Speech By Mr Lee Hsien Loong, Prime Minister And Minister For Finance Of Singapore, At The Asia Society Washington Center / US-Asean Business Council Joint Gala Dinner, 3 May 2007, at Washington D.C. - America And Asia: Our Shared Future

AMERICA AND ASIA: OUR SHARED FUTURE

Ms Susan Schwab, United States Trade Representative
Mr Matt Daley, President of the US-ASEAN Business Council,
Ms Vishakha Desai, President of the Asia Society,
Mr Joe Synder, Executive Director of the Asia Society,
Excellencies and Distinguished Guests,
Ladies and Gentlemen

INTRODUCTION
1. Let me thank Ambassador Schwab for all her efforts in strengthening the US-ASEAN relationship, especially in trade and investment. I would also like to thank Secretary Gutierrez for his kind remarks, and for dropping by despite his busy schedule. I appreciate the support of the Asia Society and the US-ASEAN Business Council in co-hosting this dinner. The Asia Society has played an invaluable role fostering understanding and ties between the peoples of Asia and the United States. The Council, too, has been a steadfast friend of ASEAN, tirelessly seeking to put the region on the radar screens of policy-makers and business leaders here. I am honoured by the presence of so many friends of Singapore. It is good to be back in DC, among all of you.

2. Over the last decade, Asia has seen rapid growth, dramatic transformation and deepening interdependence and integration. This evening, I would like to talk about the emerging architecture of Asian cooperation. Its foundation is rooted in the post-World War II environment in Asia, which the United States played a large role in creating. America's security presence in Asia, and its economic vitality and openness, provided the overarching stability for the regional economies to develop and prosper. American investments and markets were critical factors in the emergence of the East Asian Tiger economies in the 70s and 80s. America was present at the creation of this architecture, and your continued engagement, even post-Vietnam, helped bring about today's benign and stable Asia.

FORGING A NEW REGIONAL ARCHITECTURE

3. Today, Asia is being transformed by the emergence of two giants. The rise of China is the single biggest event of our age. India is also on the move, despite a late start and more complex problems than China. New patterns of trade and investment have emerged in Asia, linking Asian countries with China and India, and also with each other across the continent. China is a major export destination for many ASEAN countries, and the volume of intra-Asian trade already surpasses that of intra-NAFTA trade. These changing economic patterns are shifting strategic alignments, and creating a new matrix of regional cooperation.

4. What is the shape of this new Asia? No one can tell for sure yet. The region is surging ahead at an unprecedented pace, and the landscape is still evolving. But on some important basic points, Asian countries clearly share common interests:
• We want a region that is stable, open, and inter-connected through trade and investments, both among ourselves and with the rest of the world. In this respect, an effective Asian grouping must be defined in terms of substantive relations, and not straitjacketed by traditional notions of geography, or worse still, race.
• We want a region where countries can cooperate and compete peacefully in the economic realm; and
• We want a robust framework of cooperation within which countries can contain and manage disagreements and disputes, such as overlapping claims to territory and resources in the South China Sea, or the cross-straits situation between China and Taiwan.

5. The key to achieving these common goals is to shape the right architecture for strategic cooperation. One important piece of this architecture is APEC. It brings together both sides of the Pacific - North America and the economies of Central and Latin America on the one hand, and the key players in the Asian renaissance on the other. America has proposed an APEC-wide Free Trade Area of the Asia Pacific (FTAAP) as a long term goal. This will not be easy to achieve. No free trade agreement that includes America, Japan, Russia, together with China and Taiwan, can be a straightforward matter, for all sorts of reasons other than trade. Nevertheless, the FTAAP is a worthy long term objective to work towards. It will add substance to the APEC grouping, and have a positive effect on world trade negotiations.

6. Within East Asia, different overlapping regional groupings exist, including ASEAN+3 (China, Japan and South Korea) and the East Asia Summit (EAS), which is ASEAN+3 plus three more members - India, Australia and New Zealand.

7. Some Americans feel that no grouping should be formed in East Asia which the United States is not a member of. But this is neither realistic nor feasible. The United States need not be involved in every single regional grouping, but it remains an important pillar of the overall structure. With the growing inter-linkages within Asia, regional cooperation will continue to increase and some form of framework comprising Asian countries is indispensable, indeed inevitable. The only questions are what specific shape such a grouping will take, and how America fits into this architecture.

8. Among the Asian countries, there are different views on what is the right configuration. Some feel that the ASEAN+3 is a more natural grouping, where things can be more easily worked out. But others like Singapore are convinced that it is wiser to form a broader grouping that would help to make the grouping an open and balanced structure, and enable the United States to play an important and constructive role in the region.

9. We are still experimenting and feeling our way forward. There is a long way to go, with many twists and turns. We have agreed on a general direction, but not a precise destination. Far more than Europe, Asia is characterised by political, economic and cultural diversity rather than natural coherence.

