INTRODUCTION
I have long looked forward to this my second visit to your country.
During my first visit in 1987 when I was Prime Minister, you were looking forward to the Olympics to be held in Seoul in 1988.
They were a great success.
This time I come when you have been victorious in Barcelona. Not only did you take the first Gold Medal but you won the most coveted and distinguished one of all, the Marathon. Anyone who watched Hwang Young Cho swing into the arena for the last splendid lap must have felt not only admiration and joy for him but that his efforts symbolised the unquenchable spirit of your people and their determination to build a great country.
Korea had a centuries-long tradition of independence interrupted by a few devastating decades of oppression this century which left its scars on all who experienced it.
1945 saw the defeat of Fascism but not the collapse of Communism.
Having to face its devastation just across the border you know better than most that Marxist Communism is the most total tyranny the world has ever known.
All property is taken by the state, all jobs are at the whim of the state, and the Communists aim to govern thoughts and faith as well as action.
Oppression is complete.
But just as the world can be terrorised by the deeds of a few evil men so it can be saved by the high ideals and noble deeds of a few leaders.
Such was Winston Churchill. Such in 1950 when your hour of trial came was President Truman.
Truly the buck stopped at the right person.
So much of what happened is now history.
We in Britain are proud to have played a major part in ensuring the freedom of South Korea. One of our famous writers and also a Member of Parliament Edmund Burke said in the 18th Century “all that is necessary for evil to triumph is that good men do nothing” .
Well good men did what was right, unhesitatingly, decisively, and the world is now a better place.
THE ECONOMIC SUCCESS OF KOREA
Since then you have built a strong and powerful economy through the unremitting efforts of your people and the right economic polices.
In this part of the world you know full well that the wealth of a nation can't be counted by its natural resources.
If that were so Russia alone would be the richest country in the world.
The wealth of a nation is counted by the enterprise of its people encouraged by the right framework of policy.
Most of us can only marvel and congratulate you on the remarkable results you have achieved and on your persistence in attaining full democracy.
A process of industrialisation, export led, gave Korea an annual real growth rate of 8.8 per cent between 1962 and 1990. Between 1963 and 1978 world trade in manufacturers grew in volume by 9 per cent per annum but South Korea's exports volume grew by 31 per cent.
I won't give any more statistics although they are available because you have lived and experienced this remarkable growth and must be proud of what you have accomplished.
Of course there were difficulties, sharp wage increases, over-heating, the oil price increase in 1980, the failure of the rice harvest.
But the essence of both personal and national life is not whether you stumble from time to time but how well you get up and go on.
And you did.
Productivity and real wages rose and the gross savings ratio went up from 23 per cent in 1980 to 37 per cent in 1987.
As every economist remembers full well, Adam Smith whose great work The Wealth of Nations was completed in 1776 said: “investment equals savings and without the one you wont have the other” .
He also knew the importance of education and your investment in particular in higher education has put you in the forefront of nations ahead of both Germany and Japan.
The West should take a lesson from South Korea.
We have spent too much, borrowed too much and saved too little and that is at the root of many of our present problems. You have saved hard and invested on a colossal scale buying some of the most advanced manufacturing equipment the world over.
That, and the switch in emphasis from textiles and clothing to steel and electronics, leaves us in no doubt that what the markets demand, Korea will have the resources and enterprise to produce.
We were happy to see the successful launch of your first satellite on an Ariane rocket and to learn that the University of Surrey played some part in providing the technology.
I should say at this point that should you have any savings left to invest overseas, Britain is quite the best place, the most welcoming and co-operative in the whole of Europe.
Some of your own companies which we are glad to have in my country already know this for themselves.
And Japan knows it too.
When I opened a Japanese car factory in Sunderland I spoke to a few of our people on the production line saying that we must make sure that our performance in Britain was as good as that in Japan.
That's not good enough they said we aim to beat it!
The spirit of the industrial north lives on.
I tell this story because many of you will know that when I took office it had become clear that Britain's economy was being gravely damaged by trade union militancy.
Trade union power had led to overmanning, reckless wage claims and numerous strikes. We passed a series of Acts of Parliament which limited picketing, required officials of the Unions to be elected by secret ballot, stipulated that there must be a secret ballot of members before a strike, and abolished the closed shop.
Before the new Acts were fully in operation the Coalminers went on strike.
