USTR - Council of the Americas, Remarks of USTR Robert B. Zoellick
Office of the United States Trade Representative


Council of the Americas, Remarks of USTR Robert B. Zoellick
As prepared for delivery 05/03/2004

It is an honor for me to speak immediately after President Berger and right before you hear from former President Rodriguez. These two leaders are friends of the United States and valued partners in employing trade as a way to spread prosperity and bolster democracy in our hemisphere.

I am pleased to see that you will also be hearing from my friend Secretary Derbez of Mexico. The partnership between the United States and Mexico through NAFTA over the decade is a model that I hope will help guide us throughout the hemisphere.

And I want to compliment the Council on organizing a special congressional program tomorrow. As all of you know, under the U.S. Constitution, Congress has authority over trade, so the Administration’s active agenda depends on the leadership of Members who recognize the stakes in expanding trade, openness, opportunity and hope throughout the Americas.

Never has there been a more important time to unite the Americas in open trade and growing prosperity. Many of our hemisphere’s democracies are young and fragile -- struggling with the legacies of civil war, dictatorship, one-party rule, and self-defeating populism. Latin America has to compete in a global economy that includes 2.3 billion people in China and India, both of which pose opportunities of growth, but also the challenge of competition.

I am pleased that the signs of continuing strong growth in the United States should create a better context for gains throughout Latin American. Yet will Latin America be well positioned to benefit fully? Also, this has been a period of liquidity in international financial markets, which has made it easier for Latin American economies to manage their debt and strengthen their financial posture. Latin America needs to be positioned to seize the opportunity of the next upswing in global growth while also contending with the competition.

For me, the importance of uniting the Americas into a democratic and free-trading hemisphere is not a theory or a dream – for I have seen the expanding reality, but also encountered the attacks on the stewards of democratic prosperity.

When I traveled to Colombia in 2002 for President Uribe’s inauguration, I stood in the Presidential Palace when terrorists targeted that building with mortars. The explosions were a stark reminder that the opponents of reform are not far off in the distant past or even in the distant mountains, nor are they far away from plunging their nations into the chaos of social disintegration, economic breakdown, and isolation from the world economy.

But I also saw that day the resilience of those who work for freedom, democracy, and economic reform.

That very morning, in one of President Pastrana’s last official meetings, I met Colombian flower growers and other business people who were building a stronger economic foundation in their nation by seizing the trade opportunities offered by the extension and expansion of the Andean Trade Preferences Act we passed in 2002.

Months later, I was back in Colombia to meet with President Uribe again, this time to discuss the elements of a comprehensive U.S.-Colombia FTA. President Uribe’s focus on leading his country to a more prosperous and peaceful future made clear that the desperate acts of a few who cling to dead ideas will not be allowed to derail what we and our partners in this hemisphere are seeking to build.

I also found when I want back to Colombia that President Uribe, like many of his fellow hemispheric leaders, shares President Bush’s vision of a “world that trades in freedom.” It is a global vision where the poorest and richest, the weakest and the strongest, are united in shared interests, common rules, and resurgent economic growth.

Opening trade and integrating markets in the Americas are central to that vision. And if we work together, the Americas can become a proving ground for the long-term global ambition of a world without trade barriers.

The power of tearing down walls is on display in Chile, where an FTA with the United States went into effect a little over four months ago. On January 1st, the effect became obvious for an Chilean driving past a car dealership. Signs had gone up around the country touting the removal of the auto tariff and the reduction of a luxury tax on imported vehicles.

Chileans did not ignore the new opportunity represented by those signs. According to the American Chamber of Commerce in Santiago, auto imports to Chile in the first two months after the FTA went into effect jumped by over 90% compared to the same months last year. DaimlerChrysler predicts its exports from the United States to Chile will grow by 45% for the full year.

There is more good news. The AMCHAM also reports double digit growth in exports of trucks, auto parts, turbojets, turboprops and turbines, as well as self-propelled machinery and mining equipment. Fertilizer sales jumped from $100,000 to $3.2 million.

What does that mean in real-world terms? Consider one company headquartered here in the United States, Caterpillar, that doubled its sales to Chile in the first quarter of this year: Caterpillar employed 668 more people in the United States this March than it did last October. Caterpillar attributes those opportunities to its growing sales, not just in Chile, but around the world.

