03 October 2001

Senior U.S. Official on Agenda for APEC Meetings, China

A senior U.S. official for the Asia-Pacific Economic Cooperation (APEC) forum said the group's members are facing two serious challenges: how to counteract slowing economic growth in the region, and how to respond to the September 11 terrorist attacks in the United States.

"Countries throughout the region, throughout the world, have come together to cooperate to fight terrorism, and to cope with the economic and other impacts of those attacks," C. Lawrence Greenwood said in an October 3 "Dialogue" program with Shanghai organized by the State Department's Office of Broadcast Services.

"I think the lesson here ... for APEC is that we are all in this together," he said.

Since 15 out of the 21 APEC economies lost nationals in the terrorist attack in New York on the World Trade Center, Greenwood said he expected the topic of terrorism to be "a big, big issue" at the ministerial and leaders' meetings in Shanghai October 17-21.

"We will be, I am sure, talking about how we intend to implement the U.N. Security Council resolutions, how we are going to move forward to cut off financing for terrorists, how we are going to deny them sanctuary, and how we are going to address this problem both in the short and long term. We are also going to be talking about how APEC can actually contribute directly as an institution in the programs we do and how we can strengthen those programs to counter terrorism," Greenwood said.

Greenwood said APEC members would have to "pull together" to address the economic slowdown in the region by putting into place proper policies.

"We hope to do that -- to contribute to that effort in APEC through a call for the new trade round, a call for a continuation and acceleration of structural reforms to make our economies stronger," Greenwood added.

In addition to revitalizing APEC as an instrument for trade and investment liberalization, Greenwood said the United States wants to revitalize APEC as an instrument for delivering economic and technical cooperation and assistance to the region.

"We are also doing a number of things in APEC to lay the foundation for sustained growth over time in areas that don't directly relate to trade," Greenwood said.

For example, he said, the United States was happy that APEC will be able to launch a new policy dialogue on biotechnology, a science the United States feels can be an important tool for ensuring food security in the future.

Greenwood also said a new APEC monitoring strategy for controlling emerging infectious diseases will be launched in Shanghai, along with new 'cyber- education' initiatives.

He added that the United States is also looking to transform the economies in the APEC region through more applications of information technology.

"That's a very ambitious agenda, but I think we will be able to meet those ambitious goals. And, again, we look forward to a very successful summit in Shanghai," Greenwood said.

Following is a transcript of the program:

Ms. Lilly: Good morning, welcome to "Dialogue," I'm your host, Judlyne Lilly.

Since its inception in November 1989, the Asia-Pacific Economic Forum, or APEC, had grown from an informal dialogue of 12 Pacific Rim economies to a major regional institution. Ministerial meetings take place annually, and the chairmanship rotates among the members. China currently holds the APEC chair.

Leaders from the 21 member APEC economies will meet in Shanghai, China in just a few weeks. The United States works closely with APEC, and sees it as an important part of the U.S. engagement in the Asia-Pacific region. In the U.S. view, APEC is a forum for achieving a more regional economy, encouraging economic growth and fostering prosperity and opportunity throughout the region.

To discuss the upcoming APEC forum, we are honored to have with us Mr. C. Lawrence Greenwood. And Mr. C. Lawrence Greenwood is a U.S. senior official for APEC. Welcome to "Dialogue," sir.

Mr. Greenwood: Thank you.

Ms. Lilly: I understand you have opening remarks.

Mr. Greenwood: Yes, I do, thank you. Since the beginning of this year, the United States and other APEC members have had very high expectations for this year and for China's chairing of this year. And we have very high expectations for a successful leaders meeting later this month in Shanghai. Those expectations have I think even grown in the last few weeks.

We are facing obviously some serious challenges. On the economic side, we face the challenge of slowing growth in the region. We also face the challenge of responding to the terrorist attacks in the United States. And I think the lesson here that is a very important one for APEC is that we are all in this together. When we look at the response to the terrorist attack, it has been overwhelming. Countries throughout the region, throughout the world, have come together to cooperate to fight terrorism, and to cope with the economic and other impacts of those attacks. This has shown a very strong cooperative spirit in APEC, and elsewhere in the world, and we expect that that cooperative spirit will be shown when we go to Shanghai.

On the economic side, in the same way we need to pull together to address the economic slowdown in the region. We need to put in place the proper policies to bring about rapid recovery and to make sure that our economies are even stronger when we get back on track and see sustained growth. We hope to do that -- to contribute to that effort in APEC through a call for the new trade round, a call for a continuation and acceleration of structural reforms to make our economies stronger. We are looking to revitalize APEC as an instrument for trade and investment liberalization, also revitalize APEC as an instrument for delivering economic and technical cooperation and assistance to the region.

