Attachment 1 - Directives of APEC Economic Leaders

We support the actions of APEC Ministers Responsible for Telecommunications and Information Industry in their Cancun Declaration which lays out a Program of Action and Principles, and we urge them to find mutually beneficial ways to build upon this work to help achieve the visions we have set out in Brunei this year.

We welcome the message from APEC Energy Ministers from their meeting in San Diego this year and commend the commitments made in their Declaration. Recognising that energy is central to building the region's economic and social future, strengthening the marketplace and promoting clean and sustainable development, we support their simultaneous pursuit of economic growth, energy security and environmental protection. We welcome the new energy security initiative and the new implementation strategy and note that the latter offers important capacity building elements, including an option available by request from economies for on-site visits by facilitation teams to share experiences on implementation according to needs expressed by that economy.

We welcome and endorse the outcome of the second APEC Education Ministers Meeting held in Singapore in April. We agree with the key strategies identified by the Ministers for APEC economies to develop their education systems and meet the challenges of the new economy. We also welcome the decision by the Ministers to meet every five years to chart the future visions and directions for cooperation in education.

We agree that tourism is one of the region's most important and dynamic industries, providing employment and business opportunities for a wide section of the community including small and medium enterprises and people in outlying areas. We endorse the APEC Tourism Charter prepared by APEC Ministers Responsible for Tourism at their meeting in Seoul, noting its forward-looking approach and its inclusion of comprehensive time-bound goals, a program of capacity building, and action plans to build capacity in tourism and remove impediments to future growth in the sector.

While we acknowledge tangible progress made this year towards achieving the Bogor goals, we agree that we need to continue discussion on how best to achieve them. We welcome the comprehensive approach agreed by Ministers in reviewing and building upon the guidelines in Part I of the Osaka Action Agenda on trade, investment and facilitation as part of this process. We also note the review of implementation of the joint activities in Part II of the Osaka Action Agenda on economic and technical cooperation.

We endorse the strategic APEC plan for WTO-related capacity building as a basis for concerted action to enhance capacity for full participation in the WTO. We confirm that both developed and developing APEC members would prioritise as appropriate the plan in the development programs, and that priority should be given to allocating the APEC Trade and Investment Liberalisation and Facilitation Fund to finance possible programs in accordance with the established approval process of the Fund. We also confirm that members would pursue collaboration with relevant international organisations such as the World Bank and the Asian Development Bank to implement this plan.

We urge APEC Ministers and their officials to make further progress on the reduction of non-tariff measures as called for at our last meeting in Auckland and as reiterated by ABAC in its report this year.

We urge continued effort in APEC's work on strengthening markets, noting that there has been progress in many areas, including in cooperative initiatives on strengthening economic legal infrastructure and competition and regulatory reform. Together with individual efforts by economies, we are moving towards stronger and more efficient markets in the region. We also welcome the progress in implementing the recommendations for more competitive air services on a voluntary basis, including the proposals on widening and deepening the measures within APEC as well as a plurilateral arrangement among five like-minded economies.

We welcome the commitment by APEC Ministers Responsible for Small and Medium Enterprises to step up their engagement with business and their evolving cooperation initiative on SMEs and new business support.

We endorse our Ministers' initiative for APEC to prepare a human capacity building strategy that would define the objectives, priorities and principles for APEC to respond to the challenges of the 21st century.

We welcome the outcome of the APEC Forum on Shared Prosperity and Harmony held in Seoul in April. The Forum provided an important opportunity to discuss economic and social policies for sustained growth. In particular we welcome the proposal to strengthen social safety net activities in APEC to address economic disparities. We hope that this kind of policy dialogue established by the Forum will continue among APEC economies.

We strongly endorse the approaches many APEC fora are making to interact with the business sector in their programs and we encourage the business sector itself to be proactive in helping to shape the policy environment in which it works. We welcome the initiative of a dialogue with the chemical industry. We support ABAC's recommendation for the development of a network of Institutes of Directors to promote and facilitate the adoption of best practices and international standards in transparency and corporate governance.

We remain firmly committed to gender integration through the Framework for the Integration of Women in APEC. We Welcome and endorse recommendations from the Ad Hoc Advisory Group on Gender Integration to further accelerate the implementation of the Framework and see this as a continuation of our past efforts to ensure that all people in our economies achieve their full potential for improved economic and social well-being.

We welcome the progress report from Ministers on the implementation of the recommendations of the APEC Food System. We recall that the APEC Food System can make an important contribution to meeting the objectives of APEC, given the importance of the region's food sector. We reconfirm our commitment to address in parallel three areas of cooperation: the development of rural infrastructure, the promotion of trade in food products, and the dissemination of technological advances in food production and processing. We urge APEC fora and members to increase momentum in this regard as recommended by ABAC.

We note the progress on the private-public sector initiative, Regional Integration for Sustainable Economies, which directly improves the capacity of our rural communities to be part of the regional trading system.

