Good afternoon, ladies and gentlemen, it is indeed an honor to have the opportunity to address this joint meeting of the hkgcc and the Amcham.

In a job like mine, which involves responsibility for business operations on six continents, you quickly learn there are only two types of cities…..

Those you have to visit…..

And those you want to visit.

Hong Kong is both.

In the invitation letter, my role today was described as part of a "Distinguished Speaker Series." While I can’t promise anything I say will be particularly distinguished--- i can at least offer you the assurance that I will be brief.

My purpose in coming to Hong Kong is twofold…..

First Is to meet with executives from AOL Time Warner’s businesses headquartered in Hong Kong. Those operations are detailed in our new Asia-Pacific Fact Book. If you want to know the extent of our regional businesses or explore the opportunities for partnerships or joint ventures, the Fact Book is a good place to start.

Without reciting the details in the Book, let me stress a point central to the spirit, substance and success of AOL Time Warner’s ambitions as a global company.

The notion of globalization that prevailed through much of the last century was "either/or"--either a company achieved worldwide distribution with a standardized product or was limited to its home market.

Today, we know that Co-existing with the global marketplace are large and lucrative local marketplaces. each is characterized by different history, culture, and style, and each requires a long-term willingness to build from the ground up, using local resources, skills and talent.

This awareness is reflected throughout AOL Time Warner’s businesses.

When first introduced in this region, for example, CNN was little more than an overseas broadcast of the network’s U.S. programming. In 1985, with the launch of CNN International, that began to change.

CNN now has nine news bureaus throughout Asia. The regional production hub is located here in Hong Kong, where we have a fully integrated TV and Web editorial team which originates such award-winning programming as News Biz Today and the prime-time evening newscast, Asia Now.

Though the subject of CNN’s reporting can vary drastically in different regions, the underlying ethic is the same: Our journalists report the facts as objectively as possible, without regard for the wishes of advertisers, the whims of politicians, or the ideology of the CEO.

Independent journalism isn’t a local preference but a global need. that’s why CNN enjoys the status it does across the entire world. It’s also why we have our regional journalistic operations headquartered in Hong Kong, where the rule of law ensures we can report free from coercion or censorship.

In terms of entertainment, we create and market products that, while primarily American made, appeal to audiences everywhere. Characters like Harry Potter or Bugs Bunny are true citizens of the world. More and more, however, they’re the exception rather than the rule. At the same time as a handful of popular icons enjoy global stardom, the reach and popularity of local and regional artists is skyrocketing.

Nowhere is this clearer than in our recorded music business, which operates in 70 countries, including 12 in the Asia-Pacific region.

Some of the successful artists we distribute, such as Madonna and faith hill are U.S.-based. But last year alone, Warner Music International had nearly 130 Asian artists under contract, including stars such as stephanie sun, hong kong’s own Sammi Cheng, a-mei and china’s Na Ying.

Warner Music International is the model for expanding our presence in Asia. Our strategy is to develop local talent and build local enterprises, firmly rooting them in the culture, economy and social fabric of the countries in which they operate.

that’s the second reason for my trip.

Along with listening to and learning from AOL Time Warner’s people here, I’ve come to listen to and learn from business people like you, members of both the American and Hong Kong Chambers of Commerce. I’ve already been fortunate to speak personally with several of you, and in my return trips, which I hope will be frequent, I intend to meet and talk with many more.

Given that desire, I don’t intend to turn around and spend the next few minutes attempting to tell you how to do business. Instead, I want to touch on three closely related principles fundamental not just to enterprises in this region but to the prosperity of people everywhere.

At the beginning of the 21^st century, i think it’s safe to say that a majority of the world’s nations have reached a consensus on free enterprise’s role in achieving prosperity and progress. We can debate the proper balance between the public and private sectors, or when government intervention is helpful or harmful. But experience has proven the superiority of free markets to other forms of economic organization.

The principles I have in mind are the interlocking premises that allow free markets to develop and grow, creating a framework for individual initiative, security of property and the open exchange of ideas and products. By way of shorthand, I summarize those principles with the acronym T.L.C.

In the United States, T.L.C. is commonly taken to mean "tender loving care," which is not what I have in mind. as everyone in this room knows, Anyone looking for tender loving care in the world of global business is likely to be disappointed.

No, As I’m using it here, T.L.C. stands for talent, law and competition. Briefly, I want to consider the significance of each of these and the threat they all face.

The first--talent--is another way of describing the unique creative potential of every human being.

Different people have different talents, and people with the same talents have them in different degrees. Yet, the most economically advanced, technologically proficient, culturally vital societies all encourage people to develop their talents - whatever they may be - to the greatest possible level.

The opposite is true, as well.

History is filled with examples of how various forms of slavery, serfdom and forced labor, which deprived people of any claim on the rewards of their work, produced economic inefficiency, technological backwardness and social stagnation.

Societies that arbitrarily expropriate the results of individual talent or effort sever the connection between risk and reward. As a result, they deny themselves the means of their own improvement.

In the media and entertainment industry, talent is the engine that drives the virtuous cycle of risk, reward and re-investment. It’s what creates films, print, music and programming; equally, it’s the reason why audiences choose one film or CD over another.

You can automate assembly lines and entire factories. But you can’t automate the essential work of writing and producing movies, songs, magazines or programming.