But we were ready for it and had sufficient stocks of coal and other supplies to keep the power stations going.
The strike lasted a year and we had plenty of stocks left at the end of that time.
The most remarkable thing of all was the courage of miners in one particular region who, despite ugly scenes on picket lines, insisted on going to work day after day.
Lorry drivers got the coal to the power stations.
None of them were going to have their lives controlled by extreme militants.
Before the strike was over, the new laws took effect and because the miners had been in contempt of Court Orders, the funds of the Union were sequestrated by order of the Court.
Since then we have had very few strikes.
Indeed we have one of the lowest strike records in Europe. We had judged the legislation, the timing and the mood of the people all right.
SOUTH EAST ASIA
Mr Chairman, in this part of the world the willingness to work hard, the desire to improve oneself and the wish to see one's country succeed are very powerful.
One only has to look:
—at the extraordinary economic growth being experienced in southern China, some of the highest growth rates recorded since statistics have been kept.
—at Japan's outstanding skill in manufacturing and ability to spot market trends and design the products of the future.
—at how Hong Kong has grown from a tiny outpost on the China coast to become the hub of trade and investment for the Asia-Pacific region.
—and the outstanding leadership shown by that remarkable man, Senior Minister Lee Kwan Yew, in building Singapore's economy.
And as one looks forward to the turn of the century, the prospects are brighter still.
By the end of this decade trade within the Asia-Pacific area — just within it, not countring trade with the United States, Europe and the rest of the world — will exceed trade within Europe.
Or, to give you another statistic: between now and the end of the century, the number of people in the crucial 20-39 year old age group will decline in the US.
It will decline in Japan.
It will decline in Europe.
But in the Pacific Rim countries it will increase by some 80 million, representing a huge advance in productive capacity and buying power.
As a result of my visit, I am ever move convinced that this Asia-Pacific region will be the world's economic centre of gravity well into the next century.
A very gullible American visitor to the Soviet Union in the early years of Communism came back and announced “I have seen the future and it works” .
We all know now how wrong he was.
But today, in the very different setting of South Korea's enterprising market economy, I paraphrase his words: “I have seen the future in the Asia-Pacific region and it will work — if we all adhere to the policies which have been the foundation stone of our present success.”
THE OPPORTUNITIES
Let me start by talking about the opportunities which I see.
China under the leadership of Mr Deng Xiaoping is going through a remarkable transformation.
The stain of the events in Tiananmen Square in 1989 cannot be wiped out.
I remember the intense revulsion and disappointment which we all felt at the time, just when it seemed that China has turned a corner.
But how much has changed in the world in the three years since then.
The central principle of Communism, that human beings do not matter and that you can run everything from the centre, all the politics and all the economics, is discredited almost everywhere you look.
In China that process of change has started too, not with politics as was the case in the Soviet Union, but in the management of the economy.
Doubtless this eased the path for your decision to have full diplomatic relations with the Republic of China.
The market is being allowed to work in ever more sectors of China's economy.
It is a considerable achievement for the world's most populous state just to feed and clothe its teeming millions.
Now their living standards are improving rapidly as well, and the economy is steadily being opened up to outside investment, in which both Hong Kong and Taiwan are playing a foremost part.
But the greatest incentive of all to further progress is the demonstrable success of freer markets inside China itself.
People can see for themselves that markets work and give a higher standard of living. Chinese people know about markets.
They are natural capitalists. Now even their leaders are saying that China must learn from the capitalist system.
No doubt those who rule China hope that economic reform will stave off the need for political change.
That view will turn out to be utterly mistaken.
As you know in Korea, a sophisticated economy needs a well-educated workforce who will demand more freedom. Prosperity produces a middle class who will not be content to be deprived of political rights. And telecommunications and computers defy national boundaries and open up access to information about the outside world.
It is true that historically economic reform has usually preceded political liberty, although not in Russia.
But at the end of the day the dynamism of the market will inevitably lead to political change as well.
The best help which the rest of us can give is to encourage the economic reform associated with Deng Xiaoping and speed the great industrial revolution which is about to happen in China. One thing which I have learned from dealing with the Chinese leaders, and particularly Deng Xiaoping, is their ability to think decades ahead.
I learned in 1984 that his aim was to see China reach Hong Kong's level of development within 50 years.
