Fellow ministers, distinguished colleagues; I am pleased to join you today on behalf of the United States. I welcome the opportunity we have to discuss this region’s economic difficulties and our effort to overcome them.
It is clear that whatever the ultimate solution to the crisis, it will have to come from the nations represented in this room. This meeting has brought all the countries directly affected together with their most important economic and diplomatic partners. Together, we represent a community of interest and we have no greater common interest than in speeding this region’s recovery.
There is no questioning the severity of the crisis. All across this region, families that had joined the ranks of the middle class are now finding it hard to put food on the table, while families that were once poor are now desperate. Workers are losing their jobs. Students are being forced to leave school. Hard won gains in education, health and sanitation are being threatened.
Yet even as we acknowledge the difficulty of the present situation, we should also acknowledge the achievements of this region over the last 30 years. For Asia’s success was no illusion. And its continued success depends on learning the lessons of the past.
Let us remember that a generation ago many of ASEAN’s members were mired in conflict. China, Korea and Indonesia were three of the poorest countries on earth. Since tben, the nations of this region have lifted more people out of poverty more rapidly than any comparable group of nations in history. We’ve seen new democracies born, modern cities rise, and old barriers to trade fall. How wonderful that in this century of Lenin and Stalin and Pol Pot, the one truly successful world-historic revolution in Asia turned out to be the agricultural revolution.
The economic crisis has eroded these gains, but it has not erased them. Not by a long shot.
At a time so many people are hurting, it is inevitable that some will lose faith in the principles underlying this region’s achievements, including the value of economic openness. It is true that few if any of us predicted this crisis, and that when it came few if any of us foresaw its depth or duration.
No nation and no school of thought can claim it has all the answers.
But if we are going to return this region to growth, we do have to remember how it achieved growth in the first place. This region’s success was built on the initiative of its people, but it was also made possible by an open global trading system, and fueled by foreign investment.
In the past year, those nations that have done most to reassure markets of their commitment to open trade, transparency, and sound macroeconomic policies have made the most progress in regaining market confidence. That confidence is based on a simple premise; An economy powered by open and sound financial policies will be better able to adjust to the global market than an economy that is closed and hobbled by financial favoritism.
What is more, we have seen that those nations that give their people the greatest say in political decisions have had the greatest success in preserving stability, The region’s democracies have shown us they have flexibility built in to their system. Their leaders have been able to point to a popular mandate to carry out tough policies. And their people have had outlets for venting frustration, raising questions and proposing new ideas.
Our first responsibility in responding to the crisis is to reaffirm first principles. Open markets work. Open societies are resilient and just. And together they offer the best hope for lifting people’s lives.
Building on these principles, there are specific steps that we all can take to restore confidence and stability to the region’s economies.
The international community, of course, has both a self interest and a responsibility to help. Every nation that has a trading relationship with this region is affected by the crisis. In the United States, millions of jobs depend on exports to Asia; our companies have over $130 billion in direct investment at stake. Our economic growth has already slowed because of the Asian downturn.
America’s policy is clear. We call for reform, but we will also do all we can to help countries that are being hurt by the crisis and that are committed to reform.
Our commitment is manifested in the significant resources we have supported in loans for the IMF and World Bank to this region. We believe these financial institutions have been flexible in adjusting their response to meet basic human needs.
We strongly support the mandate our finance ministers have given them to help strengthen the social safety net in the countries most hurt by the crisis. I’m pleased that with our support and that of other donors, the World Bank and the Asian Development Bank have funded major programs to support social safety net programs and provide scholarships for poor students, grants for schools, and job creation programs.
The United States has also done its best to help see that the urgent humanitarian needs of people in this region are met. For Indonesia, we have committed $75 million in food aid, $26 million for medical supplies, and $25 million in loan guarantees to create jobs – in addition to continuing assistance programs worth $550 million. A week ago, our government purchased $250 million in wheat, much of which we will donate to the Indonesian people. In other countries in the region, we are providing medical supplies and funds to keep students in school.
Official assistance can help countries in this region get through the worst days of the economic crisis, but we also have to recognize that it is not going to solve the deeper, long-term problems they face. The crisis is not going to be resolved by aid alone.
One thing aid cannot do is to make up for the billions of dollars in new private investment Asian economies are losing. Clearly, one of the keys to recovery is to atttact long-term committed capital bark to this region.
