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Stanley O. Roth
Assistant Secretary for East Asian and Pacific Affairs
U.S. Department of State
Presentation to the Council of American Ambassadors
Los Angeles, California, April 4, 2000

Blue Bar rule

The United States' Asia Policy: A National Agenda

Thank you. It is a pleasure to join this honored assembly of Ambassadors. It would be even more of a pleasure if I didn't have Bill Perry and Peter Tarnoff following behind to clean up after anything I say.

Over the past few months, a number of commentators have been considering the impact of the upcoming elections on United States foreign policy. Against that backdrop, I thought there might be some interest in a broad review of U.S. policy in Asia -- what is on our agenda, and how we are advancing our agenda in this final year of President Clinton's term in office.

In February, I discussed the coming year in the Asia Pacific Region at a hearing with the Senate Foreign Relations Committee East Asia and Pacific Subcommittee. In opening the hearing, the chairman, Senator Craig Thomas of Wyoming observed that the new century was beginning with the year of the dragon, a particularly auspicious year for many Asian cultures. He wondered if the prospects for the year were as positive as many had hoped even a year or two ago.

I would suggest, on balance, that Asia's prospects are substantially rosier than we would have hoped a year ago. At this time last year, an overview of the region would have been cast in tones of measured pessimism. The continuing effects of the financial crisis seemed to offer the inevitable prospect of a long and difficult recovery. Talk of a coming Pacific century seemed to be an inconvenient relic of another time. Instead, regional leaders were preoccupied with the consequences of economic crisis and the potential for political instability. Some spoke darkly of a lost generation. Now, that pessimism has largely disappeared in the wake of the surprising economic recovery in most of the region. So I would propose to begin with some comment about the regional economy, acknowledging that many of you have a far better measure of these developments than I do. After that I will briefly review the Washington perspective on some salient developments in countries of particular importance to the U.S.

ECONOMIC RECOVERY

This past year has seen a remarkable recovery from the Asian financial crisis. It was, by any measure, the major regional development of the past year. Two of the countries worst hit by the crisis -- Thailand and the Republic of Korea -- posted robust GDP growth figures of five and ten percent respectively. Other countries, including China and the Philippines, also ended the year with higher GDP growth than had been predicted at the beginning of 1999. Inflation was reduced substantially across the region. With returning growth came renewed optimism.

To be sure, we are not back to pre-crisis economic levels. Clearly there are challenges remaining. The financial crisis was a harsh reminder that economies must be transparent and financial institutions must make lending decisions based on economics, not politics. Market discipline and the rule of law must be strengthened to curb the corruption and cronyism that were responsible, at least in part, for the economic suffering of the recent past. I have heard some Asian leaders and economists ruefully suggest that the recovery may have come too soon, that in some countries the recovery may dissipate the motivation to make structural reforms that are still required to ensure the long-term health of the economy. It seems to me that we must take the opportunity of recovery to accomplish reform while economies are sufficiently strong to absorb the medicine without an adverse reaction.

In addition, workers in a number of countries have yet to regain the standard of living they had enjoyed during the previous boom times. Even in Korea, the fastest recovering economy, unemployment is still higher than it was before the crisis. Where workers have secured new jobs, many are earning less than they did before, while prices have risen. The social safety nets, which were so clearly and painfully absent during the financial crisis, have yet to be put in place in a number of countries. Once again, the challenge is to weave those nets before they are needed for another emergency.

Finally, it should be recognized that there are two wild cards, which could slow or even derail the regional recovery. If U.S. economic growth should falter or Japan's economy take a severe downturn, this could significantly reduce markets and investment sources important to regional recovery.

THE REVIVAL OF REGIONAL INSTITUTIONS

When they faced these economic difficulties, countries in the region quite understandably turned inwards. As their economies have revived, there has been an equally understandable renewal of interest in regional institutions, such as APEC and ASEAN. To cite just one result of that revival, the ASEAN summit in Manila last November provided the occasion for a successful "ten plus three" meeting between ASEAN, China, Japan and Korea. The ten plus three enabled an unstructured dialogue on both economic and security issues that concern both Northeast and Southeast Asian nations.

