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| Peter F. Romero Acting Assistant Secretary for Inter-American Affairs Remarks at the Miami Herald Conference on the Americas Coral Gables, Florida, September 18, 1998 |
It is an honor for me to address this second annual conference. Once again, the Miami Herald has assembled a distinguished group of speakers. And from the faces which I recognize in the audience, I can see that I have the pleasure of addressing an audience which is highly knowledgeable about Latin America and the Caribbean. I look forward to a stimulating exchange during the question-and-answer period.
I'd like to lay out very briefly some of the key points of U.S. policy toward Latin America and the Caribbean as we move into the 21st century. I assume that the turmoil in financial markets is foremost in many minds today. Indeed, it is one of my major concerns, but I would like to discuss this critical issue within a broader context.
Let me start by outlining for you the major goals of U.S. policy toward the region. These goals represent a continuum from previous U.S. policy, reflecting our long-term interests in the region but also the growing closeness of our relationship. We want to:
Perhaps more important than our specific objectives is our general approach. U.S. leadership today expresses itself largely through multilateral actions undertaken in the spirit of cooperation among equals. Our policies and programs are aimed at building the capacity of our neighbors to achieve these goals cooperatively. The Miami and Santiago Summits provide us with a special policy tool to push forward in all these areas.
As a long-time observer of the U.S.-Latin American relationship, I am struck that we have already entered a "new age" in our relationships within this hemisphere--well before we actually enter the new century and the new millennium.
First, we are now looking at Latin America in a broader focus--the Western Hemisphere. For the first time ever, there is wide-ranging consensus in the whole hemisphere--Latin America, the Caribbean, the United States, and Canada--on basic political and economic values, on democracy and free markets. The Summit of the Americas reflects that. So does the launching of the negotiations for a Free Trade Area of the Americas. Canada, more than ever, is not only active but a leader in hemispheric affairs. It is not only the current chair of the FTAA negotiations but will also chair the next summit and the OASGA in the year 2000. To reflect this new reality, Secretary Albright decided this summer to establish a new Bureau of Western Hemispheric Affairs in the State Department, to cover all the countries of this half of the world.
Second, our policy toward the Western Hemisphere is no longer dominated by ideological battles. For the past 200 years, history could be described as a battle between different systems--monarchy vs. republicanism, conservatives vs. liberals, capitalism vs. socialism, democracy vs. authoritarianism. Today, the challenges before us are far more complicated, with outcomes far less certain. They put the essential needs and expectations of the individual citizen at the center of government legitimacy.
All this, of course, has resulted in a new U.S. partnership with Latin America. The word "partnership" has been widely used in the past to describe U.S.-Latin relations, but in my view now it accurately describes the reality of that relationship. More and more of our problems cross borders. Combating drug trafficking, maintaining a safe environment, fighting terrorism, fighting the spread of disease--these and other issues require the countries of the hemisphere to work as partners to develop solutions. The summit process and the FTAA provide us an opportunity to do so. As in any partnership, all of the participants share in both the benefits and the obligations.
"Integration" is another word which has been widely used in the past, but it is only now that there is real momentum toward economic integration in the hemisphere. The potential benefits of the summit process and of the FTAA are enormous; they can be life-transforming for the vast majority of our citizens. Our principal challenge for the next decade is to make sure that we realize that potential, and that the benefits of integration will flow to all the people of the Americas, not just a chosen few.
I have spoken so far in terms which may be taken to imply that a Golden Age is upon us. Not so, or at least not yet. I am optimistic, but also realistic. There are formidable obstacles to achieving our goals. Let me enumerate just a few and outline our basic strategies to overcome them.
As I mentioned before, the turmoil of the last few weeks in Latin American financial markets has been a major concern to the U.S. Government not only for how it will affect our foreign policy, but also how it will affect the people of the hemisphere. Is this the end of our vision of a democratic and prosperous community of the Americas?
