Remarks at the First Senior Officials Meeting (SOM) for the Asia Pacific Economic Cooperation (APEC) Forum
Secretary of State
Thank you all very much. Good morning. I appreciate Mike Froman’s introduction and his brief summary of all of the reasons why President Obama and the Obama Administration are committed to the region and committed to APEC.
And I’m delighted to be here today, and I want to thank all of our guests for joining us, including members of Congress and the business community, in particular the members of the APEC Host Committee who are working to expand a public-public collaboration throughout our activities. And let me also extend a very warm welcome to senior officials and other representatives from APEC’s member countries.
It is exciting for the United States to serve as the host of APEC for 2011. This has been in preparation for many months. We hope our time together here in Washington and in Montana, California, and Hawaii later this year, will yield real and lasting benefits for all of our people, because after all, we meet at a moment of fast and far-reaching change. The transformations that many of our economies have experienced in recent years have remade our region and our world. Hundreds of millions of people have climbed out of poverty. Places that were once largely removed from the global economy are now crackling with commerce. And this progress is a testament to the talent and ingenuity of people across this region. And it is also a testament to the power of economic integration.
The rise in prosperity and decline in poverty occurring throughout the Asia Pacific region are a direct result of greater trade and investment. These are goals that we have pursued and achieved together. And the United States is proud of the role that we have played in this region’s progress as a trade and investment partner to many APEC economies, a market for your goods and services, and a leading proponent of an open and liberalized approach to shared economic activities.
Now, there’s no question that this approach has paid off, but growth has also given rise to new challenges. Food and fuel prices have climbed. Greenhouse gas emissions and the consumption of natural resources, leading to environmental consequences, are there for all to see. Meanwhile, growth has shifted the geo-political order of our region and the world as new centers of influence have emerged and new dynamics have developed between and among our nations.
All told, these trends add up to a sense of possibility about the positive developments of the future, but also a sense of anxiety, because that future is far from certain. I have said many times before that much of the history of the 21st century will be written in the Asia-Pacific region. And it is a history that we writing together.
Every economy represented here is hard at work creating jobs, addressing the social and environmental consequences of growth, and laying the groundwork for long-term prosperity. Now of course, there will be differences in how our countries pursue these common goals. But I believe strongly we must pursue them in partnership – through more and better trade, investment, and collaborations in science, technology, and education – if we wish to continue the progress that has already begun.
That means we must decide how we will work together, what rules we will adopt, what principles we will abide by, and what behavior we will encourage and discourage in ourselves and in each other. These are open questions that deserve the most careful analysis because we are called upon to answer them as individual economies and as an economic community. APEC provides a forum for reaching those answers.
The United States brings to APEC a deep commitment to this region’s stability and prosperity. Since the earliest days of the Obama Administration, we have been working to strengthen our one-on-one relationships and to galvanize more effective regional cooperation on shared challenges. We have affirmed and deepened our alliances with Japan, South Korea, Australia, Thailand, and the Philippines. We have increased our engagement with old friends and new partners, including India, Indonesia, Vietnam, New Zealand, Mongolia and Malaysia. We have launched a strategic and economic dialogue with China to build greater trust between our governments and to coordinate policy on consequential issues facing both of our nations. And our relationships with the APEC economies of the Americas – Canada, Mexico, Chile and Peru – have never been stronger.
We have also significantly increased our participation in Asian regional organizations. That includes ASEAN. In the past two years, we established a U.S. mission to ASEAN, signed the Treaty of Amity and Cooperation and held two U.S.-ASEAN summits. We have also stepped up our engagement with the East Asia Summit. I attended the summit in Vietnam in October on behalf of the United States, the first time our country has ever participated. And President Obama will attend the summit later this year in Indonesia.
We view these institutions as pillars of a strong and effective regional architecture, which can help us work together to manage urgent strategic security and political issues. APEC has an important role to play in that architecture as the leading forum for designing economic policies that promote regional growth and prosperity.
Together, these actions by the United States comprise a strategy that I call “forward-deployed diplomacy.” It reflects our belief that the security and prosperity of the Asia-Pacific region is critical to the security and prosperity of the United States and the rest of the world. And furthermore, as a Pacific nation and a Pacific power, the United States has a responsibility to help lead in meeting these challenges and making the most of the opportunities we face today. So the United States comes to APEC as the largest economy in the world, with a long tradition of innovation, whose people have built businesses and invented technologies that have improved billions of lives.