QUIET GOOD NEWS

With that, let me turn to some of the specific countries and bilateral relationships that have seen developments of particular interest to the United States in the past year. Of necessity, I am going to omit some countries, which have seen interesting changes in the past year. I would be happy to address any of them during the question period.

I would like to start with some of the "good news" countries, some of the continuing constructive alliance partnerships, which have been the firm bedrock of U.S. interests in the region since World War II. These relationships produce few headlines, but they do produce something more important -- peace and stability. And, let me offer an unequivocal assessment: our alliances have never been stronger, and have never been more important than they are today.

Japan

No relationship is more important to the stability of the Asian Pacific region than the U.S.-Japan alliance. This statement has become such a given that we in Washington sometimes skip past it, but it bears repeating for one simple reason: it has served U.S. interests, Japanese interests, and the interests of all who seek peace in the region.

The U.S.-Japan security relationship is strong. Our bases in Japan remain fundamental to our strategic presence in Asia. Japan is host to 47,000 U.S. troops, second only to Germany, and is home to the only carrier group home ported outside the United States. This partnership enhances security for all and facilitates stability throughout the Asia Pacific region.

Strong as our partnership is, we have worked hard with the government of Prime Minister Obuchi to strengthen further the U.S.-Japan security alliance. We have agreed on revising the Defense Guidelines to enable us to cooperate more effectively in response to a regional crisis. We have agreed to fund joint research to improve our missile defense capabilities.

The U.S.-Japan cooperation on a range of foreign policy issues remains a key aspect of our partnership. Japan has played a critical role in KEDO. It has agreed to fund a significant portion of the costs of the light water reactor, which KEDO has committed to build at Yongbyon in North Korea, and it has joined in cementing a resolute trilateral approach with South Korea and the U.S. toward North Korea.

In Southeast Asia, Japan assisted Thailand, Indonesia, and many other Asian countries in responding to the Asian Financial Crisis. Japan has also supported the referendum process in East Timor and helped fund the redevelopment of East Timor and its transition to nationhood. A Japanese official now serves as the Deputy UNSYG Special Rep for the UN Transitional Authority in East Timor under De Mello.

Outside the region, Japan has provided political and financial backing for peace implementation and reconstruction efforts in Kosovo and is a major supporter of the Middle East Peace Process. In short, Japan's interests are global in scope, and as close allies, the U.S. and Japan share many of the same goals and work together on a broad range of issues.

Japan's global role will be highlighted this coming July, when it hosts the G-8 Summit in Okinawa. This summit will offer a valuable opportunity to focus the attention of the leaders of the strongest world economies on the opportunities and challenges that face us in the Asia Pacific region.

To be sure, this upbeat assessment does not obscure the fact that there are still contentious issues that need to be addressed in the bilateral relationship. But let me underscore that these issues occur within the context of a strong and vibrant U.S.-Japan relationship.

On the security side of the ledger, Japan provides the most generous HNS of our allies, some $4.5 billion. This is not merely a financial contribution, but, as Amb. Foley noted in an op ed in "The Asahi Shimbun" recently, it is Japan's investment in its own security and in the stability of the region in which it lives and which is essential to its economic well-being. We are working on renewing the five-year Special Measures Agreement, one of the two key components of Japan's Host Nation Support (HNS) for our troops stationed in Japan. This is one of the key strategic contributions Japan makes to our alliance and to regional security in the Asia Pacific.

On the economic side, the health of the Japanese economy remains a continuing concern both for the government of Japan and for its trade and investment partners, including the United States. Despite continuing fiscal stimulus efforts by the Obuchi government, domestic demand remains weak, and Japan's economy continues to sputter. Japan's economic malaise was an important factor in our record high U.S. trade deficit with Japan in 1999. We continue to urge Japan to use all tools for domestic demand-led growth, including fiscal and monetary policy, deregulation and restructuring, and more openness to foreign direct investment. We are particularly concerned about prospects for telecommunications liberalization, which would generate new jobs and business formation in Japan and opportunities for US firms; in high level negotiations, we are asking Japan to cut telecom interconnection rates, to increase competition in the marketplace.

