Ambassador Patricia M. Haslach
U.S. Senior Official for Asia Pacific Economic Cooperation (APEC)

May 25, 2009
Aoyama Gakuin University Institute for International Peace and Culture
Tokyo, Japan

Thank you for inviting me to speak about the Asia-Pacific Economic Cooperation (APEC) forum today.

The U.S.-Japan relationship is a cornerstone of American policy in Asia. For more than 50 years, our alliance has helped to secure the stability of this region. At the same time, Japan and the United States have long shared an important and beneficial economic relationship. About $750 million dollars in trade in goods and services flows each day between our two countries. Around the globe, countries look to us - the world's two largest economies, comprising over 60% of the Asia-Pacific region's GDP - to play a leadership role.

Together, the United States and Japan have worked to ensure that our common strengths and our common values advance our common interests.

But no single cornerstone by itself - no matter how important to the overall structure of a building - creates a solid and lasting home. Likewise, to ensure the long-term peace and prosperity of the Asia Pacific region - the most economically dynamic region of the world - we need to build a broader framework, a shared community of values and mutual interests. In the U.S. view, the past twenty years have shown the most effective framework for building such a community in the economic arena is APEC.

What is APEC and why is it important?

The next two years will be a critical time for the development of APEC as an organization.

Japan will host APEC in 2010, while the United States will host the following year in 2011. Both economies see this as a unique opportunity for us to build momentum for regional economic integration and shape a strong economic agenda for the Asia-Pacific – one that would ensure long-term regional prosperity.

But what is APEC, and why does it matter to the United States and Japan?

You get a good sense by looking at the numbers. The 21 APEC economies account for:

• 55% of World GDP;
• 45% of Global Trade; and
• 40% of World population (2.7 billion consumers)

APEC includes major economies from across the Pacific Rim. In addition to the United States and Japan, other members include China, South Korea, most of the ASEAN countries, Australia, as well as Canada, Mexico, Peru, and Chile.

Sixty percent of U.S. exports in goods go to APEC economies. Five of America's top seven trade partners are APEC members – Canada, Mexico, China, Japan, and South Korea. U.S. foreign direct investment in APEC economies totals $795 billion, while investment by APEC economies in the United States is valued at $536 billion.

APEC is equally important for the Japanese economy. In 2008, APEC economies accounted for 7 of Japan's top 10 export markets. Last year, 73% of Japan's exports went to APEC economies while 62% of Japan's imports came from APEC economies.

Clearly the APEC region is critical to the economic well-being of both Japan and the United States.

But as you are all keenly aware, regional growth is now threatened by severe worldwide economic upheaval. Now, more than ever, it is important for Japan and the United States to work together to help lead our region and the world back to economic health. Efforts to restore the health of the global economy cannot succeed without the active contribution of Japan and the United States.

According to the World Trade Organization, in 2009 the global economy is projected to experience the biggest contraction in exports since the Second World War. At the same time, the World Bank forecasts that the global economy this year will shrink for the first time since World War II, with growth at least 5 percentage points below potential. It also predicts that global industrial production by the middle of this year could be as much as 15 percent lower than levels in 2008.

While economic growth in East Asia will still be relatively high, the Pacific Economic Cooperation Council has estimated that Asia-Pacific growth will decrease to 1.2% in 2009, less than half the growth rate the region experienced in 2007 and 2008.

The United States has taken steps to stimulate its economy and address the challenges at the heart of the crisis. Japan and other countries in the Asia-Pacific have responded to distress in their economies as well. But as President Obama has emphasized, there also needs to be concerted action around the world to jumpstart the global economy and pursue the reforms needed to protect against future crises.

APEC has an important role to play in facilitating such concerted action at the regional level. This includes tackling immediate challenges. But just as important, it entails looking at policies and reforms that will spur long-term economic growth, and ensure all our citizens have the opportunity to thrive in the global economy.

APEC can contribute to economic growth by pursuing ambitious outcomes related to its core mission of promoting freer and more open trade and investment. APEC can also contribute to its members' mutual prosperity by addressing other pressing economic challenges such as energy security, regulatory reform, technology and innovation, and preparing workforces for an increasingly competitive global economy.

The APEC Agenda

In all of these areas, APEC has already taken important steps that will contribute to the global response to the crisis. Now is the time for APEC to build upon these achievements during the Singapore, Japan, and U.S. host years.

• APEC has committed to support the objectives of the G-20 to address the economic crisis and bring about a global recovery. This includes the pledge to avoid protectionist measures that would only exacerbate economic distress. With nine of the 21 APEC economies also being G-20 members, Japan and the United States can work to make APEC an important forum for discussing the G-20 principles and how to carry them forward.
  
  
• On our core trade and investment agenda, the United States and Japan share a vision of APEC as being at the front and center in strengthening economic integration. This includes and the long-term prospect of a Free Trade Area of the Asia-Pacific (FTAAP).
  
  
• This also includes taking practical steps to promote free and open trade in the region, including by working together on efforts to make it easier for businesses to trade and invest in the region.
  
  

In 2010 and 2011, Japan and the United States can also strengthen APEC's activities in other areas that are vital to promoting regional economic integration and sustained economic growth. For example:

• We should support APEC's ongoing work in helping economies to improve their business environments. This includes regulatory reforms that will help spur and sustain economic growth, as well as efforts to improve corporate governance.
  
