Current Issues Brief 10 1996-97

The 1996 United States Elections: Implications for the Asia Pacific

Dr Frank Frost
Foreign Affairs, Defence and Trade Group

Contents

Major Issues

Introduction

The 1996 Elections: Divided Result

• Presidency and Congress: Cooperation or Conflict?

The Clinton Administration and the Asia Pacific Region

• China
• Japan
• The Korean Peninsula
• Indonesia
• APEC and Regional Cooperation
• Australia's Interests

Conclusion

Endnotes

Appendix

Major Issues

The 1996 elections produced a mixed verdict from the United States electorate. President Bill Clinton won re-election and became only the third Democrat to achieve this in this century (after Presidents Wilson in 1916 and Roosevelt in 1936). In the Congressional elections for the House of Representatives and one third of the Senate, the Republican Party retained the control it had won in the 1994 mid-term elections. The Republican majority in the House was cut (to a probable 22 seats with several races still undecided) and Republicans increased their majority in the Senate (to lead by 55-45). Several notable features of the elections included a large 'gender gap', with substantially more women than men supporting the Democrats, and a comparatively low turnout of about 49 percent of the voting age population.

A situation where the executive and legislative branches are controlled by different parties is not unusual in American politics. However the character of relations between the Presidency and Congress will be a key issue both for domestic policy and many areas of foreign policy. For much of the period after the 1994 elections, the Clinton Administration had difficult relations with the Republican Congress, which resulted in two temporary shutdowns of government functions in a dispute over the 1996 budget, although relations improved in the latter part of 1996. Observers are divided over the likely outlook for relations between the re-elected Clinton Administration and the Congress. Some anticipate continuation of the climate of cooperation evident in the latter part of 1996. However other observers are concerned that partisan disputes could predominate and that these could potentially impact adversely on the Clinton Administration's capacity to focus on policy issues, including relations with the Asia Pacific.

The paper reviews the immediate outlook for US policies towards the Asia Pacific in the light of the election results by discussing five key policy areas. US relations with China during the first Clinton Administration were marked by both a rapidly increasing economic relationship and by tensions over trade relations, human rights issues and Taiwan. Both parties made efforts to improve dialogue in 1996 and a 'summit' meeting between Presidents Clinton and Zhang Zemin is expected in 1997. The Clinton Administration now has the opportunity and challenge of pursuing the process of dialogue on security issues at head of state level and of improving the basis for economic relations, particularly if 'Most Favoured Nation' status can be extended to China on a permanent basis and if mutually acceptable terms can be arrived at for China's entry into the World Trade Organisation.

Relations with Japan after 1993 were marked by continuing disputes over trade but in 1996 the US-Japan security relationship was reaffirmed and the tenor of economic relations also improved considerably. The re-election of the Clinton Administration and the Hashimoto government is expected to facilitate continued progress in relations, including adoption of measures to ease the pressures arising from the presence of US forces on Okinawa. The situation on the Korean peninsula remains tense both because of the unpredictable policies of the North (illustrated again by the discovery in September of a Northern submarine landing military personnel) and by the potential fragility of the economically debilitated regime in the North. The Clinton Administration's challenges include following through the 1994 agreement it sponsored to reduce the dangers posed by North Korea's nuclear industry, and closely monitoring the potential for developments in the North to produce further instability. US relations with Indonesia during President Clinton's second term may receive further attention in Congress because of a controversy during the election campaign over the alleged contribution to Democratic party fund raising by a US-based Indonesian business group.

President Clinton played a significant role in increasing the profile of APEC during his first term through his hosting of the first APEC leaders' informal meetings in Seattle in 1993 and his support for the 1994 Bogor commitment to achieve free trade among all members by no later than 2020. The second Clinton Administration faces the challenge of maintaining US active support for APEC's goals and of securing the 'fast track' negotiating authority from Congress which would facilitate greatly the President's capacity to negotiate trade and liberalisation measures in APEC.

Australia has consistently pursued close relationships both with the US and with the countries of the Asia Pacific and has a large stake in the successful evolution of US policies towards the region. Australia shares interests in parallel with the US in a number of key areas of concern to the second Clinton Administration, particularly the promotion of dialogue with China and progress towards the normalisation of China's economic relations (especially in relation to the WTO), the maintenance of strong US-Japan security and economic relations, the preservation of stability on the Korean peninsula (where South Korea is Australia's second largest trade partner) and the advancement of APEC. Progress by the Clinton Administration in its major areas of priority in the Asia Pacific will also have a positive effect on the climate for Australia's own relationships, particularly by helping to minimise the likelihood that Australia in pursuing its association with the US is in any sense reducing emphasis on its own East Asian relationships.

Introduction

The 1996 elections in the United States have produced a divided result. President Clinton was re-elected to office but the Democratic Party failed to overturn the majorities in Congress secured by the Republicans at the mid-term elections in 1994. Relations between President Clinton and the Congress in 1995 and 1996 were marked by substantial conflict over a number of policy issues and clashes over budget strategies saw two temporary closures of many government agencies and functions. Cooperation between the executive and legislative branches improved in the latter part of 1996 with a number of pieces of legislation agreed and adopted. However, with a legacy of discord and conflict and after a heated campaign, the potential for further conflict between the two branches of government appears considerable.

