*EPF408 05/09/2002
Text: Consul General Praises Macau for Anti-terrorism, IPR Advances
(U.S. Consul General Klosson May 8 speech) (4570)

U.S. Consul General to Hong Kong and Macau Michael Klosson praised Macau for its support and cooperation in the fights against terrorism, intellectual property rights (IPR) violations, and transnational crimes such as money laundering.

Speaking at the University of Macau May 8, Klosson said the Macau Special Administrative Region (SAR) of China was "an important partner" in the U.S.-led international anti-terrorism coalition.

He cited as evidence, among other things, directives from Macau's financial authorities to banks to search for terrorist accounts and new legislation to implement recent U.N. Security Council anti-terrorism resolutions.

With regard to the protection of IPR, Klosson noted that the U.S. Trade Representative's office had recently announced it had removed Macau from the group of jurisdictions the United States believes provide inadequate protection for intellectual property.

"This is a major and welcome step forward in recognition of Macau's significant achievements" in combatting IPR-infringing activities like the pirating of DVDs and VCDs, Klosson said.

Klosson was enthusiastic about Macau's decision to open up its famous gaming sector, but added that the United States hopes "Macau will seize this opportunity by implementing and enforcing strong measures in all of the casinos to ensure that its new gaming industry is matched by an anti-money laundering regime that meets global standards."

Klosson also urged Macau authorities to work hard at combating illegal textile transshipments from China to the United States.

"It is important for Macau to address this problem forthrightly, including through stiffer penalties for those found guilty of illegal transshipments," he said.

Klosson concluded his speech by saying Macau faces four main challenges in the future: to continue to strike a balance between its connections with China and ties with the rest of the world; to respond to China's World Trade Organization (WTO) accession and the pressures of globalization; to continue to preserve and develop the rule of law and fundamental human rights; and to further develop its democratic institutions.

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

(begin text)

U.S.-Macau Relations: Writing the Next Chapter
Remarks by U.S. Consul General Michael Klosson
At the University of Macau, Macau SAR
May 8, 2002

I'm very happy to have this opportunity to speak to you today. I will complete my assignment as Consul General this summer, but I want to tell you that my visits to Macau, the work my Consulate has done with your officials, and our interactions with the Macau people have been very rewarding experiences. We have no office in Macau, but someone from the Consulate on average travels here every day of the week, and I know many more would like to visit even more often to enjoy all Macau has to offer!

During my almost three years here, Macau has witnessed several major developments. Foremost was its return to Chinese sovereignty under the "one country, two systems" framework. The first post-hand-over Legislative Assembly elections last fall marked an important step in your political development. The government also worked hard to tackle a serious street crime problem that caused insecurity and tarnished Macau's international reputation. And, of course, the opening of the gaming sector to foreign competition has the potential to usher in a new era for Macau's economy. During this same period, U.S. and Macau officials have worked together to advance our common interests and deepen our cooperative relations.

I would like to start off today by talking about the events of September 11 and the larger backdrop of U.S. involvement in the Asia Pacific region. I will then focus on U.S. relations with Macau and close with some comments about the challenges ahead.

The War on Terrorism

The September 11 terrorist attacks in America were a horrific wake-up call for Americans, who for years had taken comfort in the two oceans separating our country from tensions abroad. They were the first foreign attack on our soil since 1941. In response, the United States, together with friends and allies, mobilized a massive, global campaign against terrorism. At home in the U.S., the September 11 events brought about major changes in how we police our borders and secure the safety of our citizens.

The terrorist actions were not just an attack on the United States. Governments and people everywhere, including in Macau, recognized quickly these were attacks on the international community, our shared values and our global economy. Few places around the globe were left untouched. The over 3,000 victims included citizens of some 80 countries. Stock markets tumbled, aviation and travel industries suffered, and insurance companies faced unimaginable claims. Economies around the world were pushed downward.

However, the global response was swift and overwhelming in its rejection of terrorism. It began with 46 multilateral declarations of support, including from the United Nations General Assembly and Security Council. Seventeen nations deployed 16,500 troops and warships to free Afghanistan from the Taliban's brutal rule and terrorist occupation. Some 136 countries offered some kind of military assistance. Police in more than 60 countries have arrested over 1,000 al-Qaeda operatives. Financial authorities worldwide have also acted to cut off terrorist funding. One hundred and fifty of them have issued orders freezing terrorist assets and have blocked accounts totaling $105 million, including $34 million in the United States.

