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Asia Research n.d. [OA 7566] [3]
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Asia Research n.d. [OA 7566] [3]
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Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Speech Backup Chronological Files
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Originally Processed With FOIA(s):
FOIA Number:
S; 2004-2265-S
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Backup Files
Subseries:
Chron File, 1989-1993
OA/ID Number:
13792
Folder ID Number:
13792-007
Folder Title:
Asia Research n.d. [OA 7566][3]
Stack:
Row:
Section:
Shelf:
Position:
G
26
22
2
3
1
DRAFT REMARKS BY HON. PAUL WOLFOWITZ
9/23/91/17:00
I AM PLEASED TO BE HERE THIS EVENING. IT IS ALWAYS A PLEASURE TO BE WITH
OLD FRIENDS. IT IS PARTICULARLY so TODAYAS WE STAND ON THE THRESHOLD
OF A NEW CENTURY AND A NEW INTERNATIONAL ORDER. I WOULD LIKE TO TAKE
THIS OPPORTUNITY TO SHARE WITH YOU SOME THOUGHTS ON THE EMERGING
NEW INTERNATIONAL ORDER, ON ASIA, AND ON THE ROLE OF THE UNITED STATES
BOTH GLOBALLY AND IN ASIA.
WHEN I LEFT JAKARTA, A LITTLE OVER TWO YEARS AGO, THE COLD-WAR
STRUCTURE OF INTERNATIONAL RELATIONS, THOUGH AGING, REMAINED FIRMLY IN
PLACE. GERMANY WAS DIVIDED. SOVIET AND WARSAW PACT FORCES STOOD
POISED TO MOVE ACROSS THE NORTH GERMAN PLAIN AND THROUGH THE FULDA
GAP. THROUGHOUT EASTERN EUROPE, COMMUNIST PARTIES RETAINED A FIRM
GRIP ON POWER. ACROSS THE GLOBE, THE U.S. AND SOVIET UNION FACED OFF IN
REGIONAL CONFLICTS IN CENTRAL AMERICA, AFRICA, AND SOUTH WEST ASIA.
CONTAINMENT OF THE USSR REMAINED THE FRAMEWORK OF OUR NATIONAL
SECURITY STRATEGY.
SHORTLY AFTER I RETURNED TO WASHINGTON, THE OLD WORLD ORDER BEGAN
TO CRUMBLE. [I WISH I COULD CLAIM THE CREDIT FOR THIS, BUT I CAN'T] IN
2
NOVEMBER 1989, THE BERLIN WALL, THE CRUEL AND VIVID
SYMBOL OF POLITICAL AND IDEOLOGICAL DIVISION, FELL. GERMANY WAS
REUNITED PEACEFULLY WITHIN NATO. DEMOCRACY TRIUMPHED ACROSS
EASTERN EUROPE. THE RED ARMY "ABOUT FACED" AND BEGAN TO GO HOME.
THE WARSAW PACT WAS ABOLISHED. U.S.-SOVIET RELATIONS MOVED
INCREASINGLY FROM CONFRONTATION TO COOPERATION ON A WIDE RANGE OF
ISSUES, FROM ARMS CONTROL TO THE RESOLUTION OF REGIONAL CONFLICTS.
MOST NOTABLY, THE SOVIET GOVERNMENT SUPPORTED OUR EFFORTS TO BUILD A
MULTINATIONAL COALITION TO RESIST IRAQ'S AGGRESSION AGAINST KUWAIT.
RECENTLY, THE INTERNATIONAL ENVIRONMENT BECAME EVEN MORE
FAVORABLE. LAST MONTH, THE FORCES OF POLITICAL AND ECONOMIC REFORM
TRIUMPHED OVER THE REACTIONARIES, OLD-THINKERS, AND NEO-STALINISTS.
THEIR VICTORY MARKED THE END OF THE MARXIST-LENINIST STATE IN THE SOVIET
UNION AND WAS THE FINAL NAIL IN THE COFFIN OF COMMUNISM AS AN
IDEOLOGY OR AS A FORCE IN WORLD AFFAIRS. SINCE THEN, THE BALTICS AGAIN
STAND AS INDEPENDENT SOVEREIGN STATES, AND OTHER REPUBLICS OF THE
FORMER SOVIET UNION LIKEWISE HAVE ASSERTED THEIR INDEPENDENCE. THE
3
EVENTS OF AUGUST 1991 HAVE COMPLETED A FUNDAMENTAL TRANSFORMATION
OF THE INTERNATIONAL SYSTEM.
IN 1966, HISTORIAN, AND FORMER MEMBER OF THE STATE DEPARTMENT'S
POLICY PLANNING STAFF, LOUIS HALLE PUBLISHED, A POST-WAR ANALYSIS OF U.S.-
SOVIET INTERACTION, ENTITLED THE COLD WAR AS HISTORY. TODAY, THE COLD
WAR IS HISTORY.
ALL TIMES ARE HISTORIC. BUT, SELDOM CAN WE TRULY CLAIM TO WITNESS THE
END OR BEGINNING OF AN EPOCH. LOOKING BACK OVER THIS CENTURY AND TO
THE BEGINNING OF OUR REPUBLIC, SUCH PERIODS IN HISTORY ARE INDEED RARE.
IT IS SOMETIMES SAID THAT THE "REAL" 19TH CENTURY WAS THE PERIOD OF
STABILITY FROM 1815 TO 1914. IT COULD BE SAID THAT THE "REAL" 20TH
CENTURY, THE CENTURY OF CONFLICT AND IDEOLOGICAL HOSTILITY, RAN FROM
1914 TO 1991.
4
SO WE STAND TODAY ON THE BRINK OF THE 21ST CENTURY. AND WE FACE
THE CHALLENGES WE HAVE FACED BEFORE, NOT ALWAYS SUCCESSFULLY, IN 1919
AND IN 1945.
WE MUST HEED THE LESSON, THAT THE WORLD REMAINS A VERY UNCERTAIN
PLACE. IT WOULD BE FOOLISH TO LOOK AT THE ENORMOUS CHANGES OF THE PAST
TWO YEARS AND SOMEHOW ASSUME THAT CHANGE HAS RUN ITS COURSE.
AS HISTORY SHOWS, IT IS VERY DIFFICULT TO PREDICT FUTURE THREATS,
ESPECIALLY AMID THE EUPHORIA OF A GREAT VICTORY: IN THE LONG-TERM, FROM
1919 TO HITLER'S ACCESSION IN 1933; IN THE MID-TERM, FROM 1945 TO THE
BEGINNING OF A COLD WAR IN 1948, OR THE HOT WAR IN KOREA TWO YEARS
LATER; AND EVEN IN THE VERY SHORT-TERM--FROM NOVEMBER 1989 TO AUGUST
1990. CONSIDER THE EXTRAORDINARY EVENTS IN THE SOVIET UNION AND
EASTERN EUROPE OVER THE PAST TWO YEARS. OR, THINK OF THREE DAYS IN
AUGUST, THREE DAYS, IT MIGHT BE SAID, THAT SHOOK THE WORLD.
AS GENERAL POWELL RECENTLY REMARKED, REFERRING TO CLAUSEWITZ'S
ADMONITION TO "BEWARE THE VIVIDNESS OF TRANSIENT EVENTS", "THERE ARE
5
LOTS OF TRANSIENT EVENTS OUT THERE, AND I AM TRYING TO BEWARE OF THEIR
VIVIDNESS."
AT A TIME OF FUNDAMENTAL CHANGE, AS WE CONTEMPLATE THE CHALLENGE
OF SHAPING OF A NEW INTERNATIONAL ORDER, AND AS WE CONTEMPLATE THE
LESSONS OF THE PAST, IT IS IMPORTANT THAT WE GO BACK TO BASICS. IT IS
IMPORTANT THAT WE UNDERSTAND THE FUNDAMENTAL REASONS WHY THE WEST
TRIUMPHED IN THE COLD WAR; WHY THE UNITED STATES IS ENGAGED IN THE
WORLD; WHY WE SHOULD STAY ENGAGED IN THE FACE OF PRESSURE AND
TEMPTATION TO WITHDRAW FROM IT.
FIRST AND FOREMOST, WE SHOULD BE CLEAR IN OUR MINDS THAT THE WEST'S
TRIUMPH IN THE COLD WAR WAS NOT SIMPLY A VICTORY OF WESTERN POLICIES OR
POWER; FUNDAMENTALLY IT WAS A VICTORYOF WESTERN VALUES. ITS CORE IS
OUR COMMITMENT TO THE FREEDOM OF THE INDIVIDUAL. BASED ON A RESPECT
FOR PRIVATE PROPERTY AND THE INTRINSIC WORTH OF THE INDIVIDUAL, THIS
COMMITMENT HAS LIMITED THE POWER OF THE STATE, AND UNLEASHED THE
ENERGIES AND TALENTS OF PEOPLE AROUND THE WORLD. JOINED WITH OUR
6
SOCIETIES' VISIBLE SUCCESS IN RECONCILING LIBERTY WITH ORDER AND
OUR COMMITMENT TO OPEN MARKETS AS THE SOURCE OF UNPRECEDENTED
PROSPERITY, THE PROMISE OF FREEDOM HAS PROVED IRRESISTIBLE.
