APEC MEETINGS OPPORTUNITY TO TALK ABOUT RESTORING GROWTH
(Article on briefing by senior U.S. official)
By Robert F. Holden
USIA Staff WriterKuala Lumpur -- The United States sees the latest round of Asia-Pacific Economic Cooperation (APEC) meetings as an important opportunity to talk about how to restore growth in the Asia-Pacific region, according to a senior U.S. official.
During a background briefing with the press November 12, the official said President Clinton had been stressing the need for such a growth strategy since his speech to the Council on Foreign Relations September 14.
That growth strategy, the official said, contains five elements:
The first, the official said, pertains to what developed countries can do to maintain growth. "For some it's maintaining momentum forward -- that's the United States and lots of Europe, and we've been doing that. For Japan it is bank reform -- enacting, moving forward on bank reform and, not only enacting it, but implementing it; it's deregulation, and it's opening their markets."
For the second element, the official said, developing countries need to restore macro-economic stability, strengthen financial institutions and improve government.
The third element, the official said, is global in that it will require the creation of an international financial system that helps to restore confidence around the world, because it's very evident that confidence has been shaken over the last 18 months.
The fourth element involves paying attention to those vulnerable groups which have been most seriously affected by the crisis, the official said. "How do you re-create job opportunities for them? How do you get them back into the growth economy? How do you get them out of poverty, get them enough food, health, education so that they can be productive again? ...How do you do with so-called 'safety net' issues."
Finally, the official said, President Clinton has made clear that any growth strategy has to deal with opening markets, that we can't really make progress forward if the world is not going forward.
"So that's what this meeting is about," the official said. "This meeting is looking at those five elements and trying to pull them together and to come out of here with a broad consensus that that's the way forward. If we come out with that, I think it would be an enormous success."
"As we talk here in the Asia-Pacific," the official said, "we see that the Early Voluntary Sectoral Liberalization (EVSL) initiative is a good way for APEC economies to demonstrate that they're committed to moving forward, that they are still targeted on the Bogor goal of free and open trade investment, that they are taking steps. At least one of the economies that has been most seriously affected by the crisis is in the process of demonstrating that they are prepared to take significant measures to open up as part of this initiative. And several of them have shown that they are already taking hard measures to restore fundamentals."
"Only one APEC economy is not prepared to participate in all nine sectors," the official said, referring to Japan's objections to liberalizing in two sectors -- forest products and fisheries. "We need some flexibility too in one or two areas but flexibility doesn't mean striking whole sectors," the official said. . "I think that Ambassador Barshefsky has said before that we will work with Japan, but you can't work with nothing."
"We're working very hard on coming up with a package that achieves what the Leaders and Ministers asked us to do (at the APEC meetings in 1997), which is a package that's economically significant, balanced, and mutually beneficial. ... It's going to be hard to find economic significance in a package that doesn't include the second largest economy in the world. It's going to be hard to find a message that says that Japan is really participating when the only concessions that they are making are in sectors where they already don't have tariff barriers."
The United States is willing to be flexible about letting developing countries liberalize the nine sectors in stages, the official said. "Japan," the official said, "is not a developing country."
"Japan and the United States have been working very closely on the financial crisis as well as a variety of other issues ever since (the crisis) started and I expect that we will continue to work very closely with them," the official said. "We are hopeful that we will be working just as closely with them on market opening which is also an important piece of the growth strategy."
The official added that the APEC senior officials were actively talking about how to accelerate financial sector reform and how to accelerate solutions to corporate debt.
"The big question in this region is how to restore growth," the official said. Financial sector reform is fundamental to restoring growth "in those countries there is a liquidity problem because the banks aren't lending because they are trying to strengthen their balance sheet," the official said. "And there is a huge problem in the corporate sector because they're burdened down with a massive debt and they can't get new financing until they deal with their old debt questions."
It makes sense to focus on how to accelerate that process, the official said. "Not by just giving the money because away money isn't the answer. What you've got to do is get some real serious reform. So the question is how to accelerate the reform process that's going forward through the work of the IMF, the World Bank and individual countries themselves."
Return to The United States and APEC.Return to IIP Home Page.