relations in the wake of ASEM II
Sir Andrew Burns, British Consul-General, was the Foundation's guest speaker on
26 May 1998. This is what he said.
There are two good reasons for talking about Europe and Asia at the moment:
- there have been some important European developments under the current British EU
- (there has been very strong interna tional interest in Asia over the last year. This has
been particularly noticeable at two of the major recent gatherings under British
Chairmanship - the second Asia Europe meeting at the beginning of April and the G7/G8
meeting in Birmingham in May.
European Presidencies come and go. Six months is not a lot of time to achieve a great
deal. But the first six months of this year have been especially important for the UK.
They mark the quarter century since we join the European Community. A quarter century, as
one British Minister has pointed, out of some achievement but also of missed
opportunities. The British government has been very pleased therefore to oversee two of
the most momentous decisions which the European Union has taken in its 40 year existence.
First, it has been under our Presidency that the enlargement negotiations have finally
opened. Enlargement of the Union is the final stage of undoing the trauma of the Cold War
and the Iron Curtain. We look forward to welcoming back into the fold the reborn
democracies of Central and Eastern Europe. Enlargement of our common European
institutions, based on equality, democracy and respect for the rule of law, is what we
promised the countries of Central and Eastern Europe and as they join we can work more
successfully together to shape the future of Europe.
Of course that will entail some difficult economic choices. Already this year the
European Commission has come forward with radical proposals for reform for example of the
Common Agricultural Policy and the Structural Funds. We expect that at the coming European
Council meeting in Cardiff there will be agreement on a firm timeable to resolve these
debates. Enlargement will also bring new debates about political institutions, voting
But we are profoundly convinced that the enlargement of the European Union will
increase Europe's security and over time increase our prosperity - a prosperity which we
believe will be very important to the rest of the world, including Asia.
The second really momentous issue is Economic and Monetary Union (EMU). No-one should
underestimate the potential of the euro. When it is introduced there will be over 290
million people using it - some 5% of the worlds population. The single currency of
eleven countries in Europe will account for a fifth of the world's output, the same as
that of the United States. The euro is bound to strengthen competition and market
integration, just as the single market has done.
The eleven member states going forward to EMU in seven months time have achieved a high
degree of sustainable economic convergence, price stability, exchange rate stability,
convergence of long-term interest rates and impressive progress in bringing budget
deficits under control and reducing debt. Of course there is a great deal more to do. For
the single currency to be a success, wider economic reforms will be required making
product, labour and capital markets more efficient, improving national education and
training systems and so forth.
Before turning to Asia, can I take this opportunity to flag up one other really
remarkable recent development. This is the referendum in Northern Ireland and the Irish
Republic at the weekend, giving overwhelming support for the Good Friday Belfast
Agreement. This referendum is truly a turning point for the people of Northern Ireland.
It is the first time they have had the chance to vote directly on an agreement about
their future. The overwhelming endorsement of the Agreement gives a real prospect of a
more stable and peaceful future based firmly on democratic values. The overwhelming
"yes" vote, both north and south, means a clear majority voted for the agreement
in the whole of the island. There is now an agreed basis throughout the island of Ireland
for tackling Northern Ireland's historic divisions and no statistical manoeuvre can show
that a majority of Unionists voted against the Agreement. The result removes any vestige
of justification for continuing violence. People quite clearly voted for democracy and
against the gun and the bomb. The need now is for everyone to work together in the new
Northern Ireland Assembly.
Europe and Asia
The UK and Asia have important trade links. Asia accounted for almost 15% of the UK's
trade in goods and services in 1996 - some 30 billion pounds worth of exports from the UK
and 35 billion pounds worth of imports to the UK. The region has also attracted a stock of
over 15 billion pounds in British direct investment.
The same is true of Europe. In fact European Union exports to the region are greater
than those of the United States. And the exposure of European banks is greater than that
of American banks.
As the Chancellor of the Exchequer said the other day in Indonesia, we are absolutely
certain that we will all in future years invest more in each other. We need to see each
other as partners, not as rivals, benefiting from a global economy that is kept open to
trade, investment and capital flows. We have great sympathy for the difficult situation of
so many Asian countries. After all, European countries have had our own share of banking
crises, currency problems and IMF programmes in previous decades. The process of
adjustment has never been easy but we believe that countries emerge stronger and fitter as
a result of the reforms.
With our European partners we have been playing a role in responding to the current
crisis. In April we hosted the second successful Asia Europe meeting which brought
together the leaders of all Asian and European countries. At this meeting the leaders
recognised the inter-dependence of the world economy and the need to act together to
tackle its problems, and in particular the need to ensure a liberal, multilateral trading
and investment system.
At that meeting the British government launched an initiative aimed at increasing the
amount of technical assistance available to the economies of Asia. This will involve the
establishment of an ASEM Trust Fund at the World Bank to assist countries to assess the
poverty impact of the crisis and to assist with financial sector restructuring. We have
also offered technical help from the City of London.
Europe has also played a role through its support for the IMF's role in seeking to
restore confidence in the region and providing, through our role as major shareholders of
the IMF, a significant proportion of the resources which it and the World Bank have made
That message of strong support from the UK and from the European Union was reiterated
in the course of the recent G8 Summit in Birmingham where the leaders once again discussed
the wider implications of the Asian Financial Crisis.
Gordon Brown, the Chancellor of the Exchequer, spoke recently about the world approach
needed. This would combine the continued flow of international finance with the right kind
of national and international operational rules of the game and public policy framework.
He sees change needed in four areas:
- more transparency, openness and accountability, particularly greater openness in the
dissemination of information, the publication of accurate and timely economic data, fiscal
- the need to strengthen the architecture of national and international institutions
concerned with regulation and the supervision of financial institutions. He has proposed,
for example, that there should be a joint department of the IMF and the World Bank to work
with the Bank of International Settlements and others to improve the regular surveillance
work of national financial systems, to support the analysis of countries' structural
policies and to support the advice which comes from the world institutions.