10. The North Korean nuclear issue illustrates some of the differences in the strategic positions and security perspectives of Asian countries. The Six Party Talks provide a framework to deal with the problem of North Korea's nuclear capabilities. All the countries involved in the talks with North Korea share the objective of a non-nuclear Korean Peninsula, but there are important differences. China does not want to see regime change in North Korea. Japan's overriding consideration is the issue of North Korea's abduction of Japanese citizens. South Korea takes a more benign view of the threat from its neighbour, and is convinced that a softer approach will work better. These differing priorities explain why the problem is so difficult to resolve.

11. Furthermore, Asia has not entirely resolved the legacy of the Second World War, again unlike Europe. This is why the argument over whether "comfort women" were coerced by the Japanese Army re-opens old wounds, as do visits to the Yasukuni shrine by Japanese leaders. The recent successful visit by Premier Wen Jiabao to Japan and his address to the Japanese Diet - the first ever by a Chinese premier - show the desire on both sides to move beyond this history and build forward-looking, constructive, win-win relations. It will be a long time before China-Japan relations resemble French-German relations, but the determination of China and Japan to work together pragmatically despite their not fully reconciled views bodes well for improved bilateral relations, and for stability in East Asia.

12. Asia's integration is therefore very much work in progress. Whatever the ultimate shape of the architecture, ASEAN aims to play a central role. ASEAN is non-threatening, enjoys good relations with all the major powers, and thus provides a neutral core around which to develop the regional cooperation framework.

13. To do this, ASEAN must be a strong and effective grouping, able to partner China and India effectively. ASEAN countries are not without their own internal issues and preoccupations. But most realize that if ASEAN is disunited or stagnant in a rapidly changing world, it will be marginalised and rendered irrelevant. This is why ASEAN is drafting a Charter document, to strengthen its institutions and define its long-term goals. We aim to complete this in time for the Leaders' Summit in November, which will mark the 40th anniversary of ASEAN. We are also striving for an ASEAN Community by 2015, to create a single economic entity and realise the full potential of our combined market of 550 million people.

LIVING WITH COMPLEXITIES

14. Globalisation is driving the changes in Asia, and appears to be an unstoppable megatrend. But it presents countries with considerable challenges, and is provoking a backlash of anti-globalisation sentiments around the world. The benefits of globalisation have not been shared equally. Wage disparities between the skilled and unskilled are widening. Rapidly changing patterns of production and trade are causing painful disruptions, job losses, and a sense of insecurity and unease amongst workers everywhere. This vulnerability to external forces in turn feeds nationalistic and protectionist sentiments, rejection of globalisation and change, and a longing to preserve a status quo that is no longer viable.

15. At key points in Asian history, nationalism has been a positive force for progress. In 19th century Meiji Japan, these sentiments galvanized the entire nation to try and catch up with the West. Nationalism was also a key driving force behind China's efforts throughout the 20th century to grow and modernise its economy. It remains a powerful driver for change even today, especially among a younger generation of Chinese who want to see their country take its rightful place in the world.

16. Nationalistic sentiments, however, can be negative. In America, we have seen visceral public reactions to the bid by Dubai Port World to buy P&O Ports, which included a few ports in the US, and the bid by CNOOC to buy Unocal. In Asia too, there are pressures to keep assets and companies in state hands, or to roll back liberalisations already introduced, in China, India, and even in some Southeast Asian countries.

17. These are worrying trends. Economic frictions and obstacles to trade and investment weaken countries' stakes in one another, and their incentive to uphold the international order. If countries were less interdependent on one another, frictions and rivalries between them would be harder to contain. Between America and China, for example, the large and growing volume of trade gives both sides a vested interest in managing a complex relationship, as successive US Administrations have discovered. There are no easy solutions to this problem, but it is the responsibility of governments to take an enlightened, long-term view of their national interests, help groups which are adversely affected by globalisation, and develop the political consensus to resist protectionist pressures.

18. America's attitude towards this is critical, for you set the tone for the rest of the world. I am glad that this Administration has consistently emphasised its commitment to free markets, free trade and international rules. As President Bush declared, "in a complex and challenging time, the road of isolationism and protectionism may seem broad and inviting - yet it ends in danger and decline." I can understand why the rising trade deficit with China has aroused strong reactions in the United States, as it did with Japan in the 1980s. But the strength and resilience of the US economy was proven then, and I hope that the Administration and new Democratic Congress will continue to take a rational approach to current trade issues with China, and keep US markets open. This will set a valuable precedent for China and all other countries. It will also maintain the benign conditions that have benefited both the US economy and the world.

19. China's attitudes are also critical, given its weight and rapid emergence as a major economic power. China is skilfully and consciously applying its soft power to cultivate friends in the developing world in Southeast Asia, Middle East, Latin America and Africa. But China must also play by international rules, to assuage concerns in America and Europe.

