand are 10 percent; ours are zero. Intel, one of our biggest companies on semiconductors, sells 30 percent of its Pentium processors to Asia. So if we could reduce to get a real commitment to reduce those to zero by the year 2000, we could have much more trade with the Asian region.
MARGARET WARNER: Now, I gathered that even this modified version it took the President's personal intervention to get that.
BRUCE STOKES: Right. The trade ministers who met late last week couldn't even come up with this agreement to have any kind of statement. So it took the President's personal intervention, and I think that's why it's important that the leaders of the region meet every year at the presidential level, because it took that kind of presidential intervention to get even this watered-down agreement.
MARGARET WARNER: But now just to be clear here, to make sure I understand, this is simply an endorsement of an idea. Let's say the World Trade Organization didn't take any action. Would these APEC members, nonetheless, be bound in any way?
BRUCE STOKES: No. You're right. Basically this is just a recommendation, and it's hoped that the trade ministers when they meet in Singapore in December can then agree around the world. And, of course, the important player who wasn't at Subic Bay were the Europeans, because the Europeans also have to agree, and they have, in general, said they would agree. There's some fight going on between the U.S. and Europe about what exactly the products would be that would be covered by this. We hopefully can overcome that. The U.S. and Europe are talking about that in Geneva even as we speak. But it would--it still requires an agreement to come in Singapore.
MARGARET WARNER: Now, who objected? Which countries were objecting at the APEC meeting and why? Who was dragging their feet?
BRUCE STOKES: There were a number of different countries who were foot-draggers. Malaysia felt that it was not necessary to set an exact date. They felt that different countries have different problems. Some are poorer than others, and they shouldn't be committed to an exact date. Korea had been a problem at one point in these discussions. A number of the less developed but rapidly industrialized countries felt that they did not want to give up the protections that their own industries gained from these tariffs too fast, and 2000 seemed very close. It's really only three or four years away. So it's one of those things where there is inherent in Asia, I think an inherent desire to protect some of these emerging industries. And we, of course, would benefit by reducing those barriers.
MARGARET WARNER: Now the other area they addressed was this goal that they agreed on two years ago to create, as we just saw on the tape, the world's largest free trade center by 2020 or 2020. Where did they stand on this project before this meeting, and then what was achieved, if anything, at this meeting?
BRUCE STOKES: Well, they had--two years ago when they met in Indonesia, they had surprisingly endorsed this concept of a free trade area, the various nations that met in Indonesia. In Japan last year, the U.S. attempted to get the Asian nations to agree to some kind of timetable. We've had this goal. We've got to step by step get there. The Asian nations, again led by Malaysia, part endorsed by Japan, said, no, that's not the way the Asians do things, we are more consensus-building, we don't believe in this legalistic American philosophy.
We'll get there. We just don't want to have to commit ourselves on a year by year basis. So we did get the Asians to agree that there'd be some kind of plans submitted at this meeting in Subic Bay, and some plans were, and action plans were submitted. Unfortunately, they're a very thin gruel. The Japanese, for example, said well, maybe we'll allow some English labeling on certain products. That's serious business. Now some countries, the Philippines, for example, did agree to a goal of reducing their average tariffs to 5 percent by the year 2004, which is a major improvement over current tariffs, but it's still not as concrete as we would like--it's still not as concrete as--
MARGARET WARNER: By "we," you mean the United States.
BRUCE STOKES: We, the U.S., or anybody who's interested in attaining this goal, and clearly there are some Asian countries who would like to attain the goal. Singapore and Hong Kong, for example, say they would like to attain the goal faster. But it is still relatively limited in its scope, and I think that the real test will be these leaders meet again in Vancouver next year, and with the harsh spotlight of all the media attention you'll get in Vancouver because it's close to the United States, I think then these leaders will be--there will be more pressure on them to put up or shut up.
MARGARET WARNER: So if you were looking at this goal of huge free trade zone by 2020 and it was a glass, and the old is it half empty or half full, it's obviously not even half full. How full is it?
BRUCE STOKES: My guess is it's probably about 10 percent full. There have been some measures taken by Asian countries in terms of very technical issues like customs harmonization and the freer movement by some businessmen in the region. All those are terribly important, but it's not enough to reach the goal of free trade in the region by 2020 at this pace.
MARGARET WARNER: And in the meantime, of course, the U.S. is running huge trade imbalances with some of these countries in Asia, correct?
BRUCE STOKES: That's right. We have--last year, we had a 59 billion dollar trade deficit with Japan, a 30 some billion dollar trade deficit with China. This year, for example, the current Chinese pace is that over the next 12 months we could run a $50 billion trade deficit with China, and China will soon surpass Japan as our most unbalanced trade relationship.
MARGARET WARNER: Explain to viewers who are not trade experts the average American would say is why does the United States let this happen?
BRUCE STOKES: I think the U.S. lets this happen for a number of reasons. One is its momentum. We've always felt we had security interests in the region during the Cold War, and we're willing to sacrifice some access to our market to maintain security in the region, maintain--keep these people in the capitalist western camp. Of course, the Cold War's over now. We cannot afford, I think, to continue to maintain such an unbalanced trading relationship. A third of our recent economic growth comes from exports. Nearly 25 percent of our job--recent job creation comes from exports. The U.S. is hooked on exports.
We need to export to the fastest growing region in the world. And unless we can see greater progress in opening those markets to U.S. exports, I think that the pressures at home here in the United States to begin to question why we keep an open market when their markets are more closed is going to grow, and that's going to be a problem.
MARGARET WARNER: Well, thanks very much. Thanks for being with us.
BRUCE STOKES: Thank you.