The impetus which he gave to economic reform by his visit to southern China earlier this year was, I am sure, undertaken with that goal in mind.
What is profoundly misguided is to try to restrict China's trade with the United States as a way of putting pressure on China over human rights and democracy.
First it won't work.
Second it hits hardest at precisely the wrong people: the practitioners of the market system who are the best hope of reform.
And thirdly it damages Hong Kong, many of whose people have fled from China to live under a rule of law and a more democratic system.
President Bush is right to veto the short-sighted attempts by Congress to use his blunt weapon of attaching conditions to Most Favoured Nation treatment — just as we are all of us right to keep up political pressure on China to change.
In Hong Kong, you see an extraordinary example of how British law and administration and Chinese talent can work successfully together.
The decision to return Hong Kong to China's sovereignty after 1997 was an anxious one, even though there was no other course open to us under the terms of the original lease.
What eased our concern was Deng Xiaoping's inspired concept of ‘one country, two systems’. The Joint Declaration of 1984 codifies that vision and is Hong Kong's basic guarantee for the future, an international treaty deposited at the United Nations and carrying with it the support of the world community.
Both sides have committed themselves solemnly to honour it and I am sure that both will.
But Hong Kong's future does not rest on that alone.
Already Hong Kong's business community are deeply involved in China's economic development, and that will surely increase by leaps and bounds up to 1997 and beyond.
Hong Kong benefits greatly from access to the hinterland of Guangdong province: a market of 70 million people, equal in size to France, Britain or Germany, and with the fastest growth rate in the world.
Indeed nowadays it is fashionalbe to talk not just of Hong Kong but of ‘Hong Kong Plus’ — that is Hong Kong and the neighbouring regions of China. Hong Kong is set to become the great trading and financial service centre for China's industrial revolution, in the same way that London played this role for Britain's industrial revolution in the 19th century and New York for great cities such as Chicago, Detroit, Cleveland and Pittsburg.
Hong Kong's strategy is to make itself an indispensable part of China's hopes for economic success, and in the process guarantee the survival of its own way of life.
Beyond that I see the economies of Korea, Taiwan and Hong Kong and southern China meshing ever more closely with each other to become the focus of prosperity for the region as a whole, and a challenge to Japan's present pre-eminence.
Look further afield and the picture is no less encouraging. The countries of South East Asia as a whole have been growing at 8 per cent a year, compared with an average of 2.5 per cent for Europe and the United States.
They too are achieving it by letting the market decide and by encouraging foreign investment.
And in far away New Zealand, we have seen a commitment to tough economic policies to squeeze out inflation, reduce subsidies, and curb the trade unions.
It takes great political courage not to be shaken off course. But New Zealand stood firm through hard times and now the results are coming through.
I hope their persistence — and its reward — will be a lesson to countries in other parts of the world.
In short, what is happening in the other economies of the Asia-Pacific in addition to Korea is a rate of progress which confounds the world.
Its consequence is that East Asia is emerging as one of the three great pillars of the world economy alongside the United States and Europe — and with many advantages which they do not have.
THE POLICIES
But there is nothing automatic about prosperity.
It comes only when you have the right policies and the right basic framework for enterprise to flourish.
The most essential element is a rule of law.
That's not something which you can create overnight.
In Britain's case it comes from centuries of experience and precedent.
It provides the foundation of certainty so essential for business: the knowledge that agreements and obligations will be honoured and disputes justly resolved, on a basis which is equal for all without fear or favour.
With that rule of law goes the freedom which is essential to the operation of the market.
In South Korea you already experience democracy — a genuine multi-party democracy — but some people look at experience in other parts of Asia and say that it shows you can achieve great economic success without having full democracy.
I do not believe that can be sustained over any length of time.
In the short term you can achieve rapid growth under authoritarian government.
But it will not be sustained, because authoritarianism is the enemy of the freedom of the individual, and it is millions who make the market work.
If the countries of East Asia are to make the most of the opportunities for economic growth which are there to be taken, then they must steadily extend democracy and representative government.
The experience of Latin America for much of the post-war period is a dreadful warning of how unlimited potential for economic growth can be recklessly squandered by authoritarian governments.
The rule of law and democratic governance are fundamental. There is one extra advantage that accrues to democracies.
In the 20th century democracies have never been engaged against each other in warfare in any major way.
