Leaders from the 21 Pacific rim countries which make up the Asia-Pacific Economic Co-operation (APEC) forum begin a two-day summit in Kuala Lumpur today amid doubts about the validity of the organisation after the failure of trade ministers to agree during the weekend on reducing tariffs in nine key sectors.
It was an inauspicious start to a meeting which will be dominated by the Asian economic crisis. However, the top-level meeting of countries making up more than 50 per cent of global trade has at least forced them to focus on efforts to lift Asia out of recession.
Last night, US Vice-President Mr Al Gore, in a speech in the Malaysian capital, proposed joining Japan in an initiative to help revive ailing banks and restructure companies burdened with debt.
"This much is clear: just as the global financial crisis started here in Asia, the global economic recovery can and must start in Asia as well," said Mr Gore, standing in for President Clinton, who was detained in Washington by the Iraq crisis.
Details of the $10 billion initiative were announced in a joint statement issued by Mr Clinton and Japanese Prime Minister Mr Keizo Obuchi.
However, Mr Gore's promise of an additional $1 billion for medium-term financing for Indonesia, Thailand and South Korea and $2 billion for the support of private investment paled against a package of $30 billion for the area being offered by Japan to support social safety nets and restructure corporate debt, though precise details have yet to be announced.
The best news of all for the participants yesterday was the $195 billion Japanese stimulus package, including tax cuts, designed to boost real GDP by more than three per cent in the next fiscal year.
Mr Gore pointed out that "the world looks to Japan", which even in the midst of recession generates more than two-thirds of Asia's combined GDP. "The region cannot recover without Japan boldly and strongly leading the way," he said.
The Pacific rim leaders will also discuss the regulation of currency trading, said Malaysian Prime Minister Dr Mahathir Mohamad, who is chairing the summit. "Most of them (APEC members) support our views and there might be some discussion and some attempts to regulate currency trading," he said.
Dr Mahathir has repeatedly blamed speculators for causing the turmoil on Asian currency markets and has imposed currency controls in Malaysia.
China and Taiwan have also said they will be proposing plans to revitalise the Asian economy, with Chinese President Mr Jiang Zemin planning to make an "important" speech.
After Japan refused to cut tariffs in the politically sensitive areas of fish and forestry products at the weekend, thus forcing APEC to ask the World Trade Organisation to bring about the desired result next year by recruiting a "critical mass" to the idea, the summit has become a struggle between protectionism and liberalisation of trade.
The absence of Mr Clinton, who also missed the 1995 meeting in Japan due to a domestic budget battle, has caused much comment about the effective downgrading of the event and has cast doubt over APEC's viability, especially after the rancour of the weekend debate on tariffs.
"APEC is at a watershed, it's got to move on to a more inclusive role for people in the region. It has to deal with the crisis effectively," Canadian Foreign Minister Mr Lloyd Axworthy told reporters.
It was "very unfortunate" that Mr Clinton did not come as "it would have shown greater US commitment to the Asia-Pacific," Philippine Foreign Minister Mr Domingo Siazon said. "There's a symbolic difference. It's the biggest economy, after all."
A White House spokesman said Mr Clinton still hopes to complete the remainder of his planned trip, which includes Japan and South Korea. Some observers say that Mr Clinton was not unhappy to have a pretext to avoid a possible failed summit and a diplomatic embarrassment over Malaysia's internal power struggle.
Facing a projected trade surplus of $300 billion, largely due to the Asian crisis, Mr Gore last night warned that "the United States cannot be the importer of only resort. All developed countries - whether in Asia, Europe or the Americas - must play a role and keep down trade barriers."