  
• Given these troubled times, we are also pleased that APEC is providing leadership in addressing economic and social insecurity that create pressures for protectionism and other policies that ultimately hinder growth. This includes efforts to:
  • Build and improve cost-effective social safety nets such as unemployment insurance and worker retraining;
  • To enhance microfinance capacity; and
  • To help small and medium sized businesses to better utilize new technologies.
  
  
  
• We also see an increased role for APEC members in addressing energy security and "green" development. The challenge of how to achieve both significant greenhouse gas reductions and strong economic growth is particularly acute in the Asia-Pacific region. The APEC region accounts for over half of global energy consumption and is a net importer of energy. Asian demand for energy, most of which is currently fossil fuel-based, is predicted to continue rising rapidly.
  
  APEC members are working to promote open energy trade and investment. To develop renewable sources of energy and low emission technologies. Japan has an extremely valuable role to play in this area, due to your country's global leadership in renewable and energy efficient technology. With the United States also strongly committed to this goal, we see great opportunities for Japan and America to work together in this area.
  
  
• The United States sees a role for APEC in promoting innovation and the growth of new technologies, in such areas as IT, the life sciences, and green technologies. APEC is an important and useful venue for cooperation on Intellectual Property Rights, regulatory practices, international standards, improvement in investment environments, and the promotion of public-private partnerships.
  
  
• We strongly support APEC efforts to build on its robust food safety work and enhance the safety of other products traded within the region, including toys, chemicals, and health products. We also support efforts in the health sector, to help the region prepare for and respond better to such infectious diseases as H1N1 and avian flu.
  
  

Food Security: A critical Component of Regional Prosperity

Let me take a moment to address APEC's work on food security, an increasingly critical issue for Japan and the entire region. The Obama Administration has identified food security as a major U.S. foreign policy priority. It is also an issue of particular interest to me - last year, I chaired a group of APEC Senior Officials to examine how APEC can more effectively address food security in the region. And I worked very closely in this effort with Japan, who currently chairs the group.

The challenge is clear. The world's population is estimated to grow by 50 percent, which means there will be 9 billion mouths to feed by the year 2042. Higher incomes are leading to major changes in diet, particularly increased consumption of meat, milk products, and fish. And global demand for grain is projected to double within a generation.

At the same time, the world's ability to meet increased food demand will be affected by global climate change. Shifting weather patterns are expected to impact the resilience and productivity of conventional crops, and put enormous stress on the natural resources needed for agriculture - including water.

APEC has the institutional structure in place to help the region respond to this multi-faceted challenge. Building on its previous efforts on agriculture, APEC put forward a Work Plan last year which provides a new action agenda for regional cooperation on food security. This includes efforts in such areas as trade, technology, infrastructure, and agricultural practices.

For example, APEC is working to help economies facilitate the safe introduction of biotechnology to agriculture. Farmers throughout the region are increasingly counting on new technologies, including biotech, to meet growing demand and adapt to the challenges of climate change. This work matters to Japan because it is a large grain importer and because Japan is, per capita, the world's largest importer of biotech crops.

APEC also promotes trade as a critical means for ensuring food security - especially for growing and increasingly prosperous populations like those here in Asia. Japan's own post-war history shows that meaningful food security depends on both domestic production and imports. Japan imports more than 60 percent of its food intake, with APEC economies providing over three quarters of these imports. Domestic agricultural production is essential to Japan's food security, but it cannot by itself fulfill the vast quantity and broad range of Japan's food needs. We should not put up barriers that undermine trade and, ultimately, access to food for people throughout the region.

Commitment to the Asia-Pacific and to APEC

The Obama Administration has made clear its commitment to strong ties with Asia, which we will continue to pursue bilaterally as well as through regional groups such as APEC. We anticipate President Obama's attendance at the APEC Leaders Meeting in Singapore in November.

With Japan hosting APEC in 2010 and the United States doing so in 2011, both economies are working closely with this year's host Singapore to ensure our agendas are mutually reinforcing throughout our host years.

While we have not confirmed the priorities for 2011, there are several themes we are discussing. They include:

• Regional economic integration – This means expanding and building upon APEC's work to strengthen economic integration in the region by continuing to promote free and open trade and investment.
  
  
• We are also interested in the theme of Innovation, particularly the promotion of conditions conducive to technological innovation, which is an important driver of long-term economic growth. Japan and the United States are both renowned throughout the world for our leadership in technology. So there is a lot that both our economies can do to promote cooperation and progress in this area.
  
  
• We are also looking to put heavy emphasis on Energy. Cooperation between the United States and Asia-Pacific will be critical as we seek to increase energy security and address climate change. Again, we are looking to work in partnership with Japan - a world leader in energy and green technology - to develop a robust agenda that promotes greater energy efficiency, clean and renewable sources, smarter and more efficient distribution of electricity, and other initiatives.
  
  

As the two largest economies in the world, the United States and Japan bring tremendous capability and creativity to bear on the enormous challenges that the region – and the world – faces today.

With both our countries hosting APEC, we have an opportunity to advance a 21st century economic agenda for the Asia-Pacific region. It is an agenda that promotes reforms that bring new economic growth, while addressing important issues such as disaster assistance, energy efficiency, protecting the environment and natural resources, and combating communicable diseases.

By working together as a community to substantively and tangibly address these and other issues within the APEC framework, we can achieve greater growth and prosperity in the Asia-Pacific region for years to come.

Thank you.