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Text: B. Lynn Pascoe Director, American Institute in Taiwan Remarks at American Chamber of Commerce and American University Club Dinner

Distinguished Guests, Ladies and Gentlemen:

Thank you very much for coming this evening. Shortly after Diane and I arrived in Taiwan three years ago, I had the honor to speak before this distinguished group. I greatly appreciated the opportunity at that time and have enjoyed the subsequent twice-yearly gatherings. Needless to say, I was delighted when Uncle George asked if I would be willing to do my final speech in Taipei before the same impressive audience.

These three years have been an exciting time to be in Taiwan. The culmination of the democratization process on the island has truly been of historic significance, and it has been a privilege to witness it. In this period, all of the political leadership of the island -- from county and city leaders, to the mayors of Taipei and Kaohsiung, the governor of Taiwan Province, the members of the Lifayuan and the National Assembly, and the President and Vice President -- have been elected by the people in free and fair elections. It is not hyperbole to talk about this as a first in the entire span of Chinese history; it is a fact. And everyone in the room should be very proud of your achievement. Of course, the newspapers are full each day of the intense arguments that have occurred throughout the process, but the remarkable thing to me is how smooth and seemingly normal this groundbreaking process has been.

Currently, Taiwan has one of the most active political environments anywhere in the world. Highly capable people are eager to participate in the political process, voter turnout and public participation in the elections themselves serve as a model for democracies around the world, and -- as all of you know -- no dinner party lasts over 15 minutes before the political events of the day become the main topic of conversation. And while people complain about the sometimes chaotic nature of the process -- and the occasional excesses that make the evening news -- it is important to remind ourselves that people on Taiwan are debating the major issues and searching for appropriate policies to resolve them in a completely open and democratic way.

This debate is healthy, not destructive, and a crucial first step in arriving at a consensus on the important matters that confront the people of the island. Without such a debate, it is impossible to understand what the critical issues are or to develop approaches to deal with them that serve the interests of the majority of the people. When we step back from the headlines to view the matter in broader perspective, we can see a remarkable reaffirmation of the power of the democratic process. The people have truly been empowered by this process and, after thoroughly airing the issues, we can expect them to demand that their elected representatives act to promote the common interest.

It has also impressed me to see how the political debate brings issues to the fore that in the past were never considered. We know that while democracy means majority rule, it also provides the minority and those parts of society previously ignored a voice to argue for better treatment. The transparency and attention to all of the issues will, I am convinced, produce a better life for all. In addition, as people here come to understand that they have the power to shape governmental decisions -- and also realize the limits on the government's ability to resolve all issues -- a sense of community spirit and civic responsibility has begun to develop from the grassroots in Taiwan that is critical to the future well-being of the society. People in Taiwan today not only demand that the government be more responsive to their needs, they are also themselves organizing community efforts to solve local problems.

My time here has also given me the opportunity to view at first-hand the impressive power and dynamism of Taiwan's economy. To be sure, there are problems with property prices, outdated regulations and practices, and corruption in some areas, and the events of this last year depressed growth. But the striking thing to me is the resiliency of the economy, the extraordinary quality of your business and technical people, and your position at the forefront of the growth areas of the international economy.

Most places in the world would be happy to have the beginnings of a computer industry; Taiwan stands third in the world in production behind the United States and Japan. Your schools, companies, and offices here operate at the forward edges of the information age. (We at AIT understand this well because as we moved to catch up with Taiwan's level of information technology, we found our approach was far ahead of agencies in Washington.) And the policies used to protect the NT dollar and the stock market in March were as sophisticated and confident an operation as I have seen pursued anywhere in the world.

To sustain its rapid growth, Taiwan will need to continue to play to its strengths and increase its efficiency by further liberalizing its policies and becoming more fully integrated into the world market structure. Taiwan has taken impressive strides in recent years to lower barriers to trade, protect intellectual property rights, and open its own market, but the sectors that currently lag the economy still suffer from overly restrictive past policies, as well as an absence of the competition and the transparency that comes with sometimes more efficient foreign participation in the market. There is clearly a lot of work that needs to be done for Taiwan to meet its full competitive potential. It is no surprise -- and in fact matches the pattern worldwide -- that the impressive growth in Taiwan's economy comes precisely from those private firms that are given maximum latitude and encouragement and are forced to compete directly with the most advanced international companies.

