TEXT: DALEY SAYS THE Y2K PROBLEM AFFECTS ALL COUNTRIES
(Y2K conference focuses on Asia)

Shanghai -- U.S. Commerce Secretary William Daley says a major computer failure occurring in one country caused by Y2K computer problems will very likely impact other countries.

"How every country is coping with the Y2K computer problem is important to all of us," Daley said March 31 in Shanghai at the start of a Y2K conference. The conference, which focuses on the impact of computer systems that may not be able to discern year 2000 from 1900, is among a series of conferences being co-hosted by the U.S. Department of Commerce around the world.

Daley is leading a presidential infrastructure trade mission from March 28 to April 1 in South Korea and China with representatives from U.S. government agencies and 18 private corporations.

The challenges faced by most countries, he said, are management ones. "One is, we are working against a deadline that is fixed. Two is, we do not really know all the consequences that could result from computers and systems crashing. The third challenge is, companies could see simultaneous failures from any link in their chain."

Following is the text of Daley's remarks, as prepared for delivery:

(begin text)

[U.S. Department of Commerce
Remarks by
U.S. Secretary of Commerce William M. Daley
Y2K Conference
March 31, 1999
Shanghai, China
[As prepared for delivery]

This is the first of a series of conferences that the Commerce Department is co-hosting around the world. We see this as an opportunity to share our experiences in America, and to learn from yours here.

How every country is coping with the Y2K computer problem is important to all of us.

The fact is, this is a global economy. China trades with more than 200 countries. American companies operate in thousands of places -- in fact, I am here this week with 18 companies seeing how they can do more infrastructure business in China.

Our economies are tied to economies around the world, so if there is a computer problem in one country we may feel the ripple effects. We need every government, national and local -- we need every business, large and small -- to be ready.

From a management perspective, I think there are three things that make this a tough challenge.

One is, we are working against a deadline that is fixed. This is not like a business deal, or a trade negotiation. The deadline is not negotiable. We can't change the calendar.

Two is, we do not really know all the consequences that could result from computers and systems crashing. When you have a disaster like a hurricane, you have a pretty good idea to what will happen. But we have never seen anything like this.

The third challenge is, companies could see simultaneous failures from any link in their chain. It could be key vendors. It could be service providers, clients, or staff. And the actions and responses to one have an impact on the others.

So, this is a tough management challenge in my book.

The problem itself is fixed technically. But making sure it gets done by the deadline and anticipating the worst scenarios -- is a management problem, and a big one.

President Clinton recognized the challenge within our own government. All United States agencies are working to get their computers Y2K ready. As of last month, 80 percent were ready. I am happy to report at Commerce we are 98 percent ready, and heading to 100 percent.

We also recognized the challenge state and local governments face, especially because so many of our programs are tied to one another. In America, 97 percent of our 220 largest cities have a plan to address Y2K.

President Clinton has also put resources into getting American businesses Y2K ready, particularly small- and medium-sized ones.

To be frank with you, American CEOs have expressed to me their concerns that internationally, not every country or company has taken this as seriously as they should.

I worry that here in Asia, where the financial crisis has hit hard, this could cause problems we do not need. It would be terrible for economies just recovering from the financial crisis to be hit by the computer bug.

I also worry about the infrastructure of a lot countries.

As I mentioned, I am here on an infrastructure trade mission. If any part of the infrastructure failed -- electric power, oil and gas distribution, telecommunications, or transportation -- it would be bad for that country. And it would have serious repercussions around the globe.

It is not cheap to correct the problem. I have seen figures where it could reach $600 billion internationally. That is a lot of money. But think about the cost of doing nothing. It would be a lot more.

So, this obviously is a challenge for all of us. It is one we must meet together.

The clock is ticking, but there is still time - we have nine months left.

And I just want to end by saying, there is always a tendency when there is a problem to keep quiet about how you're fixing it. That is human nature. That is business -- why tell your competitor anything. But in this case, it is different.

Even big companies that have spent huge resources to ensure their systems are ready, will not be ready if their suppliers aren't. All organizations, large and small, need to have contingency plans in place to mitigate the effects of any possible disruptions.

As President Clinton likes to say we have to make certain the "last headache of the 20th century, is not the first crisis of the 21st century."

So, I hope there is a lot of sharing going on today. And, clearly, we can all learn from one another. Thank you, and have a great conference.

(end text)


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