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The Yankee trader.

In a few weeks, the U.S. will host the 1993 Conference of the Organization for Asia-Pacific Economic Cooperation (APEC). Formed in 1989 to improve economic relations between its 15 member nations, APEC provides a needed forum for advancing free trade and investment in the Pacific Rim. That makes it as good a time as any to discuss an idea that could help open huge Asian markets to U.S. products--and further the cause of human rights in Asia at the same time.

The idea begins with a true story. In March 1992, the Hong Kong General Chamber of Commerce asked The Heritage Foundation if it would host a luncheon in Washington so prominent Hong Kong businessmen could discuss Sino-American trade ties with U.S. policy-makers.

Like most Asian businessmen, their concerns were global. Since 70 percent of Hong Kong's exports originate in mainland China, their chief concern was Washington's commercial and political problems with Beijing.

The Hong Kong businessmen were extraordinarily defensive. Instead of citing southern China's huge economic boom as evidence of the immense economic--and political--opportunities America soon will have in China, they sent the negative message that Congress doesn't understand Beijing.

After a follow-up meeting, I and my then-colleague Andrew Brick, now an editor at the Asian Wall Street Journal, told the businessmen their approach was wrong and why. They said their lobbyists had failed them and asked our advice.

We suggested to them and to all American businessmen with their eyes on potential markets in Asia that they not only repackage their message, but also rethink their approach. Neither the battle over U.S.-China trade relations nor the one over human rights on the mainland, we told them, will be won in Washington or Beijing. They won't be won by shouting at each other across bargaining tables. They will be won by businessmen-ambassadors who blaze a trail for political reform by spurring economic investment, development, and prosperity.

A few days later, the Hong Kong government office in Washington called to thank us. It said its business leaders would be spending the rest of the month in Louisiana and North Dakota telling their story to every Rotary Club, Chamber of Commerce, and state commercial leader they could fit into their schedules. China policy had gone local.

We suddenly realized we had brought businessmen into the policy-making process more directly and more usefully than simply producing research papers could. Both economic and political interests (in this case, getting U.S. policy-makers to understand that trade restrictions don't help--and actually can hinder--the cause of human rights in China) could be served by businessmen.

And we wondered why we couldn't turn the tables. We wondered why U.S. businessmen couldn't become agents of America's national interests--in China and around the world--by acting in accordance with a near immutable historical law: Political liberalization follows economic liberalization.

Thus the Yankee Trader Initiative was born. Now a major Heritage Foundation program, the idea behind the initiative is that the U.S. business executive now has a chance to become a new kind of ambassador: one whose investments can create the prosperity that advances the cause of political as well as economic freedom in places such as China and other countries of the Far East.

The business of the post-Cold War era is trade--free, fair, and mutually beneficial. The Yankee Trader Initiative proceeds from the premise that the risk-taking entrepreneur can become the vanguard of commercial, political, and cultural change throughout East Asia, Latin America, and the former communist states of Eastern Europe.

As prosperity and economic freedom expand, the ambitious and the educated demand political freedoms. Indeed, they take them. The correlation is neither inevitable nor predictable at this date. But no totalitarian regime has long coexisted with freewheeling entrepreneurialism.

Taiwan is an excellent example. This island of 21 million people sits atop $86 billion in foreign currency reserves, commands a global economic presence far greater than its size, and rapidly is approaching a historic landmark: the first case of institutionalized democracy in Chinese history. Democratic change in Taiwan has made it the economic and political model for all of Asia.

Though there have been tragic setbacks in the People's Republic of China, even outrages such as the Tiananmen Square massacre have failed to smother the spark of political change that accompanies free economic expansion.

Even as the issue of Most-Favored Nation trading status continues to be the political focus of the Sino-American relationship, the decrepit regime in Beijing is slipping almost tangibly into its terminal phase. The pillars of its legitimacy are eroding at an accelerated pace as economic prosperity replaces communist dreariness. Leadership is reduced to issuing warnings that democracy will mean only chaos and social disorder.

How long the transition to democracy will take is anyone's guess. But that the process has begun--and that economic freedoms are reaping their political fruit--is no longer in doubt. As capitalism comes within the grasp of more and more Chinese, the freedom of individuals to make choices about their own property eventually will crack the authoritarian control of central communist rule.

China will increase its economic presence throughout Asia and the world in the next 10 to 20 years in ways few can imagine today. Taken together, Hong Kong, Taiwan, and the coastal provinces of China--where all the economic activity is taking place--already command a gross domestic product nearing $400 billion a year. Free-market enterprises account for half--the growing half--of China's gross national product.

As business executives help spread prosperity through trade and investment in new Asian markets, they will find themselves in positions to influence what should be America's top foreign trade priority after NAFTA: the negotiation of free trade agreements with every Asian state.

Corporate leaders can play a key role in easing Asian fears that the purpose of NAFTA is to limit Asian access to America's markets in the Western Hemisphere and instead promote the union of both hemispheres under one trans-Pacific free trade zone. Already, this fear has resulted in the formation of the Association of South East Asian Nations Free Trade Agreement, or AFTA. Business executives who jump into the Asian market with both feet can play an important role in bringing together the nations of AFTA and NAFTA.

And the expansion of free trade agreements throughout the Pacific Rim could be just the enticement Japan needs to open its markets to U.S. products.

As Hank Greenberg, chairman and CEO of insurance firm American International Group, told us a few months ago, President Clinton would be wise to take U.S. business executives with him on every foreign trip. In so doing, he would send a signal that trade and business is at the top of our agenda, that economic security for America depends on international trade.

President Clinton should take a cue from former British Prime Minister Margaret Thatcher who, when the British were having difficulty doing business with Malaysia not so many years ago, went to that country with a bevy of business executives in tow and returned with a fistful of major orders for British products.

The term "Yankee Trader" is not chosen at random. Its purpose is to remind the American business executive of a tradition of American traders whose activities transformed the Far East. Today, American entrepreneurs have an unprecedented opportunity to write another long and profitable chapter in that adventurous saga.

Edwin J. Feulner, Ph.D., is president of The Heritage Foundation, a Washington, DC-based public policy research institution. He also serves on the boards of several other foundations and research institutes. Dr. Feulner is the author of "Conservatives Stalk the House."
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Title Annotation:Above the Beltway; improving America's trade relations with Asia
Author:Feulner, Edwin J.
Publication:Chief Executive (U.S.)
Date:Jul 1, 1993
Previous Article:Dodging the litigation explosion.
Next Article:Michael Bassermann.

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