Trading in Freedom:
The New Endeavor of The Americas
Robert. B. Zoellick
United States Trade Representative
Address to the Miami Herald's
Sixth Annual Americas Conference
October 14, 2002
is a special pleasure to be with you in the "Gateway to the Americas."
I visit Miami, I sense its excitement, feel its energy. This is where
the intellectual, economic, cultural, and human currents of North and South come
together. The people of
Miami have blended these
movements to create a community that draws on the best art, architecture,
traditions, and scholarship from two continents and many cultures.
Twenty-five years ago, as troubles abounded, many people were worried that
Miami's best days were behind it. Fortunately, optimism -- backed by energy and
civic commitment -- prevailed. Today, this jewel of the
sparkles as a shining example of the power of regeneration -- a city that has
transformed itself into a vibrant center of commerce and culture and confidence.
Miami, Latin America and the Caribbean have seen their fortunes rise and fall;
they have experienced struggles and despondency, only to reinvent themselves
through the open-mindedness, hard work and perseverance of home-grown
intellectual and political leaders.
us know that the work of the Americas is still in progress. For some, slowdowns
and setbacks stir discouragement. Others, looking ahead, recognize that Latin
America and the Caribbean still need to build the political and civil
institutions, public trust, business networks, and security partnerships that
will unlock the region's full potential.
President Bush said right here in Miami in August 2000: "Some still look at
Latin America through old stereotypes. But I see a hemisphere of 500 million
people, striving with the dream of a better life."
part, I believe we should not rest until people from Bogota to Buenos Aries to
Managua have come to experience the same opportunities that the citizens of
Miami enjoy today.
extraordinary city will play a leadership role in extending U.S. hands to hold,
help, and hearten our hemispheric partners.
Therefore, I am pleased to announce today that when I join my fellow ministers
negotiating the Free Trade Area of the Americas in Quito in two weeks, I will
propose that the United States host the next FTAA ministerial meeting -- in 2003
-- and, if our hosts agree, that we do so right here in Miami.
Challenges and Promise in
that this is a time of trial for many in the region.
the dramatic political and economic reforms we witnessed in the early 1990s,
some governments have faltered in their efforts to address the deeper and more
complex tasks of institutionalizing democracy, good governance, the rule of law,
strong education systems, fair and effective tax systems, pension reforms, and
percent of Latins believe that corruption, organized crime, and drug trafficking
have "increased a lot" in their countries over the past several years, according
to research by Chile's Latinobarometro.
World Bank estimates that weak or corrupt judiciaries drag down Latin America's
economic growth by an average of 15 percent per year by discouraging foreign
investment, pushing productive enterprises into the black market, and failing to
democracies of today's
Latin America, impatience and frustration prompt political unrest
and create openings for populists who tap these resentments, mobilizing against
rather than for. Yet democracy also creates an opportunity for a man born poor
in a favela to aspire to the
presidency of the largest country in
challenges are genuine. We should not minimize their significance. But if the
Americas are going to chart a successful course for the future, we must also
recognize what has changed for the better. This is the foundation on which to
17 of 26 countries in
Latin America and the
had authoritarian regimes. In the mid-1980s, when I served in President Ronald
Reagan's Treasury Department, Latin America was plagued with hyperinflation, a
debt crisis, and a breakdown in public sector services. In 1989, when I joined
President George H.W. Bush's State Department, violent conflicts were ripping
apart the thin fabrics of societies. The Organization of American States (OAS)
was still paralyzed by the doctrine of nonintervention and failed to defend
circumstances are dramatically different.
island dictatorship stands alone and isolated in a democratic community that
spans the hemisphere.
economic front, there has been real progress:
Inflation is down region wide, from an average of 500 percent in 1990 to 7
percent last year. The Americas learned that it is the poor, most of all, who
suffer in societies where prices spiral ever upward.
GDP (gross domestic product) grew at an annual average rate of 3.4 percent in
the 1990s, well above the 1.2 percent of the 1980s.
- On a
per capita basis, real GDP in the 1990s rose at an average annual rate of 1.5
percent, far short of what is necessary, but much better than a decline of
almost 1 percent in the 1980s.
Export volume grew by 10 percent per year in the 1990s, twice the rate of the
previous decade. As both the IDB (Inter-American Development Bank) and the IMF
(International Monetary Fund) have reported, trade growth helped increase
productivity and create better paying jobs.
Privatization -- especially of utilities -- produced better services, more
extensive coverage, increased investment, and enhanced efficiency. Millions
and millions of people can now get telephones, electricity, and clean running
water, which used to be the domain of the privileged.
