TEXT: 12/3 ASIA SOCIETY SPEECH BY APEC COORDINATOR JOHN WOLF
(APEC mapped out strategy to restore sustainable growth)New York -- The Asia-Pacific Economic Cooperation (APEC) forum's latest meetings in Kuala Lumpur (KL) succeeded in mapping out a credible strategy to restore sustainable growth in the region, according to Ambassador John S. Wolf, U.S. Coordinator for APEC.
"Many ask whether APEC can be part of the solution to the economic turmoil, or whether APEC can move ahead on market opening, or even whether APEC can help business do business in Asia?," Wolf said in December 3 remarks to the Asia Society in New York.
"My answers: Yes, Yes, and Yes!"
Wolf said the 21-member economic forum "succeeded largely in warding off the protectionist tendencies one might have expected from so profound an economic crisis."
APEC made its usual progress by generating improvements in customs procedures, via the mutual recognition agreement on telecommunications equipment, and improving air express delivery procedures, he said.
"But the fundamental test of KL will come in the willingness of APEC economies to flesh out the details and implement the policies envisioned by Leaders in their financial discussions, on the social framework for growth, and broadening support at the WTO for APEC's liberalization package," Wolf continued.
According to Wolf, APEC members faced similar questions last year about the viability of the Manila framework. "This year, today, the improvements visible in Korea, Thailand, and the Philippines, all these are real world examples that the Leaders' consensus reached last year has made a difference this year. APEC must be judged not just by what it achieves as a forum, but also by the catalytic role it has on the world stage -- via the G-7, or some new G-22 type entity, and in each economy."
Following is the official text of Wolf's remarks:
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SPEECH BY AMBASSADOR JOHN WOLF
Asia Society
New York
December 3, 1998APEC 1998
Concrete Steps to Advance CooperationI've been Ambassador to APEC for three Leaders Meetings now. After each meeting, I've been challenged by you in the private sector and by many others to prove that APEC succeeded, that APEC is relevant, that the bicycle is still moving forward.
This year there were many questions before the meeting, even more, I suppose now. Many ask whether APEC can be part of the solution to the economic turmoil, or whether APEC can move ahead on market opening, or even whether APEC can help business do business in Asia? My answers: Yes, Yes, and Yes!
But, as I have stressed before, these meetings go beyond 21 Leaders gathering to talk about APEC and the APEC work program. Leaders meet as Leaders of over half of the world's population, and half its economic activity. Their instructions are our guidance for work not only in APEC, but in other multilateral fora and bilaterally as well. This year, the instructions we have from Leaders are wide-ranging, and quite profound. Read the Declaration, not just as a chronicle of what has been done but, importantly, as a roadmap for what we commit to do -- must do -- in the months ahead.
I don't want to over hype the results, but I don't agree with those who saw APEC 1998 only as a missed shot at trade liberalization, or who those who missed the central point of a speech reiterating Americans' shared belief in the integral linkage between democracy and economic progress.
Before Kuala Lumpur, some foresaw APEC turning away from its commitments to enhance cooperation, build a Pacific community and pursue free and open trade and investment. Instead, APEC economies have charted a path forward -- together -- a path based on restoring growth in Asia, helping to strengthen the international financial architecture, and making economic governance more transparent and predictable. We agreed to intensify efforts to address the plight of the most vulnerable people in this crisis. We are continuing forward towards our goal of free and open trade and investment. We are creating new visions -- and long-term workplans -- to strengthen public/private partnerships in areas like electronic commerce and natural gas infrastructure development. APEC accomplished all of this in the face of an unprecedented economic crisis in Asia. I call this a success.
It is important to note the constructive role Malaysia played in setting the agenda and being an honest broker in building consensus for the Leaders Declaration.
The APEC meetings in Kuala Lumpur gave us an opportunity to garner broad support for the President's strategy for recovery in the region that he outlined in his September 14th address to the Council on Foreign Relations.
Some have pointed to the President's non-attendance as a sign of diminishing U.S. interest in APEC. This simply is not true. President Clinton was personally involved in pushing his administration forward to articulate, elaborate and activate our ideas in response to the financial crisis and, more broadly, our strategy for APEC. I can assure you all that he would have greatly preferred to be in Kuala Lumpur, but his counterparts understood the reasons that kept him home. That said, the Vice President did a first rate job in helping to shape the Leaders' discussion at their retreat, and the resulting declaration.
The Leaders' Declaration reaffirms economies' commitment to macroeconomic policies that promote growth while maintaining stability, and in this respect emphasizes APEC economies' consensus that Japan must quickly restore its economic dynamism. As part of the effort to revitalize private sector growth in Asia, the US and Japan put forward a new initiative that will help mobilize financing for economies in the region in support of their efforts to accelerate the pace of corporate and bank restructuring.
The devastating social impact of the crisis was a common theme in the meetings. The needs are critical and fundamental. The combination of El Nino, sharp currency depreciations, and surging unemployment has hit families in the region hard.
Secretary Albright spoke at some length on the need to strengthen the social framework for growth, and she indicated the US intends to provide an active lead in Asia in this area. She proposed that APEC work together to develop efficient social institutions that address economic security at the individual level. Of course, as Secretary Albright says, the best social program is job creation. We see bringing sustainable economic growth to the region as a fundamental part of this social framework.