Now it is true that our economy, like many worldwide, has suffered in recent years. And we are working overtime to undo the effects of recession, to create jobs, strengthen global economic norms and increase our trade and investment ties with other countries. Some have questioned whether the United States will emerge from this period as strong as we were before. Well, I am very bullish about our future, and so are millions of Americans who know that our brightest days, as it always is true in America, are still ahead of us. We will continue to lead in driving growth and innovation, just as we have in the past.
And a key element of our success will be how we manage our economic engagement in Asia. We recognize it as the most dynamic region in the world today. And although APEC is comprised of just 21 economies, together we generate more than half of global output and nearly half of global trade. Six out of ten of the largest trading partners of the United States are in the region, and our exports to this region are growing much faster than those to any other part of the world.
As we strive to meet President Obama’s goal of doubling exports in the next five years, we are looking to this region, to our partners in APEC, for opportunities to do more business. And I know that every economy here is doing the same. That is good news. We are well positioned to rise together, to achieve greater prosperity in partnership, to offer all of our people a chance at a better future. But to do that, we need to decide whether we will embrace strategies that pay off for all of us while resisting the impulse to embrace quick fixes at the expense of long-term gains. For the United States, that begins with addressing real questions that some in the region have about the strength of our commitment, as well as doubts that some of our own people have about whether the global playing field is truly level or rigged to America’s detriment.
To those in the region, I say the United States is determined not just to reengage but to lead. We have an ambitious agenda for delivering significant benefits to our people and our partners, and we are steadily carrying it out.
And to citizens of my own country, we know as we watch factories closing down at home and products continuing to flow in from overseas that economic integration is a question mark. And many people wonder whether it will really help America and Americans.
Well, let me say this. Ensuring that economic engagement delivers results to the American people is out top domestic priority. It is a top foreign policy priority as well, and it is a personal priority, more to me having had the great privilege of traveling our country extensively, representing all of New York state for eight years in the Senate. And I will be speaking more about that in the weeks ahead as we prepare for APEC.
The United States seeks partnerships that are governed reasonable, rules-based approaches, that give businesses from all of our economies the chance to compete and that are grounded in shared principles. Specifically, there are four principles the United States believes are critical to supporting long-term, high-impact, inclusive growth. We are ready to defend and advance these principles in our engagement with economies in APEC and beyond.
First, we seek an open platform, one that allows for participation from around the world, including economies not represented in APEC, in order to maximize opportunities for entrepreneurs, investors, workers, and consumers everywhere. Openness has been an attribute of APEC from the beginning, as reflected in the Bogor goals. It reflects our shared belief that an open system invites the most growth.
Even as we work to forge free trade agreements amongst our countries and craft a Trans-Pacific Partnership Agreement, it’s important we reaffirm this principle because the Asia-Pacific region should welcome ideas, products, and capital from all corners of the world.
Second, we seek a free platform, one that includes as few barriers to trade and investment as possible. In recent years, we have made strong progress together toward removing tariffs and other so-called border barriers. But let’s face it: Numerous non-tariff barriers remain. For businesses to make inroads into new markets and for citizens to find jobs, we must better align our standards applying to everything from manufactured goods to buildings. We must improve the quality of our regulations to ensure that they are not unnecessarily burdensome. And we must refrain from using local content requirements that discriminate against foreign companies.
Third, we seek a transparent platform in which the so-called rules of the road are developed in consultation with all stakeholders and known to everyone, no matter their connections or country of origin. In the absence of transparency, corruption flourishes; regulations can be applied arbitrarily, small business owners may discover that some rules change without warning or apply to them but not to others. None of this is good for competition or for sustaining the trust and confidence that is necessary for trade and investment. For the best results, the rules of the road should be known to all and applied to all.
Together, openness, freedom, and transparency help sustain the fourth principle, fairness. The United States is looking for a level playing field, an environment in which businesses rise or fall based on honest competition rather than government manipulation. American workers are able to sell the results of their labor overseas just as they buy products made by workers abroad, entrepreneurs can sell their products and services to provide companies and governments alike, and investors have the confidence to make investments across borders.
