FOCUS-on-APEC 4 May 1996

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Recommended Citation

Walden Bello*, "FOCUS-on-APEC 4 May 1996", Aprenet, May 04, 1996, https://nautilus.org/aprenet/focus-on-apec-4-may-1996/

FOCUS on APEC

____________________________________________________________________

FOCUS-on-APEC
____________________________________________________________
A regular bulletin produced by Focus on the Global South (FOCUS)
Bangkok, Thailand

Number 4, May 1996

FOCUS was designated the NGO Information/Monitoring Center on APEC
(Asia Pacific Economic Cooperation forum) by the participants of the 1995
NGO Forum on APEC in Kyoto, Japan.  It was out of this commitment that
FOCUS-on-APEC was created.  FOCUS-on-APEC carries APEC-related
news, the latest items of interest and concern, and informed and critical
analysis from a progressive perspective -- with a broad geographical
concentration on East Asia and the Western and South Pacific.

FOCUS-on-APEC is where you can learn about other people's APEC-
related work and they can learn about yours.   Please send us your APEC-
related information (by e-mail, fax or snail-mail!)  -- including news items,
research papers, opinion pieces and information on grassroots activities
happening in your respective country.  Your contributions will be
incorporated into the bulletins.

We welcome your comments and suggestions!

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CONTENTS:
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-  REGIONAL ANALYSIS
        -  TRIPs and the Monolpolization of Technology
        -  Of Myths and Perils:  Agricultural Liberalization in the Philippines
        -  ASEAN's AFTA:  History and Recent Developments
-  REGIONAL ROUNDUP
        -  Manila People's Forum on APEC 1996 Launching Statement
-  HIGHLIGHTS
        -  Trade Liberalization & Food Security
                --  SE Asian Food Security and Fair Trade Conference
                --  Asia-Pacific FAO-NGO Meeting
-  RESOURCES
        -  Summary/Review:  IMF Paper on APEC
        -  Social Clauses paper available
        -  FOCUS' Website
-  ANNOUNCEMENTS
        -  ALARM -- A New APEC-Focused Project
        -  FOCUS-on-APEC Back Issues
____________________________________________________________
REGIONAL ANALYSIS

TRIPs and the Monopolization of Technology

by Walden Bello*
FOCUS

The economic equivalent of the threat of a massive airstrike, the
announcement of the United States Trade Representative's "Watch List" of
countries that are prime candidates for retaliatory trade measures for
allegedly violating US corporation's intellectual property rights, was
announced recently.

As expected, China was on top of the hit list as a "priority foreign country"
for "extensive piracy of intellectual property."  Eight Countries were placed
on the "priority watch list," including Japan, India, Indonesia, and Korea.
Another 26 made the "watch list," including Thailand, which was charged
with "a falling off of enforcement activity in 1995; the lack of a Trade-
Related Intellectual Property Rights [TRIPs]-consistent patent law; and the
need to ensure that deterrent penalties are imposed on convicted pirates."

Enforcing TRIPs has become the great American crusade.  And Washington
now has a powerful weapon in the form of the TRIPs Accord of the General
Agreement on Tariffs and Trade (GATT), which US intellectual property
specialists practically wrote singlehanded and rammed through the
negotiations.

The GATT TRIPs Accord provides for a minimum protection period for
patents of 20 years; increases the duration of the protection for semi-
conductors or computer chips; institutes massive retaliatory measures
against countries deemed to be violating intellectual property rights; and
places the burden of the proof on the presumed violator of process patents
in the dispute settlement process.

US Business: "Tighten Up GATT"

Yet despite such favorable provisions, American business does not think the
GATT TRIPs Accord is tight enough.  Recently, the influential President's
Advisory Committee for Trade and Negotiations (ACTPN) complained that
the transition periods for developing countries to adopt the GATT TRIPs
regime are "overly long."  The ACTPN worries that unless the US
pressures Third World countries to hurry and adopt measures to make their
intellectual property standards "GATT-compatible," the "end result could be
a de facto extension of transition periods."

The ACTPN also worries about "activities underway in the Committee on
Trade and the Environment [that] could weaken WTO member's TRIPs
obligations"--apparently a reference to efforts by developing countries to
preserve ownership over their genetic resources and prevent them from
being privatized via patents for exploitation by multinational drug firms.

The TRIPs agreement is the heart of GATT.  It also exposes the lie that the
GATT Uruguay Round is mainly about promoting "free trade."  For TRIPs
is about consolidating monopoly over advanced knowledge in the hands of
the US high tech industry by ensuring that heavy royalties will be charged
for the adoption, adaptation, and diffusion of technology by non-US
producers.  TRIPs is not about market-derived profit.  It is about that most
feudal of economic practices--the exaction of rent.

The nature of knowledge is that it tends to be universalized quickly after
pioneering inventions are made. The history of technological advance has
been largely one resulting from a cooperative social process.  When the first
societies invented settled agriculture, they had no proprietary obsession that
drove them to control their neighbors' ability to borrow their technological
revolution to better their lot. When Gutenberg invented the printing press,
he was not interested in controlling its diffusion in order to make money.
Even Henry Ford was not interested in patenting the assembly line.

But in the person of Bill Gates, who is now seen as the paragon of the US
high tech industry, we encounter a different animal.  This acknowledged
technological genius is less interested in the social benefits of his
technological innovations than in using them to amass money and power for
himself and his corporation, Microsoft.

