Canadian High Commission Asia-Pacific Meeting

Your Excellency

Ladies & Gentlemen

First, let me say how delighted I am to be given this opportunity by High Commissioner Steidle, to speak at this important gathering. I am heartened that you have considered it important to include a briefing on APEC for your regional economic and finance counsellors. What I propose to do in the time I have available is to provide a brief outline of what APEC is and what it is not, do a little star gazing on the economic outlook for APEC, than touch on China's priorities for 2001, before opening the floor to questions.

From its modest beginning in 1989 as an informal Ministerial-level dialogue group with 12 members, APEC has grown in both the breadth and depth of its activities, making steady and continuous progress towards the goal of "reducing economic disparities among members and achieving common prosperity".

APEC has become a formidable regional forum, especially with the introduction in 1993 of the annual informal Economic Leaders' meeting. The decision to bring leaders into the process was particularly important in imparting a new profile and dynamic to APEC by drawing support for the process at the highest levels in each participating economy. The Leaders' meetings have proven to be particularly effective in accelerating the pace of APEC's development and providing an invaluable and unique informal setting for bilateral exchanges among APEC leaders who might not otherwise have met during the course of the year. As such, the meetings represent enormously cost-effective diplomacy, an important spur to APEC's work, and a natural focus for media attention.

APEC's main goal, as laid down in the 1994 Bogor vision, is for free and open trade and investment in the region by 2010 for industrialised economies and 2020 for developing economies. Its work is structured under three broad areas:

Today, with 21 member economies comprising some 2.5 billion people, a combined GDP of around US$18 trillion, and just over 47% of global trade, APEC has established itself as arguably the primary regional vehicle promoting economic development and cooperation in the Asia Pacific. In a region as vast and divers as ours, that is by no means a small feat. And we have reason to believe that driven by the same dynamics that gave birth to and underpinned the development of the process, this exemplary forum for dialogue, cooperation and confidence building will continue to thrive in the new century.

APEC, however, is not a negotiating forum, and that is one reason why APEC Ministers and Leaders have supported calls for a new WTO round. Nevertheless, it has been able to maintain its path towards the Bogor goals through the voluntary efforts of individual APEC economies, in line with multilateral commitments and recorded in Individual Action Plans (IAPs). These IAPs, which are offered for peer review, show that APEC economies as a whole have liberalised beyond their WTO commitments made during the Uruguay Round. Modest estimates by APEC's Economic Committee put these additional gains at around US$ 30 billion per year.

APEC does not have the resources of International Financial Institutions to respond to economic crisis nor to provide development assistance to its members. Its annual budget through member contributions is only around US$ 3.3 million. That is not to say it is helpless. Assistance to member economies - notably in the form of information sharing and capacity building activities - is provided through over 200 Ecotech projects.

APEC does not have a huge bureaucratic establishment, like the UN and OECD. The only permanent set-up it has is the Secretariat, which has a staff of around 50 people, half of them are seconded from member economies and the remaining are locally engaged support staff. Over the years, the Secretariat has provided a central link and core support to the APEC process, while maintaining the qualities of being lean, efficient and economic.

Before touching upon the China Year, I would like to say a few words about the macro-economic out-look of the region, since it has crucial and direct bearings on this year's APEC activities. Of course the assessment and prediction varies. My personal view is of cautious optimism. At the beginning of the year, US twice drastically reduced its interest rates, causing fluctuation in stock markets and foreign exchange markets around the world. Whether the US economy will have a soft landing or not still remains a big question mark. Apart from that, oil prices are posing another threat to the world economy. All these have made people fell uncertain about economic prospect. At the Retreat of SOM I, held in Beijing this month, participants presented a not very encouraging if not gloomy outlook for this year's economic growth in the region. US and other developed economies were of the view that this year's growth in the Asia-Pacific region will slow down, possibly 2% to 2.5% less than last year, (around 4% to 5% net increase). The developing economies hoped the US economy would have a soft landing, or preferably no landing. However, some economists are of the view that the current economic situation is a reflection of short-term adjustment which is good for the world economy in the long run. And there is no indication of a new crisis. They even forecast that the US economy will bounce back by the end of the year.

Although there are signs of the economy slowing down both globally and regionally, APEC's 2000 Economic Outlook report found that APEC economies still have much capacity to continue to grow:

Total trades of APEC economies will expand at 6.9% a year over the next decade. APEC trades will significantly outpace the world's total trades, growing nearly twice as rapidly. Consequently, the share of APEC trades in the world will increase to 77% in 2010, rising from 54% in 1999. Intra-regional trade is also expected to outpace APEC trades with non-member economies in the world.

However, APEC does face some new challenges due to the changing situation in the world and in the region, such as:

The theme for the year 2001: "New Century, New Challenges: Participation and Cooperation, Promoting Common Prosperity".

In consultation with member economies, China has identified three sub-themes or agenda items:

At the just ended SOM I held 12-13 February in Beijing, the main theme and the sub-themes were all accepted by the member economies.

Under the first sub-theme, APEC intends to transcend the traditional boundary between TILF and Ecotech. In this connection, work will be done to build on the existing Ecotech agenda, mobilize new and additional financial resources, and encourage greater contributions from member economies and the business community. Besides, work will be done to further implement and expand Brunei's New Economy Action Agenda.

