President Bill Clinton must address the
Asia-Pacific region's pressing economic and security challenges
when he travels to Asia later this month. In the wake of their most
serious economic crisis since World War II, Asian countries need
strong encouragement to implement market-opening economic reforms,
and America's allies in Northeast and Southeast Asia need to be
reassured that the United States will remain vigilant in the face
of new threats from North Korea and China.
Summit. APEC must prove that it can create greater free trade
throughout Asia. But leadership is needed also to refocus its
efforts on reforms based on free-market principles and policies.
President Clinton should press Asian leaders to strengthen
free-market reforms in order to address the economic crisis that is
causing great suffering across the region. This crisis, which began
when insufficient free-market reform in their financial and banking
sectors caused a decline in investor confidence, caused currency
values to fall and led to hard recessions in many Asian countries.
Specifically, at the APEC Leaders' Meeting in Malaysia on November
17 and 18, President Clinton should:
Urge APEC countries to
rely more on free-market reforms and less on aid from the
International Monetary Fund to revive their economies. Asian
leaders should increase banking sector transparency, allow bad
banks to close, and strengthen free trade.
Urge APEC to adopt a
more results-oriented approach to trade liberalization. If APEC
does not change its non-binding approach and start insisting on
real commitments to open trade and investment, its efforts to
create a free trade zone by 2020 are likely to fail, and the United
States will be forced to focus on the World Trade Organization
(WTO) to achieve trade and investment liberalization.
Warn Asian leaders
that any retreat from reforms that increase economic freedom, such
as Malaysia's actions barring foreign currency trading, only delay
Endorse a millennium
round for the WTO in 2000 to lower trade barriers. The Clinton
Administration has been reluctant to do this.
President Clinton's visit to Tokyo on November 19 and 20
will test his ability to demonstrate America's concern about
threats to Japan's economic and military security. Japan has been
unable to revive its economy, which could contract over 2 percent
this year and continue contracting next year. It also faces a
growing missile threat from North Korea. China is building new
cruise missiles and anti-satellite laser weapons, which also could
endanger U.S. forces in Asia. Japan has no defense against such
North Korean or Chinese weapons. In addition, while in Tokyo,
President Clinton should:
Tell the Japanese that
the alliance with Japan remains the most important U.S. alliance in
the region and that Japan's economic recovery is vital to ensure
that other economies do not fall victim to the spreading
Urge the Japanese
government to implement deeper tax cuts and more sweeping
deregulation of its economy as key measures to help reverse its
Urge the Japanese
government to approve implementing legislation for the 1996 Defense
Guidelines that would allow better support for U.S. military forces
based in Japan but engaged in other combat zones like Korea.
Explain to the
Japanese that they must cooperate with the United States and spend
more to build missile defenses that will deter North Korea or China
from using their missile forces in Asia.
South Korea Visit
While in South Korea on November 20-22, President Clinton
should help newly elected President Kim Dae Jung formulate a
response to difficult economic and security challenges. South
Korea's economy, once a model for developing nations, is beset with
recession and needs fundamental reforms. South Korea and the United
States continue to face a heavily armed North Korea, which is
building new missile--and possibly nuclear--threats. President
Clinton's 1994 Agreed Framework with Pyongyang, which sought to get
North Korea to halt its nuclear weapons program in exchange for
economic and energy aid, has not reduced the North Korean threat.
To help South Korea meet its economic and security challenges,
President Clinton should:
Praise President Kim
for his commitment to bring down protectionist barriers. Tangible
progress has been made, as shown by the recent agreement on
automobiles. Other areas requiring action include the lack of
adequate intellectual property protection for foreign
pharmaceuticals and the remaining tariff and non-tariff barriers to
Caution President Kim
against providing government subsidies for failing companies.
Painful as bankruptcies are, they are a part of the reform and
restructuring that will produce a stronger, more competitive
economy. Clinton should ask South Korea's businessmen to embrace
and support Kim's free-market policies.
Propose an alternative
to the failed Agreed Framework with North Korea, in close concert
with Seoul and Tokyo, to include a package of trade and aid
Link a new aid package
to the fulfillment of the Basic Agreements ratified by the North
and South in 1992, including expansion of North-South trade,
citizen exchanges, a pullback of troops from the border, and phased
reductions of armaments and troops.
appointment of a special U.S. presidential envoy to oversee these
policy adjustments and communicate with the Pyongyang regime at
--Richard D. Fisher, Jr., is former
Director of The Asian Studies Center at The Heritage Foundation;
Robert P. O'Quinn is a consultant on international trade issues;
and Daryl M. Plunk is a Senior Fellow in The Asian Studies Center
at The Heritage Foundation.