Restricting Technological Diffusion

The relatively loose diffusion of technology has been a major factor in the
waves of industrial development that have swept the world in recent times.
The US industrialized in the 19th century by using but paying very little for
British manufacturing innovations, as did the Germans.  The Japanese
"economic miracle" was due to the widespread copying, with little
compensation, of American advances in manufacturing, process, and design
technologies. And the Koreans industrialized by copying quite liberally, but
with relatively little royalty payments, for US and Japanese designs and
processes.

Since the British Industrial Revolution, in fact, early industrialization
in the
countries that have since become industrial powers has been
industrialization-by-imitation.  The TRIPs Accord threatens to make
industrialization-by-imitation a thing of the past.  As the United Nations
Conference on Trade and Development has warned, the TRIPs regime
represents a "premature strengthening of the intellectual property
system...that favors monopolistically controlled innovation over broad-
based diffusion."

A few decades ago, the US government and US firms were less uptight
about other' unauthorized use of US technology. There were several
reasons for this.  IBM, for instance, tolerated the massive cloning of IBM
PCs by East Asian producers in order to make the PC the computer
industry's global standard, thus outmaneuvering its rival Apple
strategically.  Another reason stemmed, quite simply, from a superiority
complex: as David Halberstam pointed out in his book The Reckoning,
General Motors and Ford were quite loose in allowing the Japanese access
to their technologies in the 1950's because they never believed that Toyota
and Nissan would ever succeed in turning out vehicles that would even
remotely rival an American-made car.  A third reason was the priority
Washington placed on the Cold War alliance against Communism, which
made the Americans cast a benign glance at Japan, Korea, and Taiwan's
deviations from free-market policies as well as their unauthorized borrowing
and adaptation of American technologies.

Technological Realpolitik and GATT

The change in the Americans' attitude stemmed from several developments,
including the end of the Cold War and the rapid development of the East
Asian economies, which increasingly became perceived as economic rivals
as they built up trade surpluses with the United States.  But most important
was the realization that with the speeding up and diffusion of the
microelectronic revolution, the ability to maintain the edge in innovation in
high technology became the key determinant of both the long-term
profitability of American firms and the strategic predominance of the US in
the global economy.  And to maintain the US' strategic edge, it was
important not only to lead in innovation but also to control the rate at which
others could innovate.  To achieve the latter, it was essential to develop the
international legal and coercive framework that would allow the US
monopoly over the most advanced innovations.  Thus the GATT TRIPs
Accord, which has been a devastating setback for the natural process of the
universalization of knowledge and a giant step toward its privatization and
monopolization.

One of the likely consequences of this trend is the emergence of _rentier
capitalism_ in the high tech industry. Already, an increasing part of the
income of some US firms, like Texas Instruments, derives from royalty
payments from past innovations rather than profits based on current market
performance.

Another consequence might be a dampening of high tech innovation in
industrializing countries.  For when any company in the industrializing
countries wishes to innovate, say in chip design, software programming, or
computer assembly, it necessarily has to integrate several patented designs
and processes, most of them from US hardware and software specialists
like Intel, Microsoft, Texas Instruments, and IBM.  As Korean firms like
Samsung and Hyundai have bitterly learned from their experience of being
targetted for intellectual property violations by US government agencies,
exorbitant multiple royalty payments to what one analyst has described as
the "US high tech mafia" keeps one's profit margins low while also
reducing incentives for indigenous innovation based on the creative
integration of existing patented technologies.

"Pirates" Versus Feudal Overlords

It is true that the people that US Commerce Secretary Mickey Kantor
derisively refers to as "pirates" are out to turn a profit for themselves and
can hardly be said to be acting consciously in the service of humanity.  But,
in spite of their private motivations, "pirates" are, objectively, acting
as the
great democratization of high tech, making it available to millions of people
who would not otherwise have access to it in as an exorbitantly-priced
product.

The real obstacle to the democratization of high technology are today's
"grand seigneurs", the American high tech transnationals that, in classic
Orwellian doublespeak, are advancing their high-stakes game of techno-
monopoly in the name of defending "intellectual property rights."

*Dr. Walden Bello is co-director of Focus on the Global South, and author
of _Dragons in Distress:  Asia's Miracle Economies in Crisis_ (London:
Penguin, 1991).
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Of Myths and Perils:
Agricultural Liberalization in the Philippines
by Kevin Watkins*

We are all free traders now, or so the world's agriculture ministers would
have us believe.  Since the Uruguay Round world trade agreement, no
meeting has been complete without a liturgy on the virtues of market
principles for agricultural production and trade.  Images of a level playing
field, on which all farmers compete without the help of government
subsidies, are recited with all the evangelical fervor reminiscent of a born-
again community gripped by a vision of the promised land - in this case, a
world free of trade barriers.

The Philippines has been recently visited by the spirit of the new order.
Earlier this month, the Speaker of the House of Representatives, Jose de
Venecia, was moved to push through a tariff bill which, by removing
quantitative restrictions on imports, will accelerate the rate at which
producers are exposed to world market competition.  There was precious
little debate, perhaps because the stakes were seen as too high.  The Speaker
offered apocalyptic warnings about the threat of trade sanctions should the
Philippines fail to open its markets, contrasting this bleak prospect to the
future of rising prosperity and efficiency offered by trade liberalization.

