VOLUME 6, NUMBER 21, MAY 22, 1995 
1.  American Leadership at Stake -- Secretary Christopher 
2.  Embracing a New Consensus of the Americas -- Secretary Christopher 
3.  Trade and Other U.S. Priorities in the Americas -- Alexander F. 
4.  U.S.-Mexico Relations: The Beginning of a New Partnership -- 
Secretary Christopher, Mexican Secretary of Foreign Relations Gurria 
5.  Fact Sheet: Cooperation With Mexico:  In Our National Interest 
6.  Fact Sheet:  U.S.-Mexico Binational Commission 
7.  Post-Summit Priorities in the Hemisphere -- Alexander F. Watson 
8.  FY 1996 Economic Programs for Promoting Peace in the Middle East -- 
Robert H. Pelletreau 
9.  Section 301 Determination on Japan 
10. America's Long-Term Interest in Hong Kong -- Richard W. Mueller 
American Leadership at Stake  
Secretary Christopher 
Statement before the Subcommittee on Foreign Operations of the Senate 
Foreign Relations Committee, Washington, DC, May 18, 1995 
Thank you, Mr. Chairman. I am  pleased to appear before the Senate 
Foreign Operations Subcommittee for the first time this year--and before 
the Congress for the 12th time since January.  
I have few responsibilities more important than maintaining a close 
dialogue with members of the Senate and House. And I have few objectives 
more immediate than securing full funding of our International Affairs 
I want to say at the outset, Mr. Chairman, how much I appreciate the 
leadership that you and Senator Leahy have provided. At a time of urgent 
need for bipartisanship in foreign policy, the Republican and Democratic 
leaders of this subcommittee have made a strong case on behalf of 
American engagement in the world. As you have said, Mr. Chairman, 
enacting the Senate Budget Committee's cuts "will leave this president, 
the next president, our nation and our citizens with no global options 
other than sending in troops."  Surely the American people deserve 
better than that. 
I know you share my belief that America's engagement in the world is no 
less important today than it was during the past half-century. Indeed, 
with the end of the Cold War, our challenges abroad have become more 
complex. Our security depends increasingly on combating threats like 
nuclear proliferation, terrorism, and narcotics trafficking--threats 
that call for more rather than less international cooperation. Our 
prosperity depends increasingly on foreign trade and investment. 
As the sole remaining superpower, we have an unprecedented opportunity 
to shape the world we seek--a world of open societies and open markets. 
I am optimistic enough to believe that this hopeful state of affairs 
will endure as long as we work to preserve and advance it. But, Mr. 
Chairman, we cannot simply wish that world into being. 
I have reviewed the budget committee resolutions and their impact on our 
ability to conduct this nation's foreign policy. You know I prefer to 
speak with diplomatic discretion, but in this instance, I am compelled 
to be blunt. The cuts contained in the resolutions would damage our 
nation's interests and cripple our ability to lead. They are 
irresponsible, and I will continue to oppose them as strongly as I 
possibly can. 
At issue is far more than cost-effectiveness and deficit reduction--
objectives on which I think we agree. At issue is the role that the 
United States should play in the world. At risk is the strength of 
America's leadership and the credibility of America's commitments. And 
at stake are the security and well-being of all Americans. 
As our opportunities and challenges around the world have grown, the 
resources we have dedicated to advancing them have shrunk. During the 
last 10 years, our International Affairs budget--the 150 Account--has 
dwindled from 2.5% to 1.3% of the federal budget. It has absorbed 
substantial real cuts in the last several years and is now 45% lower in 
real terms than it was one decade ago. Yet despite these significant 
reductions, the budget committees have proposed plans that would slash 
international spending even further--from $20.3 billion in the current 
budget to about $18 billion next year, and plummeting to $12.5 billion 
in the year 2000. 
Mr. Chairman, our nation's foreign policy cannot be supported on the 
cheap. We cannot protect our interests as the world's most powerful 
nation if we do not marshal the resources to stand by our commitments. 
We cannot lead if we do not have the tools of leadership at our 
disposal. We cannot have it both ways. 
Those who say they want a strong America have a responsibility to help 
keep America strong. Rhetoric without resources projects weakness, not 
strength. It worries our friends, emboldens our enemies, and imperils 
the security and well-being of the American people. 
Mr. Chairman, the United States spent trillions of dollars to defend the 
free world during the Cold War--and we did not do it with military 
strength alone. It would be a tragic and ironic mistake if we now 
refused to spend a tiny fraction of that sum to consolidate the 
remarkable gains we have made. 
Consider what we get for our International Affairs budget request of 
$21.2 billion. 
-- Our budget helps us strengthen American security by fighting the 
spread of nuclear weapons and technology. 
-- Our budget helps us protect American lives by combating terrorists, 
drug traffickers, and international criminals. 
-- Our budget helps us create American jobs by opening foreign markets 
and promoting U.S. exports.  
-- And our budget helps us give force to American principles by 
bolstering peace, human rights, and democracy from Cuba to Cambodia. 
Moreover, the preventive diplomacy that the International Affairs budget 
funds is our first and least costly line of defense. Compare the cost of 
diplomatic action to stem proliferation to the price we would pay if 
rogue states obtained nuclear weapons. Compare the cost of promoting 
development to the price of coping with famine and refugees. If we gut 
our diplomatic readiness today, we will face much greater costs and 
crises down the line. 
Less than two weeks ago, the concerted diplomacy our budget supports 
made the decisive contribution to the indefinite extension of the 
Nuclear Non-Proliferation Treaty (NPT). For 25 years, the NPT has been 
the cornerstone of global efforts to reduce the danger of nuclear 
weapons. Its extension has been a central priority for this 
Administration. We have pursued it aggressively in both our multilateral 
and bilateral diplomacy. This historic diplomatic victory will keep not 
just the United States but the world safer from the threat of nuclear 
We simply could not have succeeded in New York without the diplomatic 
resources that we have. We would not have been able to lead there if we 
had not made these investments over the years. I am going to be 
struggling to keep what I call the principle of universality with our 
embassies--that is, to have an embassy in all the countries of the world 
except, perhaps, some of the very small islands. The extension of the 
NPT demonstrated the importance of the principle of universality. Every 
country, no matter how small, had the same vote. Our ability to approach 
them in their capitals made all the difference. In this context, we 
ought to acknowledge the leadership of South Africa in crafting the 
ultimate resolution. Once again, that is an area where we have made 
great investments in recent years, and those investments paid big 
Over the past two years alone, we have expedited the detargeting and 
dismantlement of nuclear weapons in the former Soviet Union and 
facilitated the departure of Russian troops from the Baltics. We have 
promoted open trade and access for American exports in key regions like 
Asia and Latin America. We have used our overseas resources to capture 
Ramzi Yousef, the alleged mastermind of the World Trade Center bombing. 
And we have restored democracy in Haiti, assisted the transition from 
apartheid in South Africa, and helped to end the violence in Northern 
With this committee's strong support, our budget has also advanced peace 
and security in the Middle East--a goal of every administration for half 
a century. Your unwavering assistance to Israel and Egypt has been 
indispensable to the peace process. Over the past 2 1/2 years, the 
political landscape of the region has been transformed. Israel and 
Jordan are at peace. Israel and the Palestinians are working together to 
implement the Declaration of Principles and to put their conflict behind 
them. And the United States is a full partner in efforts aimed at 
achieving new agreements with Syria and Lebanon that would make the 
peace truly comprehensive. At the same time, we are trying to promote 
Arab-Israeli reconciliation throughout the region and to facilitate the 
public and private sector economic investments that are the necessary 
foundation for peace. 
American leadership is the essential underpinning of this process. Past 
agreements were built on it; future advances depend on it. That 
leadership must include a readiness to support all parties that take 
risks for peace. As Prime Minister Rabin said in Washington last week, 
"the foreign aid which America extends to the Middle East remains one of 
the key pillars supporting the peace process." 
The chances for real Arab-Israeli peace are more promising than at any 
time in two generations. It is essential that the executive and 
legislative branches work together to sustain our commitments not only 
to Israel but to Egypt, Jordan, and the Palestinians. Without this 
assistance, we will undercut those who are willing to act in support of 
peace and embolden those who are determined to kill the chances for 
In the Persian Gulf, we remain determined to contain the dangers posed 
by Iraq and Iran. I know we are all greatly concerned about the fate of 
the two Americans detained in Iraq. We are working vigorously through a 
range of diplomatic channels to secure their freedom, reserving all of 
our options in this process. Iraq has nothing to gain from continuing to 
hold these men in custody. 
Iran continues to be a violent opponent of the Middle East peace process 
and the chief state sponsor of terrorism in the world. Iran is also on a 
determined course to acquire weapons of mass destruction, including 
nuclear weapons. Rejecting this outlaw behavior, President Clinton on 
May 8 signed an executive order severing all remaining U.S. trade and 
investment links with Iran. I have repeatedly pressed our G-7 partners 
to exercise maximum restraint in their economic relationships with Iran 
and will continue to seek their cooperation in making Iran pay a price 
for its repugnant activities. We believe that the international 
community must take concrete steps--and more steps than it has taken in 
the past--to deny Iran the resources that enable that country to support 
its threatening policies. 
The World Trade Center bombing, the gas attacks in Tokyo, and the 
bombing in Oklahoma City have brought home the ruthlessness of 
terrorists and the frightening ease with which they can obtain 
destructive technology. I urge the Congress to act quickly to approve 
the President's Omnibus Counterterrorism Act of 1995, and the 
Antiterrorism Amendments Act he submitted in May. 
But in addition to these vital law enforcement efforts, it is essential 
that we sustain our diplomatic engagement and foreign assistance. For 
the sake of our nation's security, we must continue to encourage peace, 
respect for human rights and the rule of law, and economic development 
in those regions of the world where terrorist threats are most likely to 
emerge. Terrorism is often spawned in conditions of conflict, 
lawlessness, and poverty. 
In my judgment, the extreme cuts at hand would undermine these important 
Assistance to Russia and the Other New Independent States 
I want to begin today by discussing the President's trip to Moscow and 
Kiev, as well as our assistance to Russia and the New Independent 
The United States has an enormous stake in a constructive relationship 
with a reforming Russia. The real question now is not whether to engage 
with Russia, but how. Our approach is one of pragmatic engagement. We 
will cooperate where our interests coincide and speak openly and act 
appropriately when Russian actions run counter to our interests. 
We understand that the uncertain situation in Russia is likely to 
persist for some time. While reform moves ahead in Russia, its success 
is not assured. Our policy has both purpose and perspective. It is 
focused on advancing vital American interests over the long haul. 
The President went to Moscow and Kiev to commemorate the end of World 
War II and to honor the sacrifice that the people of Russia, Ukraine, 
Belarus, and the other nations of the region made during that conflict. 
Reflecting on the emotion of that day in Moscow and the importance the 
Russian people attached to the event, I cannot help but think that the 
President made exactly the right decision. If we are going to have a 
good relationship with Russia, it must be grounded in a relationship 
with the Russian people, and that was a day of great importance to them. 
Of course, the trip also provided the occasion for President Clinton's 
sixth summit with President Yeltsin and for the first presidential state 
visit to an independent Ukraine. 
Our discussions in Moscow were constructive and produced concrete 
benefits for the American people. These summits, which we hold every six 
months, allow us to pursue a businesslike relationship with Russia that 
has advanced the security of both our countries. It is important to step 
back and assess the summit with a long view. Although much remains to be 
done and we still have clear differences on a number of matters, it is 
my judgment that we made significant progress on issues of importance to 
the American people. 
We took an important step forward in our comprehensive strategy for 
security in Europe. President Clinton stressed to President Yeltsin that 
this strategy includes a steady, deliberate process for adding new 
members to NATO. He made it clear to President Yeltsin that the alliance 
is staying on the path that it has set. At the same time, and in 
parallel with that process, it is in everyone's interest that Russia 
participate in building a more secure and integrated Europe. Russia 
should not isolate itself from European security structures. So we 
welcome Russia's decision at the summit to proceed with its 
participation in NATO's Partnership for Peace and to begin a broader 
dialogue with the alliance. 
We made important progress on several other security issues. 
First, we agreed on basic principles with respect to the ABM Treaty and 
theater missile defenses--principles that reaffirmed our commitment to 
the treaty while recognizing that we must be able to deploy effective 
theater missile defenses. 
Second, the Russians agreed to our visits to Russian military biological 
facilities, starting this summer. 
Third, Russian leaders responded positively to our position that space-
launched vehicles are subject to START I provisions--allowing START I 
implementation to go forward. 
Fourth, we reaffirmed our joint commitment to seek the ratification of 
Fifth, we agreed to make the process of dismantling nuclear weapons more 
transparent and irreversible. 
Finally, we agreed to accelerate cooperation to enhance protection of 
nuclear materials. 
Each one of these six items in the arms control area is significant. 
They move the process forward. 
On the issue of Iran, this subcommittee is well aware of my views, as 
well as the President's recent decision to ban U.S. trade and investment 
in that country. The President provided President Yeltsin with clear 
evidence of Iran's pursuit of nuclear weapons, its support for 
terrorism, and its blatant opposition to the Middle East peace process. 
Though we have not yet achieved everything we want with respect to 
containing Iran, we made important progress. President Yeltsin agreed to 
close Russia's conventional arms sales to Iran, a precondition for 
becoming a founding member of the post-COCOM export control regime. He 
also agreed to abandon the centrifuge sale--one of the most dangerous 
elements of Russia's nuclear cooperation with Iran. The Russians also 
agreed to review their reactor sale to Iran under the auspices of Vice 
President Gore and Prime Minister Chernomyrdin. We will continue to 
stress that this sale serves neither Russia's interests nor the 
international community's. We believe that Russia should accept the 
position that every member of the G-7 has taken: that any nuclear 
cooperation with Iran is too dangerous to be permitted. 
On Chechnya, President Clinton reiterated that Russia should abandon its 
search for a military solution to the conflict. While it is important 
that the OSCE assistance group is in Grozny, the point we made very 
strongly is that Russia must now fully cooperate with the OSCE mission 
to reach a genuine political settlement, and to allow the unimpeded 
delivery of food and medicine. 
We simply disagree with President Yeltsin's characterization of the 
situation in Chechnya. In fact, that brutal conflict has intensified in 
recent days. The continuing violence has killed thousands of innocent 
civilians, damaged Russian reform, hurt Russia's standing in the 
international community, and called into question Russia's commitment to 
international norms, including the principles of the OSCE. 
You commented, Mr. Chairman, that Russia had not paid any price for the 
adventure in Chechnya, but, with all due respect, I disagree with you. 
It seems clear that the pace and depth of Russia's integration into 
Western institutions, including the G-7, has already been affected by 
Russia's conduct in this situation. There will continue to be a price 
paid unless they resolve that conflict in the very near future. 
I also want to discuss our assistance programs for the states of the 
former Soviet Union. The test for any program must be whether it 
advances the interests of the United States. The American people rightly 
expect no less. 
Our budget request for Russia continues carefully targeted assistance 
programs that increase our security, expand our prosperity, and promote 
our interest in democratic reform. Nunn-Lugar programs will continue to 
advance our strategic interest in dismantling nuclear weapons. Our 
assistance will continue to bolster the vital elements of a working 
democracy, including a free press. It supports privatization--a process 
that has put more than half of Russia's economy in private hands--and it 
opens opportunities for U.S. companies. Most assistance goes to private 
organizations and local governments outside Moscow--supporting the 
devolution of power from the center that is so crucial to the success of 
reform. In short, assistance has put America on the right side of the 
struggle for change in Russia. 
I know it is tempting to end or curtail these programs to punish Russia 
when it does something we oppose. I am all for maximizing our leverage, 
but I have reviewed our assistance programs and concluded that cutting 
them back now would not make sense. It would not serve the interests of 
the American people. We ought to ask ourselves some tough questions: 
Should we stop the funding necessary to dismantle the nuclear weapons 
that once targeted American cities?  Should we cut off support for 
privatization and free elections--wiping out programs that strengthen 
the very forces in Russian society that share our interests and values, 
the very forces, indeed, most likely to oppose the war in Chechnya? 
As you know, Mr. Chairman, more than half of our assistance to the New 
Independent States of the former Soviet Union now goes to countries 
other than Russia. It is equally essential that we maintain funding for 
these programs. 
Ukraine is especially critical. With its size and position, juxtaposed 
between Russia and Central Europe, it is a linchpin of European 
security. The President's visit to Kiev underscored the importance we 
attach to Ukraine's present and future as an independent, non-nuclear, 
and reforming state. 
The United States has consistently led the international community in 
support of Ukraine's courageous and far-reaching economic reforms. Last 
year, we convinced the G-7 to pledge over $4 billion for that country. 
Ukraine is now the fourth-largest recipient of U.S. assistance after 
Israel, Egypt, and Russia. Mr. Chairman, I strongly appreciate your 
leadership on this matter. 
