Remarks at the APEC CEO Summit

John Kerry
Secretary of State
Bali International Convention Center
Bali, Indonesia
October 7, 2013

Thank you, Wishnu, very, very much. It’s a great pleasure for me to be here, and an honor to be able to address you. And on behalf of President Obama, I want to thank our hosts in Indonesia for an absolutely, extraordinary generous hospitality, and I particularly – I think you will join me in feeling that they have been remarkable in their leadership in the course of this summit. So I thank them.

Let me echo the regret President Obama expressed personally to President Yudhoyono that he could not be here this week. I know he really was looking forward, genuinely to being here. I want you all to know that in 2004, obviously, I worked very, very hard to replace a president – this is not what I had in mind. (Laughter.)

But I also want to make it very clear to everybody: No one should mistake what is happening in Washington as anything more than a moment of politics. We’ve all seen it before; we’ll probably see it again, but I guarantee you we will move beyond this and we will move beyond it with strength and determination.

One of the things that encourages me enormously is the recent news that the United States of America is now the world’s largest energy – oil and gas – supplier, and we are renewing manufacturing. Our innovation is strong, our debt is coming down, our deficit is coming down, and I am absolutely confident that the innovation and strength that has characterized our economy for some period of time will continue well beyond this moment being considerably forgotten by all of you.

I want to emphasize that there is nothing that will shake the commitment of the United States to the rebalance to Asia that President Obama is leading. And I think it’s fair to say to all of you that we are very, very proud to be a Pacific nation. We are inextricably linked to this region by ties of geography, of history, culture, economics, and frankly the blood and the treasure that we expended to help lay the framework for the architecture on which prosperity is now being built.

The Asia-Pacific region, which we are all a part of, is by far the largest, the fastest-growing, and the most dynamic economic region in the world. But in the 21st century, happily, our lives are defined not just by the work of troops or of diplomats, but increasingly by the efforts of entrepreneurs and executives, of the private sector – those of you and the businesses you build, and the workers that you employ, the places that you invest, the partnerships that you forge, and the students who represent the future of this multinational, multicultural, and multigenerational relationship that is being built in the dawn of the 21st century.

This is an exciting time. It’s an extraordinary time of transformation and change. And I know that every one of you come here with a sense of excitement and a sense of the possibilities that come with that. Quite simply, how this region grows, and how we engage the 2.7 billion customers who live here, that will shape the future of the world’s economy.

And the numbers tell a very important part of this story: More than half of global GDP is represented by this region. Half of global trade happens in this region. When you list the United States top 10 trading partners, half are APEC economies. We send more than half of our exports to this region. And over the next five years, nearly half of all the economic growth that will happen outside of the United States will happen in the Asia-Pacific region. So if you put it all together, it is obvious why all of us, the private sector and the public sector, have a stake in the choices that we will make in the days ahead. But make no mistake, they are choices, and they will require the private sector and the public sector to work together like never before, in order to make the right choices.

As you know, when President Obama took office, the top priority had been creating new jobs and security for America’s middle class. And he also knows that can’t happen, and it won’t happen – and to the degree it’s happened, it hasn’t happened without your participation. What you sell, what you buy, where you invest – these are all major parts of the equation. And that’s why President Obama has worked hard to grow our exports by more than 50 percent since taking office, and two-way trade between the United States and other APEC economies has grown by nearly the same amount during the same period. Today, both American exports and American trade with APEC stands at record levels.

And when I became Secretary of State, I reminded my colleagues in the Senate during my confirmation hearing that foreign policy today is more than ever economic policy. National security is not just about the threats that we face – and we’re all familiar with those threats – but it’s about what we can do to prevent the seeds of tomorrow’s threats from being planted today. In a world where vast populations of young people are exploding on the scene with aspirations and demands, all interconnected by the social media, at that time anarchy and terror are sometimes offered as alternatives to the fulfillment of those jobs and opportunity, to the fulfillment of good governance.