We are also looking to transform the economies in the region through more applications of information technology. That's a very ambitious agenda, but I think we will be able to meet those ambitious goals. And, again, we look forward to a very successful summit in Shanghai.

All year long China has done a great job in its role as chair of APEC. It has been a very capable chair, very far-reaching and visionary chair. And, again, we look forward to working with them in the next few weeks to make this meeting that is going to take place the 20th and 21st of October in Shanghai a great success. Thank you.

Ms. Lilly: Thank you, Mr. Greenwood. Now we will open our discussion to our participants in China. Shanghai, welcome to the program. We are ready for your questions and comments.

Ms. Fang Yanran of Shanghai Broadcasting Network's News and Finance Channel: Nice to see you via satellite from Shanghai, Mr. Greenwood, and thank you, host.

Mr. Greenwood, we have interviewed you at previous APEC meetings in Beijing, Shenzhen, Dalian and we are quite familiar with you. And also thanks for your praise of the Chinese chair of this APEC year.

Mr. Greenwood: Thank you, and it's good to see you and hear your voice again.

Ms. Fang: And we get straight to the questions. Mr. Greenwood, you said at the press conference of APEC's third SOMI meeting that given the diverse development levels of the APEC members, capacity building, which is ECOTECH, is very unique and key factor to realize the Bogor goals. What makes you think so highly of capacity building?

Mr. Greenwood: That's right. I think the two important things that APEC does is push trade investment liberalization, to put the right policies in place so that the economies in the region can grow. But in order to achieve that liberalization, and in order to be able to undertake the liberalization, that requires capacity building in many of the economies in our region. And that's why that can be so important.

It's also important because it's vital that if we are going to make the whole phenomenon of globalization work for all of us, we need to make sure that those who are now less able to engage in world trade to be able to be competitive, that they are given that opportunity by making them more able to participate. Obviously the policy environment is key to that, but so is technical assistance, training, education. That's why the United States puts so much emphasis on the so-called ECOTECH, or the economic and technical cooperation aspects of APEC. That's why we have been contributing in the area of education, disease control, in the areas of labor standards, helping small business be able to do more business around the region.

Ms. Fang: What specific measures or initiatives has APEC produced in terms of capacity building?

Mr. Greenwood: Well, there's been of course capacity-building programs throughout the years. One important one that we have been discussing over the past two years is the capacity building related to the WTO: how to better equip the member economies of APEC to fill their obligations under WTO; how to benefit from the trade liberalization that results; and for those members who are not yet members of WTO, how they can do the changes and bring about the reforms necessary to enter the WTO. So this is an initiative that has been led by Japan, very capably by Japan. We and Canada and Australia and a number of other countries are very actively involved in providing assistance in the region to again build capacity in this area of WTO.

Ms. Fang: And we turn to some kind of general questions. The Bogor goals, which sets a timetable for developed and developing economies to realize trade and investment liberalization, for 2010 and 2020 respectively, is a very remarkable chapter in APEC history. But some people argue that it's impossible to achieve this goal if we look at different development levels and the basis of the member economies. So what do you think of its practicability?

Mr. Greenwood: I think it certainly is a doable goal. I don't think there's any question that we can achieve it if we have the political will. The level of development is important in terms of having the capabilities to undertake some of these reforms, but in some ways those countries that are less developed have even more to gain from trade liberalization, trade and investment liberalization. And so the stakes are very large for those economies. I think that fact alone will help drive economies to reach that goal.

Keep in mind that actually we have had a pretty good record of success in this area. Eleven years ago when APEC was formed, the majority of APEC members had average tariff rates of more than 10 percent. Today only four economies have those rates. And actually, when China gets into the WTO their rates will come very close to -- I believe just under 10 percent, so there will be only three economies that will be left over 10 percent. So it's quite a record. There's been a lot of tariff cutting in this region, some of it connected to the Uruguay Round, but some of it done outside of that, of the Uruguay Round. So we should be proud of that record. But we should not rest on our laurels. We should keep moving forward, keep reducing tariffs, keep eliminating restrictions on investment.

Ms. Fang: Just as you said, it's really a great success in cutting down the tariffs. And there I think I have a question about coordinative development. In view of the different development speeds and the levels of all the member economies, what should we do to guarantee coordinative development?

Mr. Greenwood: Coordinated? I'm sorry, I didn't catch the word.