20. I believe this is what China wants. Its leaders have constantly emphasised that China wants to open up, globalise, and integrate peacefully into the community of nations. What the Chinese are saying to their own people is equally significant. Recently China Central Television (CCTV) broadcast a documentary series on the "Rise of Great Nations". This was an objective account of the rise and fall of major powers over the last 500 years. It was highly popular, and stimulated a lively debate in China. It described how the invention of patents in Britain protected intellectual property, fostered innovation and led to the Industrial Revolution; how the United States prospered after the War of Independence because the thirteen colonies integrated their markets and traded freely with each other; how Germany and Japan destroyed themselves because after becoming powerful they went for armed expansion, leading to the two World Wars. The lessons that Chinese leaders wanted to convey to their own people were explicit and clear.

21. Small countries like Singapore know we have no choice. To grow and prosper, we must stay open and integrate ourselves with the global economy. We are acutely conscious of the risks, but we believe that the solution is not to close ourselves up, but to diversify our exposure by linking up with as many partners as possible, both in the region and beyond. Hence our strong support for ASEAN, and for the US-ASEAN partnership.

US-ASEAN PARTNERSHIP

22. From the American perspective, US-ASEAN relations fit into the broader framework of American engagement with East Asia. The relationship between America and China is critical. It anchors the stability of the whole region, and no Asian country wants to have to choose sides between the two. But besides China, America must nurture its diverse interests in the region, and in particular, its strategic interests in ASEAN.

23. Relations between ASEAN countries and China are substantial and growing, as are ASEAN's relations with India. But ASEAN countries are also keen to deepen ties with the United States, for they recognize that America continues to play an indispensable role, whether in maintaining the strategic environment, fighting extremist terrorism, or promoting economic growth. We do not want to see the growing cooperation among the Asian countries lead to rival blocs that split the Pacific down the middle.

24. Singapore has been outspoken in encouraging America to engage ASEAN. We are therefore happy to see positive developments in recent years. The US-ASEAN Enhanced Partnership will foster closer cooperation across a broad front, and the US-ASEAN Trade and Investment Framework Arrangement (TIFA) will deepen our economic ties. President Bush has visited Southeast Asia twice, and we look forward to his third visit when he attends the ASEAN-US Commemorative Summit in Singapore in September. Former President Clinton had also visited Southeast Asia three times. This bipartisan engagement is encouraging.

25. Going forward, there is scope to do even more. The 30th anniversary of US-ASEAN engagement this year is a timely opportunity to bring the relationship to a higher level. There are many possibilities for fruitful collaboration. In energy and the environment, we can share best practices on sustainable urban development, and on the prevention of trans-boundary pollution. In non-traditional security threats, we need to cooperate in the fight against terrorism, and against health pandemics such as AIDS/HIV and avian flu.

26. This is a substantial relationship, but one which has to be nurtured and grown. America's soft power is a tremendous asset. All over Asia, people watch the American Idol, and download American pop songs. All over Asia, hundreds of thousands of young people dream of studying in American universities. And anywhere in Asia, when natural disaster strikes, America uses its awesome might to do good, as it did after the Indian Ocean tsunami in 2005, when it sent the aircraft carrier, the USS Abraham Lincoln, to carry out relief operations in Aceh in Indonesia. The US should make the most of this soft power to win over hearts and minds, and inspire and shape developments in Asia and beyond.

27. One issue that holds back American cooperation with ASEAN is Myanmar. Myanmar is undoubtedly a concern, including to other ASEAN members. But ASEAN-US relations should not be held hostage by it. The US has a broader strategic interest in ASEAN, and should not allow this single matter to hinder its efforts to actively engage ASEAN countries, both individually and as a group.

28. American policies in the Middle East also impact Southeast Asia. The Israel-Palestine conflict stirs up strong passions in Muslim communities worldwide, including in Southeast Asia. If the United States can bring about progress on this problem, it will address perceptions of American unilateralism and one-sidedness, help America to build trust and credibility, and make it easier for countries with large Muslim populations to deepen relations with America.

29. In Iraq, imposing law and order remains a major problem with no clear solutions. But if the United States leaves under conditions that can be portrayed as defeat, jihadists everywhere will be emboldened, and we will all be at greater risk. The fight against extremist terrorism is far from over, whether in Southeast Asia or worldwide. But even more important, it is profoundly against ASEAN's interests to have America credibility weakened, and its standing diminished.

CONCLUSION

30. These are challenging times for America. You have fought two wars in a little more than five years. You have expended blood and treasure in a generational struggle against terrorism. The American people are, understandably, in a conflicted and introspective mood, engaged in an anxious national debate on the next steps forward. But in this tumultuous period, America's leadership and purpose is more critical than ever. I hope that Americans will firmly grasp the opportunities before you in Asia, to usher in a new era of stability and growth. In both America and Asia, we need to reach out across continents, and work together to create a better world for all.