As for the second sub-theme, APEC seeks to revive the momentum of progress in its core mission of trade and investment liberalization and facilitation. Initiatives have been put forward by members on facilitating trade, improving regional investment environment and strengthening the multilateral trading system.

Through the third sub-theme, APEC aims to foster a favourable macro-economic environment for the sustainable growth of regional economies. Efforts will be made to enhance dialogue on macroeconomic policy and structural reform to improve the sustainability and stability of growth in the region. This subject has acquired increased significance under the current circumstances.

Such an agenda has been over-arching and shaped by concerns for coherence and continuity, drawing on the rich legacy of work from previous years. At the same time, they have adopted a forward-looking approach, trying hard to reflect the sense of new century and new spirit as well as the new challenges and new opportunities facing the individual member economies as well as our region. APEC member economies aim to deliver tangible results by not only giving effect to what they have already committed to but also broadening the consensus.

Capacity building and human resource development will be major area of cooperation this year. At SOM I, it seams that member economies had quite good convergence of views on this issue. From 15-16 May 2001, China and Brunei will jointly host a high level meeting in Beijing to discuss how to reinforce human capacity building under globalization and new economy. The tripartite meeting (business, government and academia) will be inaugurated by His Majesty, Sultan Haji Hassanal of Brunei Darussalam an His Excellency, President Jiang Zeming of People's Republic of China. The outcome of the meeting will contribute to the human capacity building strategy being developed by an APEC coordinating group under the direction of the Ecotech sub-committee. In addition, HRD Ministers will gather in Japan in September for the 4th Ministerial meeting to discuss human resource development.

Frankly speaking, it is difficulty to achieve anything specific in the tariff area. This year the main focus will be on the non-tariff measures, strengthening markets and legal infrastructure issues. Member economies will continue to work on the improvement of IAP reporting, especially the use of e-IAP format.

With no sign of launching the new round multilateral trade negotiations in sight, some member economies are of the view that APEC should make its contribution to the launch of the new round, playing a similar role as in early 1990s when APEC gave the decisive push to the Uruguay round talks. Though differences remain as big as before, during the discussion, member economies all supported the early launch of the new round and agreed to work for a broad-based agenda for the new round. Japan has taken the initiative to provide opportunity for member economies to build up their capacity in implementing WTO agreements.

The question of whether the new regionalism is a building block or stumbling block to multilateralism will remain much debated within APEC. While trade diversion and protectionism against non-members are credible threats, there is much scope for FTAs, either existing or prospective, to open up to new opportunities to advance multilateral trade liberalization.

The impact of globalization on the APEC process is evident. Viewed as a double-edged sword, globalization is posing both opportunities and challenges to APEC. APEC members believe that it is important to manage the globalization process carefully. Developing APEC economies, in particular, stress the importance of taking a right approach and pace in order to minimize the negative effects of globalization. Developing economies are usually the most vulnerable ones due to their specific conditions and less advanced level of economic development.

APEC member economies also believe that measures must be taken to ensure that the benefits of globalization are shared equally by all economies and all segments of society. Issues such as poverty and inequity must therefore be urgently and effectively addressed.

In this regards, E-commerce, cyber education, digital divide and other issues will be high on this year's agenda, with a view to help economies use advances in information technology to boost productivity and stimulate growth. These include ways to promote the right policy environment and build capacity to help create a framework to strengthen markets, electronic commerce, infrastructure, knowledge and skills development and provide affordable and efficient access to communications and the Internet. Prior to SOM I, China and Australia jointly and successfully organized a symposium on E-commerce and paperless trading.

Some economies also want to see biotech being discussed.

How to build a secure and stable financial future for the region and prevent the recurrence of financial crisis will be another important issue for this year. The Finance Ministers have chosen "Growth with restructuring stability and equity" as their theme for this year. They will focus their work on:

In addition, APEC will continue to address the issues like small and medium enterprises, energy and social impact of the crisis, aimed particularly at strengthening social safety nets.

It will not be complete without saying few words on the significance of the grand gathering in Shanghai in October. Already people can tell you how may new faces will appear for the first time at the Leaders' Meeting in Shanghai. The occasion will surely be a big news-maker.

Finally, I would like to point out that APEC will fail in its cause without the support of the communities whose interest it is supposed to serve. In carrying out its work, APEC will have to listen to their voices and respond to their concerns. In this context, APEC, including the Secretariat, intends to build on its work on outreach and interaction with business and other stakeholders, in order to ensure that APEC is better understood and remains relevant to its people.

Before closing, I would like to encourage you to visit the Secretariat's website, which provides a valuable source of continuously updated information. It not only allows readers to access key APEC documents and to learn about the activities of the various fora, but it also provides useful links to other related websites, such as BizAPEC and the Ecotech Clearing House, to cater for sectoral and specialised interests. May I also invite you to visit the APEC China 2001 website for more detailed information on meetings and events to be hosted by China this year.

High Commissioner Steidle, ladies and gentlemen, I thank you again for giving me this opportunity to talk to you about APEC. I will be happy to answer any questions that you, no doubt, have been waiting to ask.