Development Assistance And Humanitarian Relief 
Many of the budget committees' deepest proposed cuts would come from 
development assistance and, to a lesser degree, humanitarian relief--
programs that support our interests and are consistent with our ideals. 
Mr. Chairman, I share your belief that our assistance should "contribute 
to a cure," not just offer "temporary relief from symptoms." But the 
drastic cuts proposed by the budget committees will not achieve these 
goals. These cuts would weaken our leverage, undermine our leadership, 
and prevent us from making a difference where it counts. Any savings 
they yield today could never cover the costs they impose tomorrow, 
whether in humanitarian crises abroad or lost economic opportunities at 
Senator Leahy, in your recent statements, you have made the strong case 
that these programs are in the national interest. They help to prevent 
the outbreak of conflicts and unrest that would otherwise call for 
costly international intervention. They promote export opportunities for 
American companies and jobs for American workers. They lay the 
groundwork for sustainable development and accountable government--two 
objectives that have eluded too much of the world for too long. 
And not incidentally, our assistance programs save lives. Our programs 
to expand immunization and rehydration therapy in Africa, for example, 
save an estimated 800,000 children each year. 
The  small proportion--less than 1%--of our budget that we devote to 
foreign assistance is already the lowest percentage among the 21 leading 
industrialized nations. Our assistance can make the difference between 
life and death. 
Let me focus briefly on Africa, where our leadership and investments 
have been vital in spurring reform. It is impossible to underestimate 
the challenges facing this vast continent. But despite the headlines of 
disease and despair, the economies of almost 20 African countries have 
grown annually by more than 4%. All of these nations have been strongly 
supported by the International Development Association--IDA. Our 
contributions to IDA are a fundamental part of the assistance we provide 
to the Multilateral Development Banks--MDBs. We get a tremendous bang 
for every MDB buck: In total, for every dollar we contributed to the 
MDBs last year, the banks were able to provide $20 in assistance. 
Denying these resources could stop Africa's fragile reform process in 
its tracks. 
Our assistance is in the best tradition of American generosity. It is 
the best way to help poor nations develop the capacity to become self-
sufficient. At the same time, as our assistance supports economic 
growth, it will help ensure that American companies and American workers 
derive the fullest possible economic benefit. 
Let me assure you, Mr. Chairman, that this Administration will continue 
to insist that aid recipients in Africa pursue sound economic policies 
and respect the rule of law. Unless they do, our aid will, indeed, do 
little more than "fuel failure." 
We cannot afford to abandon the foreign assistance effort that President 
Eisenhower used to say represented America's "best investment."  He was 
right. The aid for which he fought continues to pay off for the American 
people. American firms now enjoy annual export sales to South Korea 
worth triple the amount of assistance we provided in the decade after 
the Korean war. Our exports to Latin America in 1993 alone were 2 1/2 
times more than the total economic assistance we provided over the 
previous 44 years. 
I look forward to working with this committee and the Congress to make 
our assistance efforts as efficient and as effective as possible. But as 
the President has said, "We did not win the Cold War to walk away and 
blow the peace on penny-wise, pound-foolish budgeting." 
Let me add that I am, of course, familiar with your proposal to abolish 
USAID and to consolidate that agency's functions with the State 
Department. As I have emphasized in prior testimonies, I am convinced 
that USAID, USIA, and ACDA each has a distinct mission that can best be 
performed if they remain separate agencies under my general supervision. 
I agree with the Vice President that the financial and other costs of 
consolidating USAID, ACDA, and USIA into the State Department outweigh 
the benefits. 
In  fulfillment of this Administration's National Performance Review, 
each of the foreign affairs agencies has been proceeding vigorously with 
streamlining efforts. USAID and USIA have been at the forefront of this 
restructuring effort. ACDA also has been seriously streamlining. At the 
State Department, I have launched a Strategic Management Initiative that 
is helping us close unnecessary posts, eliminate layers of management, 
slash administrative expenses, strengthen our policy teamwork, and 
refocus our reporting and analysis. But without adequate resources, no 
amount of reform will enable us to meet the challenges that America will 
face in the post-Cold War world. 
Our programs and operations are inextricably linked. For example, the 
platforms provided by our 266 posts overseas make it possible for the 
programs in your bill to be implemented. I am convinced that U.S. 
interests and leadership will suffer directly if, because of funding 
constraints, we are unable to deploy skilled, trained personnel to work 
on the front-lines overseas in safe and adequate facilities with modern 
information and communications systems. 
Supporting American Exports, Investment, and Jobs 
Mr. Chairman, I want to call your attention to another area under the 
jurisdiction of this subcommittee that faces severe budgetary threat. 
This Administration has achieved an unprecedented degree of focus and 
coordination in our export promotion efforts. Over the past two years, 
the support targeted through Eximbank, OPIC, TDA, and the Commerce 
Department has helped to create 1 million high-paying American jobs. The 
Senate Budget Committee's proposed cuts to the 150 Account would erode 
their capacity to support American exports, investment, and jobs. 
As Secretary of State, I have repeatedly emphasized the top priority 
that the Clinton Administration attaches to America's economic security 
as a goal of our foreign policy. Along with our development assistance, 
our export and investment promotion efforts help to strengthen free 
markets and modernize vital sectors in developing economies around the 
world. They lift living standards and multiply future demand for 
American goods. And they contribute to our other core foreign policy 
goals. By helping to build prosperity, they reinforce stability in new 
democracies struggling to overcome legacies of repression and conflict. 
American Leadership In the United Nations 
Another alarming aspect of the recent policy debate in Washington is the 
short-sighted assault against international peacekeeping and the United 
Nations. Let me take a moment to explain why this Administration, like 
every Administration since Harry Truman, believes the United Nations can 
be an important instrument of U.S. foreign policy. 
As several of our recent accomplishments suggest, American leadership 
requires that we remain ready to back our diplomacy with credible 
threats of force. To this end, President Clinton is determined that the 
U.S. military remain the most powerful and effective fighting force in 
the world--as it certainly is now. 
When our vital interests are at stake, we must remain prepared to defend 
them alone. But sometimes by leveraging our power and resources, and by 
leading through alliances and institutions like the UN, we can advance 
our interest in global stability without asking our soldiers to take all 
the risks or our taxpayers to pay all the bills. That is a sensible 
bargain I know the American people support. 
During  the Cold War, UN peacekeepers kept a lid on regional disputes 
that might have led to superpower confrontation. Since the Cold War 
ended, the UN has helped to resolve conflicts in places like Cambodia, 
El Salvador, and Nicaragua, where, in one way or another, the United 
States had once been engaged. Everyone acknowledges that some missions 
have failed. But no one would deny that many missions have succeeded, 
even under the most difficult circumstances. 
And of course, the UN is about far more than peacekeeping. It provides a 
mechanism for enforcing international sanctions and isolating rogue 
states. Its many programs and agencies care for refugees, inoculate 
children, fight epidemic diseases like AIDS and Ebola, help to address 
unrestrained population growth, and help to keep nuclear weapons from 
falling into the wrong hands. Indeed, our successful effort to obtain 
indefinite extension of the NPT could not have been achieved without our 
active engagement at the UN. These activities are important to America 
and supported by the vast majority of Americans. 
There is no question that the UN can and must become more effective. 
This Congress and its predecessors have rightly insisted on reform, and 
this Administration has been pushing for genuine progress. Thanks to our 
joint efforts, the UN now has an office with the functions of an 
Inspector General and with a mandate to crack down on waste, fraud, and 
abuse. The UN's new Under Secretary General for Management, Joseph 
Connor, has embarked on an aggressive campaign to change the UN's 
management culture. In a sharp break from the past, the UN will submit a 
budget this year calling for real spending cuts. 
All these efforts depend on our continued leadership at the UN. We will 
not succeed if our allies think we are using reform as an excuse to 
avoid our financial obligations. We cannot reform and retreat at the 
same time. 
Unfortunately, there are now proposals before Congress that would force 
us to retreat from the UN in virtually every area of its activity. S. 5, 
the Senate counterpart to H.R. 7, would effectively end U.S. 
contributions to UN peacekeeping. The leadership of the Senate Budget 
Committee is calling for an end to almost all U.S. voluntary 
contributions to UN agencies save the IAEA and UNICEF. A bill before the 
House International Relations Committee is less extreme but would 
require massive cuts and micro-manage the funds that remain. 
The restrictions on peacekeeping would grievously harm American 
interests. They would force us to withdraw peacekeepers and monitors 
from vital trouble spots around the world, including the Golan Heights, 
Cyprus, and the Caucasus, and prevent the deployment of missions that 
enjoy broad bipartisan support, such as Angola. They would leave us with 
an unacceptable choice each time a crisis arose--a choice between acting 
alone and doing nothing. 
The sharp reductions in our contributions to UN agencies would wipe out 
decades of bipartisan U.S. leadership in the UN. They would require 
slashing our voluntary contributions to the UN Development Program 
(UNDP), the lead agency for UN technical assistance coordination. The 
UNDP focuses on programs that help the needy to help themselves, such as 
job creation, advancement of women, poverty reduction, and environmental 
regeneration. Withdrawing our support could spark a chain reaction, 
depleting resources for programs that support American interests: human 
rights, family planning, humanitarian assistance, and the environment. 
I do not believe that every Administration since the days of FDR was 
wrong about the importance of international organizations to our 
interests. I do not believe that President Truman and Senator Vandenberg 
were wrong. Neither were President Bush and Secretary Baker. I trust 
that this Congress will share that view as these issues are debated in 
the days ahead. 
America's Tradition of Leadership 
This raises a larger point about many of the budgetary proposals we have 
seen, which, in my view, reveal how short our historical memory seems to 
be. They reflect, I think, a troubling lack of appreciation for what 
America accomplished in the world during the last 50 years and a lack of 
confidence in our ability to shape the future. Very simply, cuts of the 
magnitude being suggested would represent a fundamental break with 
America's tradition of leadership. 
Leadership in foreign policy means more than responding to the issue of 
the day. It means anticipating the issues that will affect Americans 
down the road. It means making the long-term investments that will reap 
greater dividends--or prevent greater costs--in the future. And it means 
standing by our principles and keeping our word. 
Slashing our International Affairs budget would represent, both 
substantively and symbolically, an abdication of that leadership. 
Refusing to work in alliances and institutions would undermine our 
influence abroad. If we cast aside half a century of American 
engagement, there is no other country with the strength or the vision to 
replace us. But there are plenty of forces that would like to exploit 
the vacuum that we would leave behind. 
Last November's elections may have changed the balance of power between 
the parties. But they did not change--indeed, they enhanced--our 
responsibility to cooperate on a bipartisan basis in foreign affairs. 
The election was not a license to lose sight of our nation's global 
interests or to walk away from our commitments in the world. 
Our generation has a responsibility to sustain, not to squander, that 
leadership role. I look forward to working closely with this committee 
to achieve that goal.   
Embracing a New Consensus Of the Americas  
Secretary Christopher 
Address to the Council of the Americas, Washington, DC, May 22, 1995 
Chairman Avery, President Briggs, Chairman Rockefeller:  It is, indeed, 
an honor to have the chance to speak to distinguished members of the 
Council of the Americas. The council has promoted greater understanding 
among leaders throughout the hemisphere. You have brought home to all of 
us in the United States just how great a stake we have in inter-American 
I can think of no theme more appropriate to this conference than 
"Staying the Course." For the first time in the history of our 
hemisphere, we are set on a common course. A new consensus of the 
Americas has formed. Open markets work; democratic governments are just; 
and, together, they offer the best hope for lifting people's lives. 
This consensus has been voluntarily embraced by 34 nations. It has found 
its most hopeful expression in the extraordinary year-long dialogue that 
culminated in last December's Summit of the Americas. Led by President 
Clinton, 34 democratically elected leaders launched a historic new 
process of economic and political cooperation. Our commitment to have 
negotiated a Free Trade Area of the Americas by 2005 will generate jobs 
and prosperity for all our peoples. Under the 23 initiatives endorsed at 
Miami, the nations of the hemisphere will work together to strengthen 
democratic institutions, fight corruption, attack narcotics trafficking, 
combat terrorism, ease poverty, and reverse environmental degradation 
throughout our hemisphere. 
When historians look back on the events of that weekend in Miami, I 
believe that they will see it as a turning point in the integration of a 
prosperous, stable, and democratic Western Hemisphere. 
But since that moment in Miami, there have been two developments in our 
hemisphere that tested the strength and durability of the progress that 
we have made. In late December, a crisis of economic confidence in 
Mexico sent tremors of financial uncertainty throughout the Americas. 
The outbreak of armed conflict between Peru and Ecuador in January 
revived old questions about the ability of our nations to resolve 
disputes without resort to bloodshed or punitive measures. Some have 
cited these two events as proof that our vision of a new hemisphere 
cannot withstand adversity. 
They could not be more wrong. To anyone familiar with the history of our 
region, the progress that it has made over the past two decades is 
unprecedented. Where once country after country stagnated under military 
rule, today, we are a hemisphere of 34 democracies out of 35 nations. 
Where once economy after economy was caught in the grip of closed 
markets, choking debt, and hyperinflation, today, this is the second 
fastest-growing region in the world and the fastest- growing market for 
American exports. 
Indeed, this triumph of democracy and open markets in our hemisphere is 
reflected even in Mexico's recent crisis. Let us not forget that the 
Mexico of today is not the Mexico of earlier times. A decade ago, the 
response to a similar crisis in Mexico might have meant a return to 
statist policies, the imposition of trade barriers to American products-
-even the nationalization of key sectors. Instead, Mexico has reaffirmed 
its commitment to reform. 
President Clinton acted courageously and decisively in February to 
mobilize American and international support for Mexico. President 
Zedillo acted to tighten Mexico's fiscal and monetary policy. No doubt, 
a difficult period of hardship still lies ahead. But the tough medicine 
appears to be working, and the markets are taking notice. 
The United States will not waver in its support. Our reasons for helping 
Mexico remain clear: the prosperity of our people, the security of our 
borders, the stability of our closest Latin neighbor and other emerging 
markets in which we have a growing stake from the standpoint of our 
exports and investments--and American jobs. 
A decade ago, Mexico's financial crisis could have been enough to send 
the hemisphere into a tailspin. But nations such as Argentina did not 
let the shock waves from Mexico halt their own progress toward economic 
liberalization and open markets. 
The United States believes that the momentum for economic integration in 
our hemisphere must be maintained. We applaud the progress that the 
members of MERCOSUR, CARICOM, the Andean Group, and our Central American 
neighbors have already made. We are beginning negotiations on NAFTA's 
extension to Chile. We are determined to fulfill our Miami pledge to 
establish a free trade area by 2005. To this end, we have been engaged 
in intensive consultations for the June 30 meeting of Trade Ministers in 
Denver, which will move us further toward implementation of "Vision 
As head of what I call the America Desk at the Department of State, I am 
committed to ensuring that American companies and workers receive the 
fullest benefits from our economic diplomacy. Over the past two years, 
for example, we have helped to win telecommunication contracts in 
Honduras; to improve the protection of patents in Mexico and Venezuela; 
and to resolve investment disputes in Costa Rica, Nicaragua, and Panama. 
We have also strengthened our joint measures to fight corruption, 
complementing the global efforts the United States has been pursuing 
through the OECD. I encourage this council and other business 
organizations to maintain their productive dialogue with the State 
Department and other U.S. Government agencies. 
Coming so soon after the success of the Miami summit, the outbreak of 
hostilities between Peru and Ecuador was all-the-more disturbing. 
Together with Brazil, Argentina, and Chile, we moved quickly to help 
Peru and Ecuador end their border clash. We are now working with those 
two countries to resolve underlying issues. 
In the region as a whole, conflict and tension have diminished 
dramatically. Central America is no longer a charnel house of conflicts 
driven by class, race, and ideology. I note, in particular, the success 
of the United Nations, with the strong backing of the United States, in 
settling the almost intractable conflict in El Salvador--further 
testimony that the UN has a valuable role to play and deserves our 
Indeed, our region has attained an unprecedented level of cooperation on 
regional and global security issues. Argentina and Brazil have initiated 
dramatic new non-proliferation measures. Working together, the nations 
of our hemisphere also played a major role in shaping the worldwide 
consensus for the indefinite extension of the Nuclear Non-Proliferation 
But perhaps the most heartening aspect of dramatic progress in our 
hemisphere has been our collective commitment to democracy. The movement 
to democracy in Latin America is a great epic of the late 20th century. 
And one of the most significant chapters in that epic was our collective 
action, led by President Clinton, to restore democracy to Haiti last 
September. Together, we have demonstrated that the democratic tide that 
has swept over this hemisphere will be defended. 
