 economic recession but then recovered quite smartly and others such as Japan, Taiwan, Hong Kong, Thailand to a lesser extent Malaysia that have had more trouble bouncing back but there is good news there that many of them are starting to turn the corner now. Japan for example I think has seen significant rise in its recent GDP. Malaysia went down by 7.8% GDP decline in the first quarter of 2009 but then saw 4.8% increase the very next quarter and has seen strong growth since then. So generally I think the crisis part of this major recession has passed us. The real difficulty now is to make sure that there's a smooth exit for the macroeconomic policies which we're going to take in response to the crisis and to make sure that the recovery path is smooth and doesn't have we don't have a double dip. Most people I think think there was a second dip that would be smaller than the first one but it's better to have none at all unlike ice cream where it's always better to have two dips. So we're not we're not out of the woods. The challenge really is to and I think this was reflected in the ATHEC agenda as as as prescribed by the leaders in Singapore in November that the recovery be balanced inclusive and sustainable and just a word on what the how those are defined as discussed among economic policy makers in the region. Balance really refers to the macroeconomic piece that we need to see excess saving economies adjust. We need to see excess investment economies adjust and have a model which is is then sustainable over the long run for economic growth in the region. Often when people talk about sustainable growth they're either talking about the environment or they're talking about balance growth. The balance is definitely a question of macroeconomics. Inclusive is also very very vital. I think you all talked a bit about trade politics in the United States this morning. The short answer is that trade politics in throughout the region are back three letter word or four letter word. There really there is no economy in the Asia Pacific region which does not now have serious questioning in its domestic politics relative to market opening and deeper and faster economic integration even as leadership in almost every economy in the region understands the importance of that and the key how that is key to a rapid economic recovery and sustained growth difficult. In that environment it's very important that all of us be stating to our domestic economies and to one another the importance that growth is inclusive. That groups, individuals and types of corporations and sub-populations within each economy which have not experienced the benefits of economic growth that is resulted from regional economic integration need to experience those benefits more meaningfully and so we need to really pay attention to that going forward and sustainable referring to the environmental piece. Climate change is going to have an enormous impact on the Asia Pacific region in particular. Of course it's a global phenomenon and it's not going to have exclusively an Asia Pacific impact but it is going to have a major impact and we need to prepare for that now and I think that the leaders of the region recognize that and intend to take steps in that direction. The US-Japan economic relations that just walked in when Mike said the word that the discussion was depressing. So I'll try and be upbeat. I think in fact there's a lot to be happy about in US-Japan economic relations if you take a very broad view of the overall situation of where we are. In 2009, Japan and the United States exchanged the equivalent $550 million in foods and services every day. That's five, you know, how many of you have seen the Austin Powers movies? So we're always making jokes about you know how we're making announcements in the government that we're going to have an initiative that is one million dollars and you know the joke being that it should be a billion but in this case $550 million is actually a lot. If you think about it every day that's a lot of trade. The economies are trading rapidly. Trade is a proportion of GDP is increasing globally in the United States of Japan and that economic relationship is getting deeper and deeper. Our corporations are intertwined to the extent that it's almost pornographic. The enhanced cooperation, here's an example, which is we have signed and hopefully will implement an open skies agreement which will allow American carriers to get into Haneda to allow future slots or increased slots at 90 to allow all of us to get back and forth a lot easier. It is possible to make to have concrete achievements in US-Japan economic relations. We are in lockstep and closely communicating. I have to be really careful here. Is there anyone from Treasury Department in the room? Okay, I said the word fiscal. Our fiscal and monetary policies actually are cooperating, our policies are cooperating. We're cooperating very closely on those policies and it's been really a model. Japanese government's handling of the of the this economic crisis on micro-economic policy has been very skillful. They've had a lot of practice but it's been been really a model for how to handle an economic recovery and the United States is cooperating extremely closely with Japan. That has not always been the case in the past. The Japan has introduced a new growth strategy. Some of the details have yet to emerge yet to emerge but from a first glance it seems like a very sensible and well-thought-out growth strategy that can help achieve some of the changes in restructuring the Japanese economy that would be beneficial to everyone concerned. We have a very acute and shared interest in greener and more sustainable growth. US and Japan are taking a cooperative and strong leadership role in the Copenhagen process. I guess we can now call Copenhagen process. Next year we'll call it the Mexico City process but we're working very closely on that and in extremely forceful fashion our official development assistance policies are very much in parallel with an emphasis on food and agriculture, maternal and child health. It's having an impact around the world. US and Japan are major participants in the recovery of Haiti now in Chile in the war in Afghanistan. Our global cooperation is extremely vibrant and important. I could go on. The fact of the matter is that the US and Japan economic relations, if you broaden them beyond the question of why haven't we done an MTA yet, are really very very strong, very very cooperative and we're achieving an awful lot. Just to mention some