According to the UN Economic Commission on
Latin America, poverty declined from 41 percent in 1990 to 35
percent by late in the decade.
Foreign direct investment surged from $9 billion in 1990 to $76 billion in
2000, and this investment was closely linked to expanding exports and creating
space of a single generation,
Latin America has moved from being a region dominated by stagnant
autocracies to one of striving democracies, most of which are sustaining growing
economies. This is a hemisphere of promise -- and of near-term possibility.
Reforms North and South
Latins know well, this is also a region of great diversity. The histories,
problems, and political cultures of sub-regions and individual countries vary
enormously. As regional and even global integration deepens, we can learn from
one another and support each other, while also perceiving special needs and
to the north and Chile to the south stand out for what can be accomplished. In a
world of global capital flows, the premier links of trade and investment through
free trade agreements with the United States can prove especially valuable:
following the 1982 peso crisis, it took Mexico seven years to be able to borrow
again in international financial markets; after the financial shock of 1994-95,
with the help of NAFTA (the North American Free Trade Agreement), it took just
seven months. Following the 1982 crisis, it took seven years for U.S. exports to
Mexico to reach their pre-crisis levels; after the '94-'95 shock, it took just
Moreover, contrary to the forebodings of Latin parochialists, Mexico's and
Chile's free trade policies have enabled both to be stronger not only with the
United States, but throughout the Americas and within the world economy. Mexico
followed up NAFTA by negotiating nine free trade agreements with 29 Latin
partners. This month, it is hosting the summit of the Asia Pacific Economic
Cooperation (APEC) group, and next year it will highlight Mexico's leadership in
the World Trade Organization (WTO) by convening the global ministerial.
report by the United Nations Industrial Development Organization ranks Mexico
12th in the world for high-tech exports, 10th for medium-tech products, and 11th
for low-tech exports. In 1985,
out a listing of 23rd for low-tech exports and could not even get on the scale
for medium- and high-tech products.
thousand miles to the south, Chile provides another example of the gains from
sound policies. In the midst of a global slowdown, Chile has continued to grow:
by 4.4 percent in 2000, and by 2.8 percent last year. Chile's resilience is a
direct function of its openness, with economic growth led by an export sector
that has surged by 8.2 percent in the past nine months alone. Chile's growth has
enabled it to cut its poverty rate in half, from 45 percent in 1987 to 22
percent in 1998.
Reforms in the Center: El
countries in the hemisphere are committed to adding to the examples set by Chile
and Mexico. Consider the case of El Salvador, whose transformation is every bit
as impressive as its more high-profile partners.
Throughout the 1980s, violence and fear were a way of life for millions of
Salvadorans. El Salvador's economic performance was poor, even compared to other
Central American economies. In a 1991 book on Central America by the
New York Times' State Department
correspondent, the chapter on this poor country was depressingly titled "The
Following an historic peace accord signed in 1991 on New Year's Eve, El
Salvador's leaders turned to the task of building a new future. They tackled
inflation, cracked down on corruption, cut spending, restructured and privatized
the banking system, privatized inefficient state-owned businesses, and opened
the country's borders to trade. Drawing on
example, El Salvador has begun to harness the power of private markets to
provide for the pension needs of its citizens, simultaneously increasing the
pool of national savings and investment -- and moving ahead of the United
States. The Economic Freedom of the World: 2000 Annual Report ranks El
Salvador as the 14th freest economy in the world -- up from 67th place in 1990
-- and ahead of Japan, Germany, and France.
policies have produced results. According to the World Bank, from 1991 to 2001,
grew by an average of 4.3 percent per year, compared with 1.3 percent from 1981
to 1991. On a per capita basis, El Salvador's GDP grew more than 10 times as
fast in the 1990s than it did in the 1980s.
Salvadorans still struggle to overcome poverty. Yet economic growth -- spurred
by trade -- is making a real difference in their lives. President Francisco
Flores told President Bush, during his visit to San Salvador this April, that
"many women in the rural areas have the opportunity to work today, thanks to the
openness of the United States
... it is producing dramatic change throughout the rural areas of our country."
Salvador, trade and reform have real, encouraging names, spoken by hard-working
people. Sigma S.A. was founded in 1933 to manufacture packaging products, such
as cardboard boxes and plastic bottles. Recognizing the export opportunities
afforded by San Salvador's pro-trade policies, Sigma expanded to achieve
multinational status, employing 3,000 people and selling into markets throughout
Central and South America.