Democracy's progress has continued in recent elections in Brazil, in 
Uruguay, in Peru, and two weeks ago in Argentina. That achievement is 
all- the-more impressive in light of the sweeping economic reforms that 
elected officials are undertaking in those countries. Our leaders remain 
united in their conviction that sustained economic growth and improved 
living standards depend on strong, accountable democratic government. 
Two weeks from now, I will be in Port-au-Prince for a meeting of the 
Organization of American States at a site that one year ago would have 
seemed unlikely if not impossible. That meeting will be a tribute to the 
determination of the Haitian people and to the hemisphere's resolve to 
stand by democracy. 
The President's courageous actions to restore democracy in Haiti, and to 
deal with the financial difficulties in Mexico, are forceful reminders 
of the importance of the President's ability to act decisively in times 
of crisis. The same is true of the President's ordering U.S. 
participation in the international team that is supervising the cease-
fire in the Peru-Ecuador flare-up. 
Legislation now being debated in the House of Representatives--H.R. 
1561, the Gilman Bill--wages an extraordinary assault on this and every 
future President's constitutional authority to manage foreign policy. 
Provisions in the bill that affect this hemisphere clearly impair the 
President's constitutional authority in the field of foreign affairs. If 
the bill reaches the President's desk in its present form, I will have 
no choice but to recommend a veto. 
The events of the past few months in Mexico and Peru and Ecuador are 
only the most recent reminders of the tasks that still lie before us. 
But by any standard, the events of the past year in our hemisphere are 
cause for hope and not despair: a financial panic averted; an anti-
democratic coup reversed; a border war ended--all this and agreement on 
a comprehensive plan of action at the Miami summit. 
Much has happened in the 12 months since you last convened at the State 
Department. As the United States works to sustain that progress over the 
next 12 months, I will count on the support of the council to fulfill 
our hemisphere's true promise.  (###) 
Trade and Other U.S. Priorities In the Americas  
Alexander F. Watson, Assistant Secretary for Inter-American Affairs 
Address to the Council of the Americas, Washington, DC, May 22, 1995 
First, let me congratulate you on this, your 25th annual Washington 
conference. This conference has always provided a thoughtful and 
informed audience with which to review our policies. As Secretary 
Christopher noted, your theme--"Staying the Course"--is particularly apt 
this year. 
This is the first meeting since last December's historic Summit of the 
Americas--to which you made very important contributions through your 
trade report and in helping to define its agenda. So, I'd like to use 
this opportunity to review some aspects of the record since Miami. Some 
might argue that an evaluation of the summit only six months after its 
conclusion is premature, but we are moving very rapidly in many areas. 
In fact, Secretary Christopher will chair a meeting of foreign ministers 
June 4 on the margins of the General Assembly of the Organization of 
American States in Port-au-Prince to examine our progress in some 
Last December in Miami, our leaders articulated and consolidated the 
convergence of values, which has been emerging over the past decade and 
defined a course of action not only for the United States, but for all 
the countries of the hemisphere, excepting only Cuba. That is the course 
we must stay. 
The 23 initiatives agreed to in the Miami Plan of Action comprise a 
comprehensive and mutually reinforcing agenda to achieve the goals which 
the hemisphere now shares. To promote prosperity, for example, we agreed 
to work toward free trade but also to strengthen capital markets; 
improve the hemisphere's infrastructure; and improve cooperation in 
energy, science, and tourism. And the summit recognized that prosperity 
cannot be achieved without parallel action to strengthen democratic 
institutions, improve education and health, and conserve our natural 
environment for future generations. 
The Challenges of 1995 
As Secretary Christopher observed, we have heard some voices lately 
asserting that the summit was the high point of convergence and progress 
and that events since December demonstrate the hemisphere is on a 
downhill slide. These views arise from a fundamental misunderstanding of 
the summit and of what is actually happening in the hemisphere. 
The summit was conceived to celebrate the hemisphere's consensus on 
values, certainly. But, just as important, it was designed to chart the 
course for dealing with the issues which we recognized we must address. 
Far from declaring that all problems were resolved, the summit 
identified them clearly and projected how we should deal with them. 
The Mexican financial crisis and the shock it sent through financial 
markets are, indeed, a setback. The resultant tariff increases by 
Argentina, Brazil, and Mexico are, indeed, disruptive. The border war 
between Peru and Ecuador was frightening to all who want to see military 
solutions to political problems put forever in our past. But we should 
note that the summit identified capital markets, trade liberalization, 
and regional security as challenges for the hemisphere. 
The paramount lesson of these events is that we are in much better shape 
to deal with such crises than we would have been without NAFTA and 
without the summit. The peso crisis    did not weaken the Zedillo 
Administration's commitment to reform; indeed, the government recognized 
that restoring investor confidence requires not only a continuation, but 
a deepening and quickening of reforms. In acknowledgment of the 
disciplines of the NAFTA and the central free trade dynamic of the 
summit, Mexico did not restrict financial flows or increase trade 
barriers against the U.S. and Canada, as had been the case in 1982. 
The multilateral support for Mexico's recovery led by President Clinton; 
the creative package of financing extended by the international 
financial institutions to Argentina; the assurances from Mexico, 
Argentina, and Brazil that their trade actions are temporary and will 
not jeopardize the momentum toward hemispheric free trade; the united 
hemispheric effort to separate Ecuadoran and Peruvian forces and 
thereafter to work at resolving the underlying issues; the unprecedented 
unity of the hemisphere in supporting democracy in Haiti:  These are 
dramatic examples of new attitudes and stronger cooperation -- what we 
call the Spirit of Miami. 
Forging a Free Trade Area 
The Council of the Americas has been a leader in the quest for free 
trade in our hemisphere. The agreement to complete negotiations on the 
Free Trade Area of the Americas by 2005 is perhaps the boldest 
commitment of the summit. Ambassador Barshefsky will discuss how we are 
doing on this commitment in greater detail this afternoon, but I do want 
to make a few points. 
Whereas Latin America and the Caribbean used to be convenient sources of 
raw materials for a giant U.S. domestic economy, today the hemisphere 
has become more broadly crucial to our global competitiveness. NAFTA, 
the successful conclusion of the Uruguay Round, and the summit signaled 
our determination to assert leadership on behalf of open trading regimes 
that will serve as major components of the competitive world economy of 
the 21st century. 
By any standard, Latin America and the Caribbean are increasingly 
important participants in the world economy. With a population 
approaching half-a-billion, a growing and sophisticated entrepreneurial 
class oriented toward international markets, and relatively high 
standards of living by developing country standards, our neighbors have 
captured the interest of investors worldwide. 
I am confident everyone here understands the importance to the United 
States of the developments I have described. However, some less informed 
are asking: "With all the demands at home and elsewhere in the world, 
what's so important about Latin America and the Caribbean? What's in it 
for us?" 
Let's start with a few numbers. 
-- Latin America and the Caribbean purchased $92 billion of U.S. goods 
last year. It is the fastest-growing region for U.S. exports, and 
current projections indicate that our exports to our neighbors will 
surpass those to Europe in a decade.  
-- Even so-called "small" countries are important for U.S. trade. We 
sell more to Chile--14 million people--than to India--920 million. We 
sell about as much to Costa Rica--3 million--as we do to all of Eastern 
Europe--100 million.  
-- Latin American countries tend to import more from the U.S. than other 
regions. For example, China buys about 10% of its imports from the U.S.; 
Latin America buys more than 40%.  So, increasing our neighbors' 
capacity to import is very important for the U.S.--for U.S. business and 
for U.S. jobs. 
In addition to trade, our neighbors have a major impact on our ability 
to deal successfully with issues of vital national concern such as 
migration, drugs, law enforcement, and the environment. So, there is no 
doubt about the importance of our neighbors to our own welfare. To 
advance these interests, the only practical approach is cooperative 
engagement with the countries of the hemisphere. And the Summit of the 
Americas provides the necessary framework for this cooperation. 
But back to trade. The commitment to free trade was a centerpiece of the 
summit, and it is very high on our summit follow-up agenda. As the 
Secretary noted, we are energetically preparing for the Trade 
Ministerial and the Trade and Commerce Forum in Denver next month. 
At the same time that we move forward internationally, we are also 
moving domestically. The Administration is working with Congress to 
develop an appropriate mechanism-- the "fast-track"--to implement 
further trade agreements. At hearings last week before a joint session 
of the House Ways and Means and Rules Committees, Ambassador Kantor 
testified that timely passage of fast-track is a crucial element in the 
expansion of NAFTA to include Chile and other countries thereafter. 
Timely action on this legislation is very important. Economic 
integration among other countries of the hemisphere is moving ahead 
quickly, and the Europeans and Asians are knocking at the door. This is 
healthy. We want Latin America and the Caribbean to integrate and to 
participate more fully in the global economy. But if we leave the Latin 
American playing field to others, we will lose major economic 
opportunities, including investment, trade, jobs, and, ultimately, 
growth. The game is on, and we can compete very effectively. If we don't 
play, however, we lose. 
I also want to emphasize the Administration's strong support for 
enhancement of trade benefits for the Caribbean Basin Initiative 
countries. Last week, Charlene Barshefsky and I testified before the 
Senate Finance Committee in support of the bill introduced by Senator 
Graham to provide NAFTA parity to Caribbean Basin Initiative countries--
a companion bill to the one introduced by Representatives Crane and 
Gibbons in the House. We fully agree with these bills' intent that the 
CBI countries--so important to the U.S.--should not be disadvantaged in 
their access to the U.S. market as a result of NAFTA.   We are working 
closely with the committees and are confident that the Congress will 
move quickly to pass good legislation to address this important problem.  
The Broad Context Of U.S. Trade Policy 
I understand, of course, that the members of the Council of the Americas 
are primarily interested in U.S. trade and investment policy in the 
hemisphere. However, neither we in the Administration nor you in the 
business community can afford the luxury of focusing too narrowly on 
those issues. The Summit of the Americas defined a comprehensive agenda 
and plan of action on a broad spectrum of issues that will contribute to 
achieving free trade and economic growth. 
Democracy, for example, is critical to a prosperous and stable 
hemisphere. Because of their fundamental legitimacy, democracies are 
more likely to achieve domestic consensus for implementing far-reaching 
policies. They make more reliable partners not only in diplomacy, but 
also in trade. 
The summit highlighted the importance of effective, honest, transparent 
government to the success of democracy and economic integration. The 
rule of law and a judicial system which is efficient, impartial, 
transparent, and fair, for instance, are important not only to a 
country's citizens, but also to the foreign investors which work within 
that country's legal framework. The same can be said for tax systems and 
regulatory procedures. 
The summit's emphasis on social equity and the eradication of poverty 
makes sense not only in terms of our national ideals of compassion and 
our interest in political stability, but also because growing economies 
need healthy, educated, and committed workers and consumers. Similarly, 
a modern state cannot ignore environmental issues. Countries must 
carefully husband their resources for maximum benefit not only for 
today, but for tomorrow; not only for the elite, but for all their 
citizens--so that development truly improves peoples' lives and economic 
growth is sustainable over time. The broad scope of the summit agenda 
thus provides a concrete and realistic framework for long-term growth 
and for the sustained expansion of hemispheric trade. 
The Importance of Aid 
In this context, I want to emphasize the crucial importance of a well-
targeted foreign assistance program. 
U.S. direct assistance to Latin America and the Caribbean has been 
dramatically reduced in the past several years. Much of the slack has 
been taken up by more efficient, growing economies, increased trade 
opportunities with the United States and elsewhere, and increased 
lending by the international financial institutions. Nevertheless, 
carefully targeted U.S. aid programs remain critical to strengthening 
democracy, modernizing judicial and other institutions, increasing 
economic integration, and addressing destabilizing social inequities.  
These, in turn, are important for managing, effectively, problems of law 
enforcement and migration within the hemisphere. As I have noted before, 
sound political and social conditions are indispensable to a positive 
long-term trade and investment climate and to vibrant economic growth. 
Let me cite a couple of examples. The peace process in El Salvador-- 
whose economy is booming, by the way--has been a widely acclaimed 
success story. Continued funding is required to consolidate and 
institutionalize the peace. To have fought over this issue, both at home 
and abroad, for so many years and now not fund the peace adequately 
would be a serious failure of leadership. 
Equally compelling is the need for continued assistance to Haiti. The 
restoration of democracy in that impoverished country was a dramatic 
success for the hemisphere. Some caution is warranted, but democratic 
institutions are taking root and the economy is beginning to recover. 
For Haiti to continue to move forward, we must continue to invest 
significant resources--resources which leverage greater sums from the 
international community. 
We must also adequately support cooperative efforts to combat the drug 
trade which causes so much damage to free market economies and 
democratic institutions throughout the hemisphere. This should include 
both bilateral and multilateral support for viable economic alternatives 
to drug production, as well as strengthening judicial and law 
enforcement institutions. We all must vigorously support efforts to stop 
drug trafficking and money laundering. 
Let me take a moment to emphasize how important it is to maintain our 
financial support of the multilateral development banks. Both the World 
Bank and the Inter-American Development Bank are deeply involved in our 
most important efforts in the region--mobilizing resources from other 
donors and the private sector which are far beyond our bilateral 
capability. They are working on alternative development, strengthening 
democracy, improving governance, protecting the environment, enhancing 
market liberalization and privatization, and promoting the private 
sector--all of which are key tenets of our policy. The IDB and, very 
importantly the OAS, have seized energetically their important 
responsibilities for implementing substantial portions of the summit 
In order to achieve the objectives defined at the Summit of the 
Americas, we need to explain more clearly to the American people just 
how important is our stake in a stable, prosperous, and democratic 
hemisphere. In this effort, the support of the council has proven 
invaluable in the past. Once again, we call on you to help define and 
defend a dynamic, constructive relationship with Latin America and the 
Caribbean. We are partners with you in the council in the pursuit of 
U.S. foreign policy    goals--goals increasingly shared by our 
neighbors. Working together, we can achieve our ambitious agenda for the 
good of the people of the United States and of the hemisphere as a 
whole. (###) 
U.S.-Mexico Relations: The Beginning  Of a New Partnership 
Secretary Christopher, Mexican Secretary of Foreign Relations Gurria  
Remarks at the Opening Plenary of the U.S.-Mexico Binational Commission, 
Washington, DC, May 16, 1995 
Secretary Christopher. Good morning. I am very pleased to welcome 
Secretary Gurria and the other members of the Mexican Cabinet to this 
12th Annual Meeting of the Binational Commission--the first one during 
the Administration of President Zedillo. I am particularly glad to 
welcome you here on what I think is the nicest day we have had this 
spring yet, which is a good way for us to begin this very important 
I am joined here by a number of my Cabinet colleagues, whom I will be 
introducing in a few minutes. Many others will join us during the course 
of the day. I particularly look forward to meeting, Mr. Minister, your 
splendid colleagues--many of them, I am sure, for the first time. 
Of course, this commission reflects and reinforces the extraordinary 
cooperation between our two countries. We share far more than a 2,000-
mile border. We share common interests and common problems. But most 
important, we share a common determination to work together because it 
is in the overriding interest of both our countries to do so. 
Since we met just a year ago in Mexico City, Mexico has faced and begun 
to overcome a series of profound challenges, as we all recognize. 
Together, these challenges have tested the strength and adaptability of 
the Mexican economy and the Mexican democracy. At the same time, they 
have tested the friendship of the United States. I am very glad to say 
that I believe that our nations have risen to the occasions and have met 
these tests in very commendable ways. 
In the last few months, the financial crisis affecting Mexico has 
commanded our greatest attention. Although many others hesitated--both 
here and abroad--President Clinton acted courageously and decisively in 
February to mobilize American and international support for Mexico. 
Under President Zedillo's leadership and the leadership of many in this 
room, Mexico has responded strongly with actions to restore financial 
stability. It has tightened its financial and fiscal policy--monetary 
policy, and I am glad to say that the markets are beginning to take 
notice. The peso is stabilizing and regaining strength. The Mexican 
stock market has already recovered a substantial portion of the value 
that it lost. 
No doubt, a difficult period lies ahead, but the tough medicine that 
Mexico is taking appears to be working. The United States, I emphasize, 
will not waver in its support for Mexico. Nor will it waver in its 
support for President Zedillo's pursuit of democratic reform. We applaud 
the bold steps that your Administration has taken to broaden political 
participation, to strengthen the rule of law, to fight corruption, and 
to search for a negotiated solution in Chiapas. 
As we have met these difficult challenges in the economy and in the law 
enforcement area, we have sustained our cooperation on a number of other 
difficult, important issues on our common agenda. Today, we meet to 
review progress in the working groups on that common agenda and to find 
ways to intensify our cooperation. Let me, as a preliminary, just 
mention a few of them. 
Of course, of paramount concern to the United States and Mexico is 
cooperation on law enforcement and counter-narcotics. President Zedillo 
has courageously called the drug trade Mexico's number one national 
security problem. We certainly applaud his     determination to crack 
down on trafficking, on corruption, and on money laundering. Secretary 
Gurria and I, reflecting the importance we attach to this issue, will be 
joining the working group on Legal Affairs and Anti-Narcotics this 
morning. We will have an opportunity to discuss intelligence-sharing and 
how to improve the coordination of our law enforcement agencies. 
