September 9, 2005
JS-2709

Statement of U.S. Treasury Deputy Secretary Robert
M. Kimmitt at the 2005 APEC Finance Ministers' Meeting

"During our meetings yesterday and today we had the opportunity to discuss several issues of particular importance to the United States and to the APEC region. I again emphasized the strongly held view of the U.S. that the world economy works best with free trade, the free flow of capital, and flexible exchange rates. Our discussions touched on each of these themes.

"We continued our ongoing dialogue on the importance of global capital flows. My colleagues here joined me in recognizing that continued liberalization of trade and open investment regimes that welcome foreign capital are critical to achieving sustained economic and job growth.

"We also discussed the importance of bringing the Doha Round of multilateral trade negotiations to a successful conclusion. One of the most important contributions that finance ministers can make is to take a leadership role in advancing financial services liberalization, which, along with services liberalization generally, will be a critical part of a successful Doha Round. In our Communiqué we committed to pursue a meaningful outcome in financial services in the Doha Round. 

"Economic growth and the outlook in the APEC region remain strong. We also spoke

about risks to the outlook. High oil prices are a particularly important issue, and we discussed ways to ease the current very tight global supply. We agreed on the importance of encouraging investment to bring forth additional supply. We also recognized the importance of reducing subsidies that artificially encourage energy use, often at great cost. 

"The finance ministers noted in the Communiqué the continued threat of terror worldwide and underscored the importance of actions to combat terrorist financing, money laundering, and other abuses of our financial systems. The language complements the recently adopted U.N. Security Council Resolution, 1617, which further targets the support networks of the Taliban, al Qaida, and Usama bin Laden.  The Resolution strengthens targeted financial sanctions to cut off al Qaida's lifeline, and sets forth a vigorous global campaign against terrorist financing.

"I want to highlight the discussion on addressing global imbalances. Our Communiqué makes clear that bringing about an orderly adjustment of global imbalances is a shared responsibility, and emphasizes the need for concrete actions by all in a timely and effective manner.  By all of us taking the actions required to address global imbalances we can assure a continuation of sustained and rapid growth in global output and employment. 

"For Europe and Japan, this means further structural reforms to promote domestic demand-driven growth. It also requires greater exchange rate flexibility in the major Asian economies. The Ministers welcomed the recent moves by China and Malaysia toward greater exchange rate flexibility. As Secretary Snow has made clear, what is important now is that China, and other major economies, allow their currencies to respond to underlying market forces. Finally, the United States has noted its responsibility to raise its domestic savings by cutting the budget deficit. This is a responsibility we take very seriously. The Bush Administration remains committed to reducing the budget deficit's share of GDP, although Hurricane Katrina relief and reconstruction efforts will add to the deficit in the next fiscal year. 

"Asia remains the most dynamic region in the world, and what happens here is critical for the global economy. The creation of APEC 16 years ago was an important development in the region that provides for meaningful communication channels and a productive flow of ideas. I am pleased to have had the opportunity this week to participate in discussions on these and other important topics with my APEC colleagues," said Kimmitt.