*EPF306 06/25/2003
Text: Leach - Southeast Asia Important For U.S. Economic and Security Interests
(Subcommittee on Asia and the Pacific chairman's June 25 opening statement) (1270)

American trade and commercial interests in the Southeast Asia region are abiding, with that part of the world ranking as the United States' fifth largest trading partner, according to Representative James Leach (Republican of Iowa).

In prepared remarks for a June 25 hearing of the House International Relations Subcommittee on Asia and the Pacific, Leach, the panel's chairman, noted that American engagement with the region has increased throughout the 1990s and into the new century.

"The pace of American economic engagement with ASEAN has actually increased since the go-go days of the early 1990s," Leach said.

He noted that the region includes leading moderate Islamic countries, and nations there are playing "a critical role in the global campaign against terrorism."

Southeast Asia, Leach added, "remains a vast market for U.S. exports, more than twice as large as our exports to China and our fifth largest market worldwide."

In contrast to the trade relations with the region, Leach said, U.S. trade ties with China were problematic.

"Reasonably balanced and mutually beneficial trade is a cornerstone of good Sino-American relations," he told the panel.

However, Leach added, "unbalanced trade -- particularly in periods of economic weakness -- contains the smoldering prospect of diplomatic rupture."

Leach called on the Bush administration to tell Beijing that normal trade relations "are all about reciprocity."

He declared it "self-evident that an almost two billion dollar a week trade deficit is politically and economically unsustainable."

The Iowa Republican also noted the strong ties between Australia and the United States.

"We share a history of common sacrifice, common values, as well as robust and expanding economic relations," said Leach, "Hence it is altogether fitting that Canberra and Washington should set the goal of completing and signing a credible free trade agreement before the year is out."

Following is the text of the prepared remarks of Representative James Leach at the June 25 hearing of the House International Relations Subcommittee on Asia and the Pacific:

(begin text)

Committee on International Relations
U.S. House of Representatives
Washington, D.C. 20515-0128

Statement by Representative James A. Leach
Chairman, Subcommittee on Asia and the Pacific
Hearing on U.S. Trade and Commercial Policy Toward Southeast Asia and Oceana

June 25, 2003

On behalf of the Subcommittee I would like to welcome our distinguished Administration witnesses to today's hearing. Appearing before us today are the Honorable James A. Kelly, Assistant Secretary of State for East Asia and the Pacific, and Mr. Ralph F. Ives, Assistant U.S. Trade Representative for Asia-Pacific and APEC Affairs. I particularly would like to express our appreciation to Assistant Secretary Kelly for his appearance today. As my colleagues may know, he has recently returned from the post-Ministerial Conference of the Association of Southeast Asian Nations (ASEAN) in Phnom Penh, Cambodia.

The subject of our hearing this morning is U.S. trade and commercial policy toward Southeast Asia and Oceana. Here, a little perspective is in order. Just a decade ago, the "Asian miracle" was described as one of the economic wonders of the world. American foreign policy was focused like never before on "big emerging markets," particularly the East Asian tigers. More broadly, the 21st century appeared to be all about geo-economics instead of geopolitics, that is, the dominant interplay of international finance, trade and economics on politics rather than politics dictating economics.

As we all understand, however, the global financial crisis of 1997-1998, problems of inequality and corruption in the region, and the terrorist attacks of September 11 combined to shatter the economic optimism. Subjects like counter-terrorism and global security, and not international economic policy, now dominate our political lexicon.

Rumors of the demise of American commercial diplomacy in Asia and elsewhere, however, are greatly exaggerated. Indeed, with remarkably little publicity, the pace of American economic engagement with ASEAN has actually increased since the go-go days of the early 1990s. The reasons for America's abiding interest are plain. The region, which includes leading moderate Islamic countries, is playing a critical role in the global campaign against terrorism. In addition, Southeast Asia remains a vast market for U.S. exports, more than twice as large as our exports to China and our fifth largest market worldwide. Indeed, from a Midwestern agricultural perspective, no region in the world holds out greater promise for U.S. food and agricultural trade than Asia.

President Bush will demonstrate America's commitment to the ASEAN region when he visits Thailand for the APEC meeting this October, and I am optimistic that Congress will do the same and approve the U.S.-Singapore Free Trade Agreement - the first such American commitment in Asia - later this year. Moreover, under the Enterprise for ASEAN Initiative, U.S. economic ties to the region could be expanded further with the negotiation of additional U.S. free trade agreements with Thailand, the Philippines, and others.

Likewise, Australia is one of the United States' closest allies, with whom we share a history of common sacrifice, common values, as well as robust and expanding economic relations. Hence it is altogether fitting that Canberra and Washington should set the goal of completing and signing a credible free trade agreement before the year is out.

New Zealand and the United States have also been strong partners and good friends for over a century. Our two countries share a strong commitment to democratic values, advancing human rights and protecting the environment. New Zealand is one of only two countries - the other being Australia - that has fought side by side with the U.S. in every major war of the last century. New Zealand committed forces to the campaign in Afghanistan, and the government recently announced additional contributions to Operation Enduring Freedom and reconstruction in Iraq. In this context, I would hope that despite certain differences that exist, the Administration would give sympathetic consideration to early negotiation of an FTA with New Zealand. Comprehensive free trade between the United States, Australia and New Zealand would set a powerful example and act as a catalyst for further ambitious liberalization in both APEC and the WTO.

Finally, I would like to give notice to the Administration of growing concerns in Congress on an issue not a subject of this hearing, but which is of a subject of sharply rising angst among manufacturers throughout the country: the growing trade deficit with China. Last year merchandise imports from China were $125 billion, while exports to China were $22 billion, resulting in a trade deficit of $103 billion - by far the largest with any country in the world.

Reasonably balanced and mutually beneficial trade is a cornerstone of good Sino-American relations. Likewise, unbalanced trade - particularly in periods of economic weakness - contains the smoldering prospect of diplomatic rupture. It is time the Administration make the fundamental point that normal trade relations are all about reciprocity. It is self-evident that an almost two billion dollar a week trade deficit is politically and economically unsustainable. This Subcommittee and the Congressional Executive Commission on China, which I co-chair, will be holding a hearing on the subject later this year, with particular emphasis placed on the issue of currency relationships. A free and balanced flow of trade should be marked by free markets in currency where countries with trade surpluses should find their currencies appreciate in value and vice-versa.

In any regard, we appreciate your attendance at today's hearing and look forward to your testimony.

(end text)

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

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