We also need to ensure that governments enforce and protect intellectual property rights, because theft isn’t fair and because without these protections, inventors can’t reap the rewards of their ideas and innovation suffers.
Now, these principles aren’t prescriptions. There’s not one way or one formula that fits every situation. And we are willing to debate how they ought to be applied in various circumstances to address the different needs of different countries. We know that no economy perfectly reflects them, ours included, but we believe that together these principles ensure the best circumstances for all nations to rise, from emerging economies to those that are highly developed. They serve the interests of the American people, the Chinese people, the Australian people, all the people of Southeast Asia.
In the coming months, the United States will take concrete steps towards strengthening an open, free, transparent, and fair economic platform in the Asia Pacific by accomplishing three goals that we’ve been working toward for many years: achieving congressional approval of the Korea-U.S. Free Trade Agreement; making substantial progress toward agreement on all key issues of the Trans-Pacific Partnership; and of course, hosting a productive, results-oriented APEC 2011.
I want to briefly discuss each and how they support a principled, pragmatic strategy for regional prosperity. The U.S.-Korea Free Trade Agreement, also known as KORUS, represents a major achievement for both Korea and the United States, and we believe it can serve as a model for the region. It eliminates tariffs on 95 percent of U.S. consumer and industrial exports within five years and significantly reduces tariffs on agricultural products. It includes commitments to provide market access in major service sectors such as telecommunications, accounting, and express delivery. It includes significant improvements in intellectual property protection. And it addresses behind-the-border issues through strong provisions on competition policy, labor practices, environmental protection and regulatory due process.
Many of these provisions posed political challenges, and I want to commend both Presidents Lee and Obama for advocating for this agreement and explaining its benefits to both the Korean and American people. We believe the payoff will be significant for both of us. We expect KORUS to lead to an $11 billion increase in annual goods, exports, and to support at least 70,000 additional jobs on the U.S. side alone. And the economic benefits for the Republic of Korea are also considerable.
But there are also the benefits that cannot be expressed in dollars, a closer political and strategic partnership with a key ally that is cemented not only by shared security concerns, but by closely integrated economies. This free trade agreement will deliver immediate economic results while strengthening the broader strategic relationship between Korea and the United States for future generations. Our goal is to have all three pending agreements – KORUS, Panama, and Colombia – with their outstanding issues addressed approved by Congress this year.
The United States is also making important progress on the Trans-Pacific Partnership, which will bring together nine APEC economies in a cutting-edge, next generation trade deal, one that aims to eliminate all trade tariffs by 2015 while improving supply change, saving energy, enhancing business practices both through information technology and green technologies. To date, the TPP includes Brunei, Chile, New Zealand, Singapore, Australia, Malaysia, Peru, Vietnam and the United States.
Now we hope in time that that number will grow to include all the APEC economies and that the TPP will provide a foundation for an eventual free trade area of the Asia Pacific. The TPP represents a new kind of trade agreement, one that promotes not just more growth but better growth. For the first time in any trade negotiation, TPP is focused on small and medium-sized enterprises, which, as you know, are major job creators, but which are less engaged in international trade. We are taking on the barriers that hit these small and medium-sized businesses the hardest, such as complex legal frameworks and a lack of transparency.
We’re dealing with new obstacles, like the increasingly common problem of so-called indigenous innovation, measures that force investors to favor one country’s domestic technology. And we are working to ensure that the TPP reflects shared values, including worker rights and protection of the environment. These goals matter to all of us, and they should especially matter to those emerging economies that are growing at such a rapid rate. Now, some may think they can’t afford to stop and invest in environmentally sound practices if they’re going to catch up with the competition, or that the challenge of achieving balanced, inclusive growth doesn’t apply to them yet, or that they can postpone making serious investments in knowledge-based industries until their economies are further along the development spectrum.
But in fact, economies at all stages of development need to be dealing with these issues now, because their repercussions are already evident in deforestation, food insecurity, social inequality, and political instability. And we all face worldwide, growing problems of under-employment. Even in China, where the economy is roaring ahead, there are not yet enough high-caliber professional jobs to absorb the 6 million college students graduating every year. These young people move to the cities with high hopes and often return home after a few years disappointed and uncertain about their future. Now, that story is familiar to many young people in this country too.
