Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	:	SEOUL, SOUTH KOREA 
Tarikh/Date 	: 	24/05/93 
Tajuk/Title  	: 	THE LEADERS FORUM OF THE 26TH 
			INTERNATIONAL GENERAL MEETING OF 
			THE PACIFIC BASIN ECONOMIC COUNCIL 



 Excellencies;
Ladies and gentlemen,
    Let  me  begin  by  thanking the Pacific Basin Economic
Council and the Korea PBEC  Committee  for  giving  me  this
opportunity to be with you today.
2.   Politicians  very  often  have an over-inflated view of
what  they are and  what  they  do.   After  many  years  in
government,  I know for a fact that you and your  colleagues
throughout the Pacific Basin have been the primary engineers
and  builders  of  the Pacific prosperity that we are seeing
today.
3.   You  and your colleagues of  the  private  sector,  not
those  who  strut  the stage of world politics, will also be
the primary engineers and builders of the Pacific prosperity
of the future.  However even the politicians know  that  for
this  Pacific  prosperity to be guaranteed, the Pacific must
always remain open.
Ladies and gentlemen,
4.   Unless  we shoot ourselves in  the  foot,  our  Pacific
economy will be substantially more than two and a half times
the  size of western Europe by the year 2020.  This will not
mean that much if the Pacific is divided into closed  blocs.
Therefore  it  is  crucially  important  to  ensure  an open
Pacific -- and for that matter, an open East Asia.
5.  Before  I argue about the necessity to  fight  for  open
regionalism,  not  only in our part of the world but also in
every part of the world, allow  me  to  outline  some  basic
facts.
6.   First,  the  premise  of  the  theme of this meeting is
absolutely correct.  Our objective  must  be  globalism.  In
the context  of  trade, open globalism must be the first and
the  best choice.   The  entire  world  should be  a  single
marketplace,  a single trading bloc,  with  as few obstacles
and distortions as possible to  the freest exchange of goods
and services.   Free  trade,  like  democracy,  is  full  of
imperfections.   But free trade,  like democracy,  is by far
the  best  model.   Free  trade  will  ensure  the  greatest
economic good for the greatest number of people.
7.  The  message of the marketplace is being preached to the
emerging  market  economies  in  every  corner of the globe.
Market economies makes sense within  the  domestic  economic
system.  Market economies makes sense also within the global
economic  system.  The command economy makes nonsense within
the domestic economic system.    The  command  economy  also
makes  nonsense within the global economic system.  It would
be a great  travesty  if  we  preach  the  virtues  of  open
competition and the open marketplace and then act to  ensure
trade on the basis  of closed markets and political commands
and managed trade.
8.   A second fundamental reality: even as we recognise that
regional trading blocs can at the most only  be  the  second
best  option, we all have to accept the fact that whether we
like it or not, economic regionalism  is  not  going  to  go
away.    Indeed,  the  tide of economic and especially trade
regionalism will advance, not retreat.
9.   In the post-war period,  more  than 55 regional markets
or trade arrangements  have  been  submitted to the GATT for
its notice and examination.  In every area of the  world,  a
regional trading arrangement  or  bloc has been attempted or
is very much already in place. The only major  area  in  the
entire world where it has  never  been  seriously  tried  is
Northeast  Asia.
10.  All the members of APEC (except for those in  Northeast
Asia)  are already involved in one trading bloc or more: the
United  States  in  the  United  States-Israel   Pact,   the
Caribbean  Basin  Initiative,  the United States-Canada Free
Trade Agreement (and now NAFTA), all of which do not include
the  APEC  economies  outside  northern  America.  Canada is
involved in the last two.
11.   Australia  and New Zealand in fact pioneered the trade
bloc business in the Pacific.   As long ago  as  1965,  they
signed  the  'New  Zealand-Australia  Free Trade Agreement'.