Foreign direct investment offers many tangible benefits. It provides more jobs with higher wages; it makes possible advances in technology and productivity; it spurs exports and foreign exchange earnings. It is needed to recapitalize banks and to restructure companies in distress. It makes economies more stable – after all, people who own factories do not usually abandon their investments and fly home at the first sign of trouble.
The United States is ready to work with its partners in this region to encourage renewed direct investment in their economies, including through negotiation of bilateral investment treaties. We hope that they, too, will do what is necessary to encourage investor confidence.
This requires guarantees that ensure foreign investors will be treated like domestic investors, that permit unfettered financial transfers, and that allow access to international arbitration. In this respect, we hope those ASEAN members that have not already done so will accelerate their commitment to sign, ratify and implement the international conventions on arbitration, including the New York and Washington Conventions.
Restoring investor confidence also requires that we work closely with the business community. Business already plays a positive role in the US-ASEAN dialogue. Private sector assistance could be especially valuable in developing deep and liquid long-term debt markets, in improving the efficiency of equity markets, and in introducing new financial instruments.
But perhaps the most important ingredient in restoring investor convince is transparency.
Transparency is a word that has taken on many related meanings nowadays.
It stands for the principle that goverments and businesses should keep their books open, so investors have the information they need to make responsible decisions.
It describes a state of affairs in which people are free to exchange information and ideas and decision makers are kept accountable by an informed public.
Most important, it expresses an expectation that in a climate of openness, economic decisions will be shaped by market forces, and not distorted by corruption. This is an issue we all have to talk about openly. For in a sense, the first requirement of transparency is that we have an honest discussion about transparency.
Fortunately, the movement toward greater transparency in the Asia-Pacific region is very much under way. This year, APEC finance ministers launched an initiative, led by Malaysian Deputy Prime Minister Anwar, to improve governance in the corporate sector. APEC has also been active in improving transparency in procurement. The Pacific Basin Economic Council has issued an anti-corruption charter that proposes standards all of us should embrace. Several non-OECD countries have signed the OECD Convention that criminalizes the bribery of foreign Government officials. We hope all our partners in this region will do the same – and that all signatories will move quickly to ratify the Convention and to enact the necessary domestic legislation.
We strongly encourage ASEAN-led initiatives to improve transparency and good governance. They would give an enormous boost to this region and to our effort to restore confidence in its future.
Of course, another key to recovery is to resume export led growth.
That is why frankly, I believe that the most important contribution the United States is making to East Asia’s recovery is the one too often taken for granted. We are continuing policies at home designed to keep our economy growing. We are selling to the world, but we are also buying the exports that can help lead this region back to prosperity and growth. Our imports from ASEAN countries have already increased by 5% this year.
We count on other industrialized nations to do the same – and we believe that no nation has a bigger contribution to make than Japan. We hope that Japan will continue to move in the direction of policies that stimulate domestic demand, restructure its banking sector, and reduce regulation of the economy.
In addition to keeping our markets open, the United States will do its part to stimulate trade with our partners in this region. Our Export-Import Bank is working now with Indonesia and Thailand to finalize credit facilities of up to $1 billion for each country. Our Department of Agriculture has made more than $1 billion in credits available to ASEAN countries to spur agricultural sales. We encourage other nations to develop similar trade financing programs with ASEAN.
We also count on nations in this region to keep their markets open, to avoid raising tariffs and barriers, and to maintain their commitment to liberal trade.
One of this year’s most important developments in APEC was the decision to implement Early Voluntary Sectoral Liberalization, which will spur trade in areas such as forestry and financial services, and bring us closer to our goal of free and open trade in the Asia-Pacific region. We have to follow through on that commitment. We also hope our partners will implement the ASEAN Free Trade Area in a manner that is consistent with their WTO obligations.
I recognize that many of the steps I have outlined will be difficult. The problems this region and its partners face have no easy fixes. We should have no illusions that recovery is around the corner.
But I can say that the United States has great confidence that in time the nations of this region will return to growth. You have talented people, vast natural resources, modern infrastructure, and a tremendous record of achievement on which to build. You have peace and a commitment to regional cooperation. And you have partners with an enormous stake in your success.
We will not let you or ourselves down. We will work hard together, in these painful days, to build the basis for more stable and enduring prosperity in the years ahead.
But let me also suggest that one of our biggest challenges in this difficult time will be to remember that economic recovery is not the only challenge we face.
For the last few years, we have begun in this forum to discuss a range of transnational threats that are only going to be addressed if we are together. There is a real danger now that the financial crisis will divert our attention from challenges like sustainable forestry, drugs and crime. There is also a danger that the financial crisis will make these problems worse.
