I am delighted to have this opportunity to meet with you inBeijing to discuss APEC. Since China began participating in APECat the ministerial meetings in Seoul in 1991, it been an activeand constructive partners in advancing our common interests innurturing a Pacific community. When I was last in Beijing it wasas a member of the US Delegation to the P-5 negotiations to forgea peace plan for Cambodia. Our effort was to enable the peopleof Cambodia a chance under UN supervision to reexert theirsovereignty and independence and take their own national destinyback into their hands.

My visit this week comes as part of our common efforts to createa Pacific community that ensures sustainable economic growthacross the region, better more productive lives for our citizens,and the peace and stability that comes with a reduction ineconomic disparities between economies. For the United States,APEC is the premier forum for promoting economic cooperation inthe Asia-Pacific region. But APEC also has special significancefor the bilateral relationship between China and the UnitedStates. The annual meeting of ministers and leaders has forseveral years provided the occasion for our government officialsto discuss a broad range of issues. This has taken on particularimportance as a result of the efforts on both sides to deepencooperation through more regular dialogue, including meetings atthe highest level. Last year our two Leaders met in Manila. Just last weekend, Finance Minister Liu met in Cebu for an hourwith Treasury Secretary Rubin, and they will meet again inBeijing this fall.

But APEC is significant for our bilateral relationship not onlyas an opportunity for our top officials to strengthen and deepenthe spirit of community that Leaders declared at their historic,first meeting at Blake Island.

As former Secretary of State Christopher pointed out in Shanghailast November, what brought APEC's members together is therecognition that the best way to sustain Asia's dynamism was toensure that the economies of the APEC economies would growtogether. We have joined in developing plans for economiccooperation throughout the region. China and the United States,as APEC's two largest members, have a special responsibility toturn these plans into action.

I would like to discuss with you our ideas on how we think we canaccomplish this year. But first, it is important to be clearwhat we mean by "Asia-Pacific economic cooperation."

Ever since Osaka there has been talk of APEC having entered itsaction phase. Both Osaka and Subic took major strides towardgiving shape and substance to APEC's promise. Now, havingdesigned the blueprint and laid the foundations, we need actionto accomplish what APEC has been set up to do. Declarations ofprinciples and statements of vision are no substitute for workplans that produce real results. That will require engaging theregion's private sector, not as an appendage to be consulted atthe end, but as an essential part of our work. At the outset, itis important to be clear what we mean by "Asia-Pacific economiccooperation."

Cooperation in APEC

APEC has often been described as standing on three legs:liberalization, facilitation, and cooperation. The Osaka ActionAgenda defines APEC's agenda along these lines. On the one hand,APEC furthers regional growth through trade and investmentliberalization and facilitation, the so-called TILF activities.

While a convenient way to organize work in APEC, this distinctioncan lead to the misimpression that APEC has two parallelmissions. On the contrary, APEC has a single mission. Asleaders put it in Osaka, that mission is to advance the economicdynamism and sense of community in the region. Everything inAPEC involves cooperation to achieve this goal. It is what APECdoes.

Trade and investment liberalization and facilitation (TILF) andwhat has been called economic cooperation (Eco Tech) are notunrelated activities. We cooperate to break down barriers to theflow of goods and capital. That is the target of our efforts ontariff and non-tariff barriers, on standards, on investment, oncustoms, and on other issues. But there is more to ensuringregional prosperity than that. We also cooperate to removestructural obstacles to growth. We work together to makestrategic breakthroughs in key sectors such as energy, transport-ation, telecommunications, human resources, and infrastructure -while at the same time assuring the environmental sustainabilityof such efforts. Work in one area supports and complements workon the other. In this sense, cooperation involves not justliberalization and facilitation to free up markets to grow; italso involves removing obstacles within each economy that limittheir ability to grow.

The Challenge of Cooperation: Freeing Markets....

The challenge this year is to make good on APEC's promise withactions that apply this approach to cooperation.

Cooperation to liberalize trade and investment remains animportant part of this challenge. In some ways "liberalization"is, by its nature, a long-term process. The powerful forcesunleashed by the economic reforms by APEC members will reinforcepressures for further liberalization. Part of the process willhappen economy by economy, as each identifies areas within thefourteen areas identified by the Osaka Action plan. The 1996IAP's started that process; this year and in years ahead theprocess must continue forward. And it will depend on theinterest and active involvement of all eighteen economies. Thatis true for instance in Japan, which contributed so much toAPEC's success in Osaka, the ASEAN economies, and it is true toofor the U.S.

