U.S. and Hong Kong (2001)

REMARKS PREPARED FOR DELIVERY

U.S. SECRETARY OF TRANSPORTATION NORMAN Y. MINETA

HONG KONG - U.S. BUSINESS COUNCIL

ATLANTA, GEORGIA

JUNE 27, 2001

This evening, I'm going to focus on a few of the challenges that we face in building a global transportation system for the 21^st century. They are challenges that confront all of us here tonight -- challenges requiring the kind of international dialogue and cooperation embodied by the Hong Kong - U.S. Business Council.

Today, people all around the globe enjoy unprecedented economic opportunities, and the greatest era of technological innovation that humankind has ever known. In fact, the world's economy today is fifteen times larger than it was just four short decades ago.

Transportation in general, and particularly aviation, has led the way in this trade-driven global economic expansion. Transportation has also played a vital part in strengthening the connection among people through educational, cultural, and scientific exchange. As a result, in today's world, the notion of foreigner has less and less meaning.

The Bush Administration recognizes our nation's enormous trade and economic interests in the East Asia and Pacific region. Already the region represents our 2^nd largest trading partner -- second only to the countries of NAFTA -- with nearly $500 billion a year in two-way trade. U.S. trade with countries in the region provides millions of jobs to workers, and billions of dollars of income to investors, on both sides of the Pacific.

In announcing his decision earlier this month to extend Normal Trade Relations status to the People’s Republic of China, President Bush noted that the U.S. has a huge stake in the emergence of an economically open, politically stable and secure China. He said that we ought to speak frankly and directly with Beijing about our differences, but that we can and should cooperate with one another whenever our interests overlap.

Hong Kong serves as a bridge for those common interests . . . not only as a gateway to China, but as a world class economy, and a world class city, in its own right. Hong Kong's internationalism and openness to change provide the key.  Hong Kong has an enviable tradition of economic freedom, a reservoir of long-standing trading relationships, and the human capital to manage and leverage the future.

Chief Executive Tung correctly points out that Hong Kong has many of the ingredients necessary to remain a world class city in the 21^st century -- a well-established financial, trade, and business center; a technologically advanced telecommunications network; a thriving tourism industry; and a logistics hub for the region.

Over the last ten years, Hong Kong has invested billions of dollars in transportation infrastructure to improve the movement of people and goods. The Lantau Container Terminal. . . the new Chek Lap Kok airport. . . the 34 kilometer rail and highway system linking the new terminal and airport to the mainland. . . numerous other light rail, subway and causeway projects. All taken together, they have created a cohesive intermodal transportation network for the greater Hong Kong area. Hong Kong is truly a Transportation City . . .and an extremely successful one at that.

But, Chief Executive Tung also recognizes that Hong Kong needs to keep adapting in order to stay ahead of the increasingly complex global economy.

As you well know, in the modern global economy, the easy availability of international air transportation, coupled with access to a seamless intermodal transportation system which efficiently moves cargo over water and land, have become vital factors in corporate planning decisions, now equal in importance to the more traditional decision-making components such as labor productivity, tax structure, and capital investment.

In order for transportation companies to continue contributing to the streamlining of business practices, and responding to new customer demands, they need maximum flexibility in providing their services. Airlines and air cargo companies work hard to improve, but all too often they encounter an arcane world of restrictive agreements that limit which markets they can serve, and what services they can provide.

Over the last several years, the United States has aggressively pursued opening aviation markets around the world. As you may know, these open skies agreements establish a framework for growth in bilateral air services by giving carriers the operational flexibility to adjust to changing market conditions, and to offer a full range of services to passengers and shippers.

The United States has now concluded more than fifty open skies agreements. In the Asia/Pacific region, the United States has bilateral open skies agreements with

Korea, Malaysia, and Taiwan. We also have an open skies agreement with Australia for all cargo services. These bilateral agreements appear to have increased demand, led to pro-competitive changes in market structure, and most importantly, provided consumers and shippers with improved services and lower prices.

Last month, the United States joined with Brunei, Chile, New Zealand, and Singapore to sign the first ever multilateral open skies agreement. We think this new initiative offers several advantages. It streamlines international aviation relations by providing a single mechanism for broader exchanges of aviation opportunities, avoiding the prolonged negotiation of individual bilateral agreements. It gives carriers access to broader capital markets by easing the ownership requirements currently found in traditional bilateral agreements. We hope other nations in the region will want to join the agreement, and we trust it will serve as a model for future discussions.

By praising regional and multilateral approaches, I do not in any way want to imply that the U.S. will abandon its support of bilateral agreements. President Bush and I remain fully committed to moving forward with international aviation liberalization through any productive mechanism.

In fact, next month, we will re-engage Hong Kong in discussions about aviation liberalization. An open regime for aviation services would allow Hong Kong to build on its economic strengths, geographic location, and historical entrepot role to remain a predominant logistic and trade hub for the region. It would allow the most efficient use of the new, state-of-the-art Chek Lap Kok airport. We strongly believe that such a regime will benefit airlines and customers alike through more efficient operations and better service at the lowest possible fares.

Hong Kong has already reaped enormous benefits from open transportation services. The Port of Hong Kong has become the busiest container shipping port in the world precisely because of its business-friendly, free-trade philosophy, and because of its commitment to a level playing field for both local and international business.

Unfortunately, that same sense of reciprocity does not extend to maritime relations between the United States and China. China enforces restrictions on U.S ocean carriers that limit their ability to offer competitive service, while Chinese shipping companies enjoy the freedom afforded by America's open market and international shipping standards. The Federal Maritime Commission has these Chinese restrictions under consideration, and I fully expect DOT's Maritime Administration to revisit this issue in the months ahead.

The global economy is constantly evolving, continually presenting us with opportunities for positive change. We must seize the opportunities whenever they arise.

Passage of PNTR in the context of China's accession to the WTO provides an example of seizing the opportunity. China's entry into the WTO will ensure continuation of economic reforms, including accountability, transparency and, above all, the rule of law. We have all seen the forecasts of the resulting expanded trade flows between China and the rest of the world, benefiting consumers and businesses in Hong Kong and the United States alike.

For the same reasons, we look forward to China hosting the APEC summit this coming October. The President has said he plans to go to Beijing and Shanghai in the fall. His presence at APEC Leaders' Meeting will reconfirm this Administration's commitment to an active role in the region.

President Bush envisions a future in which the United States will join with Hong Kong, China, and other nations of the world, in moving ahead with our common transportation and trade interests. As Secretary of Transportation, I look forward to working with you in the Hong Kong-U.S. Business Council in building on that vision.

Thank you again for inviting me to join you this evening.

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