Testing the Waters

By Richard Lacayo

John Hay, Theodore Roosevelt's Secretary of State, once called the Pacific the "ocean of the future." Bill Clinton hopes the future starts this week. Just two days after Congress votes up or down on NAFTA, the President plans to meet in Seattle with leaders from 14 other Pacific Rim nations. With an expanding middle class and huge construction projects ranging from airports to mass-transit systems, the booming region should be in a spending mood for years to come. The Seattle gathering is a significant step in White House efforts to widen the pipeline for American exports to Asia, which is already the fastest-growing destination of U.S products and services.

This week's summit is actually a meeting of the Asia-Pacific Economic Cooperation forum, a four-year-old association of 11 Asian nations and the U.S., Canada, Australia and New Zealand. At this point, it amounts to little more than a trade-issues study group. Though Washington has avoided taking any position on the matter for now, the U.S. might eventually prefer to see APEC become a mechanism to bind Pacific Rim nations into a NAFTA-style trade family, especially in the face of sentiment building among some Asian nations in favor of regional trade arrangements that exclude the U.S. "The U.S. has at long last started to look seriously at its trade interests in the Pacific," says Kwon Byong Hyon, South Korea's Assistant Foreign Minister for Policy Planning.

Washington's flirtation with Asia is also designed to make Europe jealous. U.S. trade across the Pacific is already 50% greater than its transatlantic counterpart, a sizable change from 1980, when the figures were about equal. The European Community knows that APEC could provide the U.S. with a consortium to fall back on in the event of a breakdown in current negotiations over the 111-nation General Agreement on Tariffs and Trade, which aims to reduce trade barriers throughout the world. As a Dec. 15 deadline approaches, those talks have bogged down on several issues, especially the European Community's insistence on renegotiating an agriculture accord that is a sticking point for France in particular. Writing in the Financial Times, U.S. Trade Representative Mickey Kantor recently warned that if Europe balks, "U.S. trade will continue to expand with Asia and Latin America, and Europe will be left out."

Should Washington ever try to push APEC toward becoming an Asian NAFTA, the task will not be easy. Less developed Pacific nations are averse to any trade pact that might compel them to lower tariffs protecting fledgling industries. If Clinton shows up in Seattle without a win on NAFTA, Asian nations will also be under less pressure to deal; one reason for them even to consider a Pacific Rim trade group is to ensure themselves a defensive base in the event that GATT should fail or NAFTA take a protectionist turn. Thus the White House has been playing down this week's gathering as merely a gesture in favor of more regional cooperation. "The meeting is the message," says Robert Rubin, director of the National Economic Council. In trade matters, it seems, complexity is a commodity that's always in surplus.

With reporting by Edward W. Desmond/Tokyo and Adam Zagorin/Washington