FROM THE OFFICE OF PUBLIC AFFAIRS

In my first meeting with the finance ministers of the Asia-Pacific Economic
Cooperation Forum I come away impressed with the serious interest expressed by my colleagues on the important issues we came to discuss.  I thank our hosts from Thailand for their hospitality and for providing this beautiful setting for our meetings.

Both in group discussions and in bilateral meetings, I took the opportunity
to address issues important to our prosperity and our security.  I stressed
our view that the best international economic system – for the United
States, for the Asia-Pacific region, and for the world – is one based on the
principles of free trade, the free flow of capital, and market-based
exchange rates.  I also stressed the need for each of us to take steps to
increase economic growth in our domestic economies.  Raising productivity
through structural reform and private investment is the most direct route to
raising living standards for our people.  I reported that the U.S. economy
is returning to higher levels of growth, but that the global economy
requires Europe and Asia – and Japan in particular – to attain higher levels
of growth as well.

Throughout my meetings we had extensive discussions on the issue of
currencies.  I expressed my long-held view that market-determined floating
currencies, with interventions kept to a minimum, are essential to a
well-functioning international financial system.  Only freely floating
currencies bring the accuracy and efficiency necessary for proper pricing,
account settlement and capital flows among our economies.  Furthermore,
rigid currency systems, rather than promoting stability, instead increase
the risk that economies cannot properly adjust, thereby escalating the
impact of economic shocks.  The management of currencies at unnatural rates distorts markets, tending toward beggar-thy-neighbor policies, and
encourages protectionism.  These are paths we must avoid.

I was pleased with the reception of this view from my colleagues.  Our
agreement that flexible exchange rates are necessary to promote orderly and
balanced external adjustments is significant.  This principle is an
essential first step toward the universal acceptance of market-based, freely
floating currencies.  We should move quickly to build upon this initial
foundation of agreement.

The free flow of capital is also a fundamental component of our global
system of international trade and finance.  Barriers raise the cost and
limit the freedom of investment capital to seek out the best opportunities. 
We should continue to eliminate restraints on investment capital in order to
maximize our growth opportunities.

Trade among our nations has risen significantly in recent years, and this is
to the benefit of all our economies, but I emphasized that we must continue
to press for further trade liberalization in the Doha Round WTO
negotiations.  Our prosperity is enhanced when all nations have the freedom
to bring to global, competitive markets the best goods and services their
talents and abilities can produce, in compliance with the laws of
international trade.

We also discussed our collective actions to halt the flow of funds to the
agents of terror.  I announced that the United States is designating 10
members of Jemaah Islamiyah, or JI, as terrorists, freezing any assets in
the United States and prohibiting transactions with these individuals.  We
will also be submitting these names to the United Nations for action by all
UN member states.  I am encouraging my colleagues to take bold action
against this terrorist organization and I look forward to working with our
allies in the region to shut down JI’s sources of financing and support, and
to eliminate the threat they pose to the people of Southeast Asia.

We have had a successful series of meeting this week.  We have broken new ground on important issues concerning our economic relations.  I look
forward to continue to work with my counterparts in the region as we work to put in place the building blocks of strong, sustainable economic growth.