TRANSCRIPT: APEC COORDINATOR WOLF 10/27 PRESS CONFERENCE
(APEC liberalization process moves forward every year)

Singapore -- The process of getting to the Asia-Pacific Economic Cooperation (APEC) goal of free trade and investment by 2010/2020 is a continuous one, according to Ambassador John S. Wolf, U.S. Coordinator for APEC.

"It goes forward every year, and this year we have some exciting additional possibilities in terms of Early Voluntary Sectoral Liberalization that add to our own unilateral liberalization efforts," he said.

During a press conference following the first day of the APEC Senior Officials' Meeting (SOM) in Singapore October 27, Wolf said: "You could say that APEC is out there pushing, and the fact that there is so much vitality in the Early Voluntary Sectoral Liberalization proposal is another good sign. The Leaders' Declaration last year talked about getting recommendations to Leaders in a couple of years on where APEC could continue to pursue early sectoral liberalization. (APEC Trade) Ministers when they met in Montreal in May accelerated that process by two years, and they've asked for proposals on which they can base recommendations to Leaders this year."

"This year," he said, "we hope that ministers will make decisions on additional sectors where APEC can continue to push the liberalization envelope, indeed push the global liberalization envelope in a number of cases, and where it doesn't do that at least address some significant issues in the region like some specific testing, harmonization, conformity issues, custom issues which are already being dealt with but which can be given a new emphasis by this process."

APEC, Wolf said, has matured and is far different from the forum that got its start in Canberra in 1989. And the APEC Leaders' Meeting process, which got its start at Blake Island near Seattle in 1993 has changed as well, he said.

"In some ways when the Leaders met last year and the year before and the year before, there were no issues pressing in on the region," Wolf said. "There are issues pressing in on the region now. It is not a region of growth everywhere, of rising income, everywhere, of clear blue skies everywhere. There are some issues out there. There is gray sky outside our window out here, and there have been some storm clouds in the financial markets over the last four months. Many people who live in the region would not describe them as storm clouds but rather thunderstorms."

"In any event," he said, "the Leaders will doubtless discuss some those issues because they are issues that are important to everybody."

Wolf took issue with those who have said that developed countries like the United States, take a certain pleasure in seeing problems in the region. "Nothing could be further from the truth," he said. "Our economies in the United States and in the region are tightly interwoven. ...ASEAN as a whole (is) America's fourth largest trading partner. American firms have tens and tens billion of dollars invested out here. What goes on out here has an impact on us, and so we have to be concerned by the issues of the region and we are."

Following is a transcript of the press conference:

(begin transcript)

WOLF: It's good to meet with you, and I understand some of you may have already endured one session when I was on Worldnet the other night. So for those of you who did, please bear with me. I'm going to say some of the same things again just to sort of set a framework and then I'll be glad to answer your questions.

You know our participation in APEC for the United States is part of a larger foreign policy as President Clinton has talked about a vision of the Pacific community based on a mutually reinforcing framework of shared strength, shared prosperity, shared commitment to democratic values. So we work on that in a variety of ways. Security side, bilaterally and through the ASEAN regional forum. We work on democratic values in a variety of ways. It's a very important issue for us, and on economics, APEC is clearly a multilateral means by which we work on a variety of interests in terms of economic cooperation.

Quite often, we get into an argument in APEC circles about whether APEC is a trade organization. It is not. APEC is an economic cooperation forum. It deals with issues that are related to opening up the market place and building the market place, and as our Leaders talked about at Blake island and since the real idea is to build a sense of Pacific community -- a small c -- and so we need also to do the things that provide benefits to people more broadly. This is not just an organization which deals with trade. This is just not an organization that deals with the business community. There are variety of things that we do. We now are about three weeks, a little over three weeks, from the Ministers and Leaders meeting in Vancouver, and all of these channels are starting to come together, and we are looking forward with a great deal of excitement to the November meetings.

