U.S. State Department Geographic Bureaus: Latin America Bureau

U.S. Department of State
95/12/14 Remarks: Amb. Watson on Americas in 21st Century
Bureau of Inter-American Affairs

AS DELIVERED

THE AMERICAS IN THE 21ST CENTURY:
DEFINING U.S. INTERESTS
Remarks by Alexander F. Watson
Assistant Secretary of State for
Inter-American Affairs
to
The Baltimore Council on Foreign Affairs
December 14, 1995

Thank you very much. I'm delighted to be here to speak to all of you.

Since the end of the Cold War, our country has experienced a growing debate over America's role in the world.

In our country, there are some individuals -- including some people running for President -- that believe that the U.S. should pull back from its international engagement and commitments.

These contemporary isolationists apparently have not learned the painful historical lessons of the twentieth century.

Just as American isolationism during the 1920s contributed to both the Great Depression and the onset of World War II, the isolationist impulses of today, if translated into policy, could undermine the foundations of our national security and prosperity.

Therefore, we Americans, in effect, have only one choice to make: do we take firm actions to build the kind of international political and economic systems that will advance U.S. national interests, or do we step aside, cede our historic leadership role, and let other forces and actors shape events for us.

While no country is more powerful or influential than our own, the fact remains that our relationship with the rest of the world is increasingly interdependent. Today American business is international business, and American problems such as drugs, crime, illegal immigration and environmental pollution and destruction are also international problems. To deny the linkage of our own prosperity and well being to that of our neighbors is simply to deny reality.

President Clinton -- like all of his recent predecessors -- has rightly chosen to place our nation firmly on the path of continued U.S. engagement and leadership in the world.

While I am here to talk to you specifically about how the President's vision for our country has shaped our relations with the Western Hemisphere, I would be remiss if I did not briefly mention the importance of American leadership in another part of the world: Bosnia.

As a result of the President's peace initiative, the fighting in Bosnia has stopped. We now have an opportunity to secure an enduring peace because of U.S. strength and U.S. diplomacy. The parties have taken risks for peace, and we must continue to support them. And in the choice between peace and war, the United States must choose peace. We must uphold our ideals. We must keep our commitments.

Just as the Bosnian peace agreement could not have been reached without American leadership, so too our progress in hemispheric relations derives from President Clinton's vision for ensuring the prosperity of the U.S. and its regional partners.

We are already implementing our hemispheric blueprint for increasingly close and mutually beneficial political and economic relations. That blueprint is the Plan of Action of the Summit of the Americas.

Almost exactly one year ago, the democratically-elected leaders of the hemisphere met in Miami at President Clinton's invitation for this Summit -- the first one since the gathering at Punta del Este in 1967, and the first ever exclusively of democratically-chosen leaders of state and government. In Miami, they committed themselves to the creation of a hemispheric free trade zone by 2005, and to take a number of ambitious actions to strengthen democratic institutions, reduce poverty and protect the environment.

There is a great deal more at stake for Americans in the successful implementation these commitments than many people realize. Let's start with dollars and cents.

The Western Hemisphere -- including Canada -- is the most important regional market for U.S. exports. Through September 1995, total U.S. exports to the hemisphere this year exceed 160 billion dollars, or more than one-third of U.S. worldwide merchandise trade.

Latin America and the Caribbean alone comprise a huge and rapidly expanding market for U.S. companies. Between 1987 and 1994, U.S. exports to the region grew more than 150 percent, from $34.5 billion to $89 billion. 43.5 percent of all goods imported by Latin American and Caribbean countries are U.S. products.

Between 1990 and 1994 our exports to Latin America and the Caribbean increased by $36 billion. That's exactly three times more than our growth in export sales during the same period to Japan, China and the countries of the European Union combined.

I know that you here in Baltimore are particularly aware of the importance of international trade. Just a little less than 20 years ago, when the fleet of tall ships celebrating our nation's bicentenial sailed in to Baltimore's harbor, they found largely dilapidated warehouses and little commerce on the waterfront. Not far from this hotel, watermelon boats docked at the current site of the World Trade Center.

What's happened since that time is the perfect example of why international trade in general, and trade with the Western Hemisphere in particular are important. The Port of Baltimore ranks as the nation's third largest port in foreign tonnage, with goods going to and from our hemispheric trading partners representing 35 percent of the 26.2 million tons that passed through it in 1994.

Goods coming from or going to Canada and Brazil together were responsible for almost 6 million tons, making them the first and second most important sources of harbor commerce. Four other regional trading partners -- Mexico, Venezuela, Chile and Colombia are also among the top dozen tonnage leaders for the Port of Baltimore.