We urge our Ministers and officials to monitor the developments in biotechnology and foods derived from biotechnology to ensure a transparent and science-based approach to the regulation of these products and that our communities are able to be fully aware of the benefits and implications for producers and consumers.

We note that there has been an encouraging improvement in the economic and social conditions in the economies affected by the crisis of 1997/98. The regional economy as a whole is showing signs of a return to strong economic growth, but there is no room for complacency. There is a need for continued structural reform and sound policies to sustain this progress.

We note the risks posed by oil price volatility to the world economic recovery and for developing economies that are heavily dependent on oil market conditions, and the need to stabilise prices at sustainable levels. In the light of rising world demand, we call for appropriate increases in supplies and other necessary measures to promote long-term price stability in the mutual interests of consumers and producers.

Important lessons have been drawn from the crises of 1997/98. This understanding of the need for the right preventive practices to reduce the risks of financial panic - notably, stronger national balance sheets, strengthening of banking systems through effective regulation, greater transparency, greater monitoring and control of quasi-government guarantees and, crucially, more sustainable exchange rate regimes - has been the focus of the international community's response.

We welcome the recent meeting of the G-20 Ministers and Governors, which considered ways to reduce countries' vulnerabilities to financial crises and included a wide-ranging discussion on how the international community can meet the challenge of globalisation. Such exchanges between a broad group of systemically significant economies not only help strengthen the international financial architecture, they have the potential to advance other issues of concern to the developing world.

Surveillance is an important element in promoting international and domestic economic health. We affirm the importance of the IMF/World Bank Financial Sector Assessment Program (FSAP) and Reports on Observance of Standards and Codes (ROSC). Progress has been made in developing international standards, codes and best practice guidelines in a wide range of areas that will aid efforts to improve the legal, institutional, and regulatory frameworks in APEC economies. We support the key standards identified by the Financial Stability Forum and encourage APEC economies to implement them in accordance with their circumstances and priorities. Focused and targeted technical assistance will assist economies in implementing the key standards.

Implementation of the Financial Stability Forum recommendations on highly leveraged institutions, capital flows and offshore financial centers will contribute to reducing the risks associated with cross-border capital flows and promoting international financial stability. Constructive engagement is important to assist economies to strengthen regulatory and supervisory frameworks. We note that the Forum did not recommend direct regulation of highly leveraged institutions at this stage but emphasised that it could be considered if, upon, review the implementation of their recommendations did not adequately address the concerns identified.

Progress has been made in developing a framework for appropriately involving private creditors in crisis resolution and we urge the IMF and other relevant bodies to continue their efforts.

IMF lending facilities have recently been modified to improve their effectiveness. We support the work of the Multilateral Development Banks to increase their focus on policies and programs directed at reducing poverty. Representation on the Boards of the IMF and the World Bank and quota/share allocation should appropriately reflect developments in the world economy.

Cooperative financing arrangements at the regional level designed to complement resources provided by the international financial institutions in support of IMF programs can be effective in crisis prevention and resolution. In this context, we welcome the recent developments in East Asia and similar arrangements in North America.

These efforts to strengthen the international financial architecture, particularly the emphasis on surveillance and crisis prevention, have achieved real results - in reduced leverage and longer maturities of external debt; in movements towards a mix of exchange rate regimes and macroeconomic policies more compatible with stability and avoidance of financial crises; and, in more resilient domestic banking systems and under specific circumstances in each country, through greater foreign participation.

We welcome the Finance Ministers' work to strengthen markets, in particular :

The development of the Voluntary Action Plan for Freer and More Stable Capital Flows. As our Finance Ministers have recommended, economies should focus on implementing sound and credible financial policies in order to minimise the risks and to take advantage of the opportunities available in international capital markets. Economies should also note that, capital account liberalisation requires strengthened financial systems and effective risk management framework.

A study of APEC economies' experiences in managing bank failures, with the goal of developing a set of recommendations based on case studies that illustrate lessons from managing bank failures in our region.

Progress made in developing skills of financial regulators and the strengthening of financial supervisory systems and the ongoing work in this area, including a new project on developing skills of insurance regulators.

A clear recognition of the need to improve corporate governance and APEC's ongoing work in this area, including on insolvency law reform and financial disclosure.

The guidelines for developing well-designed and cost effective social safety nets.

The establishment of the Privatisation Forum as a way of sharing experience and expertise on privatisation, including governance and regulation of state enterprises.

Recommendations from the Third Pension Fund Forum, particularly on education, funds management and good governance.

Establishment of an APEC Working Group to survey the domestic legal and regulatory frameworks for fighting financial crime.

The review of the codes of conduct and practices of the credit rating agencies and continue to foster an environment conducive to greater transparency.

Establishment of an APEC Working Group to examine issues related to electronic financial transactions.