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

U.S. Department of State
96/02/14 Remarks: Alexander Watson on Hemispheric Free Trade
Bureau for Inter-American Affairs

Opening Remarks By
Assistant Secretary of State for Inter-American Affairs
Alexander F. Watson
to the
Institute of the Americas Hemispheric Policy Forum
Washington, D.C.
February 14, 1996

NEXT STEPS FOR HEMISPHERIC FREE TRADE

Three years ago this month, in a speech at American University, President Clinton outlined his philosophy and his goals for U.S. international economic policy. Many of you will recall his eloquent statement of why the U.S. must continue to lead the effort for a more open world trading system, including that now famous phrase "we must compete, not retreat".

That speech marked the beginning of a sustained effort by this Administration to lead the world toward freer trade, an effort rewarded with some remarkable successes: about 150 trade agreements, including such significant achievements as the Uruguay Round and NAFTA, which are providing major benefits to our own citizens and to those of our trading partners.

Most importantly to my mind, the U.S. is now poised for dramatic advances toward free trade in three critical regions, with Europe through the New Transatlantic Agenda, with Asia through APEC, and in this hemisphere through the Summit of the Americas commitment to establish a Free Trade Area of the Americas by the year 2005.

Indeed, the FTAA has come to dominate the public perception of the Summit of the Americas (perhaps unfairly given the comprehensive scope of the Summit's action plan). The FTAA has caught the imagination of the hemisphere not only because of its promise of higher growth but also because it symbolizes the new agenda of the hemisphere -- a cooperative, common hemisphere-wide effort to achieve for all our people a better future based on democratic political systems and market-oriented economies.

The Summit action plan is moving forward. Major multilateral programs are steadily being implemented over a wide range: to strengthen democratic institutions, to protect the environment, to root out corruption, to improve capital markets, to broaden access to quality basic education, among many, many others.

There has also been substantial progress toward moving the FTAA from promise to reality. It is ironic, therefore, that, just as we are poised to make great strides toward a more prosperous hemisphere, there is increased apprehension within the U.S. about the wisdom of pushing for freer trade. It is particularly unfortunate that the real benefits of NAFTA -- including its support for our exporters, and its support for Mexico's reform efforts to adhere to marked-based policies -- these very substantial benefits have been obscured in the public mind by the aftermath of the peso crisis.

Given this environment, nothing is more important to the success of the FTAA than building a strong public consensus in all our countries in favor of free trade.

Here in the U.S., a critical part of the effort will be for the Congress to give our negotiators the authority they need to negotiate free trade agreements around the world and, more specifically relevant to our hemisphere, to expand NAFTA and create the FTAA. To accomplish that, we need to sharpen public understanding of our enormous stake in a democratic, prosperous and peaceful hemisphere.

Let me make just four brief points in this regard:

First: Looking at U.S. exports and the jobs which they create, how many Americans know that the non-NAFTA countries of this hemisphere buy $50 billion of our exports, and are our fastest growing regional market, growing by about 25% in 1995? Even relatively small countries are important to our trade; we sell more to Chile's 14 million people than to India's 920 million.

Second: We quite rightly applaud the dramatic cuts in tariffs and non- tariff barriers undertaken by our Latin American and Caribbean neighbors, and the growing network of integration arrangements which cover virtually every country in the region. Nevertheless, Latin America's tariffs are still almost four times as high as those of the U.S., and we are unlikely to see major new unilateral tariff reductions; negotiations will be necessary for further progress. Indeed, there is a risk that some of today's barriers may be frozen in place as the region's several common markets are strengthened. Clearly, the U.S. has much to gain by pushing for negotiations of a hemisphere-wide system of free trade.

Third: So many of the issues which affect the daily life of our citizens -- such as crime, drugs, environmental degradation, uncontrolled migration -- cannot be adequately addressed without hemispheric cooperation. This is what the Summit was all about: to develop common approaches to common problems, and in this way to ensure a better future for all our peoples.

Fourth: I am convinced that neither we in government nor our business community can afford the luxury of pursuing only our trade and investment interests. At first glance, U.S. business might not have much of an interest in strengthening Latin America's democracies, improving its judicial systems, or expanding access to education and health services. But this is definitely not the case. Because of their inherent legitimacy, democracies are more likely to provide a stable political basis for investment and growth to achieve domestic consensus for far-reaching market reforms. A judicial system which is efficient and fair is important not only to a country's citizens but also to foreign investors who work within that legal framework. And educated and healthy workers and consumers are essential for economic and social equity. Well-functioning democracies with broadly-shared growth make better partners not only for diplomacy but also for trade.

Indeed, building the FTAA is a process that requires something from all of us. The challenge which I'd like to present to the conference participants today is to address more energetically the fears of free trade and international involvement which many of our citizens feel. We, in government, must continue to explain how our policies advance the interests of our nation. But only you in the private sector, through your specific experience and example, can show our peoples and our parliaments:

-- how trade creates far more jobs than it destroys,
-- how trade enriches and does not impoverish the countries engaged in it, and
-- how much we have to gain in opening our markets to each other.

This endeavor is a partnership. No one side can do it alone. I am confident that you will rise to this challenge. Our success at next month's Trade Ministerial in Cartagena -- and beyond -- depends on it.

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