TEXT: 2/10 STANLEY ROTH TESTIMONY ON U.S.-ASIA RELATIONS
(1999 will not be a repeat of 1998)Washington -- It would be a mistake to believe that 1999 will be a repeat of 1998, according to Assistant Secretary of State Stanley Roth.
In testimony before the House International Relations Subcommittee on Asia and the Pacific February 10, Roth said: "The people of Asia face a more uncertain future, but, in the long run, not necessarily a worse future. This period of change has been, and will continue to be, difficult for some time to come."
Addressing the Asian financial crisis, Roth predicted that each of the three countries initially most affected by the crisis -- Thailand, Korea, and Indonesia -- should witness improved economic performance in 1999. "The most dramatic turnaround is anticipated to occur in Korea, where the International Monetary Fund -- the IMF -- recently forecast a 2 percent growth in GDP," he said.
Maintaining this positive trend, Roth said, will depend first and foremost on what the countries of the region do for themselves. "Asian economies still face immense challenges in areas such as bank and corporate restructuring; areas essential for the restoration of sustained growth. Political instability associated with the June Indonesian elections or the adverse impact on investor confidence based on economic developments in other regions -- the contagion factor -- also immediately come to mind," he said.
"The state of the Japanese economy will be critical as well," Roth said. "Despite significant steps by the Japanese government to address its banking crisis and stimulate its economy, it remains unclear if these measures will be sufficient to lift Japan out of recession. With the Japanese economy representing more than half of Asia's GDP, the state of Japan's economic health -- or failure to regain it -- will be critical to the region's overall economic health," he said.
Roth insisted, however, that given the strength of the U.S.-Japan security relationship and the convergence of bilateral international interests on so many issues, it would be incorrect to conclude that the U.S.-Japan relationship will be characterized solely by economic issues. "The challenge in 1999 will be to maintain the proper balance in the relationship. I look forward to Prime Minister Obuchi's trip to the U.S. in May, and the opportunity it represents to underscore the robust and diversified nature of this cornerstone relationship in Asia," he said.
Turning to China, Roth said the Clinton Administration's strategy of engagement with China, and the political will to implement it on both sides, has helped to put U.S.-China relations back on a more productive track. "The exchange of state visits between President Clinton and President Jiang personified this progress, but it also provided momentum for movement forward on issues of mutual concern. Among the successes we can point to are tangible progress on promoting stability on the Korean peninsula and in South Asia, and resolving the Asian financial crisis," he said.
Roth cautioned, however, that the United States and China still must resolve difficult problems such as human rights. The Administration is deeply concerned about the recent arrests and prosecution of prominent democracy advocates, he said. "China's detention, trial, and sentencing of democratic activists is deplorable. We continue to press for improvements in China's human rights situation."
Roth added that the Administration raises "individual cases and systemic issues, including China's ratification and implementation of key international covenants that it signed over the last two years. Last month Assistant Secretary Koh held a three day dialogue on human rights with Chinese officials. Next month we will be working in Geneva at the UN Human Rights Commission where we also intend to express our views clearly and forcefully."
"We are pressing for improvements in the human rights situation throughout China, including in Tibet," he continued. "We continuously urge the Chinese government to engage in substantive dialogue with the Dalai Lama and to preserve and protect the unique cultural, linguistic and religious heritage of Tibet."
Roth's testimony also addressed issues relating to the Korean Peninsula, Indonesia, and the importance of regional institutions such as the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) forum.
Following is the official text of Roth's testimony:
(begin text)
TESTIMONY OF
STANLEY O. ROTH
ASSISTANT SECRETARY OF STATE FOR
EAST ASIAN AND PACIFIC AFFAIRS
HOUSE INTERNATIONAL RELATIONS COMMITTEE
ASIA AND THE PACIFIC SUBCOMMITTEE
FEBRUARY 10, 1999
Introduction
Mr. Chairman, thank you for the invitation to speak on challenges in U.S.-Asia policy as the 106th Congress and your Subcommittee begin your work of this session.