We are grateful for Macau's strong support of this campaign. Chief Executive Edmund Ho has pledged his full cooperation. Macau is enacting new legislation to implement recent United Nations Security Council resolutions designed to combat terrorism. Macau financial authorities have directed banks to search for terrorist accounts. Our law enforcement agencies and their Macau counterparts have also worked together in the anti-terrorist effort. Macau is thus an important partner in the coalition.

The war on terrorism is going to be a long-term effort, and there is still much more to do. The successful campaign in Afghanistan is just the first phase. The United States is now working with allies and partners around the world wherever terrorist organizations of global reach might seek to wreak havoc. In some areas we engage in military training and cooperation, such as in the Philippines, Yemen and Georgia. In others, the emphasis is on law enforcement and intelligence cooperation. We are determined to see this long-term, multi-dimensional campaign through to the end.

U.S. Engagement in Asia

The basis of our relations with Asia was not fundamentally transformed on September 11, although the war on terrorism and promotion of nonproliferation moved to the top of our policy agenda. In fact, the events of September 11 reinforced the importance of U.S. engagement in Asia in pursuit of our long-standing political, economic and security interests. They have strengthened our ties with allies and other partners throughout the region. Our fundamental objective is a peaceful region where each country is free to pursue its own economic development and prosperity in a secure, open environment. We support internationally accepted standards of behavior which ensure the pursuit of security and development is accomplished through cooperation with neighbors, rather than at their expense. We seek to encourage the regional move toward democracy and respect for individual rights.

When one surveys the region, one sees significant, long-term trends that provide a positive setting for U.S. relations with Asia, including U.S.-Macau relations. First, there has been a trend toward democratization -- improved political rights and civil liberties -- in the region. In the past decade, the Philippines, South Korea, Thailand, Mongolia, and Taiwan all have consolidated their relatively young democracies. Indonesia abandoned 30 years of authoritarian rule, although it remains in the throes of a difficult transformation. Not even China has been immune from this trend: It has been experimenting with village elections and there has been a significant expansion in the ability of Chinese citizens to make their own decisions about many aspects of daily life. In other words, in just a generation, democracy has taken hold in a way that defies those who once argued that Asian values were inconsistent with the test of the ballot box.

Second, in keeping with the impact of globalization in other parts of the world, there has been a trend toward establishing more open, market-based, transparent economies. The amount of trade and investment, both inward and outward, in which East Asian countries engage has increased dramatically. After centuries in which much of Asia looked inward, the region's most successful economies now are those focused unambiguously outward. Travel, trade and communications have exploded bringing about rising prosperity and longer life expectancy in the region.

Third, we are seeing China's emergence as a regional power which plays an increasingly prominent role on the international stage. Economically, China is now the world's seventh largest exporter, and its continued market opening makes it a priority for the global business plans of most of the world's largest corporations. China's rising economic strength has been accompanied by growing military strength, and a growing sense of national pride. Its geographic size, large population, millennia of history, and cultural influence ensure that it will occupy a central position in the Asian calculus.

These factors make it more important for the U.S. and China to deepen our cooperation where possible. Sino-American relations, as you recall, ran into early difficulties last year when a Chinese fighter and one of our reconnaissance aircraft collided over the South China Sea. Before September, observers wondered if our dialogue could get back on track. China's reaction to September 11, however, was quick and supportive. That response contributed to the success of the two subsequent meetings between President Bush and President Jiang. At those meetings, especially during President Bush's February visit to Beijing, the two sides addressed the full agenda of issues in our relationship. President Bush underlined the U.S. commitment to "candid, constructive, and cooperative" relations: candid when we disagree, constructive when there is scope for progress and cooperative when we have common regional, global, or economic interests. Vice President Hu Jintao's visit to the U.S. last week provided another occasion for our governments to underscore the importance of a constructive relationship.

China's accession to the WTO is an historic milestone in China's integration into the international community. It means that China has accepted WTO rules, will open sectors to foreign business and make its markets more transparent. China's economic transition as a WTO member will not be easy: Chinese companies and workers will face increased competition and painful adjustment. Similarly, China's WTO accession and continued growth pose challenges to other economies in the region, just as they also present opportunities.

