CLINTON: ASIA WILL RECOVER.

Byline: Jodi Enda Knight-Ridder Tribune News Wire

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 Sunday 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 attending 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 Tuesday 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 International Monetary Fund and other sources to stop the free-fall of its markets.

Outside experts warned it would likely cost considerably more - perhaps $60 billion - to rescue the world's 11th-largest economy.

South Korea's bailout would come atop loans for Thailand and Indonesia and could dwarf the $48 billion promised to Mexico three years ago. And the predicament 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 crisis. As Asian currencies have declined, the costs of Asian-made goods have fallen. 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 as Americans clamor to buy cheaper foreign goods and Asians are unable to pay for American products.

In an effort to tackle the financial crisis, an APEC subcommittee, meeting in Manila last week, crafted a proposed agreement to create a voluntary Asian monetary fund to help problem economies. The plan also would strengthen the power of the IMF to impose restrictions on troubled markets and to force countries requiring aid to make crucial reforms.

Historically, the heads of state have come to the APEC forum during times of economic boom. This year, their annual bid to expand trade and strengthen personal bonds will be overshadowed by the problems of plummeting Asian stock markets and slumping currencies.

Even Clinton's own prestige is shaky 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 actively promoting.

Clinton has tried to put the best face on his failure to win fast-track legislation - which would force Congress to vote trade treaties up or down without amending them - by insisting 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 Sunday.

The Clinton administration hopes to use this two-day conference to illustrate to Congress how expanding trade can be a great boon to the U.S. economy and its workers. ``And as that message sinks in,'' said White House press secretary Mike McCurry, ``I think we will see a change.''

Barshefsky said that, without fast track, the United States would be hamstrung in its efforts to abolish international tariffs and boost its own exports.

Officials from the U.S. and the other Pacific countries announced Sunday 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. 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 is an important key to jump-starting Asian markets.

Clinton also pushed ahead Sunday in his effort to impress other countries that the world's problems with Iraq did not end when United Nations weapons inspectors returned to work there last week.

The president sent a message to Russian President Boris Yeltsin spelling out the biological and chemical weapons that United States and United Nations inspectors believe remain hidden in Iraq, White House officials said Sunday.

Clinton sent the message one day after a 40-minute telephone conversation in which he rebuffed Yeltsin's exhortations to reduce economic sanctions that have plagued Iraq since the 1991 Persian Gulf War.