So all of us need to be working on several levels at once – creating jobs, increasing trade and investment, fueling innovation, investing in education, and pursuing inclusive growth that pays off across populations. These are the elements of a 21st century economic agenda. And helping us achieve that agenda is a job for APEC. So that’s the third and final goal that I want to discuss today.
The United States plans to use our year as host of APEC to push this organization to do more to deliver useful, tangible results. This builds upon the vision that APEC leaders voiced in Yokohama last year to promote stronger and deeper regional economic integration by advancing common trade and investment interests. In 2011, we want APEC to help define, shape, and address next generation trade and investment issues, and to take steps to help reduce the time, cost, and uncertainty of moving goods through regional supply chains.
We want to work through APEC to find ways to achieve environmentally sustainable growth by reducing barriers to trade in environmental goods and services, stopping illegal logging, eliminating inefficient fuel subsidies, and facilitating trade in remanufactured products to reduce waste and save energy. We want to work with APEC economies to strengthen the implementation of good regulatory practices to prevent technical barriers to trade, to increase regulatory cooperation particularly as it relates to emerging technologies.
We want APEC to help combat poverty. For example, to prevent destabilizing spikes in international food prices, by ensuring that none of our economies impose export restrictions on food. And we want to build upon our tradition of problem solving and help APEC become an even more effective forum where governments and businesses can find pragmatic solutions to trade and investment problems, and where new ideas can be debated and tested.
APEC has come a long way in the past two decades. Together, we have built its capacity to deliver results for member economies. Now, we ought to go even further and help APEC become an even more effective organization, one that fosters the norms and practices that will give rise to more and better economic cooperation throughout the region.
Now I will be the first to say none of what I have said already will be easy. This is a diverse community. Each of us faces our own distinct challenges, and each boasts of our own distinct strengths. But no matter where we fall on the economic spectrum, I believe we are all pursuing the same basic goals – more jobs for our people, more money in their pockets, and economic climate that supports entrepreneurs, educational systems and infrastructures that promote long-term growth, and above all, a sense that our countries are moving in the right direction and that all of our best days are yet to come.
For billions of people worldwide, life is changing in dramatic ways. The future is opening up, but that future is also unknown. In December – early December, I gave a speech in Doha in which I talked about all of the challenges to inclusive growth, employment, and opportunity that we saw in the Gulf and North Africa. In the question-and-answer period, there were many questions about what I meant, and I talked very bluntly about corruption and the lack of transparency, and the need to instill in young people who are now globally connected trust and confidence that their governments are really working for them.
That is one of the big challenges for governments everywhere today. Because what used to be the private province of governments or the very top leaders in business is now open to the world in a way that never existed. Corruption is now a concern of citizens who see with their own eyes that the people leading them are living in a much better way than they are, and that there doesn’t seem to be much attention paid or concern for the failure to raise the standard of living and the incomes of families.
We are living in a totally different environment. I think it’s good. I think the fact that a young person in Egypt can communicate with a young person in Switzerland or the United States or Japan and can share ideas and talk about how to improve their lives and make their countries even better is 21st century patriotism. These young people are looking to see their own countries deliver on the promises that we have all made over so many decades. Those governments that understand this and put into action economic policies that respond to these needs will flourish.
The choices we make today and the work we do together will help define the contours and give people the tools they want to pursue their own dreams and make the most of their own God-given potentials. The United States is committed to this mission. We seek economic growth that accords with principles of openness, freedom, transparency, and fairness because we want to see the entire world – not just a small slice at the top – get richer and stronger. From the computer programmer in the United States to the electronics manufacturer in China to the service provider in Vietnam to the miner in Peru, we know that our futures are entwined. Our people will rise or fall eventually together, and we each have a stake in each other’s success.
So we want to work with you to help lead this region’s progress in a spirit of true partnership. That is our goal. And we look forward to achieving real substantial milestones on the way to those goals in 2011 and beyond. This is a great opportunity for APEC, and we know we’re ready to seize it. Thank you all very much. (Applause.)