The outcome of the elections has important implications for the Asia Pacific region. After his election in 1992 President Clinton reaffirmed the significance of the Asia Pacific in US policy priorities but his Administration faced some difficult challenges in key policy areas including relations with China and Japan, and the potential threats to stability posed by the situation on the Korean Peninsula. The Clinton Administration made progress in a number of areas of Asia Pacific policy, particularly in the latter part of its first term, but important challenges continue to confront US policy. A particularly important issue is whether the Clinton Administration will be able to pursue foreign policy-making towards the Asia Pacific region without having to confront debilitating struggles with a politically hostile Congress.

The paper reviews the results of the 1996 elections and points out some major features of the voters' decisions. It then discusses the implications of the results of the elections for US policies in five key areas, especially in relations with China, Japan, the Korean peninsula, Indonesia, and APEC and regional cooperation. The paper concludes by emphasising the importance of these issues for Australia and the importance to Australia of its own wide-ranging bilateral relationship with the United States.

The 1996 Elections: Divided Result

The political environment for the 1996 elections was shaped to a large degree by the preceding 1994 mid-term elections in November 1994. President Bill Clinton, after his victory over President Bush in 1992 (when he achieved 43 percent of the vote against the 38 percent for Mr Bush and the large vote of 19 percent for Ross Perot) had considerable difficulty in his first two years in office. He put in place a strategy to reduce the national budget deficit which enabled him to argue in 1996 that he had cut the deficit by 60 percent (from $US290 billion to $107 billion) over his four year term. However his Administration encountered problems in areas including a series of appointments and the failure of the ambitious health care reform package developed by a task force led by Hillary Rodham Clinton to achieve Congressional approval.

In the 1994 mid-term elections the Republicans scored notable victories. Republican candidates won a net total of 73 seats on the House of Representatives, achieving the first Republican majority since 1952. The Republicans also won control of the Senate and increased their share of governorships to achieve a dominant position, with 32 states compared with the Democrats' 17. The 1994 elections saw the Republicans gain in many areas but especially in the South. The Republicans also now controlled eight of the nine most populous states.

Republican candidates for the House of Representatives ran for the 1994 elections under the banner of the 'Contract with America', a series of ten commitments which emphasised containing and reducing the role of government and securing a balanced national budget. Although the Contract was not adopted by Senatorial candidates, it became the primary agenda for the Congress under the active and high profile leadership of House Speaker Newt Gingrich. In 1995 President Clinton appeared to have been pushed thoroughly on to the defensive by the Republican victories and his political prospects appeared bleak. However, the President and his advisers moved to capitalise on the more unpopular elements of the Republicans' policies and adopted a strategy to reclaim the initiative. President Clinton endorsed the goal of the Republicans to achieve a balanced budget but undertook to do so while protecting key social programs. The President's position was boosted greatly by the battle over the 1996 budget when the Republican Congressional leadership sought to pressure the President into adopting their preferred budget and caused on two occasions temporary shutdowns of many government services.(1)

The budget battle was resolved in favour of President Clinton in January 1996 and he thus gained a greatly improved position from which to seek re-election. The President also reduced the distance between his position and that of the Republicans: he declared in his State of the Union address in January that the 'era of big government' in the US was over. President Clinton adopted an active program of political advertising to set out his Administration's approach. His position was also boosted by the fact that he faced no major competition for the Democratic nomination for President. The Republicans, by contrast, had a heated contest for the nomination, eventually secured by Bob Dole, the Senate Majority Leader. President Clinton maintained a substantial lead in opinion polls throughout the campaign.(2)

Figure 1

Election at a Glance

With 99% of voting districts reported                                   

PRESIDENT

                                                                   
                    States Won      Electoral   Popular Vote     Percentage 
                                        Votes 

Clinton                     31            379     45 389 735             49 
Dole                        19            159     37 731 302             41 
Perot                        0              0      7 837 703              8 

Needed to win: 270 electoral votes. Other candidates accounted for 2 per cent. 
Clinton electoral total includes District of Columbia.                  

SENATE

                                                                      
                         Seats        Winning   Seats in new         Change 
                   Won/leading     incumbents      Congress                 

Republicans                 20             14             55             +2 
Democrats                   14              8             45             -2 

HOUSE OF REPRESENTATIVES

                                                
                                        Seats   Seats in new         Change 
                                  Won/leading       Congress                

Republicans                               228            228             -8 
Democrats                                 206            206             +8 

1 House member is an independent                                        

GOVERNORS

                                                                   
                                        Seats        Winning         Change 
                                  Won/leading     incumbents                

Republicans                                 4              3           none 
Democrats                                   7              4           none 

Party breakdown stays at 32 R, 17 D.                                    

Source: International Herald Tribune, 7 November and Politics Now, 14 November 1996.

President Clinton won re-election but the Democratic party did not achieve a complete national victory. President Clinton achieved 49 percent of the popular vote, with Mr Dole receiving 41 percent and Ross Perot eight percent, less than half his 1992 total. In the Congressional elections, however, the Republicans' control of both the House and the Senate was reconfirmed (see Figure 1). Despite the unpopularity of the budget standoff in late 1995 and the apparently reduced popularity of Speaker Gingrich (whom exit polls suggested was disapproved of by 58 percent of voters) most of the 73 Republicans 'freshmen' elected to Congress in 1994 retained their seats. While the Democrats did defeat some of the 1994 Republican 'freshmen', the Republicans were able to offset these losses by winning some of the seats left 'open' by retiring Democrat members. The Democrats appear likely to achieve a net gain of only about 8 seats. In the Senate the Republicans achieved a net gain of two seats and now maintain a 55-45 ascendancy.

