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U.S. Department of State

Diplomacy in Action

East Asia and Pacific Issues; Readout from A/S Fernandez Trip to the EAP Region and Overview of Regional Economic Issues

Jose W. Fernandez
Assistant Secretary, Bureau of Economic and Business Affairs

Washington, DC
March 8, 2013




12:00 P.M. EST

THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.

MODERATOR: Good afternoon, everyone, and welcome to the Foreign Press Center. We appreciate having you here today. I would like to welcome Assistant Secretary Jose Fernandez. He’s going to be briefing you on his trip to southeast Asia, which includes Burma. This is on the record. He’ll make some –first he will make some remarks to start with and then we’ll take questions both from here and from New York.

ASSISTANT SECRETARY FERNANDEZ: Good afternoon, everyone. Thank you for coming. I just came back from a trip to four countries – the Philippines, Burma, Thailand, and Singapore – and I’d just like to give you a couple of minutes on that trip.

At every step of the trip one of the things that we did is speak to U.S. companies, also speak to a number of the chambers of commerce, and also obviously government officials. And basically, what we were trying to do was see how we could work together with these governments in order to promote some of our major economic objectives in Asia. Of course, given my post, I emphasized our economic relationship, and I was struck by how vibrant the trade and investment relationship between the U.S. and Southeast Asia was, and also the amount of goodwill that we got from all sorts of government officials as well as companies.

Our first stop was the Philippines, and while there I had a number of discussions with government officials on what the government is trying to do on the economic front. The Philippines, as you know, has been doing quite well in the last couple of years as a result of a number of the discussions, economic policy decisions that have been taken by the Aquino administration. And while there with government officials, we discussed how to promote more U.S. foreign investment, more transparency, what we could do to help on the efforts that had been undertaken by the Aquino administration on anticorruption. We also met with their economic free trade zone folks and also talked about what they were doing as well.

I also was struck by the, as I said earlier, the amount of goodwill that we saw in the Philippines. And some of it, it struck me while I was there, had to do with the fact that we have 4 million Filipino Americans in this country. And those kinds of people-to-people ties, I think, as I travel around the world, are becoming more and more evident, that our diaspora, the fact that we’ve got immigrants from all parts of the world, really gives us a tool to use for our economic relations as well.

Then we went to Burma; spent three days in Burma, one in the capital, one in Rangoon. While in Burma I was there as part of a delegation that was sponsored by the U.S. Chamber of Commerce. We had about 50 U.S. companies participate, and the first day was a symposium which about 300 Burmese Government officials, business people, NGOs, attended. And I spent a lot of time talking about sanctions. And in fact, my visit took place a couple of days after we had announced that we were easing sanctions on four Burmese banks. And that’s why I explained how we are following a calibrated approach to sanctions, how easing sanctions is a signal of our support for reform, and how we are trying to provide incentives for reformers as well as benefits for the diverse people in Burma.

And I also – one of my messages, both to the government and to U.S. companies, is that U.S. businesses can promote more transparency, that our corporate social responsibility programs and our ethics are second to none, and that we can encourage partnerships with civil society. And that I was there to repeat over and over again that responsible investment, environmentally responsible investment and sustainable development is something that not just resonated with the government. And in fact, every time that we mentioned the words “corporate social responsibility” their eyes – the government officials – their eyes widen and you can tell that this is something that they wanted to hear more about.

But it was also, I thought, a tool that our companies could use. The fact that we had not totally eliminated sanctions, that in fact we were following a step-by-step approach to sanctions, I think in some ways shows that we will continue to insist on our values, and that corporate social responsibility is more than just talk. It’s also the walk.

We went then – went to Thailand afterwards. And actually in Burma, in our meetings with government officials as well, we also talked about what is – what kinds of technical assistance we might be able to provide, what were they trying to do to take this country, which is very rich in resources, and turn it into a market economy, and do it in a way that provided benefits to all their people. And they’re very conscious, the government officials are, that their liberalization has now gone on for a couple of years and that the Burmese people are demanding that people everywhere are demanding results from their leaders and they’re eager to receive foreign investment, they’re eager to receive technology. And in some ways they are overwhelmed with visitors and part of what our companies need to do is to find ways to differentiate themselves, and one of those ways is corporate social responsibility.

From there we went to Thailand, Bangkok; didn’t spend a lot of time there, but enough time to meet with U.S. companies, also speak at the chamber of commerce, and also speak to a couple of government officials. We spoke about a number of items on our agenda. But again, Thailand is a place where companies in large part are doing well. U.S. businesses will always have – find something to criticize, and that’s to be expected. But overall our companies are happy there. They are – they see opportunities in Thailand; Thailand is also growing. And a number of them are looking at Burma from Thailand as well. So there – that’s another area that we spoke about.

