The Outlook of the U.S. Economy and Impact on the Asia Pacific Region

New York, New York
June 4, 2003

Good morning, ladies and gentlemen. It's a pleasure to be here and to lead this discussion on the outlook of the U.S. economy and its impact on Singapore and the rest of the Asia Pacific Region.

First, I'd like to thank everyone here for their efforts in bringing about a U.S.-Singapore free trade agreement after more than two years of negotiations. This agreement is remarkable in many different ways.

It is the largest U.S. free trade deal since the watershed NAFTA agreement ten years ago.

It is the first U.S. free trade agreement with any country in all of Asia.

In fact, Singapore becomes just the fifth country in the world to benefit from a free trade agreement with the U.S., joining Canada, Mexico, Jordan and Israel.

This agreement is also unique in that it represents not just an economic arrangement, but rather, a mutual commitment to shared values of freedom and security.

When some of our closest traditional allies opposed the war in Iraq, Singapore stepped up and offered its support.

Singapore has also been one of our closest allies in the ongoing war against terrorism, providing logistical support for the conflict in Afghanistan and hunting down Al-Qaeda-linked terrorists in its own country.

Singapore was also the first Asian country to sign onto the U.S. container security initiative—significant because it operates the world's busiest port.

With the continued support of the people in this room, Congress will move quickly to approve the U.S.-Singapore Free Trade Agreement, which we hope will serve as a model of cooperation and friendship for the rest of the Asia-Pacific region.

It is a most appropriate time for such an agreement and greater cooperation, given the extraordinary challenges facing our two nations and the global economy.

Together, we face a protracted war on terrorism.

SARS, though it has not hit the U.S. as it has in Asia, is a shared challenge as well – reminding us all that our futures and fates are linked by the speedy and endless movement people, goods, capital, ideas, and yes, sometimes even disease.

We share the challenge of jolting the global economy back to life.

Every country—big or small—that participates in the global trading system must encourage growth by increasing productivity, lowering trade, tax, and regulatory barriers, improving education, and instilling a spirit of innovation and risk-taking.

By way of leading into our discussion, let me say a few words about the U.S. economy and what we need to do to make it stronger

Clearly, our economy is not performing to its potential, which is somewhere between a 3.2% and 3.4% annual growth rate. Though we have witnessed positive growth for six consecutive quarters, we've lost 1.8 million jobs during that period.

However, there are some good signs in the economy:

• Oil prices are coming down;
• The dollar is weakening, which should help U.S. exports;
• The stock market is improving;
• Consumer confidence is growing; and
• Inflation and interest rates remain low - fears of deflation have been unrealized so far.

However, if we are ever going to get our economy growing at the rate it should be, we must put more money into the pockets of consumers and give businesses additional incentives to invest.

The tax cut signed into law by President Bush last week—the third largest in our history—is a big step in the right direction.

It lowers the tax rate on capital gains and dividend income, speeds up marginal income tax cuts passed two years ago, accelerates relief from the marriage penalty, and quadruples the amount of capital investment that small businesses can write off each year.

These ingredients will help our economy and job market achieve solid, long-term growth—if they become permanent.

Some provisions in the new law sunset in just a couple of years, and the Chamber will fight to ensure that these tax cuts are renewed in coming years.

The Chamber is also pushing several other initiatives that are necessary for long-term economic growth and prosperity in the U.S.

We need a comprehensive energy policy that calls for more domestic energy production, greater conservation, a modernized energy infrastructure, and greater incentives to develop new energy technologies.

We need real legal reform to correct a system that is sucking the vitality out of business.

We've seen some progress in the states, and the federal Class Action Fairness Act stands its best chance ever to become law this year.

I should also add that the U.S. Supreme Court recently has recognized the harmful impact of outrageous punitive damage awards on our society. It overturned a $145 million punitive damage award in April and more recently sent back two other disproportionate jury awards for reconsideration.

We also need greater investment in our transportation system so that we can move people and products quickly and safely—more dollars for highway, airport, seaport, transit, and waterway improvements.

Finally, the Chamber will vigorously support bilateral, multilateral, and regional free trade deals around the world. In two days, the U.S. and Chile will sign a free trade agreement – the second free trade signing ceremony for the U.S. in a month.

Trade promotion authority legislation that passed in the U.S. last year has given our country greater leadership in the global marketplace and has sparked a flurry of new trade negotiations.

The Chamber will seize this momentum to push for more bilateral free trade deals, a Free Trade Area of the Americas agreement, and greater progress on the Doha round.

Our success in carrying out this economic growth agenda is vitally important to Singaporean businesses.

The U.S. is Singapore's second largest trading partner – a stronger U.S. economy means greater demand for Singaporean goods and services here and more job growth and U.S. investment in Singapore.

I'd now like to invite each of you to give your perspective on the U.S.-Singapore economic relationship before we open up the discussion.