Ms. Fang Yanran of Shanghai Broadcasting Network's News and Finance Channel: It's coordinative development.

Mr. Greenwood: Oh, coordinative development, I see, meaning that for all the economies to go in step with each other in terms of development?

Ms. Fang: Yes, I really mean that.

Mr. Greenwood: I think it's, again, what we want to avoid is -- what we were trying to achieve in APEC is that everyone in the region has the opportunity to take advantage of the trade and investment liberalization and the business opportunities that are created by that. And we want the benefits of globalization to be spread as widely as possible. And that is essentially what will result in more even development among the region.

But in the end, economies will develop as fast as they are willing to take the reforms that will make them competitive, dynamic economies. And it's a never-ending process, and it takes constant forward motion to maintain that competitiveness. I think one of the major dynamics for change in the region is the fact that as one economy becomes more competitive by lowering tariffs or by creating a more competitive or interesting investment region, a more open investment regime, then that forces others to rethink their own policies and have to move forward. And this is exactly the case with China today. China is undertaking some significant reforms. That makes it a more competitive producer and a more competitive exporter. That is making other economies have to rethink their own policies and also move ahead. That's not a bad thing -- that's a good thing -- and that kind of competitive dynamic is what has made us over the last decade the fastest-growing region in the world.

Ms. Fang: What you mean is that the United States and China -- two big members in APEC -- can set a great example for the APEC members to bring out the competitiveness around the whole region. So what jobs can these two countries do to advance this goal?

Mr. Greenwood: Well, I think that's a very good question. I think our goals are going to be slightly different. But in one very important way we have the same role, and that is as an important market for the region. China is an emerging economy, but it is a very large economy and a fast growing economy, now the region's third largest. And it offers a huge potential for marketplace for the other economies in the region. That is the role of course that the United States has played all in the postwar period as the major market that has been the engine of growth not only for the Asian region but for virtually the whole world. And the more that kind of domestic demand-driven growth that we can see around the region, the better we will all be, because it will have more than one -- just one engine of growth in the United States, but many smaller engines of growth as well. So I think that's probably -- that's certainly a very important role that China will play, a particularly appropriate one now that China will be entering the WTO.

Ms. Fang: The U.S. message to APEC this year on "Foundations for a New Economy" draws on all these themes to harness the power of information technology. Could you elaborate more on the relationship between APEC and the new economy?

Mr. Greenwood: Yes. One thing that needs to be stated from the outset is that the information technology -- the potential that information technology has applies to all APEC economies. And this is regardless of whether economies have a big software industry or a big telecommunications equipment industry. What we are talking about here is the application of information technology to all economic and all government activities in order to improve efficiency, improve productivity, and essentially improve competitiveness and growth over time.

So we are talking about the applications of information technology to mining, to manufacturing, to agriculture. A friend of mine likes to talk about how they put computer chips into cows in Texas in order to better monitor the cattle. That's an application of IT to a very traditional economic activity, and that's the kind of thing that we are talking about in APEC. To do that requires first of all that you get your basic fundamental policies right. It means getting -- having a sound fiscal policy. It means having a regulatory policy that is pro-competitive; that is, that you have real competition taking place within the economy. It requires open markets and an open investment regime. And it also requires a strong and healthy financial sector. Getting those fundamentals right is the first step.

The second step is putting in place a legal infrastructure for -- particularly for e-commerce, e-business. And that's another important aspect of what we are working on in APEC. And finally the third area is the question again of capacity building, IT training, basic education, making sure that our children in particular are equipped for this new world, and also of course that adults are. In some cases children actually pick this up much faster than we old people. But that's vital to get those skills out there, so that again everyone can benefit from these changes.

Ms. Fang: One problem still confusing many people is that some people argue that APEC is a voluntary forum, that many constructive plans have just been passed but cannot be put into real practice. What do you think of this problem?

Mr. Greenwood: I think they have a point. I think that we do need to determine how best we can move APEC forward as a credible and a vibrant and an effective institution. This has been a problem. We have been very good at coming up with the right policies, best practices, good principles. And that's not insignificant. I don't want to underestimate the power of saying the right thing, particularly when you say the right thing at the working level, at the senior official level, at the ministerial level, and every year at the leaders level. And so the power of the word is important. But so is the power of action. And we do need to determine and consider how best to change APEC a little bit to make it more focused on implementation and vision.