And then my last stop was Singapore, where I met with government officials and representatives from academia, civil society, and U.S. companies and Singaporean companies. And we discussed issues and topics such as infrastructure. We talked about the Trans-Pacific Partnership. We talked about opportunities in the Asia Pacific. So that was the trip. And in terms of overarching themes, we – in every country, the Trans-Pacific Partnership was a topic of discussion, and I explained that this is a high priority for our Administration, that we want the TPP to be a high-standard 21st century agreement.

We also talked about regional conductivity and regional integration, the fact that Secretary Clinton announced last year the Lower Mekong Initiative, what we’re trying to do on the energy front on regional integration as well, and also how every country – and we talked about all of this – how every country was looking to improve its infrastructure. And this is something that I’ve seen around the world, and not just in Southeast Asia but throughout – everywhere I go in the – in developing countries. They all want to improve their infrastructure as a means of creating the conditions for growth. And we felt that improving infrastructure in areas such as electricity, communications and roads, would provide opportunities for U.S. companies to do business as well as to do some good. And we also felt that this was a strategic imperative for our approach to the region, because infrastructure was going to be one of the main topics of discussion in the decades to come.

Again, corporate social responsibility was a topic that I felt U.S. companies could tout as a distinguishing feature, how they strive to be good employers and partners to the local communities.

And then lastly, agriculture, agricultural technology. And in the Philippines this was a topic, and in a couple of other countries, how agricultural technology could promote food security and economic growth, how the regulating of technology through science-based methods was important, and why we need a technology on agriculture, because by the year 2050 we will go from the 7 billion people that we have today to 9 billion people. We will need to increase food production by 60 percent.

And how we have not just technology in order to increase yields but also something that we’ve been spending, at the State Department, a fair amount of time with, which is post-harvest technologies. In countries around the world, they can lose as much as 30 to 50 percent of their produce from the time it leaves a farm to the time it reaches the fork, from farm to fork, so to speak. And if we can just reduce those numbers, if we can reduce those numbers to First World numbers, we will make a huge improvement in food security, and we will have done it without having to grow an additional crop. So post-harvest technologies as well as agricultural technology.

So it was a wonderful trip. It’s amazing to see how that part of the world is growing. It’s amazing to see how much goodwill there is for the U.S. And it’s amazing to see the opportunities that exist for us to continue to improve relations that are excellent today.

So thank you, and I look forward to your questions.

MODERATOR: Okay. Thank you very much. And we’re joined today by our colleagues in New York at the Foreign Press Center there. If you guys have any questions, please step up to the podium and we’ll recognize you, but first we’ll turn to our journalists here. And if there are any questions, please wait for the microphone and then state your name and news organization and go ahead with your question.

Please.

QUESTION: Okay. One, two, three. So Christina Bergmann, Deutsche Welle, German international broadcasting. A policy question, if I may. With a new Secretary of State in office, there’s this notion that there’s a pivot away from the pivot to Asia – (laughter) – since, for example, Secretary Kerry’s first visit was to Europe, whereas the Secretary – Secretary Clinton visited Asia first. So what is your notion on that? Thank you.

ASSISTANT SECRETARY FERNANDEZ: We – I think we – our view is very simple. We all serve the President. It’s the President’s policies, not any one person’s policy. And we have a very strong commitment to Asia. It’s driven by not just personal interests. It’s driven by enduring interests, and those are not going to change. And as President Obama has said several times, we are going to deepen our engagement in Asia in order to seize opportunities, and that Asia – the Asia Pacific region is a strategic priority for the U.S. It’s a critical engine of growth in the world. And we are a Pacific power, and we’re in the region to stay.

So I think – and if you look at what Secretary Kerry has done since entering office, he’s been very deeply engaged with counterparts from the region. He obviously looks forward to visiting the region as soon as possible. But again, this is – we are following the President’s directives, and this is not a pivot away from anybody or a pivot to anyone, it’s just our – the policies that this Administration has followed from day one.

MODERATOR: Okay. Other questions? Yes, please. Wait for the microphone.

QUESTION: Mr. Fernandez –

MODERATOR: Where are you from? Sorry.

QUESTION: Straits Times, Singapore, based here. But I was curious to ask you a bit more about the TPP and how those negotiations are ongoing. As you know, this week everyone’s meeting in Singapore to talk about it. What’s your view on how these negotiations are going to continue, given the recent new interest shown by Japan to join the discussions as well? And how you think China will begin to see this in terms of it being perhaps a rival to the type of grouping they’re trying to put together?