I believe not. First, the whole issue of global financial instability is a major priority for the United States. President Clinton made this very clear in a far-sighted speech several days ago at the Council on Foreign Relations. He said that the United States had an "inescapable obligation" to lead and to seek ways to find concrete solutions to the recent instability in global financial markets. He outlined a 6-point program to help contain the spread of financial contagion and to spur economic growth. On Latin America, President Clinton said:
"We have to be ready to respond immediately and with financial force, if necessary, to the currency crisis if it spreads, especially if it threatens the economies of Latin America, where nations have struggled to make progress to do the right thing only to find themselves buffeted by economic storms outside of their control."
He also said he would be urging "the major industrial economies to stand ready to use the $15 billion in IMF emergency funds to help stop the financial contagion from spreading to Latin America and elsewhere." (Note: He is also urging our Congress on IMF replenishment legislation.)
Global markets responded favorably to the President's commitment to restore stability to global markets and to seek to reform the international financial architecture. Those measures can begin to repair some of the damage done to several Latin American economies caused by the fraying of investor confidence in emerging markets, and by recent drops in commodity prices such as oil. We must remember that it was the financial conditions of countries in Asia and of Russia that triggered the turn-around in investor confidence in emerging markets in general.
Overall, a decade of market-based reforms has made the economies of Latin America stronger and more resilient than they have ever been. I am reminded of the well-known economist, Arnold Harberger, who points out that economies, like the human body, need to be maintained in good condition. Exercise and proper diet do not guarantee good health, but they ensure that when the inevitable malady strikes, the body will be better prepared to deal with it and recovery will be faster. In effect, economic reforms properly done make an economy more limber in dealing with new challenges, more resilient in dealing with setbacks, and more prosperous in times of good health.
Latin America's commitment to the market model has already been tested once, in the financial crisis which followed the Mexican devaluation of the peso in December 1994. That crisis left a lot of suffering in its wake. But the Mexican economy recovered quickly and has been growing since. That crisis reinforced the commitment of the region's leaders to continue with market-based reforms within a framework of democracy and hemispheric cooperation. In some ways, the crisis actually strengthened the region's economic institutions.
In 1997, Latin American economies as a whole had their best performance in a generation, with real growth of 5% and inflation of 11%--the lowest in 50 years. As Secretary Rubin said when he met with Latin America's finance ministers and central bankers 2 weeks ago, this region is the world's "most forward-looking" in carrying out reform.
It is unfortunate that many investors look at emerging markets as if they are all alike. The savviest investors, of course, differentiate the strong reformers from the others, and evaluate each country on its merits. In this age of instantly available information, our challenge is for investors to absorb it and make informed decisions that differentiate between countries by way of their macro-economic performance.
Inevitably the new spirit of partnership in the hemisphere will be tested as we address the lower growth and social problems resulting from this crisis. But by working together in bad times as well as good, we will develop an even stronger partnership and trust among us, and eventually stronger democratic and market institutions.
Another one of my major concerns is to explain more clearly and persuasively to my fellow-citizens that we have an enormous stake in our relations with our hemispheric neighbors. U.S. trade with our hemispheric neighbors has been growing faster than with any other region in the world. Canada has long been our largest trading partner. Mexico is now our second-largest, having overtaken Japan last year. Our merchandise exports to the hemisphere in 1997 amounted to $285 million, substantially more than to Western Europe ($155 million), or the Pacific Rim ($194 million). The projections are that by the year 2010 this hemisphere will be a larger market than Western Europe and the Pacific Rim combined. I believe that only the most knowledgeable Americans know that trend, or the fact that U.S. trade in the broadest sense (goods and services of both imports and exports to the world) now accounts for close to one-third of our GNP. Or the fact that air travel within the hemisphere is projected to pass travel to Europe plus the Pacific Rim by the year 2008. My sincerest expectation is that along with the "delights" in the U.S. that Latins will enjoy, that my fellow Americans will sample the "flavor" of the Caribbean islands, the Amazon, the Galapagos and the Pampas and conclude (as I have) that there is much that binds us together by way of a shared history and values and a dream of a better future.
