*EPF507 04/23/2004
Text: U.S. Consul General Cites Macau's Role in Fight Against Terror
(James R. Keith's Apr. 23 speech at University of Macau) (2600)

Despite its small size -- just 25 square miles -- Macau is "an important actor in the war against terror," says U.S. Consul General James R. Keith.

In a speech delivered April 23 at the University of Macau, Keith noted that Macau, a thriving Special Administrative Region (SAR) of China, "is taking steps to ensure that it can deny funding to terrorists and prevent money laundering."

Macau financial authorities have directed banks to search for terrorist accounts and other irregularities and recently hosted an international meeting on terrorist financing and money laundering. Keith voiced U.S. hopes that the Macau government will soon pass supplementary legislation to fully implement United Nations Security Council Resolution 1373, a wide-ranging, comprehensive resolution containing strategies to combat international terrorism.

Keith said U.S. and Macau law enforcement also work closely together to deal with issues such as narcotics trafficking.

Trade ties between Macau and the United States are also deepening, the Consul General said, noting he had just completed meetings with 25 members of a business delegation from the Hong Kong American Chamber of Commerce interested in the many business opportunities Macau has to offer.

"We hope this is the first step toward establishing an American Chamber of Commerce organization in Macau itself, Keith said. "Establishing an American Chamber of Commerce here makes sense considering that the United States currently absorbs nearly half of Macau's exports and more than half of its textile and garment exports. Two-way trade approached $1.3 billion in 2003."

Macau's liberalization of the gaming industry to include foreign competition has "altered the economic landscape," Keith said. U.S. investment in the gaming industry in Macau is already at $300 million, with more planned.

"U.S. investment seems destined to become an engine for growth as it expands opportunities for American participation in other sectors of the economy, including architecture, construction, engineering, computer systems, hospitality, and other services. These sectors should all grow with Macau's burgeoning tourist industry," Keith said.

Following is the text of his speech, as prepared for delivery:

(begin text)

Remarks by U.S. Consul General James R. Keith
University of Macau Auditorium
Friday, April 23, 2004

(As prepared for delivery)

Rector Iu, distinguished guests, students and friends:

I'm very pleased to join you today and to have this opportunity to speak to you about the U.S.-Macau relationship. We have had close ties dating back to before Macau was a Portuguese colony. Although many of you know that President Bush's father, the former President, was ambassador to China in the 1970s, not many may know of an earlier connection between a U.S. president and Macau. Warren Delano - grandfather of Franklin D. Roosevelt, our president during the 1930's and 40's - was a businessman in Macau.

President Roosevelt always had a warm spot for his family's history. In 1934, he sent out a Christmas card with a picture of his family's former residence in Macau, where his maternal grandparents the Delanos had lived. The Delano mansion was probably situated not far from where new American investment is going today.

I mention this to emphasize the longstanding ties that this area has had with the United States. The recent revival of U.S. investment and interest in Macau, therefore, isn't exactly new. It's picking up where we had left off many years ago. And the future looks particularly bright.

Trade and security: Two pillars of the U.S.- Macau relationship

The United States and Macau enjoy a dynamic and expanding relationship. During my two years as U.S. Consul General in Hong Kong, I've watched the relationship grow in importance as American activity in Macau has increased. I came over this morning with a 25-person strong business delegation from the Hong Kong American Chamber of Commerce interested in the many business opportunities Macau has to offer. We hope this is the first step toward establishing an American Chamber of Commerce organization in Macau itself.

Establishing an American Chamber of Commerce here makes sense considering that the United States currently absorbs nearly half of Macau's exports and more than half of its textile and garment exports. Two-way trade approached $1.3 billion in 2003. Macau's liberalization of the gaming industry to include foreign competition has altered the economic landscape. U.S. companies are active participants in the development of new gaming and entertainment venues.

U.S. investment in the gaming industry here is already at $300 million with more planned. U.S. investment seems destined to become an engine for growth as it expands opportunities for American participation in other sectors of the economy, including architecture, construction, engineering, computer systems, hospitality, and other services. These sectors should all grow with Macau's burgeoning tourist industry.