In 1998 we witnessed a period of great change in Asia. Many previously accepted norms have given way. First, the notion of a permanent "Asian miracle" -- a notion fueled by years of high growth rates -- evaporated as several key economies contracted sharply and many others cooled down or slipped into recession.
Second, as the Asia-Pacific region suffered the consequences of the economic crisis, a demand for new political leadership emerged in many countries. This included, most notably Indonesia, where President Soeharto was toppled by street violence after 32 years in power. Only a year and a half after the onset of the economic crisis, the previously stable landscape of Asian political leadership has been altered by the rise to power of many new leaders: in Indonesia, President Habibie; in Japan, Prime Minister Obuchi; in Korea, President Kim Dae Jung; in New Zealand, Prime Minister Shipley; in the Philippines, President Estrada; and in Thailand, Prime Minister Chuan.
Third, 1998 proved to be a challenging year for the regional institutions of APEC and ASEAN/ARF, which struggled to demonstrate their relevance in the face of the economic crisis.
The people of Asia face a more uncertain future, but, in the long run, not necessarily a worse future. This period of change has been, and will continue to be, difficult for some time to come. But, it would be a mistake to believe that 1999 will be a repeat of 1998.
In these initial remarks today, rather than attempting to be comprehensive, I would like to concentrate on two cross-cutting issues and four country-specific priorities.
The Asian Financial Crisis
Without in any way underestimating the need to deal with the still serious social and humanitarian consequences from the Asian financial crisis, it should be recognized that 1999 will be different from 1998.
In each of the three countries most seriously affected initially by the crisis -- Thailand, Korea, and Indonesia -- 1999 should witness improved economic performance. The most dramatic turnaround is anticipated to occur in Korea, where the International Monetary Fund -- the IMF -- recently forecast a 2 percent growth in GDP.
December IMF figures indicate that the Thai economy contracted by 8% in 1998. The outlook for 1999 is better, with some Thai officials even predicting a return to positive growth by the end of the year. Even in Indonesia, which is less far along in its recovery, the 15% negative growth rate of 1998 should slow to a less calamitous IMF-estimated negative 3.4% in 1999 as the economy begins to bottom out.
Asian economies which were, relatively speaking, less impacted by the financial crisis -- Singapore, the Philippines, Taiwan -- are likely to continue in that trend. The IMF expects the Philippines to have a 2.5% growth rate; down from its pre-crisis rates, but nonetheless positive. Singapore, likely to experience continued recession in the first half of 1999, nevertheless does not expect to drop into negative growth rates for the year as a whole. Taiwan, whose export led economy is particularly vulnerable to the overall health of the region, is hoping to maintain growth rates near last year's 5% level.
Obviously there is much that could disrupt this guardedly positive outlook. First and foremost will be what the countries of the region do for themselves. Asian economies still face immense challenges in areas such as bank and corporate restructuring; areas essential for the restoration of sustained growth. Political instability associated with the June Indonesian elections or the adverse impact on investor confidence based on economic developments in other regions -- the contagion factor -- also immediately come to mind. The state of the Japanese economy will be critical as well.
Despite significant steps by the Japanese government to address its banking crisis and stimulate its economy, it remains unclear if these measures will be sufficient to lift Japan out of recession. With the Japanese economy representing more than half of Asia's GDP, the state of Japan's economic health -- or failure to regain it -- will be critical to the region's overall economic health.
The Significance of Regional Institutions
One of the main accomplishments of the Clinton Administration in Asia has been vigorous support for the establishment and strengthening of regional institutions. We were the catalyst for the first Leaders Meeting in APEC, and strongly supported the initiative of the Association of Southeast Asian Nations -- ASEAN -- to establish the ASEAN Regional Forum.