We are also pleased that we have made progress on immigration issues 
during the year since the last Binational Commission meeting. We welcome 
Mexico's efforts to improve social conditions in the states that are the 
primary sources of illegal immigration. We certainly welcome the steps 
that you have taken to end the sordid traffic in illegal immigrants. We 
will work together to do all we can to curb illegal immigration, but at 
the same time, we in the United States are committed to facilitate the 
legal movement of people and goods across our border. 
As commerce between the United States and Mexico grows, we must continue 
to improve the environmental standards that protect the health and 
safety of our people. Since our last Binational Commission meeting, the 
Border Environmental Cooperation Committee and the North American 
Development Bank have become operational. They are underway, and we are 
determined to work together to make them work. 
Of course, we continue to place a very high priority on our trade with 
each other. NAFTA has already exceeded our expectations. In fact, 
exports of both countries have risen by about 20% since the historic 
NAFTA agreement went into effect. As we go forward, we must work 
together to do all we can to achieve the goals of economic integration 
in the hemisphere as a whole that were announced last year at the Miami 
Summit, starting with our negotiations with Chile. 
I want to add just a word, as I draw to an end here, on the diplomatic 
partnership we have. The United States and Mexico are not only important 
regional partners but we are global partners in APEC--the Asia-Pacific 
Economic Cooperation forum, the OECD, and, of course, our work together 
in the United Nations. 
In that connection, the international community achieved a very 
important consensus, only last week, on behalf of the indefinite 
extension of the Nuclear Non-Proliferation Treaty. While our two nations 
had slightly different approaches to the result that was achieved, I 
have no doubt that the close dialogue that I had with Foreign Minister 
Gurria and the close relationship between our two governments and our 
cooperation helped produce that extraordinary historic result: An 
agreement that lessens the dangers of proliferation, and lessens the 
dangers of nuclear conflict for the indefinite future. 
We have a full range of issues on the agenda today, many of which I do 
not have time to mention. But I think it is worthy of mention here that 
we will be signing five agreements during our deliberations--agreements 
that will improve commercial ties, strengthen telecommunications, and 
protect and promote biodiversity. 
We are also going to be clearing the way for a new railroad bridge 
between Mexico and the United States, and for the expansion of a second. 
These bridges are not merely vital elements of commerce, but they 
symbolize--in concrete and steel--the fundamental purpose of our 
relationship with Mexico, a bilateral relationship of which we have none 
that's more important. 
History, culture, and geography have bound our nations together. I 
certainly look forward to working with each of you in the course of this 
day, but, more important, in the course of the entire year, a 
cooperation symbolized by this binational meeting--a unique meeting in 
our relationship with all other countries. Mr. Minister, welcome. It's 
very nice to see you again. 
Secretary Gurria. Thank you very much. Ladies and gentlemen, Mr. 
Secretary of State, distinguished members of the U.S. Delegation, 
colleagues from the Mexican Delegation: Today, we are beginning the 
first meeting of the Binational Commission of the U.S. and Mexico--
between members of the Administrations of Presidents Zedillo and 
Clinton. Our labors will, to a great extent, define the atmosphere, the 
priorities, and the new understanding with which we will be working over 
the next few years. 
The presence of eight members of the Mexican Cabinet is a witness to the 
relevance given by our country to its links with the United States. 
The bilateral agenda has reached a level of complexity and wealth 
without precedent. More than 300 million border-crossings per year, more 
than $100 billion in trade exchange, and the breadth of the subjects to 
be dealt with today provide us with a perspective of the dynamic 
relationship we share. Thus, in fields as diverse as product investment 
and cultural creation, the struggle against organized crime and the 
improvement of our border, the labor market and scientific and technical 
research, the quality of education and the search for new sources of 
energy, or the updating of our agricultural sectors or the behavior of 
our financial markets is evidence of the implications of what is going 
on in our countries for the development of each other. 
In recent years, bilateral relations have experienced a basic change in 
the field of the attitudes and perceptions that we share. The closeness 
of our two countries is more and more evident as a source of opportunity 
and projects for mutual benefit. 
The meeting we are beginning today is both the result of multiple 
previous contacts and also a starting point for a new determination to 
overcome differences and enlarge our coincidences: the beginning of a 
new understanding. Nearly all the officials present here today have 
already held several meetings with their counterparts, although only 
five and one-half months have passed since President Zedillo took 
There is a climate of personal confidence growing among the represen- 
tatives of both countries which is a solid base on which to build a new 
stage in our relationship. 
We should also ratify the formula of dealing with each subject according 
to its merits, avoiding the possibility of any aspect of our agenda--no 
matter how difficult it may be--contaminating the rest of our bilateral 
contacts. This approach has been demonstrated to be effective in 
maintaining respectful and reciprocally useful contacts. 
There are very few countries who have such mechanisms of cooperation as 
those developed by the United States and Mexico. Also exceptional is the 
frequency of our bilateral meetings. During the last week of the meeting 
of Governors of the Gulf of Mexico, there were five governors from the 
U.S. side and six from the Mexican side. This was a milestone. Recently, 
in fact yesterday, was the end of the 34th Interparliamentary Meeting 
which was held in Tucson, Arizona; and, finally, we are holding this 
12th Binational Commission meeting. These are clear examples of the 
closeness and the intensity of the contacts that we share and, above 
all, the quality and high level of these contacts. 
Notwithstanding, aside from these useful instruments, we should 
systematically renew summit meetings in each country every other year 
between the Presidents of Mexico and the United States in order to 
review the general state of our contacts and to provide more political 
impulse to our common projects. 
In many of the subjects of our bilateral agenda, Mexico is reiterating 
its interest in seeking joint solutions to problems which, by their very 
nature, cannot be dealt with unilaterally. Naturally, this must be done 
fully respecting the legislations of each country, their sovereignty, 
and the legal system of each state. 
In migration, Mexico reaffirms its purpose of ensuring that the work and 
the efforts of its people are carried out basically on Mexican soil and 
is shown directly in the prosperity of our country. Nonetheless, the 
migration of Mexicans to the United States is an  undeniable reality. It 
is a reality motivated by economic reasons, family reasons, historical 
reasons, sociological reasons, and cultural reasons--a reality which is 
stressed by the asymmetry that exists in the levels of income of the 
people of both countries. 
Migration, therefore, is a structural phenomenon in the relationship 
between the United States and Mexico, perhaps exacerbated but in no way 
stemming from the difficult situation that we are now going through in 
our country. We have already accepted, for the first time, the study and 
quantification of the phenomenon jointly, and on that firm basis we will 
adopt common approaches to deal with it. 
It is clear that a structural problem cannot be solved by temporal 
means.  It cannot be overcome by violence or through repression. Respect 
for human rights and labor rights of all Mexicans is one of the highest 
priorities of Mexico's foreign policy. 
We are especially concerned to see the uprise of extremist factions and 
hostile attitudes which are intolerant against the population of Mexico 
or those of Mexican origin. We are convinced that political moderation 
is a requirement to seek mutually acceptable solutions for this 
phenomenon. The leadership of the U.S. Government to educate public 
opinion in some areas and regions of this country and to denounce and 
reverse such trends is of vital importance. It is the right thing to do, 
and it serves the interests of both our peoples. 
With regard to drug trafficking, Mexico feels that this universal cancer 
must be fought based on the principle of co-responsibility and with an 
integrated approach. To this end, each country must, in its own 
territory, attack the various sources of this problem. Mexico is working 
against drug trafficking for reasons of national security, for reasons 
of public health, and as a responsible member of the community of 
nations faced with a global problem. In this important forum we are now 
reaffirming our commitment to redouble our efforts of cooperation 
binationally in order to be more effective in the struggle against drug 
In other fields, Mexico and the United States are fostering projects, 
looking toward the 21st century. Along with Canada, we built a large 
space for trade and investment, with clear and permanent rules, in order 
to promote the welfare of our people. 
The demarche carried out by Chile in order to be included in NAFTA will 
provide this instrument with a new dimension and will be a very useful 
link to comply with the spirit of Miami in the field of trade 
liberalization throughout our hemisphere. 
Multilaterally, Mexico and the United States have a fluid dialogue to 
study and deal with those problems which are common to all mankind. In 
the past few days, during the review of the Non-Proliferation Treaty, 
the Mexican delegation worked intensively along with the chairmanship of 
the conference and held consultations at the very highest level with a 
large number of delegations, among them the United States, in order to 
ensure that the indefinite extension of the Nuclear Non-Proliferation 
Treaty goes hand- in-hand with effective disarmament agreements of non-
proliferation and revision of the treaty. 
We all congratulate ourselves on the successful conclusion of this 
conference and the adoption by consensus of the final resolution. 
Ladies and gentlemen, from the beginning of this year, Mexico suffered 
the effects of a very major economic crisis. In order to deal with it, 
the Mexican Government has implemented a broad-based adjustment program 
to overcome the economic emergency, reactivate growth, and create jobs 
in the shortest time possible. This program is being supported by a 
financial package which is unprecedented, headed by the United States. 
Indicators for the first quarter of this year are very hopeful. Mexico's 
trade balance, for the first time in many years, has a surplus. The 
Mexican peso is beginning to show signs of strength and stability, and 
on its part, the stock market and interest rates are beginning to show 
favorable behavior. All of this justifies reasonable optimism that in a 
short time we will be able to be on the upward trend again. 
President Zedillo stated in Dallas last April 5 that the vision of 
President Clinton averted an explosion in the Mexican crisis and kept it 
from becoming a systemic problem or even a problem at the global level. 
I would now like to reiterate to President Clinton and to the 
authorities of the United States the appreciation of the Government of 
Mexico for his vision and for that determination. What happened in 
Mexico must lead us to a serious study of the international financial 
mechanisms and capital flows throughout the world. It is a source of 
satisfaction to have included this subject on the agenda of the summit 
meeting of the Group of Seven to be held in Halifax in a few days. 
In the political sphere, Mexico has carried out major steps in order to 
strengthen its democracy. Last August, Mexico had exemplary elections in 
choosing a new president. Free, clean, and peaceful participation of 
over 78% of the voting public was an unprecedented political step, as 
well as a legitimate and unquestionable mandate for President Zedillo. 
Based on this mandate, an intensive dialogue was begun with the 
political parties seeking out the broadest possible consensus with 
regard to the following stages of the political reform of our country. 
Even more transcendental is our  judicial reform. Day by day we confirm 
the struggle against impunity and the determination to reinforce law and    
order in our society. The Zedillo Administration has persevered in the 
search for a peaceful and negotiated solution to the conflict in 
Chiapas, with full respect for human rights. Once all parties 
represented in Congress passed the legal framework for this negotiation, 
we began the formal encounters between the parties involved in this 
conflict. For 16 months now in Chiapas there has been no war--only the 
will to negotiate. That is the road to follow. 
Secretary Christopher, Secretaries, ladies and gentlemen, before we 
begin our work, I would like to express to the U.S. authorities the 
appreciation of the Mexican delegation for your hospitality and for the 
friendly welcome that you have given us. This is the best possible 
guarantee that the work of this commission will generate the new 
understanding--and New Understanding written with capital letters--that 
will move our people toward the 21st century. Thank you very much. (###) 
Fact Sheet: U.S-Mexico Binational Commission 
The United States and Mexico have a unique relationship. They share a 
commitment to economic growth, which benefits the peoples of both 
nations; a belief that open, democratic governance provides for the most 
legitimate representation of its citizenry; and a common border and the 
stewardship of the border environment.  
Over the past decade, U.S. and Mexican political, economic, business, 
and social leaders have accelerated cooperation on a range of issues to 
find the best solutions to benefit the peoples of both countries. Such 
cooperation is symbolized by the 1993 North American Free Trade 
Agreement (NAFTA). NAFTA--together with the supplemental environment and 
labor agreements, the complimentary Border Environment Cooperation 
Commission, and the North American Development Bank--unites the United 
States, Mexico, and Canada in a shared vision for the future of the 
continent. U.S-Mexico bilateral cooperative programs further enhance 
this partnership. 
Mexico and the North American Economy 
The Mexican economy has undergone significant restructuring in the past 
decade. Mexico has gradually reduced its dependence on petroleum exports 
and has liberalized its trade and investment laws. It became a 
contracting party of the General Agreement on Tariffs and Trade (GATT) 
in 1986. Mexico joined the Asia-Pacific Economic Cooperation forum in 
1993 and the Organization for Economic Cooperation and Development 
(OECD) in 1994.  
In 1993, Mexico signed NAFTA. NAFTA marks the first time in the history 
of U.S. trade policy that environmental concerns have been addressed in 
a comprehensive trade agreement. In addition, the parallel labor 
agreement reflects concerns about protecting workers' rights and 
institutes strong dispute resolution mechanisms.  
Mexico's economic growth directly affects the U.S. economy: 
-- It is the United States' third-largest trading partner; and 
-- It is one of the fastest-growing major export markets for U.S. goods 
and services. 
U.S. exports to Mexico have more than quadrupled--from $12.3 billion in 
1986 to more than $50 billion in 1994, resulting in a $1.3 billion trade 
surplus in 1994. 
NAFTA has expanded trade: U.S-Mexico trade increased 23% in 1994, well 
above the 13.4% growth in 1993.  NAFTA also has helped lock in economic 
reforms in Mexico.  
Economic Crisis of 1994. An economic crisis, which began with the 
devaluation of the peso in December 1994, is causing a severe economic 
contraction in Mexico and will have a short-term, negative impact on 
U.S. exports to Mexico. The crisis generated an international effort led 
by the United States to assist Mexico in overcoming its economic 
problems and resuming growth. On February 21, 1995, the United States 
and Mexico signed agreements implementing a $20-billion U.S. support 
package which uses funds from the Treasury Depart-ment's Exchange 
Stabilization Fund, intended to stabilize exchange rates and maintain 
orderly market conditions in Mexico.  
International financial institutions and Mexico's main trading partners 
will help ensure that the crisis will not derail the significant 
economic reform efforts undertaken by Mexico. The Mexican Government has 
restated its commitment to continue reform to strengthen the free 
market, liberalize trade, and further privatize and deregulate economic 
Democracy and Electoral Reforms in Mexico 
Mexico is undergoing a profound political transformation. Since 1989, it 
has embarked on a series of reforms that have introduced an 
unprecedented level of openness to the political system. Although the 
Institutional Revolutionary Party (PRI) has dominated Mexico since its 
founding in 1929, opposition parties have made significant gains in 
recent elections, including four governorships, the mayoralties of the 
country's second- and third-largest cities, 200 of 500 seats in the 
lower house of the Congress, and 33 of 128 seats in the Senate. 
President Zedillo is committed strongly to further political reforms in 
campaign and party financing, full autonomy for electoral institutions, 
and unbiased access to the media by candidates. To pursue these reforms, 
the Mexican Government and leaders of the four largest political parties 
signed, in January 1995, a pact pledging cooperation and, in April, 
established permanent working groups to serve as a forum for discussing 
these issues. 
The U.S. Government has supported Mexico's efforts to achieve a fully 
participatory democracy. For the 1994 elections, the United States 
provided about $1.5 million through USAID and the National Endowment for 
Democracy to support election-related activities in Mexico. The Mexican 
Government spent nearly $1 billion for electoral technology and to 
support activities related to the 1994 elections. 
Human Rights. Mexico also has recognized long-standing problems of 
corruption and human rights abuses by governmental officials. President 
Zedillo has initiated a sweeping reform of the Mexican justice system. 
The creation in 1990 of the National Commission for Human Rights (CNDH) 
and subsequent expansion of human rights commissions to all states and 
the federal district provided a means by which human rights allegations 
could be addressed.  
Mexican and international non-governmental human rights organizations 
(NGOs) have severely criticized the Mexican military, holding them 
responsible for abuses occurring during the January 1994 uprising in 
Chiapas. NGOs remain critical of the Mexican Government's inability to 
bring charges in connection with those human rights violations. However, 
there have not been any substantiated abuses by the military during 
actions in February 1995 to restore governmental control of rural areas 
in Chiapas. The CNDH, however, reported abuses, including torture, 
committed by police or other law enforcement personnel against suspected 
rebel leaders and supporters taken into custody during the February 
U.S-Mexico Border 
The U.S-Mexico border is one of the most active and vibrant 
international boundaries in the world. In 1994, nearly 331 million 
people crossed the border from Mexico into the United States.  
Enforcement of laws on immigration, environment and natural resources, 
and illegal drugs, as well as transportation, are some of the key issues 
facing the two nations in the border area. Local, state, and federal 
officials from both nations meet frequently to seek common, cooperative 
solutions to these mutual problems. NAFTA also created additional 
mechanisms through which the U.S., Mexico, and Canada can cooperate on 
border issues. 