Now, this year that is in fact what China and the others are working to do. Under Chinese leadership, we in fact are looking at a way of making APEC more relevant and more effective. It's this idea that it's had a number of names now as you know talking to me for the last several months. It used to be called the Shanghai Charter, now Shanghai Accord. I'm not sure what it's going to be called exactly, but there's going to be a Shanghai-something, and it's going to contain some ideas, I think very interesting ones, about how APEC can be an even more vigorous institution, without losing, however, its basic character. I mean, we don't want to lose the character which is that we are going to see consensus, that we are going to move together, that we are a community. And that is -- we will retain that, but we will make ourselves I think a more vibrant, a more dynamic community.

Ms. Fang: The United States is a very important member in APEC, and I want to know more about the U.S. economy. After the September 11th terrorist attacks, the U.S. economy needs quite a long time to bounce back. And President Bush said during a Rose Garden appearance that the economic fundamentals for growth are still very strong. Just yesterday the Federal Reserve cut down the interest rates by another 50 points. So how do you evaluate the economic development in the U.S., and to what extent do you think the terrorist attacks have affected the whole U.S. national economy?

Mr. Greenwood: First, I think it's important to understand that the American economy was already going into a bit of a downturn in terms of the business cycle. That was obvious in the downward movement of the stock market, also the bursting of the dot-com bubble, and also in terms of a weakening business investment. This has been a trend now for the last number of months. That is a simple business cycle, one that we anticipate getting through relatively quickly, and we are looking forward to I think a very robust year next year.

Now, the effect of the terrorist attack is in terms of the impact on our economy fundamentals is, as the president said, is nonexistent. The -- you cannot put a price of course on the loss of life, which by the way hit 15 out of the 21 APEC economies -- 15 of 21 lost nationals in the World Trade Center. You can't put a price on that. But on the economic impact of those buildings, that's a drop in the bucket compared to the economic might that is here in this country.

The problem is of course the impact on consumers and consumer psychology. That is one that I think that we will work our way through. I don't "think" -- I "know" we will work our way through. Already we are seeing again Americans coming together, regaining their confidence, and pulling together -- in fact like no one has ever seen in this country before, as strong a nation as we are. And so I am confident that that again is just a temporary issue. Again, we have this problem with the business cycle, so we do anticipate that there will be a quarter or two of lower than expected economic growth, but I think we are looking forward to a very good year next year.

Ms. Fang: Given that ground, the upcoming leaders' meeting will be the first time in the new century for the leaders to get together, what topics do you predict will be given much more attention?

Mr. Greenwood: Well, it is the first meeting in the 21st century. It's also, by the way, the first APEC meeting for fully one-third of the leaders in the room. And this is the largest turnover of leaders that we have ever had in our 11 years of APEC history. So I think it is an important discussion from that point of view as well.

I think the obvious issues will be of course the terrorist attacks, their impact, how we can respond to it, how we as economies and as nations are going to cooperate. We will be I am sure talking about how we intend to implement the U.N. Security Council resolutions, how we are going to move forward to cut off financing for terrorists, how we are going to deny them sanctuary, and how we are going to address this problem both in the short and long term. We are also going to be talking about how APEC can actually contribute directly as an institution in the programs we do and how we can strengthen those programs to counter terrorism. So obviously that's going to be a big, big issue.

But, at the same time, we will not lose sight of the focus -- although the terrorist attack of course is an economic issue as well -- of the other part of the economic equation; that is, how we are going to address the economic slowdown. And I think looking at what's happening in the region among the different economies, the kinds of challenges we face, the political implications of those challenges -- I am sure when leaders get together they don't stick to the agenda that we bureaucrats make up for them. They talk about what they want to talk about, and they are going to have I think a pretty interesting discussion about what this all means to them in terms of both the attack as well as the economic situation in terms of their own nations and where they want to bring them.

Ms. Fang: Though APEC is a rather voluntary forum, it is still a good chance for the leaders to get together and do some bilateral agreements. So APEC has also played a complementary role to the IMF and other international financial institutions in fostering a rapid Asia economic recovery. So could you give us some more examples?

Mr. Greenwood: Yes. Particularly in the financial area there has been a lot of APEC activities. I think it has had a positive effect. One of them is the whole question of strengthening the financial systems in the region, and in order to do that the training of bank regulators, insurance regulators and bankers themselves to make them more up to date on various technologies in the financial services area, so that they can be better regulators. That's an important aspect of what they are doing. Corporate governance work is being done to again do similar kinds of things in the corporate level -- how to return corporations to profitability, how to put in place corporate governance systems that will again help address this whole fundamental issue of how do you allocate capital properly in those activities that will get maximum return. And whether it's the corporate level or the financial level, I think that's an important part of what we are doing.