And so we have a special challenge, all of us together – nobody’s exempt. There’s no business sector over here and government over here. It’s joined together, and it’s critical that we act together and work together. The consequences of failing to do so are staring at all of us – in Syria, Egypt, Afghanistan, Pakistan, and other parts of the world where young people – young people – remember what happened in Tunisia was a reflection of the aspirations of a fruit vendor who rebelled against corruption simply because he wanted to be able to live his life and sell his goods. What happened in Tahrir Square was without any religious overtones or connotations. It was again young people texting each other, using smart phones, talking about the possibilities of the future. And so it was in Syria, too, where young people wanted a voice in the future, and were met instead with violence.

So I would say to you that with all of their potential, it screams for the chance to fulfill their basic aspirations, and that is what we have to think about, even as we make bottom-line economic choices.

So it is clear: We have a stake in each other’s success. And that’s one of the reasons why multilateral fora like APEC and ASEAN are, frankly, so important in this modern context. And it’s why we are working to complete the Trans-Pacific Partnership negotiations by the end of this year. TPP, which is so critical – and to emphasize how critical it is, President Obama has sent our Secretary of Commerce Penny Pritzker, who is here sitting in the front, and our U.S. Trade Representative Ambassador Mike Froman sitting over here – because we understand how critical this is.

At its core, TPP is about generating growth for our economies and jobs for our people by unleashing a wave of investment and entrepreneurship all across the Asia-Pacific. And at a time when we, all of us, seek strong and sustainable growth, TPP is creating a race to the top not to the bottom. It’s reaching for the highest standards of any trade agreement in history. And I will tell you that is good for businesses, it’s good for workers, it’s good for economics, it’s good for stability, it’s good for relationships between countries.

It’s important to remember that all the impressive statistics that we cite about this region and all the exciting projections about our shared future, they’re not just an accident. APEC economies are thriving because over the last 25 years, countries of the region lowered barriers on trade and investment, and that has accelerated growth as much as any other single thing.

APEC has played a critical role in that success by helping governments to align their standards and their practices, by lowering the barriers for women to be full participants, and by making it easier for businesses to reach across borders and find new markets. But the truth is, that is not enough. That alone will not produce success. In this constantly changing marketplace, governments have a huge responsibility to become even more agile, more responsible, and even more responsive to people and to the demands of the business community.

And that means we need to listen carefully to all of you who are on the front lines making the investments, making the decisions, and doing the business of creating businesses and jobs. I want to emphasize, we in governance need you, the leaders of commerce, we need your creativity as the drivers of gatherings like APEC and like the CEO Leaders Summit. And we need you to keep pushing governments forward and urging them to adapt.

Just last night I had the privilege of having dinner with a group of the CEOs, as many of you all did, and I listened to some of them express frustration with policy makers who accept, in principle, certain notions about how we should do business, but in practice often revert to other choices, including protectionism.

Protectionism, my friends, is not a problem because it shuts someone out of the market – though that is a problem. Protectionism is a problem because it stifles opportunity, because it narrows the market, because it crushes the energy of the marketplace, where new solutions are created through that energy. And history has proven again and again, a freer market creates more opportunity, more growth, more dynamism, more innovation, and no one knows that better, I think, than the CEOs who are gathered here.

But I also want to emphasize something. You’ve heard many speakers this week celebrate the economic vitality of this region, and well they should. But I hope it’s not a secret to say to you that there is nothing automatic that says that that will be the future. Nothing automatic. The prosperity that you share today and we are witnessing today did not arrive by accident, and neither is its continuance inevitable. You know as well as anyone that capital looking for a place to invest will seek either the fastest or the safest or a combination of the two, for the return on investment, regardless of geography, regardless of nationality. Capital wants certainty in the political process, and the battle for the future is a battle about competitiveness. And part of what makes a region competitive for investors, is obviously the consistent, predictable business climate that is conducive to success.

There is no question that the most successful markets of the next 25 years will be determined in large measure by how well they demonstrate openness, transparency, inclusivity, and accountability. Now I’m not talking just about high-minded principles. I’m talking about pragmatic choices that will define this region and other regions around the world. I’m talking about a path to long term, shared prosperity.

