Speech By DPM Lee Hsien Loong At The Opening Of The 12th ASEAN-EU Ministerial Meeting

His Royal Highness, His Excellency Mr Hans Van Mierlo, Excellencies, Ladies and Gentlemen,

I extend a warm welcome to all the delegates to the 12th ASEAN-EU Ministerial Meeting.

2. This meeting marks two decades of ASEAN-EU cooperation. In 1977, we took a decision to hold Ministerial level meetings and to formalise the dialogue relationship. The first Ministerial Meeting was held the following year. This makes the ASEAN-EU Dialogue one of ASEAN s most established linkages with its dialogue partners.

3. Both ASEAN and the EU have witnessed dramatic changes during these two decades. When we started in the 1970s, the Vietnam War had just ended. America was recovering from its traumatic experience in Vietnam. Confidence in the future of Southeast Asia was low. Skeptics believed that it would become the Balkans of Asia a source of instability rather than a peaceful and prosperous region.

4. But contrary to expectations, the region stabilised and boomed. Because of the Cold War, the US remained engaged in Asia. It bought time for the countries in the region to establish themselves and take off. Today ASEAN is on the threshold of achieving its founding fathers vision, of a thriving Southeast Asian community comprising all 10 states of the region.

5. In Europe, in the late 70s the Cold War was still at its height. Europe was preoccupied with the security threat from the Soviet bloc. But the Berlin Wall collapsed in 1989. Europe's problems are now totally different: expanding the European Community, helping the former Eastern European countries to recover from half a century of Communist misgovernment, promoting European integration, and strengthening the competitiveness of welfare states in a bracing international economic environment.

6. Not surprisingly, these changes in the strategic environment, and in our economic situations, have significantly affected our relationship. Ties have not always progressed along a smooth upward path. There have been ups and downs. But, the years of working together have laid a firm foundation and built a useful network of official and unofficial contacts. These will be valuable as we strive to strengthen cooperation in future.

7. In the last few years, both sides have independently recognised the need to broaden and deepen ties. We should add substance to our cooperation, and strengthen the ASEAN-EU relationship to the benefit of both our peoples.

ECONOMIC COOPERATION

8. At first our economic cooperation largely meant a donor-recipient relationship. The EU represented some of the most advanced developed countries in the world. ASEAN comprised struggling developing countries. The transformation of the ASEAN economies in the past two decades has changed this. Both sides recognise that economic cooperation must be based on partnership and mutual benefit.

9. The potential for a strong partnership is excellent. The ASEAN countries are liberalising their economies and promoting foreign investments and export oriented growth. Since 1992, ASEAN has been building a Free Trade Area, to be realised by 1 January 2003. ASEAN has now expanded its economic cooperation to include services, investments and intellectual property. It also plans an ASEAN Investment Area (AIA) to allow investments to flow freely into and within the region. These initiatives will liberalise the flow of trade and investments, and create a pro-business, pro-investment environment. They will help the region stay an attractive and competitive economic partner.

10. ASEAN is already the fourth largest trading entity in the world, accounting for 7% of world trade. By the turn of the century, ASEAN will have a combined population of 500 million and a GDP of over US$500 billion. The potential for trade, both within ASEAN and between ASEAN and other regions, is therefore considerable.

11. ASEAN's promise is part of an Asia-wide boom. Asia, led by China, is undergoing a historic transformation which will shift the centre of gravity of the world economy. European companies should seize this opportunity, participate in these developments, and benefit from them.

12. ASEAN welcomes European interest in the region. This is not just because of historical sentiments, but also for sound economic and strategic reasons. ASEAN-European engagement will broaden the bases of our respective economies, expand the arena for our private sectors, and strengthen the world trading system.

13. The EU and the national governments in Europe have made clear their belief that trade is not a zero sum game, and that Asia represents a major opportunity for European firms, both MNCs and smaller firms. But sentiments still linger in the West, that the continuing economic rise and dynamism of Asia is a threat to the West s own economic well being. In sectors under pressure from competitive imports, union leaders fear that jobs will be lost to Asia. Companies worry about a hollowing out of the advanced economies, as manufacturing plants, then technologies, are transferred out of Europe.

14. These adjustment pains are real, not imaginary. Governments must act to lessen them, and to make sure the benefits of international trade reach all segments of their societies. But Governments cannot deny or buck the economic forces which cause the pressures, without paying a very high price in terms of misallocated resources, lost growth opportunities, and ultimately diminished international influence. Governments should take advantage of the opportunities brought by technology, global integration, and emerging markets. Then their countries will develop new industries, create new jobs, and prosper. This will more than make up for the pains of transition and adjustment, and produce a win-win outcome for both sides.

15. ASEAN is an important and fast growing market for the EU. The EU enjoys a favourable balance of trade with ASEAN . But ASEAN-EU trade is still smaller, in terms of volume, than both ASEAN-US and ASEAN-Japan trade , even though the EU has a larger GDP than both the US and Japan. There is therefore considerable room to expand ASEAN-EU trade.