The upshot is that farmers in the Philippines have been locked into the
global agricultural trading system.  Contrary to the view of Speaker de
Venecia, however, that system is not governed by market principles, but by
the farm policies of the European Union (EU) and the US.  These farm
superpowers continue to plough vast subsidies into their agricultural
systems, generating the surpluses which dominate international trade.
Liberalization in the Philippines will expose local farmers not to a mythical
level playing field, but to unfair competition from these surpluses.  It is
competition which, left unregulated, will destroy livelihoods on a vast scale
and leave the country increasingly dependent upon food imports.

Of course, northern governments too profess their faith in so-called free-
trade principles.  There is, however, a gulf between principle and practice.
The facts tell their own story.  Last year, the equivalent to half the value of
farm output.  This year, the European Union's spending on cereals exports
is expected to increase despite a rise in world prices and despite the
Uruguay Round agreement.  The reason: direct export subsidies have been
replaced by income transfers to farmers of the type used in the US.

The apparently arcane distinction between those two types of subsidy is
important.  Under the Uruguay Round agreement, "direct payments" to
producers of the type used in the US and, since 1992, in Europe do not
count as subsidies, even though they enable farmers to produce at far higher
levels than would otherwise be the case.  This helps to explain why the US
and the EU, unlike countries such as the Philippines, will not be required to
substantially reduce their overall level of subsidization under the new World
Trade Organization (WTO) regime.  And since, in the looking glass world
of farm policy, direct payments do not count as export subsidies, the ability
of other countries to protect their producers through anti-dumping duties
will be severely curtailed.

The inequity built into the new WTO regime defies credibility.  Currently,
each farmer in the US, the main source of cereals imports for the
Philippines, receives over $16,000 in subsidies.  To put this figure in
context, it is around thirty times the average Filipino income.

Even this situation, stark as it is, tells only part of the story.
Recently, I had
an opportunity to visit smallholder corn farmers in Mindanao.  They are
among the two million households who depend on that crop for their
livelihoods.  Most were farming around one hectare or less, working with
the most basic inputs and no capital.  The infrastructure upon which they
depend for access to markets was grossly inadequate.

During our meetings, I asked why they believed the US could export corn
to Manila at prices up to 30 percent lower than they could compete with.
Most shook their heads in disbelief, or put it down to American ingenuity.
None of them were aware that the US government provides around $5bn
annually in subsidies to its maize producers, enabling them to export at
prices which - while "unsubsidized" on the WTO definition - are far lower
than most staple food producers in developing countries can compete with.
What these producers did understand, unlike most of the legislators sitting
in Manila, was that increased competition from cheap imports would
compound their poverty, forcing many to leave the land in search of work
elsewhere.

Presumably, the Philippine government regards this prospect with relish.
After all, the medium-term agricultural plan envisages a reduction by half in
the 2.5 million hectares now planted to corn, much of which it wants to see
transferred to livestock production.  The underlying assumption, left
unstated for political reasons, is that imports will fill the gap left by
declining production.

All of which is good news for the US Department of Agriculture (USDA),
which has been systematically cultivating the Philippines as a lucrative
agricultural export market.  Two years ago, a USDA report predicted that
"In the absence of sustained investment in infrastructure......the Philippines
could become a regular corn importer by the end of the decade," and that the
US would capture a growing share of the market.  More recently, the US
embassy in Manila and the Cargill Grain Corporation has been actively
lobbying for the passage of Speaker de Venecia's tariff bill.  Thinly-veiled
threats of trade sanctions have been cleverly deployed to overcome
resistance.

As a result, corporate America can expect to make huge commercial gains in
the Philippine market.  The losers will be corn producers in Mindanao and
the Cagayan Valley.  Western and Central Mindanao are the poorest and
second poorest regions respectively in the Philippines.  The Cagayan Valley
is not far behind, with over 40% living around the poverty line.  As the
trickle of cheap corn imports turns into a flood in the years ahead, the
dampening effect on local markets will undermine household incomes, with
potentially terrifying social consequences.

The problems are not restricted to corn Since the mid-1980s, the US has
been systematically developing the Pacific Rim as a dumping outlet for its
agricultural surpluses.  The Philippines has figured prominently.  In the
early 1990s, the US was using its Export Enhancement Program to provide
$1.4 in export subsidy for every $1 worth of wheat imported, helping to
create markets for everything from wheat-based bread to pizza dough and
noodles.  Over the past decade, imports of wheat into the Philippines have
doubled to over 2 millions tons, and the country has emerged from modest
beginnings to become the US's fifteenth largest customer, spending over
$700m annually on agricultural imports.

Over the coming years, countries in the Pacific Rim can expect an
increasingly aggressive US export drive.  Market projections suggest that
two-thirds of the global increase in demand for farm exports up to 2000 will
occurring the region - and the US intends to take the lion's share.  By the
end of the decade, the USDA anticipates that export receipts will have risen
by $14bn, and that the Pacific Rim will be absorbing two-thirds of all US
farm exports.

It is not difficult to see why the US sets such great store by expanding its
commercial outlets for farm exports.  After all, the $2.3bn surplus on the
agricultural trade account plays a vital role in containing the country's
chronic trade deficit.  Moreover, agricultural trade remains a surplus item
even in US trade with southeast Asia.  There is an obvious strategic interest
in expanding that trade.

