IN a profession which prizes constructive ambiguity, Japanese diplomats are now international grandmasters of the fudged phrase. As hosts of this year's Asia Pacific Economic Co-operation forum (APEC) summit, they put their skills to clever use. The judicious insertion of a single word in a controversial text defused rows between Washington and Beijing over China's Most Favoured Nation (MFN) trading status and between Northeast Asian rice producers and Australian and American competitors on the speed of agricultural deregulation. Malaysia was able to insist on the word 'voluntary' to describe APEC's commitment to meet free trade goals by the year 2010 in the case of developed countries and 2020 for developing nations. But if everything is now 'flexible' and 'voluntary', and the US need only 'endeavour' not to discriminate against China over MFN, just what has the Osaka meeting really achieved? More, in fact, than these hedging formulas might suggest. Malaysia's move, in particular, may have given countries the get-out they need to avoid lowering tariffs on particularly sensitive goods 15 or 25 years from now. But there was little other than moral force to stop them doing that. APEC nations, including some of notorious mercantilists, are coming forward with tariff-cutting packages as 'down payments' for future liberalisation. China, with its sights set on entry to the World Trade Organisation (WTO), was yesterday promising tariff cuts and an accelerated timetable for the full convertibility of the Yuan. The conference has drawn a free trade framework, rather than setting commitments in stone. How things work in practice will depend more on the way Asian economies - particularly China's - develop than on communiques agreed by government leaders. Given the fizzy nature of Asia's economies, there will be plenty of bumpy passages on the road to free trade as countries seek to consolidate individual positions and exploit market openings. Bilateral accommodations will cut across broader agreements. There will be quick fixes when individual countries run into inflationary or balance of payments problems. Strong leadership will be needed on APEC's part. That is the normal change of international economic reality, and does not obscure the progress made this week. But there are some questions about APEC, itself, which need to be addressed. To begin with, is the organisation turning into a huge body to promote intra-regional multilateralism while maintaining high tariffs for imports from the rest of the globe? Will its success thus end up introducing protectionism of far wider dimensions? Malaysia's preference for an East Asian Economic Caucus which excludes the non-Asian members of US-dominated APEC could seal Asia off from the North American Free Trade area and the European Union. Already, APEC excludes fast growing economies of South Asia, particularly India, for whom the region is a natural trading partner. Formally shutting them out by putting up protective walls around a Pacific Rim free-trade area would be damaging to all. There is neither economic nor strategic logic to a trade bloc which includes Chile and South Korea, but excludes the Indian sub-continent. APEC members are linked by the geographical accident of being perched on the edge of an ocean. Politically, economically and culturally, some have more ties with Europe or South Asia or the Middle-East than with each other. Freer trade between them is valuable, but formalising the Pacific Rim into an exclusive bloc would be counter-productive. Nor is there much to be said at this stage for the suggestion by US Defence Secretary William Perry that APEC be expanded into a security alliance. An alliance which included the US, China and Japan would be hard to build into any permanent structure. Such nations may have common interests on which they can co-operate - but an alliance as envisaged by Mr Perry would not usher in Pax Asiana. What might be worth examination is a looser security co-operation forum, not unlike the Conference on Security Co-operation in Europe which did provide an arena for the Cold War antagonists and Europe's neutral nations to examine ways of diffusing tensions. Perhaps APEC could develop some similar function - preferably without providing a soap box for attacks on other nations' political systems. It is a role already performed to some extent by the Association of Southeast Asian Nations, but one which would be well worth expanding to the rest of the Pacific Rim as APEC looks to its future after Osaka.