The Republic of Korea

Later this year the United States will join the Republic of Korea in commemorating the fiftieth anniversary of the Korean War. This anniversary finds the Korean-American relationship closer than it has ever been. I discussed earlier our assessment of Korea's remarkable economic recovery. Here I would like to focus on our continued and growing cooperation in managing the threat posed by North Korea.

The past 18 months have seen dramatic changes in the situation on the Korean Peninsula, in terms of tension reduction. If you think back only a year ago, the dynamic on the Peninsula was quite different. The August 1998 Taepodong missile test over Japan threatened to derail support for the Agreed Framework both in Japan and the United States. Shortly thereafter, intelligence indicated that North Korea might be developing an underground nuclear site in violation of its Agreed Framework obligations. In the wake of these events and with support diminishing in Congress for the nuclear agreement, the Administration agreed to undertake a fundamental review of its policy towards the DPRK. Faced with these dangerous challenges, the US and its allies entered into a period of -- a largely successful -- intense diplomacy.

The U.S. Representative to the Korean Energy Development Organization (KEDO), Ambassador Chuck Kartman, engaged in intense negotiations with North Korea to gain access to that suspect site to deal with these concerns. These negotiations led, last May, to our gaining access to the underground site last year, and we confirmed that it did not contain a reactor or nuclear processing facility, nor was it suitable to house either one. A U.S. team will return to the site again this year.

Meanwhile, the U.S. undertook a fundamental review of our policy towards the DPRK over the past year. As a result, we have created, in cooperation with Tokyo and Seoul, an important trilateral framework for our approach to North Korea. It is built upon the principle that the U.S. and its allies remain ready to markedly improve their ties with the DPRK, but only as the DPRK deals with issues of concern to us, particularly in the missile and nuclear areas.

Significantly, as we pursued the policy initiatives recommended by former Secretary of Defense Perry, North Korea agreed to suspend long-range missile testing while we carry on high-level talks to improve relations with Pyongyang. Negotiations with North Korea have laid the groundwork for the visit to Washington by a high-level DPRK official. We expect that visit will fix the dates for renewed talks aimed at eliminating the DPRK's long-range missile program, and for new talks aimed at dealing with our remaining concerns about their nuclear weapons program.

For all the progress that has been made, much remains to be done. In addition to bringing off the high level visit -- with all the mutual benefits expected to accrue from it -- the challenge of fully funding KEDO remains. As you know, thanks to the Agreed Framework and KEDO, the nuclear facilities at Yongbyon are frozen and under international inspections. South Korea and Japan have assumed the bulk of the cost of the light water reactor (LWR) project. Other countries in Asia and elsewhere -- including Australia, Singapore, New Zealand and the European Union -- have contributed to the costs of heavy fuel oil to provide electricity for North Korea until the light water reactor is completed. It is essential that these countries and the U.S. continue to fund KEDO's provision of heavy fuel oil to North Korea. Only then will this freeze remain in place.

None of the progress that the ROK and Japan and we have made would have been possible without the visionary leadership of President Kim Dae Jung. Taking office in the midst of Korea's unprecedented economic crisis, he has not only led Korea through the challenges of economic recovery and restructuring, he has also undertaken a resolute engagement policy designed to expand contacts with the DPRK and seek reconciliation with Pyongyang.

U.S. policy strongly supports and complements ROK efforts to engage North Korea in a process that holds the hope of reducing tensions, defusing distrust and misunderstanding, promoting dialogue, and enhancing stability on this troubled Peninsula. Ultimately, the problems of peace and security on the Korean Peninsula must and should be resolved by Koreans.

Pyongyang should be clear that we and our allies are serious in desiring to engage positively and build new ties. But we and others who seek better ties with the DPRK are under no illusions. Whether we are able to make further progress on these issues will depend on the North's willingness to engage seriously with us and to honor its commitments, including its Agreed Framework obligations. We have extended a hand of cooperation to Pyongyang. We trust the DPRK will have the wisdom to grasp it.