AT THE SAME TIME, WE MUST RECOGNIZE THAT THE COST OF LIBERTY IS
VIGILANCE. AS HISTORY HAS REPEATEDLY DEMONSTRATED, CONFLICT CANNOT BE
DETERRED BY KIND WORDS OR GOOD INTENTIONS; LIBERTY MUST BE DEFENDED.
IN THE EUPHORIA OF COLD WAR VICTORY, WE CANNOT FORGET THAT THE DEFENSE
OF LIBERTY WILL REQUIRE A NON-GOING COMMITMENT OF HUMAN AND
FINANCIAL RESOURCES. NOR SHOULD WE PRESSUME, AS SOME DO, THAT OUR
ALLIANCES AND GLOBAL RESPONSIBLITIES ARE A THING OF THE PAST.
THERE ARE SOME TODAY WHO ARGUE THAT, WITH THE COLLAPSE OF
COMMUNISM, WE SHOULD LAY DOWN THE BURDEN AND RESPONSIBILITIES OF
GLOBAL LEADERSHIP AND "COME HOME." THERE ARE MANY REASONS WHY WE
ARE ENGAGED IN THE WORLD AND WHY WE SHOULD STAY ENGAGED; BUT SIMPLY
PUT, IT IS BECAUSE WE HAVE INTERESTS, ECONOMIC, POLITICAL AND SECURITY
INTERESTS THAT ARE GLOBAL, AND WHICH DIRECTLY AFFECT THE WELL-BEING OF
OUR COUNTRY AND PEOPLE.
7
THE WORLD WE LIVE IN TODAY IS AN INTERDEPENDENT WORLD, OUR
PROSPERITY TIED TO EVENTS AND ECONOMIES ACROSS THE GLOBE. IN AN AGE OF
CNN, INSTANTANEOUS CAPITAL FLOWS, BURGEONING INTERNATIONAL
INVESTMENT, AND GLOBAL OPERATING STRATEGIES AND PRODUCTION PROCESSES,
THE BORDER BETWEEN DOMESTIC AND FOREIGN ECONOMIES, BETWEEN FOREIGN
AND DOMESTIC AFFAIRS GROWS INCREASINGLY TRANSPARENT.
THIS INTERDEPENDENCE IS OF DIRECT AND IMMEDIATE BENEFIT TO OUR WELL-
BEING. SINCE 1950, THE PERCENTAGE OF U.S. GNP DERIVED FROM EXPORTS HAS
INCREASED ALMOST TENFOLD - -- FROM 1.5% TO 12% OF OUR GNP LAST YEAR.
OVER THAT SAME PERIOD, THE DOLLAR VALUE OF U.S. EXPORTS HAS SKYROCKETED
SOME 4000 PERCENT FROM $10.3 BILLION IN 1950 TO $400 BILLION IN 1990.
YET ANOTHER SIGNIFICANT STATISTIC IS THE GROWTH IN EMPLOYMENT RELATED
TO EXPORTS: IN 1990, MORE THAN SEVEN MILLION AMERICANS WORKED IN JOBS
SUPPORTED BY EXPORTS, AN INCREASE OF TWO MILLION SINCE 1986. IN
MANUFACTURING ALONE, ONE IN SIX JOBS IS NOW DIRECTLY OR INDIRECTLY
RELATED TO EXPERTS.
8
THERE IS ANOTHER REASON FOR ENGAGEMENT -- LEADERSHIP. LOOKING BACK
OVER THE TWENTY-YEAR SPAN 1919-1939, WHEN THE UNITED STATES STOOD AS
THE WORLD'S DOMINANT ECONOMIC FORCE, OUR INTERNATIONAL LEADERSHIP
WAS, TO PUT IT CHARITABLY, INCONSTANT. I WOULD NOT ARGUE THAT OUR
LEADERSHIP ALONE COULD HAVE STAVED OFF THE SECOND WORLD WAR. BUT I
WOULD ASSERT THAT OUR POST-WAR LEADERSHIP HIGHLIGHTS THE FACT THAT
THE INTERNATIONAL SYSTEM FUNCTIONS BEST WHEN INTERNATIONAL LEADERS
DO IN FACT LEAD.
THIS, I BELIEVE, IS TRUE TODAY, AND IT WILL BE TRUE TOMORROW. AS IN THE
CREATION OF THE INTERNATIONAL ECONOMIC ORDER AT BRETTON WOODS,
DURING THE CRISES OF THE COLD WAR,AND, MOST RECENTLY, IN THE PERSIAN
GULF, THE WORLD LOOKS TO THE UNITED STATES FOR LEADERSHIP. THE SIMPLE
FACT IS THAT LEADERS MUST LEAD.
TODAY THE UNITED STATES STANDS AS THE WORLD'S PREEMINENT POWER. WE
ARE THE ONLY COUNTRY WITH ALL THE INSTRUMENTS OF POWER -- POLITICAL,
ECONOMIC, AND MILITARY-- THE ONLY COUNTRY WITH THE ABILITY TO INFLUENCE
EVENTS ACROSS THE GLOBE. IF WE ARE THE SINGLE SUPERPOWER - -- AN EXAMPLE
9
TO MANY, A DETERRENT TO OTHERS, WE ARE A SUPERPOWER IN AN INTER-
DEPENDENT WORLD.
HOWEVER, ENCOURAGED WE MAY BE WITH THE RECENT TURN OF EVENTS, WE
MUST AVOID ANY SENSE OF NATIONAL TRIUMPHALISM. WE MUST REMEMBER
THAT THE WEST'S VICTORY IN THE COLD WAR WAS THE VICTORY OF AN ALLIANCE
AND OF LIKE-MINDED COUNTRIES WHO COMBINED TO CONTAIN THE TYRANNY OF
COMMUNISM.. IN ESSENCE, WE ARE THE WORLD'S PREEMINENT POWER BECAUSE
OUR ALLIES AND FRIENDS LOOK TO US FOR LEADERSHIP WHEN DEFENDING
SHARED SECURITY INTERESTS AND, WE, IN TURN, WILL LOOK TO THEM TO ASSUME
GREATER RESPONSIBILITIES AND LEADERSHIP IN SHAPING THE NEW
INTERNATIONAL ORDER.
THOUGH THE CHALLENGE IS GREAT, I AM OPTIMISTIC THAT, WORKING
TOGETHER, IT WILL BE POSSIBLE FOR THE UNITED STATES, OUR ALLIES, AND LIKE-
MINDED FRIENDS TO BUILD A NEW INTERNATIONAL ORDER. WE WILL DO SO
PRAGMATICALLY AND INCREMENTALLY, REMAINING TRUE TO OUR ENDURING
INTERESTS AND THE FUNDAMENTAL VALUES THAT LED US TO VICTORY IN THE
COLD WAR.
10
THUS, EVEN AT A GREAT DISTANCE, WE CAN SEE THE OUTLINES OF THE NEW
INTERNATIONAL ORDER WE WANT TO BUILD. WHAT WILL IT LOOK LIKE? YOU
ASK. LET ME TRY TO ANSWER. FIRST, IT SHOULD BE AN ORDER OF FREE NATIONS,
SHARING A COMMITMENT TO DEMOCRACY AND HUMAN RIGHTS. AS WE HAVE IN
CENTRAL AMERICA, IN EASTERN EUROPE, IN ASIA, IN THE SOVIET UNION, AND
AROUND THE WORLD, WE WILL PROMOTE OUR VALUES OF POLITICAL AND
ECONOMIC FREEDOM, BOTH BECAUSE WE BELIEVE IN THEM AND BECAUSE THEY
ENHANCE OUR OWN SECURITY. AS THE PRESIDENT AND SECRETARY OF STATE
HAVE MADE CLEAR WE WILL WORK WITH POLITICAL AND ECONOMIC REFORMERS
WHEREVER WE FIND THEM.
IT SHOULD BE AN ORDER BASED ON AN OPEN INTERNATIONAL ECONOMIC
SYSTEM. THE POST-WAR GATT SYSTEM OF INTERNATIONAL TRADE HAS
GENERATED UNPRECDENTED ECONOMIC GROWTH AND RAISED STANDARDS OF
LIVING ACROSS THE GLOBE. AS IN THE URUGUAY ROUND, OUR OBJECTIVE SHOULD
BE EVEN GREATER LIBERALIZATION.
11
WE MUST NOT FORGET THE LESSONS OF THE 1930S. WHILE SENATOR SMOOT
AND CONGRESSMAN HAWLEY DID NOT CREATE THE GREAT DEPRESSION, THE
LEGISLATION THAT BEARS THEIR NAMES AND SIMILAR POLICIES THROUGHOUT THE
INDUSTRIAIZED WORLD DID MUCH TO DEEPEN AND PROLONG IT. THE
DEPRESSION, IN TURN, PROVIDED A BREEDING GROUND FOR FASCISM, AND LEST
WE FORGET, LENT A DESPARATELY NEEDED BOOST TO THE FORTUNES OF
COMMUNIST PARTIES WORLDWIDE. IT SAPPED THE SELF-CONFIDENCE OF FREE
NATIONS, TIPPED THE BALANCE AGAINST DEMOCRATIC FORCES WORLDWIDE, AND
EMBOLDENED THE ENEMIES OF THE HUMAN SPIRIT. IN MANY WAYS, IT COULD BE
SAID THAT ONLY NOW ARE WE RECOVERING FROM SOME OF THESE
CONSEQUENCES, MORE THAN SIXTY YEARS LATER.