It is certain that economic desperation will drive more people across our borders in search of a better life, and that it will lead to more exploitation of women and children. The economic downturn will undoubtedly make economies in drug producing nations even more dependent on narcotics exports. It is quite possible that more forests will now be felled and burned to produce timber and palm oil and other agricultural products for export.
We must continue to address these issues together. For unless we think our people can hold their breath until growth resumes, we have to act together now against haze and pollution. Unless we think that the criminals who traffic in drugs and people are willing to go on holiday while we wait for recovery, we have to maintain our focus on defeating them.
The United States would like to propose a number of endeavors to strengthen our cooperation in these areas.
Cooperation on the environment is especially important in the wake of the forest fires that devastated this region and contributed to the global problems of climate change and species loss. Those fires were fanned by El Nino. But they were caused by people clearing forests for agriculture. And they were made possible by the absence of strong environmental standards, and by a lack of enforcement of those standards that do exist.
The United States was proud to stand with our friends in the region in the effort to extinguish the forest fires. But preventing fires is ultimately far more effective than putting them out. And that requires getting at the underlying causes of the problem.
America’s Southeast Asian Environmental Initiative is designed to help do just that. We have asked our congess to continue funding the program for the coming year. We are actively soliciting participation by other donors. And we look forward to continued close coordination with the ASEAN Regional Haze Action Plan,
Another environmental challenge that calls for new thinking and new resolve on the part of all our nations is the challenge of averting global climate change.
We took an essential step in Kyoto. There, for the first time, industrialized nations, including the United States and Japan, agreed to mandatory emissions targets. This is appropriate, because if we are to slow global warming, the wealthiest nations must show the way.
But it is also essential to understand that we will not find a solution without the participation of developing countries, whose emissions will surpass those of the developed world within the next 30 years .
The United States would also like to expand our cooperation with ASEAN in the fight against narcotics,
This will require sharing information and expertise, helping each other to interdict drugs at our borders and ports, and strengthening our rules against money laundering. We are prepared to assist ASEAN in specific project activities in all these areas.
To this end, we hope ASEAN will consider enlarging participation in its upcoming Senior Officials on Drugs meeting to include the United States and other countries. We are also pleased that we have agreed with Thailand to establish an international law enforcement academy in Bangkok.
But we should also remember that our multilateral cooperation is unlikely to succeed if we are not also prepared to urge change in countries where change is clearly needed. For example, there is no getting around the fact that many of the region’s leading traffickers have found safe haven in Burma, that they are still permitted there to keep what they value most -their money and their freedom. This is a problem that affects us all and we need to discuss it openly.
Another problem that calls for increased cooperation among our countries is migration, especially trafficking in women and girls.
In the United States we have seen cases of trafficking for forced prostitution, sweat shop labor and domestic servitude. In this region, thousands of young women are lured into a condition that can only be described as sexual slavery. For many, this experience is not just a temporary tragedy. The majority of Burmese women and girls forced to work in Thailand, for example, will get AIDS. Most will die before they even have a chance to know adulthood.
Addressing this problem will not be easy. It will require changing attitudes and peceptions, which is something that governments cannot do alone. But as governments, we do have a responsibility to police our borders and enforce our laws. And it is a simple fact that no human being is ever trafficked arross our frontiers without at some point coming into contact with immigration officials and police.
That is why, in conjunction with ASEAN and the UN, the United States has agreed to help train NGOs and law enforcement officials in areas such as witness protection, illegal visa processing, and victim services. We will fund programs to educate women and girls about the risks they face.
That is why we are so enthusiastic in our support of the proposed international conference on migration scheduled to occur in Thailand next year – as described by Foreign Minister Surin yesterday. I hope that the subject of trafficking comes up and that strong measures of cooperation and enforcement are adopted.
I am also pleased to announce that the State Department has just contributed $ 100,000 tothe International Organization for Migration for its Mekong Region return project. Since 1996, this project has already helped 362 women and children return home from Thailand to Cambodia, China, Vietnam, Laos and Burma.
I hope this is just a beginning, that working together we can make real progress in combating this cruel practice, and in meeting the other challenges I have outlined.
In each case, our efforts can help meet a basic human need. But they can also help us build the kind of societies that can sustain prosperity in the long run, and in which the benefits of prosperity are broadly shared.
That is a goal worth every measure of our common effort in the months and years ahead. My nation is dedicated, and I am determined, to help achieve it with our friends and partners in this region.