problem areas because although the very delicious lunch was paid for by JETRO, I'm paid for by the US government. I need to mention these. Japan Post is really important that this not result in a major irritant in US-Japan economic relations. The decision about whether Japan Post is a private company or a public company, that's for Japan to make. But as any changes are made in how that organization is structured, it needs to result in a level playing field for all the financial services firms involved. Automobiles, I think you might have gotten a sense this morning about the importance of this issue in the United States. There's not, and I want to tread carefully here, but there are not enormous problems in the automobile area between the US and Japan, but there's always the potential for serious trouble and I think we need to be, keep an eye on the sector and make sure that issues are handled extremely well and then we still have the beef issue. It's now T-minus, what was that, 2003? Again, up to approaching seven years now without a scientific approach to beef in Japan and it's been a long time. So the Asia Pacific trade agenda from the US perspective, there's really four items, only one of which I play an important role on, but I'll just mention them all out loud, that the United States is focused on as we think about what we want to try to accomplish over the next few years in the economic realm in the Asia Pacific. First is the Trans-Pacific Partnership. I think you've heard a bit about that this morning. It's a significant trade initiative. We're cognizant of the fact that the participants in them are not all the largest economists in the world, but it's a realistic initiative and an important potential platform for region-wide economic integration by approaching the free trade agreement at a high standard and using what we will refer to as 21st century approaches to trade issues and then having an inclusive agreement which is a difficult agreement to achieve but then a significant agreement once it is achieved is an astute approach, I believe, to the economic architecture of the Asia Pacific region and an important answer by the United States to other alternative approaches and ultimately I think it's going to be difficult but ultimately optimistic that this is an approach that's going to work. Second of four issues is US China economic relations. We could go on for days about this but there are significant challenges in this area both in the macroeconomic realm and in the behind the border barrier area as well as at the border barriers. We've got an enormous structure now established between the US and China to address these issues. That is working okay. We hope that it will work better and we'll see faster results, more significant results in the months ahead. The third is the US-Korea free trade agreement. I think the region is waiting for the United States. I'll anticipate the question on this. I will admit that the region is waiting for the US to act on the chorus FTA. I think we can. As the President has stated we're looking for the way forward on this agreement and I think we will find a way forward. And the last is APEC, my personal area of responsibility. The US as you've heard of no doubt this morning is hosting in 2011. It's a major commitment of resources and attention from the United States to this organization. It's indicative of the fact that we view it as the primary venue for regional engagement with Asia Pacific on a range of economic issues and we're very hopeful about the potential for APEC to deliver results in the future. Our approach to APEC, like that of Japan, is very much a results oriented approach. We look forward to concrete achievements in 2010, 2011, in the trade area, behind the border area on human security and also in mapping out the future course of regional economic integration in the region. I think pretty much all the membership of APEC is realizing that it's the most important forum for exchange of ideas among the economies of the region about the future path of economic integration and it seems to be working pretty well. It requires a lot of attention and basically I want to tell you that we intend by hosting in 2011, following up on the excellent job that Japan is already doing to try and achieve significant results. Plus you're all welcome to go to the leaders meeting in Hawaii, which I guarantee the weather will be good. I think Nishiyama-san has already mapped out to some of the 2010 priorities for APEC. The 2011 priorities are not ready to stand up here and announce yet what they are. The one key though for the Americans in the room that I'd like to emphasize is that we really need to make sure that 2011 results in clear messaging to the American public about the importance of the Asia-Pacific region to US economic recovery and growth. The mantra that the president starting with the State of the Union address and through the National Export Initiative is going to be trying to push is that exports equals jobs equals growth. Two equal signs there. APEC provides us an opportunity to add one more equal sign which is equals Asia-Pacific. It's a very simple message but it's a message which has not been internalized by our general public. Our general public is fearful of trade agreements. They're concerned about unemployment. They tend to think that cooperative trade agreements between the United States and other nations result to the disadvantage of the United States when in fact close study of these initiatives show that because we are a competitive economy because we've got highly productive, we've got a well-trained workforce and a well-managed economy these actually work to our benefit. Adam Smith was not wrong but that's not believed by the American people and it relates to confidence and confidence in Washington's ability to make coherent policy and confidence in the US economy to compete globally and I think hopefully APEC posting 2011 will make a small contribution to restoring some of that confidence in the American people. So I don't know how long I've gone on actually but we have some time for questions and answers and as Mike said fastballs, curveballs, screwballs are hard but anything's fine. Thank you. Mike. I'll leave you the microphone. Thank you, Kurt. That was perfect actually when we were trying to get it started. On APEC, it sounds like much of the credibility of trans specific trade liberalization is now being invested in the team. There is to focus. Historically one of the important roles APEC has played has been forcing