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The Way Forward for APEC

The Right Honourable Jenny Shipley
Prime Minister of New Zealand
APEC CEO Summit
Auckland, New Zealand
Saturday, September 11, 1999

John Maasland, delegates, ladies and gentlemen, as Chair of APEC, and as Prime Minister of New Zealand, I extend a very warm welcome to New Zealand and to this business summit.

As Leaders gather to discuss the future of our region we need your views, expertise and enthusiasm as business leaders. Confidence has been conspicuous by its absence from our region for much of the last 18 months. We've all shared in the shock of the recent economic downturn. But we've also learned some lessons from it.

This business summit, and the Leaders' meeting which follows it, are both opportunities to absorb the lessons we've learnt and to graduate into renewed confidence in our region's future. These have been difficult months for government and business alike as we have grappled with reduced growth, external shocks, and the commercial political and social dislocation of change as it's affected our people.

Right now, as we meet, we are seeing further shock waves in East Timor.

This APEC gathering of Ministers and Leaders has seen round the clock diplomatic activity aimed at restoring order in Timor. Those who criticise APEC's economic agenda overlook the fact that were it not for APEC, we would have neither the opportunity nor the people together to focus on this urgent regional crisis.

The clear message from Auckland this week is that Indonesia must bring stability and law and order back to East Timor. If they need assistance to do so the international community stands ready to assist. Indonesia only needs to ask, the LIN agree and I am confident from discussions I have had that rapid assistance could be given. Timor is an urgent crisis, and we are giving it urgent attention.

Equally, APEC must address the important and crucial medium term issues of economic growth and development. The meetings in New Zealand this week will allow the urgent and the important issues of the region to be tackled. Prosperous economies are a foundation of stability for the people of our region.

I do not intend, as Chair of this APEC Leaders' meeting, to allow the critically important goal of building strong open economies to be derailed. The lives, hopes and welfare of hundreds of millions of people in our region, including the people of Indonesia, have been affected by the 1997 downturn. Those millions deserve a better future for them and their families.

The work of APEC is part of that future as we deliver growth, jobs, access and a cooperative environment in which we can work together on the issues of our people. The 1997 financial crisis showed the downside - or, should I say, 'downslide' of globalisation. Changes in economic sentiment can spread like wildfire. Global market forces have no respect for balance sheets or government policies that are seen as unsustainable. In the ebb and flow of economic cycles, neither business, nor government can walk on water, let alone remain buoyant if we lack a firm base on which to stand.

That is where APEC is so important for our region. APEC is building foundations for sustainable growth. It is about shared values and common goals. A community of Asia Pacific economies is emerging based on open trade and investment, economic co-operation, and the importance of wellgoverned markets.

APEC is our community and we are its life blood. The barriers to trade, investment, knowledge and contact between us are steadily coming down - not through coercion but through co-operation. We are volunteers, not conscripts, in achieving prosperity built on stronger more open economies.

Ten years ago, when APEC started, few would have expected a common goal of free and open trade to be adopted by Asia Pacific economies, let alone substantive progress towards its achievement. New Zealand assumed the Chair with a simple mission in mind. We wanted APEC, in 1999, to make concrete progress towards meeting its goals, and to set out a strategic direction for APEC in its second decade. Nothing flashy, no gimmicks. But progress where it counts - that delivers real and sustainable results.

We set ourselves three themes.

First, we set out to expand opportunities for doing business around the region. Business is at the heart of APEC. It creates jobs, wealth - and tax revenue - to finance social spending. The fastest and most effective way to lift human welfare is not through redistribution in a static or diminishing economy. Prosperity comes through sustainable growth, higher incomes and increased employment opportunities. If these economic drivers are in place then we have laid the foundation for strong social outcomes.

That is why we have been working this year to see APEC take a strong leadership position around the launch of new multilateral trade negotiations in the WTO. It's why we also welcome business calls to see APEC pursue the benefits of an open food system involving technology transfer, infrastructure development and increased trade in food products. Business growth is a precondition but not a panacea for prosperity. Successful economies also require strong domestic policies that foster growth.

Our second theme as Chair has been therefore to strengthen markets within and between APEC economies.

It is, to adapt a phrase, all about 'reinventing governance'. As tariff barriers at the border come down, what happens inside those borders will increasingly determine economic success. Sound macroeconomic policies, regulations that are clear and effective, and the way in which the public and private sector conduct themselves, will increasingly drive or deter investment and growth in the years ahead.

Our strengthening markets theme faces up to this issue. It has attracted strong support from across APEC's membership this. past year. Let me give you just four specific examples.

Firstly, member economies have supported the adoption of principles to enhance competition and, regulatory reform.

Secondly, a blueprint for progress on E-commerce has been developed, alongside a commitment to transparency in government procurement.

Thirdly, we have pressed ahead with contingency planning on Y2K issues, and a clearing house to support economic and technical co-operation projects.

Fourthly, business has called for, and got, political support for more liberal aviation arrangements between APEC economies.