There are a number of issues that APEC has been dealing with in energy and transportation, telecommunications and trade, and finance, the whole array of issues, and they will come together very shortly at the meeting in Vancouver. During the year, we've been pursuing six goals, or six clusters of issues, that we see still as relevant. I'll just name them, and we can talk about them if you wish.

One is the whole financial area. That has taken on a whole new dimension in line of the currency instability in the last three or four months. But the finance ministers have had a very active process for several years now and from their meeting in Cebu had already launched a series of things that dealt with important issues in the region like the regulatory apparatus of individual governments or supervisory capabilities that dealt with a variety of things like that. We still hope that it is possible to see a conclusion to the financial services negotiations but, obviously, that has been made more complicated. While it's been made more complicated, it's been made no less important.

Second of all, we have been in this meeting (which) is largely about the issue of Early Voluntary Sectorial Liberalization which the trade ministers launched at their meeting in may in Montreal in response to the points that were in the Leaders' Declaration last year. This is a very exciting area where APEC economies have put onto the table literally dozens of proposals for sectoral liberalization. We have been discussing today where we are and how we can package our proposals in a way that makes it easier for ministers to actually make some decisions when they meet in Vancouver.

Third of all, we want APEC to make a difference in terms of real results. APEC is not just about holding meetings. APEC's not just about having discussions. APEC is about building relationships, and that's been an important thing that has happened over the first eight or nine years that APEC has been around. But now increasingly we're looking at very specific things and not just seminars, dialogues, web pages and databases, but concrete things like new air express techniques and mutual recognition agreement for telecommunications and maybe a natural gas delivery infrastructure, a whole variety of things in a whole variety of sectors.

Fourth, we have had discussions here, and we will continue discussions on the whole question of electronic commerce. It is the new enabling technology of the next century. It is not something that benefits just large countries nor just large companies. It is of equal benefit to small countries and equal benefit, if not more, to small companies because it enables entrepreneurs to compete globally right from the start, and we think it is an exciting, new area. It's an area where APEC economies have a great deal to gain through encouraging the private sector to develop this important new technology.

Fifth, APEC has its own work plan on the environment, and it's very clear that part of the discussion that will take place in Vancouver will relate to what we see outside the windows here. The whole question of environment takes on much more topicality when you're sitting here in Southeast Asia. Environmental threats, as we can see, are not just the result of things that come from industrial country factories. There are a variety of factors, and we have to find global ways and global means to deal with what are global problems.

Finally, we emphasize all the time when we're looking at the trade side of APEC and the movement towards our Bogor goals our individual actions, the work that we do in our individual action plans, really remains the central pillar of it, and we hope the 18 plans that will be tabled in November will provide a concrete, demonstrable step forward from where economies were last year in 1996.

APEC is built on the idea that we work voluntarily. We work unilaterally, but we also come together as a community collectively. The establishment of institutions like APEC and the ASEAN regional forum are first steps towards building the Pacific community that Leaders envisioned in 1993. Ultimately, it is the soundness of this community and the commitment of its members to make it work, but the willingness that we each contribute to share in the prosperity and the security and the values that the region has. It's all of those things together that will help to maintain the economic dynamism of this important region and enable it to expand and to benefit all of the citizens of the region.

The Pacific community is real, and the United States intends to remain a vital part of this region. Thank you.

Q: What are the sectors which the United States is offering under the EVSL programs?

WOLF: We proposed a number of sectors, eight, and I won't be able to list them out of memory but never can. We talked about chemicals, automobiles, forest products, medical devices, telecommunications MRA, oil seeds and oil seed products. Anyway, things like that. But the exciting thing is that when we started this year from members, there were sixty-one actually, sixty-one proposals from individual economies. We've spent a lot of time over the past few months consolidating those into now forty-one proposals, and ministers, I suspect, will be looking to pick a handful out of that. They need to find some package of things, that are economically significant that address real needs in the region, that are credible demonstrations that APEC is actually moving forward the process of liberalization -- not just in this region but globally. That's the challenge. This meeting has been a first step towards figuring out how we can present things to the ministers next month.

