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RT HON JENNY SHIPLEY
PRIME MINISTER

Keynote address to

APEC SYMPOSIUM ON THE ASIAN ECONOMIES

Dai-ichi Hotel, Tokyo, Shimbashi
9.40am Friday 23 July 1999 (Japan Time)

Mr Chairman,
Ambassadors,
Representatives of the media,
Ladies and Gentlemen.

Good morning.

I should like to extend my thanks to the organisers and sponsors of this significant Symposium. It is a great pleasure to be in Tokyo once more.

Yesterday I had the pleasure of having very productive discussions with Prime Minister Obuchi and key Japanese Ministers.

I am delighted on this, my second visit to Japan as Prime Minister of New Zealand, to address this Symposium on APEC and the Asian economies.

I welcome this opportunity to outline New Zealand’s view of APEC and the Asian Economies.

The Governments of Thailand and Japan are to be congratulated, for the initiative you have taken to bring together this group of speakers and delegates.

You have challenged yourselves to consider and discuss the role that APEC can play in the recovery of Asian economies. It is an important and exciting challenge.

In less than five months we enter a new millennium. It is right that we look back as we look ahead with confidence and enthusiasm.

There is much upon which we can build.

Just last week, I had the pleasure of launching a study of the way the relationship between New Zealand and Japan has unfolded over the last 150 years. But it has been only over the last 30 years that it has expanded and matured.

This study, funded by former Prime Minister Murayama’s Peace Friendship and Exchange programme, reminded me how much all of us, as Asia Pacific economies, have systematically developed our links over recent decades.

In the case of New Zealand and Japan we have moved from two countries who hardly knew each other, to regional partners.

Around the region, we are entering a new millennium woven together by a wide and colourful fabric of people to people links, trade, investment and an emerging sense of being an Asia Pacific community.

We are enriched both by our diversity and the values and policies we increasingly hold in common.

Ten years ago this year, the enlightened development of APEC was established to be an engine for closer cooperation between all our members economies.

APEC’s goal of a region bound together by free and open trade and investment has, during this decade, brought real improvement in the standard of living for our people.

In the past two years, however, APEC has been severely tested by the financial crisis that hit all our economies.

I believe that the responses we have made to the crisis- individually and together - have proved the worth of the consensus and cooperation which underpins all of APEC’s work.

Once economies got past the shock of the crisis, much effort has been put into finding durable solutions.

When APEC Leaders met last year in Kuala Lumpur they emphasised the important role of open markets in reinvigorating economic growth in the APEC region. This is the right approach which is well supported by empirical research.

A recent IMF study of 110 developing countries for the period 1985-95 found that countries with open trade positions, stable macro economic policy settings and relatively small government tended to grow faster.

Reflecting this emphasis, one of New Zealand’s goals this year, as Chair of APEC, is to expand opportunities for people to do business in the region. This means opening markets and keeping them open, as well as reducing barriers to trade and investment within and between our economies.

APEC members have agreed that they will take individual actions to open their markets. Through these actions, which form the cornerstone of APEC’s liberalisation agenda, APEC has made good progress. Far more than many commentators gave credit for.

This year, for example, 14 members have implemented tariff reductions, 14 have liberalised their investment regimes and 17 have announced measures in the area of competition policy and/or deregulation.

Given the importance of open and strong markets to the prosperity of us all, I want to acknowledge today the strong support our host, Japan, is giving to the pursuit of APEC’s goals.

Japan’s economic size and strength, and the success of its domestic reforms, will be critical in the return of sustainable growth to the rest of the region. Much is expected.

As the world’s second largest economy, Japan’s support for the launching of new broad based multilateral trade negotiations is also crucial in keeping the world trading system open and dynamic.

Collectively, APEC members are helping that task by working to make trade easier. For example, by the end of this year most APEC members will have automated their export and import customs clearance procedures. This will speed up the process of customs clearance and reduce the associated costs.

Studies suggest that the gains from these types of initiatives may outweigh the gains from opening markets by a factor of about two to one. APEC Ministers will consider in September options for broadening and deepening APEC’s work in this area, to the mutual benefit of member economies.

At the global level, APEC Ministers – who met just last month in Auckland – have called for the launch of new broad-based negotiations to further liberalise global trade.

Ministers also agreed that industrial products should be included in these negotiations and that we should aim to conclude the process within three years.

This is an important and powerful development. When APEC speaks with one voice it is a powerful voice indeed - for together we represent half the world’s output and population, and its leading industrialised and developing economies.

The inclusion of industrial goods to the other areas where APEC has sought early voluntary sectoral liberalisation in the WTO, now adds critical mass as APEC engages other WTO members – and in particular the European Union – in steps towards further global trade liberalisation.

Ensuring the support and participation of developing countries in the new WTO Round is crucial.

