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  1. Conducting an in-depth examination of how best to remedy the global financial system was outside the Committee’s study reference.

  2.   Stanley Fischer, "The Asian Crisis and the Changing Role of the IMF.", Finance & Development, June 1998, p. 4.

  3. Ibid., p. 4.

  4. Assistance was also forthcoming from the World Bank, the Asian Development Bank, and bilateral donors.

  5. During his appearance before the Standing Senate Committee on Banking, Trade and Commerce on November 19, 1998, the Governor of the Bank of Canada expressed his surprise at the lack of progress in Japan in undertaking necessary reforms. He agreed that the Japanese economy with its net creditor status was wee-positioned to resolve its economic and banking shortcomings.

  6. In November 1998, the Japanese government unveiled a spending and tax-reduction plan, which would, among other things, lower the top income-tax bracket from 65% to 50%, and reduce the corporate tax rate from 46% to 40%.

  7. "Bad Analogies", The Economist, July 4, 1998, p. 74.

  8. Richard W. Wright, "Japan And The Asian Crisis", Canada-Japan Trade Council Newsletter, January-February 1998, p. 3.

  9.   China’s foreign debt accounts for only 15% of GDP.

  10.   The problem is exacerbated by the fact that there are huge levels of inventories remaining from the production excesses of several years ago.

  11. The four leading banks account for 90% of all Chinese bank lending.

  12. P. Rodman, "Chinese Puzzle", National Review, June 1, 1998, p.46.

  13. Currently, the region absorbs 40% of China’s exports and is the source of 60 % of its capital inflows.

  14. James Powell, Bank of Canada, Statement to the Senate Standing Committee On Foreign Affairs on the Asian Crisis, 18 February 1998, p.2.

  15. Lester Thurow, "Asia: The Collapse and the Cure", The New York Review, February 5, 1998, p. 23.

  16. Not all of the lending was government-directed. However, it is quite possible that much of it had transpired on the perhaps faulty assumption that the government would rescue the borrowing company if it ran into financial difficulty.

  17. William McGurn, "Asian Values Wrong", National Review, December 31, 1997, p. 38.

  18. James Powell (1998), p. 2.

  19. Ibid., p.4.

  20. Ibid., p.2.

  21. John McCallum, "Asian Crisis Update", Econoscope, Royal Bank of Canada, July 1998, p.10.

  22. Ibid., p.10.

  23. Ibid., p. 12.

  24. "The Asian Crisis: Causes and Cures", Finance & Development, June 1998, p. 20.

  25. "The fight to fund the Fund", The Economist, February 21, 1998, p. 25.

  26. Michael Walker, "IMF is more suited to the role of an impartial monitor", Financial Post, May 2, 1998, p. 25.

  27. Yet, many large creditors of banks have been too well shielded from the consequences of the Asian turmoil.

  28. "Fischer Presents IMF Perspective on Origins, Implications of Asian Crisis", IMF Survey, January 26, 1998, p. 22.

  29. As the next section will suggest, however, there is some disagreement on this point, with some analysts attributing a certain degree of the deterioration in East Asian economies directly back to IMF policy prescriptions.

  30. Morris Goldstein, "The Asian Financial Crisis", International Economics Policy Briefs, Institute Of International Economics:

  31. The alternative view is that the monetary authorities in Japan and other countries could adopt measures to contain the crisis that had developed in their own monetary system.

  32. Michael Walker (1998), p. 25.

  33. Bruce Stokes, "A Conversation With Camdessus", National Journal, February 14, 1998, p. 359.

  34. "Fischer Outlines IMF Policy Prescriptions to Minimize Impact of Asian Crisis", IMF Survey, April 6, 1998, p. 100.

  35. Martin Feldstein, "Refocusing the IMF", Foreign Affairs, March/April 1998, p. 27.

  36. Jeffrey D. Sachs, "Fixing the IMF remedy", The Banker, February 1998, p. 17.

  37. Martin Feldstein (1998), p. 31.

  38. Robert E. Litan, "A Three-Step Remedy For Asia’s Financial Flu", Brookings Policy Brief Series no. 30, February 1998: Briefs/pb30.htm, p. 9.

  39. For greater detail on the Asian Monetary Fund proposed, see the views of Robert Wade and Frank Veneroso in "Two Views on Asia", The Economist, 7 November 1998, pp. 19-21.

  40. Yilmaz Akyuz, "The East Asian Financial Crisis: Back To The Future?":, p. 9.
  41. In fact, a few days before the emergence of the crisis in South Korea, IMF staff economists had erroneously promoted the South Korean economic model as the one that other nations ought to emulate.

