By Marco Mezzera
; The U.S. administration, or any other free-marketeer within APEC, that originally took the lead in pushing for an even faster track towards total liberalization, might regret by now the tricky choice of words made in the specific case of the Early Voluntary Sector Liberalisation or EVSL. Although the original intention was to abide by one of the pillars of the decision making process of APEC, which is the voluntary and non-binding principle, the strict interpretation of “voluntarism” suggests that other words could have been of better use for the supporters of liberalization.In fact, the philosophical definition of the word voluntarism refers to “any theory that regards the will rather than the intellect as the fundamental agency or principle”. Which, in other words and in the specific case of the EVSL, hints: the discussion about early liberalization of nine specific sectors is essentially based on an irrational, brute behavioural basis, that leaves unsophisticated will to take over the decision making responsibilities. Having said this, it should not, therefore, appear bizarre that the negotiations taking place during the Senior Officials Meeting (SOM) and the following ministerial meetings at the APEC Summit in Kuala Lumpur, November 1998, revealed and brought out clear conflicting behaviours among the involved parties, and more specifically between Japan and the U.S.

Although the tones of the discussions were eventually smoother over, due to an ingenious implementation of diplomatic and conflict solving skills, USA Trade Representative Charlene Barshefsky's words during a ministerial dinner and panel, echoed by Kaoru Yosanu, Minister of International Trade and Industry of Japan, assessing the will to “push ahead on APEC's EVSL initiative”, could hardly conceal the harshness of the battle of the previous days, when she was reported shouting in the direction of the Japanese delegation words of frustration and disapproval. What indeed appeared clear in this situation and from her words, is that once again, the U.S. irrefutably presented itself as the prime mover behind the thrust towards trade and financial liberalization. Barshefsky's self congratulating speech, praising U.S. commitment “to remain true to their open market principles” and to having kept their borders “open despite the trade deficit of this year is likely to approach US $ 240 billion and US $ 300 plus next year”, do not conceal the real reasons motivating the U.S. administration to run after fast track liberalization. It is precisely because of, and not despite, its huge and growing trade deficit that the U.S. economy is trying very hard to unhinge the last protectionist barriers still holding on in some of the APEC economies. As Trade Representative Barshefsky clearly pointed out, the U.S. is conscious that “at this point, (we) are not the economy of first resort, not the economy of last resort, (we) are virtually the economy of only resort,” and the US is definitely going to do whatever it needs to in order to protect and foster its economic interests in the region.

Amid the thick fog of non-decisions taken during the Malaysian '98 APEC Summit, there is at least one sure result: further discussions about the EVSL are postponed to the WTO arena, in the year 2000. This

result has been presented by the official sources as one of the many successes to be remembered in the future history of APEC, a measure of the overall successful trajectory of the economic forum. But little doubt exists that instead, it signals another surrender to the seemingly impossible task to create cohesion and a sense of direction for this heterogeneous group of economies, loosely bound by free adherence and voluntary commitment by all the members. In this sense, a more coercive arena like that of the WTO, will definitely reduce the chances to end up in similar shipwrecks.

Barshefsky's version of the matter was, again, a curious one. According to her, the 16 ministers (of the 16 member economies participating in the EVSL) were very pleased, including Japan, to have agreed to fill and improve on what they had accomplished in so far: “… to bring these 9 sectors and the package to the WTO … so that we can broaden the initiative … and reach agreement on a more multilateral basis in 1999”. Even the conclusive declaration of the APEC's leaders spoke of a welcome “progress achieved on the EVSL package of nine sectors,” because it demonstrated their “commitment to the liberalization process amidst the financial crisis in the region.” Joining this hallelujah chorus came also the statement released by John F. Smith Jr., chairman and president of General Motors Corporation, during a CEO roundtable organized at the APEC Business Summit. Mr. Smith, also co-chair of the APEC Advisory Business Council (ABAC) Task Force on EVSL, said in fact that, although tariff issues were not going to be finalised at the summit, the agreement marked “an important step in the process of liberalising trade” and once again positioned “APEC as a catalyst for trade liberalization”.