There are many other -- certainly again in the financial area, there has been work on financial crimes in APEC, which also of course is particularly relevant today.

Ms. Fang: The United States initiated the first APEC informal leaders meeting in 1993. I want to know as part of the national economic strategy what role does APEC play in the U.S. economy?

Mr. Greenwood: I think APEC of course for us is an important institution, one to show that we are truly committed to the region. We are committed to being an economic presence, that we are an integral part of the economy of the region. Of course that's demonstrably the case. But we in APEC can increase -- enhance the economic integration in the region. And that every time we become more integrated economically, that has a direct benefit to the American economy.

A lot of our growth over the past five years, in which we have had of course quite, even unusually high levels of growth, have to do with the fact that we have been increasingly integrated into the world economy, and Asia obviously is an important part of that. Our exports have grown dramatically -- so have our imports. But that's also made us more efficient. And so the competition we have had from overseas producers, as well as the investment we have enjoyed from overseas -- Japan, U.K., Netherlands, from all over -- that investment has played an important part in our becoming more competitive and increasing our productivity.

So it's those kinds of economic ties that play a very important part in the economic success we have enjoyed to date. More broadly, APEC allows us an opportunity, a place to show that we value the relationships we have in the region -- not just economically, but politically as well. APEC is the most important multilateral institution in the region, and our leadership role as one of the leaders of APEC, we show that we are in fact committed to the region and committed to those relationships.

Ms. Fang: You have attended three times APEC meetings this year in Beijing, Shenzhen and Dalian. Based on your experience, how do you evaluate China's current economic developments and its role in APEC?

Mr. Greenwood: Well, certainly China's role in APEC has increased of course dramatically in this last year -- this of course not surprising, given its position as chair. And, as I said before, China has performed that role very admirably.

In terms of the economic development of China, of course it's impressive. China is perhaps the only economy -- I guess maybe China and Australia -- that will not suffer significant decline in growth rates this year. And so the economy is doing relatively well. It's being hurt along with everybody else, but not as badly clearly as others. And so that's impressive.

The amount of economic reform that is taking place in order to prepare for WTO membership is also impressive. I was sitting next to a banker at one of the meetings, a Chinese banker, and she was telling me about the various training programs that her bank was undertaking in order to be more familiar with Western banking systems and to become more competitive. And it was very impressive. What impressed me was that she wasn't content simply to be a Chinese bank -- she wanted to be an international bank. And I think that's exactly the right idea. So it's impressive.

I think this, as I said though, is a never-ending process, and it's one that takes a long-term commitment, and it will be sometimes maybe difficult to transition for China. But we look forward to working closely with China to make that transition as successful as possible.

Ms. Lilly: Mr. Greenwood, I believe we have a question we need to ask you to clarify some things for Shanghai. They want to find out what are the other non-trade issues that will be on the U.S. agenda.

Mr. Greenwood: That's a very good question, Judlyne. In addition to starting the new round and reinvigorating APEC's role in trade and investment liberalization, we are also doing a number of things in APEC to lay the foundation for sustained growth over time in areas that don't directly relate to trade. One example -- well, let me give you three. One is food security. It's very important that we are going to be able to feed our people in the coming century. Biotechnology is an important part of the tools, one of the tools that we need to play that role. And this year we have done a lot of work on biotechnology in APEC. We are very happy that we will be able to launch a new policy dialogue on biotechnology. So that will be an important area.

Two is controlling emerging infectious diseases, a huge economic threat to the region -- malaria, TB, HIV/AIDS. People don't think about those problems in Asia, but they are problems, and they are growing problems. And we need to get a handle on it. We need to set up ways of surveiling it and monitoring it. APEC has developed a strategy this year as a result of a call by leaders last year to do just that. And APEC will be launching and unveiling that strategy in Shanghai.

And finally education. Education, again, as I mentioned earlier, is just vital. And there's been a number of efforts. China has been a leader in this particular area in terms of human capacity building, and we have been working with Korea and a number of other economies on cyber-education, and we'll have some exciting initiatives to unveil as well in Shanghai.

Ms. Lilly: Thank you very much. Now back to you Shanghai.

Ms. Fang: Mr. Greenwood, thanks for your time and interview, and hope to see you in Shanghai.

Mr. Greenwood: I look forward to it. Thank you.

Ms. Lilly: Well, we have come to the end of today's program. I would like to thank our guest, Mr. C. Lawrence Greenwood, for being with us today. I would also like to thank our panelists in Shanghai for their questions. From Washington, I'm Judlyne Lilly for "Dialogue." Good day.