To reduce the risk of war we must therefore help all those nations in the former USSR in their transition to genuine democracy.
There the Communist system may have gone but the Communists haven't.
Some of them have joined parties with innocuous sounding names but their purpose is to hang on to their powers and privileges in one way or another. They must not succeed.
I believe that President Yeltsin is right when proposing to privatise business by a system of vouchers issued to the people. It is not a method we have used but the newly free countries face different circumstances.
There the most effective and immediate way to demonstrate the difference between the old Communist system and the new democracy (in addition to the personal and political freedoms) is to spread the ownership of property widely among the people backed up by a good legal system.
WORLD TRADE
The world trading system has been kind to the newly developed countries.
It has enabled you to develop your industries with a degree of protection from outside competition.
Only last month South Korea was praised warmly by the GATT officials for its free trade policies.
The report speaks in glowing terms about financial sector reforms, encouragement for foreign direct investment and the abolition of export subsidies. Average tariffs have comedown from 24 per cent in 1982 to 10 per cent now.
Your own liberalisation has contributed to the strength of the multilateral trading system from which your economy has also benefitted.
I should of course put in a word at this stage for Scotch Whisky which seems to be so good that you daren't let people buy it and have put on a 150 per cent liquor tax — more than on cognac.
That is particularly hard for us to swallow!
I must report to you that I had a similar problem with Japan and I had to work through four Prime Ministers before I had obtained fairer treatment.
I hope it will be forthcoming long before that in Korea's case.
Mr Chairman, manufactured products have come within the GATT trading system from the beginning consequently trade has expanded and flourished the world over.
Trade in services, agricultural products and intellectual property are not within the GATT and they are highly protected.
If we wish to see an expansion of trade we must make every effort to see that they too are covered by the GATT system.
We all have difficulties with agriculture, yourselves, North America and Europe as we all believe in the strength of the rural economy.
But if we expect other countries to buy our manufactured goods on the basis of price and quality we must expect to buy their agricultural products on grounds of value for money.
It does not help either international trade or goodwill if we deprive third world countries of the chance to export to us while we export to them.
Nor does it help our friends in Australia, New Zealand and others in the Cairns Group.
Nor the newly free countries of Eastern Europe.
To preach the need for help to them while practising protection for us is to enjoy our prosperity while denying them the chance to improve their own standard of living.
The most important thing for the future is gradually to free up all world trade including agricultural products, services and intellectural property.
The current GATT round should have been brought to a conclusion two years ago and two or three European countries carry a heavy responsibility for blocking a solution to agricultural subsidies.
The time for reaching a solution by the end of the year is now very tight especially given the American Presidential Election.
Genuine free trade is the most effective international co-operation and the best the recipe for prosperity.
The more it succeeds the less we need exclusive trading blocs which damage others.
NEW INTERNATIONAL ORDER
May I say a word about the new International Order.
The phrase is an old one and was first used after World War I when hopes were high that such a terrible conflict would never occur again.
The United Nations is the political arm and since the collapse of Communism the Security Council has worked more effectively.
But let us be clear that while United Nations resolutions give wider moral authority, something which is very well worthwhile, clear leadership and action, especially if force is required, still has to be carried out by member states.
To seek consensus whether in the United Nations or the EEC or the CSCE or NATO is sometimes to delay action vitally needed to save lives and bring hope to those suffering people who have none.
Of course there are sensitivities and some nations we should not like to see in action again because past memories are still too fresh in our minds.
Nevertheless they must bear a fair and indeed an enlarged financial share of the burden.
But the need for national leadership and strength is as great as ever.
Strong defence, the latest technology and national resolve are the best way to deter or defeat an aggressor.
It is not strength but weakness that tempts the tyrant and when you face as you do, and it concerns us all, a possible nuclear capability the utmost vigilance is required.
It is not a time to reduce defence expenditure too much.
Liberty is not secure because it is liberty.
Things don't stay put, new weapons need new defences.
We can sustain civilised values if we stay strong and united.
We shall always need the leadership of the United States which I hope will continue to play a global role.
It has been the willingness of the United States to stand by her friends that has guaranteed your safety and ours.
We do not thank them enough for their staunchness in defending liberty.
In the next century the Pacific Rim will be a, and possibly the, principal centre of enterprise and economic power in the world.
Let us see that we keep the relationship across the ocean in good repair.