At this point, let me add a few brief thoughts about the status of our other security alliances in the region.

Australia

Australian-American cooperation is so consistently strong that it is hard for it to generate in Washington the kind of public attention it deserves. This past year, Australia demonstrated once again why it is such a valuable partner and leader in the region. When violence erupted in East Timor in September, Australia stepped forward to organize and provide the bulk of the personnel for the multinational force that was sent to East Timor under the authorization of the UN Security Council.

By its actions, Australia provided a role model about how nations can take the lead in responding to crises in their own region. This kind of leadership has won Australia some well-deserved praise both from the "White House" and the United States Congress.

The Philippines

The American alliance with the Republic of the Philippines is among our oldest in the Pacific, and 1999 saw a significant revitalization of this relationship. On June 1, 1999, the Visiting Forces Agreement between the Philippines and the United States entered into force. Due in no small part to the strong support of Philippine President Estrada, the VFA has made it possible for us to resume normal military-to-military contacts, including numerous ship visits and exercises.

Regionally, the Philippines has played an important part in the international effort to assist in East Timor. It provided 750 troops for INTERFET and added an additional 450 to its UNTAET effort. In addition, a Philippine general, Jaime Los Santos has taken command of the military component of UNTAET.

The Philippine military requires significant modernization, yet faces very real funding constraints. We have agreed to help assess the Philippines' defense needs so that it can plan a cost-effective acquisition and training program over the next several years. This will support the Philippines' need for modern equipment as it expands its participation in peacekeeping while providing for its external defense and internal security in the face of an ongoing Communist insurgency.

Thailand

Thailand was the first country to be hit by the Asian Financial Crisis, and the economic crisis led to a political crisis. One of the strongest democracies in the region, the Thai responded by installing a new government committed to making the tough economic choices necessary to enable recovery. Over the past two years, the government of Chuan Likphai has won praise in many quarters for its willingness to press forward with the reforms necessary to ensure renewed growth and greater prosperity for all Thai.

Prime Minister Chuan has also led his country into a more active role on the international stage. We are pleased that Thai Deputy Prime Minister Supachai will succeed Mike Moore as Director General of the WTO in 2002. We have also welcomed Thailand's participation and leadership in INTERFET for which it provided the deputy commander.

Thailand and Supachai particularly should be congratulated for the successful UNCTAD meeting in Bangkok last month. This meeting brought together developing and developed countries, as well as the leaders of the UN, World Bank, IMF and WTO, to identify steps to integrate developing countries into the world economy. The U.S. delegation, with our highest level representation to UNCTAD in 17 years, worked with representatives of the G-77 to call for "strengthening the democratic basis of institutions and ensuring sound public administration."

We look forward to Thailand hosting the ASEAN Regional Forum and Post-Ministerial Conference Meetings this summer with equal success.

HEADLINES IN THE REGION

With that understanding of regional developments and our alliance posture in the region, I thought I would turn to a couple of issues that I know will interest this group -- Indonesia and China.

Indonesia

Indonesia has seen dramatic and positive changes -- changes of considerable importance to regional stability and prosperity and to U.S. interests in the Asia Pacific region. The past twelve months have witnessed a successful transition from an authoritarian regime toward a pluralistic, representative democracy. Successful parliamentary elections in June and the selection of President Abdurrahman Wahid in October enabled Indonesia's first democratic government to take office since the 1950s.

The new government came into office with the broad-based legitimacy necessary to begin to confront Indonesia's daunting economic and political difficulties. That said, it should also be underscored that no one realistically expected that President Wahid and his new government would be able to resolve all of Indonesia's problems in the first 100 days, or even 1000 days. The Government has, however, made a promising start in a number of areas:

In all of these areas, significant challenges remain ahead, but the crucial first steps have been taken, and I am convinced that Indonesia's prospects are positive.