ASSISTANT SECRETARY FERNANDEZ: That’s a lot of questions in one. Let’s go with the first one. The negotiations are ongoing, as you know. They – you probably have better information than I do in terms of the latest news, but I’m told that they’re going well. It’s a complex agreement. You’re talking about 11 countries, and 11 countries that are separated by – well, they’re just 11 countries. And that makes it into a complex agreement. It’s our intention to try to complete that agreement, to complete that agreement by this year.

And in terms of China – this is a question that I get all the time, and I – what we’ve always said is that the TPP – if you look at the TPP, it’s intended to allow other countries to ask to come in. And ultimately, our hope is that there will be more countries that will join, and that ultimately this could very well become sort of the free trade of the Asia Pacific agreement. So it’s an agreement that, by its terms, is open to anybody who’s willing to sign on to what we call 21st century high standards, comprehensive standards. But it’s not intended to exclude anybody. And in fact, I think we welcome expressions of interest from other countries, as we have in the case of Japan, as you heard from the press release that was issued a couple of weeks ago or a week ago.

MODERATOR: Did you have another question?

ASSISTANT SECRETARY FERNANDEZ: Sure.

QUESTION: I was curious –

MODERATOR: Hold on for the microphone.

QUESTION: Are you truly very confident that you would finish it this year, given how big the number three economy, Japan, might be in trying to perhaps upset this balance that you’ve got going?

ASSISTANT SECRETARY FERNANDEZ: Again, all I can say is that it’s – that’s the intent.

MODERATOR: Other questions? In the back there.

QUESTION: My name is Satoko Shimbori from TV Asahi, Japanese broadcasting company. Thank you for your time. And follow-up question of him up front about TPP, I mean joining, that the Japanese try to join right now. And as you know, negotiation between the United States and the Japanese Government is still going on, especially over the automobile and the insurance. Could you just tell us the current situation? Any progress? And do you – what is your expectation?

ASSISTANT SECRETARY FERNANDEZ: I would have to refer you to USTR on that, to be frank. We – you saw the press release that was issued February 22nd. That actually has – it’s a very careful description of where we are. We are continuing bilateral consultations with respect to Japan’s possible interest in joining the TPP. And then one of the things that we pointed out in that press release is that there’s lots of issues to be – a number of issues to be dealt with, that include the ones you mention, automobile, insurance, and addressing other non-tariff measures and also doing a lot of the work meeting the high TPP standards. But that’s – I really don’t have much more to add than the – than that press release.

MODERATOR: Questions? Yes, please. Go ahead. Right here.

QUESTION: (Off mike.) (Laughter.) Jim Berger with Washington Trade Daily, a global publication. But on this TPP in Japan, during your trip you said there was a lot of conversation about TPP, I assume with both government officials, foreign and U.S. businesses you met with. Did U.S. businesses in particular urge you to – urge Japan to join? Or what was their view on Japan joining?

ASSISTANT SECRETARY FERNANDEZ: I didn’t get any – interestingly enough, not a lot of comment on that. It’s just, I think, there was a lot of excitement over TPP in general. And a lot of the questions that you’re asking were asked as well – when is it going to be completed, what does it mean to have Mexico and Canada join. And basically, what I said is Mexico and Canada have been very welcome additions. They actually have- been very positive members of negotiations. But there’s interest.

There’s this – everyone realizes that if we can get the TPP done, you’re talking about 30 percent of the world’s trade. And if you put that together with the European potential free trade agreement as well, you’ve got another 25, 30 percent. So that will change the trade dynamics in the world. So there’s a lot of excitement and people see the possibilities and companies would ask about that. And that’s basically what I told them. We’re continuing to work and they know that the 16th round is taking place in Singapore, and that we’ll continue to work.

MODERATOR: Okay. Other questions? Yes, please. Right up front here.

QUESTION: Yeah. Good morning. Chuanjun Wang from Guangming Daily. During your trip, you got any new commitment from the new Thailand Government or Philippine Government regarding the TPP? If I’m not wrong that I remember, Thailand said before that they are studying TPP. What’s the new commitment from them now?

ASSISTANT SECRETARY FERNANDEZ: The TPP is intended – countries ask to join the TPP. And then there’s a process for achieving consensus. My point to government officials everywhere was if you joined, that’s something that will be – if you ask, or if you ask to be invited, that’s something that will have to be considered by the TPP countries as a whole.

As I said, there’s lots of questions, lots of interest, and understanding of the potential of TPP and also of the difficult decisions that will have to be made not just by these countries but also by ourselves, by the U.S.

