E&OE.......................................................................................................
PRIME MINISTER:
Mr Chairman, to the President of Korea, to the President of Peru,
Ladies and Gentlemen. I would like to commence my brief remarks by
welcoming the President of Peru attending for the first time, as the
Leader of a new member of APEC. As the Leader of a country which has
been relatively untouched by the economic downturn that has afflicted
the Asian Pacific region over the last eighteen months, let me register
one or two observations.
The first of those is that Australia is very conscious of the devastating
social impact of the economic downturn in so many of the nations of
the Asian Pacific region. And Australia is also acutely aware of the
painful adjustment process that has been undertaken in so many of
those countries, and I am full of personal, and on behalf of my government,
national admiration for the steps that have already been undertaken
by so many of the Leaders in this region. We understand that it has
not been easy and we understand the political courage involved and
the economic pain also involved in that process.
In preparing for this Leaders' meeting, my thoughts have really
been centred in four areas. The first of those is that we should collectively
reaffirm our commitment to open markets, the second is that we should
adopt, where possible, policies that will promote growth. Thirdly,
we should strengthen economic and financial sector management in our
economies, and finally we should take action to improve the international
financial system.
It has to be acknowledged that the Trade Ministers' outcome on
EVSL was second best from an APEC point of view, but at least the
process is moving forward, and that decision has to be understood
against the background of the difficulties that I referred to a moment
ago. I think we all understand the need to promote national policies
which encourage greater economic growth, and we all have different
stories to tell in relation to that. But the burden of my remarks
really falls in relation to the third and fourth points that I made.
The need to strengthen economic and financial sector management is,
in my view, paramount if investor confidence is to be restored. And
this must mean building up the institutions of economic governance
by adopting international best practice and by adhering to codes in
areas such as banking supervision, securities regulation and fiscal
transparency. To further this goal I announce today an Australian
Government initiative on financial and economic management.
The initiative involves a commitment of $50 million dollars over three
years. It builds on the APEC survey we did on economic governance.
It will help APEC members take practical steps to strengthen economic
and financial management. Examples of what we have in mind include
training for central bank officials and technical assistance with
issuing government bonds. This initiative complements other initiatives
which have been independently implemented by private sector participants.
For example, the Australian Securities Institute has formed a joint
venture with a Malaysian fund manager to provide courses to improve
the country's financial industry skills.
My final area of concern is to ensure that urgent action is taken
to improve the international financial system. I see three priority
areas requiring immediate attention. Firstly, disclosure and monitoring
of hedge funds. Secondly, crisis management and private sector involvement,
an IMF anti-contagion contingency funding. We certainly need prompt
action on the first two, and possible actions could involve a taskforce
of experts led desirably by the United States to develop practical
proposals to better control short term capital flows, particularly
hedge-funds, and also a working group focused on either the G22 or
APEC to develop proposals for crisis management, principally the orderly
workout arrangements for sovereign and corporate debt.
In this connection I would like to emphasise the importance that G22
can play. Unlike G7, it has broad representation and has a strong
Asian voice. I think there may be value in G22 leaders meeting when
there are outcomes in this context to ratify.
Before sitting down, could I just make a point about globalisation.
There is, of course, a lot of debate about the impact of globalisation,
particularly against the background of what has happened over the
last eighteen months. Without detracting from what I said at the beginning,
let me emphasise that globalisation is inescapable and there is a
responsibility on governments to provide a well-balanced explanation
to their domestic and to their world constituency of the advantages
of globalisation. There will inevitably be adjustment costs in both
developed and developing economies and all governments have to deal
with this. But we should never lose sight of the enormous benefits
of globalisation. Indeed much of East Asia's remarkable growth
over recent years has been built on the benefits of a global economy
and what it has brought in terms of investment, technology transfer
and rising living standards. And that experience should be set against
the understandable concerns about the developments over the last eighteen
months.
Thank you.
QUESTION:
Thank you Mr Chairman, distinguished leaders, I am a delegate from
the Bank of China. As you may have noticed, Bank of China is one of
the platinum sponsors of this summit. The notion behind our sponsorship
is quite clear, that we shall do our best to encourage and promote
the business into actions and exchanges all over the world, so we
can benefit from such kind of interactions and exchanges. But, we
have also noticed that what a single business entity could achieve
is rather limited as compared to what could be done on the inter-governmental
level. So in this regard I would like to have your opinions and point
of views regarding the past performance, its effect in this of the
APEC, and based on its performance, and what is your view about the
future of APEC. Will it be corrupt into another talk-shop? It could
be a question to any of you or all of you.
PRIME MINISTER:
Well Sir, I certainly don't see APEC just becoming another talk-shop.
