Housing a host of flourishing economies, the Asia-Pacific Economic Cooperation forum can serve as a laboratory to test and refine global trade negotiations.
C. Fred Bergsten is Director of the Institute for International Economics, Chairman of the Competitiveness Policy Council and Chairman of the APEC Eminent Persons Group.
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The existence of a Pacific community is an article of faith for Washington, but the Pacific nations have only embryonic regional institutions, and there are daunting security challenges in Korea and between Japan and China. Even worse, American military and economic power in the region is waning. Yet the economic opportunities here are too great for the Clinton administration to pass up. The key to continued U.S. engagement in the Pacific should be the private sector.
By the end of the decade U.S. trade and investment flows across the Pacific will be double transatlantic levels. President Clinton should use the November summit of the Asia-Pacific Economic Cooperation to galvanize American economic efforts in the Far East and to ease trade tensions.
America now faces the prospect of economic conflicts with both Europe and East Asia. The United States and the European Union have already fired the first shots of retaliatory sanctions over their ever-growing trade disputes. On the other side of the world, meanwhile, Asian countries are creating a bloc of their own that could include preferential trade arrangements and an Asian Monetary Fund. These developments could produce a tripolar world and hamper global economic integration. To avert this outcome, the United States must quell its domestic backlash against globalization and reassert its economic leadership in the world. The new Bush administration should make multilateral trade liberalization a top priority -- or it will face unpleasant economic and political consequences as the U.S. and foreign economies slow.
