The 21 member economies of the Asia-Pacific Economic Cooperation forum have reached a compromise on the contentious question of revising its 1995 guideline for liberalizing trade and investment within the Pacific Rim by 2020.

According to government sources, the Osaka Action Agenda, which now simply calls for the APEC economies to "progressively reduce" import tariffs, will be rewritten to call for them to "progressively reduce" import tariffs "until the Bogor goal (of liberalizing trade and investment by 2002) is fully achieved."

The APEC economies have agreed, however, to retain basic principles for achieving the liberalization goal, such as "voluntarism" and "flexibility," in modifying the Osaka Action Agenda, the sources said.

The compromise agreement was reached among working-level APEC officials preparing for an annual meeting of top APEC leaders in Shanghai, the bustling Chinese coastal city, in late October, the sources said.

At their 1994 summit in the Indonesian resort of Bogor, top APEC leaders set the goal of liberalizing trade and investment within the region by 2010 for industrialized members and by 2020 for developing members.

The APEC leaders then adopted the Osaka Action Agenda at their 1995 summit in the western Japan city as a road map for reaching the Bogor goal. At their last summit in Brunei, the APEC leaders agreed to review the Osaka Action Agenda before they meet again in Shanghai in October.

In an apparent bid to give a fresh momentum to APEC's liberalization goal, which has been stalled since the 1997-1998 Asian financial and economic crisis, the United States has insisted on including the phrase of "tariff elimination" in the 1995 document.

The U.S. demand put itself and other industrialized APEC members, except Japan, against most developing APEC members in Asia, who vehemently object to the U.S. drive for a tariff elimination. Canada, Australia and New Zealand backed the U.S. stance.

Most developing APEC members in Asia do not want to see the focus of APEC shift back to liberalization from economic and technical cooperation extended from the industrialized camp to developing members.

At the heart of the dispute is the fact that no agreement has been reached yet even on the definition of "liberalization."

If liberalization is taken in the broadest sense, APEC economies would have to do away with all import tariffs. But if liberalization is taken in the narrowest sense, they would only have to lift bans or quotas on foreign products and investments by the deadlines set in Bogor.

Although the APEC economies reached a compromise agreement on how to revise the Osaka Action Agenda, the question of how to define "liberalization" remains unresolved, making it likely that APEC will face a similar row over liberalization in the future.

Unlike liberalization negotiations held under the auspices of the World Trade Organization -- where parties engage in intense haggling, swap concessions and thrash out legally binding agreements -- the 12-year-old APEC's mode of operation is quite unique.

While leaving the definition of "liberalization" ambiguous, the Osaka Action Agenda's basic principles, such as "voluntarism" and "flexibility," allow each APEC member economy to continue protecting politically sensitive domestic markets, like Japan's rice farmers, and advance toward liberalization at its own pace.

The compromise wording of the revised Osaka Action Agenda will allow developing APEC members in Asia to claim that they have not committed themselves to tariff elimination.

But at the same time it will allow industrialized APEC members minus Japan -- who generally tend to interpret "liberalization" as elimination of all import tariffs -- to contend that by agreeing to include the phrase of "until the Bogor goal is fully achieved," all APEC economies are now committed to tariff elimination by 2020.

The 21 APEC economies are the U.S., Canada, Mexico, Chile, Peru, Japan, South Korea, China, Taiwan, Hong Kong, Indonesia, the Philippines, Malaysia, Singapore, Thailand, Brunei, Vietnam, Australia, New Zealand, Papua New Guinea and Russia.