Remarks as Prepared for Delivery
Thank you, Juan Manuel, for that kind introduction. I’m delighted to be here among friends. On a personal note, U.S. Chamber of Commerce president Tom Donohue and I have known each other for years – to be honest, I don’t always agree with everything he says but make no mistake, he is one of the most effective leaders in the city. You are lucky to have him.
I come here as Deputy Secretary of State, and as a recovering businessman. One reason I was so eager to work for Secretary Clinton is that I believe our foreign policy needs to do more at the intersection between business and diplomacy. Fortunately, Secretary Clinton recognizes the vital link between foreign policy and economics as well.
Last Friday, the Secretary gave a major speech on what she called “economic statecraft” – how we use our diplomacy to strengthen our economy at home and how we use economic tools to strengthen our diplomacy abroad. And last week the Secretary sent formal instructions to every American diplomatic post around the world, highlighting the need to elevate the role of economics and business in everything we do. This is part of our larger effort to modernize the way we connect American companies with opportunities overseas; to break down barriers to trade, investment and fair competition and make sure that our presence around the world drives our economic recovery at home.
This is a major priority for us. Let me walk you through part of the Secretary’s argument: Around the world, we see countries gaining power and influence not because of their militaries, but because of their economies. Not just China and India but Brazil, Mexico and Colombia. That kind of growth has a magnetic pull in global politics—one that has benefitted America for decades. Meanwhile, closer to home, the American people are frustrated and hungry to get back to work. We need to use everything in our toolbox – especially foreign policy. And over time, we know that a strong economy is necessary to fund the mix of diplomacy, development and defense that make American global leadership possible.
The upshot is that Secretary Clinton was dead right when she said: “America’s economic strength and our global leadership are fundamentally a package deal.” And as we think about our future, it’s not enough to look east to Asia. We have to look south to our own hemisphere.
A focus on economics in our foreign policy leads us to Latin America and the Caribbean. We believe strong economic relationships in our neighborhood are a strategic necessity. And we know that sustainable, inclusive economic growth in Latin America and the Caribbean will benefit all of us.
So I want to discuss three things with you today: one, economic opportunity we have in Latin America; two, our agenda to seize this opportunity; and three, our efforts to make sure that Latin America and the Caribbean not only keeps growing, but grows in a way that creates widespread prosperity for its people.
First, the opportunity. I know I’m preaching to the converted when I say that Latin America’s progress in recent decades is matched only by its promise for the decades ahead. But not enough people in Washington understand: Latin America’s economies grew by six percent last year. Over the next five years, the economies of Latin America and the Caribbean could grow by one-third. Meanwhile, the consensus supporting democracy and universal rights in the region has never been stronger.
Let me be clear: there are plenty of challenges – transnational crime, backsliding democracies, continuing inequality and poverty, inadequate education and others. Our policies must continue to address each of them. But, out of nearly 600 million people living in Latin America, 56 million households have joined the ranks of the middle class over just the last 15 years. And if current trends continue, the region’s per capita income will double by 2025. That’s remarkable.
And as Secretary Clinton said last Friday, we believe in the power of proximity. Geography matters. Forty-three percent of all U.S. exports stay in this Hemisphere. We export more than three times as much to Latin America as we do to China. We export more to Latin America than to Europe—more to Chile or Colombia than to Russia. What does that mean? It means that each dollar of growth in Latin America creates greater opportunities for us.
And so the question is not whether this Hemisphere matters to our economic future, it does — but how can we make sure it creates jobs in the United States; and how can we sustain and broaden the economic progress unfolding in the Americas?
III. Seizing the Opportunity
Secondly, seizing this opportunity starts with trade. As you know, this is one area where we can report a major victory just last week when Congress finally approved the Panama, Colombia, and South Korea Free Trade Agreements, along with Trade Adjustment Assistance to help U.S. workers adapt to a changing economy.
These agreements could add as much as $10 billion to America’s economic output, translating into many tens of thousands of new jobs for American workers. Colombia is already our third largest market in Latin America. Last year, American exports to Colombia reached a record high of $12 billion—a number we will surpass with the FTA. These trade deals give our businesses better access, new protections and recourse in case of disputes. They have protections for workers and the environment. And as Secretary Clinton said last Friday, by adding Colombia and Panama to our existing FTAs, we will create a nearly unbroken chain of economic integration.