1998 was, admittedly, a difficult year for ASEAN. With its most populous member, Indonesia, preoccupied with internal problems, with difficulty arriving at consensus with its expanded membership and with the rise of bilateral tensions between some of its members, ASEAN certainly appeared less robust than in previous years. These problems spilled over into the ASEAN Regional Forum (ARF), which had difficulty bringing attention to bear on security issues such as the South China Sea.
Some observers, generalizing from these experiences, have been quick to conclude that ASEAN is permanently weakened. I do not share this view, and believe instead that ASEAN's deft response to the delicate 1997-98 Cambodian situation is more predictive of its future utility. I expect to see ASEAN's effectiveness increase as the region's general vitality returns.
Similarly, cries of the irrelevance of the Asia Pacific Economic Cooperation, APEC, seem misplaced to me. What APEC is, and will remain, is the best vehicle through which we can make it easier for business to do business in the region. Founded on the concept of trade and investment liberalization, APEC was never intended -- or structured -- to be an Asian IMF.
APEC leaders did, however, embrace a comprehensive strategy to strengthen national financial systems, to improve transparency and accountability, and to help restore sustainable growth in the region. In addition, at Secretary Albright's initiative, APEC will work to develop a social framework for growth to help those most vulnerable to the hardships arising from the crisis. Leaders also adopted the vision of an integrated gas infrastructure for the region, pushed forward efforts to promote and facilitate the development of electronic commerce, and renewed their commitment to advance sustainable development including programs on sustainable cities, cleaner production, and protection of the marine environment.
The President's planned participation at the September APEC Leaders meeting in New Zealand will help to re-affirm APEC's dynamism. So too, I believe, will our efforts to define a solid work program intended to highlight APEC's unique ability to promote trade and investment liberalization.
Japan: Cornerstone in Asia
It is not an accident that I address Japan as the first of four bilateral focal points: Japan remains the cornerstone of U.S. security in Asia. President Clinton's trip at the end of 1998 was successful in emphasizing this point and in strengthening our bilateral relationship. 1999 should see further improvements.
We are presently positioned to make good progress on a range of bilateral security issues in 1999. Senior Japanese elected officials have assured us of their commitment to passage of legislation to implement the Defense Guidelines. Recent Okinawa election results bode well for progress on crucial base issues, including the relocation of Futenma Marine Corps Air Station. We expect that the Diet will approve funding for research cooperation with the U.S. on Theater Missile Defense (TMD.) Perhaps most important, the relevance of our security relationship in the post cold war period has been amply demonstrated by our close cooperation -- both bilaterally and trilaterally -- on Korean peninsula issues.
Our partnership on global issues of mutual concern -- our "Common Agenda" -- is also faring well. Launched in 1993 by President Clinton and then Prime Minster Miyazawa, the U.S. and Japan are now working together around the world -- in more than 200 projects -- to fight disease, study climate change, and protect the environment.
The strength of our traditional security relationship and our emerging global issues agenda does not diminish, however, our concerns about Japanese economic issues. In 1998, the robustness of the U.S. economy helped to buffer the effects on Asia of the weakened Japanese demand for goods and services, but clearly, for its immediate neighbors, there is no substitute for a healthy Japan.
Since coming to power in July of 1998, Prime Minister Obuchi's government has taken significant steps to address Japan's banking crisis and stimulate its economy. While Japanese officials believe that these measures will be sufficient to avoid a banking crisis and lift Japan out of recession in 1999, persistently sluggish private demand and worrisome rises in interest rates, give reasons for concern.
For the fiscal stimulus of this year to translate into sustained positive growth in the longer term, Japan needs to deregulate and open its markets further. It has taken some steps in this direction, notably in the financial sector, but structural changes need to go broader and deeper. We are looking for positive results this spring in the second year of our bilateral "Enhanced Initiative on Deregulation."