Other Bilateral Cooperation 
Immigration. According to Immigration and Naturalization Service (INS) 
estimates, about 3.8 million undocumented migrants were residing in the 
United States in June 1994. About half of these illegal residents 
entered the United States by unlawfully crossing the southern border 
from Mexico, while the other half entered as legal visitors and 
remained. The INS estimates that 98% of the migrants who illegally cross 
the U.S-Mexico border are Mexican; visitors who remain come from all 
over the world. Each year, the U.S. Border Patrol apprehends about 1 
million Mexicans and returns them to Mexico. Mexico cooperates with the 
United States on efforts to reduce the use of Mexican territory by 
third-country nationals as a springboard for entry into the United 
States. Mexico deports more than 100,000 third-country migrants each 
In August 1994, a Border Patrol strategic plan for gaining control of 
U.S. borders was approved. The plan focuses on preventing illegal entry 
instead of apprehending aliens once they have entered the country. It 
aims to provide barriers against entry in those areas with the highest 
concentration of illegal activity. 
The United States and Mexico also work actively to make the border a 
safer place for citizens of both countries. Mexico created a special 
police force to combat crime against migrants. Mexico has effectively 
addressed the dangerous problem of pedestrians running through the 
southbound vehicular lanes of I-5 to avoid U.S. immigration inspections. 
Mexico and the United States have both taken action to close access to 
the infamous cross-border drainage tunnels in Nogales. 
Illegal Drugs. The United States and Mexico are active partners in 
counter-narcotics matters. This is vital to the efforts of each 
country's law enforcement communities. Mexico is increasing cooperation 
on joint task forces that target drug kingpins, money-laundering, and 
precursor chemicals. The United States and Mexico are developing new 
initiatives on fugitives, stolen vehicles, arms-trafficking, prisoner 
transfers, and white-collar crime.  
Narcotics-related corruption has been high on the bilateral agenda for 
some time. The United States is working on several fronts with the 
Government of Mexico to help reduce the amount of drugs transiting 
Mexico and to combat corruption where it does exist.  
President Zedillo, having named drug-trafficking as Mexico's chief 
national security problem, has launched a package of judicial reforms to 
strengthen anti-drug and anti-crime institutions and efforts. Opposition 
National Action Party legislator Antonio Lozano Gracia was appointed as 
Attorney General and immediately initiated a reorganization and reform 
effort within the Attorney General's office to deal with corruption.  
The Mexican Government has made significant advances in its own anti-
narcotics efforts, including increased seizures of cocaine, expansion of 
the eradication of opium poppies, and efforts to strengthen the criminal 
code for drug crimes. In 1993, it assumed the full cost of the counter-
narcotics programs that previously had been supported by U.S. funds. 
Mexican law-enforcement officials seized more than 247 metric tons of 
cocaine, made more than 100,000 drug-related arrests, and eradicated 
147,000 hectares of illicit drug crops--opium poppy and marijuana--
during 1989-94. In 1994, Mexican seizures of heroin, marijuana, and 
precursor chemicals increased, as did destruction of clandestine 
laboratories and landing strips. 
Cocaine seizures fell during 1994, in large part because Mexico was 
unable to interdict the multi-ton jet cargo shipments of the drug by 
South American drug cartels. The United States works with Mexico to 
strengthen its capability to interdict these jet shipments and to 
enhance cooperation with the Government of Colombia. 
Environment and Natural Resources. The United States and Mexico long 
have worked together to manage natural resources and to resolve 
environmental matters which affect the lives of people along the border. 
The following cooperative activities highlight continuing and new 
efforts to address environmental challenges. 
-- As a result of the environmental agreement negotiated as part of 
NAFTA, the United States, Mexico, and Canada created a North American 
Commission on Environmental Cooperation to strengthen environmental laws 
and address common environmental concerns. The United States and Mexico 
established two institutions in November 1993: The Border Environment 
Cooperation Commission (BECC) works with local communities to develop 
plans for better meeting their need for environmental facilities, and 
the North American Development Bank (NADBank) leverages private-sector 
capital to finance project construction certified by the BECC. 
-- The International Boundary and Water Commission (IBWC), under the 
1944 Water Treaty, focuses on border sanitation problems and is 
responsible for flood control, conservation and division of the use of 
border waters, and maintaining the international boundary. The IBWC--
working with the Environmental Protection Agency and border state and 
local authorities in both countries--completed several border sewage 
projects, including the expansion of a wastewater treatment plant at 
Nogales, and is building wastewater treatment and disposal facilities at 
Nuevo Laredo and Tijuana.  
-- The United States and Mexico intensified efforts to protect and 
improve human health conditions and the natural ecosystems along the 
border region with the signing of the 1983 La Paz Agreement. This 
agreement established a general framework, resulting in six bilateral 
technical working groups and specific problem-solving annexes that deal 
with border environmental issues. Current initiatives include a proposal 
for an international air-quality improvement district in El Paso/Cuidad 
Juarez and efforts to deal with air pollution from the Carbon I/II coal-
fired power plants in Mexico, which affect visibility in the Big Bend 
National Park. 
-- Under the Integrated Border Environment Plan of 1992, the United 
States and Mexico in 1995 will review ongoing environmental initiatives 
with the objective of developing a new border environmental plan, 
"Border 2000," with public participation and input. 
-- The Good Neighbor Environmental Board, initiated in 1994, strongly 
emphasizes the needs for binational approaches to environmental and 
infrastructure issues and needs within border states. 
-- The Public Health Service of the Department of Health and Human 
Services and its Mexican counterpart work with their state and local 
colleagues in a unique binational health association--the Border Health 
Association (BHA)--founded in 1942. The BHA will hold its next annual 
meeting in June 1995 in San Diego, California. 
-- In 1994, the U.S. Department of Energy and the Mexican Petroleum 
Institute (IMP) extended a 1990 memorandum of understanding which 
supports Los Alamos Laboratory and IMP studies of modeling and state-of- 
the-art measurement equipment to better categorize the sources and 
abatement strategies related to air pollution in Mexico City. 
-- The United States and Mexico have about 100 joint wildlife/park 
projects, ranging from conservation and management of migratory bird 
habitats, to protecting endangered species such as the jaguar, to 
research on tropical birds. The two countries also have cooperated on 
adjacent forests and national parks under a 1985 agreement and a 1987 
memorandum of understanding. Under the 1994 North America Waterfowl 
Management Agreement, the United States and Mexico, with Canada, are 
cooperating on protecting migratory waterfowl habitats.  (###) 
Fact Sheet: U.S.-Mexico Binational Commission 
The U.S-Mexico Binational Commission (BNC) is a unique forum established 
by the two countries to allow for regular exchanges at the Cabinet level 
on a wide range of issues critical to U.S-Mexico relations. 
Development of the BNC 
Presidents Carter and Lopez Portillo established the precursor to the 
BNC in May 1977 to provide better coordination in U.S-Mexico relations. 
Then called the U.S-Mexico Consultative Mechanism, it had three broad 
working groups--political, social, and economic--and subgroups within 
each of these. At the first meeting in May 1978, Secretary of State 
Vance and Mexican Secretary of Foreign Relations Roel met in Mexico with 
the chairmen of the working groups to review the first year's progress. 
In February 1979, the two presidents agreed to reorganize and strengthen 
the Consultative Mechanism. The working groups were realigned and 
broadened to provide an improved forum for discussion and understanding. 
The presidents later reaffirmed the Consultative Mechanism during their 
September 1979 meeting in Washington, DC. 
The Binational Commission was established in 1981 by Presidents Reagan 
and Lopez Portillo to serve as a forum for meetings between Cabinet-
level officials from both countries. The new BNC was envisioned as a 
simple, flexible tool that would meet once or twice annually, with 
counterparts exchanging an action agenda of topics requiring attention. 
One of the early, temporary action groups formed in November 1981, the 
Border Relations Action group, met twice and carried out several on-site 
investigations and technical-level consultations and submitted 
recommendations to the two governments. 
BNC Structure 
This year's BNC meeting is the 12th since 1981. The meeting has become a 
one-day conference chaired by the U.S. Secretary of State and the 
Mexican Secretary of Foreign Relations. Each delegation includes 
numerous Cabinet-level officials and other agency chiefs. Meeting in 
plenary sessions and working groups, they discuss a complex and diverse 
range of bilateral issues which have international and domestic impact. 
The number of groups has grown steadily. Nine working groups met at the 
1989 BNC. Two additional groups, education and agriculture, were added 
in 1990. In 1991, working groups on housing and urban development and 
labor were added, bringing the total to 12. A transportation working 
group also met informally for the first time. The education working 
group was combined with the cultural affairs working group. For the 1993 
BNC, transportation was added as a full-fledged working group, and a new 
science and technology subgroup was formed. 
In preparing for the BNC, each group develops an agenda which serves as 
the basis of working group discussions. In some years, bilateral 
agreements are signed. Furthermore, the working groups continue to 
communicate throughout the intervening months between BNC meetings. Some 
working groups meet several times each year in addition to the formal 
BNC session. 
Contacts between the two governments at every level from staff to 
Cabinet officials have proliferated, partly as an outgrowth of the BNC. 
The approval of the North American Free Trade Agreement (NAFTA) has seen 
these contacts grow still closer and more frequent. The 1995 BNC meeting 
is the first since the December 1994 inauguration of Ernesto Zedillo as 
President of Mexico. The meeting offers an opportunity for both 
countries to review and strengthen the overall relationship. (###) 
Consultative Mechanism Meeting Dates 
May 1977 
May 1978 
BNC Meeting Dates 
November 1981 
November 1982 
April 1983 
April 1984 
July 1985 
January 1987 
August 1989 
August 1990 
September 1991 
June 1993 
May 1994 
May 1995 
BNC Working Groups 
Business Development, Fisheries and Tourism 
Education and Cultural Affairs 
Environmental Cooperation 
Fiscal, Financial and Customs Issues 
Housing and Urban Development 
Legal Affairs and Anti-Narcotics Issues 
Migration and Consular Affairs  
Trade and Investment  
Bilateral Relations: 
   Border Cooperation Subgroup 
   Science and Technology Subgroup (###) 
Post-Summit Priorities In the Hemisphere 
Alexander F. Watson, Assistant Secretary For Inter-American Affairs 
Address to the Miami Congressional Workshop, Miami, Florida, April 28, 
It is a real pleasure to be here again to discuss the current state of 
hemispheric affairs with such a distinguished and well-informed group of 
workshop participants, including legislators from Canada, Chile, and 
Mexico, as well as the United States. This forum provides an excellent 
opportunity to take stock of where we are in the wake of last December's 
Summit of the Americas, as well as to discuss how best to capitalize, in 
a mutually beneficial manner, on the intriguing set of new opportunities 
and challenges we face at this moment in history. 
Summit of the Americas Provides the Framework 
During the summit, which Miami hosted with such panache, the 34 
democratically elected hemisphere leaders signed a Declaration of 
Principles and Plan of Action committing themselves and their countries 
to foster stable societies that are well-governed and that enfranchise, 
in the fullest sense, all their people. They threw their support 
unequivocally behind democracy, respect for human rights, open markets 
and free trade, preservation of the environment, and the sharing of the 
benefits of growth among all segments of the population. As enshrined by 
the summit, for the first time in history we have a hemispheric 
convergence of values which includes every country except Cuba. But the 
summit represented far more than a celebration of this historic 
convergence of values and objectives; the Action Plan and Declaration of 
Principles also identified the issues we expect to face in the future 
and established a strong conceptual foundation from which to address 
them cooperatively. Consistent with our emphasis on regional 
cooperation, we have given the OAS, the IDB, and PAHO--the premier 
regional organizations--central roles in implementation of the action 
Working closely with governments around the hemisphere, the Clinton 
Administration has sought to implement summit-related commitments 
aggressively, and we have a solid record of progress. Although we are 
less than half a year removed from the summit, we have already moved 
forward across the broad spectrum of action items. Next week, we are 
meeting in San Salvador to prepare a report on this progress for our 
foreign ministers to consider at the OAS General Assembly in Haiti in 
June. Just to take one of many examples, leaders at the summit called 
for completion of negotiations on the Free Trade Area of the Americas--a 
$12 trillion market of some 800 million consumers--by the year 2005. To 
this end, we have already been engaged in intensive technical 
consultations with key countries in preparation for the June 30 meeting 
of trade ministers in Denver, which will produce a roadmap for 
implementation of "Vision 2005."  Indeed, a second trade ministerial is 
already planned for March 1996. 
In reviewing those positive developments, however, some might ask, "But 
what about the negative events of this year? Don't the fiscal crisis in 
Mexico and the border war between Ecuador and Peru indicate that the 
convergence was more apparent than real--or that somehow the 'Spirit of 
Miami' is suddenly losing its energy?" 
Not at all. We knew well before the summit that there would be 
reversals, that some of the ghosts exorcised by the Miami Spirit would 
be back to remind us that our multiple tasks were not finished--the 
ghosts of instability, of militarism, of central economic planning and 
control, of poverty, and of pollution and corruption. It was precisely 
to address these concerns that we fashioned the Action Plan. When I 
think back to the development of the idea of a summit--right after the 
passage of NAFTA in late 1993--I recall that we wanted to do a bit of 
celebrating--yes; we wanted to see what more progress we could make on 
trade and other issues--definitely; we recognized the need to build on 
an extraordinarily buoyant momentum--of course. But we were keenly aware 
that serious problems still threatened, and we needed a new approach to 
addressing them. 
So we conceived the notion of a gathering of leaders--the first since 
1967 and radical in its democratic and capitalist make-up and including 
Canada for the first time--to define and confirm the convergence and to 
create ways to defend it against those threats. That was the point of 
the summit. The summit did not say we no longer have problems. What it 
did say was that we are significantly better prepared, in 1995, to deal 
with the problems that face us than we were at any time in the past and 
that we will deal with them on a collaborative basis. 
Look at what has happened this year. The Mexican crisis is a setback. We 
did not predict it, and it came as a shock and disappointment. We had no 
idea that the Upper Cenepa Valley would once again erupt into border 
warfare between Peru and Ecuador. What happened was frightening to all 
who wanted to see military solutions to political problems placed 
forever in our past. But in both cases, all of us--from Washington, to 
Mexico City, to Quito, Lima, Brasilia, Buenos Aires, and Santiago--were 
in much better shape to deal with crises than we would have been without 
NAFTA and without the summit. The Zedillo Administration's willingness 
to lash itself to the mast of economic reform and resist protectionist 
sirens, the strong support for Mexico provided by the U.S., Brazil, 
Argentina, Chile, and Colombia, as well as Brazil's leadership within 
the Group of Guarantors of the Peru-Ecuador Protocol of Rio; and the 
willingness of the U.S., Argentina, and Chile to contribute 
energetically are direct results of this new attitude. The flight of 
capital from Mexico and war between two South American countries are 
historical facts. The multilateral support for the recovery of the peso 
and the separation of Ecuadoran and Peruvian forces are signals of 
something new: The Spirit of Miami. There are scores of other examples. 
One of the most dramatic, of course, is the continued support from many 
countries of the hemisphere for the democratic recovery in Haiti. 
What's In It for Us? 
I am confident everyone here today understands the importance to the 
United States of the developments I have described. However, some less 
versed may ask, with everything else going on at home and elsewhere in 
the world, why should we spend so much time fussing with Latin America 
and the Caribbean? In other words, what's in it for us? 
This hemisphere matters to the American people. What happens in Mexico 
City or Santiago or Brasilia or Kingston or Port-au-Prince affects the 
daily lives and welfare of our own citizens. The defense of peace, 
democracy, and broad-based prosperity in Latin America and the Caribbean 
is not just the defense of high moral principles. We pursue these goals 
also because they build cooperation on issues which directly affect our 
own citizens. For example, the need to rid the hemisphere of the 
scourges of terrorism and narcotics trafficking is vital. The economic 
health of our neighbors increases trade and investment, which stimulates 
economic growth and creates jobs and wealth for U.S. citizens. Better 
cooperation to ensure a more measured flow of migrants throughout the 
hemisphere is mutually beneficial, as is increased cooperation in areas 
such as environmental protection, tourism, and cultural preservation. At 
bottom, we seek a closer relationship with our neighbors, based on 
shared values and mutual objectives, in order to advance the interests 
of our own citizens. 
To protect these interests, the only practical approach is cooperative 
engagement. Some in the United States argue for a more coercive approach 
to relations with our neighbors. Others argue for neglect of the region 
and refocus of our resources elsewhere. But in reality, the issues we 
face in this hemisphere that are really important to the U.S. are many, 
and they are intertwined. Coercion or neglect in one area has negative 
effects in others, perhaps more vital to U.S. interests. Our only 
reasonable choice is to foster cooperation on a broad spectrum of issues 
in a spirit of mutual interest to implement the full agenda which the 
United States and, increasingly, our neighbors desire. The Summit of the 
Americas provides the necessary framework and guidelines for this 
Cooperation With Congress Critical 
In advancing our interests, we must work shoulder-to-shoulder with the 
104th Congress. At this critical juncture, we have the opportunity to 
craft and implement a truly bipartisan policy for the hemisphere, based 
on the summit framework and supported by congressional leaders from both 
sides of the aisle. 
