INTRODUCTION
Not since 1989, when the APEC ministers foresaw the need to incorporate environmental matters under the Regional Sectoral Cooperation Program of the APEC, has so much emphasis been given to the environment in economic growth and development.
THE ENVIRONMENT AGENDA
That commitment to the environment was sealed in Blake Island in Seattle in 1993, when I urged my colleagues the APEC leaders to assist developing economies in coping with environmental problems brought about by rapid economic growth. The Philippines called for a ministerial meeting particularly to present my concept of debt-for-environment swap as an environmental financing scheme.

This has now resulted in the identification of potential areas of cooperation on funding environment-related activities, which you will now discuss.

This is a concern we all share, and we are heartened to note that Canadian Prime Minister Jean Chretien has invited APEC ministers responsible for the environment to a meeting to develop APEC’s vision on the environment vis-a-vis economic development.

For our part, my government continues to be vigilant both in words and action, as demonstrated by our unflagging efforts to enshrine the environment as a key item on the agenda in international discussions and in our own work priorities at home.
We place great emphasis on the preservation of the environment because we know that, after painstaking effort, we finally stand on the threshold of unprecedented growth and change. That threshold — unless we watch our step and look when we cross — could very well be the brink of environmental disaster.
A MEETING FOR SUSTAINABLE DEVELOPMENT
You have already devised a framework of principles for integrating environmental considerations within APEC. I am confident that in your capable hands, the task of implementing this agenda will proceed smoothly.

Allow me therefore to present you with a reminder and another challenge at this point, and that is, to place equal emphasis on the sustainability of economic development as you do the environment, per se, and to address these linked objectives equally in your discussions.

The paradox of environment versus economic development remains a challenge for all us to resolve to this day. True, we have agreed that economic growth should not come at the expense of the environment or put another way, that the environment should not be sacrificed on the express train of economic growth.

We do not have much time to waste on circuitous debates. Therefore, what I propose is that in your work, you devote equal attention to the urgent agenda of ensuring that economic growth and development are spread evenly and benefit the most number of people. In so doing, you will be removing a substantial cause of environmental degradation and go a long way towards preserving the environment.

In this process, I am certain that you will find the sustainability of economic growth and of the environment to be mutually reinforcing, and are not, as some would argue, diametrically opposed.

Our objectives should be: first, the reduction and elimination of mass poverty and promotion of equity; second, the preservation of environmental resiliency, or the capacity of the ecosystem to “maintain its structure and patterns of behavior in the face of external disturbances,” and third, efficiency, or the ability of the market to price resources according to the structure of supply and demand and the wider social consequence of their loss.

These three common objectives feed on each other and if attained virtually ensures sustainable development on all fronts — the environment, the economy, the civil and political sectors of society.
LIBERALIZATION, GLOBALIZATION AND WORLD ECONOMIC GROWTH
Let us bear in mind that you are meeting against the backdrop of rapid and exciting changes — as well as daunting challenges — in the global economy.

The past decade has been characterized by liberalization; the significant reductions and in many cases, outright removal of impediments to international trade and investment.

Liberalization has caused the disengagement of the state from the actual production of goods and services and its making a new but equally important role in crafting the appropriate enabling environment for private enterprise, and facilitating and fostering the establishment and expansion of private business.

Liberalization had led to globalization. It has enlarged the economic space available to producers and investors beyond national boundaries to the point where the international market is increasingly being managed as a single market.

Liberalization and globalization have propelled economic growth. Countries that have liberalized, almost without exception, have observed marked improvements in their economic situation. The completion of the Uruguay Round, a hallmark of international liberalization for its sweeping opening of previously closed sectors such as agriculture and services, is envisioned to expand world trade by some $745 billion and to boost incomes by the same proportion by the time that its agreements are fully implemented at the end of a 10-year period.

Much of the world’s economic growth is predicated on the internationalization of economic activities. It also assumes increasing consumption levels, buying capacities and open markets to facilitate international trade in goods and services.