Q: How would you characterize the progress of the trade liberalization process in APEC? Are member economies on track with theirs?

WOLF: I think if you look at APEC and if you look at what's happened in several years, you could say that APEC has made an astonishing contribution in its very short time here.

It took eight years to negotiate the Uruguay Round. Since 1994 at Bogor, they came up with a vision of free and open trade. In 1995 at Osaka, they actually came up with a 15-point action plan, and in 1996, APEC launched their first individual action plans, which in and of themselves perhaps weren't the definitive word in our liberalization plans, but they were done in a more or less common format. They presented transparency. They enabled the competitiveness of the region to play off the plans.

That is just part of it and now this year we expect the ITA to step forward again. But last year APEC Leaders endorsed the idea of an Information Technology Agreement, and many people would say that that gave the definitive boost towards successful conclusion of the Information Technology Agreement here in December of last year. That was $500 billion of liberalization all by itself and the success of ITA, many people say, helped later in Geneva to conclude the telecommunication services liberalization talks, another 500 billion dollars.

You could say that APEC is out there pushing, and the fact that there is so much vitality in the Early Voluntary Sectoral Liberalization proposal is another good sign. The Leaders' Declaration last year talked about getting recommendations to Leaders in a couple of years on where APEC could continue to pursue early sectoral liberalization. Ministers when they met in Montreal in May accelerated that process by two years, and they've asked for proposals on which they can base recommendations to Leaders this year. So in other words, this year we hope that ministers will make decisions on additional sectors where APEC can continue to push the liberalization envelope, indeed push the global liberalization envelope in a number of cases, and where it doesn't do that at least address some significant issues in the region like some specific testing, harmonization, conformity issues, custom issues which are already being dealt with but which can be given a new emphasis by this process.

Q: You said you hope this meeting would deliver a package of things that will help establish the credibility of, or improved credibility, of APEC. Is it in danger of missing its aim?

WOLF: No, I did not mean to infer that we are in the danger of losing our credibility, and, quite the contrary, I think that last year a number of you but not all, or some of you but not all, were in Manila, and I was really puzzled by the reaction to what APEC Leaders came up with. Something that resulted in $500 billion in trade liberalization in the fastest growing, most dynamic sector of the world's economy, enabling hardware of the digital century to come, and everybody said, "Pooh, pooh!". I thought it was a pretty significant outcome. I think APEC is solidly launched but, having said that, we can't afford to stand on our laurels and say "we gave at the office last year."

The process to get to Bogor is a continuous one. It goes forward every year, and this year we have some exciting additional possibilities in terms of Early Voluntary Sectoral Liberalization that add to our own unilateral liberalization efforts.

Q: If you have already achieved something so significant, what is left to achieve?

WOLF: Well, as I said, there were 61 proposals out there in everything ranging from "a" is for automobiles and "f" is for food and "o" is for oil seeds, and you know if you do a-b-c, I don't know if there was a b, but there was automobiles, there are chemicals, there are foods, there are gems, there is energy, medical, and environmental goods and services. There's just a host of issues out there where we have been looking at whether or not we can reach an agreement.

I think, for instance, that ministers will find some attraction in looking at grouping several of the sectors together in ways that you can show direct benefits in the region. For instance, there are some infrastructure-related proposals which would help to bring down the cost of infrastructure projects here in the region. At a time when people are concerned about how to keep momentum going forward, bringing down project costs is in the interests of everybody. There are several sectors that are inputs in the production here and bringing down the costs of those inputs enables both producers for domestic consumption and producers for export in the region to hold the line on their costs. So that's important.

There are a variety of ways that this kind of liberalization initiative can have a direct benefit which is a win-win. Win-win for the exporters, whether they are in the region, whether they are developed countries or developing countries, because the people who are benefiting from the infrastructure who use the inputs for their production everybody gains, that is what the process is about.

Q: Seen by the discussions today, how many sectors do you think would be able to (inaudible).

