In the face of this challenge, our primary objective is to help stabilize the current financial situation. Our strategy has four key elements: support for economic reforms; working with international financial institutions to provide structural and humanitarian assistance; providing bilateral humanitarian aid and contingency bilateral financial assistance if needed; and urging strong policy actions by Japan and the other major economic powers to promote global growth.
We will continue to support South Korea, Thailand and Indonesia as they implement economic reforms designed to foster financial stability and investor confidence in order to attract the capital flows required to restore economic growth. These reform programs have at their core restructuring the financial sector, promoting greater transparency in trade and investment laws and regulations, and ending policy-directed lending practices. All three nations face a difficult road ahead that will test their political will. The international community can continue to help ameliorate adverse consequences of the crisis, but only resolute action to keep to the agreed policy course will bring a resumption of sustained growth.
Although the Asian financial crisis is having a crippling effect, we believe the underlying fundamentals for economic recovery are good and are confident that full and vigorous implementation of economic reforms combined with the efforts of the international community will lead to the restoration of economic growth to the countries of the region. U.S. initiatives in APEC will open new opportunities for economic cooperation and permit U.S. companies to expand their involvement in substantial infrastructure planning and construction throughout the region. While our progress in APEC has been gratifying, we will explore options to encourage all Asia Pacific nations to pursue open markets.
The United States will continue to work with the IMF, the World Bank, other international financial institutions, the governments in East Asia and the private sector to help stabilize financial markets, restore investor confidence and achieve much-needed reforms in the troubled East Asian economies. Our goal is to help the region recover quickly and to build a solid, resilient foundation for future economic growth in the region.
Bringing the PRC more fully into the global trading system is manifestly in our national interest. China is one of the fastest growing markets for our goods and services. As we look into the next century, our exports to China will support hundreds of thousands of jobs across our country. For this reason, we must continue our normal trade treatment for China, as every President has done since 1980, strengthening instead of undermining our economic relationship.
An important part of integrating China into the market-based world economic system is opening China’s highly protected market through lower border barriers and removal of distorting restraints on economic activity. We have negotiated landmark agreements to combat piracy of intellectual property and advance the interests of our creative industries. We have also negotiated—and vigorously enforced—agreements on textile trade. At their 1997 and 1998 summits, President Clinton and President Jiang agreed to take a number of positive measures to expand U.S.-China trade and economic ties. We will continue to press China to open its markets (in goods, services and agriculture) as it engages in sweeping economic reform.
It is in our interest that China become a member of the WTO; however, we have been steadfast in leading the effort to ensure that China’s accession to the WTO occurs on a commercial basis. China maintains many barriers that must be eliminated, and we need to ensure that necessary reforms are agreed to before accession occurs. At the 1997 summit, the two leaders agreed that China’s full participation in the multilateral trading system is in their mutual interest. They agreed to intensify negotiations on market access, including tariffs, non-tariff measures, services, standards and agriculture, and on implementation of WTO principles so that China can accede to the WTO on a commercial basis at the earliest possible date. They reiterated their commitment to this process in their 1998 summit.
China has been a helpful partner in international efforts to stabilize the Asian financial crisis. In resisting the temptation to devalue its currency, China has seen that its own interests lie in preventing another round of competitive devaluations that would have severely damaged prospects for regional recovery. It has also contributed to the rescue packages for affected economies.
The Administration continues to make progress on increasing market access in Asia’s largest economy. Since the beginning of the first Clinton Administration, the United States and Japan have reached 35 trade agreements designed to open Japanese markets in key sectors, including autos and auto parts, telecommunications, civil aviation, insurance and glass. The Administration also has intensified efforts to monitor and enforce trade agreements with Japan to ensure that they are fully implemented. The United States also uses multilateral venues, such as WTO dispute settlement and negotiation of new multilateral agreements, to further open markets and accomplish our trade objectives with Japan.
During the period from 1993 to 1996, U.S. exports to Japan increased from $47.9 billion to $67.6 billion, and the bilateral trade deficit fell from $59.4 billion to $47.6 billion. The recent economic downturn in Japan, however, has reversed this positive trend with the bilateral trade deficit for the first four months 1998 already at $20.8 billion, up 32 percent from the same period in 1996. Sustained global expansion and recovery in Asia cannot be achieved when the second largest economy in the world, accounting for more than half of Asian output, is in recession and has a weakened financial system.
Japan has a crucial role to play in Asia’s economic recovery. Japan must generate substantial growth to help maintain a growing world economy and absorb a growing share of imports from emerging markets. To do this Japan must reform its financial sector, stimulate domestic demand, deregulate its economy, and further open its markets to foreign goods and services. We look forward to substantial and effective actions to achieve a domestic demand-led recovery, to restore health to the financial sector and to make progress on deregulation and opening markets. Strong, immediate, tangible actions by the Japanese Government are vital to make Japan again an engine of growth and to help spur a broader economic recovery in Asia, as well as reinvigorate a critical market for U.S. goods and services.
At their summit meeting in June 1998, President Clinton reaffirmed to President Kim that the United States will continue its strong support for his efforts to reform the Korean economy, liberalize trade and investment, strengthen the banking system and implement the IMF program. President Clinton reiterated our commitment to provide bilateral finance if needed under appropriate conditions. The two presidents discussed a number of concrete steps to promote growth in both our countries and explored ways to more fully open our markets and to further integrate the Republic of Korea into the global economy, including new discussions on a bilateral investment treaty. They also signed an Open Skies agreement which permits unrestricted air service between our two countries.