THIS IS WHERE OUR FRIENDS AND ALLIES, WHO SUFFERED so MUCH FROM
THE CONSEQUENCES OF THE 1930'S AND HAVE so BENEFITED FROM THE GATT
SYSTEM, NEED TO STEP UP TO LEADERSHIP IN THEIR OWN RIGHT. WE ALL NEED TO
RECALL THAT THE SOLUTION TO TRADE IMBALANCES IS NOT PROTECTIONISM, BUT
A GLOBAL OPENING OF MARKETS AND AN EXPANDING VOLUME OF WORLD TRADE.
THIS NEW WORLD WILL NOT, OF COURSE, BE A UTOPIA. THE COLD-WAR THREAT
12
OF DELIBERATE, MASSIVE NUCLEAR ASSAULT IS GONE, BUT THE THREAT OF
NUCLEAR ATTACK, EITHER ACCIDENTAL OR PREMEDITATED, HAS NOT
DISAPPEARED. NUCLEAR COMMAND AND CONTROL ARRANGEMENTS BETWEEN
MOSCOW AND THE NEWLY INDEPENDENT REPUBLICS REMAIN DISTURBINGLY
UNCLEAR. AND IN ASIA, ON THE KOREAN PENINSULA, IN THE MIDDLE EAST,
AND IN AFRICA, THE PROLIFERATION OF NUCLEAR, CHEMICAL, AND BIOLOGICAL
WEAPONS THREATENS THE SECURITY OF ALL OF US IN THE EMERGING NEW ORDER.
DESPITE THE END OF THE COLD WAR, AND PERHAPS IN PART BECAUSE OF
IT, THE WORLD TODAY IS A VERY UNCERTAIN PLACE. WE SHOULD NOT, AS
SECRETARY OF DEFENSE DICK CHANEY RECENTLY CAUTIONED THE AMERICAN
POLITICAL SCIENCE ASSOCATION, BE MESMENIZED BY EVENTS OF THE MOMENTS.
WE NEED A LONG-TERM SECURITY STRATEGY, NOT ONE DRIVEN BY THE EVENTS OF
THE DAY, HOWEVER, FAVORABLE OR UNFAVORABLE. LIKEWISE, LONG-STANDING
NATIONAL AND ETHNIC RIVALRIES ARE LIKELY TO RE-EMERGE. THE DANGERS OF
SUCH CONFLICTS TO OUR VITAL SECURITY INTERESTS SHOULD NOT BE DISCOUNTED.
FINALLY, IT SHOULD BE A WORLD IN WHICH THE INTERNATIONAL COMMUNITY
IN UNITY WILL RESPOND TO ACTS OF AGGRESSION. OUR EXPERIENCE IN THE GULF
13
BOTH OFFERS CAUTIOUS OPTIMISM IN THIS REGARD AND UNDERSCORES THE SINE
QUA NON OF UNITED STATES LEADERSHIP.
AT ALL TIMES, WE MUST BEAR IN MIND THAT THE NEW ORDER STANDS TODAY AS
SOMETHING WE ASPIRE TO AND MUST WORK TOWARD. WE NEED TO REMAIN
MINDFUL BOTH OF THE OPPORTUNITIES AND POTENTIAL DANGERS WE FACE. WE
SHOULD NEITHER DISCOUNT THE DANGERS NOR SHRINK FROM THE TASK.
IN THIS CONTEXT, THAT OF THE EMERGING NEW ORDER, I WOULD LIKE TO OFFER
SOME THOUGHTS ON ASIA. LIKE THE WORLD AT LARGE, ASIA TOO IS MARKED BY
CHANGE, CONTINUITY, AND UNCERTAINTY.
AS IN EUROPE, THE PAST TWO YEARS IN ASIA HAVE WITNESSED TRULY HISTORIC
EVENTS: THE FIRST MEETING BETWEEN THE PRESIDENTS OF THE REPUBLIC OF
KOREA AND THE USSR IN SAN FRANCISCO IN 1989; AND THE SUBSEQUENT SOVIET
DECISION TO RECOGNIZE THE GOVERNMENT OF THE REPUBLIC OF KOREA.
MONGOLIA IS MOVING TOWARD DEMOCRACY AND MARKET-ORIENTED
ECONOMIC REFORM. WE SEE THE SOVIET NAVY MOVING FROM CAM RANH BAY,
AND, MOST RECENTLY, THE SIMULTANEOUS ENTRY INTO THE UNITED NATIONS OF
BOTH THE REPUBLIC OF KOREA AND THE PEOPLE'S DEMOCRATIC REPUBLIC OF
14
KOREA. YET, OVERALL, CHANGE IN ASIA HAS BEEN FAR MORE MODEST,
AND LESS FUNDAMENTAL THAN, IN EUROPE.
THE REGION CONTINUES TO TROUBLED BY LEGACIES OF THE COLD WAR. THE
KOREAN PENINSULA, STILL POLITICALLY DIVIDED ALONG THE 38TH PARALLEL,
STANDS AS THE MAJOR FLASH POINT IN EAST ASIA. KIM IL SUNG'S REGIME
CONTINUES TO DENIGRATE THE LEGITIMACY OF THE REPUBLIC OF KOREA AND HAS
YET TO RENOUNCE THE USE OF FORCE AS A MEANS OF REUNIFYING THE PENINSULA.
AS A RESULT, TWO MODERN AND POWERFUL ARMIES STAND POISED ALONG THE
DMZ. THIS UNSTABLE SITUATION IS EXACCERBATED BY THE NORTH'S FAILURE TO
LIVE UP TO ITS SELF-ASSUMED INTERNATIONAL OBLIGATION TO SIGN AND
IMPLEMENT AN IAEA SAFEGUARDS AGREEMENT, BY ITS EFFORTS TO DEVELOP A
NUCLEAR REPROCESSING CAPABILITY, AND BY THE ATTENDANT DANGER OF
NUCLEAR PROLIFERATION ON THE PENINSULA.
ALSO IN NORTHEAST ASIA, JAPANESE-SOVIET RELATIONS REMAIN TROUBLED BY
THE SOVIET UNION'S ILLEGAL OCCUPATION OF JAPAN'S NORTHERN TERRITORIES.
ALTHOUGH WE ARE ENCOURAGED BY INDICATIONS THAT THE USSR AND THE
RUSSIAN REPUBLIC ARE DEMONSTRATING AN INTEREST IN RESOLVING THE
15
NORTHERN TERRITORIES ISSUE, THIS DISPUTE, FORTY-SIX YEARS AFTER THE END OF
THE SECOND WORLD WAR, CONTINUES TO PREVENT THE CONCLUSION OF A PEACE
TREATY BETWEEN TOKYO AND MOSCOW AND THE FULL NORMALIZATION OF THEIR
RELATIONS.
IN SOUTHEAST ASIA, THE PROSPECTS FOR A JUST AND DURABLE SETTLEMENT OF
THE CONFLICT IN CAMBODIA ARE IMPROVING, DUE IN LARGE PART TO THE
PERSEVERANCE AND STRENUOUS DIPLOMATIC EFFORTS OF INDONESIA'S FOREIGN
MINISTER, ALI ALATAS, WHOM I HOLD IN HIGH REGARD AS A FRIEND AND
DIPLOMAT. TO THE EXTENT THAT THE CAMBODIAN PARTIES ACCEPT THE PERM
FIVE PLAN, WITH ITS STRONG U.N. ROLE AND EMPHASIS ON PROPERLY PREPARED
AND MONITORED ELECTIONS, WE HAVE A CHANCE TO BRING THIS CONFLICT TO A
CLOSE. TO THE EXTENT THAT THEY DEVIATE FROM IT, WE SHOULD BE CONCERNED
BOTH ABOUT THE STAYING POWER OF ANY SETTLEMENT AND THE PROSPECTS FOR
STABILITY IN INDOCHINA.
UNCERTAINTIES ALSO ABOUND IN ASIA. IN BEIJING, A LEADERSHIP TRANSITION IS
APPROACHING, ONE WHOSE OUTCOME COULD SIGNIFICANTLY ALTER THE ENTIRE
ASIAN SECURITY ENVIRONMENT. CHINA'S POLICIES TOWARD TAIWAN AND HONG
16
KONG CONTINUE TO GIVE CAUSE FOR CONCERN. LIKEWISE, NORTH KOREA WILL
FACE AN UNPRECEDENTED TRANSFER OF POWER ON THE PASSING OF KIM IL SUNG;
WE MUST BE PREPARED TO DEAL WITH CONTIGENCIES THAT COULD RANGE FROM
IMPLOSION TO EXPLOSION AS A RESULT OF DEVELOPMENTS IN PYONGYANG. WE
ALSO MUST BEAR IN MIND THAT, DESPITE THE POLITICAL TRANSFORMATION IN
MOSCOW, THE SOVIET MILITARY PRESENCE IN ASIA IS SIGNIFICANT. AND, GIVEN
THE GLOBAL DIFFUSION OF TECHNOLOGY, WE CANNOT OVERLOOK THE
DANGERS OF PROLIFERATION ACROSS THE ENTIRE REGION OF THE WEAPONS OF
MASS DESTRUCTION.