Hemispheric trade is therefore responsible for a substantial portion of the 1.3 billion dollars generated annually by the Port, as well as a significant percentage of the 87,000 jobs it supports.

The State of Maryland also receives a big economic boost from its exports to the Western Hemisphere. The state sold 1.2 billion dollars worth of goods to Canada and over 500 million to Latin America and the Caribbean in 1994. This combined 1.7 billion dollars in exports is greater than Maryland's sales to the European Union, and almost twice the level of exports to the the Pacific Rim -- exclusive of Japan. Maryland's trade with the hemisphere grew by almost 75 percent between 1987 and 1994.

These figures include goods produced by Maryland's Hughes Corporation which sells telecommunications equipment. Hughes is taking advantage of the spectacular increase in the Latin American and Caribbean market for these American products, which topped 2.7 billion in 1994 and is expected to rise to a staggering total of 7.5 billion dollars by the end of this year.

It also included millions of dollars in sales generated by the Maryland- based components of such international corporations as Black and Decker, McCormick and Company, General Motors and Westinghouse.

Our Summit of the Americas goal of creating a hemispheric Free Trade Area of the Americas, which will expand trade with our neighbors, is clearly of interest to your city and state. Moreover, it is designed not just to lock in these gains, but to expand upon them.

The success of NAFTA, in spite of Mexico's short-term problems, shows that we are on the right track.

In 1994, the first year it was in effect, U.S. trade with our NAFTA partners increased 17 percent -- more than $50 billion.

U.S. trade with Mexico grew by one-fourth, rising from $80 billion in 1993 to $100 billion in 1994.

This trade translates into jobs -- good jobs, which in the U.S. pay an average of 17 percent more than positions in non-export industries. Exports to Mexico and Canada will support an estimated three million jobs this year, an increase of over half a million from 1993, the last year before NAFTA was implemented. NAFTA also ensured that Mexico would not close off its markets to U.S. producers during its current recession. In fact, while Mexico raised tariffs on goods from its other trading partners in response to the peso crisis, it actually lowered rates on U.S. goods, as required by NAFTA. As a result, 1995 U.S. exports to Mexico are still 11 percent higher than in 1993, the last pre-NAFTA year, and U.S. companies have actually increased their market share of overall Mexican imports.

This is what our move toward a Free Trade Area of the Americas is all about: creating high-wage jobs in good times and protecting them in bad.

For that reason the Administration has pushed ahead with the Summit's free trade goals, despite sometimes harsh criticism. In addition to the multilateral discussions in post-Summit trade meetings and ministerials, this means moving forward with plans to make Chile the fourth member of NAFTA.

Though its market is small, Chile is not an insignificant economic partner. In fact, last year U.S. companies sold more to Chile's 14 million people than they did to the 920 million citizens of India.

Although passage of fast-track legislation has been delayed in the Congress, we and our NAFTA partners are pressing forward in discussions with Chile.

Liberalization and expansion of trade is the central dynamic of our policy toward our neighbors. However, as we move towards this goal, we must remember that the Summit of the Americas agenda seeks to change more than just the conditions of trade in the hemisphere.

Some people have questioned why these other issues are important to the U.S. They ask why we should expend U.S. effort and tax dollars to strengthen democracy, reduce poverty, or preserve the environment in Latin America? How do our citizens benefit from this?

Altruism and philanthropy aside, the United States derives important, long-term benefits from its efforts to address non-economic issues abroad. Illegal immigrants, illegal drugs, terrorism, polarizing civil conflict and environmental destruction are the real threats we face when we do not work to improve conditions in our hemisphere.

As the President said in his October 22 address at the United Nations "we can't free our own neighborhoods from drug-related crime without the help of countries where the drugs are produced. We can't track down terrorists without the assistance of other governments. We can't prosper or preserve the environment unless sustainable development is a reality for all nations."

Fighting drugs and crime is one part of the Summit agenda to strengthen democratic institutions that clearly has a direct impact on every city and town in America.

This year, we have seen some notable progress, such as the arrest of the leaders of the Cali cartel by Colombian authorities.

However, the Summit of the Americas agenda calls for much more. In addition to efforts to enhance cooperation and information sharing among the region's law enforcement organizations, the hemisphere's 34 democratic governments agreed on December 3 to adopt a strict series of measures to control money laundering in order to keep drug traffickers and other criminals from enjoying the profits of their illegal enterprise.

We are also engaged in efforts to better control the flow of precursor chemicals used in narcotics production, and to assist in programs designed to reduce the production of crops used for the illegal drug trade.

By participating in this process, the U.S. government is actively working to protect the lives of young people in America by helping keep drugs off our streets, as well as ensuring that our neighbors and trading partners don't have their institutions inflitrated and corrupted by the drug traffickers and their henchmen.