United States Trade Representative Robert Zoellick recently said in a speech in Beijing that for the U.S. and China, "Our goal now should be to work together to assure that China's commitments are implemented faithfully and on schedule, and to assure that China, in turn, can utilize WTO rules to prevent other countries from closing their markets unfairly to Chinese goods." He emphasized that the U.S. and China should work together, not only on China's WTO entry, but also on the global trade negotiations launched last November.

In sum, the United States sees China as a great country and supports its successful integration into the international community. We want China's economic development and reforms to succeed. A more open, reforming China that seeks to better the lives of its people and enhance the rule of law is likely to mean a China that is a force for regional stability. It is likely to mean an East Asia region that is a dynamic source of world growth.

U.S.-Macau Relations

Let me now turn to the progress we have achieved in U.S.-Macau relations over the past several years.

The starting point for our relations with Macau is support for its vitality as a Special Administrative Region of China that enjoys a high degree of autonomy and preserves its unique culture and way of life. In support of that distinctiveness, the United States Congress passed a law eighteen months ago which recognizes Macau's unique international status and authorizes the President to conduct relations with Macau distinct from our relations with the rest of China.

On these foundations, we conduct relations with Macau in a number of significant areas. In addition to our new common efforts against terrorism, those areas include protecting intellectual property rights, combating illegal textile transshipment, cooperating to prevent transnational crimes such as money laundering, and promoting U.S. exports and investment.

One of my top priorities as Consul General has been protection of intellectual property rights. Intellectual property is a broad term that covers items ranging from trademarks to computer software and drug patents. In Macau our primary concern is with the manufacture of pirated optical discs such as DVDs and VCDs. I am happy to tell you today that in recognition of the Macau government's broad and effective actions, the U.S. Trade Representative's office last week announced that it had removed Macau from the group of jurisdictions which we believe provide inadequate protection for intellectual property. This is a major and welcome step forward in recognition of Macau's significant achievements. Although we will no longer give special attention to Macau, we do expect that the Macau government's efforts will continue and extend to convictions and deterrent penalties for intellectual property rights pirates.

What created the U.S. concern and what actions have Macau authorities taken? Following the mid-1990s crackdown on the production of DVDs and VCDs in the PRC, Macau saw a surge of manufacturing and retail sale of pirated goods as pirates shifted their manufacturing operations out of the mainland. In response to this development in 1998, the United States placed Macau on what we call a "Priority Watch List," one of the highest categories of scrutiny under U.S. trade law. We encouraged Macau to take a series of steps to address the problem. Recognizing the importance of protecting intellectual property for its own economic interests, Macau strengthened its intellectual property rights laws, tightened controls over DVD and VCD manufacturing and raw materials, and stepped up street-level enforcement. The result was the seizure of hundreds of thousands of counterfeit discs, and the shutting down of pirate manufacturers. The strong performance of the new Macau Customs Service, in working with U.S. industry associations and maintaining a high tempo of enforcement operations, further reinforced these positive trends.

Macau stands to benefit from its success on this front. We have seen many companies choose Hong Kong as a base of business operations instead of the mainland because of that SAR's intellectual property legal regime. With this experience in mind, I am hopeful that foreign companies will now accord Macau a more favorable rating as an investment location. Effective protection of intellectual property plays an important part in investment decision-making: Companies want to ensure their intellectual property, developed at great cost in time and money, will be safeguarded.

Macau's actions are also important from another perspective. They demonstrate a commitment to uphold international standards. Protection of intellectual property is not just a U.S. concern. The World Trade Organization, as reflected in agreements among its members, also places a high priority on such protection. In this regard, we were pleased to see the strong endorsement that Macau received last year from the WTO's Trade Policy Review, the first such review that Macau has gone through since its return to Chinese sovereignty in 1999.

Another important issue in our bilateral economic relationship, and one in which we have made progress through joint efforts, are illegal textile transshipments. These are shipments of goods that are mislabeled as "Made in Macau" when in fact they are produced in the Mainland. The objective is to evade export quotas and would involve, for example, shirts made in the PRC but then sent here for tagging with a "Made in Macau" sticker before packaging and transport to the U.S.