In the 16 years since I left USTR, the region’s economy has changed substantially. In the past, America sent manufactured goods to Latin America and purchased commodities. Today, we’re making things together that create jobs for both of us. Take Embraer, Brazil’s biggest jet manufacturer. The United States accounts for about 65% of its sales and about 70% of the parts in its planes are made in America.
As you know, President Obama has made it a priority across the whole of government to double America’s exports in five years. This starts with trade deals but doesn’t end there. We are working to harmonize regulations, eliminate red tape, strengthen supply chains, fight corruption, protect intellectual property and address all sorts of barriers that prevent our economic relationships from realizing their full potential.
The United States has a unique role to play as the largest economy in our Hemisphere. And this is important: while it’s true we are not the only major investor in Latin America we are in a better position than any other power to engage with the region and seize future opportunities together. It’s worth taking a minute to put this in perspective.
There’s no doubt Chinese investment has helped Latin American economies grow amid the recession. But China’s share of Latin American trade went from 2% in 2000 to 10% today. Eight percent of Latin America’s exports went to China. What percent went to the United States? 41 percent.
And what do these relationships look like? Latin America’s trade with China has often been limited to commodities. That prevents countries from diversifying and moving up the production ladder. Here’s the difference: 60% of Latin America’s exports to the United States are manufactured goods. 87% of Latin America’s exports to Asia are raw materials. The numbers are even starker when it comes to China’s trade with Latin America’s largest economy, Brazil.
What does this mean? Latin America’s economies want to modernize, diversify, and move up the value chain. And if we get this right, then the United States will be their partner of choice for many years to come. We have broader, healthier, more balanced relationships. Our economies are more complementary. Our ties are stronger.
And I want you to know that the U.S. government – the State Department, our Foreign Commercial Service, our Trade Rep and so many others—we’re your partners too. We stand ready to help your companies do business overseas.
III. Inclusive, Sustainable Growth
Finally, and number three, as we promote the efforts of American businesses across Latin America and the Caribbean, we also have to take the long view. The people of this Hemisphere are not just our neighbors—they are future customers and trading partners. They are the building blocks for stable, successful societies that can work with us to solve global problems –not to mention regional challenges like crime with violence that spills into the cities of the United States.
Growth in Latin America has lifted tens of millions into the middle class. But there are still many groups left behind—especially indigenous peoples, women, and isolated rural communities. Countries like Brazil and Colombia deserve credit for efforts to achieve inclusive growth and reach out to these populations. But there remains a great deal of work to do.
And so we are partnering with governments, businesses, and other institutions to break down barriers to social mobility in the Americas.
Two weeks ago, Secretary Clinton traveled to the Dominican Republic for a Pathways to Prosperity Ministerial meeting. This is a regional network that promotes growth, small business, trade, financial inclusion, and environmental protection. At the meeting, countries agreed to a concrete action plan to put best practices to work to help the rural poor. This is just one example of by working together we can promote sustainable change.
Across the region, we are pursuing new venues and partnerships to advance our shared goals—from trade deals to police training to clean energy partnerships.
One important test will be the Summit of the Americas. In six months, the next Summit of the Americas will be held in Cartagena. And we’ll be working to build momentum to the Summit a success.
The theme of the 2012 Summit is “Connecting the Americas: Partners for Prosperity.” And that idea of partnership is essential. Businesses are at the heart of what we hope to accomplish in Latin America—and we need to work together. Whether it is a program to bring electricity to rural Salvadorans or energy cooperation or earthquake recovery, Public-private partnerships are essential. Neither government nor business can have the impact we need without these partnerships.
So let me end with a reminder of why this matters.
No single military can compete with America’s. And yet our leadership in the century ahead is not guaranteed.
Because – as Secretary Clinton said—we are living at a moment when economics is at the heart of what it means to lead in this world. What is economic is strategic and what is strategic is economic.
And so we are counting on you to be part of America’s economic statecraft-- which is central to how our country will sustain our leadership going forward.
We can celebrate real accomplishments—for Latin America and for free trade.
But that progress pales next to what we can accomplish in the years ahead.
Together we can help you help people across our hemisphere rise out of poverty. We can help emerging powers become strong partners in solving shared challenges.
We can help America to recover economically.
And we can be a force for opportunity that touches and improves the lives of people and families – from the slums outside Lima to communities across this country.
And if we can do that, we won’t just have a strong America. We’ll have a successful hemisphere and a better world.