Let me be specific on our immediate legislative agenda. We now have 
before the Congress a number of issues which will require timely action 
and the support of the Members of Congress here this afternoon and of 
your colleagues. Heading the list of issues are trade integration, 
providing the necessary resources to maintain United States leadership 
in the hemisphere and bringing peaceful democratic change to Cuba. 
One of the key themes emerging from the Summit of the Americas was the 
commitment to expand free trade. Under the leadership of Ambassador 
Mickey Kantor, this Administration is now consulting with Congress to 
develop appropriate legislation for fast-track procedures to support 
trade negotiations. This is a crucial element in the expansion of NAFTA 
to include Chile and other countries thereafter. For the credibility of 
the Miami process and for our own credibility on the World stage, it is 
crucial to meet the commitment made by the 34 hemispheric leaders to 
negotiate a Free Trade Area of the Americas by 2005. There should be no 
doubt that to do so would be in our national interest. 
--  Latin America purchased $92 billion of U.S. goods last year. The 
European Union purchased only slightly more. 
--  Western Hemisphere countries are more inclined than countries in 
other regions of the world to import from the United States. So, 
increasing their capacity to import is more important for the U.S. 
--  From 1987 through 1993, U.S.  exports to Latin America grew at an 
average annual rate of 21%. That is twice the growth rate of our exports 
to the EU. 
--  It is likely that Latin America will outstrip the EU within a decade 
as a market for U.S. exports. 
--  Even so-called "small" countries are important for U.S. trade. We 
sell more to Chile--14 million people--than to India--920 million 
people. We sell about as much to Costa Rica--3 million people--as we do 
to all of Eastern Europe--100 million people. 
I understand hearings on a fast-track bill are tentatively scheduled for 
May. Timely action on this legislation is, indeed, critical as 
commercial integration among other countries of the hemisphere is moving 
ahead quickly and the Europeans and Asians are knocking at the door. 
This is healthy. We want Latin America to integrate and to participate 
more fully in the global economy. But if we leave the Latin American 
playing field to others, we will lose major economic opportunities, 
including investment, trade, jobs, and, ultimately, growth. The game is 
on, and we can compete very effectively. If we don't play, we lose. 
I should note, parenthetically, that it is no accident that Mexico's 
response to the peso crisis did not include any increase in trade 
barriers against the U.S. and Canada as was the case in 1982. Mexico's 
continuing commitment to free trade with its NAFTA partners comes not 
only from the Zedillo Administration's adherence to market principles, 
but also from the clear disciplines of NAFTA and the central free trade 
dynamic of the summit. 
I also want to emphasize the Administration's strong support for  
enhancement of trade benefits for Caribbean Basin countries. I 
understand the excellent bill introduced into the House by 
Representatives Crane and Gibbons will be taken up by the full Ways and 
Means Committee in early May, and that the Senate will hold hearings on 
a companion bill at around the same time. The Administration is happy to 
support the Crane-Gibbons bill. We fully agree with this bill's intent 
that the Caribbean Basin Initiative countries--so important to the U.S.-
-should not be disadvantaged in their access to the U.S. market as a 
result of NAFTA. 
Provision of Resources For Foreign Policy Success 
Another critical issue before Congress is provision of sufficient 
resources so the President can effectively pursue the foreign policy 
interests of the United States. This includes assistance to countries as 
well as funding for the U.S. Government's foreign affairs activities. 
U.S. assistance to Latin America and the Caribbean has been dramatically 
reduced in the past several years. Much of the slack has been taken up 
by more efficient, growing economies, increased trade opportunities with 
the United States and elsewhere, and increased lending by the 
international financial institutions. Nevertheless, carefully targeted 
aid programs remain critical to strengthening democracy, modernizing 
judicial and other institutions, increasing integration, and addressing 
destabilizing social inequities. For example, the peace process in El 
Salvador, which has been a widely acclaimed success story, requires 
continued funding in order to consolidate long-term gains and 
institutionalize peace. To have fought over this issue, both at home and 
abroad, for so many years and now not fund the peace adequately would be 
a serious failure of leadership. 
Equally compelling is the need for continued aid to Haiti. For Haiti to 
stand on its own and move toward a  democracy that is sustainable, we 
must continue to invest significant resources--resources which leverage 
greater sums from the international financial institutions. I was with 
the President on March 31 to witness the transfer of command from the 
U.S.-led multinational force to the UN in Haiti. This moving event 
demonstrated clearly that the Haiti case is a success story for this 
hemisphere. For the first time, the nations of the hemisphere stood 
together and reversed an illegal coup. Among the first to join the U.S.-
led effort were the CARICOM countries. Other hemispheric participants, 
including Argentina, Bolivia, Canada, and Guatemala, also sent soldiers 
and police to Haiti. This kind of hemispheric effort would have been  
unthinkable even five years ago. But because of the current convergence 
of values and interests, it is now possible. We must reinforce this U.S. 
policy success by providing appropriate funding as Haiti struggles to 
rebuild. Some caution is warranted, but an atmosphere of hope is 
evident. Democracy is slowly taking root. To consolidate success, our 
continued leadership is required. We must also be prepared to provide 
adequate resources to support cooperative efforts to effectively combat 
the production and distribution of illegal drugs that cause so much 
damage throughout our hemisphere, not only to the United States, but 
also to our neighbors. 
The overall reduction of aid also places a premium on appropriate 
support for our diplomatic efforts. "Traditional diplomacy" is a 
misnomer, because there is nothing traditional or old-fashioned about 
the way we deal with the constantly changing challenges which face the 
United States throughout the hemisphere. A glance at the Summit Action 
Plan reveals a rich agenda for cooperation covering a host of issues 
which have only recently entered the diplomatic arena. 
Not only the substance but also the conduct of diplomacy is changing 
radically. Revolutionary changes in technology have fostered new means 
of international interaction which require intense personal interaction 
and rapid handling and analysis of information. Who would have thought 
the foreign ministries of Peru and Ecuador would use the Internet to 
conduct a war of press releases, or that private investors could get 
MERCOSUR documents on their personal computers? 
To effectively represent the interests of the United States, the 
Department of State and the other agencies represented in our embassies 
need the equipment, technology, and skills to work competitively in the 
increasingly dynamic world of cyberspace. Our current state is woefully 
inadequate and must be redressed immediately. 
Cold War Remnants: Cuba 
Finally, most of our agenda with the hemisphere concerns the issues of 
the future--democracy, trade, the environment, and poverty. But we are 
still dealing with the heritage of the Cold War in one country--Cuba. 
Critics argue that our Cuba policy is a relic of the Cold War; that, 
when the Soviet Union disappeared as a global threat to the United 
States, we should have ended our embargo of Cuba and re-established full 
diplomatic relations. The U.S. embargo began, of course, as a specific 
reaction to the nationalization of U.S. properties by the Castro 
Government, but it also represents the U.S. commitment to assist the 
Cuban people to obtain their freedom. 
Far from being a prisoner of the Cold War, U.S. policy toward Cuba 
already looks beyond it. We are prepared to establish the same kind of 
mature partnership we have with other countries of the region when Cuba 
is prepared to do so. It is Cuba, not the United States, that is stuck 
in Cold War rhetoric--disparaging elections, human rights, party 
competition, and the guarantees of free speech and press accepted 
universally throughout the region and enshrined in our hemispheric 
We will soon announce the Administration's position on the Helms/Burton 
legislation currently before Congress. While we have differences on 
several points, I am confident we will endorse the bill's three central 
principles--making the embargo a more effective tool of pressure for 
change in Cuba, preparing to assist the Cuban people during their long-
awaited transition to democracy, and protecting the property rights of 
U.S. citizens--while ensuring that the President protects his 
prerogatives as the maker of foreign policy and the arbiter of other 
important national interests which may be affected by the legislation. 
I began these remarks by describing the role the Summit of the Americas 
and the city of Miami have played in forging a new consensus with regard  
to our role in the hemisphere. Our long-term, ambitious goals are 
achievable, as long as we keep focused on where we want to go and deal 
with our common problems in a cooperative manner. We intend to work 
closely with our neighbors to address the challenges and opportunities 
we face. 
In order to achieve meaningful results, we want to continue to work 
closely with Congress. We are partners in the pursuit of U.S. foreign 
policy goals, and, working together, we can achieve our ambitious 
hemispheric agenda for the good of the people of the United States and, 
as well, for those of the rest of the region. We have begun the process 
energetically. Let's move forward together. (###) 
FY 1996 Economic Programs for Promoting Peace in the Middle East 
Robert H. Pelletreau, Assistant Secretary for Near Eastern Affairs 
Statement before the Subcommittee on Near Eastern and South Asian 
Affairs of the Senate Foreign Relations Committee, Washington, DC, May 
11, 1994 
Mr. Chairman and distinguished members of the subcommittee: I am pleased 
to appear before you to review recent events and to discuss the 
Administration's International Affairs budget request for fiscal year 
1996. Secretary Christopher appeared before this Committee in February 
to present the President's budget and outline the Administration's 
global foreign policy objectives. Today, I will focus on programs for 
the Middle East which serve our goal of "promoting peace." 
As has been the case in budgets submitted by the last four 
Administrations, a large part of this year's budget request is for the 
Middle East peace process--$5.24 billion. We also request funds to 
support peacekeeping operations in the Middle East as well as for 
programs aimed at meeting humanitarian needs, curbing weapons 
proliferation, and combating terrorism. 
My statement today will outline broad U.S objectives, review the status 
of the Middle East peace process, and trace how U.S. assistance is 
essential to advancing the peace process. I will also make some remarks 
about specific programs in our budget for preserving regional security 
in the Middle East. 
Securing a just, lasting, and comprehensive peace in the Middle East--a 
long-standing goal of presidents of both parties--remains one of the 
cornerstones of our overall foreign policy. As the Secretary has stated, 
nowhere is the importance and effectiveness of sustained American 
engagement more evident. 
But we cannot continue our effective engagement in the Middle East and 
protect our interests there if we do not marshal the resources to stand 
by our commitments. The Administration's FY 1996 budget request is the 
rock-bottom investment we need to promote our vital interests in the 
Middle East. 
Progress toward peace bolsters long-standing U.S. interests in the 
region, which include: 
-- Maintaining our steadfast commitment to Israel's security and 
-- Building and maintaining security arrangements that assure the 
stability of the Gulf region and unimpeded commercial access to its 
petroleum reserves, which are vital to our economic prosperity; 
-- Ensuring fair access for American business to commercial 
opportunities in the region; 
-- Countering the proliferation of weapons of mass destruction and the 
systems to deliver them; 
-- Combating terrorism; and 
-- Promoting more open political and economic systems and respect for 
human rights and the rule of law. 
The Peace Process and U.S. Interests 
Since the Madrid Conference in October 1991, Arabs and Israelis have 
engaged almost continuously in bilateral and multilateral negotiations 
aimed at a comprehensive peace settlement based on United Nations 
Security Council Resolutions 242 and 338. Much progress has been made. 
Since Israel and the PLO signed the Declaration of Principles in 
September 1993, the world has witnessed a series of historic steps 
toward peace. 
-- Jordan and Israel signed a full treaty of peace in October, formally 
established diplomatic relations in November, and exchanged ambassadors 
in March. 
-- Israel and the PLO, despite violent challenges and tough issues on 
the negotiating table, have signed two agreements on implementing the 
Declaration of Principles and are negotiating implementation of the 
second stage of the Declaration. 
-- Morocco opened a liaison office in Tel Aviv and Israel has opened its 
own office in Rabat. 
-- Tunisia and Israel announced plans to exchange economic liaison 
-- Arab nations began the process of dismantling the boycott of Israel. 
-- The Casablanca Middle East/North Africa economic summit gave new 
force to regional economic integration, private investment, and the 
development of regional economic institutions. 
Our efforts at working with the parties are intense. Secretary 
Christopher and Vice President Gore made separate visits to the region 
in March, followed by Ambassador Ross in April. Further breakthroughs in 
the peace process will require bold decisions by the region's political 
leadership, but we believe that economic interaction is an essential 
component. It will be the glue that binds the region and its people 
together. The United States is determined to help build the economic 
foundations for peace in the Middle East. 
That new economic foundation which U.S. assistance plays such a 
significant role in creating is being constructed on three fronts worthy 
of special mention. 
-- The bilateral agreements reached by Israel with the Palestinians and 
with the Jordanians contain extensive and detailed plans for jointly 
addressing economic problems. The United States has been closely and 
constantly involved in supporting those agreements. 
-- The multilateral peace process which the U.S. co-sponsors has, since 
January 1992, brought together Arabs, Israelis, and interested non-
regional parties into discussion, planning, and modest projects designed 
to instill a regional approach to solving economic, water resource, and 
environmental problems. These contacts have also resulted in a gradual 
expansion of bilateral economic ties between Israel and a variety of 
countries in the Gulf and North Africa. 
-- The North Africa/Middle East economic summit brought business people 
fully into this process last year in Casablanca. This process of 
applying private sector ingenuity and resources to solve the pressing 
economic problems of the region will continue with the Amman summit in 
October of this year. At that meeting, we hope to be in a position to 
announce formation of a regional bank, as well as regional councils for 
business and for tourism. 
A remaining impediment that blights the many positive trends toward 
expanding economic interaction is the Arab League's boycott of Israel. 
We have made good progress this past year, including the Gulf 
Cooperation Council's announcement that its members have ended the 
secondary and tertiary boycotts, Jordan's renunciation of the boycott in 
its treaty with Israel, and the Palestinian endorsement of an end to the 
boycott in the February Taba Declaration. However, we were disappointed 
that the most recent meeting of Arab League foreign ministers took no 
action against the boycott. 
We will continue to urge our Arab allies to take unilateral steps 
against the boycott while we press for an Arab League resolution to end 
it. We are urging governments to give particular attention to 
eliminating the policy and practice of making boycott-related requests--
a problem addressed in the Anti-Economic Discrimination Act of 1994. 
The Role of Foreign Assistance 
U.S diplomatic engagement is necessary, but not sufficient, to protect 
our interests in the Middle East. It is through the combination of 
diplomatic and financial support, complemented by military strength, 
that we give Israel and other regional parties the confidence to take 
further difficult steps. More broadly, through preventive diplomacy, 
U.S. assistance more than offsets the massive costs of another Middle 
East war and ensures that our vital oil supplies are protected. Five 
billion dollars is a significant amount of money, but it pales in 
comparison to the financial and human costs of military conflict between 
Israel and its Arab neighbors or unchecked military provocations in the 
Gulf. I now wish to address the specific programs supported by our FY 
1996 request. 
The U.S. commitment to Israel's security and well-being is based on 
historic and cultural ties, shared democratic values, and the imperative 
of our national interests in the region. We are thus committed to 
maintain and enhance Israel's qualitative military edge over any likely 
combination of adversaries. Our assistance to Israel is vital in helping 
to maintain its security while it pursues peace. 
The Administration's FY 1996 budget maintains current aid levels to 
Israel at $3.0 billion. Funding under the "promoting peace" objective is 
designed to strengthen a free and democratic Israel as well as support 
our peace process goals. At $1.8 billion, our grant Foreign Military 
Financing-- FMF--for Israel supports major weapons systems and allows 
Israel to engage in significant military-related research and 
development. In addition, we recently completed the transfer of F-15 
fighter aircraft, Apache and Blackhawk helicopters, F-16 A/B aircraft, 
Harpoon sea-to-sea missiles, and other defense articles under drawdown 
U.S. Economic Support Funds-- ESF--for Israel total $1.2 billion and 
provide balance-of-payments support while encouraging economic reform 
and sustained private sector growth. These funds can be used to finance 
the importation of goods and services from the U.S.--a point which we 
emphasize and promote. This assistance also allows Israel to service 
external debt owed to or guaranteed by the U.S. Government, pay 
subsidies or other costs associated with loans guaranteed by the U.S. 
Government, and finance military sales debt. 
Egypt is our key Arab partner in efforts to achieve an Arab-Israeli 
peace and bolster moderate forces in the volatile Middle East. Egypt was 
the first Arab state to conclude a peace agreement with Israel; the 
Egypt-Israel peace treaty is the cornerstone of the Arab-Israeli peace 
process. Egypt has also been extremely helpful in the current 
negotiations between Israel and its other Arab neighbors. 