Our law enforcement cooperation with Macau is critical to the bilateral relationship. This includes cooperation in the war on terror, my government's top priority around the world. Macau is an important actor in the war on terror because it recognizes that terrorists are seeking to exploit small and potentially vulnerable actors. Macau is taking steps to ensure that it can deny funding to terrorists and prevent money laundering. Macau financial authorities have directed banks to search for terrorist accounts and other irregularities. The territory recently hosted an international meeting on the subject. We deeply appreciate the efforts already made on this important issue, and we also hope the Macau government will soon take the next step and pass supplementary legislation so that Macau's law fully implements United Nations Security Council Resolution 1373, a wide-ranging, comprehensive resolution with steps and strategies to combat international terrorism.

Beyond counterterrorism, our law enforcement officials are working much more closely together. The United States provides training to Macau law enforcement officials, focusing on money laundering and counternarcotics as well as counterterrorism. In addition, our two customs services have cooperated on inspections on suspected illegal transshipments.

Trade and security are pillars of the U.S.- Macau relationship. They echo some of the reasons Europeans and Americans came to Macau over 400 years ago. But they only begin to tell the story of the re-emergence of Macau and the Pearl River Delta.

Economic opportunities....

Once again, Macau is on the verge of reaping major benefits from its geographic position in one of the most dynamic economic areas in the world. Growing tourism is just one of the advantages you are starting to realize. You enjoyed a three per cent increase in visitors last year, most of that due to increased tourism from the mainland. This will surely increase as the independent travel scheme is extended to all Guangdong residents on May 1. Deepening economic ties with mainland China will boost Macau's manufacturing sector and drive growth in your tourism and gaming sectors. As Hong Kong has been a catalyst for development of the eastern Pearl River Delta, Macau is well placed to lead the western PRD by providing services to facilitate mainland exports to the rest of the world. Macau's financial institutions are becoming more active across the border in acquiring shares of Chinese banks. Infrastructure improvements will also link Macau with Hong Kong and with mainland Chinese railroad and highway grids. The proposed bridge linking Macau with Zhuhai and Hong Kong will be an important part of this.

Chief Executive Ho has enunciated a vision of Macau as a family-centered tourist destination and regional convention center. The United States is pleased to be a part of that vision. American companies are eager to participate in the vibrant cluster of casinos, hotels, and entertainment venues planned for Macau. Several laws under consideration will increase foreign investor's interest in Macau and help turn it into a family destination. These new laws should help enhance the stability and attractiveness of Macau as a whole. The draft bill on casino credit has passed the Executive Council, and we look forward to its passage by the Legislative Assembly. We have also urged Macau to pass a law allowing casinos to deduct unrecoverable loans from their taxes. Both of these measures will make the business environment more attractive to foreign investors, especially U.S. firms in the gaming industry. From a broader perspective, the stability and attractiveness of the Macau SAR will be significantly enhanced as a result of these investments. Development of non-gaming attractions will be crucial to attract higher-end tourists, building an image of an orderly society while continuing to manage gaming liberalization.

People have asked whether Macau will become the "Las Vegas of Asia." I think it is very difficult to put an American template on a city with the rich history and cultural diversity of Macau. Macau will, as always, have a very unique character reflecting its Chinese and Portuguese heritage. Certainly in terms of its dynamism and vitality, its resorts, shopping and convention centers - everything associated with the development of gaming resort industry - Macau will convey a similar sense of Las Vegas's diversity and vitality. But Macau will continue to have a unique identity of its own.

The gaming industry is not the only factor that is transforming Macau. The Closer Economic Partnership Arrangement with China will also have an impact. CEPA should give a boost to your manufacturing sector, particularly textiles for those who don't want to invest everything in China. The planned Macau-Zhuhai trans-border industrial park under CEPA should allow Macau's manufacturing sector to expand and ease Macau's labor shortage. Macau's low office rents and wages also represent competitive advantages.