These  two  economies  upgraded  their 'NAFTA' into  a  more
effective 'Australia-New  Zealand  Closer Economic Relations
Trade Agreement' or 'ANZCERTA' in 1983.  Both countries  are
also  the  mainstay of the South Pacific Forum.  Again, both
ANZCERTA and the South Pacific Forum  do  not  include  APEC
members  outside  Australasia or the South Pacific, although
no one accused these countries of trying to be exclusive.
12.  In the western Pacific, the  Association  of  Southeast
Asian  Nations  (ASEAN) started life as a loose consultative
forum in 1967.  However from January this year, it phased in
AFTA, the 'Asean Free Trade Area',  a  process  intended  to
create a virually free trade area over a wide range of goods
by  the  year 2008.  Again, no APEC member outside Southeast
Asia is a member of ASEAN,  although  ASEAN  already  has  a
loose  consultative  forum -- called 'the PMC process' which
involves the United States, Australia, New Zealand,  Canada,
South  Korea  and  Japan (and China and Russia as guests) --
long before APEC was formed.
Ladies and gentlemen,
13.  Trade blocs are by definition groupings  which  have  a
common  set   of  market   access  conditions  among  member
economies which  are  not  accorded  to  those  outside  the
'bloc'.  Given that trade blocs are not going to go away and
look  set  to  proliferate,   I  believe  that  what  global
statesmanship must ensure is that as  many  trade  blocs  as
possible will be as open as possible and will contribute  to
global liberation rather than global protectionism.  We must
fight for 'open regionalism'.
14.  No doubt,   we are  all  going to  have  a  great  time
discussing and  disagreeing   about  the  meaning  of  'open
regionalism'.  Your sister institution, the Pacific Economic
Cooperation  Council  (PECC)  last  year  adopted  the   San
Francisco Declaration on Open Regionalism.  PECC has pledged
to  become  a  movement for 'open regionalism'. The theme of
this very PBEC meeting is 'open regionalism'.   Now  all  we
have to do is agree on what 'open regionalism' means.
15.   In   my  view,  there  is  open   regionalism  if  the
participants in a regional enterprise:
     (1)  go into it with the purpose of liberalising the
          conditions for economic intercourse between its
          members,
     (2)  if they launch the regional enterprise without
          desiring to raise drawbridges and to man the
          battlements, and
     (3)  if they have the intent of reducing  the  barriers
to economies outside the region.
16.  This  is  no  doubt  a  rigorous  test.  Most of the 55
postwar trade regionalism schemes I have mentioned fail  the
test because most may have passed the first condition,  many
may have passed the second but almost all failed the  third.
'Project 1992', the creation of a full economic union by the
European  Community, certainly did not have the intention of
reducing  the barriers to  economies  outside  the  European
Community.
17.  For any regional enterprise to be an  example  of  open
regionalism,  therefore,  I  believe it is necessary for the
involved parties to have the  intent  of  opening  up  their
region  to the outside world.  This  may not be the  primary
intent.  But the intent must be there.
18.  To qualify as open regionalism, in my view, it is  even
more important to pass the test of result or outcome.
     Open regionalism exists in fact only if:
     (1)  there is actual internal trade liberalisation, and
if
     (2)  the barriers to outside economies are actually
          reduced.
     Intent without outcome is not sufficient.
19.   If any regional enterprise fulfils these requirements,
there is no need for the question mark behind your question:
'Open Regionalism -- a  New  Basis  for  Globalism'?    Open
regionalism  will  indeed be a great contributor to the open
global trading system that we want  and  that  we  must  all
fight for.
20.  We   have   had   more   than   20  years  of  creeping
protectionism.  President Clinton has  himself  stated  that
whilst  the  developing  countries  have been reducing their
protective walls, 20 out of the 24  countries  of  the  OECD
have been raising  protective  barriers.   Voluntary  export
restraints  are now negotiated as a matter of course.  Trade
sanctions are openly talked about  between  countries  which
call  themselves friends.  Politicians can without shame ask
other nations  to  buy  so  much  of  this  and  that  else.
