Advancing Prosperity and Security in the Asia-Pacific Region
Asia Society’s “APEC Breakfast Briefing”

Ambassador Lauren Moriarty
U.S. Senior Official for APEC

Washington, D.C., December 1, 2004

Thank you, Joe, for that kind introduction. It’s a privilege to be here with you all this morning. I enjoy coming to Asia Society events because the audiences are always so well-informed and influential. Looking around this room, I can see that today is no exception to that general rule.

Some of you, like me, may have just returned from Santiago, where Chile hosted this year’s APEC meetings. I was there with Secretary of State Powell and Ambassador Zoellick, who represented the United States at the November 17-18 APEC joint Ministerial Meeting, and with President Bush, who attended the November 20-21 APEC Leaders’ Meeting. Before outlining some of the key outcomes of these meetings, let me take a moment to introduce you—or, for some of you, to re-introduce you—to APEC.

Building Regional Cooperation through APEC

As with any introduction, let’s start with the name. The letters in the name “APEC” – “A-P-E-C” – stand for Asia-Pacific Economic Cooperation.

APEC is not an international organization in the same way as the United Nations. It is a forum which brings together 21 developed and developing economies from both sides of the Pacific. On this side of the Pacific, APEC members include the United States, Canada, Mexico, Peru, and Chile. On the other side of the Pacific, members include China, Japan and Korea, Thailand, the Philippines, Malaysia, Indonesia, Singapore, Vietnam, and Brunei, Hong Kong, China and Chinese Taipei, Australia and New Zealand, Papua New Guinea, and Russia.

Collectively, these APEC economies account for about 40 percent of the Earth’s population, almost 50 percent of world trade, nearly 60 percent of global GDP, and, by some measures, some 70 percent of world economic growth in recent years.

The APEC region is critically important to the United States. Our APEC partners buy two-thirds of U.S. exports and supply us with two-thirds of our imports.

As an institution, APEC has grown and expanded over the years since its founding in 1989. Historically, APEC’s work has focused on facilitating trade, investment, growth and cooperation in the Asia-Pacific region. Last year APEC Leaders recognized that there can be no prosperity without security. They dedicated APEC not only to promoting the prosperity of APEC economies, but also to ensuring the security of the people in the APEC region.

Throughout the past year, APEC members met in working groups and ministerials to implement commitments made in previous years and to prepare for the joint Ministerial and Leaders’ meetings which took place this November in Santiago.

APEC’s 2004 Accomplishments

From press reports of this year’s APEC meetings, you would think that the meetings were mostly about North Korea and that the United States was focused like a laser beam on security issues. In fact, in Santiago and throughout the year, the United States had three priorities for work in APEC: promoting free trade, enhancing security, and combating corruption. We made good progress this year in each of these three areas.

Promoting Free Trade

First, the United States played a leading role in encouraging APEC’s strong support for trade liberalization and facilitation.

In Santiago, APEC Leaders issued a strong statement of support for progress in the WTO Doha Development Agenda, the world’s most important vehicle for trade liberalization. You’ll remember that last year, APEC Leaders helped put the WTO talks back on track after they had derailed at the Cancun Ministerial. This year in June, APEC Ministers called for the launch of trade facilitation negotiations. That call helped generate the momentum to launch trade facilitation negotiations in Geneva as part of the July framework agreement. Now, in November, APEC Leaders agreed to work with a renewed sense of urgency to achieve an outcome that will meet the high levels of ambition set for the Doha Development Agenda negotiations. They instructed their Ministers to seek substantial results in the negotiations by the time of the Sixth WTO Ministerial Conference in Hong Kong next December. They also agreed to contribute to the WTO negotiations on trade facilitation by sharing with the WTO APEC’s considerable experience in the area of trade facilitation.

Like the United States, many APEC members strive to open markets globally through the WTO, regionally through APEC and regional trade agreements, and bilaterally through bilateral free trade agreements. Indeed, regional trade agreements and free trade agreements have become a major part of the Asia-Pacific economic landscape in recent years. Dozens of FTAs are in force and scores more are under negotiation or consideration.