Both the U.S. and Indonesia's neighbors have a profound interest in seeing a successful democratic transition in Indonesia. Last year, the Secretary of State identified Indonesia as one of the world's four priority emerging democracies. President Clinton welcomed President Wahid to the Oval Office shortly after he assumed the Presidency. UN Ambassador Holbrooke and Secretary of Treasury Summers have both visited Indonesia since President Wahid took office.

In response to the urgency and importance of the need, U.S. will offer increased bilateral assistance to Indonesia to help strengthen Indonesia's nascent democratic institutions. Indonesians must build an effective and just judicial system, promote civil society, spur continued economic reform, and professionalize national and local parliaments. The U.S. will be joining with other countries and multilateral institutions to assist Indonesia's reform efforts.

In the midst of dramatic changes in Indonesia over the past year, many Americans have seen East Timor as one of the defining changes. With the establishment of the UN Transitional Authority in East Timor, we are beginning to see a new nation of East Timor, independent of Indonesia.

Before this audience, I am not going to detail the familiar events of the past year. Since last September, the international community has united in taking steps to end the violence and respond to the humanitarian crisis. Now, six months later, we are assisting East Timor develop democratic institutions and prepare for independence. We are pressing the Government of Indonesia to enable refugees remaining in West Timor to return home or resettle elsewhere in Indonesia free from militia intimidation. Finally, we are supporting the Indonesian Government's efforts to ensure accountability for atrocities in East Timor. We believe that the ability of the Indonesian Government to effect accountability will be crucial to establishing civilian control of the military. That, in turn, will be essential to the stability of the country's new democratic order and the resurgence of investor confidence.

China

To put it simply, U.S.-China relations went through difficult times in 1999. Despite enormous efforts and high expectations on both sides, it proved impossible to conclude a WTO bilateral agreement at the time of Premier Zhu Rongji's visit last April. In May, U.S. planes mistakenly bombed the Chinese Embassy in Belgrade; Chinese demonstrators damaged a number of U.S. diplomatic facilities in China. The combination of these two events led to increased bilateral tensions and the suspension of much of our engagement efforts.

President Clinton's meeting with President Jiang in Auckland in September turned the tide and provided the impetus for the conclusion of the WTO bilateral on November 15. This was followed by our December 15 agreement on handling property issues connected with the bombing, helping to close that regrettable chapter. On January 10 of this year, President Clinton announced the Administration's determination to win permanent normal trade relations for China, stating the obvious but essential fact: "Bringing China into the WTO is a win-win decision. It will protect our prosperity, and it will promote the right kind of change in China." We anticipate working hard with the Congress in coming months to make that win-win a reality.

With bilateral relations on a positive course, we worked to engage China in a number of areas of fundamental national interest to the United States. Deputy Secretary of State Strobe Talbot, led a high-level group -- including Under Secretary of Defense Slocombe, Vice Chairman of the Joint Chiefs of Staff General Ralston and Deputy National Security Advisor Steinberg -- to Beijing in February for a strategic dialogue with senior Chinese officials. They discussed our respective strategic views of the world, including regional issues such as the Korean peninsula, Indonesia, and the strategic equation in South Asia as well as our concerns over the proliferation of weapons of mass destruction. While we should not have any illusions about our differences on some of these subjects, I think it is worth remembering that China believes its national interests, like our own, are best served by a world where stability and security are the norm.

We are also carefully resuming our military-military contacts with China, in a manner consistent with US national interests. It is important that our military leaders are able to clearly understand one another, avoid potential problems from lack of communication and be in a position to work together in areas where we have mutual interests, such as avoiding incidents at sea.

Within this overall context, I should be clear that I am not in any way trying to minimize the significant problems that remain. Clearly there remain difficulties in our relationship with China. On January 11, the Administration announced that the United States would sponsor a resolution at the UN Commission of Human Rights when it meets in Geneva in March. We took this step because of our concern with China's violation of internationally recognized standards of human rights and because of the clear evidence that China's human rights record has deteriorated seriously over the past year.