Ensuring economies are able to participate through access to markets is critical if we are to bring many people into the real economy who are currently excluded.

The alleviation of poverty through increased per capita incomes, secured through trade, new jobs, and increased development, must be the social dividend which the new Round delivers, particularly for developing countries.

APEC’s work programme can and must help developing countries lift their growth, incomes and employment in the new WTO Round.

The announcement, last night from Geneva of the split-term appointment of Mike Moore and Dr Supachai, respectively, as Director-General of the WTO is also good news for world trade, and for APEC.

Two excellent candidates, both from the Asia-Pacific region will now, in succession, be responsible for leading the WTO’s work through the new Round.

APEC economies can be well satisfied with the calibre of these appointments.

The APEC Food System proposal is another important focus for APEC this year.

The proposal, developed initially by the business sectors of APEC, seeks a robust regional food system that supports rural infrastructure development, sharing of new technology and promotion of trade in food products.

Over time we hope that the food systems proposal, alongside strengthened economic and technical co-operation between our economies, will help us achieve the full gains in prospect from APEC’s free and open trade and investment goal.

Opening markets and keeping them open is an essential factor in reinvigorating growth.

But no less significant – as illustrated by the events of the financial crisis – is ensuring that markets function effectively. This is the aim of New Zealand’s second theme for 1999: Strengthening the role of markets.

New Zealand hopes that this work will help APEC economies with the process of structural reform.

As a first step, I will be proposing, when we meet in September, that Leaders endorse a set of voluntary competition and regulatory principles.

These principles will stress the need for markets to be open, transparent and well governed. We see such principles as forming an economic policy “toolbox” - a set of policy approaches that economies can use in developing domestic regulatory policy in an increasingly globalised economic environment.

Japan’s own experience underlines the value of competitive markets. Strong
domestic competition within Japan played an important role in helping its household electronics and car industries become world leaders. In the US the same point can be made in respect of aviation, telecommunications,
financial services, and computers.

Our strengthening markets initiative in APEC seeks to foster the benefits of a strong competitive process in all sectors of the economy, recognising that each has different circumstances.

As a second step, APEC is working to strengthen financial markets.

APEC has an important complementary role to play alongside the work underway in the G-7 and elsewhere to reform the global financial system.

Given APEC’s unique membership and experience, New Zealand as Chair will want to ensure that there are opportunities for contributing our region’s perspectives to the debate.

If the recent financial crisis has taught us anything it is that the real issues are as much domestic as they are international. More than anything else, the stability of the global financial system will flow from policies and practices in our domestic economies.

Thirdly, strong corporate governance has an important role, that needs to be emphasised.

I understand that private sector leaders in Japan have recently formed a group to pursue reform of Japanese corporate governance arrangements, strengthen the relationship between shareholders and managers, and improve corporate accountability and accounting in line with international best practice.

These and other areas of progress are exactly the approach we seek to encourage through APEC - positive peer review to improve market functioning. Through co-operation, the strengthening of information, technical assistance, and practical experience, progress can be made.

When we look back on 1999 I expect it will be seen as the year that we all turned the corner towards sustainable economic recovery in the Asia Pacific region.

Already, the signs are emerging that the worst of the crisis that engulfed us in 1997 is over. Indeed, some very positive signs are emerging. But, we must not be complacent for there is still much to be done.

I have no doubt that APEC has helped governments in particular to find the policy measures, and the political encouragement, to press ahead with needed reforms.

All of us – be we in government or business – have had to take difficult decisions since 1997. We now have some satisfaction in the success that is now apparent.

We have had to change the ways we govern and do business, and change is never easy.

But we are seeing results. The growth, 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. We must work to lock this progress in by action across APEC and with member economies.

Much hard work lies ahead if we are to consolidate these hard won gains.

We can look ahead with a growing sense of confidence in the strength of the links between us, and the realisation that if we keep to the path of increased links between our economies, and strengthened markets, then we will all benefit.

The Government sector and private sector both have an important role to play. Governments will often only act when third party support for such action is apparent.

Equally, the private sector will only retain its confidence in Governments if we are capable of responding within our respective economies in a way that is relevant and effective. This is the challenge.

At APEC this year, which in addition to the Economic Leader’s meeting we hope to have greater contact and interaction between leaders and the private sector CEOs than ever before.

Just as your Symposium is meeting the challenge, so, I believe, will APEC ’99.

I look forward to the presentation of the results of this Symposium to this year’s Economic Leaders’ meeting, which I’m sure will illustrate the point.

As Chair of APEC for 1999, you can be assured of New Zealand’s support and determination, and interest in spreading the word of the discussions you are engaged in today, and the innovative ideas and solutions you may propose.

I wish you well in your deliberations.

Thank you.

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