2001 APEC Finance Ministerial Meeting
I. Introduction
1. We, the Finance Ministers of APEC met for the eighth time in Suzhou, People's Republic of China. Representatives of the International Monetary Fund (IMF), the World Bank and the Asian Development Bank took part in our discussions.
2. We convened under the policy theme of Growth with restructuring, stability and equity . We took stock of the latest global and regional macroeconomic developments and the policy challenges faced by APEC economies, and discussed the policy responses to promote sustainable growth necessary for increased prosperity in the region.
3. We agree that wide-ranging structural reform lays an essential foundation for macroeconomic stability and sustainable improvement in living standards. The work programs underway in the APEC Finance Ministers Process (as outlined in the Annex A) reflect our reform priorities in the medium-term.
4. In the year ahead, we ask our officials to focus their efforts on further strengthening collective understanding and capacity in policy areas that directly contribute to financial stability and sustainable economic growth in the region. We also ask our officials to look at ways to encourage greater economic cooperation, integration and openness among APEC economies.
II. Macroeconomic Challenges and Policy Responses
5. We note that the global economic environment is less favorable than when we met in Brunei Darussalam a year ago. The major world economies are experiencing a slowdown and forecasts for global growth have been revised downward. Reflecting this, most economies in the APEC region have experienced an economic downturn, with a slowdown in the IT sector, weaker financial market performance and, for many developing economies reduced capital inflow and foreign direct investment.
6. In the United States, the economy has slowed since the middle of last year. However, growth is expected to pick up towards the year-end, and long-term prospects remain favorable. Monetary and fiscal policies have been adjusted to stimulate the economy, including seven consecutive interest rate cuts and a significant tax reduction. These measures are expected to support growth while maintaining price stability. Monetary authorities have expressed a willingness to ease further if necessary. In Japan, economic activity has weakened and prices continue to decline. In response, monetary policy has been eased significantly under the new policy framework introduced in March. Further efforts are needed to implement financial and corporate sector reforms to facilitate the growth potential. The adverse short-term impact of reforms on growth should be minimized where possible. We welcome the recently announced structural reforms with these goals in mind. The Chinese economy, though affected by the global slowdown, has maintained its growth momentum, underpinned by domestic demand, supportive macroeconomic policies and restructuring. Reforms will be deepened to meet the challenges presented by China's expected entry into the WTO. We note the uneven nature of economic performance elsewhere in the region, especially in the crisis-affected Asian economies. Those economies that rely substantially on external markets have been affected more seriously by the global downturn. Despite the unfavorable external market conditions, we welcome that Korea has repaid its IMF loans which were drawn during the 1997 financial crisis, ahead of schedule.
7. Against this backdrop, we stress the importance for all members of the international community to take timely and appropriate policy actions to facilitate an early pick-up in global economic activity. We reaffirm our commitment to enhanced macroeconomic policy dialogue and cooperation to tackle the current economic difficulties, and to build a strong foundation for sustained and broad-based growth in the APEC region and the rest of the world.
8. We also emphasize the importance of continuing domestic structural reform to enhance economies' ability to respond flexibly to shocks. We take note of the progress that has been made in several member economies in corporate and financial restructuring. However, we stress the need to fully resolve financial and corporate sector difficulties. These include the need for further strengthening of banking regulation and supervision, corporate governance, and financial disclosure, and measures to strengthen market disciplines on financial institutions and other corporate entities over the longer term. We acknowledge the need for creating a conducive environment for entrepreneurship, and promoting and broadening private sector development within the APEC community.
9. We welcome the progress of the work of the APEC Finance Ministers' process, especially in the area of strengthening financial systems, improving economic and corporate governance, promoting e-finance, and developing adequate social safety nets. We resolve to continue developing the skills of banking, securities, and insurance regulators through policy initiatives under the Finance Ministers' process. We have asked our officials to continue their collaborative efforts on policy initiatives and technical assistance in this area that add value to other international efforts and take advantage of APEC's strengths (see Annex A).
10. Globalization is crucial to improving living standards. We stress the need for the public debate about globalization to be based on rigorous and comprehensive analysis of its impact. However, we recognize that too many people are still not participating in its benefits. We also resolve to address the challenges presented by globalization and to make sure that, by putting in place the right framework and policies, it works well for all of its participants, while continuing the policies that have led to greater prosperity, stability and equity for our region.
11. We pledge to strengthen our cooperation in narrowing the development gap within and among member economies to achieve sustained and equitable growth in the APEC region. We are committed to pursuing structural reform and well-managed liberalization policies, while seeking to ensure that the benefits of increases in productivity and growth reach all people. We place particular emphasis on well-targeted assistance to the poor and vulnerable through human resources development, particularly education, and capacity building. We stress the importance of development assistance to support sound domestic policies and poverty alleviation efforts. Such efforts will empower our people to harness the benefits of globalization and allow them to better cope with on-going changes.