Some notable aspects of the 1996 elections include:

• There was a striking 'gender gap' in the national vote. While President Clinton and Mr Dole achieved approximately equal shares of the votes of males (about 44 percent) women favoured Clinton by 55 percent to 37 percent. This result appeared to vindicate a major feature of President Clinton's campaign in emphasising issues including education, family leave and the rights of working women.(3)
• Opinion polls suggest that the longer the campaign went on, the less likely it appeared that undecided voters were willing to back the President. Among those who made up their minds in the last week of the campaign, 47 percent chose Mr Dole, 35 percent chose President Clinton and 19 percent Mr Perot.(4)
• The Democrats continued the trend of 1994 by performing badly in the South. The Clinton-Gore ticket was able to win only their home states of Arkansas and Tennessee, along with Florida and Louisiana. The Republicans increased their Senate representation by winning two formerly Democrat held seats in Arkansas and Alabama.
• In addition to the fact that Republican strength in the Senate has increased by two seats, the political character of that chamber is considered likely to be predominantly more conservative. Several retiring Republican Senators considered to be 'moderates' were replaced by candidates who are thought to be markedly more conservative; for example, Senators Bob Dole and Nancy Landon Kassebaum in Kansas were replaced by more conservative figures. This change may be significant in affecting the chances for approval for some measures such as the attempt to secure Congressional support for a measure to introduce a Constitutional amendment to enforce a balanced budget. The proposed amendment was opposed strongly by the Clinton Administration, primarily on the grounds that it would reduce the scope available to the federal government to manage the economy, particularly in a time of recession. This measure was introduced in 1995 and passed in the House but failed to secure the necessary two-thirds approval in the Senate by one vote. After the 1996 elections this proposal is thought likely to achieve a higher vote in the Senate and thus be adopted.

Figure 2

• A further notable feature of the elections was the participation rate by people of voting age which at 49 percent was the lowest recorded since 1924 (see Figure 2 for participation rates since 1960). The turnout of 49 percent was a decline from 55.2 percent in 1992. Observers attributed the very low turnout to a variety of possible factors including the relatively uneventful election campaign, an electorate that was generally satisfied with the state of the economy, and dissatisfaction with the character of the choices offered by the political parties, especially with the candidates for President. One pointer to possible attitudes was provided by a New York Times/CBS News opinion poll which found that only 42 percent of voters said they would describe the Presidential race as interesting, compared with 75 percent in a similar poll in 1992.(5) One experienced observer, Curtis Gans (of the Committee for the Study of the American Electorate) has argued that the low turnout may have also resulted in part from the impact of negative political advertising. Gans suggested that some of the 'attack ads' had been framed deliberately to 'weaken the impulse to vote' among potential supporters of targeted candidates. Instead of trying to solicit support for their own policies, candidates were devoting a considerable part of their effort to keeping the vote for their opponents as low as possible.(6)

Presidency and Congress: Cooperation or Conflict?

In a statement immediately after the elections, President Clinton called on the country to 'put aside the politics of division and build America's community together' and Republican leaders in Congress, including Speaker Gingrich and the new Senate Majority Leader Senator Trent Lott of Mississippi, also made conciliatory comments. A situation where the Presidency and Congress are controlled by different parties is not unusual in American politics. Both Presidents Eisenhower and Reagan, for example, served for considerable portions of their terms without their party controlling both houses of Congress. However the level of discord between the two branches of government since 1994 has been higher than average and the prospects for the second Clinton Administration in both domestic and foreign policy have been brought into question by the American electorate's divided verdict.

Observers have disagreed about the likelihood of effective cooperation between President Clinton and the Congress. One experienced analyst, David Broder of The Washington Post, has argued that a climate of cooperation is likely to continue, partly because of the considerable common ground between President Clinton and the Republicans, for example in regard to the necessity of securing a balanced budget by 2002. Broder has reported the comments (made before the final returns were clear) of a senior Republican Congressmen, Representative Jim Leach (Chairman of the House Banking and Finance Services Committee) who said that 'I think the next two years will be like the last six months of the 1996 session. Even if we prevail, Republicans will have been chastened'.(7)

However, another experienced observer, R. W. Apple (New York Times) has suggested that while President Clinton has a chance to seize on the climate for conciliation (for example, by appointing a Republican into one of the senior Cabinet positions), the prospects for cooperation are not encouraging. Apple has argued that:

The paradox of the 1996 elections is this: Dissatisfied with their political leadership, American voters opted for the status quo; weary of bickering, they set the stage for more by prolonging divided government. There was no ringing mandate for President Clinton and none for the Republican Congressional leadership, although both lived to fight again. 'Fight' is the operative word. Despite morning after murmurings of bipartisanship, the next four years are likely to be marked by the turbulence and infighting that characterise not only divided governments but many second Presidential terms.(8)