In addition to macroeconomic policy, trade issues remain a very serious concern. In 1999, the U.S. trade deficit with Japan could reach a new record of over $66 billion. I know that the members of this committee follow trade issues -- such as our discussions concerning deregulation and competition policy, Japanese steel exports to the U.S., Japanese government procurement, and WTO related concerns -- closely. In each of these diverse areas the U.S. is not seeking undue access or special treatment. Rather, we seek a level playing field. And in doing so, it should be emphasized -- as President Clinton did in his trip to Japan -- that Americans will not be the primary beneficiaries of a more open Japanese market place. Ultimately, it is the Japanese consumer who will benefit from greater selection, greater competition, and lower prices.
Given the strength of our security relationship and the convergence of our international interests on so many issues, I think it is incorrect to conclude -- as some have argued -- that the U.S.-Japan relationship is, or will be, characterized solely by economic issues. The challenge in 1999 will be to maintain the proper balance in the relationship. I look forward to Prime Minister Obuchi's trip to the U.S. in May, and the opportunity it represents to underscore the robust and diversified nature of this cornerstone relationship in Asia.
U.S.-China Relations
Many experts consider China the greatest foreign policy challenge facing the U.S. today, and with good reason. China's remarkable economic achievements, increasing diplomatic prominence and growing military strength over the course of the past decade have made the utility of constructing a cooperative relationship with China all the more pressing.
Before turning to U.S. China policy, I would like to set the context with a few observations about internal developments within China. The bottom line is that 1999 will be a difficult year. The Asian financial crisis is beginning to have a noticeable impact on the Chinese economy. Implementation of previously announced reforms, including privatization of state economic enterprises and getting the military out of the economy, have not been fully achieved. The banking system continues to experience considerable difficulty. The cumulative impact of all of these factors has been a marked slowdown in growth, which in turn has affected social stability as evidenced by protests by laid off workers and hard pressed farmers. Recent terrorist activities in border provinces associated with separatist movements have contributed to leadership anxiety. The overall picture, then, is of a China that is experiencing considerable problems in its ongoing path towards modernization.
The Administration's China policy must deal with this complex reality. Our efforts are geared to facilitate the emergence of a China that is stable and non-aggressive; that cooperates with us to build a secure regional and international order; that adheres to international rules of conduct; that has an open and vibrant economy; and that works to protect the global environment. We work to achieve these goals by engaging China.
Engagement, as Secretary Albright has often noted, is not the same as endorsement; it is not about turning a blind eye to practices at odds with our principles or about forsaking democratic ideals in the name of political expediency. Engagement is quite simply a way to move beyond the sterile shouting match which had characterized US-China relations after Tiananmen by establishing an overall strategic framework based upon the growing intersection of shared interests, thereby increasing opportunities for cooperation and improving the prospects for resolving differences.
This strategy, and the political will to implement it on both sides, has helped to put U.S.-China relations back on a more productive track. The exchange of state visits between President Clinton and President Jiang personified this progress, but it also provided momentum for movement forward on issues of mutual concern. Among the successes we can point to are tangible progress on promoting stability on the Korean peninsula and in South Asia, and resolving the Asian financial crisis.
We are encouraged by China's serious study of membership in the Missile Technology Control Regime. We look forward to productive cooperation towards a Biological Weapons Convention Protocol and implementation of the Chemical Weapons Convention and we are pleased with the substantial steps China has taken in recent years to bring its nuclear non-proliferation practices into line with international norms.
The strategy has also helped create a positive environment for the resumption of discussions between Taipei and Beijing. In the past year, we have welcomed important developments in cross-strait talks that have enhanced the prospects for peaceful resolution of cross-strait issues. The October 1998 visit of the top Taiwan negotiator, C. F. Koo, to Shanghai and Beijing and the upcoming visit of the PRC negotiator to Taiwan are both positive and promising developments.
But even as the U.S. and China find new ways to move forward with such strategic cooperation, we must also make progress on resolving difficult problems. Human rights is an important case in point.
