WASHINGTON-Amid a backdrop of deeper financial woes in Asia and prospects for an unprecedented bailout for the region, the United States last week reached an agreement to expand telecommunications equipment free trade and appeared to take advantage of global market instability by pressuring a vulnerable Japan to further deregulate its telecommunications market.
“Japan can lead Asia out of this difficulty with the strength of its economy,” said Clinton at the 18-member Asia-Pacific Economic Cooperation forum in Vancouver, British Columbia, last week.
The $68 billion, belt-tightening rescue plan would be administered by the International Monetary Fund and the World Bank. The United States and Japan could be called upon to be back-ups.
Asia offers immense wireless telecom trade opportunities for U.S. firms. The Asian meltdown threatens wireless investment not only in that region but also in other emerging-albeit fragile-markets such as Latin America, India, Africa and Eastern Europe. Even some developed countries could be hurt.
Since 1990, when Japan’s real estate and securities markets crashed, the United States has been pushing Japan to enact aggressive reforms to stimulate its stagnant economy. In particular, the United States has sought to persuade Japan to rely less on export surpluses and more on internal fiscal measures to shore up its economy.
Today, business is booming as the world begins to open its telecom equipment market. The United States already exports $15 billion in telecom gear. The world market is $60 billion for telecom hardware and will grow far beyond that level as trade barriers come down. The global telecom services market is just as lucrative. Being the most technologically advanced nation on earth, the United States wants to capitalize on the new rules of the game and it is ratcheting up pressure on countries like Japan and China that sell far more than they buy from America.
“While Japan has made some progress in its deregulation efforts over the past three years, more substantial deregulation is necessary,” said Charlene Barchefsky, U.S. trade representative. “The test now is whether it is willing to fulfill the promise of Prime Minister Hashimoto’s vision of carrying out fundamental deregulation so as to increase market access and allow market forces to determine market outcomes.”
Given that so many U.S. exports go to Japan and that Japan accounts for more than half of Asia’s gross domestic product, the prospect of the Asian meltdown-which has stricken Thailand, the Philippines, Indonesia and South Korea and could spread to Hong Kong, Taiwan or Japan-has gotten global trade ministers concerned.
With Japan on the ropes, Clinton seemed to be telling Japan that it could either get its own house in order-along the lines recommended by the United States-or become an abandoned victim of the Asian financial crisis. “We sell about a third of our exports to Asia … and need to take this seriously,” said Clinton.
Ryutaro Hashimoto, Japan’s prime minister, had a different take on things: “I would like to make it clear that Japan’s problems are completely separate from those of the so-called Asian currency crisis.”
Clinton, for his part, must be careful about not overstating the crisis or underestimating it either. Playing politics with the Asian financial crisis could be dangerous. Overstating Asian financial woes could become a self-fulfilling prophecy.
Understating the problem could prevent the United States and others from limiting any fallout.