  42. Stanley Fischer (1998), p. 5.

  43. James Powell (1998), p. 6.

  44. Ian Vasquez, "The IMF: Bad Watchdog with a Bad Attitude", CATO:, p. 1.

  45. International Monetary Fund, World Economic Outlook, May 1998, p. 7.

  46. Julie Kosterlitz, "Thriving on Crisis", National Journal, February 7, 1998, p. 286.

  47. Jagdish Bhagwati, "The Capital Myth: The Difference between Trade in Widgets and Dollars", Foreign Affairs, May/June 1998, p. 7.

  48. Chile’s decision to remove the above deposit regulation can be contrasted with Malaysia’s recent move to impose exchange controls.

  49. "Finance Minister annouces six-point Canadian Plan to Deal with Global Financial Turmoil", Finance Canada News Release 98-094, September 29, 1998, p. 5-6.

  50. Various levels have been put forward by Tobin tax proponents; they are generally in the 0.1% to 0.5% range.

  51. Two key concerns surround: (a) whether the officials would, in fact, arrive at the optimal debt level; and (b) whether the threshold in question would cause an automatic surge in insured lending up to the prescribed level.

  52. Statement by Alan Greenspan, Chairman Board of Governors of the Federal Reserve System before the Committee on Banking and Financial Services, U.S. House of Representatives, 16 September 1998, p.2. (

  53. "Financial Crisis Prevention, Management Will Be Focus of Ministers’ Discussions", IMF Survey, April 6, 1998, p. 99.

  54. According to Statistics Canada’s definition, the Pacific Rim includes the countries of East Asia and Oceania.

  55. However, one important element that these data do not capture is the level of Canadian raw material and component exports to the United States that are incorporated in U.S. products and ultimately exported to third countries, including those in the Pacific Rim.

  56. Doug Nevison, Profiting in the Pacific Rim: Can Canada Capture its Share? The Conference Board of Canada, Ottawa, April 1994, p. 16.

  57. Ibid.

  58. Walid Hejazi and Daniel Trefler, "Canada and the Asia Pacific Region: Views from the Gravity, Monopolistic Competition, and Heckscher-Ohlin Models," in Richard G. Harris, The Asia Pacific Region in the Global Economy: A Canadian Perspective, The Industry Canada Research Series, University of Calgary Press, 1996, p.72.

  59. Ibid., p. 73.

  60. A "direct investment" is one in which the investor may exercise some influence over the management of the enterprise. Statistics Canada defines a direct investment as one in which ownership amounts to at least 10% of the equity of an enterprise and that covers claims intended to remain outstanding for more than one year.

  61. Citizenship and Immigration Canada, "Minister Robillard Announced New Immigrant Investor Program," News Release, 18 March 1997.

  62. Keith Head and John Ries, "Rivalry for Japanese Investment in North America," in Richard G. Harris, The Asia Pacific Region in the Global Economy: A Canadian Perspective, The Industry Canada Research Series, University of Calgary Press, 1996, p.87.

  63. Foreign Affairs and International Trade Canada, Opening Doors To The World: Canada’s International Market Access Priorities 1998, 1998, p. 47.

  64. Ibid., pp. 47-48.

  65. John McCallum, "Asia Crisis – Consequences For North America And Europe", Econoscope, Royal Bank of Canada, 1998, p. 5.

  66. Canada’s past inability to fully capitalize on Asia’s economic performance is seen by some analysts as a blessing in disguise, given the recent financial turmoil there.

  67. John McCallum (1998) , p.6.

  68. Statistics Canada, Canadian International Merchandise Trade, Catalogue no. 65-001-XPB, June 1998. Owing to still relatively strong domestic demand, import growth has been slightly under twice the pace of export growth during the first four months of 1998.

  69. Resource-based goods account for approximately 30% of total exports.

  70. Asia Pacific Foundation of Canada, Canada Asia Review 1998, February 1998, p. 16.

  71. Exports to the Asian region account for 5% of the total U.S. economy, versus 3% for Canada.

  72. John McCallum, "Risks For The Canadian Economy", Econoscope, Royal Bank of Canada, April 1998, p. 10.

  73. Hugh M. Brown, Canadian Banks: Lower 1998 Earnings Estimates, Nesbitt Burns, January 12, 1998, p. 4.

  74. Foreign Affairs and International Trade Canada, 1998-99 Estimates: A Report on Plans and Priorities, p. 11. The rule of thumb that the Department uses for job creation arising out of exports is as follows: 11,000 jobs for every billion dollars worth of exports.

  75. Ibid, pp. 11-12.

  76. It is worth noting that efforts by federal and provincial governments to reduce internal trade barriers have also contributed to external trade by providing a platform for export growth.

