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U.S. Trade and Commercial Policy Toward Southeast Asia
James A. Kelly, Assistant Secretary of State for East Asian and Pacific
Affairs
Testimony before the House International Relations Committee
Washington, DC
June 25, 2003
Mr. Chairman, I would like to take this opportunity to thank you and the
members of the Subcommittee on East Asia and the Pacific, for inviting me
to discuss trade and commercial policy priorities in Southeast Asia and
Oceania.
Looking back, this region has seen a remarkable transformation. Just a few
decades ago, it suffered from cross-border conflicts and struggled with
domestic instability and poverty. Today, the region has virtually no cross-
border conflicts, has more open societies and democratic institutions, and
boasts some of the most dynamic economies in the world. Thirty years ago,
Malaysia's per capita GDP exceeded Korea's, and today Korea's per capita
GDP is more than double Malaysia's. Hong Kong and Singapore, which earned a
little more than $1,000 per capita in 1971, today exceed $21,000 in per
capita GDP. Over the past 30 years, these economies have made great strides
in overcoming income inequality and developing a solid middle class. Even
amid the deep poverty I observed on my recent trip to Cambodia, I saw the
beginnings of a middle class taking shape.
However, these economies are still struggling to overcome the setbacks of
the Asian financial crisis of 1997-1998 and, more recently, economic
fallout from the SARS epidemic. The Asian Financial crisis revealed
structural weaknesses in the region's financial and corporate sectors. Some
Asian countries, such as Korea, have taken important steps to resolve the
twin problems of non-performing loans and non-performing assets, and have
been amply rewarded through increased growth rates. Most countries in the
region have moved beyond the pegged exchange rates that exacerbated the
crisis, and have seen an improvement in their investment environment. But
many economies of Southeast Asia continue to wrestle with bank and
corporate reform, leaving structural problems that are seriously impeding
growth.
The economic impact of SARS on Southeast Asian countries remains unclear,
but it is likely to shave at least some growth from the most affected
economies this year. Countries like Singapore and Vietnam moved quickly and
decisively to contain the disease and, by taking a transparent approach to
the problem, succeeded in restoring the confidence that is key to
continuing to attract investment. The APEC SARS Action Plan, recently
endorsed by APEC's Trade Ministers, emphasizes APEC's strengths in cross-
sectoral outreach to rebuild business confidence and mobility of persons
through cooperation and information sharing. The Plan includes convening
the first APEC Health Ministers meeting at the end of this month, and
responding to the impact on tourism, transportation, industry, and social
welfare.
The focus you have put on Southeast Asia is well placed, for this region is
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