FROM THE OFFICE OF PUBLIC AFFAIRS

I appreciate this opportunity to speak to you today to discuss the tremendous importance of Asia to the United States. As businesspeople who appreciate the importance of the global economy, you understand better than anyone the potential for expanding economic ties in this region. The Clinton Administration has put in place a strategy to help you do that. Tonight I leave for Asia in order to advance that strategy.

I will first visit Japan to meet with the Prime Minister and continue our ongoing economic dialogue. Then I will travel to Cebu, Philippines to attend the annual meeting of the finance ministers of the Asia Pacific Economic Cooperation forum. Finally, I will visit Vietnam to speak about that country’s efforts to join the economic mainstream.

Today, I’d like to talk about the Administration’s strategy to strengthen economic ties in Asia and what I hope to accomplish in these visits.

One of President Clinton’s highest priorities in his Administration has been to maintain U.S. leadership with respect to issues in the global economy. We live in an era marked by true global interdependence, when millions of Americans depend on trade for their livelihoods and our economic success is inextricably linked to a healthy international economy. Now more than ever before, what happens abroad deeply affects our well-being at home. Promoting economic reform and growth in developing nations and reducing barriers to trade and investment are critical to building prosperity at home and creating jobs.

The United States has been a Pacific nation since the Louisiana Purchase extended our boundaries to Oregon. But for most of our history, our economic and political interactions largely have been with Europe. In recent decades a tremendous transformation has occurred in Asia. As a result of sweeping economic reforms, Asia today is the fastest growing economic

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region on earth and home to some of the world’s most dynamic market economies. Developing countries in Asia now represent 24 percent of world GDP. Their share of world trade rose from 9.6 percent in 1981 to 16.1 percent in 1994. This, in turn, has resulted in an explosion of trade with the United States. We now export more to Asia than to Europe.

But Asia’s transformation is not complete, nor inevitable. To help it continue on a path of reform, President Clinton has dramatically increased focus on Asia. He revitalized the Asia Pacific Economic Cooperation forum, turning it into the preeminent body to create a foundation to help expand economic ties in the Asia Pacific region. At the beginning of his first term, he invited the leaders of APEC, representing 18 economies in all stages of development, to Blake Island, where he pressed APEC to take a more prominent role in reducing barriers to trade and investment. APEC then reached agreement in the Bogor Declaration to eliminate all barriers to trade by 2020.

The President is fully committed to working with our partners to build a new Asia-Pacific community, a community built on a shared vision of sustained growth and prosperity in all Asia-Pacific economies, including the United States. This means expanding trade and economic ties with developed countries in Asia; bringing less developed countries in the region into the economic mainstream; and integrating the Asia-Pacific economies with the global economy. Our goal is clear: to foster growth in Asia, which will, in turn, promote global growth. The end result will be increased U.S. exports, more high-paying jobs and greater prosperity. And this will be equally good for Asia, as it will raise standards of living in these nations, and promote political stability.

Of course, our interests in Asia and the Pacific have many dimensions. We have clear national security interests in the region, and we have a strong commitment to encouraging conditions that respect the universal principles of human rights. Closer economic relationships can contribute to progress in all of these areas, just as political opening can spur the progress of economic reform and growth. And progress will best be furthered through cooperation, mutual respect, and engagement.

Much of the work of building a Pacific community is not glamorous. It is yeoman’s work: the work of harmonizing customs standards and accounting practices, of publishing tariff schedules and foreign investment priorities and regulations. It is the work of creating an environment that will sustain economic growth and facilitate trade and investment liberalization.

The infrastructure of a well functioning market economy and a modern capital market is still being developed in most countries in the region. And while Asia is one of the great growth stories of the past decade, several economies are still at an early stage of the transition from state dominated, centrally planned economies to open, market economies. The United States has a great stake in seeing Asia deal successfully with these challenges by creating a legal and economic framework to facilitate business: reducing tariff and non-tariff barriers, liberalizing investment, harmonizing customs, developing capital markets, and addressing issues such as the environment.

My trip to Asia this week is part of the Administration’s ongoing strategy to help advance President Clinton’s vision of a new Pacific community, through the regional effort in APEC and through bilateral efforts. Let me briefly discuss what we hope to accomplish on this trip.