Precisely what strategic interest of countries such as the Philippines have in
following the African route to dependence on food imports is less obvious.
The warning signs are there for all to see.  Per capita production of maize
and rice have stagnated, and structural deficits in rice -  amounting to
800,000 tons over the past five years - now appear to be an accepted part of
the landscape.  Embarking on a mindlessly extravagant exercise in market
liberalization will further erode the incentive to invest in staple food
production, and expand the market for imports.

So, what is the alternative?  Part of the answer is to be found in public
investment.  Current levels of expenditure on agricultural infrastructure are
grossly inadequate, amounting to 6 percent of total government spending.
That is less than half of the ASEAN average.  Rural feeder roads are in a
dilapidated condition in most rural areas, post-storage facilities are non-
existent.  Inevitably, such conditions have the effect of excluding producers
from market opportunities.

Ultimately, however, no amount of public investment in the Philippines is
going to compensate for the effects of US and European export dumping.
That is why the Philippine government should reconsider its obligations
under the WTO, and re-think its obsession with rapid import liberalization.
Perhaps a negotiating strategy in which market access for US agricultural
imports was made contingent upon America reducing its farm subsidies to
the level of the Philippines would be a step in the right direction.

More fundamentally, in a world market dominated by subsidized exports,
there is no economic rationale for liberalizing markets and exposing
vulnerable producers to unfair competition.  The fact that the WTO
effectively permits agricultural export dumping while prohibiting the same
activity in other sectors, reflects the extent to which the pursuit of US and
EU self-interest have perverted the multilateral system.  It does not
constitute grounds for governments to impose on their citizens trade reforms
which threaten national food security.

Finally, the people of the Philippines have a right to expect that their
legislators will protect their interests, rather than pursue those of US
agricultural exporters.  Free market platitudes and legislation born of back-
room deals between the US embassy, the Cargill grains corporation and its
friends in Congress, are not the answer.  What is needed is a genuine public
debate about the future direction of Philippine agriculture, and about the
realities of the world market into which it is being integrated.

*Mr. Kevin Watkins is a senior policy adviser at OXFAM UK-Ireland and
has authored several books about structural adjustment, debt and trade
liberalization.  His most recent works include the books "Fixing the Rules:
North-South Issues in International Trade" (1992) and "The OXFAM
Poverty Report" (1995).

ASEAN's AFTA:  History and Recent Developments

by Ma. Salome Bulayog*
FOCUS

This article strives to be roadmap for the ASEAN Free Trade Area (AFTA) -
the rival - or counterpart - to APEC.   It provides the reader with some
background information and basic facts.  The article chronicles the
rationales for AFTA's conception and gives an account of its varied
implementation, including time frames for AFTA's liberalization agenda and
the scope of products within the Common Effective Preferential Tariff
(CEPT) Scheme.  It delves a bit into the country members agendas, and
highlights the issue of liberalizing agriculture.  Finally, it explores the
perceived rivalry between APEC and AFTA.

Background

ASEAN now has seven member countries: the original five members of
ASEAN are Indonesia, Malaysia, the Philippines, Singapore and Thailand;
the newest members are Vietnam and Brunei.  Cambodia, Laos and Burma
are observers, striving to become members.

The original rationale for the founding of the ASEAN in the 1960s was to
create a regional forum to accelerate economic cooperation between its
members.   However, economic cooperation in the region did not really
begin to blossom until the 1975 Summit in Bali.  Since then, it has enjoyed
a varied history.

A number of regional trading initiatives were launched in the seventies and
eighties including: the Preferential Trading Arrangements (PTA), which
aimed at a limited liberalization; the ASEAN Industrial Projects (AIP),
which sought to assign large-scale capital-intensive projects to different
countries to develop; the ASEAN Industrial Complementation Scheme
(AIC), which aimed to divide different production phases of the automobile
and other industries among member countries; and the ASEAN Industrial
Ventures (AJIV), aimed at increasing industrial production through resource
pooling and market sharing by ASEAN firms.  Behind all of these schemes
is the intention to reduce trade barriers among members while keeping them
up against non-members as an instrument to build regional industrial
capacity.  However, few of these initiatives have come to fruition due to a
lack of political commitment.  During the Cold War, ASEAN countries
focused mostly on regional political issues like the volatile situation in
Cambodia.

After the Cold War, the ASEAN countries returned to their common market
agenda.  And an extra push to reinvigorate ASEAN's regional economic
cooperation agenda came at the heels of the founding of APEC in Australia.
In 1992, during the Fourth ASEAN Summit held in Singapore, the heads of
government established the ASEAN Free Trade Area (AFTA).  Primary
objectives of AFTA include: The promotion of greater foreign direct
investment and intra-ASEAN investment, and the promotion of the ASEAN
as a competitive production base geared towards servicing the global
market.  The decision to establish the ASEAN Free Trade Area by the year
2008 was the most significant step thus far to enhance trade in the region.
Its conception was an effort to unify the ASEAN market across a wide
range of manufactured products and processed agricultural goods.  The
creation of AFTA was also motivated by the growing trend of regionalizing
trade as evidenced by the current proliferation of regional trade agreements
(i.e. EU in Europe and NAFTA in North America).