And so – but in terms of – that was not part of a lot of my discussions. A lot of my discussions were more on Burma, how they saw Burma, how we could work together in the region, to – for more investment and more trade with Burma, on the issue of regional integration, on the Lower Mekong initiative, and corporate social responsibility.

So TPP was always a subject, but it was not ever the main subject of discussion because at some point it’s up to those countries to ask.

MODERATOR: Okay. Yes, up front here, please.

QUESTION: Thank you very much, Mr. Fernandez. I’m Denise Chrispim from O Estado de San Paulo, Brazilian newspaper. Yeah. Well, as you said, and other officials are saying, the – Asia is nowadays the priority for United States.

ASSISTANT SECRETARY FERNANDEZ: The what? I’m sorry.

QUESTION: Asia is nowadays the priority for United States in terms of investments, business, and opportunities. May I conclude that Latin Americans, especially Brazil, is not so important as their – those markets?

ASSISTANT SECRETARY FERNANDEZ: (In Portuguese.)

QUESTION: (Off-mike.)

ASSISTANT SECRETARY FERNANDEZ: No, and I said I don’t agree. Look, this is a question again that I’m asked a lot. And the answer is, it’s not that the U.S. has decided to ignore anybody, it’s not – it’s what we call, at times that I’ve heard called, pivot envy from other countries. (Laughter.)

The U.S. is Pacific nation; it’s an Atlantic nation. We have relations with Latin America that go back centuries and we have – it’s more than just trade relations, it’s historical relations, it’s human relations.

If you look at our trade in – with Latin America, 40 percent – 42 percent, to be exact, of our exports stay in the Western Hemisphere. We take up about the same from the Western Hemisphere – that includes Canada. Our trade with Brazil, to take your specific country, has increased substantially. We have – I personally lead our economic partnership dialogue with Brazil and we always talk about more things that we could do. We’ve worked with Brazil on agriculture in third countries. We are working with Brazil on fiscal administration in Central America. Our trade with Mexico is $1.5 billion a day over the border.

So it’s a lot of figures, but the bottom line is we are a Pacific nation, we’re an Atlantic nation, and it’s not that we’ve decided to put one ahead of the other, which we’re not. What we have decided to do was to put renewed emphasis in a part of the world, Asia Pacific, that is continuing to grow. But that is not intended and will never be intended to in any way reduce our relations with the part of the world that we’re bound to by geography, history, and a number of other things.

How’s that? (Laughter.)

QUESTION: Well, I mean, nowadays we have these TPP negotiations going on. There is this initiative with Europe. But I think that since 2005, when the FTAA agreement simply failed, and that was declared, including by Hugo Chavez, as died, so I think that there is no more initiatives to have to get this agreement back to the table, to release a new initiative for a free trade agreement with more Latin American countries.

ASSISTANT SECRETARY FERNANDEZ: Well, again, I would disagree in the sense – I mean, you’re forgetting two big agreements: Panama and Colombia. Okay?

QUESTION: Yeah. Panama and Colombia.

ASSISTANT SECRETARY FERNANDEZ: Well, that’s not – those aren’t details; those are --

QUESTION: It is not Brazil and Argentina, and --

ASSISTANT SECRETARY FERNANDEZ: But they are Latin America. And I guess my point is this is a region of the world that – look, when you trade 42 percent with the Western Hemisphere, that doesn’t sound to me like – ignoring a region. It’s a region that we value highly. And if you look at the two – those two free trade agreements, they show the emphasis that we’re putting on Latin America.

MODERATOR: Okay. We have time for one more question. Any other questions? Yes, right there in the center.

QUESTION: Yeah. Now that you mention Latin America, can you give your reactions on the aspects --

MODERATOR: Sorry, could you state your name and your news organization?

QUESTION: Yeah. Santiago Tavara from Notimex News Agency, Mexican (inaudible). Yes, could you react to – if you expect better relations with Venezuela in terms of energy after the death of President Chavez?

ASSISTANT SECRETARY FERNANDEZ: How did the Latin Americans take over the – an Asian – (laughter).

The – we have, and the President has, expressed sympathies to the family and friends of President Chavez. We know that Venezuela will face challenges as it goes forward. And what we’ve said is that we stand ready to support Venezuela during this period, and that part of moving forward will be electing a new president. We remain the longstanding friend of the Venezuelan people, and we will continue to support their aspirations. So that’s what the President has said, and that’s what we intend to do.

MODERATOR: Okay. Thank you.

ASSISTANT SECRETARY FERNANDEZ: Let’s have one more.