The capacity of the Clinton Administration to secure an effective working relationship with the Congress is clearly important for the prospects for most of the Administration's key policy priorities, including foreign policy in general and the Asia Pacific region in particular. Some observers have expressed concerns about the possible impact of disputes between the two branches of government, particularly in relation to several areas of alleged impropriety or illegal behaviour by Administration officials, including matters arising from contributions from Asian-Americans to the Democratic party (see below). Richard Armitage, a former senior defence official and adviser to President Bush, has stated that 'I worry that the next Clinton administration may be so tied down with domestic problems that we don't spend time in developing careful relations (in Asia)'. Thomas Mann of the Brookings Institution has said that he expects the Republicans in Congress to make 'very aggressive use of their investigative oversight powers' on the question of political fund-raising, particularly in relation to fund raising by the Democratic party among Asian interests and Asian-Americans. The issue, Mann suggested, '...could get pretty nasty and could drain the President of his foreign policy leadership in some ways'.(9)

The Clinton Administration and the Asia Pacific Region

The results of the 1996 elections were greeted favourably in the countries of Northeast and Southeast Asia. A number of governments made positive official comments, including China, Japan, Thailand, Indonesia and Vietnam (which appreciates President's decision to normalise relations in July 1995). The approval of private business was indicated by a number of the region's stock markets, which registered gains when the results became known. The favourable reactions were accompanied by hopes that the second Clinton Administration would see further progress in both economic development and cooperation and in the preservation of regional security.

After its first four years, the Clinton Administration can point to a number of achievements, as it pointed out in a statement issued just after the elections (see Appendix). President Clinton from 1993 reaffirmed on a number of occasions the great importance that the US attaches to the dynamic Asia Pacific region and he added emphasis to this by his hosting of the inaugural informal meeting of the heads of government of the members of the Asia Pacific Economic Cooperation (APEC) group in Seattle in November 1993.(10) The US reaffirmed its commitment to an active and ongoing role in preserving a stable regional security environment in the post Cold War period through its East Asian Strategy Report of February 1995 which committed the US to retaining a military presence of 100,000 personnel to underpin its bilateral and multilateral security policies. The Clinton Administration made a major effort to deal with the potential for regional destabilisation which was posed by the development of North Korea's nuclear industry, which was feared widely to be an incitement to nuclear proliferation, and after complex negotiations an agreement was secured in October 1994. Other important initiatives included the final lifting of the economic embargo on Vietnam and President Clinton's decision to normalise relations in July 1995 in the face of some continuing domestic opposition.

However, the Clinton Administration's Asia Pacific policies were also the focus of considerable contention and disagreement both in the US and in the region. An attempt to link trade relations with China to progress in human rights was made but abandoned in 1994 in the face of intense Chinese opposition. Relations with Japan were marked by considerable discord over trade issues, leading up to a public and acrimonious dispute over the trade in cars and car parts in June 1995. While President Clinton had taken an early lead in raising the profile of APEC in 1993 he did not attend the 1995 summit (because of the conflict over the budget with Congress) and there was criticism over the relative degree of attention which the Administration appeared to devote to the region (it was pointed out, for example that Secretary of State Christopher made over a dozen visits to Syria and just two to China upto November 1996).

The Administration has been widely seen to have substantially improved its performance in policies towards East Asia in the latter part of its first term, with important steps taken to consolidate relations with both China and Japan. Nonetheless, the Asia Pacific region will continue to pose challenges for the US in the next four years and the Clinton Administration's approach to several policy areas will be important for the whole region.

China

The conjunction of very rapid economic growth and political uncertainty about the impending post-Deng Xiaoping era has made China a dominant issue in the Clinton Administration's Asia Pacific policies. China's achievements in economic growth (which has exceeded 10 percent annually for the past decade) has been derived partly from the rapid development of trade with the US. However Sino-US relations have also been subject to suspicion and strain.(11) While the two countries were able to cooperate during the 1970s and 1980s in the face of what they saw as a common strategic threat from the Soviet Union, the decline of the USSR removed this strategic 'glue' and relations cooled, particularly after the Tiananmen massacre in June 1989. The Clinton Administration's attempt in 1993 to link China's continued access to Most Favoured Nation status (ie normal trading status) with progress on a series of human rights issues added further tension to relations. The two countries in the 1990s have had a complex pattern of close common interest and cooperation (for example in the development of civil aviation) alongside areas of discord including human rights issues, areas of trade relations such as protection of intellectual property, and arms control and nuclear proliferation issues.

Taiwan has continued to be the key focus of potential tension in China-US relations. China's leadership has been concerned that the progress of growth and democratisation on the island is posing added obstacles to their long term determination to secure reunification. Tension over Taiwan escalated when the Clinton Administration, under pressure for the Republican-controlled Congress, allowed Taiwan's President Lee Teng-hui to make an unofficial but highly publicised visit to the US in June 1995. China's reaction was very negative and a number of areas of communications and cooperation were suspended. Tensions continued in late 1995 and early 1996 when Beijing mounted military exercises in the Taiwan Straits during Taiwan's presidential elections. The US despatched two carrier battle groups to stand by in one of its biggest deployments of military force in East Asia since the end of the Vietnam war.

In 1996 the US and China made significant progress towards stabilising relations. An agreement was reached on a number of intellectual property issues in June 1996 and in July National Security Adviser Anthony Lake expanded dialogue during his visit. However the China relationship will pose the Clinton Administration with some of its most complex foreign policy challenges.