Mechanism for Implementation

AFTA is implemented through the Common Effective Preferential Tariff
(CEPT) scheme.   The CEPT scheme, which was launched January 1,
1993, covers all manufactured goods, including capital goods and
processed agricultural products.  The product coverage in the CEPT scheme
is the most comprehensive ever in any ASEAN trading arrangement.  For
instance, more than 90% of the total ASEAN tariff lines are already included
in the scheme.  In addition, more than 85% of the intra-ASEAN trade values
and about 86% of the overall trade of ASEAN member countries are
covered by the CEPT scheme (ASEAN: An Overview, 1995).

Originally, CEPT called for the reduction of tariffs on all manufactured
goods to 0-5% within fifteen years beginning January 1, 1993.   Its central
provision was the lowering of tariffs to a substantially "free-trade" level
within 15 years.  Initially,  in the Singapore Declaration of 1992, ASEAN
members identified 15 groups of products to be covered under the CEPT
scheme. They are:  Vegetable oil, cement, chemicals, pharmaceuticals,
fertilizers, plastics, rubber products, leather products, pulp, textiles,
ceramic and glass, gems and jewelry, copper cathodes, electronics, and
wooden and rattan furniture.

Time Frame Changes

During the 26th meeting of the ASEAN Economic Ministers (AEM) in
1994, all member countries agreed to shorten the time frame for the AFTA's
tariff reductions from 15 years to 10 years.  It was thought that an earlier
achievement of a liberal trading bloc would bring greater benefits to the
ASEAN countries through increased foreign trade and investments.

The most obvious outcome of the 26th AEM decision was the acceleration
of the tariff reduction program under the CEPT scheme.  Under the new
time frame, the schedule of tariff reductions for normal and fast tract
products are as follows:

        Normal Tract:

        - products with tariff rates above 20% will have their rates reduced
        to 20 % by January 1998 and subsequently from 20% to 0-5% by
        January 1,  2003.

        -  products with tariff rates at or below 20% will have their rates
        reduced to 0-5% by January 1, 2000.

        Fast Tract:

            - products with tariff rates above 20% will have their rates
reduced
        to 0-5% by January 1, 2000.

        - products with tariff rates at or below 20% will have their rates
        reduced to 0-5% in January 1, 1998.

Last year, the Sultan of Brunei proposed that the achievement of trade
liberalization in AFTA should take place by the year 2000, three years ahead
of the already revised schedule.  Some analysts say that it was Bill Clinton's
big push for the APEC free-trade agreement during the November 1993
Seattle Summit that served as the spur to ASEAN's quickening pace of trade
integration.  According to political economist Walden Bello, if the APEC
free-trade area solidifies and takes off in the direction set by the US,
AFTA's importance in the region will most certainly wane.

Unprocessed Agricultural Products (UAPs)

AFTA's impact on intra-regional trade would increase significantly if it were
to include unprocessed goods such as sugar, fish, iron, steel and petroleum
-- goods heavily traded within ASEAN.  It is for this reason that the
economic ministers during the 1994 Chiang Mai meeting agreed to include
almost all agricultural products (processed and unprocessed) in the CEPT-
AFTA Scheme.

However, incorporating all agricultural products into the CEPT scheme will
not be easy in practice.  For example, the Philippines has moved to protect
its sugar producers so liberalizing trade in sugar will be a difficult
task.  The
reality is most member countries have a large rural population that depends
on farm production, and in the past strong protection has been extended to
this sector.  Immediate lifting of this protection is bound to create
significant
adjustment costs which can lead to unemployment of resources and social
disruption.

To implement the UAP decision, member countries decided to group
unprocessed agricultural products into 3 lists:  (a) Immediate Inclusion list;
(b) Temporary Exclusion list and (c) Sensitive list.  Goods are deemed
sensitive if imports carrying relatively low tariffs will damage domestic
production of the same items.

The listing of products under these different groups has caused rifts among
member countries.  For instance, Malaysia included 1,200 items of timber
and tobacco products on the Sensitive list and encountered opposition from
Thailand(Bangkok Post, July 17, 1995).

At the September 1995 ASEAN meeting, the deadline for tariff reductions
set for 2003 became less clear.   Member countries agreed to keep 2,528
items of agricultural goods in the non-processed category.  As agreed in the
sixth AFTA Council meeting in Phuket in April 1995, a special arrangement
will be created for the products on the Sensitive list.  This is with the
understanding that the features of the special arrangement need not be the
same as the arrangements in the CEPT scheme. This means that the time
frame maybe longer than 2003 and tariff rates will not be required to be
reduced to the 0-5% range as set in the CEPT.

Rivalry Between AFTA and APEC

Undoubtedly, one of the main reasons for the acceleration of AFTAs time
frame was the conception of APEC and the momentum behind it.  Recent
statements to APEC members by the US head of APEC's Eminent Persons
Group Fred Bergsten are more than a cause for concern for ASEAN.
Bergsten called on APEC members to cut their original tariff reduction
commitments under GATT and halve the period during which the cuts will
be made.  Bergsten went on to proclaim that permission should be secured
from APEC and the WTO before any sub-regional economic grouping in
East Asia is allowed to pursue further integration -- e.g. AFTA.   In
response to Bergsten's statements, a  commentator from the Singapore
Business Times stated that  "APEC is a voluntary and non-binding
agreement among Asia-Pacific States, why should it have the right to veto
any proposal from a formally constituted body?"  Indeed, Bergsten's thinly
veiled threats could lead him into trouble with the ASEAN members of
APEC.