In your businesses, you all know that connectivity and innovation are the key to success. And you know the kind of environment that you need for innovation to be able to thrive. In the United States, I’m proud to say to you – not arrogantly, but just as a matter, I think, of a reality that the key to our productivity over the last 50 years has been the freedom of this innovation. The entrepreneurial spirit that allows somebody in America to take a risk and take a chance and to find a Google or an Apple or any other number of great businesses historically. That really is what has defined America, and it’s the centerpiece of our continued growth and success, even today. The gas that we are currently using from shale is the result of new technology, of pushing that curve.

And our world-changing businesses and our world-class universities – schools like the one that drew Wishnu across the Pacific to study in Los Angeles – these are a critical component of our economic foundation. It has been proven again and again that the next innovation in technology or the next great stride in medicine is most likely to be created in countries where citizens are free to share ideas, move capital around, free to try new things, free to fail, and where the laws are clear and equitable and where you know that the profits that flow from your ideas will be protected.

In order for businesses to fully unlock the promise of the great Asia-Pacific market, or to realize the potential of a booming middle class a billion people strong, we need updated rules that protect not just the basic decisions about moving goods and services, but also protect the spirit of innovation on which the economies of the future are already being built.

We need modern rules for a changing road, rules that keep pace with the speed of today’s markets. We need norms that protect us from competitive disadvantages. We need a level playing field, predictability, transparency – so that when you invest and do business, you can have a reasonable expectation of the risks and rewards in front of you. And that is one of the promises of the TPP. And as I mentioned, it is about breaking down barriers and raising the bar, the standards, in a way that protects everybody and works for everybody.

You’ve all heard American officials talk about the importance of intellectual property. But the truth is that every economy that wants to be an innovation economy needs to defend their innovators. It’s not just Americans; every entrepreneur and business in the Asia-Pacific needs to know that they can reap the benefits when they develop the next big thing. Economies that can make that guarantee are inevitably going to be stronger. And those that can’t make that guarantee, if your ideas are at risk of being stolen and your innovations can be ripped off, you will never reach the full potential of that country or economy.

As you know, the Asia-Pacific region is increasingly reliant on complex supply chains. Think of an iPad that is designed in California, with its parts made in Taiwan, assembled in China, shipped through Singapore, loaded with apps from Korea, and sold in Jakarta. (Laughter.) All of the businesses and investors along the way – (applause) – that must be the crowd from Jakarta. (Laughter.) But all of the businesses and investors along the way clearly need the consistency and the certainty of transparent policies and predictable regulations. And I want to recognize the cutting-edge work of APEC, which is leading on supply-chain connectivity, all the while ensuring that the rules are made with input from the public and the stakeholders like you.

And that’s why I want to pay tribute to the synergy – I really felt it last night at dinner with the group that I had dinner with. There’s a great synergy here. And I think that it would be very valuable, frankly – one of the greatest assets of this gathering is the interaction between those of us who are privileged to be leaders in our countries, and those of you who lead in the business world.

On behalf of President Obama, I would urge APEC to find more ways to increase the interaction between the leaders here and the private sector, because I think that, in the end, will result in better policy faster. Beneath the surface of the success that we celebrate though, there is also an undercurrent of concern. And I would be remiss if I didn’t say something about it.

When we talk about rules, predictability, and the sanctity of contracts, we cannot forget that corruption corrodes our markets by raising the cost of doing business, it brews uncertainty, it creates inefficiency, it undermines good governance, and it frightens away capital. Put simply, it slows down growth. It doesn’t speed it up. It doesn’t expand growth, and it certainly doesn’t meet the standards of a world that is increasingly looking for more transparency and accountability. It creates a fragile system instead of a strong one.

President Obama and I commend APEC for its close work with the private sector to develop ethics for businesses large and small. And we also commend APEC’s recent work to shine a light on money laundering and illegal trade, including wildlife trafficking. Our economies – simple, bottom-line – our economies will not reach their full potential and we will not meet the demand of all those young people looking to us for good choices, for the future. We will not do that unless we eliminate criminal enterprises that undermine the legitimacy of what we are all trying to achieve, and the rules by which we are all trying to work.