  77. Notes For An Address By The Honourable Sergio Marchi Minister For International Trade On The Occasion Of A Dinner In Honour Of Canadian Heads Of Mission In Asia At The Canadian Chamber of Commerce, Foreign Affairs and International Trade Canada Statement 98/16, March 12, 1998, p. 3.

  78. Ibid, p. 4.

  79. As of March 1998, the Asia Pacific region was the beneficiary of the largest concentration (31%) of Canadian TCs stationed overseas.

  80. John McCallum, "Has Canada Capitalized On Asian Growth?", Econoscope, Royal Bank of Canada, September 1997, p. 9.

  81. KPMG, The Competitive Alternative: A Comparison of Business Costs in Canada, Europe and the United States, 1997,

  82. Centre for Trade Policy and Law, An Assessment of the Prospects for Trade Liberalization in APEC, A paper prepared for the Senate Foreign Affairs Committee, No.47, Carleton University, October 1997.

  83. Ibid., p. iv

  84. Terry G. McGee, Widening the APEC Agenda: A Canadian Perspective, Institute of Asian Research, University of British Columbia, date unknown.

  85. Asia-Pacific Economic Cooperation, Manila Action Plan for APEC, Vol. 1, November 1996.

  86. APEC Business Advisory Council, APEC MEANS BUSINESS: Building Prosperity for Our Community, Report to the APEC Economic Leaders, 1996.

  87. Centre for Trade Policy and Law(1997), An Assessment of the Prospects for Trade Liberalization in APEC, A paper prepared for the Senate Foreign Affairs Committee, No.47, Carleton University, October 1997.

  88. There was still room for improvement in lowering peak tariffs for textiles, clothing and automotive products.

  89. PECC, PIDS, The Asia Foundation (1996), p. 19.

  90. Foreign Affairs and International Trade Canada (1998), p. 41.

  91. Canada and the World: Government Statement. Publishing, Public Works and Government Services Canada, 1995.

  92. S. Selin, "East Asian Arms Build-ups and regional security", in Canada among nations 1997: Asia Pacific Face-off, Carleton University

  93. SIPRI Yearbook 1996: Armaments, Disarmament and International Security, Oxford University Press, 1997, p. 17.

  94. R. Manning , "The United States and the Endgame in Korea", Asian Survey, July 1997, pp. 597-608.

  95. Negotiations on the Korean issue began in March 1998; however, as of the time of this writing no significant progress has been made.

  96. B. Garett, and M. Glaser, " Looking Across the Yalu: Chinese Assessments of North Korea," Asian Survey, June, 1995, pp. 528-545.

  97. R. Manning, "The United States and the Endgame in Korea", Asian Survey, July 1997, pp. 597-608.

  98. On May 14, 1998 North Korean officials announced that they had suspended their compliance with the 1994 nuclear freeze agreement. While experts have expressed doubt as to the ability of the North Koreans to carry through on their threat, it is perceived as an ominous signal in the wake of India’s nuclear testing. (International Herald Tribune, Thursday May 14, 1998, p. 5)

  99. SIPRI Yearbook 1996: Armaments, Disarmament and International Security. Oxford University Press. 1997, p. 17.

  100. K-C Oh. " The Anatomy of Anxiety in the Emerging East Asia Security Order" Asia Pacific Confidence and Security Building Measures. Edited: R. Cossa. Washington: Centre for Strategic and International Studies, 1995.

  101. David Carment, "Managing Interstate Ethnic Tensions: The Malay-Thai Experience" Conference Paper, 1994.

  102. "East Asia’s new faultlines", The Economist, March 14, 1998, p. 16-17.

  103. "Sea Raid", Far Eastern Economic Review, May 7, 1998, Vol.161, No.19, p. 8.

  104. "Markets Misfire: Arms sellers hurt as Asia Abandons price weapons", Far Eastern Economic Review, . Feb 5, 1998.

  105. "Malaysia to Indonesia: Go Away", International Herald Tribune, March 25, 1998, p. 1.

  106. A. Chong, "The Security Impacts of East Asian Market Turmoil" CANCAPS Bulletin No. 16, February 1998, pp. 2-3.

  107. M. Cohen, "Us and Them. Muslim activists say its time to seize economic power", Far Eastern Economic Review, February 12, 1998, Vol. 161, No. 7, pp.16-17.

  108. T.F. Homer-Dixon, "Environmental Scarcities and Violent Conflict", International Security, Vol. 19, No 1, Summer 1994, pp. 5-40.

  109. Ibid., p 38.

  110. P. Chalk, "Terrorism in Southeast Asia: The Evolving Dynamic", CANCAPS Bulletin No. 16, February 1998, pp. 7-8.

  111. R. Cossa, Asia Pacific Confidence and Security Building Measures, Center for Strategic and International Studies, Washington.