Should AFTA be extended to APEC, NAFTA and the WTO?

It seems Manila is in favor of extending AFTA to APEC and the WTO.  At a
conference this year on Asian Economies in Hong Kong, Philippine
Finance Minister Jesus Estanislao proposed that ASEAN Free Trade Area
concessions be offered to other groupings (Asiaweek, May 17, 1996).  The
Thai delegate to the APEC's Eminent Persons Group agreed that it would be
a good idea to extend AFTA to the other regional/global trade agreements.
Thai Deputy Prime Minister Amnuay Viravan also called for a link between
three regional groupings: APEC, NAFTA and EU.   He said that a complete
link would create unlimited opportunities.  However, Malaysia is unsure
about offering concessions without demanding anything from the other
countries.  Although Mahatir would most likely have stronger words,
economist Ghazali Atan stated, "I do not know if it's strategic"(The Nation,
March 5, 1996).

Conclusion

The fate and direction of APEC and AFTA are still uncertain; it remains
unclear if APEC will succeed in overshadowing AFTA.  But one thing is
apparent:  The fate of these regional trading forums should not only rest
with the unfolding official negotiations and debates, but with research and
activism concerned with the undemocratic processes which bore them and
their potentially socially destructive natures.

*Ma. Salome Bulayog is a research associate at FOCUS on the Global
South, Bangkok.

____________________________________________________________
REGIONAL ROUNDUP

The Manila People's Forum on APEC 1996
25 April 1996 Launching Statement

Across the 18 countries that make up the Asia-Pacific Economic
Cooperation (APEC), this regional forum -- which aims to dramatically
accelerate full trade and investment liberalization -- is being peddled by
governments as an ideal arrangement that will enhance the prosperity of
people in the region.

But we who have been observing the APEC processes, who have long been
advocating the interests of various communities in the Asia-Pacific region,
contend that there is more to APEC than this.  As we sated in our last
gathering in Kyoto, parallel to the 1995 APEC Summit in Japan, the basic
framework embraced by the APEC agenda -- which privileges economic
growth through unrestricted trade and investment -- does not lead to equity
nor freedom.  Our experiences with liberalization have shown that the
indiscriminate, unregulated economy it advocates imposes irreversible social
and ecological costs.

We who belong to various people's movements in the Asia Pacific region
believe that the drive for economic growth should be tempered by a strong
regard for people's rights and interest.  We also believe that communities
and sectors must be privy and party to any far-reaching economic decisions
whose costs will be borne by them.  Thus, when the leaders of 18 member-
countries of the APEC meet here in the Philippines in November to submit
their specific plans for trade and investment liberalization, they shall be met
by some 300 delegates from NGOs and people's organizations across the
region who will hold their own parallel gathering and assert the inclusion of
people's concerns and proposals into the APEC Summit's agenda.

APEC has always held a tradition of unaccountability and lack of
transparency.  While the ministerial meetings and leaders' summits often
become photo opportunities for the member-countries' heads of state, the
real essence of the APEC agenda is hammered out behind the scenes by
private sector consultants, technocrats and liberalization lobbyists.  And
because the APEC touts itself as an alliance of economies -- implicitly
outside the framework of national governments -- it has become very
difficult to monitor and hold to account.  In this sense, APEC allows
governments to abdicate their responsibilities to communities who bear the
costs of economic liberalization, leaving them at the mercy of transnational
corporations and international financial institutions who are accountable to
no one.

The Manila People's Forum on APEC 1996 will strive to be a venue where
people can assert their right to chart their countries' and communities' pace
and course of development.  While we recognize the need for trade,
cooperation and economic growth, such growth must never be at the
expense of people's rights, community solidarity, and ecological
sustainablility.  The pursuit of development must always place the needs of
people and nature at its core.

We therefore urge governments who are members of APEC to ensure
effective people's participation in decision-making, to privilege their
people's interests, and to practice transparency and accountability in all
aspects of trade and investment negotiations.  We also call for regional
cooperation that genuinely promotes socially and ecologically sustainable
development.  These are the principles upheld in the Kyoto parallel summit,
and which we shall continue to assert as we launch the Manila People's
Forum on APEC 1996.

Contact information:  Manila People's Forum on APEC 1996, Rm. 209
PSSC Bldg., Commonwealth Ave., Diliman, Quezon City, Philippines,
Tels: 632 929 6211, 922 9621, Fax: 632 924 3767.

____________________________________________________________
HIGHLIGHTS

Trade Liberalization & Food Security

The current global trend of rapid trade liberalization of agriculture
necessitates an urgent and sustained response to ensure a secure and
democratic food production and distribution system.  In February 1996,
over 100 representatives of NGOs participated in the Southeast Asian NGO
Conference on Food Security and Fair Trade in Manila, hosted by MODE
(conference papers may soon be available through the FOCUS website).
The three-day conference bore a Southeast Asian Liaison Committee on
Food Security and Fair Trade.  The Liaison Committee was createdto
conduct research, to network and to do advocacy work on the issue of
regional trade liberalization and its impact on food security.  The Secretariat
is currently based at the MODE office and will move to the FOCUS office
by December 1996.