The recognition of the benefits a society receives when it guarantees individuals the right to express their talents fully and to enjoy the success they achieve has resulted in various legal protections.

whether it be in the form of common law protections for material property such as land or a house, or in copyright protection for intellectual property, societies have evolved systems of laws designed to make people secure in their possessions. Without such systems of legal protections, free markets and free societies have no foundation.

The best summary I’ve ever come across of the simple logic behind the rule of law is in Robert bolt’s play about Sir Thomas More, "A Man for All Seasons."

At one point in the play, while More is still in the King’s good graces as Lord Chancellor, he’s reproached by his son-in-law for his refusal to disregard the laws of England in order to catch and punish religious dissidents.

If England is planted thick with laws that heretics use for protection, his son-in-law argues, then cut down the forest.

at which point more asks his son-in-law, "And when the last law was down and the devil turned round on you, where would you hide then, the laws all being flat?"

The wisdom of More’s answer applies not just to England, but everywhere: The reason we extend the protection of the law to others--to their material possessions, intellectual property and freedom of expression--is to ensure that same protection for ourselves.

As a result, we are able to construct a context in which it’s possible to work, invest and engage in competition.

which brings me to the "c" in T.L.C. – competition.

True competition--the kind that rewards innovation and excellence, serves consumers’ best interests and drives a society’s progress--can only take place in an arena in which the rules are the same for everyone.

Empirically, we know that a level playing field is the fairest, most effective arbiter of price, quality and value. It weeds out inefficient businesses and rewards innovation and invention.

Conversely, Nothing is more apt to undermine a country’s ability to develop the strength of its economy or build its capacity for re-investment and modernization than 1) shielding itself from competition; and 2) failing to establish and maintain an environment in which ownership of property--intellectual and otherwise--is secure from theft and piracy.

On the first count --protectionism--I’m fairly optimistic. We’re a long way from an ideal situation but, despite serious setbacks and obstacles, I believe the overall momentum of world trade is in the right direction.

On the second count --piracy--I remain deeply concerned.

In the United States, for instance, over the last three years, music industry shipments have fallen a whopping 25% largely as a result of illegal music-swapping on the Internet.

In China, it’s estimated that the illegal trade in music accounts for over 90% of the industry’s business.

The pillaging has spread to movies and TV shows. The motion Picture Association estimated last year that piracy in the Asia-Pacific region cost filmmakers almost $650 million in lost sales--$168 million of that in China. worldwide the figure is $3 billion.

The very ubiquity and ingenuity of digital technology that creates the potential to connect everyone on this planet gives digital pirates the capacity to steal on a scale that Captain Kidd and Bluebeard could only dream of.

this practice challenges the right of artists and the companies that invest in nurturing, marketing and distributing their work to reap the rewards of their labor.

I find it particularly ironic that this challenge should arise so soon after practically every country in the world--socialist and non-socialist alike--has recognized the role of individual initiative and profit-driven enterprise in sustaining a healthy economic future.

Digital piracy threatens that future.

On the creative level, which musicians, writers or filmmakers are going to spend years of hard work and talent in producing work that will bring them no financial return?

On the corporate level, which companies can justify new investments in "the infrastructure of content production"--that is, in upgrading their technology and in developing local facilities--when everything they produce and market is at instant risk of being pirated?

Piracy is the enemy of everyone who believes in a thriving global marketplace for ideas, images and information--a market supplied by vibrant local enterprises capable of investing resources into developing new talent and new technologies.

Ultimately, I believe that through a combination of more effective technology, law enforcement, and using technology to create legitimate alternatives, piracy will be brought under control.

We already know the difference that rigorous enforcement can make. The success of the film "Hero" in China--the mainland’s highest-grossing domestic film ever--was made possible by the government’s crackdown on piracy.

Here in Hong Kong, you’ve shown real leadership in enacting optical disc legislation that serves as a model for all of Asia. You’ve also had measurable success in raising consumer awareness of the harm that piracy does to local artists and legitimate businesses.

Along with the willingness of governments everywhere to enact and enforce protections for intellectual property, we need a new international commitment to take joint action on problems that no nation can solve on its own.

We’re in this together, all of us who want to see a world in which economic opportunity, personal security and individual expression aren’t limited to a lucky handful but are available to people everywhere. The challenge is by no means limited to digital piracy.

Stopping the outbreak of SARS from spreading into a global epidemic required an awareness of what was at stake by nations on both sides of the Pacific.

The blackout that recently struck parts of Canada and the U.S. was a vivid reminder of the interconnectedness of the physical networks that bind us ever-more closely together.

The water we drink and the air we breathe are parts of an intricately intertwined global environment that exists apart from national boundaries.

"East is east, and west is west," the poet Ruyard Kipling wrote. "And never the twain shall meet."

It turns out Kipling was a better poet than prophet.

East and west have met, and north and south, as well.

The corners of the earth are joined. There’s no more vibrant embodiment of that truth than Hong Kong.

These are challenging times for this city. Some of those challenges are unique. Others are common to all the world’s great cities.

Given your history, and the initiative, intelligence and ambition that you possess in such abundance, I’m confident that you’ll meet those challenges--and master them.

In doing so, you’ll achieve more than just securing Hong Kong’s future, you’ll show the whole world what can be achieved when east and west learn to accommodate, accept and assimilate the best each has to offer.

I speak on behalf of everyone at AOL Time Warner when I say that we look forward to working as partners to ensure Hong Kong’s future.