  112. Canada and the World: Government Statement, Public Works and Government Services Canada, 1995.

  113. While today Russia does not play a significant military role in the region, due to its significance and size it should not be overlooked as a potential military might.

  114. The concern over military build up is not unique to China’s activities. There has been a considerable military build-up among most of the regional players. For example six nations bordering the South China Sea have, or will soon possess a submarine force. (Harvard International Review. Vol. XIX, No.1 Winter 1996/1997 p.54

  115. R. Finn, "The Search for a Global Role: Politics and Security" in W. Hunsberger, Japan’s Quest: The Search for International Role, Recognition and Respect, 1997.

  116. J. May, "Asia – Pacific: Questions and choices", Canadian Foreign Policy, Fall 1997, P. 106.

  117. Members of the ARF include the ASEAN member states, most of the countries in Northeast Asia, Australia, New Zealand and extra-regional powers including the United States and Canada.

  118. Brian Job, "Canada’s Year of the Asia Pacific: 1997 - A Watershed for the Policies of the 90’s", CANCAPS Bulletin No. 17, May 1998.

  119. The theme of "the soft state" as a central problem for the Asia Pacific region came out repeatedly during the presentations, not only for security issues but also during the hearings on human rights. Recommendations made here are equally applicable to the chapter on human rights.

  120. Human Rights Watch, World Report 1998:, p. 1.

  121. Human Rights Tribune, Vienna Plus Five International NGO Forum Special Edition, July 1998, Vol.5, No.3, p.39.

  122. Canadian International Development Agency, Government of Canada Policy for CIDA on Human Rights, Democratization and Good Governance, Catalogue No. E94-239, 1996, p. 3.

  123. Ibid., p. 3

  124. Vienna Declaration and Program of Action, p. 18 from the World Conference on Human Rights.

  125. NGO conference on Human Rights, Working Group on the Rights of Women.

  126. Canadian International Development Agency, "SEAFILD Newsletter", Vol. 1, April 1998.

  127. The Shan Human Rights Foundation, Disposed: Forced Relocation and Extrajudicial Killings in Shan State, April 1998.

  128. Foreign Affairs, July-August 1998.

  129. D. Mauzy, "The Human Rights and ‘Asian Values’ debate in Southeast Asia", The Pacific Review Vol. 10, No. 2, 1997, p 210-236.

  130. Ibid., p. 216.

  131. Human Rights Watch, World Report 1998.

  132. E.P. Mendes, "Canada, Asian Values, and Human Rights: Helping the Tigers to Set Themselves Free", Canada Among Nations: Asia Pacific Face-Off, 1997.

  133. A. Sen, "Universal Truths: Human Rights and the Westernizing Illusion", Harvard International Review, Summer 1998, p. 42.

  134. Kim, Dae-jung "Asia’s Destiny" 1994 as cited in E.P. Mendes, "Canada, Asian Values and Human Rights: Helping to Set Themselves Free" in Canada Among Nations: Asia Pacific Face-Off, 1997.

  135. E.P. Mendes (1997).

  136. J. Hay (1997), p. 107

  137. "Notes for an Address by the Honourable Lloyd Axworthy, Minister of Foreign Affairs at McGill University, Human Rights and Canadian Foreign Policy: Principled Pragmatism", Foreign Affairs and International Trade Canada Statement, 1997.

  138. C. Forcese, Putting Conscience into Commerce: Strategies for Making Human Rights Business as Usual, Canadian Lawyers Association for International Center for Human Rights and Democratic Development, 1997.

  139. The United States had also previously adopted legislation making it illegal for U.S. firms to bribe foreign officials into rendering decisions favourable to the interests of these companies. The 1977 Foreign Corrupt Practices Act made it unlawful for a domestic business entity to provide payment to a foreign government official, political party, or candidate, for the purposes of influencing decision-making. In November 1997, member countries of the Organization for Economic Co-operation and Development (OECD), including Canada, adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Canadian legislation to criminalize bribery of foreign officials is currently being drafted.

  140. Ibid., pp. 90-91.

  141. Foreign Affairs and International Trade Canada, Canada and the World, p. 34.

  142. Canadian International Development Agency, Government of Canada Policy for CIDA on Human Rights, Democratisation and Good Governance, 1997.

  143. Canadian International Development Agency, "Asia: an overview" in Rights, Democracy And Governance: CIDA’s Support To Development In Asia, September 1977, p. 1.

  144. Canadian International Development Agency, Rights Democracy and Governance - APEC Developing Countries, 1997.

  145. Information for this table has been obtained from Senate testimony (34300), the U.S. State Department Annual Human Rights Reports, and Human Rights Watch World

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