Building a Pacific community means strengthening relations between the two largest economies in the region, Japan and the United States. Overall our relationship with Japan -- economic and otherwise -- is strong. We are encouraged by the progress achieved over the last several years in opening markets and reducing Japan's external surplus. As I mentioned earlier, I will meet with Prime Minister Hashimoto, and we welcome the Prime Minister's commitment to further reform and deregulation. Japan faces an important challenge in sustaining the conditions for strong domestic demand-led growth and avoiding a significant increase in the current account surplus. And Japan faces additional challenges in strengthening its financial institutions. How it deals with these challenges is of critical importance to the economic outlook for Asia. Like the United States, Japan's trading partners have much to gain from increased access to Japan's markets, a stable financial system, and strong domestic demand led growth.

From Tokyo, I travel to Cebu, Philippines for the annual meeting of the APEC finance ministers. Building relations with my other Asian counterparts is critical and the Finance Ministers’ work contributes vitally to the rest of APEC. Sound macroeconomic policies, deep and liquid capital markets, and freer flow of capital are the foundation for Asia-Pacific prosperity and will contribute to our own prosperity.

In Cebu, I expect to reach agreement with the other Ministers on a set of principles to guide development of capital markets and enhance the role of the private sector in meeting the region’s vast infrastructure needs. We also hope to come to agreement on some practical initiatives to promote these two objectives. I will also seek the Ministers’ support for the successful conclusion of the World Trade Organization financial services negotiations, which resume next week in Geneva. Treasury is seeking to conclude a true market-liberalizing agreement by the end of the year. Before a successful outcome is achieved, however, key emerging markets must significantly improve their 1995 commitments by providing substantially full market access and national treatment on a most-favored nation basis.

One of the most valuable roles of APEC is the opportunity which it provides to meet with my counterparts. In that regard, I will meet with Finance Minister Liu of China to discuss a broad range of economic issues, as well as human rights and the situation in Hong Kong.

My final stop in Asia will be Vietnam. Vietnam’s cooperation on POW/MIA issues, our top priority, and its progress on economic reform have permitted us to take steps toward economic normalization. While in Vietnam, I will sign an agreement for that country to repay the debts of the former South Vietnam. Conclusion of this financial agreement with the United States is an important and meaningful signal to the international financial community that Vietnam takes seriously its obligations and gives an important aspect of our relationship a fresh start. Under the agreement, Vietnam will resume regular repayments of its debt to us. This is a necessary step toward gaining access to Eximbank, and other US credit programs.

The economic normalization process is not complete. The United States, in both the government and the private sector, has much to offer to promote growth in Vietnam. On my trip, I plan to discuss with Vietnam what both nations can do to unleash the benefits which our economic interaction can yield. The kinds of reforms by Vietnam that are necessary to conclude a bilateral trade agreement, coupled with structural reforms, could provide the impetus for Vietnam’s emergence as the next Asian tiger. Progress in these negotiations will depend on Vietnam’s willingness to make substantial market access and national treatment commitments. Such commitments will also move Vietnam closer to WTO membership.

Building the new Pacific community means working together, as partners, all nations accepting certain responsibilities. As Asian economies strengthen, they must open their markets, and continue on the path of economic reform. The United States, in turn, must continue to address three critical challenges here at home.

First, it is critical to global growth that the United States, as the world’s largest economy, continue to pursue the policies which have been critical to our current favorable economic conditions. That means continuing on the path of fiscal discipline, and balancing the budget, to keep interest rates low and sustain the economic recovery.

Second, we must work to provide Americans with the tools to make the most of the potential of the global economy, by improving educational opportunities and standards.

Finally, as I said earlier, we must maintain our leadership with respect to issues in the global economy. That means full and meaningful participation in groups such as APEC, but it also means we must fully fund our commitments to international organizations such as the United Nations, the World Bank, and the IMF. There are many in Congress right now who wish to cut funding for these programs. In my opinion, that would be a serious mistake. U.S. engagement abroad is in our national interest. These institutions play a critical role in our efforts to create jobs and foster growth in this country.

If we in the United States do these three things while working to build growth and open markets to forge a Pacific Community, we will promote global growth and prosperity in the United States for years to come.