Caterpillar’s success is not just good news for the United States. As Caterpillar was exporting and creating jobs here, the company increased its overseas employment as well.

The United States has also benefited from the growth of Chile’s exports. Chilean exports of produce jumped by $40 million in the first two months of 2004, with expanded sales of everything from frozen blueberries to fresh plum-like sloes. Exports of gold, iron, and molybdenum increased $16 million and exports of wood products added another $9 million.

Of course, two months of trade data are not conclusive, but they do suggest a big step up in trade between the United States and Chile. Soon this is likely to become an unnoticed everyday part of life in both countries. U.S. consumers will not notice they are buying a high-quality alpacablend suit. Chilean families watching “The Emperor’s New Groove” – which, incidentally, mentions the warmth and quality of alpaca garments – won’t even think about the fact that Disney’s intellectual property is now better protected in their country. It is that kind of win-win outcome that will turn the vision of a free-trading America and a free-trading world into a shared dream and a shared enterprise.

That is why we are pursuing a three-prong approach to opening trade in the Americas. We have been moving forward with highly ambitious, individual or sub-regional Free Trade Agreements; with the Free Trade Area of the Americas; and with the global Doha round of the WTO. By working from all three directions at once, we are creating a dynamic of competitive liberalization that gives each effort a greater chance of success.

The FTAA has been a target for trade expansion efforts in the hemisphere for a decade. We have worked hard to make it a reality because integrating the whole region will clearly have a greater impact than just freeing the two-way trade between the U.S. and our Latin neighbors. Nevertheless, many challenges remain and the decisions are not just up to the United States.

We have been taking a practical approach, which we sought to outline at the Miami Ministerial last November. We understand the hemisphere’s 34 democratic nations are vastly different with unique sensitivities and needs. The outline allows all nations to buy into – and benefit from – a common set of rights and obligations in a two track approach, while a path remains open, for the nations that want to be more ambitious, to do so within the FTAA.

Since Miami a lot of work has been done to define the “common set.” The current phase may take some time, but once we work through it, I expect the process will elicit a new dynamic to become a driver of trade, economic reform, and development for the Americas. In the meantime, the United States is not standing still: We are creating important building blocks for free trade in the Americas through our bilateral and sub-regional agreements.

NAFTA celebrates its 10th anniversary this year. NAFTA has been a resounding success. Trade among the United States, Canada, and Mexico has more than doubled, amounting to $1.3 million per minute. Booming trade and closer integration with the United States helped Mexico weather and then recover from a currency crisis.

NAFTA has locked in Mexico’s free-market reforms and bolstered the nation’s democracy. For the United States, NAFTA was one of the contributors to the record-setting economic expansion of the 1990s. The unique advantages of each of the three NAFTA partners is fostering greater productivity in the region and giving all three partners a competitive edge in the global marketplace.

At last October’s NAFTA Ministerial meeting in Montreal, our three countries initiated a comprehensive effort to ever deepen our integration: We are seeking to streamline, and, in some cases, eliminate special NAFTA rules of origin. This step will better equip manufacturers in all three countries to compete in the global marketplace and will increase the attractiveness of North America to inward investment.

As our area of free trade expands to Central America, we also are exploring the possibilities for cumulation of inputs in the textile and apparel sector among both NAFTA and CAFTA countries -- as a way to enhance the competitiveness of our industries and workers in this hemisphere in a new environment of post-quota textile trade next year.

Of course, we did not want to rest with adding Chile to our Canadian and Mexican free trade partners. As all of you know, we are exceptionally proud to have completed our free trade negotiations with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. I recall when working as Undersecretary of State from 1989 to 1992 how our relations with that region were dominated by war, guerillas, death squads, and arms shipments across borders. Now we are partners with six democracies that want to share trade, prosperity, and hope across those same borders. Together we need to explain the historic stakes of the CAFTA to Members of Congress.

Throughout the 20th Century, there has been a sad pattern of civil and economic breakdown in Central America that draws in the United States, which gets burnt, patches up the problems, and then turns its back – until a new crisis arises. We can break this cycle. We must break it -- by enacting CAFTA.