The U.S. absorbs about fifty percent of Macau's textile and garment exports. These goods continue to enter the U.S. under quotas separate from those of China. Illegal shipments hurt our American textile producers, but they also damage Macau's legitimate manufacturing enterprises and take jobs away from Macau workers. Given the importance of the U.S. market to the Macau textile industry, it is important for Macau to address this problem forthrightly, including through stiffer penalties for those found guilty of illegal transshipments.

Our relations extend beyond trade issues to law enforcement cooperation. In recent years we have broadened our relationships with Macau police agencies. U.S. law enforcement personnel assigned to the Consulate now have regular contact with their Macau counterparts and work together to solve criminal cases. We have also provided assistance to boost law enforcement capabilities in Macau. Our Immigration officials have conducted document training for your immigration and airline staff. A number of Macau crime fighting officials have participated in programs at the U.S.-sponsored International Law Enforcement Academy in Bangkok and, this year for the first time at a similar training facility in the United States. We continue to look for additional training avenues.

Over the past several years, the world community has increasingly turned its attention to identifying and disrupting the funding networks of criminals, an effort given further impetus by the September 11 events. Identifying and seizing the funds of criminals is an integral part of countering illegal activities, whether of terrorists, narcotics kingpins, alien smugglers, or those who traffic in human beings.

Macau has taken some important initial steps in joining this international effort. It has undergone a review of its anti-money laundering regime and joined the so-called Asia-Pacific group, the regional organization dedicated to combating the money networks of criminals. The Macau government is now revising some of its anti-money laundering guidelines and is conducting a self-assessment of its abilities. We were happy to assist these efforts by conducting a training seminar for over one hundred Macau officials last year on anti-money laundering techniques, and are looking for ways to expand those activities in the future.

Turning to a topic that has absorbed Macau's attention in recent months, we have watched with great interest as Macau has moved to introduce competition into its gaming industry, which plays such a pivotal role in Macau's economic development. The government demonstrated a strong commitment to open up the industry as a means to improve Macau's international reputation and reposition Macau as a convention and family-oriented destination. From all accounts, the license bidding process was conducted in a fair and transparent manner. The expected new investment in the gaming and entertainment sector should contribute significantly to income and employment over the next several years.

Naturally, we were happy to see that two of the new license holders, pending negotiation of final agreements with the government, will have substantial private U.S. involvement. The entry of these American companies will dramatically raise the U.S. business profile in Macau and ensure that our commercial relationship occupies a much more prominent position in the future. The U.S. companies have unique skills and experience that will help Macau pursue its ambitions.

The restructuring of the gaming industry should also provide a number of other business opportunities. We see new markets for U.S. companies that sell products such as gaming machines and software, computer systems, construction materials, and restaurant and hotel equipment. Organizers of conventions and entertainment shows, and design and engineering firms should also find new opportunities for their services. Indeed, reflecting these new prospects, 10 U.S. companies exhibited at an international gaming and entertainment exposition in Macau two weeks ago.

The gaming sector restructuring creates opportunities, but also challenges for our law enforcement cooperation. Vigorous monitoring and vigilance will be required by Macau regulatory and other authorities. Based on our experience elsewhere in the world, moreover, new gaming establishments could increase the amount of counterfeit U.S. currency circulated in Macau. We hope to address this potential problem through training and wider contact with Macau law enforcement authorities.

Equally important, this restructuring provides a crucial opportunity for Macau to put in place measures to prevent criminals from using casinos here to launder illicit funds. As I mentioned above, combating money laundering is now high on the agenda of the world community. We hope Macau will seize this opportunity by implementing and enforcing strong measures in all of the casinos to ensure that its new gaming industry is matched by an anti-money laundering regime that meets global standards.

During my time as Consul General, we have also worked hard to increase interaction and contacts between our two people. We have regularly encouraged American officials to visit Macau. I was pleased to accompany the first legislative delegation from the United States to Macau just over two years ago; several have since followed. We have arranged for distinguished American professors to participate in seminars here on topics such as the Internet, intellectual property rights, and the free flow of information. The Consulate has also supported cultural events, including an art exhibit last year at the Camara Municipal de Macau.

A number of Macau officials have traveled to the United States and we hope they will continue to do so. One group of legislators and officials went on a familiarization trip last year in which they visited Las Vegas and other cities to get a first-hand view of how our government regulates the gaming industry. Secretary Ao Manlong recently met with U.S. Secretary of Transportation Mineta in Washington. Six Macau officials will travel to the U.S. this year on our International Visitor Program. And two officials from your anti-corruption commission just finished a two-week law enforcement seminar in Manila.