There's always a danger with any organisation, any grouping such
as this, that that will happen. I think APEC has achieved an enormous
amount in focusing the attention of a remarkably diverse group of
countries on the benefits of trade liberalisation. It's very
important that APEC never sees its role as being to duplicate the
institutional behaviour of other international groupings.
There's always a tendency to see APEC perhaps in the context
of duplicating the role of the IMF or the World Bank. It certainly
shouldn't attempt to do that. It was established as a body to
promote trade liberalisation. I expressed some disappointment in my
speech about the Trade Ministers' conclusion in relation to the
EVSL and I don't retreat from that, but I think it's important
that we still see the decision that was taken as a move forward and
that we take the opportunity at this meeting of focusing on some of
the more positive outcomes in the area of economic governance, of
financial management, and the like.
It is the case that many of the members of APEC have passed through
the most difficult economic experience that they've had for thirty
or forty years. It's therefore not surprising that there would
be some domestic political strains in the member countries, in relation
to the impact of the economic downturn, and what comes out of APEC
has to be seen against that background. I'm an optimist about
APEC. It has focused the attention of governments of various political
persuasions in my country, as well as in many other countries, on
the benefits of trade liberalisation.
The biggest single challenge for political leaders in relation to
trade liberalisation is to explain its benefits. It's incredibly
easy to explain the disadvantages, or let me not so much say explain,
but to promote resentment about the disadvantages of trade liberalisation.
It's far easier to point to an industry that has closed down
because of import penetration. It is far harder to point to an example
of an industry that is gaining new markets as a result of them being
opened as a consequence of trade liberalisation. And if I had a message
to the business men and women here today, I would say that if you
believe in APEC, and you believe in the cause of trade liberalisation,
you have a responsibility along with your political leaders to explain
the benefits of trade liberalisation, because if you don't, you
will lose the argument.
QUESTION:
I want to pose a question to President Kim of Korea. Is he satisfied
with the IMF measures which have been introduced into his country?
And if he's not satisfied, what would he have done? And secondly,
is there any danger of his country, since its opening the banks and
other institutions and businesses to foreign participation, is there
any danger of his country losing its economic independence?
CHAIRMAN:
May I please ask President Kim to respond to that question, and of
course Prime Minister Howard too, if he wishes to respond?
PRIME MINISTER:
I think the only thing I'd add, Mr Chairman, to that is that
I don't think for some years now has it been possible to speak
of any country in the world having complete economic independence.
I don't think in the present circumstances, or in the recent
past, countries that have suffered a severe economic downturn have
had any realistic alternative other than to accept assistance from
the International Monetry Fund. I think Korea responded in a very
intelligent fashion. The IMF bailout, to which Australia was a very
willing contributor, has certainly stabilised the economy of Korea.
We see that as beneficial, not only for the people of Korea, but also
so far as our own participation is concerned, very beneficial for
the people of Australia. Korea, I am very happy to say, is one of
Australia's major purchasers, in fact our second best buyer in
the whole of the Asian Pacific region, and it's just an example
to me of the inter-dependence of the region and the fact that that
kind of economic cooperation within the region is an example of a
sophisticated response to a neighbour's economic difficulty,
and issues of economic independence and economic sovereignty don't
really come into it. It's a question of international common
sense.
QUESTION:
My name is Richard Drabnik from the University of Southern California
in Los Angeles. President Kim and President Fujimori and Prime Minister
Howard all talked about the inter-relationship between finance and
trade and finance and liberalisation, my question is a structural
one. The finance ministers from the APEC economies are not here in
Kuala Lumpur, and they will not meet until six months from now perhaps,
and my question is, how do the Presidents and Prime Ministers interact
with their Finance Ministers in a systematic way to bring to the table,
the ideas and concerns that you have collectively, and that the Finance
Ministers will have collectively, what are the mechanisms for the
APEC process to work more smoothly between the political leadership
at the highest level and the Finance Ministers.
PRIME MINISTER:
Well Sir, just speaking for my own part and for the Australian experience,
we of course operate in very close collaboration, and the views that
I express here are the views of my entire government on these matters
and they're very much in synchronisation with the view of our
Finance Minister, which we call our Treasurer, although we do have
a Finance Minister but he doesn't discharge the responsibilities
of a Finance Minister in the APEC context, and very much the views
of our Federal Treasury, there's really no lack of information
flows within the Australian Government and I don't think there's
going to be any real difficulty in the views that I will be expressing
at this meeting, likewise being expressed and communicated by our
Treasurer when he comes to the meeting of APEC Finance Ministers.