There are also multilateral forces at work that will promptbroader liberalization, among APEC economies alone, or morelikely as a stimulus to WTO efforts. That is what was behindAPEC's endorsement last year of an Information TechnologyAgreement in the WTO. APEC members saw dismantling of tariffbarriers as key to their competition for capital and technologyin one of the world's most dynamic industries. The same forceswere at work more recently in convincing many APEC members tosupport the WTO agreement on telecommunications. This may provetrue this year in the WTO negotiations on financial services. Increasingly, the ability of APEC economies to attract thecapital necessary to grow will depend on making their capitalmarkets safer, more efficient, and more open.

Comparability will be a key issue in APEC's liberalizationefforts. Each economy should be moving forward toward APEC'sfree trade and investment goals in a comparable manner--whichmeans, among other things, that closed economies have to bemoving proportionately faster than open ones. Our view continuesto be that, to evaluate comparability, we need to examine each ofthe fourteen issue areas, not just overall. An informed assess-ment of overall comparability requires a careful analysis of thecomponent parts. In the US view, in each area, we need todevelop a specific set of benchmarks, best practices, or criteriafor assessing the degree to which economies are meeting the Bogorgoals.

Comprehensiveness also remains a cardinal principle. There seemsto be an impression that APEC's success or failure dependsentirely on what happens in terms of unilateral tariff cuts. Thework on individual liberalization covers fourteen areas--tariffsare just one, and probably not the most important. IPR,competition policy, investment policy, government procurement,and other areas are also critical.

That point is important as well for another task on APEC'sliberalization agenda this year. At Subic Bay, Leaders asked usto identify new sectors for early liberalization. At theirmeeting in Victoria in January, APEC's Senior Officials reached aconsensus that the concept of sectoral liberalization should be abroad one. It means much more than tariffs and non-tariffmeasures.

...Facilitating Trade and Investment

Trade and investment facilitation is the complementary aspect ofAPEC's work to eliminate barriers to the flow of goods andcapital. It deserves high priority this year. In the here andnow, business frequently finds itself hamstrung by a bewilderingarray of administrative impediments. What matters most tobusiness persons are practical measures to make it easier to dobusiness in the region. This is what yields tangible, immediatebenefits.

Facilitation is the here and now aspect of APEC's work on tradeand investment liberalization. We need progress in such areas ascustoms procedures, standards for goods and professionalservices, and investment. These are core Bogor areas, and key toassuring APEC improves the efficiency of economic activity in theAsia Pacific.

What does "action" mean? It means for instance, accelerating worktoward a paperless, electronic clearance process within APEC. Itmeans agreement by the private sector to allow cross recognitionof professional qualifications for architects, engineers, andaccountants. It means adoption of common safety standards forroad transport vehicles. It means fashioning a model MRA fortelecommunications equipment. It means implementing the"initiatives" agreed by Finance Ministers at Cebu - more on thatin a moment.

To make this happen, APEC must, in business terms, reengineeritself. The test for what we are doing in APEC is this: whatdoes it means for the bottom line?; how does it contributes toimproved economic efficiency?; and does it target outcomes withmeasurable goals to quantify success?

...And Attacking Structural Impediments

The other side of the challenge we face this year is devisingpractical steps to attack structural impediments to regionalprosperity. This is the other dimension of APEC's cooperationagenda. President Ramos set the tone for the year in his openingspeech last November in Manila, when he called on APEC members toengender "a spirit of common problem solving."

Those meetings also succeeded in developing a framework to givefocus and coherence APEC's wide-ranging work on EcoTech issues. First, we reached a consensus that APEC should become directedmore toward producing concrete outcomes. Meetings, seminars,surveys and other activities can be useful in getting to theseoutcomes, but they should not be confused as ends in themselves.

Second, we set priorities for APEC's ten Working Groups. Theiractivities will be organized into six areas: 1)deepening humancapital; 2)developing safe and efficient capital markets;3)strengthening infrastructure; 4)harnessing technologies;5)ensuring environmentally sound growth; and 6)promoting smalland medium-sized enterprises. These clusters cannot be just away to repackage old wine in attractive new bottles. There isnot room for complacency--APEC must do much more than simply andmore adeptly repackage what it already is doing. We need toprioritize among our Working Group activities, and we need toprune the lower priorities. Here too the test is: what does itmean for the bottom line? Were this activity not a free good,would the private sector pay for it?