16. As the ASEAN countries take-off, they offer attractive investment opportunities for EU companies. The World Bank has estimated that for the next ten years, there will be more than US$150 billion worth of infrastructural projects in East Asia. Many of these will be in ASEAN countries, for example the Mekong Basin Development project. European technology and MNCs can play a major role in this area.

17. ASEAN is also well placed to be a gateway for trade and investments between Europe and Asia. European companies have advanced technologies and expertise. ASEAN companies are conveniently plugged into the social, cultural, political and business networks in the region. While European companies have the know-how , the ASEAN companies have the know-who. It makes sense for the two to form joint ventures to exploit the business opportunities in this region.

ROLE OF PRIVATE SECTOR

18. The private sector therefore plays an important role in the Europe-ASEAN relationship. Governments on both sides must establish a macroeconomic framework for growth. But they need a vibrant private sector to generate the growth. Governments must help to create the opportunities and the conducive environment for our private sectors to interact, exchange ideas and form partnerships, so that they can do what they do best, that is, create wealth and employment.

19. In this respect, I am happy that ASEAN will be working with the EC to convene the first ASEAN-EU Partenariat, a business forum for matchmaking ASEAN-EU small and medium enterprises. Several new ideas have been mooted to strengthen cooperation between the private sectors of our two regions. I hope the Meeting will endorse some of these ideas and give clear guidance to officials to study and implement these ideas.

POLITICAL DIALOGUE

20. Economic cooperation is only one dimension of the ASEAN-EU relationship. To have a more balanced relationship, we need a better understanding of one another's sensitivities, motivations and aspirations.

21. ASEAN and the EU both have rich but different historical and cultural traditions. This diversity of history and culture means that often, ASEAN and the EU countries will have different perceptions of the roles of the individual and the family, the community and the state. What works in Europe will not always work in the Asian context, and vice versa. As Asian countries progress, they will adapt, but will not copy wholesale, ideas and institutions from Western societies, to suit their needs.

22. A political dialogue is a natural complement to discussion of economic matters. However, the need to proceed sensitively, and on the basis of equality, is even greater with political issues. From time to time, disagreements are inevitable, even among good friends. The constructive way forward is for both sides to accept these differences, and focus on areas of cooperation, not to fixate on individual contentious issues and allow them to undermine the broader relationship.

PEOPLE-TO-PEOPLE LINKAGES

23. Stronger people-to-people links can help to bridge the cultural differences between the two regions. Ties should extend beyond political leaders and government officials, to business people, journalists, students, officials and researchers. Over the past two decades, people-to-people links between ASEAN and Europe have expanded rapidly, in both directions. But we should encourage still more exchanges with new and imaginative schemes.

24. In this regard, I am happy that the Junior EU-ASEAN Managers Programme is being launched. This programme aims to place junior managers from ASEAN in European companies, and European junior managers in ASEAN companies, for a six-month internship. The programme will help to increase the pool of future managers who will be comfortable in operating in each other s region. The more contacts at all levels there are between our peoples, the better we will appreciate our similarities, and manage our differences.

THE ASIAN BACKDROP

25. The ASEAN-EU relationship is an important and enduring one. It will remain relevant and useful to both sides, despite other recent initiatives to promote inter-regional cooperation. APEC has not diminished the role or cohesiveness of ASEAN as a pivotal grouping. Last year, a mature ASEAN-EU dialogue relationship helped launch ASEM smoothly and quickly.

26. ASEM makes economic, political and strategic sense. In a rare conjunction, all the three major regions of the world, North America, Europe, East Asia, are flourishing together. A robust world trading system requires strong trade and investment ties along all three sides of this triangle. Then each will view the prosperity of the other two regions as an opportunity and not a threat. This will reduce the chances of serious trade friction, or of the WTO system splitting up into rival trading blocs.

27. By linking Asia to Europe in a multi-faceted relationship, ASEM completes the missing link in relations among Asia, Europe and North America, and thus contributes to a more stable equilibrium among the three major economic centres.

28. Both sides share an interest in keeping the ASEAN-EU and ASEM processes equally strong and vibrant, and in keeping the ASEAN-EU partnership at the core of ASEM. To use a Dutch saying, we should not discard our comfortable shoes just because we have bought a new pair.

CONCLUDING REMARKS

29. The ASEAN-EU relationship has endured and matured. Both sides recognise its relevance and importance to our wider interests. It is time to take our relationship to a new level. Closer contacts will produce more opportunities for a productive and durable relationship. We must consolidate and build on the inherent strengths of this relationship, and nurture it so that it will blossom into a model for inter-regional cooperation.

30. I now have the pleasure to declare open the 12th ASEAN-EU Ministerial Meeting.