This year, for the first time, APEC put regional trade agreements—RTAs—and free trade agreements—FTAs—squarely on the APEC agenda. APEC adopted “Best Practices for FTAs and RTAs” to help ensure that agreements are comprehensive, consistent with the WTO, and truly trade liberalizing. APEC economies also committed to make the texts of their free trade agreements available on-line. This will improve transparency for trading partners, businesses, and academics who seek to understand and operate in the new world of multiple bilateral and regional free trade agreements.

Another key trade outcome from this year’s APEC meetings was the “Santiago Initiative for Expanded Trade in APEC.” The U.S.-proposed Initiative has two components: trade and investment liberalization and trade facilitation. APEC Leaders asked Ministers to recommend how to further liberalize trade and investment in the APEC region. The Leaders agreed to continue APEC’s work to reduce business transaction costs by cutting red tape, embracing automation, harmonizing standards, and eliminating unnecessary barriers to trade.

Beyond support for trade and investment liberalization and facilitation, APEC took a number of steps to promote prosperity in the Asia-Pacific region. Let me hightlight two of them.

The first is APEC’s adoption of a Data Privacy Framework. The Framework addresses a very real challenge for U.S. and other companies. Currently, a hodge-podge of incompatible rules designed to protect the privacy of information hinders companies from undertaking even such simple tasks as compiling an internal company telephone directory. The APEC Privacy Framework seeks to establish a network of compatible approaches to information privacy that will facilitate the free flow of information while providing the needed protection of privacy. A more standardized framework could save companies millions of dollars per year. The APEC Framework could eventually become the new global standard on information privacy.

The second area I want to highlight is APEC’s decision to undertake an ambitious program in 2005 to protect intellectual property rights. APEC Leaders recognized that improved protection and enforcement of intellectual property rights contribute to the promotion of investment, innovation and growth. APEC Ministers agreed to work in the coming year to reduce piracy and trade in counterfeit goods, address online piracy issues, and increase IPR cooperation and capacity building.

Enhancing Security

The second major priority for the United States in APEC in 2004 was to enhance security. Here again, we made good progress.

APEC Leaders reaffirmed APEC’s determination to ensure the security of the people of the Asia-Pacific region. The Leaders called on APEC members to demonstrate APEC’s “unmistakable resolve” to confront collectively the threat of terrorism and its disastrous effects on the people and the economies of the region.

APEC took specific actions to promote security in the APEC region. If you read through the APEC Ministerial Statement, you will find many of these specific actions described. Let me note a few of them.

Export controls: APEC identified key elements of effective export control systems, and APEC members committed to continue work in APEC to facilitate the flow of goods to legitimate end users while preventing illicit trafficking in weapons of mass destruction, their delivery systems, and related items.

Aviation security: APEC established guidelines on the control of Man-Portable Air Defense Systems, or MANPADS. APEC economies committed to work individually to develop measures consistent with these guidelines to prevent terrorists from obtaining and using these weapons to attack civilian aviation.

Ship and port security: APEC embarked on a major initiative to improve the security of ships and ports. The APEC region is home to 21 of the world’s 30 top container ports. Economies agreed to work together to support implementation throughout the APEC region of the International Maritime Organization's International Ship and Port Facility Security Code. The code requires port officials to evaluate threats, plan for contingencies, and improve port access controls and calls for the establishment of standardized ship identification procedures. Seven APEC economies, including the United States, will provide grants and technical assistance to help fellow APEC members complying with the code.

Travel security: APEC agreed to implement a trial of a Regional Movement Alert List. The system will link airline check-in operations with government databases to notify economies if suspected terrorists attempt to travel by air.

APEC continued to work effectively in 2004 to implement the “Secure Trade in the APEC Region,” or STAR, initiative. STAR specifies actions and deadlines for each APEC economy to make the flow of goods and people within APEC more secure and efficient. STAR includes activities such as: an integrated container security regime, standardized customs reporting, and the promotion of private sector supply chain security.