This year we need to take practical steps that begin to realizethis approach to cooperation. The task will be to go beyondexchanging information, holding seminars, or putting data on theInternet. Those activities were useful in APEC's formativeyears, but much more is required now.

Take capital markets, for example. Last March in Kyoto, FinanceMinisters began to build a consensus on the macroeconomic,financial, exchange rate, and other policies necessary to sustainprivate capital markets, promote capital market stability, andmobilize private capital infrastructure projects. Last weekend,in Cebu, Finance Ministers embraced a series of initiatives onstrengthening market supervision, clearing and settlementinfrastructure, supporting the development of rating agencies,sharing experiences on pension reform, and asset basedsecuritization. And they discussed at least informally the WTOfinancial services talks that resume this week. All this ifrealized advances Economic Leaders' call for measures to helpmobilize the region's high savings rates, transforming thesesavings into long term investment in infrastructure, as well asattracting external private capital flows. But agree oninitiatives and implementing them are two separate matters. APECskeptics this year and in the years ahead will judge us not onour statements of principles, and our vision, but by practicalresults that accomplish the tasks set in the Osaka Action Agenda.

While finance officials work the market-wide issues, we shouldsupport the APEC Business Advisory Council's work to develop itsidea for AVIP (APEC Voluntary Investment Projects). Working withthe multilateral development banks and export credit agencies,the private sector can hammer out principles that would signal toborrowers what it takes to make projects more creditworthy. ByNovember, I hope we will see one or several AVIP projects - whynot one here in China.

Customs is another area where cooperation can produce soliddeliverables this year. One idea is to simplify and standardizethe forms for processing cargo. Another would ensure expressdelivery of small packages through customs. Making small packagedelivery more predictable would cut costs, and facilitatebusiness throughout the region. China is quite advanced in thisarea - I hope your experiences can help move other APEC economiesforward. Small and medium sized firms would be majorbeneficiaries.

There are other larger outcomes, especially in energy,telecommunications and transportation. In these keyinfrastructure areas, we should be looking for outcomes thatcombine liberalization, deregulation, and a coordinated assaulton the structural impediments Leaders identified as priorityareas for strengthened economic cooperation. Some havesuggested, for instance, setting new benchmarks for portefficiency in the 21st Century. Others talk about the idea of aregional gas grid that would increase energy security,rationalize capital costs, and greatly increase thesustainability of Asia's economic growth. There are key environ-mental initiatives that stand on their own, but also respond tothe Leaders' injunction to factor environmental concerns in allthat we do. At the ministerials this year there is anopportunity for business and APEC's political Leaders to identifythese special areas for APEC action.

APEC's work on the environment can make a strong contribution tothe efforts China and the United States are undertakingbilaterally. During their meetings in Beijing in late March,Vice President Gore and Premier Li Peng launched a joint Forum onthe Environment and Development. This was an important step. Notwo countries are more important to solving internationalenvironmental problems than China and the United States. Byengaging government and the private sector in joint efforts tofind solutions, we benefit not only ourselves but the world as awhole. The environmental initiatives underway in APEC canreinforce these efforts.

Engaging the Private Sector

Leaders last year put special emphasis on seeking business input. None of APEC's work will have much relevance in the marketplacewithout participation by the private sector. Our companies andtheir people are the source of the region's dynamism. They arealso the source of the advice and expertise APEC needs toidentify outcomes that remove obstacles to growth.

Business involvement cannot be just lip service. Simply briefingthe private sector is not "consultation". Presenting fullydeveloped plans for it to bless just won't do the job. Theprivate sector must be involved in setting the goals and definingthe means to achieve them from the ground level up.

We made a start at this last year. In both its report and itsdialogue with Leaders in Manila, the new APEC Business AdvisoryCouncil challenged us with many new ideas. Leaders embraced keypoints in their Declaration. Some of the working groups havealso done well in bringing in the private sector. The task thisyear is to push the ideas we are hearing from business throughABAC and the working groups into the APEC process and ensure APECfollows through.

As a forum that brings together Leaders, ministers, policyofficials, and a broad cross section of the private sector, APECalready has made a demonstrable contribution to building the"community" envisioned in the Blake Island Leaders' communique. By challenging the global trading system in 1993, and again in1996, it has materially advanced global trade liberalization. Inits Individual Action Plans last year, APEC economies made astart on the liberalization envisioned at Bogor. But that is oldnews. The challenge this year is, building on this momentum, tobecome increasingly concrete and focused in our "economiccooperation" outcomes.