Respected economists can come out and advocate managed trade
as a legitimate way for the conduct of future  world  trade.
Increasingly,  health, the environment and even human rights
are part of the trade armory of nations.   And  in  so  many
areas,  leaders talk of open regionalism when what they want
is to man the barricades, to keep others out.
21.  The old champions and makers of the multilateral,  open
global  trading  system are no longer there. The world needs
new champions and makers of  such  a  free  trading  system.
This is  one  central  reason  why  Malaysia  advocates  the
formation of an East Asian grouping, or EAEC -- so  that  we
can be a coalition, building the necessary regional organ to
strive for the success of the Uruguay Round and for the type
of  open  global  trading  system  that we  have  had  since
Bretton Woods.  This  open global trading system has allowed
us to become what we are today.  On this open global trading
system  much of our future depends.
22.  For us in East Asia, this is truly a matter of life and
death.  Yet, we are mere bystanders as our friends cynically
quarrel  over what seems to be literally peanuts.  What they
do or do not do will determine our future.   Should  we  not
seek  to  empower ourselves so that we  can  fight  for  our
national  and  regional  interests  and  for the good of the
entire  world?
23.  Our proposal for East  Asian  economic  cooperation  is
also  propelled  by  the  desire  to  ensure that East Asian
regionalism develops in the most productive way possible, in
a way that is most productive for all the economies  of  the
region,   without   forgetting    our    friends   who   are
geographically located outside East Asia.
24.  Whether we like it or not, whether we want it  or  not,
East  Asian  economic  interdependence  and  integration  is
taking  place  at  a  ferocious  pace  now  and is going  to
continue  at the same pace.
25.   East Asian economic integration, unlike integration in
Europe and elsewhere,  is  completely  market  and  business
driven.   And I believe that the future economic integration
of East Asia should remain market and business  driven.    I
also  believe  that  governments should lend a helping hand.
We should sit down together now and again to talk about what
is happening, and if possible, accentuate the  positive  and
try to do something about the negative.
26.   Obviously we must work on the basis of mutual benefit,
mutual respect, egalitarianism, consensus and democracy.  We
must ensure that all of us in East Asia feel secure and that
our friends elsewhere do not feel  threatened.    We  should
further free the productive forces of enterprise.
27.   At the same time we should also cooperate to  champion
global trade liberalisation, the  Uruguay  Round  and  GATT.
And we should ensure that what is already inevitable -- East
Asian  economic interdependence, integration and cooperation
-- will be an example to the world of open regionalism.
28.  I don't think this is very difficult because all  these
things  are very much in our national and regional interest.
It is also very much in our  interest  that  we  secure  the
foreign  direct  investment  portfolio  and  capital  flows,
technology,    know-how,    entrepreneurship   and    modern
management that we need from every corner of the world.
Ladies and gentlemen,
29.  I do not want an open East Asia.  I must say I prefer a
very  open  East Asia.  Such a very open East Asian economic
cooperation will most definitely be  a  contribution  to  an
open  world,  to  the globalism that we can all be proud of.
The EAEC will help bring about this  very  open  East  Asia.
The  vibrance and dynamism of this region should benefit not
just the region, but the world as well.
30.  The East Asian countries have proven their  ability  to
accept  and  adjust to new systems and to benefit from them.
We admit that in many fields the West  have  the  lead,  but
East  Asia is not without the wisdom which can shape the New
World Order.  To keep the East Asians from  contributing  to
the new philosophies and systems because of unwarranted fear
is to deprive the world from the vast store of knowledge and
skills  that  the East Asian have accumulated in the process
of their rapid  development.  So  do  not  prevent  us  from
coming together for we can  contribute  to the globalisation
process.  No one will lose.  The world can  only  gain  from
the formation of the open East Asia Economic Grouping.