September 8, 2006
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Statement of U.S. Treasury Secretary Henry M. Paulson
at the APEC Finance Ministers Meeting Hanoi, Vietnam

I would like to thank Finance Minister Ninh for hosting the 13th annual APEC Finance Ministers' meeting. This is an important meeting, and it is fitting that it took place in Hanoi, the capital of one of the world's fastest growing and dynamic economies. My last visit to Vietnam was in the mid-1990s and much has changed since then. My visit today comes as Vietnam is rapidly transforming itself, and as America's relationship with Vietnam is transforming to one of growing friendship and cooperation.

While in Hanoi, I had the opportunity to meet Vietnam's new leaders -- Prime Minister Dung and economic officials. We discussed a range of bilateral issues, including the importance of open trade for both our economies, Vietnam's WTO accession, and achieving Permanent Normal Trade Relations. Yesterday I had the opportunity to discuss the challenges of doing business in a transitioning economy when I met with a group of Vietnam's energetic entrepreneurs. Later this afternoon I will meet with Vietnamese business students. Vietnam's economic success for this and future generations is largely in the hands of these individuals. I encouraged them to have the confidence and courage to continue steadily on the path of economic reform.

In my meetings with APEC finance ministers I encouraged my colleagues to go beyond their traditional finance minister roles and confront the economic challenges we all face. APEC needs to be a relevant and results-oriented organization. I focused on three priority issues where we can make a difference: energizing the chances for multilateral trade liberalization; addressing the orderly adjustment of global imbalances; and preventing the abuse of our financial systems.

We as finance ministers must take an active role in our governments to bring forth enhanced trade liberalizing offers that are necessary for continued progress in lowering global trade barriers. In my discussions I noted that services must be included in this process as it is the largest and fastest growing sector in the world economy. Services account for more than 50% of global GDP but only 20% of world trade. The World Bank estimates that goods and services liberalization could provide income gains in developing countries four and a half times the gains from goods liberalization alone. Financial services liberalization, in particular, is essential for all economies to reach their growth potentials.

To bring about an orderly adjustment of global imbalances, we discussed the actions needed in the United States to increase saving, the need for stronger domestic demand-led growth in Japan, other APEC members and Europe, and the value of flexible exchange rates in China and emerging East Asia.

Finally, I described how financial enforcement tools are valuable to respond to and combat growing threats to our financial systems that include narcotics trafficking, organized criminal activities, terrorism, and weapons of mass destruction (WMD) proliferation. We must act to prevent and combat threats to our security by establishing authorities that will financially isolate those engaged in illicit activities and ensure that they do not access the international financial system.

I look forward to making progress on these issues with my colleagues in APEC, and I thank the Government of Vietnam for hosting these meetings and the warm hospitality of the Vietnamese people.

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