The Administration is deeply concerned about the recent arrests and prosecution of prominent democracy advocates. Secretary Albright recently addressed the heart of our concerns when she said:
"I could not fairly represent [the American people] if I did not emphasize America's belief that organized and peaceful political expression is not a crime or a threat; it is a right that is universally recognized and fundamental to the freedom and dignity of every human being. Accordingly, we are profoundly distressed by the unjustified prison sentences recently imposed upon a number of Chinese who tried to exercise that right."
China's detention, trial, and sentencing of democratic activists is deplorable. We continue to press for improvements in China's human rights situation. We raise individual cases and systemic issues, including China's ratification and implementation of key international covenants that it signed over the last two years. Last month Assistant Secretary Koh held a three day dialogue on human rights with Chinese officials. Next month we will be working in Geneva at the UN Human Rights Commission where we also intend to express our views clearly and forcefully.
We are pressing for improvements in the human rights situation throughout China, including in Tibet. We continuously urge the Chinese government to engage in substantive dialogue with the Dalai Lama and to preserve and protect the unique cultural, linguistic and religious heritage of Tibet. We were disappointed that there has not been PRC follow-up to President Jiang's overture to the Dalai Lama at the June, 1998 summit. We urge the Chinese authorities to establish a meaningful and productive dialogue with the Dalai Lama or his representatives.
Turning to economic issues, in 1998 the U.S. trade deficit with China -- second only to the U.S. deficit with Japan -- was $58 billion. Against this backdrop, we have begun to see new Chinese protectionist measures. Long-standing trade irritants over agricultural products -- wheat, meat, citrus -- remain unresolved. I hasten to add however, that the news is not all negative. U.S. exports to China last year rose 11% and U.S. companies increased their market share compared to their foreign counterparts.
The Administration believes the best way to address these problems and to give American businesses fair access to China's markets -- just as China has access to U.S. markets -- is to bind China to the rules and standards of the World Trade Organization. We are working hard to move China in this direction by negotiating a commercially meaningful agreement with them.
The Administration is also very mindful of the issues raised in the Cox Committee's report. Clearly, we need to maintain effective measures to prevent the diversion of U.S. technology and prevent unauthorized disclosure of sensitive military information. We welcome the committee's recommendations on ensuring effective export controls and strong protections in the context of our national security, foreign policy, and economic objectives.
The Korean Peninsula
There is no greater threat to peace and stability in the Asia-Pacific region than the situation on the Korean Peninsula. The combination of the discovery of a suspect underground facility and the August 31 test of a Taepo-dong missile has raised tensions in the region and raised questions about the viability of the Agreed Framework if these issues are not satisfactorily resolved.
In response to these developments, the Administration has held several rounds of negotiations with the DPRK concerning the suspect facility. We have made several points absolutely clear:
-- unless this issue is resolved the Agreed Framework will be at serious risk;
-- this issue can only be resolved by full access to this suspect site and that one visit won't be sufficient; and
-- the United States will not "buy" compliance with the Agreed Framework.
In every negotiating session with the DPRK, we also make it clear that a second long-range missile test would have serious consequences and could jeopardize KEDO funding and other aspects of our relationship.
At the same time we have reiterated our intention to continue to supply food aid to North Korea in 1999 on a humanitarian basis, in response to World Food Program appeals.
While our most recent discussions in Geneva on the suspect facility showed some movement, they have not yet come to closure, and we expect to hold another round of talks in February.
The DPRK has been less forthcoming on missile talks. The Administration is pressing the DPRK very hard on this issue. We expect another round of talks soon.
As we continue to seek progress on these two issues the United States and our two key allies have agreed that funding for KEDO should continue. The termination of such funding while negotiations are underway would only provide an opportunity for the DPRK to leave the negotiating table, on the grounds that we were not fulfilling our obligations under the Agreed Framework.