Let me note here that Egypt remains one of the most reliable and 
important partners of the United States in the Middle East. Cooperation 
is broad and deep at many levels. The United States is Egypt's largest 
donor and its largest military supplier. Egypt coordinates closely with 
us on the Middle East peace process, Persian Gulf security, and other 
issues of importance to the United States. We do not, of course, always 
agree on everything, but the relationship is solid and mature, resting 
on a foundation of mutual interest in peace, stability, moderation, and 
development of the region. 
The Vice President's recent inauguration of the U.S.-Egyptian 
Partnership for Economic Growth and Development puts our good 
relationship with Egypt on even sounder footing for the future. 
President Mubarak's meetings with President Clinton last month confirmed 
this. This partnership will facilitate contacts between the U.S. and 
Egyptian private sectors, strengthen science and technology cooperation, 
and establish an "economic dialogue" that will foster development of a 
broad-based economic relationship focused more on trade, investment, and 
mutual commercial benefit than on assistance. 
The President's FY 1996 budget request maintains current aid levels to 
Egypt at $2.116 billion, and the Administration will make its best 
effort to maintain those levels in subsequent years. Our security 
assistance investment in Egypt over the past 15 years has produced many 
benefits. Egypt has used our assistance to modernize its military and 
strengthen its economy, enhancing its important role in contributing to 
stability in the Middle East and furthering U.S. objectives in the 
region. Our $1.3 billion FMF program coupled with a $1 million 
International Military Education and Training-- IMET--program for Egypt 
will underscore further a close and cooperative relationship. 
Egypt has provided essential support for the U.S. military presence in 
the Middle East. The importance and strength of the bilateral military 
relationship with Egypt was demonstrated throughout the Gulf crisis. 
Strong Egyptian leadership paved the way for active Arab participation 
in the coalition, and over 35,000 Egyptian troops constituted the next 
largest foreign force to our own during Desert Storm. 
Egyptian participation in and support for UN peacemaking and 
peacekeeping operations has also been very important. Egypt is currently 
taking part in five UN peacekeeping missions, including Bosnia. Although 
it is now behind us, Egypt was also a major participant in the UNOSOM 
operation in Somalia. In fact, Egypt greatly expanded its role in UNOSOM 
in direct response to a request from the United States after the 
President decided to withdraw U.S. forces. 
With the support of the United States, Egypt is in the middle of a long-
term military modernization program which emphasizes quality over 
quantity. Its primary emphasis at present focuses on several major 
programs: co-production of the M1A1 tank and procurement of F-16s and 
Apache Helicopters. 
At $815 million annually, U.S. ESF for Egypt makes a significant 
difference and provides significant benefits not only to Egypt but to 
the United States. Our ESF program has evolved over time as Egypt has 
developed. Its initial focus was on infrastructure, then structural 
reform, and now on private sector development. Besides helping Egypt, 
our economic assistance helps boost American prosperity. In FY 1994, 
more than 85% of the $815 million congressional earmark for Egypt was 
spent in the U.S. for goods and services. U.S. assistance has also 
developed Egypt as a major market for U.S. products, especially 
agricultural goods. Egypt has become our second-largest foreign market 
for wheat. 
In October, Jordan became the second Arab state to sign a peace treaty 
with Israel. Jordan and Israel see this treaty as much more than an 
absence of hostilities; they share a vision of a warm and wide range of 
bilateral contacts and interactions. In the wake of their agreement, the 
Jordanians and Israelis have begun to formulate plans for a series of 
joint development projects dealing with the environment, water, energy, 
and tourism. As Prime Minister Rabin has emphasized, the Israel-Jordan 
treaty and all of its elements of cooperation should be the model for 
the area. 
The President committed the U.S. to support Jordan when King Hussein 
took his courageous move toward peace without waiting for others in the 
region. This commitment, and the Congress' expression of support in the 
reception accorded King Hussein and Prime Minister Rabin last July, 
bolstered King Hussein's ability to take the political risk of embracing 
full peace with its former adversary. 
Jordan is clearly doing its part. We must do ours. The Administration 
has requested a $275 million supplemental appropriation to complete 
Jordan's debt relief, as authorized by Congress last summer. Acting now 
to forgive Jordan's debt is essential to build the confidence of the 
peace constituency in Jordan and elsewhere in the region. The price the 
United States and our friends in the Middle East will pay for failure is 
high. Your support is essential to ensure the President's commitment is 
fulfilled and the prospects for  a comprehensive peace in the Middle 
East are enhanced. 
Beyond debt forgiveness, we must look to assistance for Jordan to 
promote economic stability and military modernization. The $7.2 million 
ESF program and $7.8 million in development assistance will fund 
projects designed to support broad-based economic growth and better 
management of water resources. At $30 million, U.S. FMF will enhance the 
Jordanian armed forces' ability to maintain security along its borders 
and help Jordan prevent infiltration and cross-border attacks against 
Israel by opponents of the peace process. This requested increase in FMF 
follows a visit by a Department of Defense team in August 1994, which 
identified serious deficiencies in the capability of the Jordanian armed 
forces to provide border security. Our $1.2 million IMET program will 
promote military professionalism among officers and NCOs. Helping 
sustain Jordan's military capabilities serves our interests in other 
ways: Jordan is currently participating in seven UN peacekeeping 
operations and is the fourth-largest contributor of such forces in the 
West Bank/Gaza Strip 
The historic accords between Israel and the PLO unlocked the potential 
for a more peaceful and stable Middle East, and they deserve our 
support. Israel and the PLO have remained in direct negotiations since 
signing the Declaration of Principles and have concluded important 
implementation agreements. Their negotiations are now moving into the 
second phase of the Declaration of Principles, which addresses further 
transfers of authority, redeployment of troops, and elections. 
On March 9, Foreign Minister Peres and Chairman Arafat took an important 
step forward with their agreement to establish a joint senior security 
committee. They also announced plans for the transfer of additional 
responsibilities to Palestinians in the West Bank and set a target date 
of July 1 to conclude negotiations on implementation of the second 
We would all like to see the Israeli-Palestinian negotiations progress 
rapidly, but we need to recognize that the issues on the table are 
complex and sensitive. Israel wants the Palestinian Authority to do all 
it can to prevent attacks by Palestinian extremists against Israeli 
targets. The Bayt Lid bombing in January and the suicide attacks against 
Israeli buses last month in Gaza serve as reminders that the enemies of 
peace are active. The Palestinian Authority has taken actions to preempt 
terrorism and must continue to do so. More must be done to implant the 
rule of law, to apprehend, convict, and imprison those who plan and 
carry out terrorist acts, and to disarm those who would commit violent 
For their part, the Palestinians seek increased responsibilities and 
opportunities for economic development. The Palestinian people must see 
tangible evidence of the benefits of peace. To this end, extensive 
economic assistance is vital to help create new economic conditions and 
effective institutions of self-government. To mobilize assistance for 
the Palestinians, the U.S. organized the Conference to Support Middle 
East Peace in Washington in October 1993, as well as successive donor 
meetings throughout 1994, and just last week in Europe. Donors initially 
pledged over $2.4 billion, with the U.S. pledging $500 million for 1994-
98. This includes $125 million in Overseas Private Investment 
Corporation programs and $375 million in USAID-administered funds. This 
is in addition to our substantial contribution through the Humanitarian 
Assistance portion of our budget to the United Nations Relief and Works 
Agency for Palestine Refugees--UNRWA--and in-kind assistance for the 
Palestinian police and Ministry of Health. 
For FY 1996, the Administration requests $75 million in ESF for the West 
Bank and Gaza Strip. We will continue to coordinate our aid program with 
other donors, the World Bank,   and the Palestinians to ensure our 
programs are cost-efficient and bring lasting changes on the ground. We 
have reprogrammed approximately $40 million of our FY 1995 funds to 
emphasize job creation, high visibility infrastructure, and private 
sector activity.  Mrs. Carpenter will give some details about our recent 
efforts to refocus our assistance program. 
I would only add that we also make clear to the Palestinians that they 
must generate revenues of their own. Palestinian self-help efforts--
collecting taxes and tapping the resources of the Palestinian diaspora--
as well as economic cooperation between the Palestinians, Israel, and 
others are ultimately the keys to Palestinian self-sufficiency. 
Furthermore, the Palestinian Authority must create the necessary 
conditions and environment to ensure the significant and dynamic 
participation of the private sector. 
Lebanon's plan for economic reconstruction and revitalization is 
critical to reestablishing stability and functional government 
institutions after 17 years of civil war. The Lebanese have made 
impressive headway on reconstruction, although progress on the Israel-
Lebanon track of the peace process is essential if Lebanon is to realize 
its full potential. 
Progress has been slow in the Israel-Lebanon negotiations. The issues 
are clear: The Lebanese seek Israeli withdrawal from southern Lebanon. 
Israel claims neither land nor water, but justifiably seeks to secure 
its northern border from terrorist attack and to establish formal peace 
and security arrangements between the two governments. I should add here 
that we support Lebanese independence, sovereignty, and territorial 
integrity, and share the goals of the Lebanese people of a nation secure 
and at peace and free of all foreign forces. 
The U.S. seeks to assist in rebuilding government institutions that 
enhance Lebanon's stability. The Government of Lebanon seeks to rebuild 
the independent, non-sectarian Lebanese armed forces responsive to 
civilian control and respectful of human rights. In this regard, our 
$475,000 request for IMET, in addition to EDA, is central. Humanitarian 
aid, channeled through private voluntary organizations, and aid to 
American-founded educational institutions demonstrates U.S. concern 
about the fate of Lebanon and its people. We also request $4 million in 
ESF, which will help the government take on the responsibility of again 
providing services to its citizens. U.S. aid to Lebanon is currently 
focused on rehabilitation of housing and training for civil 
Multilateral Peace Process 
In January 1992, shortly after the Madrid/Middle East peace conference, 
a set of multilateral negotiations was launched to complement the 
bilaterals. For three years, representatives of Israel, the 
Palestinians, 13 Arab countries, and more than 30 parties from outside 
the region have been meeting in various working groups to address issues 
facing the region as a whole: water, the environment, economic 
development, refugees, and arms control and security. 
Progress in these talks has surpassed our expectations. Israeli 
delegations have been received in Arab capitals: Five of the six 
meetings of the last round of multilateral talks were held in the 
region--in Morocco, Tunisia, Egypt, Qatar, and Oman. The multilaterals 
are proving to be a catalyst  for positive change and may be giving us a 
glimpse of what the region will look like when the countries of the area 
cooperate in an era of comprehensive Arab-Israeli peace. 
These negotiations have moved from a phase of discussion and seminars to 
a phase in which they are funding modest regional projects. In order to 
foster this important new development in the region, the President 
requests $5 million in ESF in FY 1996 to provide a centralized source of 
support for U.S.-funded activities of the five multilateral working 
groups. U.S. assistance will help fund the activities of these working 
groups to promote regional cooperation, demonstrate the fruits of peace 
to the people of the Middle East, and augment progress in the bilateral 
Middle East Regional Cooperation (MERC) 
The MERC program promotes mutually beneficial cooperation between Israel 
and its Arab neighbors. For FY 1996, the Administration requests $7 
million in ESF for this program, which facilitates Arab-Israeli 
scientific and technical exchanges. MERC supports a wide range of 
collaborative efforts, including work on tropical diseases in the Middle 
East, waste-water management and reuse in trans-border areas of Israel 
and the West Bank, and research on saltwater intrusion in coastal areas 
of Morocco, Israel, and the Gaza Strip. The program has cemented solid, 
professional ties and eased communication. By demonstrating to the 
parties that peaceful cooperation can yield tangible benefits to all 
involved, MERC strengthens Arab-Israeli relations. 
Other Bilateral Assistance 
In order to support U.S. regional security and development goals, the 
U.S. provides modest military training assistance to several states in 
the Middle East. In addition to the countries noted above, the 
Administration proposes IMET programs for Oman, Bahrain, Morocco, 
Algeria, and Tunisia. IMET is widely recognized as one of the most cost-
effective components of U.S. security assistance. These programs promote 
regional security, enhance military cooperation, and help maintain 
access to facilities for the U.S. military with Oman, Bahrain, and 
Morocco. These funds will also improve joint exercise capabilities for 
Tunisia and will promote professionalization of the Algerian armed 
Preserving Regional Security 
Mr. Chairman, the Administration's budget request for the Middle East 
highlights the opportunity for peace, but we remain alert to the 
continued threat of war and violence in this tumultuous region. Forces 
of terrorism and rejection complicate the task of peacemaking. The 
pursuit of weapons of mass destruction by some states poses a long-term 
regional menace. Some governments also face challenges from opposition 
movements, religious and secular, that use violence and terrorism as the 
path to political power. I would underscore that the activities of Iran, 
Iraq, and Libya remain sources of particular concern. 
Containing Iran has long been a top foreign policy priority of the 
Clinton Administration. Last week, the President announced that he will 
sign an executive order imposing additional sanctions on Iran. In 
general terms, the executive order will prohibit trade, including 
overseas trade in Iranian oil, and prohibit U.S. investment in Iran. 
Iran's worsening behavior with respect to its support for extremist 
groups seeking to disrupt the peace process, the pursuit of weapons of 
mass destruction, and its ongoing military build-up underscore the need 
for additional measures by the international community. The President's 
decision clearly signals his determination to lead that effort, as he 
has since 1993. 
Iraq presents a multi-faceted challenge to regional security. Our budget 
request demonstrates that the U.S. is clearly prepared to meet that 
threat. The U.S. supports Operation Provide Comfort, which provides 
security and humanitarian assistance to the people of northern Iraq. It 
has acted as a deterrent against Saddam Hussein's historical repression 
of the north, and it serves vital U.S. interests. The bulk of our 
Kurdish relief program will be transferred from the Department of 
Defense to USAID's Office of Foreign Disaster Assistance--OFDA--in FY 
1996. While it is still clear that the Defense Department must maintain 
security elements of Operation Provide Comfort and provide some limited 
infrastructural support to the relief program, we believe OFDA can 
assume responsibility for implementation of the relief projects. The 
International Affairs budget for FY 1996 includes a request for 
International Disaster Assistance funds to make this possible. 
The final element of the Administration's budget for "promoting peace" I 
wish to highlight is our request for funding in the peacekeeping 
accounts. These accounts support several multilateral operations in the 
Middle East. I am aware these accounts are under great scrutiny, but let 
me assure you that the Administration has set forth rigorous standards 
for U.S. support to peacekeeping operations in the Middle East and 
Several long-standing peacekeeping operations help prevent hostilities 
between Israel and its neighbors. These include the UN Truce Supervision 
Organization--UNTSO, the UN Disengagement Observer Force-- UNDOF, United 
Nations Interim Force in Lebanon--UNIFIL, and the non-UN Multinational 
Force and Observers--MFO--in the Sinai. We have traditionally given 
these operations our strong support. Withdrawal from that position of 
leadership would be perceived as a lessening of our support at a 
critical juncture in the Middle East peace process. 
Two other UN peacekeeping operations help safeguard our interests in the 
area. The UN Mission for the Referendum in Western Sahara--MINURSO--
supervises the cease-fire between the Polisario and the Moroccan armed 
forces and is preparing for a historic referendum on the status of the 
former Spanish colony. MINURSO has made great progress in identifying 
potential voters for a referendum since this work began last August. We 
have made very clear that the continuation of this mission at its 
present level depends on clear progress on the ground. Elsewhere, the UN 
Iraq/Kuwait Observer Mission--UNIKOM--funded mainly by Kuwait, monitors 
the demilitarized zone and conducts buffer force activities. There can 
be little doubt that UNIKOM provides a vital line of defense against 
renewed Iraqi aggression. 
Recent developments in the region present both opportunities and 
challenges for U.S. interests. However, despite some enduring dangers to 
regional security, the record shows that a historical shift toward 
reconciliation is under way. Thanks, in part, to effective U.S. 
leadership and U.S. assistance, the promise of peace is gaining ground 
and the people and governments of the region can see a new era of 
cooperation and prosperity almost within their grasp.  (###) 
Section 301 Determination on Japan 
Statement by President Clinton released by the White House, Office of 
the Press Secretary, Moscow, Russia, May 10, 1995. 
For more than two years, I have committed my Administration to a 
bipartisan effort to open world markets. I have done this because where 
markets are open, Americans compete and win--and that means more high-
paying U.S. jobs. 
Over the past 20 months, my Administration has made every effort, 
through negotiations, to remove obstacles to Japan's auto and auto parts 
market. Unfortunately, those negotiations have not produced meaningful 
results. Today, we announced U.S. action in response to the continued 
discrimination against U.S. and foreign competitive autos and auto parts 
in Japan. I want to underscore my strong support for these actions. 
At my direction, my Administration will finalize a preliminary list of 
Japanese goods for retaliation. I also have directed Ambassador Kantor 
to send a pre-filing notification to the Director General of the WTO, 
indicating our intent to pursue a WTO case against Japan's unfair 
trading practices in the auto and auto parts sector. 