EVSL has been out of tune from the beginning

The other side of the story discloses however, a far less harmonious negotiating process and sombre perspectives in terms of the goals stated before the Malaysian Summit. The EVSL initiative has in fact been controversial and met with resistance since its beginning at the 1997 Vancouver meeting. On that occasion, two of the eighteen member economies (Mexico and Chile) decided voluntarily not to take part in the EVSL program. They therefore, immediately undermined one of the three key principles upheld by ABAC, meant to ensure a successful implementation of the EVSL: that of the credibility of the initiative, with all APEC member economies endorsing each of the work plans. Furthermore, while the initial EVSL agreement – to liberalise before the agreed goal of 2010 for industrialised economies and 2020 for developing economies – included 15 sectors (environmental goods and services, fish and fish products, toys, forest products, gems and jewellery, chemicals, energy, medical equipment and instruments, telecommunication mutual recognition agreement – MRA-, oilseeds and oilseed products, food, natural and synthetic rubber, fertilisers, automotive, and civil aircraft), only the first 9 were eventually identified for a fast-tracked finalisation by the end of 1999. The remaining 6 had to be left out for “further development and action”.

The process came across other setbacks during the Trade Ministers meeting in Kuching in June 1998 when, although the MRA was approved, according to the words of the current ABAC Chair, Mr. Tajudin Ramli, “EVSL was seriously challenged … by some economies that do not want to participate in the trade liberalization initiatives for certain sectors.” Mr. Ramli was almost certainly referring to Japan's resistance to further liberalisation of the fisheries and forestry sectors. That resistance caused an early crack in the compact EVSL front by admitting some space for concessions, only when “absolutely needed,” “in the form of staging for cutting tariffs, and not opting out of sectors or product coverage”.

The crack has been further widened during the last 1998 APEC Summit, when Japan chose to defer any substantial decision on tariff and non-tariff measures in the two disputed sectors to the 2000 WTO talks. Japan tried to minimise the magnitude of the dispute by emphasising the fact that after all, it was still “fully participating” in the negotiations about the other 25 measures. The overall EVSL fast-track package includes the previously mentioned 9 sectors, and these 9 sectors contain 3 measures, bringing therefore the total amount of scheduled measures to 27. The 3 measures are divided into:

1. Tariff and non-tariff measures (regarding essentially tariff cuts measures; point of stalling of the negotiations with Japan). 2. Trade facilitation measures (in terms of procedures and regulations). 3. Economic and technical cooperation measures (responding to the so called ECOTECH agenda and focused on capacity-building and on the involvement of business sector in APEC's activities).

Japan defended its position by reminding that it is the world's largest net importer of both forestry products and fisheries products. Eighty per cent of Japanese consumption in forestry products and forty per cent in fisheries products is imported. Besides, the trade-weighted tariff rate of forestry products in Japan, as it was reduced under the Uruguay Round, is 1,7%, which is quite low if compared with those of most of the other APEC's member economies and certainly lower than that of the U.S.

All these arguments, and the appeals to understand the political sensitivity of the two sectors for the Japanese society, however, could not spare Japan the frontal attacks made by the U.S. delegation during the ministerial meetings in Kuala Lumpur. In particular, allegations were made that Japan was trying to use the US$ 30 billion assistance package, going under the name of the Miyazawa Initiative, to try to buy support from countries in the region and persuade them to back off from their trade liberalization commitments and specifically from the EVSL program. U.S. Trade Representative Barshefsky was even reported by the press as saying that Japan was “actively discouraging countries from liberalising,” which was “terribly disturbing and destructive.” Japan's stance vis-เ-vis the dispute remained unchanged and at a press briefing, after rejecting Ms. Barshefsky's words as “groundless accusations and defamation” the spokesperson for the Japanese Minister of Foreign Affairs stressed Japan's compliance with the principle of voluntarism and confirmed its consideration of the WTO as “an appropriate, perhaps the most appropriate, setting to negotiate this kind of things in a comprehensive manner.”

At this point the question rises whether a combination of sound rational exercises would have resulted in a more ( at least for the U.S. camp) satisfying resolution or compromise on the EVSL? The answer is probably yes. However, the predominance of will above intellect has in this case guaranteed a non-solution of the conflict that will protect, at least from the time being, certain social groups and traditions from homogenising global tendencies.

* Marco Mezzera is a research associate at focus on the Global South in Bangkok.