Hong Kong will revert to Chinese control in July 1997 and the US will be observing closely to see that the Chinese government adheres to the commitments it has made in relation to the transition. If China is seen to act with intolerance towards elements of the Hong Kong population, then criticism is certain from both the Clinton Administration and from Congress: under the United States Hong Kong Policy Act passed in 1992, the US government is required to monitor the implementation of the commitments made by China in relation to Hong Kong after sovereignty is resumed. Human rights issues will also continue to be contentious. The eleven year sentence imposed on leading dissident Wang Dan in November 1996, shortly before a scheduled visit by Secretary of State Christopher, was an indication of a continuing tough line by China's leadership on internal criticism: it was announced before the visit that Christopher would take up this matter with his Chinese hosts.(12)

China and the US must also contend with ongoing disputes in trade relations. China in 1996 surpassed Japan as the country with the largest trade surplus with the US (a surplus which is expected to reach $US38 billion for the year). The US is determined to improve market access for US products but this has caused disputes. China has announced restrictive measures against some US imports in protest against recent US trade policy actions.

The Clinton Administration will also face two additional challenges in trade policy with China. Most Favoured Nation status is still subject to renewal on an annual basis, a status which China shares with only six other countries. At present the President is required to seek approval from Congress each year for continuation of MFN, a process which is an incitement to debate and controversy. With China now the fifth largest trading partner for the US and a major market for many American industries this situation has seemed increasingly anomalous. The Clinton Administration faces the question of whether it can secure access for China to MFN on a permanent basis.

A second important issue is whether the US and China can agree on terms by which China can enter the World Trade Organisation. Access by China to WTO membership is supported widely in the US and in East Asia as a major contribution towards consolidating China's legitimate role in international trade and the mechanisms for its regulation.(13) China's economy is still heavily regulated, with the government protecting many state-owned enterprises. China's entry into the WTO could advance US interests not only by improving access for US companies and goods but by placing trade disputes over access to China's market in a multilateral forum, so that the US was not seen as the 'bad guy' in bilateral disagreements.

However, there are reported to be divisions within the US government on how best to approach this issue. As Paul Blustein (Washington Post) recently observed, 'Beijing's interest in joining the group presents a historic opportunity to demand changes in the way China treats foreign companies and goods, and debate is raging among China hands and trade specialists over how tough Washington should be'. Some analysts argue that if China is pressed too hard in negotiations it will remain outside the WTO, given that it is already highly involved in international trade without membership, Other experts argue that China's leadership strongly wants to gain membership and that the US - which absorbs abut one-third of China's exports - would be foolish to pass up the opportunity of pressing China for major concessions. The resolution of this internal debate, will be a vital challenge for the Clinton Administration, as will the maintenance of Congressional support for China's WTO membership.(14)

Japan

The US partnership with Japan remains a cornerstone of regional security arrangements in East Asia and the economic relationship is vital to both countries. Through the 1980s considerable tensions developed in US-Japan relations, as the decline of the Soviet threat encouraged attention in the US to focus on the extent of Japan's trade surplus with the US and the difficulties which many US businesses encountered in gaining access to Japan's market. President Clinton came to office committed to taking strong stands in international trade negotiations and this emphasis was reflected in the relationship with Japan. A series of trade disputes culminated in the highly-publicised conflict over cars and car parts in mid 1995. A number of observers in both countries were concerned that trade issues were being pursued by the US to the detriment of the overall relationship. The longstanding security relationship between the two countries also came under some strain in 1995 over the issue of the presence of US forces on Okinawa. A highly-publicised case of rape against an Okinawan resident led to renewed calls from Okinawans for measures to reduce the presence of US forces.

However in 1996, US-Japan relations were improved by several factors. The Chinese military exercises in the Taiwan Straits highlighted the potential for insecurity in East Asia after the Cold War and also emphasised the crucial ongoing role of the US. In April 1996, during a visit by President Clinton to Japan, the two countries reaffirmed the strength and vitality of their security alliance. The US reaffirmed its commitment to maintain its military presence in Japan and in East Asia, but with an expanded role expected from Japan in paying for its own security. The two countries were able to agree on arrangements to reduce the impact of US forces in Okinawa. US-Japan relations were also boosted by an improved climate in economic relations. The trade deficit with Japan has been declining and in August 1996 China replaced Japan as the country with the largest surplus with the US in trade. Progress was also made in trade negotiations with a new agreement concluded in trade in semi-conductors.(15)

Disagreement continues in US-Japan economic relations in areas including photographic film, and insurance, with US companies seeking improved market access in both areas. However the degree of rancour in negotiations has been reduced substantially. Prime Minister Hashimoto commented in late July 1996 that 'We are not in a situation where we have to worry about a shake up in the relationship between the two countries'.(16)

With both President Clinton and Prime Minister Hashimoto reconfirmed in office after national election, the recent improved climate of cooperation in US-Japan relations should continue. However both the US and Japanese governments will need to give continuing attention to following through the April 1996 joint declaration while maintaining domestic support for their ongoing relationship. In Japan, implementation on the agreements on Okinawa will help reduce concerns about the impact of US bases and operations. In the US, cooperation between the Administration and Congress will be an important factor in ensuring that problems in economic relations do not overshadow the crucial importance of the US-Japan security relationship for the stability of East Asia.(17)

