APEC as Seen from the Eyes of a Japanese Economist

         
Author Name Ryutaro Komiya
Creation Date/NO. July 1996 96-DOF-24
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Abstract

The Japanese trade policy authorities showed great enthusiasm toward the formation and growth of APEC. Viewed from Japan's perspective, since the second half of the 1980s there have been two worrying developments in the world trade system. First, the Uruguay Round did not progress smoothly, and second, regionalism, which included elements running contrary to globalism, was spreading. The ASEAN countries, Australia, Japan, and South Korea hoped for the maintenance and development of a free, multilateral world trade system, as well as for keeping the EU and North America as open as possible. APEC was also expected to strengthen the negotiating power of the West Pacific countries vis-a-vis the U.S. and the EU.

The APEC countries agreed to liberalize trade and investment by 2010 or 2020, but the meaning is not clear. I see difficulties with either of the two approaches to promote the liberalization of trade and investment in APEC: an MFN approach and a reciprocity approach. Most East Asian countries, at least at present, are not in favor of the second approach, which implies the formation of a free trade area. Whereas the U.S. is negative toward an MFN approach, which allows the EU a free ride on the APEC liberalization wagon.

The heat of Japan-U.S. trade "friction" has declined substantially, and this trend will more or less continue. There is widespread acceptance of the concept that Japan has very high trade barriers, but it is a mistaken view.

Will the Japanese government include agricultural products among the targets for free trade? In Japan, "agricultural prefectures" are relatively poor and economically stagnant, but politically influential. Japan's protective agricultural policies will more or less continue for the time being. Because the majority of the Japanese people support free trade, however, Japan's trade barriers relating to agricultural products are unlikely to become higher than at present. Japan is now the world's largest importer of foodstuffs, and the value of its food imports doubled in sevenyears from 1987 to 1994. Since Japan's agricultural production is expected to stagnate or decrease in the future, its food imports will probably expand steadily in the future.

APEC has so far been a great success. The evaluation of APEC in the next several years will depend on how much progress is made in terms of liberalization and facilitation of trade and investment and economic cooperation among members.