QUESTION:
I come from China. I have to say that I'm very thrilled to have
a face-to-face discussion with country leaders, and that is my pleasure.
I would like to address three questions, very simple ones. I have
learned that President Clinton is not going to show up and attend
this APEC meeting, and I would like to ask the first question to the
two country leaders on the panel. What's your feelings about
that because the Iraq crisis he can't come? What's your
feeling? And the second question is, without President Clinton attending
this APEC what kind of influence will there be on the Leaders'
Meeting? Will the impact be more negative or will it be more positive?
And the third question is, between the Iraq crisis and this Asian
or global financial crisis, who is more in crisis?
PRIME MINISTER:
Mr Chairman, it's always good to have the President of the United
States at an international gathering but speaking for the Australian
Government I completely understand why he has regrettably felt unable
to come to this meeting. I'm quite certain that the meeting will
be a very productive and positive one, and that Vice President Gore
will fill his shoes very effectively.
As to comparing the two crises, I agree with my colleague from Korea,
you can't really compare them. There are vital interests at stake
for the entire world in relation to the two of them, they are entirely
dissimilar and I wouldn't seek to establish a hierarchy of threat
between the two of them. They're both quite serious and they're
both very important, and there are vital world interests at stake
in both of them.
QUESTION:
I am a Korean student currently studying at the International School
of Kuala Lumpur. My question is how can APEC nations protect their
currencies from rapid increases and decreases, even as they promote
freer financial markets and attract increased foreign investment to
the region?
PRIME MINISTER:
Well Sir, a certain amount of volatility is an unavoidable consequence
of an open exchange rate system and nothing that I said about the
desirability of examining some measures in relation to capital flows
and hedge funds should be taken as altering that fact. I don't
think any country, be it a developed country or a developing country,
or one that's been touched or relatively untouched by the recent
international economic crisis, is immune from currency fluctuations
and currency instability.
There does seem to be a mistaken belief in some quarters, that in
some way you can regulate your way out of adverse international judgements
being made against your economy. That can't happen, the days
of that occurring perhaps never existed, and they certainly aren't
going to return, so I think my answer to you is that it's just
not possible to insulate the currency of any nation against a certain
degree of volatility. I think there is a case for seeing if you can,
as it were at the margin, monitor and control the severity of that
volatility, but not imagining that you can get rid of it altogether,
because that is utterly unrealistic and it is quite incompatible with
an open exchange rate system, and quite incompatible with the essentially
globalised world economy in which we now live.
QUESTION:
I'm from the International School of Kuala Lumpur, and I was
just wondering how can APEC improve the educational systems and employment
opportunities for young people in the member nations, and how are
your countries approaching this issue?
PRIME MINISTER:
I think it's very important when we're looking at APEC not
to assign to it too many specific tasks above and beyond the task
of promoting trade liberalisation, and above and beyond the task of
improving the general economic health and stability of the financial
systems and the economic systems of the member countries. I don't
say that because I regard fostering educational opportunities as being
unimportant, indeed I'm very conscious speaking as I do in the
Malaysian capital, over the last decade something like 150,000 Malaysians
have had their education within my country, and we continue to regard
the access of people from this region to Australian schools and to
Australian universities, as a very important part of our participation
as a good neighbour in the Asia Pacific region. The scope for promoting
that kind of thing is best, in my opinion, done through different
forums on a bilateral basis between individual countries. I think
it's important to keep the focus of APEC as much as possible
on the trade liberalisation goals and the general economic health
and strength of the member countries. That, as I say, is not to in
any way down play the education role, it's simply to see it as
being responded to in another context.
QUESTION:
I would like to put this question to both the APEC leaders. During
the experience of the past eighteen months, what is the opinion of
the two APEC leaders present here, President Kim Dae Jung of Korea
and Prime Minister Howard of Australia, as to the proposal that there
should be some type of supervisory structure to regulate the activities
of international currency traders?
PRIME MINISTER:
Well, my view is that the idea of any elaborate supervisory structure
is probably not desirable. There is an argument to develop some responses
to the repetitive capital flows and the activities of some hedge funds.
I think it is fair to say that because of the activities of some of
these, a number of countries paid a much higher price and suffered
a great deal more than they deserved to. And I can understand the
concern of those countries, but you either believe in an essentially
open economy around the world, an open currency system, or you don't.
And I think once you start talking about elaborate supervisory structures
you do start to run into some difficulties. I think the sort of proposal
that I outlined in my brief remarks represents the distance that we
ought to be willing to go, but once we start going significantly further
than that, I think we will run into some fundamental incompatibility
with the sort of open trading system and open currency system in which
I think most of us in this room still believe.
[ends]