We have been strong supporters of Taiwan's effort to liberalize its economy and adjust past policies to smooth the way for entry into the World Trade Organization. Your plans to develop the regional operating center concept also seem quite sensible to us as an approach to Taiwan's future development. In addition, Taiwan's active participation in APEC has contributed greatly to that organization's effectiveness in bettering the lives of everyone in the region.

In watching you make adjustments in the economic and political spheres, as well as the modernization of your society, I have often been struck how Taiwan's accomplishments and problems are so similar to other developed societies. The debates here are common to modern societies everywhere -- how can we combine economic growth and an improvement in the quality of life? What are an individual's responsibilities to him or herself, to the family, to the neighborhood, and to the society? What are the roles of men and women in the modern world? What is the proper balance in educating our children? How do we improve the environment and our surroundings? How do we deal with drugs, crime, and other social ills? How do we improve efficiency and accountability simultaneously in a modern democracy?

These and similar questions debated in Taiwan are serious issues. The willingness to grapple with problems common to so many other societies makes me quite optimistic about the future of people here. And the open debate is producing some real results. For instance, in talking with people from the U.S. Environmental Protection Agency a few weeks ago, I learned there were only three places in East Asia where the environment is getting better, not worse: Japan, Singapore, and Taiwan.

When the issue of depletion of international wildlife resources came to the fore a couple of years ago, the authorities, NGO's, and ordinary people took quick effective action to ensure that Taiwan was not contributing to the destruction of our international habitat. For an outsider, the rapid improvement in the quality of life here as you tackle issues from health care to traffic congestion to education is obvious and encouraging.

Let me now turn for a few minutes to external issues and the relations between the people on Taiwan and the U.S. Those of you who were in the audience three years ago heard me say emphatically that the U.S. sees East Asia as vital to its own interests. Our ties to this dynamic part of the world are increasing day by day, not in decline. I believe events over the past three years have proved this to be true beyond a doubt. President Clinton has repeatedly emphasized the point that our role in Asia is crucial to the security and prosperity of the American people and to the future of the globe. And our actions have matched our words.

Over the past few years, I have heard a lot less about the supposed decline of the United States or the inability of its economy to adjust to the modern world. Indeed, steady U.S. growth, the dynamism of our companies, and their impressive ability to innovate and lead the way to the twenty-first century have been the hallmarks of the U.S. economy this decade. And American firms have been aggressive in expanding their role in East Asia. Well over a third of our world trade is now with the region, and it continues to grow rapidly.

Our companies are active throughout the area and the reputation of U.S. products and services continues to grow. The U.S. government has worked in partnership with the private sector to promote these efforts precisely because the prosperity of the American people and our future influence in the world depend on their success.

Taiwan plays an important role in U.S. regional and global economic interests. At times, I think the best way to check our perceptions of the world is to get away from the standard geographical maps and look to those generated by a computer that depict the size of a region's territory by statistics on its economy, population, etc. A map showing U.S. trading partners would have Taiwan as a giant, the seventh largest in size. Taiwan would be fourth largest on a map of U.S. agriculture exports, and it would be second to Japan in trade in information technology.

Small wonder that the AmCham and AIT put so much effort into the trading relationship between our two peoples. That trade has been an extremely important element in our close ties over the years and the relationship continues to get better. Indeed, during my three years in Taipei, we have put great emphasis on increasing those ties, and I have been quite pleased to see our exports to Taiwan register steady growth. I believe the dynamism of Taiwan's economy, the affluence of its consumers, and the planned further opening of its markets indicate that the prospects for continued growth are bright indeed.

I would like to note here that I have been especially pleased with the close cooperation between AIT and the American Chamber of Commerce in Taipei. Blessed with an impressive membership and truly outstanding leadership, the AmCham plays a critical role in Taiwan in promoting the trade and economic interests of the U.S. We at AIT consider it a privilege to work with you. I think that our cooperation is a model that many others in the region would do well to emulate.