Japan is a valued friend and ally. Our political and strategic relations 
are strong. Even in trade, we have worked together to promote successes 
in the Asia-Pacific Economic Cooperation forum (APEC) and the Uruguay 
Round of the GATT. It is in the context of this overall strong 
relationship that we must directly address our differences.  (###) 
America's Long-Term Interest In Hong Kong 
Consul General Richard W. Mueller 
Address to the Foreign Correspondents' Club, Hong Kong, May 2, 1995 
I want to thank the Foreign Correspondents' Club for inviting me to be 
with you today. The FCC has long provided a forum for its members to 
hear speakers talk about issues of current interest. This is an 
important service to Hong Kong's journalists, and, indeed, to the 
community as a whole, and I hope my presentation today will be a useful 
contribution to your tradition. 
Today, I want to talk with you about how the United States sees its 
current and future interests in Hong Kong. I will touch on our major 
areas of interest and try to give you a sense of what we think is going 
well and of where we see possible problems for U.S. interests in the 
future. I'm talking here not just about the interests of the U.S. 
Government but of Hong Kong's resident American community. 
I want to telegraph my final punch by telling you here at the beginning 
of my remarks what my overall conclusions are. Then, I will go back and 
fill in the reasons why I have reached those conclusions. 
The Bottom Line 
Hong Kong is today, as it has been for many years, a dynamic, stable, 
and prosperous city--one that is friendly to international business, to 
interaction with foreigners, and to American interests. Every day, I 
encourage American business people, scholars, and, yes, journalists, to 
come here to live, pursue their careers, and develop their enterprises. 
I believe that the Joint Declaration and the Basic Law provide a 
comprehensive and rational framework for the transition of Hong Kong 
from British to Chinese sovereignty in 1997. If the principles embodied 
in those documents are faithfully implemented by the parties concerned, 
Hong Kong will continue to be one of the world's most prosperous and 
livable centers for trade, finance, education and culture, tourism, and 
information exchange. In that event, Americans will certainly continue 
to come here to seek their livelihoods and their personal happiness. I 
am hopeful that that will, indeed, be Hong Kong's destiny. 
In order for this to happen, it is important that the conditions which 
helped to build Hong Kong--and which have made it a haven for 
international business--remain in place. Those conditions include, but 
are not limited to: 
-- The continuation of a high degree of autonomy, stability, and 
-- The presence of a free market system, including the free flow of 
-- A favorable attitude toward business--law taxes, a duty-free port, 
minimal regulation, and predictable enforcement of contracts; 
-- The rule of law, accompanied by the protection of civil liberties and 
human rights; 
-- The continued development of open, accountable, and democratic 
institutions; and 
-- Continued cooperation between Hong Kong and foreign law enforcement 
This does not mean that Hong Kong must be preserved in amber after 1997, 
any more than it could have been preserved in amber in 1984 when the 
Sino-British Joint Declaration was signed. There will, of course, be 
evolution--some changes in how basic principles are implemented. There 
must be close cooperation between the people of Hong Kong and China over 
the coming years if the concept of one country, two systems is to be 
successfully implemented. At the same time, the fundamentals of the 
conditions I have just mentioned must remain if U.S. interests--the ones 
on which it is especially appropriate for me to comment--are not to be 
The U.S. Government is watching carefully developments on all these 
fronts. We recognize that the responsibility for their implementation 
and preservation lies with the present sovereign--the United Kingdom--
and the future sovereign--the People's Republic of China.  
In making these remarks to you today, it is not my intention to instruct 
either London or Beijing on how the transition should be carried out. 
The blueprint for that is already embodied in the Joint Declaration and 
the Basic Law. Our intention is to cooperate with both sovereigns to do 
what we can to help Hong Kong maintain the conditions which have made it 
one of our best international friends and trading partners. In this 
connection, it is especially important for the transition to provide the 
sense and substance of continuity through 1997. Reducing uncertainty 
about the shape of future institutions and policies increases confidence 
on all sides. 
Now let me turn to each of the U.S. interests I identified and say a 
little bit about what is hopeful and what is not so encouraging with 
regard to each of them. 
High Degree of Autonomy, Stability, and Prosperity 
The Joint Declaration stipulates that, after 1997, the Hong Kong Special 
Administrative Region (SAR) will have a high degree of autonomy, except 
in matters relating to foreign affairs and defense. It further states 
that the social and economic systems, lifestyle, and rights and freedoms 
currently enjoyed by the Hong Kong people will remain unchanged for at 
least 50 years. The Basic Law, passed by the seventh National People's 
Congress in 1990, adds that China's socialist system and policies will 
not be extended to the territory. It reiterates the Joint Declaration 
promise to allow the SAR to exercise a high degree of autonomy and to 
enjoy executive, legislative, and independent judicial power. 
The continuation of this promised high degree of autonomy is a key 
factor in the future of Hong Kong's international position and in the 
future of U.S.-Hong Kong relations specifically. Let me be very clear. 
The U.S. will continue to support Hong Kong's participation in the World 
Trade Organization, APEC, and other such international institutions, as 
well as maintain bilateral agreements such as civil aviation and 
extradition. But in order to do so, Hong Kong after 1997 must be allowed 
to retain a genuinely high degree of autonomy. Hong Kong's leaders and 
institutions must make their own decisions; this, after all, is a 
central thesis of the Basic Law. 
The U.S. has been encouraged by the Joint Liaison Group's (JLG) action 
in extending 170 multilateral treaties currently applying to Hong Kong 
through the U.K. and by its approval of Hong Kong's continuing to 
participate in 30 international organizations. The JLG has also made 
good progress on approvals for bilateral agreements between Hong Kong 
and other countries. The U.S. is currently negotiating or discussing 
with Hong Kong various agreements to replace those which are of interest 
to both sides, and, of course, Hong Kong's high degree of autonomy is 
crucial for those agreements to remain valid after 1997. Among the most 
important, from the U.S. point of view, are a new extradition agreement, 
a mutual legal assistance agreement, and a new agreement on air 
services. In addition, the U.S. remains very interested in negotiating a 
full bilateral investment treaty with Hong Kong.  
We think it is very important that the agreement be fully consistent 
with the highest international standards in important areas such as 
international arbitration and the unconditional right of establishment. 
At the very least, an agreement should lock in the continuation of the 
many very favorable aspects of Hong Kong's current investment regime; we 
would certainly hope that it would make further improvements. Unless 
such an agreement provides substantial and legally binding protections, 
it will not be possible to rally the necessary commercial and political 
support in the U.S. for this effort. 
Free Market System and Favorable Attitude Toward Business 
The free market is one feature of Hong Kong life which everyone 
recognizes as distinctive. It has made many fortunes for those who have 
taken advantage of it. The system must be maintained and, if possible, 
enhanced for Hong Kong's continued prosperity. 
Hong Kong has one of the most liberal trade and investment regimes  
in the world. There are virtually no government barriers to firms--
foreign or domestic--wishing to establish businesses and to compete. 
Important components of this system in the public sector have been the 
professionalism of the Hong Kong Civil Service--and I would note here 
the importance of maintaining the morale and efficiency of this fine 
institution--and an open process of awarding government contracts, with 
awards based not on favoritism but on getting the best product or 
service at the best price. 
A strong, reliable system of commercial dispute resolution goes hand-in-
hand with the free market system. Hong Kong is world-renowned for 
fairness and sound judgments in adjudicating contract disputes, whether 
in its courts or in its arbitration centers. This fact gives business 
confidence to invest large sums of money here. While I will go into this 
in more detail in a minute, let me say here that the adaptation of Hong 
Kong's laws and the creation of a complete court system is, in my view, 
crucial to maintaining Hong Kong's attractiveness to international 
entrepreneurs. If the rule of law is replaced by the rule of personal 
connections alone, then Hong Kong will quickly lose its luster and, I 
fear, its prosperity. 
Of course, Hong Kong is not without its blemishes in the free enterprise 
arena. I continue to be concerned by the difficulties certain 
U.S.professionals--physicians and attorneys, for example--encounter if 
they want to practice in Hong Kong. Surely a way can be found to 
recognize their U.S. credentials and experience. In the commercial 
field, I have followed with interest the efforts of some to put in place 
anti-trust legislation, which would ensure fuller competition in all 
sectors of Hong Kong's economy. 
With regard to competition for the many contracts associated with the 
new airport at Chek Lap Kok, according to Hong Kong Government figures, 
U.S. companies to date have only been awarded two percent of the 
contract value associated with this project. U.S. companies provide 
world-class high- technology and high-quality services in many airports 
around the world. The last chapter has not been written on this, 
however, and with several billions of dollars in franchises and 
contracts still to be awarded, we are hopeful that that share will 
increase. I truly believe the new airport would be a better facility for 
their participation. 
Legal System 
The continuance of Hong Kong laws and the present legal system beyond 
1997 will be a key factor in the territory's ability to maintain its 
promised high degree of autonomy. U.S. interests focus particularly on 
the rule of law and the protection of civil liberties. As I mentioned 
briefly a few moments ago, the rule of law is necessary in a world-class 
commercial center like Hong Kong. Its dilution would certainly drive 
away the very foreign investors whose business here is so important to 
Hong Kong and China. Business people must be able to rely on the courts' 
upholding the sanctity of contracts and on the impartial enforcement of 
commercial laws and regulations. In this connection, the establishment 
of a court of final appeal before 1997 would be a crucial step in 
maintaining confidence in Hong Kong's ability to operate an effective 
legal system after the transition and to avoid damaging legal gaps. We 
strongly hope that China and Britain can agree to establish the court 
Beyond that, people, in general --not just business people--must feel 
secure about the protection of their basic rights. People who look over 
their shoulder for fear of arbitrary arrest or detention, or who fear 
they cannot get a fair trial in the event they are charged with an 
offense, are not the kind of people who built Hong Kong. It is 
reassuring to remember that the Joint Declaration and the Basic Law make 
clear that Hong Kong's system of legal protection of civil liberties and 
common law traditions are to continue after the transition. 
I want to note that our concern with civil and human rights is a 
universal concern. It is a global aspect of our foreign policy. If we 
pay close attention to the protection of civil liberties here, it is the 
same close attention which we focus on other areas around the world, 
and, indeed, on our own domestic situation. Human rights is an integral 
part of our policy as a matter of principle and because we believe it 
affects so many aspects of relations between states--economic, 
political, and cultural. 
Democratic Institutions 
When U.S. Government officials speak about the virtues of open, 
accountable, and democratic institutions, we are sometimes criticized 
for trying to impose American values on people from other cultural 
backgrounds. I reject that criticism. Democracy is not uniquely 
American. The idea is rooted in ancient Greece, as I recall, and has 
evolved in various forms around the world ever since. It is far from 
unknown in Asia: Witness Japan, South Korea, Taiwan, Malaysia, the 
Philippines, Mongolia, Thailand, and others. 
We believe strongly that the most stable and prosperous societies over 
the long run are ones which are responsive to their citizens' needs and 
interests and which hold their governmental institutions and leaders 
accountable for their actions. The form of government we have in the 
U.S. is by no means the only model for a democratic government, and we 
readily admit we have our shortcomings also. But whatever model one 
chooses, the value of a democratic system lies in making government 
accountable to the people. If the people are dissatisfied with 
corruption, with spending priorities, or with inefficiencies, they are 
empowered to make their views known and, when necessary, choose new 
leaders. Over time, that promotes more honest, effective, and stable 
government, and that is why the U.S. favors the development of more 
open, democratic institutions in Hong Kong, giving Hong Kong's highly 
educated and informed residents some say in decisions which affect their 
lives and families. It is why we expressed regret last year at China's 
announced intention to abolish the elected Legislative Council in 1997. 
The process of building more democratic institutions can be a lengthy 
one; it does not take place overnight. While we could all wish that this 
process might have started earlier in Hong Kong, it is now important 
that the momentum which is already underway be continued toward the goal 
set forth in the Joint Declaration and the Basic Law, which is that the 
Chief Executive of the SAR and its Legislative Council should eventually 
be selected by universal suffrage. 
Concomitant with a democratic system is a guarantee of freedom of 
expression, including freedom of the press. If you will permit me for a 
moment to preach to the converted, let me say that a free press is 
especially important to Hong Kong, which relies to such a great degree 
on the free flow of information and ideas. There is a direct link 
between such a flow and the smooth and rational operation of a great 
international trading and financial center like Hong Kong. You here-- 
and your colleagues in the Chinese-language and English-language 
electronic and print media--are to be commended and encouraged for the 
role you have played in building Hong Kong. 
I think all of us in this room sense a widespread unease among Hong Kong 
reporters and correspondents as well as some editors and publishers 
about the future press environment for a robust and dynamic media. Just 
as the U.S. supports the continuation of Hong Kong's free market in 
goods and services, we also support--and will continue to support 
strongly--a free market in information for Hong Kong reporters, editors, 
and publishers, as we do for the media all around the world. 
Law Enforcement Cooperation 
This brings me to the last U.S. interest I mentioned: the importance of 
continuing law enforcement cooperation between Hong Kong and the U.S. 
This has been one of the most satisfactory aspects of our bilateral 
relationship with Hong Kong--one which has been of tremendous benefit to 
both sides. Areas of criminal activity which Hong Kong and U.S. law 
enforcement officers are effectively fighting together include drug 
trafficking and associated money laundering, transshipment of pirated 
software and other intellectual property, organized crime, credit card 
fraud, counterfeiting of U.S. currency, and the smuggling of illegal 
Signs are good that this close cooperation will continue after 1997. As 
I alluded to earlier, the U.S. and Hong Kong have initialed a new 
extradition agreement which would apply to the SAR after 1997. This 
agreement awaits approval by the Joint Liaison Group, after which it 
will be submitted to the U.S. Senate for ratification. Last month, the 
JLG also approved the U.S. as a negotiating partner with Hong Kong on a 
bilateral legal assistance agreement, which we hope to conclude before 
I believe China understands the importance of our law enforcement 
cooperation. Indeed, in recent years, U.S.-P.R.C. law enforcement 
cooperation to combat precisely the problems I have mentioned has made 
major strides. U.S. law enforcement agency representatives have formed 
closer professional and personal ties with their Chinese counterparts. I 
am convinced that the Chinese Government will want this kind of 
cooperation to continue with regard to Hong Kong after 1997, because it 
is in China's interest. 
U.S. History in Hong Kong 
I have covered the major issues surrounding the 1997 transition in which 
the U.S. has a particular interest. In closing, I want to put all this 
in a historical context. 
U.S. interest in Hong Kong is not something new--something that we  
just discovered in the last decade. We can go back to the late 1830s, 
when the largest of the American trading companies in these seas, I am 
proud to say, pulled out of the opium trade. Today's Hong Kong American 
community of over 31,000 traces its roots back to about 20 missionaries 
and merchants who had gathered here by the early 1850s. The American 
Chamber of Commerce's earliest predecessor might be that lone American 
in the 1880s who--according to Frank Welsh in his history, A Borrowed 
Place--sat on the Chamber of Commerce here alongside 20 Britons, six 
other Europeans, three Jews of undetermined nationality, two Chinese, 
and a Parsee. 
Today, Hong Kong has become our 13th-largest trading partner--7th if one 
looks only at agricultural trade. In 1994, our two-way merchandise trade 
surpassed $21 billion, with U.S. exports over $11 billion and U.S. 
imports of Hong Kong goods, excluding re-exports of P.R.C.-made goods, 
at $9 billion. There are about 1,000 American companies here, including 
about 370 regional headquarters. U.S. investors have bids in on many of 
Hong Kong's amazing new infrastructure projects. At the end of 1993, 
U.S. direct investment in Hong Kong on a historical cost basis was $10.5 
billion, concentrated in wholesale trade, banking and finance, and 
manufacturing. Of course, those investments which have been here longer 
have been growing right along with the Hong Kong economy. So the value 
of total U.S. investment in today's dollars, although an exact amount 
cannot be known for sure, is clearly substantially higher than the book 
value I mentioned earlier. 
Our children attend school in Hong Kong, and many of us teach in the 
territory's schools and universities. On weekends, we join other Hong 
Kong residents in hiking the MacLehose Trail and renewing our spirits by 
viewing the beauty of the New Territories' mountains. We compete every 
year in the dragon boat races--usually with little success, but we do 
Approximately 14,000 Hong Kong students currently study in the U.S., and 
the territory abounds with alumni groups for American schools and 
universities of all sizes and from all regions. Alumni of American 
universities here in Hong Kong number in the tens of thousands. Every 
summer, and every Chinese New Year, the line for tourist visas outside 
our Consulate General swells with Hong Kong people who want to cross the 
Pacific to see their friends and relatives who live permanently in the 
United States. 
The ties between Hong Kong and the U.S. are not only those of money or 
of successful business; they are human ties--ties of culture, ties of 
education, ties of blood. The U.S. always has been a player in the 
pageant of Hong Kong's history, and I confidently predict that we always 
will be. (###) 

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