APEC can advance its efforts by continuing to build capacity among customs officials, connecting law enforcement agencies, and reducing demand. And these days, if the governments don’t step up to tackle their responsibility, guess what? Citizens will. Because with the global use of social media, everybody in the world has an instant communications tool, everybody has a camera, and increasingly where I’ve seen people hold people accountable. Pictures, videos, stories that anyone with a video can share with millions of people in milliseconds will actually help to create accountability. There is a new cop on the beat.

Finally, I want to say one last word about another value that we need to defend. And it is one that, like the others that I mentioned, will actually benefit businesses and economies, and it’s one we can only address multilaterally, and some of you may think it’s strange that the Secretary of State of the United States picks this issue to say something about here at this APEC conference, but I think it is a moral responsibility, as well as a practical business one, and that is the urgency with which we must all come together to deal with the issue of climate change.

I know that when people talk about climate change, eyes still glaze over. And against all evidence, there are still some people who wonder if it’s real – and many wonder what they can actually do about it. Well, the fact is that the absence of a concerted global commitment to address this is inviting catastrophe. And for everybody’s business, it is inviting uncertainty.

For insurance companies, it is inviting insolvency. The recent United Nations report, with its nearly unanimous conclusion that human beings are to blame for what is happening, warns us of the consequences and makes clear our responsibility. As the world’s biggest consumers of energy and the biggest emitters of greenhouse gases, Pacific nations, including my own – we’re number two in the world – Pacific nations including my own have an enormous responsibility to lead a transformation that can not only save lives, but create millions of jobs.

I will just tell you, after 29 years of following this, that the extreme weather around the world – the flooding, the fires, the drought, the intense storms – are nothing compared to what will come if we don’t act. The reduction in some of our fisheries, the melt of ice, the rise of sea level, the Pacific islands that are threatened, all of this will present us with refugees such as we have never seen before, and with food shortages that may boggle the mind.

What’s astounding to me is this: Staring us in the face is an economic revolution that can solve all of this. There is a $6 trillion market out there for energy, with six billion to nine billion additional users over the next 20-40 years, and that is the marketplace of all time. The market that created the great wealth of the 1990s was a technology boom. It was a $1 trillion market, with one billion users. Compare that to the six trillion and six to nine billion users.

Energy is the solution to climate change. And the energy market is staring us in the face with an enormous amount of opportunity, and despite the amount of gas that is becoming available, we still have a responsibility, particularly those 20 major emitter nations, to deal with this issue. I think APEC understands that doing nothing is not an option, and that’s why it’s been a leader in increasing energy efficiency and reducing inefficient and market-distorting fossil fuel subsidies, and we need to continue to move in that direction. But this is a visible and tangible change in this part of the world, and tomorrow I look forward to meeting with President Yudhoyono and representatives of the Pacific Island countries and APEC leaders to talk about how we can ensure a more sustainable economic development program around us.

Yesterday, I had the chance to visit Benoa Port, where America is engaged in a public-private partnership with some fishermen here in Indonesia. And we’re engaged with universities – UCLA and three universities out here trying to build a sustainable fishery and sustainable future. These are fishermen who work for a Tampa Bay, Florida company. Fish are shipped from here every day, and it goes to Outback restaurants in America, to Walmart, and to Whole Foods. This is the world we’re living in today. But if there’s too much money chasing too few fish, and we don’t have sustainable practices, then we will obviously inherit crises beyond recognition. Sixty million people in Indonesia depend on fishing and on marine resources for their livelihood. And 60 million Indonesians get most of their protein from the sea.

So these are examples of the ways in which APEC and all of us can come together. This is the new norm. This is the future. This is the way the world is going to have to work in order to deal with these problems, but to grab the opportunities that are staring us in the face. In bringing together businesses and governments, NGOs, students, and all citizens to address these issues, APEC does the seemingly impossible: it makes one of the largest regions in the world smaller and more connected. And because APEC gives economies such an effective forum to talk about and tackle these challenges, and thanks in large part to the business leaders like you, tomorrow we will be able to innovate more imaginatively, think more freely, grow more equitably, consume more sustainably, partner more broadly, and create greater opportunities for this generation and the next. And by doing that, we will live up to our responsibilities. Thank you very, very much. (Applause.)

PRN: 2013/T15-08