The U.S. also plays a broader security role in the region. I am firmly convinced that the prosperity of the people here on Taiwan and throughout East Asia has been closely linked to the U.S. commitment over many decades to promote the peace and security of the East Asian region. In recent years, some people have occasionally expressed doubts that the U.S. would have the staying power to continue in that role now that the Cold War has ended. Indeed, with the drawdown of U.S. forces in Europe, the closure of the Clark and Subic Bay Bases in the Philippines, and the tragic events last year in Okinawa, some pundits in the region and in the U.S. questioned whether we would continue to play much of a role at all.

Such predictions, of course, have been proved to be dead wrong. As we have stated many times, the United States has huge strategic and economic stakes in a peaceful and stable East Asia. The U.S. commitment to the security of the region remains strong, and we have backed our statements and diplomacy with a steady military presence in the area. If any doubts remained, the events of the past few months have emphatically shown that the U.S. has the power and determination to stay the course.

With this audience, it is hardly necessary for me to recount the events surrounding the serious increase in tensions in March as the PRC tried to intimidate Taiwan's voters during the presidential election. The military exercises near Taiwan -- including the provocative bracketing of Taiwan's ports with M-9 missile tests -- unsettled not only people on Taiwan, but people throughout the region. Many feared that the long era of peace and stability was in danger of being replaced by an old fashioned "might is right" approach that would use military force to bring about political change.

To ensure there was no miscalculation in Beijing and to reassure our friends throughout the region -- including most obviously those in Taiwan -- the U.S. dispatched two aircraft carrier battle groups to the waters off Taiwan to calm tensions. The sighs of relief were audible throughout the region. Clearly the U.S. meant what it said, and it did indeed intend to continue its traditional role as the mainstay of peace and security in the region. Coincidentally, President Clinton made a highly successful visit to Japan which demonstrated for all concerned that the traditional underpinning of the region's security and prosperity provided by that alliance was here to stay.

Dramatic as these events were, it is important for all of us to remember that our actions were not a new departure in any way; they did not change the traditional fundamentals of our policy in the region, they merely reaffirmed the U.S. was steadfast in carrying out its stated approach.

As we have said many times, the U.S. is intent on promoting a strong and growing -- albeit unofficial -- relationship with the people on Taiwan. We are stalwart supporters of your continued prosperity and development. The U.S. has, and will continue to, honor its commitments under the Taiwan Relations Act, but we also want to pursue common interests on a wide range of issues on the basis of mutual benefit. AIT has worked hard in the past to promote these common interests, and I can assure you it will continue to do so in the future.

There can be no doubt that Taiwan's prosperity and security depend on the continued peace and stability of the entire region. The U.S. will work to promote its interests throughout the area, including its interests with the PRC. We believe that China's development as a secure, open and successful nation is in our interests and support its full integration into the international community. We will continue our "one China" policy which we believe has been beneficial to the people on both sides of the Strait and to the peace and security of East Asia. We have insisted -- and will continue to do so -- that the resolution of outstanding issues between the two sides of the Taiwan Strait be carried out peacefully.

The U.S. will continue to play its role as a stabilizing force, but it is also the responsibility of others in the region to seek to reduce tensions and resolve outstanding problems. The resolution of cross-strait issues depends in the first instance on the efforts of the two sides involved, and only they can resolve the outstanding issues now and in the future.

We have urged both sides to seek ways to return to the dialogue broken off last summer and have emphasized the importance of avoiding provocative actions or unilateral measures that would alter the status quo or pose a threat to peaceful resolution of outstanding issues. We have no intention of getting involved in the substance of cross-strait discussions, but we do believe it is important that the two sides make a maximum effort to get the talks back underway.

I would like to close my remarks this evening on a personal note. Diane and I are grateful for the splendid way we have been treated during these past three years. We believe it has been a great privilege to be in Taiwan leading AIT at this interesting period. And we have been treated with incredible courtesy and kindness by so many individuals that we could never repay them. People throughout the society from top officials to businessmen to ordinary individuals have made us feel that we are welcome in their midst. You can be sure that we will remember the many, many friends we have made here for the rest of our lives.

And we would like to thank first-hand those of you who came here this evening for your friendship and many courtesies. Thank you very much.