Briefing to the U.S.-ASEAN Business Council

Opening

Good morning ladies and gentlemen.

I would like to start by thanking the U.S.-ASEAN Business Council for giving me this opportunity to speak with you today, and by thanking you for wanting to know about APEC.

This briefing is timely in light of the APEC meetings in Bangkok next week that will culminate in the APEC Economic Leaders' Meeting.

I believe that we are at an historic point in the region's history, and that APEC is positioned to play a pivotal role in providing a secure and efficient trading environment for Asia-Pacific businesses.

APEC has already delivered many practical benefits to businesses in the region.

However, in order to live up to APEC's promise as it was conceived, there are important challenges ahead.

In the context of a more uncertain region, shaken by crises such as terrorism and SARS, and in light of developments in Cancun, APEC cannot afford to become complacent.

APEC must rather strive to be more flexible and responsive.

APEC needs vision and focus, and APEC needs to actively manage a wide range of inter-related groups, activities and programs, if it is to achieve its goals and live up to its potential.

But, as I promised when I accepted this invitation, let me offer a bit of context about APEC, preview the upcoming APEC Economic Leaders Meeting in Bangkok, and offer a few thoughts about what APEC means for business.

As many of you may know, APEC's work has been generally grouped into three areas: trade and investment liberalization, business facilitation, and economic and technical cooperation or "ecotech".

The first pillar of APEC - trade and investment liberalization - was laid out by APEC Leaders when they met in Bogor, Indonesia, in 1994.

They set the goal of achieving free and open trade and investment in the APEC region by the year 2010 for industrialized economies, and the year 2020 for developing economies.

While those dates may seem far off to some, APEC economies have already undertaken many incremental, market-opening steps, and APEC will conduct a mid-term review in 2005 to assess progress towards meeting these goals.

As one sign of progress, when APEC was formed in 1989, most economies had average tariff rates of more than 10%, now only three members have tariffs at this level.

Within the region, markets in many sectors have opened dramatically.

Walking into a typical market in any APEC economy, you will see the penetration of products, technologies, and services from across the region.

The second pillar of APEC - business facilitation - is probably of most interest to you here today.

Business Facilitation's focus is on cutting red tape, reducing costs, and minimizing the frustrations faced by businesses operating outside of their home markets.

In short, it means making the APEC region a better place to do business.

APEC experts are working to accomplish this in many areas, including:

As an example, APEC's Telecommunications Mutual Recognition Arrangement covers trade worth an estimated 50 billion US Dollars per year.

The arrangement is expected to cut 5% from new product placement costs, cut six months off the time required to get new products to market, and reduce new product marketing costs by up to 30%.

Benefits from Immigration cooperation include:

APEC is also working to strengthen the market framework in which business operates, addressing issues of:

In Shanghai in 2001, APEC Leaders pledged to reduce transaction costs by 5% throughout the region by 2006. This 5% reduction is projected to result in increased trade in APEC economies valued at 280 billion US Dollars.

These are substantial gains that will benefit businesses throughout the region.

The third pillar of APEC - Economic and Technical Cooperation or Ecotech - means capacity building, research and information and skills sharing.

Ecotech activities seek to help member economies to increase their competitiveness and strengthen both their public and private sectors.

The six ecotech priorities are:

APEC seeks to equip all member economies to be more engaged, and to help ensure that the benefits of economic growth will be widely enjoyed.

The other critical aspect of ecotech, especially in view of the outcome of the trade talks in Cancun, is that it helps to build confidence and support for continued liberalization.

It has become unavoidably clear that an effective liberalization strategy must reflect the long-term needs and interests of a broad cross-section of stakeholders, which APEC is working to achieve.

Unfortunately, those three pillars are no longer a complete description of APEC.

APEC's first major shock was perhaps the Asian financial crisis in 1997.

Since then, the region has also faced a global economic downturn, the continuing threat of terrorism, and SARS.

I am pleased to say, in general, that the regional coordination in response to these crises was good.

But they have also highlighted the need for governments to provide more stability and security - to avert problems when possible - and to be better prepared and more responsive - to deal with problems we cannot avert.

APEC is currently focusing on issues including:

Perhaps most interesting are the initiatives that aim to address serious problems while also adopting new technologies, improving efficiency, or cutting costs.

A few current examples include:

Turning to next week's meetings in Bangkok, I expect Leaders and Ministers will provide vision and direction for APEC's work over the next 12 months and beyond.

I will briefly review Thailand's themes for the year, as well as some of the front-page issues that Leaders will confront.

Thailand, as APEC Host Economy and Chair for 2003, selected the theme: "A World of Differences: Partnership for the Future."

The sub-themes of this year's agenda are:

This includes a genuine commitment to successfully concluding the WTO Doha Development Agenda negotiations.

In addition to APEC's agenda, Leaders will obviously also discuss the most pressing issues of the day.

The WTO and the Multilateral Trading System will be a major topic, as this will be one of the first major opportunities for Leaders to meet since Ministers returned from Cancun.

I expect that Leaders will reaffirm APEC's strong commitment to successfully concluding the Doha Round of trade negotiations.

Counter-terrorism, Security and Health will also be major issues on the Agenda.

Again this year, we expect Leaders to endorse regional initiatives to protect people and ensure that our communities and markets are safe from threats, including terrorism, epidemic diseases, or even environmental threats.

APEC Reform may also be discussed. After ten years of APEC Economic Leaders' Meetings, the Leaders may want to review and improve the APEC structure.

I would like to conclude with some thoughts about APEC and business.

We are proud, in APEC, of the role business plays. There are few international or regional organizations in which the business sector plays such a central role.

The APEC Business Advisory Council, ABAC, is just one of the ways business has input into APEC processes.

ABAC meets four times each year and, again this year, will present business recommendations directly to APEC leaders.

Another way for business to participate is through APEC's industry dialogues, such as those in the automotive and chemicals sectors.

The APEC Automotive Dialogue was established in 1999 so government officials and senior industry representatives could work together on ways to increase automotive sector's integration and development in the region.

The APEC Chemical Dialogue, launched just last year, has already taken a collective stance on a proposed EU regulatory regime, and is promoting the adoption and implementation in APEC of the Globally Harmonized System on hazard classification and labeling of chemicals and safety data.

There are also many APEC technical fora that benefit from dialogue with business. Whether on customs or e-commerce, standards or government procurement, business engagement is important to help guide and keep APEC's work on track, as well as to harvest the benefits of liberalization.

I would close with three practical suggestions about how you can get involved with APEC:

Learn about APEC - visit the APEC or ABAC websites - and consider whether there are aspects of APEC's work of particular interest or concern to you.

Get involved - share with us your priorities, your ideas and your feedback. This is with a caveat, however, that APEC is a member-driven organization and typically you can most effectively engage through your own economy's APEC offices.

And finally, take advantage of APEC's information, programs or initiatives - APEC is only successful when it helps to make you more successful.

Some resources that might be of interest to you include:

The website also features many APEC and affiliated business links including:

Additionally, there are periodically training seminars open to business such as a recent E-Procurement Seminar offered for SMEs. You can find out about these programs and others on the APEC website.

Finally, if you want to be part of the upcoming Leaders' Meeting in Bangkok, let me just make a brief pitch for the CEO Summit, which will be held in conjunction with the annual APEC Economic Leaders' Meeting.

This is a high-level conference and networking event that attracts a number of the biggest business names in the region and provides a chance to meet directly with Leaders.

Keynote addresses will be given by:

and many other prominent political and business leaders.

Thank you much for your interest in APEC and for your attention this morning.