or nudging or pressuring progress in global trade liberalization. Can you say something about how you see the global impact in the context of the stalled, not dead global trade liberalization process? Is there room for APEC to start doing sort of path breaking work defining or being environmentally good to services or tightening up some definitions of rules and borders? The kinds of things that businesses care about, the kind of change that would help to perhaps create some life would help the client agenda for go on. Excellent question. Within APEC, there's something we call Pathfinder initiatives which are initiatives that do not necessarily all of them, they might ultimately have the support of all 21 economies. And I think what you're referring to is can APEC be a Pathfinder in the WTO context can beyond, the easy answer to this question is yes the APEC trade investors meet every year and every year they say go dopa, right? And they'll do that. Eric's laughing, sorry. They will do that and it actually is important that they do that and it has an impact on the pace and tenor and momentum of the negotiations because more than half of the global economy is represented at APEC. But the question is then beyond that can APEC carve out some issues which are related to what's on the WTO agenda and make progress within APEC that then helps move the WTO and I think the answer is maybe. Just to give you a sense of the dynamic of it is there's general recognition among APEC membership that the potential is there to do that. The question is which issues and what are the trade-offs for each of the economies at play between doing that kind of leaderly leadership approach within the APEC context versus saving their concessions or their progress in the WTO context and it's sort of a work in progress. It's tricky to do that. Last year in APEC there was a, as proposed by the United States and ultimately implemented an important initiative on services which this is a USTR initiative and they know it better than I do but it was a significant statement of principles and services trade and was a practical follow-up to try and push the APEC economies in a certain direction on how they do trade services. That kind of thing I think is possible again in 2010 whether we can cross over into the tariff realm. I think it's a harder question and cross over into some of the other technical issues that debate within the WTO. Again, it's difficult that there's some potential there. Just to give you kind of a sense of the overall dynamic I'm trying to be, not to give a definitive answer because I don't know. How do you see the Toyota recall issue? Is it overblown or is it not overblown? Well, it's certainly gotten a lot of media attention and it's a large recall. I kind of view it as a very normal thing to happen. Automobiles are complex pieces of machinery. Things go wrong with them. When something has gone wrong, they should be recalled. That's taking place. People have questions about it. The whole thing seems kind of, I hesitate to say the word normal because it is a big incident and people are very focused on it. A lot of people drive Toyota. I have one built in 1999 which has 156,000 miles on it and it's doing quite well. It does get a lot of attention because it matters to individuals. I hesitate to say it's overblown but also the whole incident has kind of followed the normal course of events as would happen with any other product recall of a complex and important consumer. You mentioned the problem of clear messaging to the American people about the importance of these various activities. Could you comment about the difficulty in acronym and leader meeting overloads? Have we exploded this to the point where nobody understands the American population with any of these individual meetings to meet or to be packed with? That's a good question. In fact, I could respond with a serious background. But if I'm quite good enough to have them roll off my tongue, I wouldn't have worked on the Pentagon yet. If I ever get that chance, I'm sure I'll be trained in doing that. It is a mind-boggling set of initiatives and acronyms. Beyond the acronyms, there's a mind-boggling amount of detail at work. There's something approaching 50 working groups just with an impact. Many of these produce real, some of them don't, but many of them produce real substance and progress in their issues. Either information sharing or capacity building among the economies of the region or in coming up with initiatives that then move you all forward on regional academic integration. But it is complex and it's difficult to follow. Really, it's a question of being... So the acronym problem is a matter for people who are responsible for creating acronyms to then not use them. Instead, be clear about what you're trying to achieve and use the English language or some other more commonly used language to explain what you're trying to do. Now, summit proliferation, that's another important question because there's a lot of them. And as the global community becomes more of a community, there's the number of issues that require really close attention and the leaders of the global community will become more and more complex and it becomes physically capable to get people together. The desire is for a lot of town meetings in this global community or the meeting of the selectmen, whether it's the GA or the G20. The problem, the difficulty for those of us working on international affairs is that most of these people come from democracies, not all, but most of them do and the expectation is they're elected to take care of the people that voted for them and not always spend all their time meeting with other leaders. And so I think it needs to be handled skillfully that it shouldn't always be the first step, but the problem here is we've got to have another leaders meeting or another leaders meeting that will meet forever every year. Pretty soon you can run out of weekends. So it's a problem, in fact, we're cognizant of that. But I think it's also a good sign that the impetus is there to have this number and depth of activities. Can you say what you think APEC is for? I mean, is it a good place to negotiate trade policy? In Australia, we've heard Australians like to think of themselves as initiators of APEC. Is the APEC starting to lose its direction when it's set to vote on goals because it's not the kind of organization that could ever deliver on a goal like that. What are the reasons for this? The organization's stated purpose is to accelerate or advance free and