Sigma has even begun to make inroads into European markets for luxury packaging,
through contracts with Meissen in Germany. And Sigma is linked to the U.S.
economy, the source of its paper and most of its manufacturing equipment.
Deli, which makes snack foods, used to be focused exclusively on the domestic
market -- and was fearful about free trade. Today, 74 percent of the company's
sales are made abroad -- up from zero a few years ago. And Bocca Deli's story
reveals the win-win nature of trade: the company makes its corn chips from the
white corn sold by U.S. farmers.
there is St. Jack's, a small textile manufacturer that makes T-shirts and
children's clothing using fully licensed Disney motifs. Despite its modest size,
St. Jack's supplies big retail outlets in the United States -- including Kohl's
and J.C. Penney -- under the reduced tariffs provided in the Caribbean Basin
Initiative. St. Jack's also markets its own brand throughout Central America,
Mexico, and the Dominican Republic. Rolando Siman, CEO of St. Jack's, reports
that El Salvador's new free trade agreements with Mexico and the Dominican
Republic spurred expansion inside Latin America. He also notes that his company
buys most of its thread and yarn from the United States.
Salvadoran exports to
have doubled in the first year of their new free trade agreement and are
predicted to double again in 2003. Exports to the
rose 160 percent in the first year of that free trade agreement.
President Flores has been clear where this path of reform leads: El Salvador has
"advanced much more in the ideas that we share with the United States" -- toward
an Americas of democracy, open markets, transparency, and the rule of law.
Commitment to Latin America
aftermath of September 11, there was anguish in the hemisphere that the demands
of war would lead the United States to lose interest in Latin America.
could be further from the truth: President Bush is committed to Latin America as
a fundamental economic, political, and security partner.
president and the American people appreciate the solidarity of the hemisphere
after September 11, when the OAS activated the Rio Treaty. We also appreciate
that solidarity runs both ways.
past 20 months, the president has had 30 Oval Office meetings with Latin
American heads of government. His first foreign trip as chief executive was to
Latin America. His first summit was the Summit of the Americas. He has visited
El Salvador, Peru, and Mexico. For President Bush, this hemisphere is home, the
neighborhood of the Americas.
the importance of trade in the Americas, the president asked me to visit our
friends here frequently. During my year and a half as trade representative, I
have traveled to Argentina, Brazil, Canada, the Caribbean, Chile, Colombia,
Mexico, Peru, and Uruguay to listen and learn. Last month, I journeyed to
Trinidad and Tobago
to discuss the special needs of small island economies with the trade ministers
of the Caribbean Community and Common Market. Later this month, I will visit
Bolivia and Ecuador. I have met with small businesses competing to be a part of
Wal-Mart's global sourcing network in Brazil, entrepreneurs in Colombia, and
factory workers and environmentalists in Chile -- and I have seen the face of
President Bush's intentions have been backed by actions and results.
August, the president's perseverance on trade paid off when the U.S. Congress
passed the Trade Act of 2002. Reversing the three failed efforts in the 1990s,
President Bush pressed vote-by-vote to regain Trade Promotion Authority, so that
we can bring back our trade agreements to Congress without amendment.
wasting no time employing this authority to open markets and opportunities.
weeks ago, I formally notified the Congress of our intention to try to complete
negotiations of the U.S.-Chile Free Trade Agreement by the end of this year.
weeks ago, I sent another letter formally notifying Congress of the
administration's intention to begin negotiations on a free trade agreement with
the five nations of the Central American Common Market -- Costa Rica, El
Salvador, Guatemala, Honduras, and Nicaragua.
Promotion Authority also impels new momentum toward our agreed goals of
completing both the new WTO global trade negotiations and the Free Trade Area of
the Americas by 2005.
a partnership among the ministers of the Americas to achieve the launch of the
new WTO negotiations at
last November, reversing the failure in
My friends and close colleagues Celso Lafer of
Luis Derbez of Mexico, and Pierre Pettigrew of Canada worked hand-in-hand with
me through an all-night session in Doha to craft the WTO negotiating mandate and
persuade our more reluctant colleagues. Chile's Deputy Trade Minister, Heraldo
Munoz, Colombia's Trade Minister, Marta Lucia Ramirez, now the Defense Minister,
and other close Latin associates all played key roles.
Americas delegation at Doha was particularly focused on cutting barriers to
agricultural trade, which can generate great growth for the hemisphere. The
has followed through on our commitment with a bold proposal to eliminate all
agricultural export subsidies, to slash $100 billion worldwide from domestic
farm subsidies that distort production -- including our own -- and to cut
tariffs by 75 percent.
and the United States, in a group chaired by Minister Derbez of
also led the way in working out a landmark understanding so that the rules on
intellectual property will both safeguard the development of life-saving drugs
and enable developing countries to license pharmaceuticals to cope with
HIV/AIDS, malaria, tuberculosis, and other pandemics.