I want to assure the Committee that the Administration is fully aware of the provisions in the legislation enacted last year conditioning KEDO funding on progress with respect to both the suspect facility and the missile talks. Beyond the legal requirements, the point I would like to stress is that the Administration shares the same concerns as the Congress. The Agreed Framework and KEDO are not ends in themselves; their purpose is to freeze the DPRK's existing graphite-moderated nuclear reactors, the reprocessing facilities, the spent fuel storage, and other related facilities at Yongbyon in order to stop a serious proliferation threat. Unless our concerns about the suspect facility are addressed, we will have to address the question of whether the Agreed Framework is working.
It is for precisely this reason that Dr. William Perry, the former Secretary of Defense, has been asked to undertake a comprehensive and thorough review of our North Korea policy. I am confident that his close consultations with Congress, outside experts, our allies in Seoul and Tokyo and other countries, will result in a meaningful contribution to our North Korea policy.
Indonesia
Indonesia, the fourth most populous country in the world, has been the hardest hit by the Asian Financial crisis. The country straddles vital international shipping and air lanes, has vast natural resources, and wields significant influence in Southeast Asian politics. All this makes it of strategic importance to the U.S. Although many reasons for concern remain in Indonesia, much has been accomplished since President Soeharto's forced resignation last May.
The most dramatic and welcome development in Indonesia in 1998 was the rapid emergence of many aspects of democratic government, including a free press and the right to organize political parties. The upcoming June elections have the potential to be the first truly democratic elections in Indonesia in more than 40 years. Or, putting it another way, that makes these elections the first since 1955 where the outcome is not known in advance.
The success of the elections constitutes our highest short-term priority for Indonesia, since they constitute a necessary, if not sufficient, condition for the restoration of political stability and economic recovery. The newly passed election laws have been accepted by all of the major opposition leaders in Indonesia as sufficient to allow for free competition. The growing spectrum of diverse political parties -- all of which currently believe they will win in the elections -- is another indicator of a healthy political process.
Nonetheless, there are any number of challenges facing the elections including the possibility of manipulation, boycotts, and discontent with the retention of un-elected parliamentary seats by the military. Working with USAID, we have allocated more than 20 million dollars towards supporting the elections. But this is far short of the amount needed and we are working closely with other potential donors to ensure that additional necessary monies are made available to Indonesia on a timely basis.
Another positive change under President Habibie has been the willingness of the Indonesian government to participate in serious negotiations for a political resolution to the East Timor situation. The two major proposals offered by the Indonesian government, broad-based autonomy and independence, certainly provide a basis for negotiation and potentially for resolution of the issue, although other outcomes may well emerge in the UN-sponsored negotiations.
However, it should be emphasized that any viable solution in East Timor must seek to avoid the type of bloodshed that occurred in 1975 when Portugal withdrew. For this reason we are deeply concerned by numerous reports that the Indonesian army has been arming pro-integration militia groups. When I met with Defense Minister Wiranto in Jakarta last week to express this precise concern, he indicated that he supported a proposal by Xanana Gusmao to disarm all paramilitary forces on East Timor. While I welcomed his statement, implementation remains key.
Even as I emphasize several important areas of positive change in Indonesia, I do not mean to ignore the numerous difficult problems that remain. First and foremost, is the problem of containing the violence that has arisen in so many parts of Indonesia, including but by no means limited to East Java, Aceh, Ambon, and East Timor. The Indonesian government is obligated to protect the lives and well-being of all of its citizens, including those of Chinese descent.
A second set of issues revolved around the economy, which experienced 15% negative growth last year and will continue to contract this year, albeit at a slower pace. Indonesia must do its share to continue its implementation of its economic reform program agreed to with the IMF, World Bank, and Asian Development Bank, and which is essential to restoring confidence and growth to its economy. At the same time, it is crucial that the international community remains committed to seeing the economic recovery process through and to addressing social safety net programs to help Indonesia's poor.
Conclusion
I know that this Subcommittee has great interests in Cambodia, Burma, Malaysia, and other countries in the region which I have not highlighted in these opening remarks. I look forward to discussing these with you.
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