open trade investment for prosperity. So that's a fairly broad statement. And you use the words negotiate trade policy. Trade, yes. Policy, yes. Negotiate, maybe. The trick with APEC is that because it is usually, although not always, consensus-based. That doesn't mean unanimity on every objective, but it does require consensus or general broad adoption by the room, whoever's participating in the room. It makes it a relatively difficult forum to negotiate binding agreements. It does make it a good forum for negotiating non-binding or agreements or statements of principle or to exchange views that result in initiatives that then are negotiated outside the APEC context. And there are a number of examples of APEC initiatives that then graduate into regional initiatives. The most important recent one is the trans-pacific partnership. I think it's very clear to me that if APEC didn't exist, then the P4 would not have existed. Because as smart as people from Brunei and Chile are, I'm not sure they would have thought that there was a constellation of New Zealand, Brunei and Chile in Singapore that had potential to it. But by rubbing against each other in APEC meetings through trade policies together and what was in the interests of each of their economies, they came to the conclusion that, yes, we don't be able to do it. Because, hey, what? Guess what? We'll get everyone's attention. And even though we're small, we might be able to get others to pile in. And they did get our attention. They got the attention of the largest economy on the planet. So now the initiative has momentum and potential to grow. So that APEC has a definite role in that area. In coming up with agreements that although not legally binding in the sense of a contract and we've gone and had legal scrub and ratified by legislatures, but still significant agreements that result in meaningful forward progress. And in the much more line word, top shop. It's important to have top shops because that's where you exchange ideas. Today's event is sort of one of those. It's important to have events where people exchange ideas and then come up with, oh yeah, let's do this. Let's go forward. This way. My name is Kikuchi and I work for Masaoka and Associates. I'd like to put a positive spin on a disastrous situation perhaps. If there is an Olympics medal for deficit spending, Japan will be by far the gold medal winner and the silver medal will go to the United States. In fact, Japan not only finances its own deficit, the Japanese people, they finance about $6,000 per capita of U.S. debt, which is about 10 times that of the Chinese on a per capita basis. Now this massive debt is growing and perhaps I see no solution. Is there some possibility, say, for a currency union, for the yen and the dollar to merge and the huge deficit would be one? And then we can all sort of inflate ourselves out of it. Perhaps I'd like to hear seriously perhaps your idea on that. Thank you. If you give me a lot of yen, I'd be happy to give you a few dollars and then we could have a good result. Seriously, I think monetary union, and again, I've got to be really careful because I'm not good to talk about anything to do with currencies or exchange rates. But generally, I think every academic that has looked at this in the Asian Pacific region sees it as a prospect that is somewhat distant prospect for economies which are still not integrated to the extent anywhere near the degree to which the economies of the current European Union are integrated to take the step towards monetary union would be beyond the realm of possible at this stage. But I'm just, I think, stating what most academics believe. Asian Pacific region, we've got to think about the region. It's a good region and a bad region, right? It's growing. It's got well-educated people, people who are motivated and tend to work hard. It's got a lot of natural resources. On the other hand, it's got a lot of water. It's got a lot of distance. It's got a range of religions and cultures and so integrating it into a seamless economy which approaches the level of integration and it's currently the case in Europe where these countries have been physically right next to each other throughout their entire existence. It'll be a challenge. I think it'll happen. This technology advances and educational exchanges continue and trade grows that eventually the region will reach that level of integration, but it takes time. Thank you so much. H.C.S.I. This is your fellow at the CSI's from the Central. I want to ask you regarding the U.S. FDA policy. You said that you do those FDA policies as in the case of the recent FDA's that the U.S. has achieved has to be high standard and inclusive in industry-wise. One of the things. But there's been criticism. Just like you said earlier, the U.S. should be more pragmatic in terms of including FDA talks with the other partners like excluding some of the industry or sectors which can be controversial in terms of achieving these. How would you respond to those criticisms? From that, how would you prospect the future of the U.S. and the U.S. FDA policy? That's a good question. As I was walking in, I might refer to the Constitution and the fact that our legislative branch has constitutional authority over trade and by extension, therefore, the design of trade policy must be a cooperative venture between the executive branch and the legislative branch. In that context, we really can't have an FDA approach which would be inconsistent with what we're hearing from Congress. And in order to establish consensus within Congress in support of free trade agreement, the words free trade agreement means that you're really aspiring to accomplish a state of no barriers to trade between however many economies are participating in that agreement. The fairly clear message that we've gotten over the last several decades for Congress is that that means you better get it right the first time and not leave out important things or else it won't be passed. So in that context, I'm a little bit skeptical about the idea that we should be productively thinking about excluding sectors or taking issues off the table as we do FDAs. Rather, what we should be doing is looking for partners who are ready for that degree of integration for partners that are really to tackle their own difficult barriers even as they make difficult demands of the United States and then have these agreements be comprehensive and high standard. That's what works for the United States and there's a political reason behind it. Thank you very much.