AGAINST THIS BACKGROUND OF CHANGE, CONTINUITY, ANDUNCERTAINTY, I
WOULD LIKE TO HIGHLIGHT UNITED STATES'INTERESTS IN ASIA, TO ANSWER THE
QUESTIONS WHY WE ARE THEREAND WHY WE ARE GOING TO STAY THERE.
AS WE LOOK TO THE FUTURE, THE PAST PROVIDES A PATTERN OF REMARKABLE
CONSISTENCY IN OUR APPROACH TO ASIA. SINCE 1784, WHEN THE MERCHANT SHIP
"EMPRESS OF CHINA" SAILED FROM NEW YORK BOUND FOR CANTON, THE UNITED
STATES HAS PURSUED AN OPENC DOOR STRATEGY TOWARD THE REGION:
EQUALITY OF COMMERCIAL OPPORTUNITY -- "A FAIR FIELD AND
17
NO FAVOR"; ANDA BALANCE OF POLITICAL INTERESTS TO PREVENT THE
DOMINATION OF THE REGION BY ANY SINGLE POWER.
OUR ECONOMIC INTERESTS IN THE ASIA-PACIFIC REGION
ARE LARGE AND GROWING. TODAY, THE VALUE OF TRANS-PACIFIC TRADE
EXCEEDS $300 BILLION ANNUALLY, ACCOUNTING FOR 37% OF OUR TRADE
WORLDWIDE. WE CURRENTLY EXPORT MORE TO MALAYSIA THAN TO THE SOVIET
UNION, MORE TO INDONESIA THAN TO ALL OF EASTERN EUROPE, MORE TO
SINGAPORE THAN TO SPAIN OR ITALY. THROUGHOUT THE REGION, AMERICAN
PRIVATE SECTOR INVESTMENT STANDS AT, OR NEAR, AN ALL TIME HIGH.
TOGETHER THE UNITED STATES AND JAPAN ACCOUNT FOR 40% OF THE WORLD'S
GNP. ACROSS THE UNITED STATES, AMERICANS BENEFIT, IN EMPLOYMENT,
INVESTMENT, AND CONSUMER GOODS, FROM THE STRENGTH OF OUR ECONOMIC
RELATIONS WITH ASIA.
AS IN EUROPE AND CENTRAL AMERICA, so TOO IN ASIA WE HAVE A VESTED
INTEREST IN SUPPORTING THOSE WHO SHARE OUR POLITICAL VALUES, IN
SUSTAINING DEMOCRATIC GOVERNMENT WHEREVER IT EXISTS AND HELPING
THOSE WHO ARE WORKING TOWARD GREATER DEMOCRACY. OVER THE PAST
18
DECADE, WE HAVE BEEN ENCOURAGED BY EMERGENCE OF POPULARLY ELECTED
GOVERNMENTS IN THE PHILIPPINES, THE REPUBLIC OF KOREA, AND MONGOLIA,
AND WE LOOK FORWARD TO THE COMING PRESIDENTIAL ELECTIONS IN THE
PHILIPPINES AND THE REPUBLIC OF KOREA.
WE RECOGNIZE THAT DEMOCRACY MAY SUFFER SETBACKS, AS IT HAS IN THE
REGION, BUT WE ARE CONFIDENT IN ITS ULTIMATE SUCCESS. AGAIN AND AGAIN,
WE HAVE SEEN DEMOCRACY PREVAIL. AND, AS OUR VALUES TAKE EVEN DEEPER
ROOT IN THE REGION, so TOO WILL OUR INTERESTS AND ENGAGEMENT.
WE ALSO HAVE ENDURING SECURITY INTERESTS IN THE REGION, STARTING WITH
OUR STRONG NETWORK OF BILATERAL ALLIANCES. THAT ALLIANCE STRUCTURE IS
AS VALID TODAY AS IT WAS AT THE HEIGHT OF THE COLD WAR.
THOUGH THE SOVIET THREAT IS RAPIDLY RECEEDING, THE FACT IS THAT THE
CHANGES IN THE SOVIET UNION HAVE NOT TRANSFORMED THE SECURITY
SITUATION IN ASIA AS DRAMATICALLY AS THEY HAVE TRANSFORMED THE
EUROPEAN LANDSCAPE.
19
MOREOVER, THE SECURITY SITUATION IN THE PACIFIC IS MORE COMPLEX AND
MULTI-POLAR THAN IN EUROPE, AND OUR SECURITY INTERESTS REFLECT THIS. IN
ADDITION TO OUR MOST WIDELY RECOGNIZED MISSION OF DETERRING THE
SOVIET UNION, WE HAVE ALSO DETERRED THE OUTBREAK OF ANOTHER WAR ON
THE KOREAN PENINSULA.
MORE BROADLY, OUR PRESENCE HAS CONTRIBUTED TO PEACE AND STABILITY
ACROSS THE ENTIRE REGION, BY PROVIDING BALANCE AND INSURING THAT NO
SINGLE STATE ASSUMED A PREDOMINENT MILITARY POSITION. IN THE FUTURE,
THIS LATTER ROLE -- THE ROLE OF REGIONAL BALANCER, HONEST BROKER, AND
ULTIMATE SECURITY GUARANTOR - WILL ASSUME GREATER RELATIVE
IMPORTANCE. LET ME MAKE THIS CLEAR -- WE ARE NOT DEFINING "NEW"
INTERESTS TO JUSTIFY UNITED STATES ENGAGEMENT IN A POST COLD-WAR
WORLD, BUT SIMPLY RETURNING TO THE HISTORICAL ROOTS OF OUR INTERACTION
WITH ASIA.
IF SUCH BE OUR INTERESTS, WHAT WILL BE OUR AGENDA?
I WOULD BEGIN WITH A SIMPLE, UNQUALIFIED, UNEQUIVOCAL STATEMENT: THE
20
UNITED STATES IS COMMITTED TO THE SPREAD OF DEMOCRATIC VALUES
THROUGHOUT THE REGION. WE WILL NOT FORCE OUR VALUES ON OTHERS, BUT
WE WILL SUPPORT THOSE WHO SHARE THEM WITH US.
OUR ECONOMIC AGENDA IN ASIA IS IN SOME WAYS FOCUSED ON EVENTS ON THE
OTHER SIDE OF THE WORLD, ON THE SUCCESS OF THE URUGUAY ROUND OF GATT
TALKS. A SUCCESSFUL CONCLUSION IS VITAL IF WE ARE TO CONTINUE TO EXPAND
GLOBAL TRADE AND THE WEALTH OF THE GLOBALECONOMY. IT IS ALSO VITAL IF
WE ARE TO PREVENT THE EMERGENCE OF INWARD-LOOKING, PARTICULARIST,
TRADING-BLOCS, WHICH, I AM AFRAID, WOULD FOLLOW A FAILURE IN THE
URUGUAY ROUND. THIS, IN TURN, COULD HAVE MAJOR SECURITY IMPLICATIONS
FOR THE EMERGING INTERNATIONAL ORDER AND OUR SECURITY INTERESTS.
IT WOULD BE A TRAGEDY IF WE WERE TO ALLOW THE WORLD ECONOMY TO
CONTRACT INTO REGIONAL TRADING-BLOCS, A EUROPEAN BLOC, AN AMERICAN
BLOC, AND AN ASIAN BLOC. IT WOULD BE INCREASINGLY DIFFICULT FOR ANY
ADMINISTRATION IN WASHINGTON TO CONVINCE THE AMERICAN PUBLIC TO
SUPPORT AN AMERICAN SECURITY PRESENCE WHERE IT IS DENIED ECONOMIC
ACCESS. IN THE BRIGHT PROMISE OF THE EMERGING NEW ORDER, A BREAKDOWN
21
OF THE GATT TRADING SYSTEM IS WORST-CASE SCENARIO WE MUST MAKE EVERY
EFFORT TO AVOID.
AS FOR OUR SECURITY AGENDA, WE WILL REMAIN ENGAGED IN ASIA.
ACCORDINGLY, WE WILL MAKE EVERY EFFORT TO STRENGTHEN OUR BILATERAL
SECURITY RELATIONSHIPS, WITH PARTICULAR EMPHASIS ON THE U.S.-JAPAN
ALLIANCE. WE DO NOT SLIGHT OUR OTHER ALLIES, AUSTRALIA, THE REPUBLIC OF
KOREA, THE PHILIPPINES AND THAILAND, WHEN WE SPEAK OF THE PRIMACY OF
OUR ALLIANCE WITH JAPAN; THEY AND OUR FRIENDS THROUGHOUT THE REGION
SEE IT AS WE DO -- THE CORNERSTONE OF STABILITY AND SECURITY IN THE ASIA-
PACIFIC REGION, AND THE ANCHOR OF OUR FORWARD-DEPLOYED SECURITY
PRESENCE.