I know that many of you will be interested in an assessment of recent developments between the PRC and Taiwan, particularly the Taiwan election and the PRC White Paper on Taiwan. Before discussing those topics directly, I want to underscore once more the three principles that remain the foundation of our position on cross-Strait relations:

Turning first to Taiwan's recent elections -- they came at the conclusion of an open and vigorously conducted campaign and, with the election of Chen Shui-bian of the Democratic Progressive Party, they mark the first peaceful transition of power from one party to another in China. The President issued a statement congratulating the people of Taiwan on the successful election process. Republicans and Democrats in the House of Representatives passed overwhelmingly a resolution expressing the same sentiment.

In the midst of the campaign, the PRC issued a new white paper on cross-strait issues, which stated in part that Beijing would consider it had reason to use force against the island if Taiwan refused cross-strait negotiations on reunification indefinitely. The United States has expressed deep concern to China over this formulation both in Washington and in Beijing. As I noted a moment ago, we support cross-strait dialogue as the best way to resolve differences.

In the weeks since the election, I have accompanied both U.N. Ambassador Richard Holbrooke and National Security Advisor Sandy Berger to China. During both trips, we urged the Chinese leaders not to prejudge Chen Shui-bian. They assured us that they would take a wait and see attitude. At the same time, former Congressman Lee Hamilton traveled to Taipei as an unofficial envoy to meet with the newly elected President. Chen repeated the promises he had made publicly to reopen a dialogue with Beijing and not to declare Taiwan independence. Taiwan has also initiated, as a confidence building measure, legislation to enable direct shipping between the mainland and certain offshore islands under its control.

We urge both the PRC and Taiwan, to continue to refrain from actions or statements that could increase tensions or make dialogue difficult to achieve, and to take steps that foster dialogue, reduce tensions, and promote mutual understanding. The United States has consistently stated that it is up to the PRC and Taiwan to determine what constitutes the basis for dialogue, but again, our key point is that we have an abiding interest in the peaceful resolution of differences between the PRC and Taiwan.

At the same time, there should be no doubt that the United States will continue its faithful implementation of both the three communiques and the Taiwan Relations Act. Some in the U.S. Congress have sought to amend the Taiwan Relations Act through new legislation, the Taiwan Security Enhancement Act. These efforts are not merely unnecessary, they actually weaken Taiwan's security. That is why the Administration will continue to strongly oppose this new legislation.

Before leaving the issue of China, let me just briefly note that the Administration supports the accession of both the PRC and Taiwan to the WTO, and we hope both Taiwan and the PRC will accede this year. The accession of the PRC raises what will be perhaps the most important decision the Congress will make this year -- approving permanent Normal Trade Relations (PNTR) for China. Under U.S. law, China's normal trade relations must be renewed annually by Congress. For the United States to enjoy most of the trade benefits of China's accession, the Congress must make that permanent. Otherwise, China will enter the WTO, China will continue to export it goods into the U.S., but our companies and workers will be denied much of the access to the Chinese market laboriously negotiated by our Special Trade Representative, Charlene Barshefsky. That makes no sense.

CONCLUDING REMARKS

It is always dangerous for a foreign policy practitioner to make predictions. Perhaps I should leave that task to Bill and Peter. The onset of the unforeseen Asian financial crisis in 1997 and the fall of President Suharto in 1998 are two striking reminders of just how unpredictable the foreign policy business is.

Yet even if I accept my own sage warning and shy away from predictions, I would like to lay out my vision for what is possible -- and even likely -- this year. China will accede to the WTO and the Congress will vote in favor of permanent NTR. The Taiwan elections will set the stage for a revival of cross-straits dialogue. The Wahid government will continue down the path of democratic transition, with civilian supremacy firmly enshrined. Japan will hold a successful G-8 summit, which will reflect the fact that it is being held in Asia. Tensions on the Korean Peninsula will continue to diminish as North Korea deepens its engagement with the United States, Japan, and many other countries. Asian regional institutions -- APEC and ARF -- will feel a new sense of vitality as the Asian economic recovery continues and confidence returns to the region and its leaders.

[end of document]

Blue Bar rule

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