12. Trade and investment liberalization and facilitation will increase investor confidence, attract capital to the region, stimulate growth, and reduce poverty. In this regard, we emphasize the importance of making progress towards the Bogor Goals of free and open trade and investment. In this context, we welcome and encourage further cooperation of customs authorities to promote trade facilitation without compromising enforcement.
13. We reaffirm our strong support for an open, equitable, sound and rules-based multilateral trading system. We welcome the continued efforts by the WTO to build consensus for further multilateral trade liberalization and strengthening of trade rules. We believe that these mechanisms will bring broad-based benefits to the global economy, including benefits to the disadvantaged. In this context, we express our strong support for the launch of a new round of global trade negotiations at the Fourth WTO Ministerial Conference to be held in November in Qatar. We reiterate the Trade Ministers' Statement on the need to facilitate the equitable and effective participation of all members and to work out in advance a balanced and sufficiently broad-based agenda as early as possible.
III. Strengthening the International Financial System
14. We welcome the important steps that have been taken in reforming the international financial architecture, and urge continued implementation of reforms. We stress the importance of broad participation to foster consensus on key aspects of the reform and to ensure ownership in the reform process among all economies, including in the development and implementation of international financial standards and codes. We welcome the efforts of the G-20 and the Financial Stability Forum in this area.
15. We underscore the importance of promoting financial stability and crisis prevention. We encourage further efforts at the national level to strengthen domestic financial systems and ensure greater consistency in domestic macroeconomic policies, and efforts at the international and national levels to strengthen global financial sector surveillance. We welcome the progress made and encourage further participation, on a voluntary basis, in the IMF/World Bank Financial Sector Assessment Program (FSAP) and Reports on Observance of Standards and Codes (ROSC) to strengthen financial systems by assessing economies' implementation of key financial and economic policy standards. Voluntary disclosure of ROSC modules can serve to promote policy transparency. We emphasize that work to implement and assess compliance with standards and codes needs to take full account of each country's unique circumstances, reform priorities, and institutional capacity. In this regard, we encourage prioritized and well-sequenced implementation of key standards by APEC economies, and urge focused and targeted technical and financial assistance where necessary. We also note the work underway to fight against the abuses of the international financial system and protect its integrity. We welcome the review by the Financial Stability Forum of the effectiveness and the progress in implementing the recommendations from the Working Group on Highly-Leveraged Institutions and the Working Group on Offshore Financial Centers.
16. We welcome the completion of a major review of IMF lending facilities and the efforts to make the Contingent Credit Line operational. We underscore the importance of continuing efforts by the IMF to further enhance the clarity and operational flexibility of its private sector involvement framework.
17. We urge continued efforts to enhance the effectiveness of the International Financial Institutions (IFIs). We support the work underway for the IMF to sharpen the focus on surveillance and crisis prevention and the Multilateral Development Banks (MDBs) on poverty reduction, and to strengthen coordination, transparency and accountability of their internal governance. We emphasize the importance of ensuring that representation on the IMF Board and IMF quota/share allocation appropriately reflects the current world economy. We encourage the IMF and the MDBs to continue efforts to further streamline and prioritize conditionality, improve national ownership, while ensuring that programs are of high quality and achieve meaningful results.
18. While recognizing the pivotal role of the IMF and other IFIs in promoting global financial stability, we agree that regional cooperation also has an important role to play. Cooperative regional financing arrangements designed to complement the resources provided by the IFIs in support of IMF programs can be effective in crisis prevention and resolution. In this regard, we welcome the recent developments in regional cooperation, in particular the substantial progress that has been made in implementing the Chiang Mai Initiative among the ASEAN+3 countries.
IV. Strategic Goals of the APEC Finance Ministers Process
19. We took stock of the APEC Finance Ministers' process and assessed how the work of the process can more effectively complement the work of APEC as a whole and the efforts of other international organizations and fora. To this end, we have agreed to a set of strategic goals and modus operandi that build on the strengths of our process (See the Annex B). We believe our new framework will help guide and focus our work in a way that complements APEC's overall vision.
V. Other Matters and Next Meeting
20. We welcomed the opportunity to have a dialogue with the APEC Financiers' Group (AFG), the APEC Business Advisory Council (ABAC), the Pacific Economic Cooperation Council (PECC) and the APEC Economic Committee (EC), and value their contribution to our work. We note their recommendations with regard to economic growth, financial development, and corporate governance. We ask our Deputies to continue to work with private sector organizations to ensure that their perspectives are effectively reflected in our work programs.
21. We welcome the achievement made by our Deputies on strengthening closer links with the APEC Senior Officials Meeting (SOM) process and other APEC fora over the past year, and urge them to continue their efforts to ensure our work programs complement each other and avoid unnecessary duplication.
22. We would like to thank the people and Government of People's Republic of China for the hospitality extended to all delegations and the excellent arrangements they have made to make the eighth APEC Finance Ministers Meeting a success.
23. APEC Finance Ministers will next meet in Los Cabos, Baja California Sur, Mexico, in September 2002.