Throughout the Americas,
I sense a strong common purpose to press the WTO negotiations forward, to open
access for agriculture, manufactured goods, and services. And it will be the
Americas -- in Cancun -- that will host the key WTO midpoint meeting of
ministers next year to keep the Doha agenda on track.
President Bush's trade strategy for the hemisphere is already delivering
results. The Trade Act of 2002 includes the renewal and expansion of trade
preferences -- the unilateral lowering of U.S. tariffs to zero -- for an
estimated $20 billion of exports from developing countries, with about $7
billion of this trade coming from our partners in Latin America and the
Trade Act of 2002 renewed the Generalized System of Preferences (GSP), which
enables some 3,500 products from 140 developing economies to enter the United
States free of duties. We are already reviewing how we can use this authority to
expand imports from Argentina, and are inviting others to submit petitions for
the product review that we will begin later this month.
expanded the Caribbean Trade Partnership Act by liberalizing apparel provisions.
new Trade Act extended and augmented the Andean Trade Preference Act (ATPA),
first passed in 1991 by President George H.W. Bush, increasing the list of duty
free products to some 6,300.
well the importance of the ATPA to Colombia, Bolivia, Peru, and Ecuador.
August, I was honored to attend the inauguration of President Alvaro Uribe in
Bogota. The morning of the inauguration, I joined outgoing President Andres
Pastrana for his last official event: a meeting of Colombian business people to
discuss how they could use the expanded ATPA to strengthen Colombia's economy
during this time of danger. A few hours later, I stood in Colombia's Chamber of
Deputies while terrorist guerillas fired rockets in a failed effort to stop
they halted the new Colombian business of selling cut flowers to the United
States -- now a $500 million enterprise that supports 75,000 jobs in Colombia --
which flourished because the ATPA cut
tariffs on those flowers to zero.
exports to the United States have increased 155 percent under the ATPA, which
estimates generated about $1.2 billion of output between 1992 and 1999.
President Bush is delivering on his promise to
to invigorate the drive for political and economic liberty through trade -- and
to reach across the seas and the isthmus to create a hemisphere that trades in
freedom. Yet he recognizes that trade alone is not enough.
why the United States
stepped in with the IMF and the G-7 (Group of Seven) economies to give Uruguay
-- a country that has pursued sound policies -- the opportunity to revive a
banking system under severe stress. It is why the United States stands by Brazil
with a new $30 billion IMF support package. It is why the United States is
working with the IMF, the World Bank, and the Inter-American Development Bank --
led by our friend Enrique Iglesias -- to assist Colombia. And it is why the
United States is willing to support assistance from international financial
institutions for our friends in Argentina if the country's political leaders can
take the necessary steps for self-help.
The Free Trade Areas of The
greatest enterprise -- the grandest goal -- is to create a Free Trade Area of
This dream has inspired since the age of independence for
Latin America, with visionaries from Henry Clay to Ronald Reagan
to George H.W. Bush articulating the potential, the possibilities, and the
President Reagan looked to a day "when the free flow of trade, from the tip of
Tierra del Fuego to the Arctic Circle, unites the people of the Western
Hemisphere in a bond of mutually beneficial exchange, when all borders become
what the U.S.-Canadian border so long has been: a meeting place rather than a
of inspiration has now reached the shore of firm possibility: since last year we
have been doing concrete work to construct the FTAA, or ALCA. Not surprisingly,
skeptics abound. Some political leaders position themselves at home with
warnings, while others seek to engage their publics about opportunities. Each of
us has sensitive topics that we need to address with care, while not losing
sight of the great gain for all. Only time will tell whether the sharp
objections are negotiating positions or the bluster of fearful politicians.
Amidst the rhetoric of resistance, it is striking that as many as 70 percent of
Latins in a 2001 Latinobarometro survey said that they
creation of a hemispheric free trade zone.
avid student of history, I, too, am moved by the epic nature of this venture. As
a practical person who must concentrate on achieving results, I am focusing on
the milestones along the roads that lead over the next hill.
United States is moving toward free trade in the hemisphere through free trade
in North America,
soon with Chile, next with Central America. We are preparing the way for more
free trade by opening the U.S. market through the Caribbean Basin Trade
Partnership and Andean Trade Preferences Acts. We want to negotiate with all the
democracies of the Americas through the FTAA, but we are also prepared to move
step-by-step toward free trade if others turn back or simply are not yet ready.
to offer the Americas
the first choice. Countries in the Asia-Pacific region,
Africa, and the
Middle East are also interested in free trade agreements with
the United States.