And finally, news reports notwithstanding, there was important forward movement on sectoral liberalization. We succeeded in gaining APEC endorsement to move EVSL into the WTO -- our charted path since Trade Ministers first agreed on sectoral liberalization at their Montreal meeting last year. A good deal of work remains in the WTO next year and we will be looking to New Zealand as APEC Chair to help maintain pressure through APEC. By agreeing to take the nine sectors intact to Geneva, APEC is pushing the world system as it pushed forward with the Information Technology agreement in 1996. Many of you may have forgotten that the ITA "agreement" that left Subic Bay had no product definition, and a number of prominent APEC members still on the sidelines. Read the statements carefully -- Japan may have resisted agreement within APEC on fish and forests, but they part of the consensus to seek agreement on the nine sectors at WTO. A number of Asian economies substantially improved their offers -- Korea led in this area. I said in KL and I will say again with conviction, EVSL is alive, it has a passport and it's moving to Geneva, and we intend to work very hard to achieve binding agreements there that will provide substantial economic benefit for you here.
Additionally, Ministers pressed ahead in the remaining six sectors. Notably, this agreement launched an APEC auto dialogue -- the first regional forum to address trade and investment issues in the auto sector.
One of those oft-quoted "senior Administration officials" in KL said the Leaders' Declaration is a sober, hardheaded assessment of the situation in the region -- an assessment acknowledging that even as progress has been achieved in the region, there still are many of the challenges ahead. Leaders simply expressed their confidence that the region has the ability to restore sustainable economic growth.
Leaders endorsed a number of initiatives President Clinton announced two months ago -- a new contingent, precautionary line of credit anchored in the IMF, and more innovative use of guarantees and other instruments by the World Bank and other MDBs to spark private capital flows to emerging markets.
They also strongly endorsed the work of the G-22 -- a U.S. initiative from last year's meeting in Vancouver. Looking ahead, they agreed work must be done to create a better balance between risks and benefits of open capital markets. They expressed concern in the Declaration, and even more at their retreat, over the vulnerabilities that small economies, and large, face due to the rapid movements of short term capital. The US will chair a group to give priority attention to this question, including the role of hedge funds and other forms of highly leveraged and offshore institutions.
One other financial area I'd like to mention is the area of economic and corporate governance. There was a surprising degree of consensus on the need for improved governance. Improving legal systems, increasing the transparency and predictability of transactions, these are important aspects of restoring confidence -- and the door is open for officials and you in the private sector to help APEC economies move forward in this area.
On that score, Leaders and Ministers focused on how to equip economies with the tools and systems they need to deal with the risks that come with more open capital markets. Secretary Albright called for a private sector "peace corps" to work with emerging economies on important reform issues, issues like risk management, improved governance, even establishing the market tools that can allow stable growth in emerging markets. There already are models, like the work many from the private sector are doing in Central Europe through the International Financial Service Volunteers or the work of the International Executive Service Corps. Asia needs this help, and a bit of pro bono work now can provide valuable markets a few years hence. The US Government will be increasing bilateral funding for technical assistance in these areas; we'd like some matching support from the private sector.
We have been working hard this year to get APEC more focused, to be more outcome-oriented. Beyond the finance area we've also been busy. Leaders welcomed the idea of an Asian natural gas infrastructure. And work is proceeding -- US companies will meet in Houston in February to develop a common approach to the gas grid concept. This idea isn't about a grand design for pipeline routes. Rather, it is the vision of individual projects converging over time that will gather gas from Southeast Asia and Northeast Asia, and distribute it along the right-of-way, thereby stimulating economic growth within APEC economies and across borders into other APEC economies.
APEC also worked hard this year on electronic commerce. Leaders recognized that this new technology will provide a dynamic way to stimulate growth. Part of the challenge has been to de-mystify the concept that there are developed and developing economies in regards to E-Commerce. We have worked hard to convey the fact that this is a threshold technology for us all, and Asia needs to catch up. Dozens of companies from around the region participated actively in APEC activities this year, and we will extend that universe via the work program we set in the year ahead.
Conclusion
This year APEC succeeded in mapping out a credible strategy to restore sustainable growth. And it succeeded largely in warding off the protectionist tendencies one might have expected from so profound an economic crisis. There are a variety of garden grown improvements in customs procedures, via the mutual recognition agreement on telecommunications equipment, or improving air express delivery procedures that make incremental differences to many of your businesses. But the fundamental test of KL will come in the willingness of APEC economies to flesh out the details and implement the policies envisioned by Leaders in their financial discussions, on the social framework for growth, and broadening support at the WTO for APEC's liberalization package.
We had much the same discussion last year about whether there were teeth in the Manila framework. This year, today, the improvements visible in Korea, Thailand, and the Philippines, all these are real world examples that the Leaders' consensus reached last year has made a difference this year. APEC must be judged not just by what it achieves as a forum, but also by the catalytic role it has on the world stage -- via the G-7, or some new G-22 type entity, and in each economy.
I'm a firm believer in APEC. But I also am a firm believer that for APEC to move forward it needs to hear from the private sector. I'll fall back on an adage I borrowed last year... Get informed; get involved; get specific.
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