MODERATOR: You want one more? Okay.

ASSISTANT SECRETARY FERNANDEZ: Yeah, let’s just have one more Asian question.

MODERATOR: Any other? Yes, right here.

QUESTION: You traveled to Myanmar. I want to know how – what’s the status by U.S. companies in Myanmar now? Like, how much investment? You said earlier 50 companies there.

ASSISTANT SECRETARY FERNANDEZ: Five-zero.

QUESTION: Yeah.

ASSISTANT SECRETARY FERNANDEZ: Mm-hmm.

QUESTION: And how about the aid plan? Do you have already aid plan to Myanmar ready?

ASSISTANT SECRETARY FERNANDEZ: Repeat the last point. I’m sorry. How much what?

QUESTION: I mean, you discussed aid – assistance to Myanmar. So what’s the plan for the States regarding the aid or assistance to Myanmar?

ASSISTANT SECRETARY FERNANDEZ: I know that there are a few – of course, the oil companies have – many of them have been in Myanmar. I think a couple of U.S. companies have also announced that they intend to invest in Burma, one of them being Coca-Cola, I think.

The – look, our companies for many years were not able to do business in Burma. So they are learning as they go along. They are looking for opportunities. They see that they – the opportunities in electricity that I mentioned, the opportunities in telecoms – so for example, the delegation that I met with in Burma included a very strong, almost like a dream team, list of U.S. IT companies. You had Microsoft, Sysco --

QUESTION: HP.

ASSISTANT SECRETARY FERNANDEZ: -- HP, Intel --

QUESTION: Google.

ASSISTANT SECRETARY FERNANDEZ: -- Google, also. It was a great list of companies that are in the process of looking at opportunities in Burma. And so I think – but I think what they understand, as I said earlier, is that this is – there’s going to be some groundwork that will need to be done. There will be – Burma is not a place, and then we are not intending the companies to basically go in, make some money, and leave. The idea of Burma is that relationships matter. You’ve got to show a commitment to the country. You’ve got to talk about – you’ve got to be willing to help them develop, which, at the end of the day, they keep saying, we’ve got to deliver for our people. And so I think you’re seeing a couple of companies like the ones I just mentioned. But I do think there’s great interest on the IT side, electricity side, telecommunications side.

On the aid, I would have to get back to you, but for example, I know on the energy side, we have had meetings with and we invited officials from the ministry of mines and the ministry of energy in November – let me quickly look at this – and to come here. And what they did is they – the ministers of energy and mining and the managing director of Moge – M-o-g-e – to basically come to the States. And what they did is they looked at a lease sale in the Gulf of Mexico. Their – as investors come to them, they want to learn best practices; how do you lease an oil site, a drilling site? How do you conduct concessions? How do you conduct public tenders?

So we brought them here for that. We also had them meet with folks at the – officials at the State Department, the Department of Interior, Commerce, in order to show them best practices. We also know that they have signed up to EITI, which is the Extractive Industries Transparency Initiative. And basically, this is an initiative to help countries make good use of their natural resources and avoid the resource curse. So we’re working with them on that as well. And then there’s also a program for energy governance and capacity, that – it tries to do the same thing. So you’ve got – USAID is in Burma. I don’t have the details of what exactly it is that they’re doing. But I know that they’re working on agriculture issues and others.

The needs are vast, and one of the things that we – that I – that we realized is that it’s not just going to be the U.S. It’s going to be the international community. The Japanese have been quite active in Burma. We’ll all have to work together to help build the capacity of the Burmese. One of the things I was struck by, one of the government officials I met – I met him at about 11:00 – no, at noon – and we were supposed to have an hour’s meeting. And he said, “Mr. Fernandez, I’ve been up here in my office since 7 o’clock. I’ve only had meetings, and I’ll keep having meetings after you leave till 8:00 p.m., then I’ll start to work.” (Laughter.) And so my meeting, which was intended to be an hour – I just said, “We’ll cut this short. We’ll make this 15 minutes.” They’ve got a lot of visitors. They’ve got a lot to do. They realize how much they have to do.

And so I think part of what U.S. companies can do, what other governments can do, is try and build some of that capacity. Because they are savvy enough to know what they need. They need a lot, and they realize it, and I think we as governments and as companies, the private sector, can help them to achieve and make a start on their development goals.

MODERATOR: I know you have to be somewhere at 1 o’clock, in about 10 minutes, so I think we’re going to wrap it up there. Thank you very much for joining us, and thank you, Assistant Secretary. It’s been a pleasure.

ASSISTANT SECRETARY FERNANDEZ: Thank you.

MODERATOR: Thank you.