With China, the fourth largest trading nation in the world, now in the WTO,
will face stronger global competition. We want the Americas to be moving ahead,
not standing still, or worse, falling behind.
Endeavor: Seven Objectives
November 1, the trade ministers from the 34 democracies participating in the
FTAA will meet in Quito
to endeavor to advance the negotiations into the phase of specific, concrete
United States will be seeking to achieve seven objectives in
we need to launch a Hemispheric Cooperation Program so that smaller, developing
nations -- especially in the Caribbean and Central America -- have the capacity
to participate in and benefit from the free trade negotiations. It is our aim to
ensure these countries have the support to negotiate complex subjects, the
ability to implement the final agreement, and the help to make the necessary
structural adjustments that will be part of creating an effective free trade
area. The Inter-American Development Bank, the U.S. Agency for International
Development, and the U.S. Trade and Development Agency have been excellent
partners in this effort to combine trade with aid for growth and opportunity.
we will seek to establish firm schedules -- over the coming months, not years --
for the negotiations to open markets in each participant.
addition, we will seek to negotiate tariffs downward from applied rates, not WTO
bound rates. This principle may seem technical, but it would be a landmark
statement of the seriousness of our common endeavor. Tariff reductions would be
based on the reality of current trade patterns rather than the legally allowed,
highest-case scenario. The "bound" tariff range of many countries is far above
their current tariff levels, so cuts from bound tariffs would take much longer
to affect trade. At the same time, we recognize that the small island economies
of the Caribbean may need flexibility on the tariff starting points for a
limited number of sensitive products.
we will seek to establish chairs for the nine negotiating groups and three
related committees, so that leaders will press the work forward.
we will urge that the revised negotiating text be presented to the public, a
practice we began last year in Buenos Aires. The release of this draft text
should enhance the transparency of the FTAA process. We value public input,
which we will seek to take into consideration as our work continues.
we hope that Quito provides another opportunity to engage groups from our civil
societies about the FTAA project. We will listen. And we will not shrink from
explaining the benefits of free trade.
already received unprecedented input from civil society groups and are
forwarding their recommendations -- in both English and Spanish -- to the
negotiators on an ongoing basis.
we look forward to listening and learning from representatives of private
enterprise at the Americas Business Forum. The FTAA can only be an enabling
framework within which the genius of entrepreneurs, the commitments of
investors, and the energy of growing businesses create jobs, growth, and hope
for the peoples of the Americas.
as the United States and Brazil are scheduled to serve as co-chairs of the
negotiations from Quito to the conclusion, the United States will offer to host
the next ministerial meeting right here in Miami in 2003. With your help -- and
your model of urban renaissance -- this Gateway of the Americas will help make
history for the Americas.
with your supportive governor and congressional delegation, we want to leverage
the benefits of trade for the ever-brighter future of Florida within the new
second half of the 20th century was characterized by a divide between East and
West, by a long twilight struggle for freedom that defined the Cold War. In this
new century, our vital challenge is to overcome the divide between North and
South, to shine the light of a new dawn of hope and opportunity.
believe it is here -- in the new world of the Americas -- that we can topple the
walls of prejudice, poverty, and protectionism by connecting our two continents
through the bonds of freedom and prosperity.
free trade agenda can help fragile democracies in the Americas, just as U.S.
trade policy after World War II helped secure democracy and hope in
seen that after crises in the 1970s and 1980s prompted the first generation of
reforms in Latin America; rapid improvements gave people reason to hope that
they could build a better life for themselves and their families. They began to
dream great dreams.
dreams have not been realized as quickly as any of us would have liked. Yet
there are real prospects for historic improvements. Even as recent shocks have
roiled Latin economies, recovery has come more rapidly in most places than in
the past, and the response of most democratic Latin leaders has been to deepen,
not depart from, free market reforms.
there is no quick fix to the problems of poverty and underdevelopment. The next
generation of market and political reforms will require courageous leaders who
will not flinch from their responsibility. It needs leaders who will look beyond
self-interest, beyond the next election, to promote empowerment of all the
people of Latin America. To succeed, such political leaders will also need the
support of the private sector, not for private gain but for a public
For those in Latin
America with that determination and foresight, let me leave you with this
message: we will work with you. We will strive with you. We will reach with you
to make this hemisphere a model for the world.
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October 21, 2002