And President Bush is relentless in the continuing drive for free trade. Last week we launched free trade talks with Panama. Later this month we will begin talks on the Andean FTA. I am pleased to announce today that officials of Peru and Ecuador will be joining Colombia in those negotiations. We have been working intensively with Peru and Ecuador to address a range of preparatory issues especially concerning investment disputes and the protection of worker rights. While some important work remains, we are now in a position to welcome all three countries to the negotiating table. And we hope to include Bolivia at a later stage, and we are working with Bolivia to increase its readiness.

Adding together Canada, Mexico, Chile, Central America, the Dominican Republic and the Andeans we are well along a path to open trade that will cover two-thirds of the hemisphere’s population and non-U.S. GDP.

In order to seize the full potential of our trade agreements in the hemisphere, we are making trade capacity building an integral part of the process. CAFTA is the first trade agreement that formalizes this effort, through the establishment of a Committee for Trade Capacity Building – a concrete step to continue the focus on integrating trade policy and development policy, which fosters economic growth and accelerates the alleviation of poverty.

A core component of the U.S.-Andean FTA is an effective initiative to build capacity in the Andean countries to negotiate, implement and benefit from the FTA. I am pleased to announce today that the Board of Directors of the Overseas Private Investment Corporation (OPIC) has approved - - subject to Congressional notification provisions - - a $54 million loan for a major micro-financing initiative targeted to benefit Colombia, Ecuador, Peru and Bolivia (in addition to other countries).

The BlueOrchard Microfinance Securities Project will serve thousands of new entrepreneurs - - particularly women - - who understand the crucial importance of credit to enhance their quality of life and to get a start in small business. The project will help fuel job creation and economic growth in these countries and help provide tangible and early benefits from the FTA negotiations. The BlueOrchard project will be the first global micro-financing funding vehicle to access U.S. capital markets.

We have partners in this effort. The Inter-American Development Bank, the World Bank, and the Organization of American States are helping. I would like to thank in particular my friend, IDB President Enrique Iglesias, for his personal involvement and leadership. The private sector has joined our effort as well with a new group called The Business Coalition for Capacity Building, which includes companies such as Microsoft, the Gap, Citigroup, and Proctor & Gamble.

Of course, the Americas must prevail in a growing global economy. In the WTO, the United States has pressed to re-energize the Doha round of negotiations. Our goal is clear: 2004 should not be a lost year for the Doha Round.

First, we sought to set a high standard for the Doha negotiations by laying out very ambitious goals: to eliminate all global tariffs on consumer and industrial goods by 2015; to make substantial cuts in farm tariffs and trade-distorting subsidies; to eliminate agricultural export subsidies; and to create a broad opening of services markets.

Second, after the breakdown of last September’s Cancun meeting, we spoke some plain truths about the approaches that would and would not make it possible to draw together 147 diverse economies closer to an agreement. By December, we sensed that many countries had concluded that Cancun had been a missed opportunity – and certainly was not cause for celebration – but they were unsure how to get back to the negotiating table.

So early in January, I wrote a letter to all my colleagues in the WTO explaining our assessment and our commitment to trying to move forward in 2004. I followed up with a 32,000-mile around-the-world trip, meeting with representatives of over 40 countries. My last stop, I am pleased to note, was Costa Rica, which was leading by hosting a meeting of the Cairns Group of agricultural exporters.

We have continued the effort, both in Geneva and smaller meetings, including one in London from which I just returned. I believe there is an opportunity to advance the negotiations by this summer. Yet, many hurdles remain, and all countries will need to work to find the balance between ambitious opening of markets and solving problems with countries’ special sensitivities in mind.

My simple, short answer to the question, “What are the prospects for trade in the Americas?”, is a determination to be optimistic. My experience with the commitment of Colombia’s president to economic reform even in the face of violence – with a Central America that has moved from civil war to civil liberties and free trade – with a Chile that has passed from dictatorship to becoming the democratic driver of free trade agreements around the world – with a Mexico that broke free from the fears of its history to face the future as a North American and Latin democracy -- each and all have shown the power of Latin Americans to transform their countries and their society.

The tasks are far, far from finished. And there will be setbacks. Yet, with our neighbors’ help, we are clearing the pathways to expanding trade, opportunity, and hope throughout the Americas. None of us can predict with precision the exact course the countries of the hemisphere will take. I do know we are moving ahead. And I do know that each step we take to expand trade and openness can support democratic reform and helps the Americas determine the future that can be.



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