AT THE SAME TIME, RECOGNIZING THE CHANGES IN THE POST-COLD WAR
SECURITY ENVIRONMENT, WE WILL ADJUST OUR SECURITY PRESENCE TO MATCH
EMERGING STRATEGIC REALITIES. THE GROWINGSTRENGTH OF OUR ASIAN ALLIES
MAKES IT POSSIBLE FOR THEM TO ASSUME GREATER RESPONSIBILITES. AND THE
BUILDING OF MORE RECIPROCAL, MORE MATURE SECURITY RELATIONSHIPS WILL
MAKE THEM MORE SUSTAINABLE OVER TIME. THIS IS IN OUR MUTUAL INTEREST.
22
A WORD HERE ABOUT THE PHILIPPINES. IN OUR APRIL 1990 REPORT TO THE
CONGRESS ON THE EAST ASIA STRATEGY INITAITIVE, WE MADE CLEAR OUR
INTENTION "TO ATTMEPT TO RETAIN OUR BASING RIGHTS IN THE PHILIPPINES,
RECOGNIZING THAT OUR PROSPECTS ARE UNCERTAIN." THAT IS STILL OUR
INTENTION. AND, IF IT MEETS WITH THE APPROVAL OF THE PHILIPPINE PEOPLE,
WE WILL MAKE EVERY EFFORT WITH OUR CONGRESS TO REMAIN.
WHATEVER THE FINAL OUTCOME IN MANILA, THE ON-GOING ADJUSTMENTS IN
OUR SECURITY PRESENCE SHOULD NOT BE READ AS A DESIGN FOR AMERICAN
DISENGAGEMENT FROM ASIA. EVEN AS WE ADJUST OUR POSITION, WE ARE
LOOKING FOR WAYS TO ENHANCE AND SUSTAIN OUR PRESENCE THROUGHTOUT
THIS VAST REGION.
WE ARE WELL AWARE OF THE SECURITY CONSEQUENCES OF EVEN THE
PERCEPTION OF A UNITED STATES WITHDRAWAL FROM THE REGION. WHAT WE
HAVE BEEN DOING, THROUGH OUR EAST ASIA STRATEGY INITIATIVE, IS DESIGNED
TO INSURE OUR ENGAGEMENT, TO MAKE IT MORE SUSTAINABLE. OUR RECENTLY
CONCLUDED ACCESSAGREEMENT WITH SINGAPORE IS A CASE IN POINT. GIVEN
23
OUR SIGNIFICANT INTERESTS IN THE REGION, UNITED STATES' SECURITY
ENGAGEMENT IS A VITAL NATIONAL INTEREST.
THIS DEFINITION OF VITAL INTEREST, OF U.S. INTERNATIONAL
ENGAGEMENT BROADLY DEFINED IS, WITH THE COLLAPSE OF COMMUNISM,
NOW BECOMING A MATTER OF PUBLIC POLICY DEBATE. JUST TWO WEEKS AGO,
PAT BUCHANAN, A CONSERVATIVE'S CONSERVATIVE, ECHOED GEORGE
McGOVERN'S 1972 "COME HOME, AMERICA" CALL IN THE SUNDAY OP-ED PAGE OF
THE WASHINGTON POST. EVEN CENTRIST FIGURES SUCH AS THE EDITOR OF
FOREIGN AFFAIRS HAVE CAUTIONED AGAINST THE COSTS OF UNITED STATES'
INTERNATIONAL ENGAGEMENT.
I WOULD LIKE TO CLOSE TONIGHT WITH SOME BRIEF REMARKS ON THIS TOPIC,
DRAWING ON THE THEMES I HAVE TRIED TO ARTICULATE IN THIS ADDRESS, THEMES
OF INTEREST, INTERDEPENDENCE, AND LEADERSHIP.
MY STARTING POINT IS PRESENT-DAY REALITY -- THE UNITED STATES AS THE
WORLD'S PREEMINENT POWER. IT IS BASED ON PRESENT-DAY ECONOMIC REALITY
-- GLOBAL INTERDEPENDENCE. AND IT IS BASED ON THE GLOBAL NATURE OF OUR
INTERESTS, ECONOMIC, POLITICAL, AND SECURITY. MY END POINT IS THE POST-
24
COLD WAR, EMERGING NEW INTERNATIONAL ORDER -- OUR BRIGHT HOPES FOR A
BETTER WORLD IN THE NEW CENTURY.
THE UNITED STATES CANNOT, NOR WILL THE WORLD OR OUR INTERESTS ALLOW
US, TO ESCAPE THE INESCAPABLE REPSONSIBILITY OF LEADERSHIP. AT THE
ENTRANCE TO OUR NATIONAL ARCHIVES IN WASHINGTON, THE MUSE OF HISTORY
CAUTIONS US THAT "THE PAST IS PROLOGUE." THERE ARE TWO PASTS IN THIS
CENTURY THAT WE, AS AMERCANS, SHOULD BE CONSCIOUS OF, THE PAST OF THE
INTER-WAR YEARS, 1919-41 AND THE POST-1945 PAST - -- ONE IN WHICH WE
ESCHEWED LEADERSHIP AND ONE IN WHICH WE EMBRACED IT.
TO ME, THE CONCLUSION IS OBVIOUS: TODAY'S WORLD IS A BETTER PLACE
BECAUSE OF AMERICAN ENGAGMENT AND LEADERSHIP. THE EMERGING NEW
INTERNATIONAL ORDER WILL BE A BETTER PLACE, IF WE REMAIN ENGAGED AND
CONTINUE TO LEAD. AS THE WORLD'S PREEMINENT POWER, IT IS IN OUR INTEREST
TO LEAD. WE LAY DOWN THE RESPONSIBILITES OF LEADERSHIP AT OUR OWN
PERIL.
TO THOSE WHO WOULD TURN INWARD TOWARD SOME IDYLLIC PAST OF NON-
25
ENGAGEMENT, NON-LEADERSHIP, PERHAPS THOMAS WOLFE SAID IT BEST: "YOU
CAN'T GO HOME AGAIN." WE SHOULD MAKE THIS OUR GUIDE AS WE BUILD A
NEW INTERNATIONAL ORDER.
IF I MAY CLOSE WITH THE WORDS OF A GREAT STATESMAN, WHO FORESAW
MUCH THAT I HAVE TOLD YOU TONIGHT BY SOME 50 YEARS. IN 1943, WINSTON
CHURCHILL POSED THIS CHALLENGE:
ONE CANNOT RISE TO BE IN MANY WAYS THE LEADING COMMUNITY OF
THE CIVILIZED WORLD WITHOUT BEING INVOLVED IN ITS PROBLEMS,
WITHOUT BEING CONVULSED BY ITS AGONIES AND INSPIRED BY ITS
CAUSES. IF THIS HAS BEEN PROVED IN THE PAST, AS IT HAS BEEN, IT WILL
BECOME INDISPUTABLE IN THE FUTURE. THE PEOPLE OF THE UNITED
STATES CANNOT ESCAPE WORLD RESPONSIBILITY.
THANK YOU AND GOOD NIGHT.
NOV
1 '91 17:38
FROM USTR PUBLIC AFFAIRS
PAGE. 017
1991 National Trade Estimate Report on
FOREIGN TRADE
BARRIERS
Office of the United States Trade Representative
8
NOV 1 '91 17:38 FROM USTR PUBLIC AFFAIRS
PAGE. 018
SINGAPORE
In 1990 the U.S. trade deficit with Singapore was $1.8 billion or $223 million higher than in
1989. U.S. merchandise exports to Singapore were $8.0 billion, rising $666 million or 9.1
percent compared to 1989. Singapore was the United States' 12th largest export market in
1990. U.S. imports from Singapore totaled $9.8 billion in 1990 or 9.9 percent higher than in
1989.
The stock of foreign direct investment in Singapore was $2.2 billion in 1989, down $77 million
from 1988. U.S. direct investment in Singapore is largely concentrated in petroleum and
electronics.
1. IMPORT POLICIES
Tariffs
Singapore imposes very few tariffs on imports; 91 percent of imports enter duty-free. However,
Singapore currently maintains tariff bindings on less than one percent of its tariff lines
(non-petroleum trade), in comparison with the United States, which has bound 98 percent of its
tariff lines.
Since 1987 the U.S. government and U.S. companies have pursued elimination of a barrier to
cigarette imports into Singapore. Imported cigarettes are assessed a duty of S$86 per kilo.
Cigarettes manufactured in Singapore are assessed a tax of S$82 per kilo, consisting of an
import duty on tobacco of S$42 per kilo and an excise tax of S$40 per kilo. In practice, the
differential is greater because domestic manufacturers pay import duty on the actual weight of
the tobacco, while the duty on the imported cigarettes applies to the entire cigarette, including
the approximately 15 percent composed of filter and paper. It is not possible to estimate the
increase in U.S. exports from elimination of this barrier.