More importantly, developing countries have been identified as the key source of this economic growth. The sustainability of this growth therefore rests, to a large extent, on the ability of developing countries to provide the markets and to actually buy the produce of international exchange.
THREATS TO SUSTAINABLE ECONOMIC GROWTH AND DEVELOPMENT
Liberalization has heightened interdependence among economies which demand a coordinated international response. At the same time, the benefits of liberalization have not spread evenly among countries and or among sectors in a given economy.

The spread of liberalization has also been uneven — sparing, in some cases, vested interests or protected groups and sectors. Such undesirable residual conditions constitute serious threats to our quest for the preservation of the environment and equitable development. As I said earlier, economic hardship is the single biggest cause of environmental degradation.

Some of these threats to sustained economic growth manifest themselves in the following:

1. Risks of instability arising from international financial flows. The past year has been replete with examples of this threat starting with the financial difficulties of Mexico which amply demonstrated the close linkages of international capital markets. On the other hand, movements of interest rates in major capital markets have determined the direction in the flow of international capital, leaving national markets in precarious situations both from surges and sudden withdrawals.

If not coordinated well, movements of international capital can make or break an economy and put to risk the overall economic situation of the affected country.

2. Renewed calls for protection from marginalized workers, and the difficulty of structural adjustment. The slow growth of demand, stagnant wages and persistently high unemployment in the developed countries have resulted in pressures from their firms and workers for new protection against developing countries.

While developing countries are also subject to the same pressures, lingering economic difficulties in the mature economies have made their governments vulnerable to such pressures from their constituencies.

3. Persistent poverty and inequity in income distribution and high cost of social reform. Poverty continues to exist alongside prosperity in many economies and countries. The poor and vulnerable groups are unable to seize market opportunities to achieve even minimum income levels.

In the industrialized countries, governments are struggling to scale down — without much success — the cost of social security contributions with consequent implications for the well-being of the vulnerable and the unemployed.

These factors, together with the constraints of slow economic growth and the maturation of pension schemes with respect to funding have led to the spiralling cost of social security schemes. Meanwhile, the possible reduction of social security benefits has caused citizens of industrialized countries to agitate for more protection against competition from developing countries.

4. Limited capacities to absorb and benefit from liberalization. Many developing countries are not adequately equipped with export and market capabilities to fully benefit from global liberalization. It is a well known fact that countries which are largely dependent on export earnings from commodities stand to be marginalized in the great rush towards liberalization.

The same can be said of the labor force in both developed and developing economies. A number of developing countries do not possess internationally competitive production bases. Their businessmen may not be in a position to identify, on their own, new comparative advantage niches abroad.

Inefficient (or insufficient) infrastructure may also render them uncompetitive owing to higher telecommunication and transport costs and the like. Still others are unable to access new and more efficient technologies to improve production processes and bring down production costs.

5. Persistent market access problems for developing countries. While the uruguay round was marked by sweeping liberalization, it only marginally improved the market access for some products which are of key export interest to developing countries. High tariffs, tariff escalation, and in some cases, quotas continue to be applied on agricultural products, tropical and resource based products as well as textiles and garments exports.

The refusal of developed countries to significantly open their markets for these products limits the growth potential of developing countries whose economies are for the most part, now dependent on export earnings for growth.

6. Distortions affecting the management of natural resources. These distortions do not arise solely from policies directed to the natural resource sectors. Policies which promote industrialization at the expense of agriculture discourage investments in land conservation and encourage encroachment on marginal lands.

Certain trade policies can also create problems: agricultural protectionism leads to more resources being used in farming than in environmentally or economically justified enterprises and impedes market access for low-cost producers, thus raising consumer prices in developed countries while lowering incomes in developing countries.
RESPONSES BY GOVERNMENT
In this era of openness, governments have a critical role to play in combating the unwanted effects of liberalization and globalization. It is here where governments must lead, not follow nor merely support the private sector. Failure to address these problems squarely risks economic growth and its sustainability. Among the actions that governments should take are:

1. Intensified policy coordination among governments to minimize if not avoid the “spiral effect” of economic imbalances — the decision of APEC finance ministers to work closely on capital movements is a case in point.