Contact information:  Southeast Asian Liaison Committee on Food Security
and Fair Trade Secretariat (until November 1996): c/o MODE, Unit 1102
Goldloop Towers 1, Amber Ave., Pasig City, Philippines, Tel: 632 633
8589, Fax: 632 633 5191, E-mail: <mode@phil.gn.apc.org>
............................................................................
..............

On April 29-30, 1996 more than 100 representatives of NGOs participated
in the Asia-Pacific FAO-NGO Meeting in Bangkok in preparation for the
World Food Summit later this year.  The meeting served as regional input
into the World Food Summit.  Organizations such as ANGOC will be in
close contact with the FAO to ensure Asian farmer's groups, NGOs and
people's organizations concerns are brought to the Summit.

Below are the Preamble and Conclusion to the "Proposed Draft Declaration
of the Asia-Pacific NGO Meeting in Preparation for the World Food
Summit"

Preamble:

During the last two decades we have witnessed governments from both
North and South come together in the United Nations and other international
forums to make solemn commitments to advance, among others, sustainable
development and food security.  These commitments were made with
knowledge that there is more than enough food to feed the world's peoples.
However, more than 20 years after the First World Food Conference,
where it was declared that the elimination of hunger was just a few years
away, there are more hungry people, there are more poor farmers, and
agriculture is in a worse state.

The current crisis of agriculture and farming communities throughout the
South stems from the exacerbation of existing poverty and inequity by three
major trends:
        first, the promotion of Green Revolution technology without regard
for its social and ecological consequences;
        second, the submission of agriculture and farming communities to
strategies aimed at rapid urban industrialization;
        third, the dissolution of small farming households owing to
indiscriminate liberalization policies allowing the entry and dominance of
extremely powerful multinational agribusiness.

While there have been local initiatives in sustainable smallholder and
community-based agriculture, these have been relatively few in number and
overwhelmed by these larger forces.  Unless appropriate strategies are
devised and immediately implemented, our farming communities face
extinction and food security will become a permanent condition for all.

Democratic control of the food system is the ultimate test of democracy.
Food security cannot be ensured by entrusting agriculture, food production
and trade to global markets.  Land, water, biodiversity, traditional and
intellectual practices, which are the vital resources that make food security
possible, should stay under the democratic control of those who produce the
food and local communities themselves, with special emphasis on
establishing mechanisms to ensure the participation of women at all levels of
the decision-making process.

Therefore, a new social contract needs to be established among Asian
farmers, Asian peoples and Asian governments.  This social contract must:
        be people-derived, people-led, and people-managed;
        be based on a vision that places the integrity of local farming
communities and food security of the national community at the center;
        be implemented via strategies that promote social equity, gender
balance, people's empowerment, ecological sustainablity;
        include policies aimed at immediately countering the negative impact
of forces and institutions that promote food insecurity, namely the WTO,
the GATT Agricultural Accord and international financial institutions.

Immediate Measures (Conclusion):

Immediate measures must be taken to prevent the further erosion of food
security.  In this connection, we further demand that Asia-Pacific
governments firmly oppose the indiscriminate and binding liberalization
initiatives being proposed by some governments in the Asia-Pacific
Economic Cooperation (APEC).

We urge a halt to the coercive, unilateral trade initiatives employed by some
powerful governments to undermine the food security of more vulnerable
countries.

We also wish to express our concern that the FAO's progressive views on
food security are increasingly undermined by the organization's acceptance
of the emphasis on indiscriminate trade liberalization promoted by the World
Trade Organization.  We caution the FAO to resist this colonization; and we
urge the FAO instead to listen to the rising and increasingly organized
voices of the poor and marginalized.

While critical of the FAO documents and many of the practices of the FAO,
we in the NGO's nevertheless welcome its effort to consult the NGO
community and people's organizations in the process leading up to the
World Food Summit.  We ask the FAO to cast its lot with the poor and the
marginalized communities of farmers, fisherfolk, and forest dwellers in an
expression of faith on the possibility of change.  With such a partnership,
we can turn the World Food Summit from an event legitimizing the
corporate subjugation of the countryside and destruction of food security
into a historic opportunity to reverse the erosion of food security and the
degradation of agriculture.

Contact:  ANGOC <angoc@econet.apc.org>
____________________________________________________________
RESOURCES

Summary/Review:  "Captial Flows in the APEC Region", an IMF Working
Paper

by John Gershman
Institute for Development Resesarch, USA

This IMF Working Paper contains three essays and about 15 pages of charts
relating to capital flows in the APEC region. These papers were prepared by
IMF staff in response to requests made by the APEC Ministers of Finance,
and presented at APEC Finance Ministers meetings in 1994. The papers
were not updated to draw lessons from or evaluate the Mexican collapse. As
an occasional paper, it does not necessarily reflect the views of the IMF.

The chapters cover portfolio flows to developing country APEC members,
macroeconomic management issues raised by capital inflows, and the
effects of capital flows on domestic financial sectors in APEC developing
coutries.The appendices provide a wealth of data on types of capital flows
to and among APEC member countries.