2. SERVICES BARRIERS
Telecommunications
Singapore's monopoly parastatal telecommunications authority severely limits market access by
U.S. firms. It does so by imposing restrictions on the sale of value-added network services,
through unreasonably high volume-sensitive prices on leased-line data services resold to third
parties, and through its ever-expanding definition of what constitutes "basic services" that the
authority then reserves for its own exclusive provision to the market.
193
NOV
1 '91 17:39
FROM USTR PUBLIC AFFAIRS
PAGE. 019
Singapore
Senior U.S. officials have discussed opening the telecommunications market with Singapore
officials, especially in the context of the imminent privatization of the Telecom Authority. As
yet, however, no progress has been made.
Legal Services
Foreign law firms that set up offices in Singapore to advise clients on U.S. or international law
cannot hire Singaporean lawyers to practice law in Singapore. A locally educated and
accredited lawyer becomes effectively disbarred when he or she goes to work for a foreign
lawyer.
194
NOV
1
91
17:39
FROM USTR PUBLIC AFFAIRS
PAGE. 020
APPENDIX I
MARKET ACCESS BARRIERS IN THE FINANCIAL SERVICE SECTOR
Financial services activities have taken on increasing importance in recent years and so has the
complexity of their analysis. The issues involved transcend cross-border trade and include the
right of establishment, effective market access, national treatment, and equality of competitive
opportunity as well as prudential and supervisory considerations.
Multijurisdictional recognition of prudential supervisory requirements and international
convergence of rules, regulations, and capital standards are among the many other
considerations involved.
Detailed analyses of treatment of U.S. commercial banks and securities firms in foreign markets
have already been undertaken in considerable detail by the Secretary of the Treasury in
collaboration with the Secretary of State, the Office of the Comptroller of the Currency, the
Federal Reserve Board, the Federal Deposit Insurance Corporation, and more recently the
Securities and Exchange Commission. These were presented to Congress in the 1979 National
Treatment Study (originally mandated by the International Banking Act of 1978) and more
recently in updates Congress requested in 1984 and 1986.
Sections 3601-3602 (Financial Reports Act of 1988) of the Omnibus Trade and Competitiveness
Act of 1988 require the Secretary of the Treasury to report on:
"(1) the foreign countries from which foreign financial services institutions have entered into
the business of providing financial services in the United States, (2) the kinds of financial
services which are being offered, (3) the extent to which foreign countries deny national
treatment to United States banking organizations and securities companies and (4) the efforts
undertaken by the United States to eliminate such discrimination."
The report on financial services required by the Financial Reports Act of 1988 was presented to
Congress in December 1990. In addition to the agencies mentioned, the U.S. Department of
Commerce collaborated in this undertaking for the first time.
The report analyzed changes taking place in foreign banking and securities markets with
particular attention to countries where there are significant denials of national treatment. The
result was an extremely comprehensive report covering in detail the overall aspects of banking
and securities markets' treatment of U.S. financial firms in overseas markets.
For example, the 1990 report examined at length the banking and securities markets in Japan
and Korea and provided an analysis of EC financial directives. The full range of activities that
233
NOV 1 '91 17:40 FROM USTR PUBLIC AFFAIRS
PAGE. 021
in any one Korean brokerage may equal up to 40 percent with no single foreign securities firm
owning more than 10 percent.
MALAYSIA
Under the Banking and Financial Institutions Act of 1989, all foreign banks must incorporate
locally by 1994. At this time, the central bank is not permitting new foreign banks to open in
Malaysia and is not allowing existing foreign banks to open additional branch offices. The
central bank considers automated teller machines (ATMs) to be bank branches, so foreign banks
are not permitted to set up ATMs separate from their existing branches. They also are not
permitted to join local ATM networks.
Sixty percent of all bank loans must be provided by Malaysia-incorporated banks, severely
limiting business opportunities for foreign banks.
PHILIPPINES
Banking
Foreign bank branches have been denied entry since 1948. Foreign participation is now limited
to no more than 30 percent (40 percent with presidential approval) of voting stock in existing
domestic banks.
Securities
Only domestically incorporated companies may engage in the securities brokerage business.
However, the government allows majority foreign ownership in this business. A foreign
investor wishing to purchase shares of stock in a domestic corporation is limited by national
ownership requirements.
SINGAPORE
Banking
In addition to a longstanding freeze on the number of full banking licenses granted to foreign
banks, those banks that already have full licenses do not enjoy national treatment. Foreign
banks cannot open branch offices or freely relocate existing branches nor may they operate
off-premise ATM systems.
One U.S. nonbanking institution has been permitted to install two traveler's check dispensing
machines in the transit area of the international airport. Singapore's only electronic banking
network is open only to domestic banks.
237
NOV 1 '91 17:40
FROM USTR PUBLIC AFFAIRS
PAGE 022
In June 1990 Singapore raised the ceiling on foreign ownership of locally incorporated banks
from 20 percent to 40 percent. It also announced that fully licensed foreign banks will be
allowed to introduce home banking services to individuals via telephone and personal computer.
TAIWAN
In July 1989 Taiwan took steps to liberalize its financial markets by adopting an amended
banking law. However, further liberalization measures and movement toward national
treatment are needed. It also permits foreign banks to expand their scope of business to include
both savings and trust/investment businesses and, at least in theory, to establish additional
branches anywhere in Taiwan.
A number of problems remain regarding the treatment of foreign banks in Taiwan and, almost
two years after passage of the amended banking law, U.S. banks have seen little practical
improvement. The Taiwan authorities have acted slowly on applications to establish additional
branches beyond the two (one in Taipei, one in Kaohsiung) to which U.S. banks were formerly
limited. One U.S. bank, however, was allowed to establish an additional branch in Taichung
early in 1991. Domestic banks have extensive networks of branches across the island.
Foreign bank branch capitalization requirements remain onerous, and limits on foreign
exchange transactions discriminate against foreign banks in favor of the "big five" domestic
banks. Although the guidelines for the establishment of branches and representative offices of
foreign banks, as amended on April 12, 1990, allow foreign bank branches to operate
trust/investment businesses, U.S. banks will not be able to take advantage of this because
foreign banks are not allowed to establish wholly-owned subsidiaries in Taiwan. (U.S. banks
may only conduct these activities from subsidiaries.) The credit card processing monopoly
enjoyed by Taiwan's National Credit Card Center is particularly onerous for U.S. banks, which
possess considerable processing capabilities of their own.
U.S. banks in Taiwan estimate that elimination of these restrictions could increase their
aggregate earnings on Taiwan by $25 million to $100 million annually.
Securities
Taiwan has made limited progress in liberalizing its securities market in the past three years. In
February 1990 two U.S. brokerage houses were given approval to open branch offices in Taipei,
and one of them formally opened its branch office in December. In January 1991 ön-shore
transactions of foreign securities became available to local investors. At the same time,
regulations were published to allow foreign institutional investors to invest in Taiwan's stock
market.
However, restrictions on foreign participation in the local stock exchange remain. Foreign firms
are barred from ownership in the Taiwan stock exchange. Total foreign ownership in a local
238
NOV, 1 '91 17:29
FROM USTR PUBLIC AFFAIRS
PAGE. 001
ASIA AND PACIFIC
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C. 20506
Date: n/1
No. Of Pages: 2021
(Excluding cover page)
TO: NAME:
Co./AGENCY:
PHONE #:
FAX #:
Carol Aan has
White House
7750
X6218
FROM:
Sandra Kristoff, AUSTR
(202) 395-3430
Nancy Adams, DAUSTR
(202) 395-4755
Laura Kneale Anderson, South Asia and Pacific
(202) 395-6813
Peter Collins, South East Asia and India
(202) 395-6813
Terence Mulligan, Special Assistant, Asia and Pacific
(202) 395-6813
Tommie Johnson
(202) 395-3430
Diane Parker
(202) 395-6813
FAX #:
(202) 395-3512
CONTACT:
If There are any problems please call: (202) 395-3430, 4755, 6813
SUBJECT:
Surgapore
Resending
-
NOV, 1 '81 17:29
FROM USTR PUBLIC AFFAIRS
PAGE. 002
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
20506
November 1, 1991
NOTE TO CAROL AARHUS
WHITE HOUSE RESEARCH OFFICE
FROM:
Peter Collins PC
Director, Southeast Asian and Indian Affairs
SUBJECT: Material on Singapore
I've attached the following:
Two papers prepared for Ambassador Hills's October 11
meetings in Singapore,
the text of the framework agreement signed on October
11 and USTR's press release, and
sections on Singapore from USTR's annual trade barriers
report to Congress.
Please call me on extension 6813 if you have any questions.
NOV 1 '91 17:29
FROM USTR PUBLIC AFFAIRS
PAGE. 003
SINGAPORE - SCOPE PAPER
CIRCUNSTANCES OF THE TRIP
The purpose of your stop in Singapore is to sign the bilateral
framework agreement, sending a message that the United States
remains vitally interested in its trade and investment ties to
Asia, not just with the Americas. Meetings with senior Singapore
officials will provide a direct exchange of views with the ruling
elite in this small but influential country, while press events
are designed to get your message to the business elite.
