`Mega-Markets' Shine on Pacific Rim
WAKE up and smell the green tea, America. Go East, young Europeans. Don't dillydally, Gorby: In the next century, a growing chorus of Pacific Basin ballyhooers say, the world economy will be controlled by Asians - and there's still time to get in on the ground floor. The opening of Eastern Europe, German reunification, and the expanding Common Market is a blip on the screen compared to the ``mega-markets'' emerging in Asia, these observers say.
Five years ago, United States trade with Pacific countries surpassed trade with Atlantic countries by 50 percent. In five more years, Pacific Rim-US trade is projected to be twice that with Western Europe. Already, 40 percent of world trade is done by Asian nations - and the number jumps by ever greater increments each year.
``The whole Atlantic is excited about a new market of 17 million East Germans, when they should be thinking about the 170 million Indonesians,'' says Jeffrey Rosensweig, an economist at Emory University in Atlanta.
Caught up in ``Europhoria,'' Professor Rosenweig and others warn, the US and Europe are neglecting to take advantage of the Asian countries that are both investing and opening themselves to investment. These include Thailand, Malaysia, and Indonesia, which are following the earlier patterns of South Korea, Taiwan, Hong Kong.
``We are still a Eurocentric country; the Old Country is still easier and more obvious,'' says Frank Gibney, director of the Pacific Basin Institute in Santa Barbara, Calif. Outside the West Coast, the awareness of Asia has not been communicated to the country, he says.
Meanwhile, intra-Asian trade is the growth story of the past two years and the foreseeable future:
Small countries such as Hong Kong and South Korea are out-investing the US in countries such as Thailand, China, and Indonesia.
Regional trade is expected to exceed US-Asia trade by the year 2000. (In 1989, intra-Asian trade amounted to $200 billion, compared with $271 billion for transpacific trade.)
The so-called ``four tigers'' - Taiwan, Hong Kong, Singapore, and South Korea - are receiving unprecedented investment from other Asian countries. Despite unofficial barriers to investment in Japan, Asian investment there has more than doubled since 1986.
``The idea of the Pacific Rim is past its `gee whiz' stage, where everyone said, `Isn't this great we can get together?' to a stage where everyone is standing back to assess the problems of so much trade,'' says Ernest Preeg, a professor of international business at the Center for Strategic and International Studies.
Two years ago, foreign ministers from 12 countries set up the region's first intergovernmental body: the Asian-Pacific Economic Cooperation (APEC) consists of the US, Canada, Japan, South Korea, Australia, New Zealand, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
``They are moving beyond the stage of just exchanging views across a table to scratching out serious solutions to region-wide problems,'' Mr. Gibney says. This bodes for a switch in bilateral (US-Japan) dominance of the Pacific Rim to a multilateral focus that will transcend national boundaries.
``In the next few years, you will see a recognition that it is very hard to make regional economics follow single-country policy or domination,'' says Larry Krause, professor of international economics at the University of California, San Diego. Rosenweig predicts ``huge conglomerations of nations in trading zones'' in the next 10 years in Asia.
Without a formal policy to deal with Pacific Rim trade, US strategists are dividing into two schools of thought:
Although most see a bipolar trading world, with Europe and Asia at the two poles, a tri-polar world is seen by Dr. Preeg and C. Fred Bergsten, director of the Institute for International Economics. That would divide the Asian Pacific into an East Asian and North American camps (US, Canada, and Mexico). Europe would be the third pole.
Krause says the US must make a dramatic shift toward a focus on Asia. ``The US is a Pacific country, not an Atlantic one,'' he says. ``The fact that we don't recognize this in our policy is sheer accident [that] our capital and New York City face the wrong way.''
Both sides see the Pacific Rim countries as opportunities ripe for aggressive business dealings of a cooperative nature - where the US, European, and even Soviet businesses must take initiative and be ready to stay in for the long haul.
Anticipating an easing of protectionism on both sides of the Pacific, Gibney sees a ``leveling of the playing field'' in coming years - one that could be accelerated if US policymakers would address the issue head-on.