US pushes for a Pacific defence union

RICHARD LLOYD PARRY

Osaka

Leaders of the main Pacific Rim economies begin meeting here today, a day after William Perry, the US Defense Secretary, suggested that the divided membership of the Asia-Pacific Economic Co-operation (Apec) forum consider forming a security alliance.

"It is possible to expand Apec into an organisation that can take up security problems," he said. "This could act as a foundation for building mutual confidence in Asia." The suggestion provided an unexpected beginning to the gathering. The third full summit of Apec was always going to be lively. At the weekend, South Korea threatened to cancel President Kim Young Sam's summit with the Japanese Prime Minister, Tomiichi Murayama, after one of Mr Murayama's ministers made off-the-record remarks justifying the occupation of Korea.

The next day, in Seoul, China's President, Jiang Zemin, and Mr Kim denounced Japanese wartime cruelty. To add to Tokyo's problems, President Bill Clinton nearly cancelled due to the US budget crisis.

In the end, the Japanese minister resigned and Mr Clinton arranged to arrive in Osaka a day late and leave early. The show will go on; what it will achieve is another question.

Apec was inaugurated in 1989 and annual meetings of ministers and heads of government culminated last year in the ambitious Bogor Declaration, which set out the aim of free trade in the Asia-Pacific area by 2010, or by 2020 for developing economies.

The Pacific Rim is the world'smost powerful trading region. Apec's 18 members conduct 40 per cent of world trade; a report yesterday predicted that their collective economies could grow by 20 per cent by the end of the century. But their economic policies are not co-ordinated. The Association of South-East Asian Nations groups seven economies; Japan and the United States have long-standing trade relationships. But there is nothing to compare with the European Union or the North American Free Trade Area.

Cynics say the Apec nations are too diverse. In Europe, there is anxiety about the difference between Germany and Portugal. In Apec, it is intended that the free trade will eventually flourish between the US and Papua New Guinea.

There are also diplomatic and military tensions: the resentment of Japan by its former Asian conquests; the trade disputes between Japan and the US; and the expansionist fears inspired by China. The Apec absurdity is epitomised by the presence in Osaka this week of Taiwan. To avoid upsetting China, it is referred to in official literature as "Chinese Taipei".

Diplomatic differences, however, have focused on another dispute, mundane, but more central to Apec's economic raison d'etre. The aim of the 1995 meeting is the formulation of an "Action Agenda", to which member-states will contribute concessions and proposals in Manila next year. Japan, China, South Korea and Taiwan want an exemption in the case of agriculture. The big food exporters, the US, Australia, Canada and New Zealand, insist that to agree tariffs on everything but rice undermines the principles of the organisation.

The rift is an embarrassment for Japan, which wants a clear outcome to its first summit as Apec host. A compromise on rice tariffs will be the main task of the next four days. Even if it is reached, Mr Perry's talk of "mutual confidence" will remain a long-term vision.