WOLF: The ministers were really quite specific in the discussion today (and) they came back to the point after wondering all over the place. The ministers told us not to cut sectors out so while we have consolidated proposals and, therefore, our sixty-one is now forty-one because there were multiple proposals of the same thing and where we could, we put them together. The ministers told us that we weren't to give them two and throw away 39. They want all 41. They'll make the choices. They are actually smarter than we are.

Q: You said in the interview last week that this year's summit will be the most interesting of all the four and that it'll be quite different in that the Leaders will be focusing on problem solving for the first time. Does this reflect that the organization is moving beyond bread and butter trade liberalization issues to tackling specific problems?

WOLF: Well, what I meant then, well, I think the simple answer is probably yes. This is a forum which has matured, and it is far different in 1997 than it was even, when was APEC in Singapore, 1991 or 1992? In those four or five years since ministers met in Singapore, it has changed dramatically. It has changed dramatically since Blake island and since Bogor and since Subic, too. But what I meant then was that in some ways when the Leaders met last year and the year before and the year before, there were no issues pressing in on the region. There are issues pressing in on the region now. It is not a region of growth everywhere, of rising income, everywhere, of clear blue skies everywhere. There are some issues out there. There is gray sky outside our window out here, and there have been some storm clouds in the financial markets over the last four months. Many people who live in the region would not describe them as storm clouds but rather thunderstorms.

In any event, the Leaders will doubtless discuss some those issues because they are issues that are important to everybody. I also said that in the interview something that I would like to repeat. Some people have said that you know developed countries like the United States, take a certain pleasure in seeing problems in the region, and I said then and I will repeat, nothing could be further from the truth. Our economies in the United States and in the region are tightly interwoven. I saw during my time in Malaysia how involved American companies were in trade with Malaysia and through their investments in Malaysia. What goes on in this region which is a region which is our fourth largest trading partner if you take ASEAN as a whole. It's America's fourth largest trading partner. American firms have tens and tens billion of dollars invested out here. What goes on out here has an impact on us, and so we have to be concerned by the issues of the region and we are.

Q: There was a suggestion by (C. Fred) Bergsten and company, a panel of economists, who talked about the creation of an APEC fund towards future regional financial turmoil? What is your reaction to that?

WOLF: There are a lot of proposals out there, and I don't think that anybody has reached agreement on any proposal, and so it would be kind of foolish for me to sit here and say this is the way it is going to come out. There are some very active discussions that are continuing among the people who are most charged with this.

The finance ministry deputies met in Hong Kong, Secretary Rubin actually met with the finance ministers from ASEAN countries. There are lots of discussions taking place including among APEC officials. It seems to me that in the next several weeks they will be trying to frame recommendations or frame some points that would be taken by the time Leaders discuss this.

By saying that, I don't want to preview that there's going to be some big announcement because I'm not saying that. I'm simply saying that there are lots of things going on in the region, whether it is IMF negotiations with individual countries, or whether its discussions that take place in the IMF and in the world bank, and discussions that are taking place among Treasury officials. All of them are looking to find ways to bring an end to the current sense of crisis and to find ways to improve the regulatory environment, to improve supervision, to lead to more transparent and open financial markets to make it easier and make it safer for investors to mobilize the amounts of capital that will be needed to continue to sustain growth over time.

Somebody asked one American official if the "Asian miracle" is over, and he said it doesn't have to be, but everybody has to work together to try to put in place the reforms and mechanisms that will help get beyond the issues of today and hopefully ward them off in the future.

Q: There's been some talk that the reason the currency turmoil has been so bad is because these markets are open and maybe we should close our markets so that these speculators can't get in. Do you think there is a danger that this could slow down the process of liberalization?

WOLF: We think that would be drawing the wrong message. The financial markets are not really very open in a number of Asian economies. They need to be more open. That's what the financial services negotiations are all about, and we believe that there are good and sound reasons to march forward to increase competition, increase transparency, improve regulation, improve supervision. It's obviously not going to simply happen overnight, all those things won't happen over night but there are good reasons to move forward and lots of reasons not to move backwards.