The Korean Peninsula

The situation on the Korean peninsula remains highly unstable and could pose the Clinton with one of its most significant problems in the next four years. North Korea remains largely isolated under a regime which is an anachronistic legacy of the Stalinist era. The poor state of the economy of North Korea has led to widespread concerns about the medium term viability of the regime and a collapse or 'implosion' is possible. Meanwhile the North continues to pose a threat to the security of South Korea through its large armed forces and its potential for provocative actions. The discovery of a North Korean submarine in South Korean waters on 17 September 1996 and the subsequent clashes by South Korean forces with the infiltrators who had landed highlighted the tensions which continue on the peninsula. North Korea's development of advanced weapons, particularly long range missiles, has also been a focus for recent concern.

The recent tensions over the submarine incident have served as a focus for the reaffirmation of South Korea's relationship with the US which will be discussed by President Clinton and President Kim Young Sam when they meet during the APEC summit at Subic Bay in late November. An aide to President Kim commented in early November that 'North Korean provocations are a serious security threat to the peninsula and the region, and President Kim will seek to reaffirm strong alliance with the US against the threat'.(18)

The situation on the Korean peninsula is likely to demand attention from the Clinton Administration in at least two major ways. The Clinton Administration is committed to continuing support for the implementation of the 1994 agreement on the redevelopment of North Korea's nuclear industry (which involves replacement of two nuclear reactors with new and safer 'light water' reactors and provision of petroleum to help meet North Korea's power generation needs). However continued cooperation and support from Congress will be necessary, for example in maintaining funding to support the work of the Korean Peninsula Energy Development Organisation (KEDO) which is to rebuild the North's nuclear capacities in ways which do not threaten nuclear weapons proliferation. As the costs of the project increase, Congress may heighten scrutiny of the Administration's policies. In addition, the redevelopment of North Korea's nuclear industry will involve the transfer of some US-developed technology for the two new light-water reactors. Under the Atomic Energy Act, such a transfer would have to involve a treaty with North Korea which would require Congressional approval.(19)

The Clinton Administration will also need to develop contingency plans to prepare for a possible rapid deterioration in economic conditions and political stability in the North. Such a development would place great strain on South Korea and the US might well be expected to provide assistance.

Indonesia

Relations with Indonesia may be the focus of increased attention during President Clinton's second term. The Administration had maintained friendly relations with Indonesia while on occasion continuing to press US concerns on areas including human rights, labour standards in Indonesia's industries, the situation in East Timor and restrictions on political expression (the US Department of State was sharply critical of the government's crackdown on demonstrations in July 1996).(20) Alongside areas of criticism, the US has sought actively to maintain a cooperative relationship (for example in multi-lateral economic cooperation) and in 1996 had moved to approve the sale of F-16 fighters to Indonesia.

However, late in the 1996 election campaign, attention was given to allegations of substantial contributions to Democratic Party funds by the Indonesian Lippo Group, owned by the Riady family. The Republican party seized on the issue and it was suggested that the Lippo Group might have sought to influence President Clinton through donations of $US1 million to the Democrats (a suggestion denied strenuously by the Administration).(21) Under US law, the receipt of funds by political parties from foreign sources is illegal. Attention was also focussed on the role of John Huang, a fund raiser for the Democratic Party, who had previously been President of the Lippo Bank, a Californian subsidiary of the Lippo Group before being appointed by President Clinton to a senior position in the Commerce department. Huang is now under investigation by congressional committees to see if any of his activities violated US laws.(22)

The controversy over Huang and the Lippo Group seems likely to direct attention to wider issues of US-Indonesia relations including US approaches towards the situation in East Timor. House Speaker Newt Gingrich said after talks with President Clinton on 13 November that he expected that Congress would hold hearings on East Timor. The Republicans will have support on the issue of East Timor from Democratic Senator Russell Feingold who has a long-term interest in the issue. Feingold has already criticised the decision to sell F-16s to Indonesia and Congressional approval of the sale may now be more difficult to obtain.(23)

APEC and Regional Cooperation

The maintenance of consistent United States interest in and commitment to APEC is another important issue for the Asia Pacific. Since the high profile commitment made by the APEC leaders at Bogor in 1994 to secure free trade and investment flows among members by 2010 (for developed member economies) and 2020 (for all members), through a series of working groups and ministerial meetings, APEC members have been developing Individual and Collective Action Plans which will be presented to the next meetings in the Philippines in late November. APEC has been continuing to make solid progress in developing cooperation on trade facilitation but it needs to be seen to be making headway on the commitment to free trade.(24)

President Clinton took an early lead in raising the regional and international profile of APEC at the Seattle meetings in 1993 and continued US active support is obviously vital. The US has had some differences in emphasis on its approach towards how APEC should best operate. In particular, some US policymakers have been keen to use APEC as a mechanism to develop clearly reciprocal arrangements in liberalisation so that US liberalisation measures can be seen to have been matched by comparable commitments and actions by its major trading partners. A number of major East Asia members, by contrast, have preferred a less formal and more flexible approach; these differences in emphasis have still to be resolved.