- when crises do occur we need to find new and better ways to involve the private as well
as the public sector in their resolution. If they are to make good investment decisions
private investors have to take responsibility for the consequences of their actions.
- we need to find ways of reinforcing social cohesion and building a consensus on the way
ahead which involves governments, business, unions and the public.
Of course, events in Indonesia have been of particular concern in recent days.
Fortunately the situation there is calmer with shops and businesses reopening and fewer
troops and armoured vehicles on the streets. It is still early days for the new Cabinet of
President Habibie. It seems likely that public demonstrations will continue, but it looks
as if the new economic team there will now be able to resume its discussions with the IMF.
Clearly, change is essential. Political reforms are now needed that will do justice to the
aspirations of the Indonesian people.
EU - China
At the time of the Asia Europe meeting in London there were also two important meetings
with the new Chinese Premier, Zhu Rongji. He had an important bilateral programme with the
UK but also a useful summit with European Union leaders.
We were able to emphasise our desire to rebuild the EU's bilateral relationship with
China across the board. It is a global relationship and will serve the interests of both
countries both internationally and in the area of trade. We hoped that these summits would
become an annual affair and help take forward a dialogue on a whole range of new subjects
such as arms control, the environment, drug trafficking etc. In particular, the European
Union wanted to speed up the WTO negotiations, support economic and social reform in China
and seek a more open society based on the rule of law and human rights. The discussion of
human rights issues was important. We welcomed the plans for Mrs Robinson to visit China,
the proposed ratification of the international covenant on economic, social and cultural
rights and plans for the covenant on civil and political rights. We referred to a variety
of human rights concerns and both the Europeans and the Chinese agreed that the present
dialogue had produced considerable results and should be maintained.
One of the particular values of the summit was the opportunity to discuss the Asian
Financial Crisis and to welcome the very responsible role which the government of China
had been playing, in particular of course its commitment not to devalue.
You will recall that the Foreign Secretary made it very clear when he was here in
January that Britain was determined not only to build a new partnership with Hong Kong but
to develop a new and stronger dialogue with Beijing along what he called "a broad
road". We firmly believe that the better the Sino-British relationship, the better
placed we are to promote the interests of Hong Kong. Indeed the Sino-British relationship
has blossomed very substantially and will be enhanced when the Prime Minister visits China
and Hong Kong in the autumn. The dates are under active discussion. Two major bilateral
summits of this kind in one year is, I think, a testimony of the speed with which our
relations with China have developed recently.
But I do want to emphasise to you that there is no contradiction between a strong and
friendly dialogue with Beijing and preserving and promoting the interests of the people of
Hong Kong or of the British in Hong Kong. The Prime Minister made it clear last July that
he wanted to see Hong Kong become a bridge between Britain and China. Although our
relationship with Hong Kong has been on a different basis since last summer I really do
not think it has been weakened because it is built on such solid foundations of common
values, shared interests and joint concerns.
Hong Kong has always been one of Britain's most important trading partnerships. It is
our twelfth largest market in the world and the second largest export market in Asia. Our
two way trade flow is now moving at over seven and a half billion pounds a year. Well over
one thousand British companies operate in Hong Kong and thousands more operate through
agents. We are the largest foreign investor in Hong Kong - and indeed the largest European
investor in mainland China, well ahead of France and Germany. And 40% of our exports to
China worth nearly nine billion dollars last year passed through Hong Kong. I think the
British firms have a very good track record here.
Trade is, of course, a two way process. We import enormously from you, being your fifth
largest overseas market and I am particularly glad to see how strongly Britain continues
to perform as the preferred location for investment in Europe. More than 40% of Asian
companies in general, 40% of Japanese companies and 40% of all US investment find a home
in the UK for very obvious reasons relating to the business friendly environment there. It
is no surprise therefore that more than 80% of Hong Kong's investments to Europe come to
These economic links underpin a huge array of professional, political, legal,
educational, cultural, business and many other contacts between our two societies. My
objective here is to try to develop a fresh relationship with Hong Kong so that both sides
can maximise the benefit of that relationship both for our own interests and for our
common interest in improved relations between Asia and the Chinese mainland.
Perhaps I should just conclude by saying that throughout all this we continue to watch
very closely political and economic developments in Hong Kong. We have made it very clear
that we will go on doing so and feel a strong moral responsibility to promote Hong Kong's
autonomy in line with the Joint Declaration. We have been very pleased with the way the
transition has taken place and the very responsible attitude shown by the government of
China. We have sought to reciprocate that.
We are particularly pleased to welcome the fact that fresh elections to LegCo have been
held and that the people of Hong Kong have had the opportunity in such unprecedented
numbers to vote for candidates of their choice in the geographical constituencies. The new
LegCo includes representatives from across the political spectrum. That is very welcome.
We have had our concerns about the framework of Hong Kong's elections, particularly in
the Functional Constituencies. But we look forward to the continuing development of
democracy in Hong Kong and the attainment of the ultimate goal of a legislature elected
entirely through universal suffrage as provided for by the Basic Law. But we believe that
the conduct of the elections fully meets our criteria for a free and fair vote.
The Electoral Affairs Commission has done a good job ensuring strict adherence to the
rules and fair treatment for all candidates and we must congratulate the government on its
very vigorous efforts to ensure a high turn-out. I don't propose to comment on the success
or failure of particular parties or individuals. I look forward to developing good
contacts with the members of the new LegCo as they set about their task of fulfilling
LegCo's responsibilities over the next two years.
The above does not necessarily represent the views of the Foundation.