PRESS EVENTS: BREAKFAST SPEECH AND "MONEY MIND" AND "BUSINESS
TIMES" INTERVIEWS
Singapore's business leaders will be interested in your views on:
0
U.S. trade policy if the Uruguay Round fails,
the potential for trade blocs and their effect on
Singapore's economy,
U.S. commitment to an economic presence in the Asia-Pacific
region, and
prospects for a bilateral FTA.
MEETING WITH MINISTER OF TRADE AND INDUSTRY AND DEPUTY PRIME
MINISTER LEE HSIEN LOONG
Make the points on market access, services, TRIPs,
antidumping code, TRIMS, and BOP, as noted in the bilateral
Uruguay Round paper.
Minister Lee will raise the possibility of using the framework
agreement as a vehicle for FTA negotiations. You may wish to
respond that:
It would not be helpful to appear to be out in front of our
domestic legal requirements.
Small steps may be the way to go for now: a BIT, an IPR
agreement, or a bilateral agreement on services.
MEETING WITH FINANCE MINISTER RICHARD HU
The embassy recommended this short courtesy call on Minister Hu
so that you could reiterate USG concerns about the lack of
1source: "Singapore As a Model for Development -- Lessons
on Creating an Economic Dynamo" (Embassy Singapore, May 1991).
NOV 1 '91 17:30 FROM USTR PUBLIC AFFAIRS
PAGE. 004
2
openness in the banking and insurance sectors and the need to
respond positively on financial services in the Uruguay Round.
MEETING WITH SENIOR MINISTER LEE KUAN YEW
Minister Lee likely will have thought-provoking views on regional
and global issues, including ASEAN economic integration, ASEAN-
Indochina relations, and the role of economic groupings like the
EC, NAFTA, and APEC.
MEETING WITH PRIME MINISTER GOH CHOK TONG
Prime Minister Goh will host the ASEAN Summit in January 1992.
He may be interested in discussing his vision for Singapore in
the world economy, as part of ASEAN, Southeast Asia, including
Indochina, the Asia-Pacific region, and the Uruguay Round.
THE BILATERAL AGENDA
Trade and investment issues play a relatively small role in
overall bilateral relations with Singapore, primarily due to the
congruence of the two countries' approaches in this area.
Major contentious issues that dominate U.S. trade relations with
other developing countries have been successfully addressed
either unilaterally by Singapore or through bilateral
consultations in the 1980s. The virtual absence of restrictions
on imports of goods and on foreign direct investment are examples
of the former. An example of the latter is the 1987 amendments
to Singapore's copyright law, which were undertaken at the
request of the United States and which effectively shut down the
extensive piracy of audio and video tapes for which Singapore had
been noted.
Compared with other advanced developing countries like Korea and
Taiwan, in Singapore we have the luxury of establishing a
bilateral dialogue based primarily on "big picture" concerns,
including the Uruguay Round and regional economic initiatives,
without major contentious issues like residual import barriers or
ineffective IPR enforcement. Our bilateral objectives --
primarily binding the openness to goods imports and establishing
similar treatment for services -- can be addressed in the Uruguay
Round.
A framework agreement with Singapore has value on its own:
establishing a forum for regular, problem-solving consultations
between important trade and investment partners. The agreement
also can have a demonstration effect on the other ASEAN members
in two ways. First, it can encourage them to request (or, in the
case of the Philippines, more actively use) a similar agreement
and thus from their perspective ensure ongoing senior-level
attention to their concerns. Second, it may prompt the five
NOV
1
'91 17:31 FROM USTR PUBLIC AFFAIRS
PAGE. 005
3
other ASEANs to reinvigorate their intra-ASEAN economic
integration initiatives so that they continue to be prime
beneficiaries of Singapore's openness.
THE ECONOMIC SETTING
After averaging nine percent real economic growth annually for
its 25 years of independence, Singapore had a per capita GNP of
US$13, 107 in 1990 (placing it among the middle tier of OECD
countries), total trade of over three times GNP, inflation far
below the OECD average, and an income distribution among the most
equitable in the world.
The Singapore government made three critical economic policy
decisions at independence. First, facing the political
imperative of creating jobs, it opened up the country completely
to foreign investment. Second, with virtually no industrial
sector to protect, Singapore embraced free trade and
international competition, allowing the market to set prices and
determine who survived. And third, it adapted its incipient
social security program (the Central Provident Fund) to mobilize
massive private savings to develop infrastructure and housing,
giving the populace a stake in Singapore's survival and success.
In addition to these early steps, a number of other factors have
contributed to Singapore's development. Among the most important
have been: the early switch to universal English language
education; the lack of corruption; efficient public investment; a
profitable public sector; placing a priority on education; co-
opting the labor movement; tight political control by the
government; and most importantly, superb economic management --
reflected in perennial budget surpluses.
From the start, Singapore had several unique advantages. It is a
tiny country, has had virtually no agriculture, and its colonial
experience as an entrepot and shipping center meant that early
policy choices caused little dislocation.
Singapore is in the process of reorienting its economy. By the
mid-1980s Singapore had run out of large investment projects as
its infrastructure was basically in place. With its savings rate
still very high and investment falling from over 40 to about 35
percent of GDP, the country has reached the point of structural
current account surpluses. In addition to seeking to shift to
higher value-added products and more capital-intensive means of
production, it wants to move away from overdependence on a single
market (i.e., the U.S.) and toward a greater integration with its
Asian neighbors. Singapore is in the forefront of nations intent
on taking advantage of the tremendous increase of international
direct investment, led in Asia by the Japanese, and it is a
driving force behind the increasing integration of the Southeast
Asian economies on the basis of such investment. Singapore has
NOV 1 '91 17:31
FROM USTR PUBLIC AFFAIRS
PAGE 006
4
now reached the stage where it has the confidence and the track
record to advance its own vision of the region. While Singapore
has thrived under the present multilateral international trade
regime, we believe it will actively pursue bilateral and regional
arrangements that are to its advantage.
Singapore's per capita income is about $12,800, on a par with the
Real
growth
middle range of industrialized countries in the West. Buoyed by
strong exports and domestic demand, real economic growth in 1990
was 8.3 percent. Most observers believe economic growth will
slow to 7 percent in 1991 because of the downturn affecting
Singapore's major trading partners, but Singapore's success in
diversifying its export markets should mitigate the effects of
weaker sales abroad.
Nevertheless, the city-state's economic growth is constrained by
shortages of land and labor. Singapore is looking to its
neighbors to overcome these deficiencies. Prime Minister Goh in
1989 proposed a "Triangle of Growth" linking Singapore, Johor
State in Malaysia, and Riau Province in Indonesia. Plans for
industrial parks in Indonesia's Batam Island under the proposal
are well under way, and some manufacturing firms there have
already begun operations.
Goh envisages expanding the Triangle of Growth concept to include
the much less developed countries of Indochina and Burma in a
"Crescent of Prosperity." Although Singapore prohibits private
investment in Indochina until a Cambodian settlement is reached,
according to the U.S. Embassy, it has encouraged trade with
Vietnam's second-largest non-Communist trading partner, with
bilateral trade totaling more than $700 million in 1990.
To complement these efforts, Singapore has endorsed Malaysian
Prime Minister Mahathir's proposal for an East Asian Economic
Grouping (EAEG), despite opposition to the initiative from its
major trade partners and the rest of ASEAN.
NOV.
1 '.91 17:32
FROM USTR PUBLIC AFFAIRS
PAGE. 007
U.S.-SINGAPORE FRAMEWORK AGREEMENT
OBJECTIVES
Respond to expected queries from Singapore officials regarding
your views on what steps should be taken next under the framework
agreement. B.G. Lee, in particular, will ask whether you favor
negotiation of a free trade agreement under the current fast-
track authority.
SUGGESTED POINTS
Especially pleased we are able to sign the bilateral
framework agreement. Represents a step forward in the U.S.-
Singapore trade dialogue, and I thank you for the personal
attention you gave it.
We've identified four areas for immediate consultations:
intellectual property and services (U.S. agenda) along with
market access and countervailing-antidumping issues
(Singapore agenda). Believe we should instruct our staffs
to work vigorously to craft proposals for bilateral
cooperation in these areas.
:
Proposals could range from taking joint positions on
issues in the Uruguay Round, to establishing a role for
the private sector in our talks, to negotiation of
additional bilateral agreements on specific issues.
I notice there has been speculation in the press that this
agreement is a precursor to a free trade area between us. I
don't believe we should encourage such speculation.
:
The U.S. fast-track authority covering FTA negotiations
is explicit about the steps we need to take, including
close consultation with the Congress before any
negotiations actually take place.
It would not be helpful to create a perception that our
consultations to date are out in front of our domestic
legal requirements.
o
While I would not rule out talking about what a free trade
agreement would entail, I think it would be better for us to
take a series of small steps toward the goal of free trade
rather than one quantum leap.
:
We might want to consider negotiating a bilateral
investment treaty, a bilateral IPR agreement, and a
bilateral agreement to reduce barriers to financial and
professional services. (Note: Treasury is currently
opposed to negotiating a double taxation treaty, an
item of interest to Singapore.)