A key issue for the second Clinton Administration, as it pursues US trade policy in relation to both APEC and the World Trade Organisation, is whether Congress will provide it with 'fast track' authority to conduct trade negotiations. President Clinton has not had this authority since 1994. Under 'fast track' authority, trade and investment agreements are submitted by the President to Congress for a straight 'accept or reject' vote: Congress may not amend any portion of a proposed agreement before voting on it. This authority is necessary for the Administration to be able to continue to pursue in an effective manner the implementation of the APEC commitments. President Clinton was unable to attend the 1995 APEC meetings and the Administration has been preoccupied through much of 1996 by the demands of the re-election campaign. A reassertion of US commitment to APEC with Congressional support is an important goal for the second Clinton Administration.

In the post Cold War environment in the Asia Pacific, regional economic cooperation has so far assumed a higher profile than cooperation on regional security but the initiation of the ASEAN Regional Forum in 1994 has been a promising development. The Clinton Administration has been supportive of the nascent efforts being made through the ARF to build up dialogue on security issues and continuing US interest will help maintain momentum in the ARF process.(25)

Australia's Interests

Australia's close alliance relationship with the US and its deep engagement in the economies of East Asia give it an obvious and direct interest in the character and success of US relations with the Asia Pacific region. Successive Australian governments have made clear Australia's support for the major role the US has played in contributing to regional security through its alliances, its military presence and its support for multi-lateral cooperation. Australia has an equally strong interest in the health and progress the US's major bilateral relationships and especially with China and Japan. Australian governments have sought to give active support to the maintenance of US involvement in the Asia Pacific and Australia's active role in the initiation of and development of APEC has been motivated partly by a wish to see US bilateral relations placed in a productive wider regional context.

The Australian government was not always in full accord with the Clinton Administration during its first term. For example, the Keating government expressed some disagreement with the early emphasis of the Clinton Administration in seeking to link China's access to MFN with human rights progress and was pleased to see this policy withdrawn. Australia also expressed reservations about the US pursuit of its trade disputes with Japan (particularly over the car industry in 1995) in a bilateral manner rather than though multi-lateral channels. Successive Australian governments have also had to contend with the active pursuit by the US of its trade interests, sometimes in ways detrimental to Australian interests. This issue is highlighted by the current dispute over US attempts to bring into question Australian policies in relation to the car industry and textiles, clothing and footwear.

Australia shares interests in parallel with the US in a number of key areas of concern to the second Clinton Administration, particularly the promotion of dialogue with China and progress towards the normalisation of China's economic relations (especially in relation to the WTO), the maintenance of strong US-Japan security and economic relations, and the preservation of stability on the Korean peninsula (where South Korea is Australia's second largest trade partner) and in the advancement of APEC.

The direction of US policies in the Asia Pacific have important implications for Australia's own policies. Australia, for example, has been affected by the increase in tensions between the US and China, particularly since the visit by President Lee in mid 1995.(26) This was evident in 1995 before the change of government in Australia and has been increasingly apparent since mid-1996 when Chinese commentaries have criticised Australia's reaffirmation of its relations with the US after the annual 'Ausmin' meetings in July.(27) Progress by the Clinton Administration in its major areas of priority in the Asia Pacific can have a positive effect on the climate for Australia's own regional relationships, particularly by helping to minimise the likelihood that Australia in pursuing its association with the US is seen to be in any sense reducing emphasis on its own East Asian relationships.(28)

Conclusion

In many ways the economic and security environment in the Asia Pacific region continues to be favourable: economic growth is continuing, regional cooperation is expanding and democratic institutions and practices have been advanced in a number of regional states. The region, however, also faces several issues which could impact adversely on the security environment, especially the combination of rapid growth and political uncertainty in China and the unstable situation on the Korean peninsula.

The Clinton Administration made considerable progress in developing policies towards the region in its first term but continued policy development is required to continue and consolidate the progress already made. The Clinton Administration now has the opportunity to continue the process of upgrading dialogue with China and of encouraging China's further integration into international trade regimes, to maintain the renewed partnership with Japan and to work to ease sources of discord (for example over Okinawa), to sustain the effort to remove the threats posed by North Korea's nuclear capacities and to advance the cause of regional trade liberalisation. In each case, the role of Congress and the capacity for effective cooperation between Congress and Presidency will be essential for the fulfilment of the Administration's policy goals if concentration and momentum are not to be dissipated. The Asia Pacific region thus has an important stake in the immediate and eventual outcome of the 1996 United States elections.

