VANCOUVER, British Columbia -- With Asian markets tumbling and the U.S. trade deficit on the rise, President Clinton and 17 other Pacific leaders are gathering in Vancouver to explore emergency measures aimed at averting long-term economic distress.
Clinton expressed optimism yesterday that Asian economies would bounce back with the help of the International Monetary Fund, internal reforms and the kind of free trade that is the prime goal of heads of state in Vancouver for the Asia-Pacific Economic Cooperation forum.
"I think this is a time for confidence in the future of Asia and confidence in the future of our relationship with them," Clinton said. "We have a few little glitches in the road here; we're working through them."
But the president's words belie the depth of the problems that will face Pacific Rim leaders today and tomorrow as they grapple with the Asian crisis and its potential to pull other economies into the mire.
On the eve of the annual Asia-Pacific Economic forum, South Korea announced that it would need about $20 billion in loans from the IMF and others to stop the free fall of its markets.
Outside experts warned that it would likely cost considerably more -- perhaps three times as much -- to rescue the world's 11th-largest economy.
South Korea's predicament comes atop bailouts for Thailand and Indonesia, and could dwarf the $48 billion in IMF aid promised Mexico three years ago. And it comes as Japan's market, the world's second largest, is increasingly vulnerable because of large, questionable loans.
The United States is not untouched by the crises. As Asian currencies have declined, the costs of Asian-made goods have fallen. And while American consumers might relish the lower prices, they increase the U.S. trade deficit, which jumped 17 percent in September.
Asia's problem could eventually raise U.S. unemployment levels, Americans clamor to buy cheaper foreign goods and Asians (( are unable to pay for U.S. products.
Although the U.S. economy is far more stable than its APEC competitors, Clinton is shadowed by some concerns himself, after his recent failure to persuade Congress to grant him expanded negotiating authority on trade treaties. Unless Congress approves "fast-track" trading authority next year, Clinton might find himself in the awkward position of being unable to implement some of the big-ticket tariff reductions that he is promoting at the forum.
Clinton has tried to put the best face on the administration's failure to win "fast-track" legislation -- which would force Congress to vote trade treaties up or down, but not to amend them -- by insisting that Congress will pass it next year.
"It's incomprehensible to these countries that the president will not get the authority," U.S. Trade Representative Charlene Barshefsky said yesterday.
APEC officials announced yesterday that they had agreed to phase out tariffs, starting in 1999, in nine areas: chemicals, energy-related services, environmental goods and services, forest products, medical equipment, telecommunications equipment, fish and fish products, toys, and gems and jewelry.
The U.S. exports in those areas measured $170 billion in 1995, and world trade was worth $1.5 trillion that year, Barshefsky said.
In a news conference with Canadian Prime Minister Jean Chretien, Clinton said cutting tariffs was an important key to jump-starting Asian markets.
Pub Date: 11/24/97