NOV
1
91
17:32
FROM USTR PUBLIC AFFAIRS
PAGE 008
(IF RAISED) Commerce has the statutory authority for
administering the CVD/AD laws; but I understand your concern
over the costs and administrative burdens associated with
the U.S. domestic review process. I cannot guarantee a
specific Commerce action on a specific case, but I will
endeavor to see that the consultations on this action agenda
item are as comprehensive and sympathetic to Singapore's
concerns as possible.
BACKGROUND
As part of Vice President Quayle's trip to Asia, we (in
conjunction with Singapore trade counterparts) suggested that the
announcement of the start of negotiations on a bilateral
framework agreement would be a welcome result of the Vice
President's meeting with Prime Minister Goh. The press
conference following the meeting confirmed that the two officials
had agreed to move forward on the framework agreement.
Negotiations over the summer produced an agreed document in late
September. Singapore had resisted until the last minute
inclusion of language on worker rights, fearing that this would
open the door to the acceptance of petitions by the AFL-CIO.
Additionally, Singapore had angled for inclusion of language that
would commit the USG to an early warning system on CVD/AD cases.
We rejected that proposal, but tried to meet singapore half-way
by including this issue on the action agenda. The rest of the
document posed no real difficulties.
Singapore's aim in concluding the agreement is to pave the way to
an FTA, which it would like to see concluded before expiration of
our current fast-track authority. We have not yet produced any
economic analysis that would put us in a position to support or
reject this idea; nor have we had any interagency discussion of
the topic. At the same time, however, it could be argued that a
free trade area with Singapore would send a strong signal to
other ASEAN partners about the value of adopting market-oriented
policies. It would be helpful if you left the door open a bit,
perhaps suggesting that if we are able to conclude agreements on
investment or IPR then you would be in a better position to
evaluate more positively the FTA idea.
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us
AGREEMENT BETWEEN THE GOVERNMENT OF
THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE REPUBLIC OF SINGAPORE
/
CONCERNING A FRAMEWORK OF PRINCIPLES AND
PROCEDURES FOR CONSULTATIONS REGARDING TRADE
AND INVESTMENT RELATIONS
The Government of the United States of America and the
Government of the Republic of Singapore (individually a "Party" and
collectively the "Parties"):
1
Desiring to enhance the friendship and spirit of cooperation
between both countries;
2
Desiring to develop further both countries' international trade
and economic interrelationship;
3
Taking into account the participation of both countries in the
General Agreement on Tariffs and Trade (GATT), and noting
that this Agreement is without projudico to the rights and
obligations of the Parties under the General Agreement,
together with its agreements, understandings and other
instruments;
4
Taking into account their commitment to the successful
completion and implementation of the Uruguay Round of
Multilateral Trade Negotiations;
5
Recognizing the importance of promoting a more liberal and
predictable environment for international trade and Investment;
6
Recognizing the benefits to each Party resulting from
increased International trade and investment and that
protectionism would deprive the Parties of such benefits;
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-2-
7
Recognizing the essential role of private investment, both
domestic and foreign, in furthering growth, creating jobs,
expanding trade, improving technology, and onhancing
economic development;
8
Recognizing that foreign direct investment confers positive
benefits on each Party;
9
Recognizing the increased importance of services in their
economies and in international trade;
10
Taking Into account the need to eliminate non-tariff barriers in
order to facilitate greater access to the markets of both
countries;
11
Recognizing the importance of providing adequate and
effective protection and enforcement of intellectual property
rights, and taking account of their commitments undertaken
and to be undertaken in the GATT, and in intellectual property
rights conventions;
12
Noting the common objective of both countries to improve
workers' welfare and provide for better terms and conditions of
employment;
13
Recognizing the desirability of resolving trade and investment
problems as expeditiously as possible;
14
Considering that it would be in their mutual interest to establish
a bilateral mechanism between the Parties for encouraging the
liberalization of trade and investment between them, as well as
for consulting on bilateral trade and investment issues;
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++
10.41
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- 3 - -
To this end, the Parties agree as follows:
ARTICLE 1
The Parties shall establish a United States-Singapore Council on
Trade and Investment (the "Council").
ARTICLE 2
The Council shall be composed of representatives of both Parties.
The Singapore side will be chaired by the Ministry of Trade and
Industry (MTI); and the United States of America's side will be
chaired by the Office of the United States Trade Representative
(USTR). MTI and USTR may be assisted by officials of other
governmental entities as circumstances require.
ARTICLE 3
The Council will meet at such times as agreed by the two Parties,
including, level. where necessary, meetings at the Cabinet or subcabinet
ARTICLE 4
The Parties may seek the advice of the private sector in their
respective countries on matters related to the work of the Council.
Private sector representatives may be asked to participate in Council
meetings whenever both Parties agree that it is appropriate.
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4
ARTICLE 5
The objectives of the Council are as follows:
1
To monitor trade and investment relations and to identify
opportunities for expanding trade and Investment.
2
To hold consultations on specific trade and investment matters
of interest to the Parties and to negotiate agreements where
appropriate.
3
To identify and work toward the removal of impediments to
trade and Investment flows.
ARTICLE 6
1
Either Party may raise for consultation any trade or investment
matter between the Parties. Requests for consultation shall be
accompanied by a written explanation of the subject to be
discussed and consultations shall be held within 30 days of the
request, unless the requesting Party agrees to a later date.
Each Party shall endeavor to provide adequate notification and
an opportunity for consultations before taking actions that
would affect adversely the trade or investment interests of the
other Party.
2
Consultations shall take place initially in the country whose
measure or practice is the subject of discussion.
3
This Article shall be without prejudice to the rights of either
Party under domestic law, the GATT, Its codes, or under any
other instruments to which both countries are Parties.
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- 5
4
In the event that consultations involve a dispute concerning a
trade or investment measure or practice, every effort shall be
made to resolve the dispute at the working level. At any time,
either Party may request that the Issue be reviewed at a higher
level.
5
If resolution is not reached within 30 days following the first
meeting, either Party may refer the dispute to any applicable
dispute resolution procedures under the General Agreement,
its codes or other instruments to which both are Parties. If a
measure is referred to the GATT, consultations under this
Agreement shall be considered to have constituted
consultations under Article XXIII:1 of the GATT or any
preliminary bilateral consultations required as part of any
GATT code dispute settlement procedures.
ARTICLE 7
1
The Council will commence its work by considering those
subjects included in the "Immediate Action Agenda" attached
as an Annex to this Agreement.
2
The Council may establish joint working groups to facilitate the
work of the Council.
ARTICLE 8
This Agreement shall enter into force on the date of its signature by
both Parties.
ARTICLE 9
1
This Agreement shall remain in force unless terminated by
mutual consent of the Partles or by either Party upon six
months written notice to the other Party.
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- 6 -
2
In the event that the Parties decide by mutual consent to
amend this Agreement, such amendments may be done by an
exchange of letters.
3
The Parties agree to prepare a mutually acceptable record of
any agreements reached between them concerning any
specific trade or Investment Issues.
IN WITNESS WHEREOF, the undersigned, being duly authorized by
their respective Governments, have signed this Agreement.
Done in English in duplicate at Singapore this eleventh day of
October, 1991.
Carla A. Hills Lee Hsien Loong
For the Government of the
For the Government of the
United States of America
Republic of Singapore
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Annex
IMMEDIATE ACTION AGENDA
In relation to the Agreement Between the Government of the United
States of America and the Government of the Republic of Singapore
Concerning a Framework of Principles and Procedures for
Consultations Regarding Trade and Investment Relations, the United
States and Singapore confirm the following:
1
They are prepared to commence the work of the Council within
120 days of the signing of the above mentioned Agreement
with an "Immediate Action Agenda" composed of the following
topics:
Anti-dumping and Countervailing Duty Issues
Market Access Issues
Services Issues
Intellectual Property Rights Issues
2
The inclusion of topics on this "Immediate Action Agenda" does
not limit the ability of either Party to raise for consultations
under Article 6 of the Agreement any other issue relating to
trade or investment which might arise in the near term and
requires immediate bilateral consultations, nor prejudice the
raising of new issues in the future.
Carla A. Hills
Lee Hsien Loong
For the Government of the
For the Government of the
United States of America
Republic of Singapore
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OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
20506
91-46
FOR IMMEDIATE RELEASE
Contact: Torie Clarke
Friday, October 11, 1991
Timothy O'Leary
(202) 395-3230
UNITED STATES AND SINGAPORE SIGN TRADE AND INVESTMENT AGREEMENT
United States Trade Representative Carla A. Hills and
Singapore's Minister of Trade and Industry Lee Hsien Loong today
signed a framework agreement establishing a United States-
Singapore Council on Trade and Investment.
The framework agreement consists of a declaration of trade
and investment principles, an agreement to consult on a regular
basis and an initial action agenda for consultations between the
two governments.
The Council's objectives are to monitor trade and investment
and identify opportunities for expansion, to hold consultations
on specific trade and investment matters, to negotiate agreements
where appropriate, and to identify and work toward the removal of
impediments to trade and investment flows.
The agreement comes under the umbrella of the U.S.-ASEAN
Memorandum of Understanding On Trade and Investment signed in
December 1990 in Washington, D.C. by Ambassador Hills and ASEAN
representatives.
-- 30 --