Endnotes

1. Alison Mitchell, 'Stung by Defeats in 94, Clinton Regrouped and Co-opted G.O.P. Strategies', The New York Times, 7 November 1996.
2. Martin Walker, 'The US presidential election, 1996', International Affairs, 72, 4, 1996, pp 657-674.
3. 'The last best Campaign', The Economist , 9 November 1996.
4. R.W. Apple Jnr, 'Despite Some Words of Bipartisanship, More Political Storms are Likely', The New York Times, 7 November 1996.
5. 'Half the Electorate, Perhaps Satisfied or Bored, Sat out the Voting', The New York Times, 7 November 1996.
6. '"Attack ads" linked to declining turnout', The Australian, 8 November 1996.
7. David S. Broder, 'Peace and a strong economy did it: But voters hedge their bets', International Herald Tribune, 7 November 1996.
8. R.W. Apple Jnr, 'Despite Some Words of Bipartisanship, More Political Storms are Likely', The New York Times, 7 November 1996.
9. Kohei Murayama, 'Funding scandals could hamper Clinton's Asian policy', Washington, 9 November 1996, Kyodo News Service.
10. For a survey of US policies towards East Asia in the post Cold War environment see Frank Frost 'The United States and East Asia', Research Paper No 18/1995-96, Parliamentary Research Service, 21 December 1995.
11. For a more detailed discussion of recent US-China relations see Frank Frost, 'The United States and China: Containment or Engagement?', Current Issues Brief No 5/1996-97, Parliamentary Research Service, 16 August 1996.
12. Stephen Hutcheon, 'US hopes to break diplomatic deadlock', Sydney Morning Herald, 19 November 1996.
13. Michael Richardson, 'Asia is hoping for nod to China', International Herald Tribune, 7 November 1996.
14. Paul Blustein, 'Clinton's trade challenge: Playing the China card correctly', The Washington Post, 7 November 1996.
15. International Herald Tribune, 6 August 1996.
16. Reuters , 28 July 1996.
17. Mike M. Mochizuki, 'Towards a New US-Japan Alliance', The Japan Quarterly, 43, 3, July-September 1996, pp 4-16.
18. Moon Ihlwan, 'Seoul to seek tough U.S. stand against N. Korea', Reuters, Seoul, 7 November 1996.
19. Tim Shorrock, '1994 N. Korea nuclear deal could become key U.S. issue', Journal of Commerce, 12 November 1996.
20. 'US deplores attack on demonstrators', Australian Financial Review, 31 July 1996.
21. John F. Harris, 'Clinton Denies DNC Funds Had Influence', The Guardian Weekly, 17 November 1996.
22. Nigel Holloway, 'Donor Doubts', Far Eastern Economic Review, 7 November 1996.
23. Jennifer Hewitt, 'Congress will target rights abuse in Timor', Sydney Morning Herald, 14 November 1996.
24. Alan Oxley, 'Slow and steady will win the race', Australian Financial Review, 12 November 1996.
25. Mochizuki, loc cit.
26. Colin Mackerras, 'China', in Russell Trood and Deborah McNamara eds, The Asia-Australia Survey 1996/97, Melbourne, MacMillan, 1996, p 57.
27. 'Australia and Japan are the claws US will use to entrap us, says China', Australian Financial Review, 8 August 1996.
28. David Jenkins, 'Why we still need our Uncle Sam', Sydney Morning Herald, 16 November 1996.

Appendix

FACT SHEET: MAJOR ACCOMPLISHMENTS IN THE ASIA-PACIFIC REGION
(Released by State Department 8 November 1996)

Washington - The State Department released a fact sheet November 8 highlighting significant Clinton Administration accomplishments in the Asia-Pacific Region.

ASIA-PACIFIC REGION: MAJOR ACCOMPLISHMENTS

The Clinton Administration has laid the groundwork for a more secure, prosperous and free Asia-Pacific. It has:

1. Elevated the region on the foreign policy agenda through the President's Pacific Community vision and addressed Asian fears of U.S. disengagement - through, inter alia, maintaining our force levels, revitalizing our security alliances, lifting APEC to the Leaders level, and shaping regional security dialogues. In addition, we can cite the achievements listed below.
2. Frozen - and will eventually dismantle - the most urgent security threat of four years ago, the North Korean nuclear program.
3. Strengthened U.S. - Japan ties, the most important bilateral relationship in the world, highlighted by the President's April 1996 trip with its broad communique of cooperation and reaffirmation of the security alliance.
4. Stabilized the most difficult bilateral relationship with an emerging, nationalist and transitional China and laid out a road map of higher level meetings for future progress.
5. Normalized relations with Vietnam, thereby achieving the most cooperation ever on the POW/MIA issue, promoting our security and economic interests, and healing the wounds of our most divisive war.
6. Supported Cambodia's dramatic progress away from the Killing Fields - UN elections, return of 400,000 refugees, removal of Vietnamese, Chinese and Thai interference, coalition government, decimation of Khmer Rouge threat.
7. Promoted aggressively American economic interests in the world's most dynamic region, globally (Uruguay Round and WTO), regionally (APEC's free trade and investment in the Pacific by 2020) and bilaterally (23 agreements with Japan, opening the market, expanding our exports, and reducing the trade deficit). In addition, highlighted the importance of economic issues generally to U.S. foreign policy.
8. Taken a prominent role in shaping a new regional security architecture through creation of the ASEAN Regional Forum and other security dialogues while shoring up alliances and maintaining force levels.
9. Other accomplishments:

• Encouraged democracy; e.g. Taiwan (stronger unofficial ties, movement of carriers), Mongolia (diplomatic and economic aid), Thailand and the Philippines (upcoming Presidential visit).
• Reaffirmed security ties with Australia (new security declaration and exercises, upcoming Presidential visit).
• Revitalized political ties with New Zealand (without according it allied status).
• Integrated global views into the fabric of U.S. foreign policy by pursuing international arms control (NPT extension, CTBT) and environmental policies (Rio conferences, global warming, coral reef) that benefit entire region, including South Pacific.

Source: USIS Washington File, 8 November 1996

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