...And economic challenges

The end next year of the global multifiber arrangement will affect Macau. Any major change in the flow of the textile and apparel trade - so important to Macau - cannot help but have a profound effect. So now is the time for Macau to be investing to make itself more cost-efficient, more competitive, and able to hold onto market share. Working in Macau's favor in the textile and apparel trade are well-established, long-term relationships with foreign buyers, as well as solid channels of communication to well-developed markets. Macau can build on those in the post-multifiber arrangement world in 2005, when there will be a need for companies around the world to look for a diversity of sources of supply. Macau can leverage its extensive contacts and its reputation for quality and reliability. The planned Macau-Zhuhai trans-border industrial park could give advantages to its textiles. In the meantime, Macau needs to ensure no one is taking advantage of its reputation by labeling mainland goods with the Macau stamp. This will help Macau maintain its reputation as a reliable trade partner.

Protecting intellectual property rights is a worldwide concern for the United States. Macau has made great strides in IPR protection by pursuing those involved in the piracy of software, film, and music. We removed Macau from our Special 301 watch list in 2002, and Macau has done much on the legislative front. While some problems remain, particularly regarding end-use piracy, Macau is a valued partner in IPR protection. Continuing strengthening of Macau's IPR regime will be essential to Macau's efforts to attract foreign direct investment and to develop high-tech industries. We have seen the authorities here work effectively against the pirating of optical discs, for example. There are other areas where the political will exists, but the machinery to translate that political will into results is still being developed. The U.S. is prepared to help. This is another example of the critical nature of our law enforcement cooperation.

Macau needs more effective export controls if it is to fully realize its economic potential. Although your legislature is working on draft legislation, there is currently no way to control exports - and therefore no way for Macau to ensure that it is not re-exporting sensitive items, particularly those related to the high-tech industry. This limits the number of U.S. goods that can be sold here. We urge to you to pass legislation as soon as you can.

Combating textile transshipments, promoting IPR protection and establishing effective export controls are all challenges. But the pressure of competition is something Macau is used to. The World Trade Organization has described Macau as one of the world's freest markets. Your free and open competitive environment, driven by market forces, represents a tremendous strength and advantage. As long as Macau remains committed to open markets, I am confident that you will continue to thrive.

The Future

As we look to the future, Macau is well positioned to take advantage of the burgeoning growth in the Pearl River Delta, something that is surely going to accelerate in the decade ahead. The region's increased prosperity and China's expanded tourism policies will benefit Macau. Macau-based companies will be able to increase their distribution networks on the mainland. Macau's belief in the free-market system and Macau's high degree of autonomy will help you take advantage of this growth. U.S. investment in the gaming and tourism industries will certainly contribute to Macau's transformation into a regional entertainment center.

All of this will take hard work, and the challenges are not merely economic. Businesses need dependable infrastructure with a firm foundation of rule of law and free flowing of information. A vital civil society, protection of fundamental freedoms, transparency of government, and the maintenance of a high degree of autonomy under the "one country, two systems" formula are all key ingredients to Macau's continuing success.

We are enjoying the hospitality of an excellent university, so I think it is only right to mention that in today's globalized economy, education is key. The future will require a strong educational system to produce students with a global outlook. I'm pleased to say the Consulate and the University are working together in this area. Immediately after this talk we will sign an agreement with the university to t provide materials and equipment for an "American Corner" in the university library. The American Corner concept is part of a worldwide effort by the Department of State to provide libraries with more information about the United States, including direct access to American literature and periodicals. It will help complement the library's already strong international collection In the future, the Corner should serve as platform for more informational and cultural programs on the United States, and we look forward to working the with the university in this effort.

English language skills are another important tool in our globalized world, and the Consulate is also pleased to be working with the English Language Center at the University of Macau this coming year. The Department of State funds roughly 60 English Language Fellows worldwide each year to work with local institutions on the development on English language skills. I'm pleased to say that this year the University of Macau was successful in this very competitive process, and your first English Language Fellow is expected to arrive next year. We hope our efforts in this area will serve Macau well in the coming years as foreign investment and the tourist industry continue to grow.

In closing, allow me to observe that this is an exciting moment in Macau's development. You are transforming Macau into a dynamic international tourism hub building on the strengths of its rich and diverse history. There is every reason to believe the U.S. relationship with Macau will grow in the coming years. You can look forward to our continued consideration, friendship, and support.

(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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