Investments in measures like these are proving to be good investments for APEC economies and companies. A cost-benefit analysis of the APEC Smart Container Seal Project showed savings of $220 or more per container. Electronic seals on the containers alerted authorities to any tampering with container seals, but they also reduced pilferage and speeded up customs clearance. Results for individual companies might vary, but the bottom line is that making trade more secure does not necessarily make it more expensive.

At the end of their meeting, APEC Ministers announced that all APEC economies are implementing, have concluded, or aim to conclude an Additional Protocol with the International Atomic Energy Agency by the end of 2005. This commitment will help give the IAEA the tools it needs to prevent nuclear proliferation. The commitment reflects APEC’s determination not to allow illicit nuclear activities in the Asia-Pacific region.

Beyond these steps in the traditional areas of security, APEC members worked together in other ways to enhance the security of the people of the Asia-Pacific region. For example, APEC Leaders pledged to work together to combat the further spread of the AIDS pandemic, and they encouraged new APEC efforts in 2005 to address the specific threats posed in the Asia-Pacific region by infectious diseases such as SARS, avian flu, and pandemic influenza.

Promoting Transparency and Fighting Corruption

The third major priority for the United States this year in APEC was to promote transparency and fight corruption. APEC members were enthusiastic about taking action in this area, and the results were impressive.

APEC Leaders made a political commitment to fight corruption and ensure transparency. They endorsed a course of action to implement their political commitment. Six economies pledged assistance to support implementation of that course of action. Members of the APEC Business Advisory Council, ABAC, made a parallel commitment to conduct their own business affairs in accordance with the highest ethical standards.

APEC members committed to:

• Deny safe haven to officials and individuals guilty of corruption, those who corrupt them, and their assets,
• Implement anticorruption policies and practices consistent with the UN Convention Against Corruption,
• Implement the APEC Transparency Standards, with particular emphasis on government procurement and customs procedures,
• Encourage collaboration to fight corruption and ensure transparency, including through cooperation with other multilateral and regional intergovernmental institutions, and
• Develop innovative training and technical assistance programs to fight corruption and ensure transparency.

The United States will contribute $2.5 million over four years to support this initiative. APEC economies will be supporting each other in the fight against corruption, a scourge which the World Bank identified as the single greatest impediment to growth.

Retreats and Meetings on the Margins

Fighting corruption, enhancing security, and promoting trade liberalization and facilitation—from a U.S. perspective, those were the highlights of APEC’s work in 2004.

But what about North Korea, you may be wondering. Well, in addition to the official APEC meetings, a lot of action happens on the margins of APEC meetings. And that is where most of the action on North Korea took place.

APEC provides the President each year with a unique opportunity to meet with other leaders from this critical region of the world and to exchange views with them on issues of regional and global consequence.

This year was no exception. In Santiago, President Bush held bilateral meetings with his counterparts from Canada, China, Indonesia, Japan, South Korea, Mexico, Peru, and Russia. In these meetings, the President took up bilateral, regional and global issues. All the members of the Six-Party talks except for North Korea are members of APEC. Thus, it is not surprising that the President discussed North Korea during his bilateral meetings and raised the issue in his address to the APEC CEO Summit.

During his CEO address, President Bush shared with 350 business leaders from across the Asia-Pacific region his vision of free trade to support economic prosperity, political liberty and good government, greater security, and strong Pacific fellowship. He pointed out that the capital of Hawaii – my home state – is as close to Sydney and Manila as it is to Washington D.C. “Our nation is a Pacific country,” the President said. “America’s future is inseparable from our friends in the Pacific.”

Conclusion

Let me conclude by saying that the United States considers APEC an important institution in a region of critical importance to the United States. The decisions and actions that APEC takes contribute to the peace, stability and prosperity of a region vitally important to the United States. Work done in APEC complements work done in other regional and global fora. APEC also provides a unique forum for Asia-Pacific leaders to engage regularly on important issues. APEC Ministerials and other meetings provide other invaluable opportunities for exchange with partners from the dynamic Asia-Pacific region.

I expect APEC to continue to play a vital role in advancing the prosperity and security of the Asia-Pacific region in the coming year and beyond.

I hope to see some of you next year, when Korea hosts APEC. Meanwhile, thank you for your attention this morning.