Under Secretary Larson Nov. 13 Remarks to APEC

Under Secretary Larson Nov. 13 Remarks to APEC Ministers

(All APEC should benefit from global information economy) (1500)

Under Secretary of State Alan Larson told ministers gathered in Brunei November 13 for the Asia-Pacific Economic Cooperation (APEC) that they "should resolve at this meeting that the benefits of the (global) information economy will become available to all people in all APEC economies."

Larson suggested taking action in four priority areas in order "to ensure that no APEC economy is left behind":

-- Foster the appropriate policy and regulatory environment by utilizing "Readiness Evaluation Action Partnerships" between the private and public sectors and ensuring intellectual property protection.

-- Improve connectivity, increase access, and lower cost through competition in telecommunications markets.

-- Build human capacity through investment in basic education as well as creating more specialized training.

-- Make it possible for all APEC economies to participate in global electronic commerce by encouraging small and medium-sized enterprises to access global markets and participate in worldwide supply chains by fostering e-commerce readiness.

Following is the text of Larson's remarks, as prepared for delivery:

(begin text)

Remarks as prepared for delivery

to APEC Ministers

by Alan Larson

U.S. Under Secretary of State

for Economic, Business and Agricultural Affairs

U.S. CALLS FOR BROAD BENEFITS

FROM THE NEW ECONOMY

Introduction

APEC economies stand at the beginning of a promising new era, one that can produce profound economic and social benefits for our people. The New Economy has the potential to bring gains in productivity and expanded opportunities for growth all over the APEC region. These gains and opportunities are not limited to high technology or information technology companies. Agriculture, light and heavy industry, public and private services can all be part of the New Economy.

In my remarks today, I would like to address two questions: What is so "new" about the New Economy? What can we do to ensure that all APEC economies benefit from the New Economy?

What is so "new" about the New Economy?

My colleague Robert Lawrence, a member of President Clinton's Council of Economic Advisors, identifies four new attributes of the New Technology:

-- The first, and most obvious, is new technology, particularly information technology and the Internet.

-- The second is new firms. Many of the largest and most dynamic firms in the United States today were hardly on the radar screen a decade ago.

-- The third is new forms of financing, including venture capital, that let new firms with great ideas but few assets gain access to capital.

-- The fourth is new talent, which in the American economy includes both home-grown talent as well as talented professionals from around the world, notably from the APEC and South Asian countries.

The bottom line is that the pulse of business beats faster in the New Economy and successful businesses need to be plugged into the network.

How can we ensure that all APEC countries benefit from the New Economy?

APEC is moving forward to prepare for the New Economy. Growth in Internet use in the APEC region is occurring at impressive rates. Measuring Internet usage is an imprecise science, but I am impressed by estimates that many APEC economies have more than tripled the number of Internet users over the past three years. Nevertheless, the percentage of APEC economy populations that uses the Internet varies dramatically; the penetration rate is well over 40 percent in several economies but less than one percent in several others. We should resolve at this meeting that the benefits of the (global) information economy will become available to all people in all APEC economies.

APEC economies vary greatly not only on Internet access but also on the many other measures of their readiness to participate in the New Economy. One highly regarded study of "E-Business Readiness" in 60 nations concluded that of those APEC members studied, about one third were among the nations most ready for e-business, another one third "have the potential to catch up" and a final one third "risk being left behind."

We need to work together to ensure that no APEC economy is left behind. APEC should work to triple the number of people within the region with individual and community-based access, triple the number of small businesses doing e-commerce on-line, and wire all schools within the region for Internet access. To reach these goals will require action in four priority areas.

First, we must foster the appropriate policy and regulatory environment. Nothing will deter investment, growth and development faster than an outdated or highly regulatory environment that stifles private investment and innovation. APEC wisely has been a pioneer in helping its members assess their readiness to benefit from the New Economy. Nineteen APEC members have already participated in the APEC Readiness Initiative unveiled just a year and a half ago. Using the APEC Readiness Assessment, these economies have worked with the private sector to identify gaps in their readiness for participation in the New Economy.

APEC economies must now move quickly to make the changes necessary to close those gaps. We are encouraging APEC economies and the private sector to work on pilot projects and other activities that would put in place the building blocks of a vigorous e-marketplace in the region. "Readiness Evaluation Action Partnerships" (REAP) between the private and public sectors will provide policy advice and support capacity building to help create pro-competitive, flexible, market-led, technology-neutral policy and regulatory regimes that unlock the private sector's energy, ideas, and investment. The United States will be announcing later this week its participation in specific REAP partnerships.

Good policies also are needed to support technology development. In that regard, intellectual property protection is key, and we welcome APEC's program that will help ensure the legal and proper use of software and other intellectual-property assets throughout government offices.

Second, we must work throughout APEC to improve connectivity, increase access and lower cost. The experience all over the world is that competition in the telecommunications market spurs innovation and expansion of service. One good example of how this can work is Peru, where the privatization of two telecom companies in 1994 triggered a flood of new investment that in five years boosted the number of fixed lines by more than 165 percent, increased the number of mobile lines from 20,000 to nearly half a million, and doubled employment in the telecom sector. Access to telephones among the poor households increased from near zero to around 20 percent.

Third, APEC economies must build their human capacity. Human capacity is an often-neglected component of building a digital society. The starting point is investment in basic education, a priority for many APEC economies.

It also is vital to create more specialized capacity. In light of this, we are proposing that APEC Leaders call for an APEC "Knowledge Network". As envisaged, this Internet-based network would connect public and private officials, educators, NGOs and citizens in APEC economies with programs and projects directed at supporting education and training and the increase in digital opportunities for all APEC citizens.

Fourth, as will be discussed in more detail in the next session, we must make it possible for all APEC economies to participate in global electronic commerce. We can encourage small and medium-sized enterprises to access global markets and to participate in worldwide supply chains. To foster e-commerce readiness we must organize efficiently what has been referred to in APEC as the "web of connections." To make an internet transaction work, from the first mouse click to delivery to a customer's door, a country must:

1) Make it cheaper to get online and stay online.

2) Facilitate swift and secure electronic payments options.

3) Ensure that digital commerce is not being impeded by outdated, inconsistent laws.

4) Liberalize transportation regimes to make it easier and cheaper to ship goods ordered electronically from one country to another.

5) Speed goods efficiently through customs, at reasonable and predictable tariff rates.

6) Permit goods to quickly and inexpensively traverse the "final mile" between the port of entry and the customer's doorstep, in part by keeping small parcel delivery systems open to competition.

Finally, even as we discuss the expansion of access to the Internet, we should not lose our focus on the more fundamental reforms that help economies create new firms, make capital accessible to new entrepreneurs, and make our economies open to the new talent that can be made available by immigration and foreign direct investment.

The New Economy will be facilitated by ongoing initiatives in APEC economies to strengthen financial markets, to foster competition and to be open to flows of international trade and investment. The New Economy is not an alternative to the reforms several APEC economies have launched since the financial crisis. Rather, it is one of the potential rewards for those economies that persist with those reforms.

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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