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SCMP Reporter

THE United States wants the Asia-Pacific Economic Co-operation (APEC) group to become the springboard for global free trade if the Uruguay Round fails to conclude this year.

  Analysts and trade officials say the United States is gearing up to promote the regional group into a free trade zone, with tariff cuts, and will seek to bring non-members - notably Europe - on board to give it global status.

  APEC's Asian members are less keen to see the grouping take on the full mantle that the General Agreement on Tariffs and Trade has carried since World War II.

   However, half-way measures aimed at oiling the wheels of trade are likely to provide a boon to traders in Hongkong.

  These second-tier plans for boosting APEC include:    Harmonisation of standards such as measures.

   An investment code that gives minimum protection to traders against nationalisation and allows repatriation of profits.

   An effective end to dual tax bills for deals carried out between members.

   An arbitration panel dedicated to resolving trade disputes swiftly.

  According to Victor Fung, who represents Hongkong on the Eminent Persons Group - the think-tank advising the APEC forum - proposals for the future of APEC will form a central issue at the ministerial meeting in Seattle in November.

  Mr Fung said: ''This will be a very key issue at Seattle. These points will certainly be on the table.

  ''It could become very important, but in a sense I would be saddened by that because it would mean the multilateral system has not worked, if it has to fall back on APEC.''   In the US, the chances of stitching up the Uruguay Round this year are perceived as growing slimmer by the day.

   On Friday President Bill Clinton admitted he had only modest hopes that this week's summit in Tokyo of the Group of Seven industrial leaders could achieve a breakthrough.

   So more ambitious schemes are being devised around APEC.

  Mr Fung said: ''The American position may be that APEC could be turned into a free trade zone: if the Uruguay Round really fails the next best thing may be for APEC - being its next largest grouping - to be the catalyst to get the world moving again.

  ''APEC could be developed into a Pacific-Area Free Trade Agreement (PAFTA) and then encourage the rest of the countries like European ones to join, then pick up the pieces of a multilateral world system.''   APEC is also a natural choice because it includes many of the most powerful voices in world trade, including the US, Japan and China.

  Some Asian members, particularly those in the Association of Southeast Asian Nations, have baulked at the notion of an expanded role for APEC, especially if a viable safety net might take the pressure off concluding the GATT talks.

  Hongkong too is committed to seeing a successful Uruguay Round put in place.

  Mr Fung said: ''I'm a little concerned that going all the way to the creation of a free trade zone may be jumping too far and too fast. That may not be a very good way - the carrot-and-stick way - to induce the Europeans to come in.

  ''But APEC could be a very useful vehicle short of changing into PAFTA. Perhaps there is more one could use APEC for, and that all lies within the area of trade facilitation, rather than liberalisation.''   A draft agenda for APEC to be thrashed out by the 11 members of the Eminent Persons Group in Bali next month is likely to contain the proposals listed.

    Mr Fung said: ''There is a lot of circumventing to the GATT system, for example with anti-dumping rules. If we could get a resolution system that could quickly bring things to arbitration it would be more efficient.''   APEC has 15 members: Australia, Brunei, Canada, China, Hongkong, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand and the US.

   The grouping has a population of 1.9 billion and a 35 per cent slice of world trade, worth about US$2.3 trillion. Its first meeting took place in Australia in November 1989.

  Following its inclusion in the North American Free Trade Agreement (NAFTA), Mexico is expected to join APEC before South American countries such as Chile and Argentina and other Asian members, such as Vietnam.

  In contrast to the European Community, APEC is a strictly economic agreement and does not attempt to put political issues such as security or human rights on the agenda.

  Mr Fung said: ''Even if we cannot get a successful conclusion to the Uruguay round and the multilateral system really does fall into disarray, I think we should move towards liberalisation and a free trade zone in stages, moving first in facilitation, then giving more time for the world multilateral system to work. Only if that fails will we gradually move into anything resembling PAFTA.'' 



World trade leadership role touted for APEC