Shogo Ishii and Steven Dunaway's chapter on "Portfolio Capital Flows to
the Developing Country members of APEC" describes the shift in importance
from syndicated bank loans to portfolio investment as the fastest growing
form of capital flows from North to South. In 1993, the developing country
members of APEC received about 85% of all capital flows to developing
countries. There is a notable contrast between the Latin American
developing country APEC members (Chile and Mexico) and the Asian
developing country APEC members in terms of the relative weight of
portfolio investment as a percentage of overall capital inflows, versus direct
foriegn investment. Another notable developent has been the rise of Taiwan
and South Korea as investors in the region.

In "Macroeconomic Management in APEC Economies" The Response to
Capital Inflows" Mohsin Khan and Carmen Reinhart survey the
macroeconomic responses to capital inflows, with a focus on Asian
countries and economies and occasional comparisons with Latin America.
They note similarities in the magnitude of swings in the capital accounts,
heavy intervention by monteray authorities, increases in stock and asset
prices, an acceleration in economic growth and an increase in private bond
and equity financing.

They do note a significant difference between Latin American and Asia
developing APEC member countries. Capital inflows in Latin America are
associated with significant real exchange rate appreciations; such
appreciations are less common in Asia. They identify several possible
explanations for this difference: nature of aggregate demand, nature of
public sector consumption; different import profiles, with greater import
of capital goods in Asia, and imports for direct consumption in Latin
America, and more effective 'sterilization ' of capital flows by central
banks in Asia than in Latin America. They do not try to explain why these
countries pursued these different policies, and why 'sterilization' was
more effective in Asia than Latin America, for example.

They also examine the extent to which internal or external factors are
driving these capital flows, and argue that domestic factors alone "cannot
explain why capital inflows have also occurred in countries that have not
taken reforms and have not stabilized, or why they did ot occur in
countries where reforms were introduced well before 1990."(p.25)

In the third chapter David Folkerts-Landau et al  explore the impacts of
capital flows on banking systems and capital markets of APEC developing
countries. Significantly, they acknowledge that "the distinction between
long-term international portfolio investment and short-term "hot money" is
no longer helpful." (p. 32) They evaluate challenges posed by capital
inflows for the operation of the banking sector and newly-integrated
capital markets, as well as regulatory obstacles. They highlight the
volatilty of portfolio investment as a major challenge for policymakers.

A common theme to all the papers is how good regulation is essential to
make markets work, and how effectively calibrated state intervention is
essential both to create markets and to 'make markets work.' But as with
most IMF papers, the political economy side is missing, which would
evaluate why certain countries were more able to weather the aftermath of
the Mexico collapse for example, or forstall such a crisis in the first
place. The 'logic of integration' is never challenged; rather it is
presented as a technical policy question (e.g., timing and sequence of
integration).

Mohsin S. Khan and Carmen M. Reinhart (eds) Capital Flows in the APEC
Region (Washngton, D.C.: IMF, March 1995).
----------------------------------------------------------------------------
--------------

New Paper on Trade Agreements and Social Clauses!

The Labor Studies Department at the University of Adelaide is about to
publish a collection of articles on trading agreements, social impacts and
social clauses, including APEC and NAFTA.  For copies, contact Ray
Broomhill: <rbroomhi@arts.adeaide.edu.au>
----------------------------------------------------------------------------

FOCUS Website!  URL:  http://www.nautilus.org/focusweb

Visit the FOCUS website for more general information and find more
APEC-related information and internet links.
____________________________________________________________
ANNOUNCEMENTS

ALARM -- A New APEC-Focused Project

The APEC Labor Rights Monitor (ALARM) project was launched in April
1996.  ALARM aims to monitor and disseminate information on labor
rights, issues and actions in Asia and Pacific rim countries, with emphasis
on the APEC countries.  Its main tasks are: to gather, monitor, analyze,
disseminate and publish information about the status of workers and labor
rights in the APEC region for lobbying, advocacy and networking
purposes; to campaign, organize, and do education work; to help develop
lobby and agenda papers for ALARM partners for the 1996 and 1997
parallel APEC forums; to help build workers' solidarity and networking by
serving as (a) a channel for "action alerts" and "solidarity appeals"; and
(b) a
general communication post among the groups involved in the project.

For more information, contact: ALARM Secretariat, c/o Asian Migrant
Centre, 4 Jordan Road, Kowloon, Hong Kong, Tel:  852 2312 0031, Fax:
852 2992 0111, E-mail: <alarm@hk.super.net>
----------------------------------------------------------------------------

Back issues of FOCUS-on-APEC

FOCUS-on-APEC is archived on the Nautilus Institute's electronic archive 
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subdirectory.

To receive back issues of the bulletin via e-mail, please e-mail:
<focus@ksc9.th.com> and request the issues desired. We are working on
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address for receiving back issues. . . stay tuned!

Hard Copy versions are available upon request.  However, due to our
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people/groups, so we kindly ask you to print this out and regular mail
it to interested people/groups in your country who/that do not have
access to e-mail.  Thank you.
____________________________________________________________
FOCUS-on-APEC is produced by Focus on the Global South (FOCUS).
Edited by Shea Cunningham.  Contact information: c/o CUSRI,
Chulalongkorn University, Bangkok 10330 Thailand.  Tel: (66 2) 218
7363/7364/7365, Fax: (66 2) 255 9976, E-Mail:  focus@ksc9.th.com,
Website: http://www.nautilus.org/focusweb


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