2. Adoption of pro-active policies or policy interventions to influence savings and investment rates (and build-up sufficient pool of domestic capital as a hedge against sudden movements of international capital); to promote the efficient functioning of markets; to improve access to international markets and the diffusion of technology; to promote core capacities in manufacturing and services; and to create the best possible conditions for the competitiveness of their firms.

In developing countries especially, small and medium enterprises which provide employment and the building blocks for strong companies must be nurtured and supported.

3. Closer cooperation among developed and developing countries as partners in economic growth. This includes assistance in capacity building, access to technology at affordable cost for developing countries, access to information and the like.

In view of the tight reins on public spending which limit the amount of financial assistance that countries can extend, a new form of development cooperation should be applied, i.e. One that would harness knowledge and technology in the implementation of development cooperation programs.

4. Continued market opening for products of developing countries. Countries, especially developed countries, should continue to undertake market opening measures for the exports of developing countries under the World Trade Organization (WTO). Trade policies which distort international trade and the allocation of resources, particularly those on agriculture must be abandoned and be replaced by more market-based schemes.

5. Broadened retraining of dislocated workers and focus on appropriate skills development for the poor. Unless and until governments make this objective their number one priority — with the necessary funding — calls for protection from international competition will not cease.

It has been observed that governments worldwide appear to have passed on this responsibility to companies by way of “on the job training.” however, tough competition for jobs and demand for high skills make it imperative that specialized training and retraining be provided separately with government support to enhance workers’ employability and to provide for a pool of trained workers to insure a country’s international competitiveness.
SHARING EXPERTISE WITHIN APEC
There will be many such issues for you to cover at this meeting, a number of which I have already enumerated.

For example, crowded cities appear to be the unavoidable product of economic development. In this respect, the environmentalists, businessmen and policy-makers among us should work hand-in-hand to develop new sustainable cities with the use of technology that will sustain their economic and environmental viability well into the future.

In the area of clean technology and clean production, an unimpeded exchange of information on new and developing technologies in all the production sectors will enable APEC economies to benefit from the work undertaken by the leaders in this field.

Besides information, an active transfer of technology among APEC economies, whether developed or developing, should be encouraged. The mode of transfer of technology should be aimed at both cleaning up the environment and reducing the disparities among member-economies.

Clean technology appropriate to small and medium enterprises should be given consideration, which the APEC Center for Technology Exchange and Training for Small and Medium Enterprises (ACTETSME) located here in the Philippines, can carry out. Since small and medium enterprises serve as a major element in our economies, this will encourage the growth of environment — friendly economies in our region.

And we cannot afford to neglect, of course, the Pacific Ocean, which connects all APEC economies in the physical, political and economic sense. Given the central importance of our ocean to all of us, its management cannot simply be limited to warding off pollution from land or water-based activities. The very life of — and in — the pacific must be protected, its growth promoted, its freedom of navigation guaranteed, its quality and diversity enhanced.

Owing to the critical and often competing claims of environmental protection and economic growth in this highly dynamic region, we must keep pushing the limits of what we can do to harmonize these concerns. If there is any region equal to this monumental task, that is us — the Asia-Pacific region.
CLOSING
Excellencies, I would not wish you to depart feeling that you bear this heavy burden on your shoulders alone. Aside from my assurances that my own country stands with you in this mission, I will continue to advocate my message of the harmony of the environment and the economy to my colleagues, the leaders of APEC, and to your partners, the ministers responsible for economic and financial management.

I believe that it is only when each and every one of us accepts sustainable development as a shared and indivisible responsibility, and pursues it in solidarity do we stand a chance of arriving at our common vision of a better, sustainable future.

Thank you.