APEC is not telling economies and companies how to conduct themselves. APEC is about providing resources - a toolkit if you like - of proven policies that are the mark of a successful growing economy. Individual actions, and co-operation between us, are bringing progress for our collective benefit. It is up to each of us to select, from within a proven menu, those policies which suit our individual circumstances as they also contribute to achieving our shared goals. APEC is delivering in all these areas.

Perhaps APEC's greatest success this year is that it has helped its members resist protectionist pressures following the 1997-98 financial crisis. APEC has provided the political encouragement for governments to press ahead with policies that improve economic performance. In the last year alone, for example, 14 members have implemented tariff reductions, 14 have liberalised their investment regimes and 17 have announced measures in the areas of competition policy and deregulation. Many economies have taken significant steps to strengthen the economies so the market can function with confidence.

The confidence and investment which is now returning to our economies is, I believe, more soundly and sustainably based than at any time in the past 30 years. Now, our challenge is to lock this progress in and move ahead with renewed confidence.

As a woman leader, I have a sense of urgency. We must demonstrate real commitment and make progress. The opportunity to grow through trade more than aid is a commitment we must deliver on. The alleviation of poverty must be the social dividend on which APECs work is judged.

APEC's first decade has seen considerable measurable progress. Right across the Asia Pacific region the living standards of hundreds of millions of people have been lifted through growth and reform. And that is despite the setback and shocks of the last 18 months from which we are now commencing recovery. It has been worth it. It is the right thing to do. If this process is to continue, we have to meet the challenge of bringing the people with us.

That's why New Zealand's third theme as APEC Chair is one of broadening support for the work of APEC.

We need to share our success. Talk honestly about the pain of adjustment. Ensure policies that support people through change and equip them to prosper as a result Give confidence that change can be change for the better. At the government level, the last decade has seen a growing gap between action on, and explanation of, reform. Liberalisation and globalisation have become loaded labels which hinder rather than help!

As globalisation gains pace driven by bright ideas and new ways of thinking, a major task for APEC in its second ten years is to inspire the public in terms of why these challenges matter to them. If we do not, then those who see the future lying in protecting special interests, and inward looking economies, will have a fertile field in which to nurture their self-fulfilling prophecies.

Sustaining successful reform requires explanation. But it also demands the politics and practice of inclusion so that our people understand where they belong. New areas opened up for APEC's discussions include:

  • work on increasing the voice and success of small and medium enterprises,
  • an important new framework for integration of women across all aspects of APEC's work,
  • dialogue with trade union representatives,
  • policy development on social safety net issues, and
  • intensified dialogue with business representatives

Consultation and inclusion are important but are not ends in their own right. Dialogue without dividend is activity without achievement. Genuine inclusion is about ensuring opportunities for people and economies to develop and benefit from their resources and strengths.

It is about governments providing a 'hand-up' to individuals, families and communities through education, infrastructure, the fair rule of law, sensible and stable economic policies, and incentives to learn, invest and exercise initiative.

Governments, too have a responsibility to provide a social safety net. We have a moral duty to sustain those unable for any good reason to take part in the market economy. But our safety net should also be a springboard which helps lift people into successful self-reliance and social participation.

At the international level, inclusion requires fair trade rules and real market access, particularly for developing economies. The Bogor goals set our target- free and open trade and investment by 2010 and 2020.

Many have forgotten that the reason why Leaders agreed to the Bogor goal was to close the gap between developed and developing economies. Now, as APEC turns ten, we must renew our commitment and lift cur energy to achieve it.

The proposed WTO round may prove to be a major stepping stone.

Trade, more than aid, is a highway to development and success. Now is the time to urgently lift the pace of our progress.

We need to keep that trade road open, lower and abolish the tariffs upon it, and decrease the production-distorting subsidies both within economies and on exports that crowd out the export access and returns of poorer economies. Tariffs and subsidies are always a cost to someone. Producers and consumers benefit as we face up to these issues.

I am, quite deliberately, using values-based language because it is at the heart of open trade and all that it can offer.

Make no mistake. Free and open trade and investment is as much an ethical as it is an economic issue. We need to challenge those who claim the moral high ground to come down from their protectionist pedestal and engage in the real ethical debate:

  • of creating sustainable growth in a global economy;
  • of allowing people to be included who are currently excluded.

APEC is uniquely placed to influence that debate - by showing that cooperation, consensus, diversity and openness can deliver sustainable growth and development. Political leaders and corporate traders must have a shared responsibility in this area.

You, as corporate Leaders, are the generators of wealth and investment. You have a crucial role to play in driving our economies forward, setting standards of economic behaviour, and in signalling to governments your needs in order to invest and grow your business.

Don't hang back.

Give us this weekend your best advice, your best shot, so that together we can develop a community of Asia Pacific economies bound together by success and prosperity. We as Leaders in turn will give you our best response. Our peoples deserve nothing less.

Thank you.


© Copyright 1999 Pacific Basin Economic Council
Last Modified: 28 September 1999