Challenges and Opportunities Ahead

I want to close my remarks by talking about the challenges ahead.

The unfolding relationship between China and the Macau SAR will obviously play a key role in determining Macau's long-term development. As the State Department's April report on Macau indicated, the U.S. believes that Macau under Chinese sovereignty has developed in an overall positive direction. China has generally respected its commitments regarding Macau's high degree of autonomy and preservation of Macau's unique culture and way of life. To judge from the public statements of your civic and government leaders, it is clear that Macau has many strong and thoughtful voices committed to its way of life. Of course, Macau will not remain static. Your society, institutions, and economy will evolve to meet the changes of our new century, but how you exercise your autonomy will shape that evolution.

That evolution will also be shaped by Macau's links to the international community. So, it's important that Macau continue to strike a balance between its connections with China and ties with the rest of the world. Increased economic interaction with the mainland is natural as China opens its economy through its WTO commitments and maintains a solid rate of growth. At the same time, it is important for Macau to continue to reach out beyond its immediate horizon. Visits abroad by the Chief Executive and other senior officials help keep Macau's international ties strong. Gaming sector liberalization will expand them as well by drawing in substantial sums of foreign investment and tourists from throughout the region. The establishment of your office at the European Union in Brussels will sustain and deepen your traditional ties with Europe. Your plan to open a similar office at the WTO in Geneva will place Macau more firmly in the WTO's fraternity of trading nations.

Responding to China's WTO accession and the pressures of globalization are the second set of challenges Macau confronts. Increased competition is inevitable, and this is likely to produce some structural adjustment in Macau's employment mix. But there will also be new opportunities for people involved in trade, tourism, accounting, advertising -- anything and everything associated with China. In addition, increased prosperity in southern China will translate into growth in retail sales and Macau companies will be able to extend their distribution networks in the PRC. Overall, I believe Macau will benefit from development of its historical role as a gateway into and out of China, but this will take hard work. Macau's economy and market, while small, have their strengths.

It is important to remember, however, that this role -- and, indeed Macau's continued prosperity -- depends on more than just economic factors. It also depends on things businesses need to prosper in an increasingly internationalized market place, such as the rule of law and free flow of information. A third important challenge thus will be continued preservation and development of the rule of law and fundamental human rights. Macau citizens enjoy a high degree of religious freedom. They enjoy the right to free speech, to hold demonstrations, to form associations, to petition the legislature and to have a fair trial in an independent court of law. There is press freedom. The International Covenant on Civil and Political Rights is applied in Macau through the Basic Law. These rights, and their exercise and protection, are key to Macau's special way of life, its continued distinctiveness and future development. They are also seen by the international community as the most credible expression of the integrity of Macau's new status. Any lapses in their observance would raise doubts about that status.

A fourth challenge is further development of your democratic institutions -- the legislature, independent judiciary, and civic organizations. These institutions make an essential contribution to preserving the integrity of the "one country, two systems" arrangement and ensure that changes take account of the wishes of the Macau people. An important step in the development of the legislative branch of your government was your first post-handover legislative elections last September. These polls were well run, open, and fair and we noted that pro-democracy groups made a strong showing. This body will become more representative of the Macau people when the number of directly elected legislators increases to twelve in 2005.

We have sensed a new energy and dynamism in Macau since the reversion to Chinese sovereignty, borne it seems from a sense of commitment by those Macau people who now govern Macau. We have also seen calls for more accountability and more transparency. We hope that these expressions will eventually find their full voice in a more democratic system, in keeping with trends throughout the region. We Americans can attest to the tremendous energy and dynamism that comes from the power of the individual. At the same time, we understand that other peoples have their own history and cultures, their own dreams and fears, and must find their own distinctive path forward to unleash that power for the good of all.

Macau has experienced difficulty at different points in its long history. Your challenges will be different, but each and every one of you can help shape the future, preserve valuable traditions and blend the old and the new. You will have the advantages of the hard work of previous generations and your calling is to build on those achievements by creating an open and tolerant community, a modern economy linked with China and the rest of the world, a more democratic political system, and a just society. As you write the next chapter in Macau's history, you can look forward to the continued interest of the United States and your other international partners. Thank you.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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