Another key issue within the United States is to demonstrate that trade is not a zero-sum game, where one country's gains are offset by another country's losses. This widely held assumption is certainly reinforced by the actual language of trade negotiations, including such terms as "trade concessions" and "reciprocity." Somehow we need to get across the notion that the U.S. economy--like any economy-- benefits not only from opening up other markets for our exports, but also from opening up our own market to imports. It is ironic that "trade" and especially "imports" have become dirty words to much of the public at a time when the U.S. is experiencing extraordinarily good economic times--the longest period of sustained growth in postwar history, combined with remarkably low inflation. Since 1993, about 13 million jobs have been created, and the unemployment rate is the lowest in a generation. With the budget deficit approaching zero, we are now engaged in debates about what to do with the coming budget surplus--a situation which was unthinkable even a few years ago. The globalization of the U.S. economy has contributed enormously to this happy state of affairs. But the vast majority of U.S. citizens are unaware of the connection between non-inflationary growth and open markets.
Clearly, when it comes to trade and globalization, the attention of the media and the public is focused primarily on those cases where jobs are lost and the lives of individual families (and sometimes communities) are disrupted. Trade is often blamed when in fact it is technological change which accounts for the biggest share of changes in production and employment patterns.
Nevertheless, it is undeniable that open trade may cost some jobs and may lower wages in those parts of the economy where we are less competitive. Generations of economists have shown that such losses are more than offset by gains to workers in other sectors, and society as a whole experiences a net benefit. Somehow, we must make that clearer to our public.
And we must continue to mitigate the painful effects of job losses where they do occur. We must above all maintain the U.S. economy's extraordinary job-creating power by continuing sound economic policies. And we must continue to invest in our workers, both through retraining and other assistance to help them adjust, and through education to prepare our young people with skills for the 21st century.
This is a challenge which all hemispheric leaders have in common--the need for continual reform and never-ending renewal. Building democracy and free markets and addressing the basic needs of the people will always remain a work in progress. American prosperity and democracy are built on the assumption of equal opportunities. But with galloping globalization and the dizzying pace of technological progress, those individuals who are ill-prepared will not get the benefits of the modern economy. The challenge is to make our people not only literate, but also science literate and computer literate and politically literate. Our electorates need to be knowledgeable and involved. And we need to help our people continually update their skills in response to new technology and new consumer demands. Over the long run, universal quality education (and whether it is provided) will be key to achieving our vision of a democratic and prosperous community of the Americas.
As you know, education--improving its quality and expanding its availability--was a major theme of the Santiago Summit in April. Indeed, the Santiago Plan of Action is a commitment of the Americas to move into what has frequently been called "a second generation of reforms"--to expand the capacity of all our citizens to participate in the economy and society. The World Bank, IDB, and USAID have responded to the leaders' call by programming $8.3 billion of loans and grants for education projects in this hemisphere between now and 2001. Today's financial crisis shows more forcefully than ever that appropriate macro-economic policies are indispensable. And also that they are not enough. Resilient societies are those whose institutions are efficient, transparent, and responsive to present and future human needs.
With technology shrinking the globe at an ever faster rate, issues which were not so long ago considered to be purely domestic--like the environment, drugs, crime, or health--are now clearly transnational. And areas which were considered too sensitive even for international dialogue--like human rights, corruption, or judicial reform--have now become the subjects of multilateral cooperation.
We in the Americas have an extraordinarily ambitious agenda before us. It will require extraordinary effort and extraordinary leadership to achieve it. But I see no alternative to this agenda if we are to fulfill the expectations which the ideas of democracy and free markets have aroused in the people of the Americas. The hemisphere is blessed with a wealth of natural and human resources. I am confident that the coming century will witness some of our most remarkable, collective achievements ever. Thank you for your attention.
[end of document]
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