Combating corruption and improving the administration of justice also are part of our efforts to strengthen democracy among the Summit of the Americas partners and are of direct relevance to U.S. citizens.

Why should this be important to people in America?

Just ask the international businessman whose deal fell through because he was unwilling to bribe a local official. Ask a company like Reebok which cannot get the right to market products under its own name in one country, because of an overwhelmed and inefficient court system. Ask the traveler who has faced the petty corruption of a customs or law enforcement official.

Corruption is a vice not unknown in our own society. However, we have long-standing mechanisms in place to deal with it when it occurs, as well as more than 200 years of solid, democratic tradition to guide us. Many of our regional partners are not as fortunate.

Moreover, if we are to have a free trade zone in this hemisphere, corruption and judicial system inefficiency are problems that must be addressed. At present, they represent major drags on the ability of all citizens of the region to conduct their affairs in an atmosphere of openness and trust.

They create more than economic disincentives, they strike at the very heart of the notion of equality before the law which is an essential component of any well-functioning democratic society. As Peruvian Foreign Minister Tudela told me on a recent visit "the biggest enemy of social justice is corruption."

Summit actions designed to reduce poverty in the region also have similar benefits for the United States. For our hemisphere to be stable and prosperous, something must be done to address the stark economic inequalities suffered by the populations of many countries.

Once again this is in our own self-interest. By improving the standard of living in the hemisphere we are increasing the demand for U.S. goods and services, as well as ensuring social peace and political stability.

Ensuring "stability" may sound rather abstract, but what it means is reducing the kinds of economic, social and political tensions that have resulted in massive outflows of illegal migrants or have plunged our hemisphere into coups and internal conflicts into which we are often drawn at significant expense.

Preventing such problems will require the judicious use of foreign aid. While foreign aid may not be most popular way to spend American tax dollars, the small amount dedicated to aid programs is an essential insurance policy against future unrest.

Our Summit initiatives on the environment flow naturally from our efforts to reduce poverty and enhance economic opportunity. Just as our communities have zoning laws to ensure that growth and expansion occur in an orderly manner that is in the long range interest of its residents, so our environmental initiatives seek to ensure that today's economic development does not produce problems down the road.

Working with our Summit partners, we are engaged in efforts to ensure that economic developments are forward-looking and designed to make the best use of our natural resources while simultaneously preserving them for future generations.

Once again, this goal makes good sense for America. In addition to the social benefits of ensuring biodiversity and preserving natural resources for future generations, American companies benefit directly from these initiatives.

In fact, sales of American environmental equipment and services to the region -- exclusive of Canada -- is expected to grow from 4 billion dollars in 1993 to almost 7 billion dollars by 1998, due to new environmental regulations and increased enforcement.

U.S. firms are currently engaged in such diverse projects as wastewater treatment plants in Sao Paulo, automobile emissions inspection systems in Mexico and dairy industry waste disposal in Argentina.

Our Summit environmental intiative for sustainable energy development has also led to a partnership between the U.S. and Central American countries to reduce greenhouse gasses.

Venezuela, now our number one foreign oil supplier, has pushed ahead with efforts to open up its energy sector to new, environmentally- friendly investments, to the benefit of U.S. companies. Colombia's expanding energy sector has also provided new opportunities for Maryland's Crown Petroleum Corporation.

As we move ahead to meet the goals set forth in the Summit's Plan of Action there will be some bumps in the road. Still, I hope my remarks today have given you a better understanding of the U.S. Government's efforts to ensure the kind of mutally beneficial relations in our hemisphere that will help guarantee the prosperity of the United States now and in the future.

There is no turning back. Were we to stop this process and throw up barriers to greater trade and interaction, we would only succeed in stifling our own talents and initiatives. We cannot shackle the economic dynamism which will be relased as the hemisphere is integrated.

I want to assure you that I and my colleagues at the State Department and in our diplomatic missions throughout Latin America will continue to make every effort to achieve the goals of the Summit and translate them into benefits for the American people.

Our task is not an easy one, especially in the face of Congressional budget actions which have reduced international affairs spending by 45 percent in real terms in the last decade. While the worldwide foreign affairs operating budget is just 1.3 percent of all Federal Government spending, Congress has proposed cutting it by as much as 20 percent more this year.

The members of the Foreign Service in Latin America and the Caribbean will continue working as best they can to give the American people the support they need and deserve, and to advance our national interests at this critical juncture in hemispheric relations.

We must and we will move ahead. Our blueprint is visionary, yet fully grounded in the political and economic facts of our hemisphere. With your help, we shall succeed in making it a reality.

Thank you very much.

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