Q: (Singapore) Senior Minister Lee Kuan Yew said it will take two to three years for these countries hit by the currency turmoil to recover. Does this mean that they will setback their trade liberalization programs by two to three years too?

WOLF: I didn't see that point in the Senior Minister's statement. I saw him say that it will take two to three years to recover, but I thought I saw in his statement something that said we have to continue the process in the region of liberalization, openness, becoming more competitive, adopting new technologies, improving our management, continuing to improve our education, using our resources wisely. I thought those concepts were built into the speech in the part before turning to his views on China, but I didn't see anything about turning back on liberalization, did you?

Q: With the countries so preoccupied with their national problems, maybe they will hold back?

WOLF: I read his speech, and I thought I got exactly the opposite, and Secretary Albright says he is a very wise man.

Q: What do you see with this turmoil taking place and occupying a lot of people's time, particularly the Leaders of the Asian nations, don't you think a proposal should come out and crystallize as it moves on the summit for the Leaders to come out with some kind of a concrete action plan or something like that, or is it being worked out?

WOLF: The answers of the region aren't going to be worked out in a week or two weeks or three weeks. It's taken a while to build up some of these problems. It's going to take a while to sort out some of these problems. I suspect these issues will be discussed by the Leaders, but I suspect that out of that discussion will come a conclusion we need to do more work in a series of areas. Anybody who thinks that the 18 Leaders getting together will then fashion one silver bullet which will kill this crisis are anticipating too much. There's a lot to be done and a lot of issues to look at and some of them will take time to mature.

Q: What do you think about new members this year?

WOLF: I do think that this year we will draw up some guidelines because we were asked to do that, and we will do that and that's about as much as I think about membership this year. The ministers agreed on a process last year and are quite comfortable with that.

Q: But while liberalization may not be slowed down or reversed, the question really is whether APEC can agree to some form of regulation in the financial markets forum or some form of discipline. Would you agree with that? What is the U.S. position on such a proposal?

WOLF: I'm not sure I understand your question.

Q: In view of the market turmoil, there have been suggestions that liberalization should go on and should not be affected.

WOLF: Right.

Q: But there have also been calls that perhaps there should be some form of regulation to instill some market discipline. What is your view?

WOLF: Finance ministers when they met in Cebu discussed the question of improving the regulatory apparatus of developing economies, and work is going on on that. They discussed the question of improving supervision of improving rating agencies, of increasing transparency for data, and a variety of issues like that. There was a work program actually underway, but it would appear that in addition to that that probably more is needed to be done sooner. All that work didn't get done before this took place starting this summer. That work has to continue. Regulation to be improved, supervision to be improved, transparency to be improved, capital to be used more wisely, prudent policies to be followed. That's the way the region got going, and that's the way it will keep going through wise and prudent policies.

Q: Could you follow up on the proposals that suggested that the APEC fund be discussed? Will that be discussed in the meeting next month?

WOLF: I already answered that once.

Q: In the videoconferencing?

WOLF: No, just now. What I said about Mr. Bergsten's ideas is what I would have to say about the fund idea. There are a lot of ideas out there. I'm not sure there is a silver bullet in any of the ideas. There is a lot of work to be done. A lot of what needs to be done is hard work in each economy to improve regulation, improve supervision, liberalize the marketplace, be competitive, improve education, do a whole series of things that are necessary and, if those things happen, it is less likely that we will have this kind of occurrence. I think, to be honest, if you look at Singapore, while you have been battered by what goes on in your neighborhood, and I walk around the streets and things don't look too bad here. People seem to be going along quite well. You follow sensible policies, and you have worked hard to maintain confidence and that comes together economically.

Q: Just a point of argument, I mean Hong Kong is quite liberal in its ways and yet it has come under attack.

WOLF: I don't want to get into the prediction business and I like Hong Kong, too, and I'm going there tomorrow.

(end transcript)