I am grateful for the opportunity to be here today to share with you details of what APEC is doing on counter terrorism. As the Defense Minister of Chile has just mentioned, this second STAR conference is an important forum for government and the private sector to share dialogue on critical issues of mutual concern in the global fight against terrorism.
I have often been asked the question why APEC, a traditionally economic forum, is engaged in counter-terrorism initiatives such as the STAR Conference. The response is simply that terrorism is one of the most threatening obstacles to APEC's goals of free trade and investment in the Asia-Pacific region. Terrorism not only destroys the lives and property of individuals, it also attacks entire economies, undermining market confidence, inflating the cost of trade and reducing market activity.
APEC knows that to overcome the terrorist threat while ensuring free trade requires enhanced cooperation between governments and business. Terrorists are becoming increasingly skilled at exploiting global communication systems, financial networks and gateways to travel. So we too must increase our ability to prevent the misuse of these essential conduits to trade.
In Bangkok last year APEC Leaders restated the commitment made at the first APEC Leaders' meeting in 1993 to a shared vision of achieving stability, security and prosperity for the people of the Asia-Pacific region.
As an essential part of securing and strengthening regional trade, APEC Leaders clearly stated their commitment to a range of initiatives to dismantle, fully and without delay, transnational terrorist groups that threaten APEC economies.
These commitments include eliminating the threat posed by weapons of mass destruction, strengthening domestic controls on Man Portable Air Defence Systems, and confronting other direct threats to the security of our region, including bio-terrorism.
Research by Australia presented to APEC has shown that the threat of terrorism reduces investment and lowers economic growth. Increased risk perceptions undermine investor confidence. Higher risk premiums increase the required rates of return on investments thereby discouraging investment and retarding economic growth. The currencies of economies with high-risk premiums may also experience higher exchange rate volatility.
APEC's 21 member economies represent about 60 percent of the world's GDP and half of its trade. Most of the world's largest seaports and busiest airports are located in APEC economies. The threat of terrorism may not only reduce trade flows, but if terrorists were to shutdown major ports, this would severely affect the economies of the region.
For example, the economic cost of a terrorist attack on US ports has been estimated to be up to $58 billion for the United States and would reduce nominal GDP in Member Economies such as Hong Kong, Singapore and Malaysia by 1.1 per cent. In the case of Indonesia, the Bali bombings resulted in a fall of around half a percentage point in GDP growth. However the bombings had a far more devastating impact on small and medium sized enterprises and the tourist industry.
At the same time as measures are being adopted to counter terrorist threats, APEC Member Economies are mindful that, if not implemented carefully, more stringent security measures could increase the cost of trade and slow the movement of passengers across borders.
APEC also recognizes that enhanced counter-terrorism measures will require a substantial investment in new infrastructure. In the case of shipping, the OECD calculates that the global cost to implement the International Maritime Organizations package of security measures to be over $US2 billion. However it is important that these costs are placed in perspective. This investment not only protects trade from debilitating risks and potential damage, but with improvements and streamlining in trade and exchange systems, there are also trade facilitation benefits.
APEC's Strategy to counter terrorism
APEC's contribution to global efforts to counter terrorism includes several elements. APEC is working with other international organizations to make the most of our collective strengths. We cannot afford to duplicate the work of others, nor can we leave gaps for the terrorists to exploit.
From our perspective, APEC can help build political will and generate the support needed for the implementation of new security-related norms and standards throughout the APEC Region. While providing security is a primary role of government, it is one of many interrelated priorities for regional governments. Through their involvement in APEC, Leaders and Ministers from Member Economies are able to participate in a dialogue and exchange views on building a secure environment that also facilitates trade.
Another contribution to global counter terrorism efforts is the APEC Counter-Terrorism Task Force which has a mandate to coordinate and enhance regional cooperation in combating international terrorism and making sure that it does not disrupt the free flow of goods and people. When it was established in February 2003, the Task Force was given a two-year mandate to coordinate APEC's counter terrorism activities and programs and administer the APEC Counter Terrorism Action Plan.
The Task Force's work includes the provision of capacity building and technical assistance, not only from its own members but also from other intergovernmental organizations. For example, APEC is leveraging on the relevant resources and expertise of organizations such as the International Maritime Organization (IMO), the World Customs Organization (WCO) and the International Civil Aviation Organization (ICAO).
APEC's Leaders have recognized that the fight against terrorism involves strengthening the capacity of government agencies to suppress terrorist activities while, at the same time, promoting legitimate trade and border movements. To achieve these objectives, close coordination between Member Economies is essential.
To facilitate the exchange of information on their security needs, each APEC Member Economy has prepared a Counter-Terrorism Action Plan (CTAP). These plans list specific objectives and expected outputs by each economy to secure cargo, protect people in transit, secure ships engaged in international voyages and secure international aviation. Other areas covered by these plans include halting the financing of terrorism, enhancing cyber security, securing energy supplies and protecting the health of our communities. The Action Plans also encourage all APEC members to both identify their capacity building needs and outline what capacity building assistance they can offer to other Member Economies.
Relevant APEC fora are now examining the Action Plans to determine specific regional gaps in counter-terrorism capacity relevant to their fields. This year, the Counter-Terrorism Action Plans, and data provided by APEC fora will form the basis of a rigorous cross-analysis by Asia-Pacific security experts.
This analysis will seek to identify linkages between the various Action Plan objectives and regional needs to promote and facilitate effective responses to shared challenges.
APEC's programs are not as exciting and high profile as the day-to-day work of port operators or security specialists. However, our programs do contribute to efforts to limit the capacity of terrorist groups to inflict damage on our economies. They can also assist to facilitate the region's trade. Recent studies by the World Bank show that these savings can be of the order of one per cent of the value of merchandised trade.
Whilst APEC has responded quickly to the counter-terrorism needs of our members, the business-government partnership we are developing at this conference is essential to our success.
I hope that your discussions at this Second STAR Conference will build on the progress achieved so far. And I look forward to you providing APEC fora with clear guidance on how to create a more secure and efficient environment for trade and investment.
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