Remarks by Frederick W. Schieck
Deputy Administrator, U.S. Agency for International Development
"The Role of Trade in the Caribbean and Central America"
CLAA Conference
Miami, Florida
December 10, 2003
Thank you, Robert (Robert Riley).
Presidents Bolanos, Flores, Maduro, Mejia, Moscoso, and Pacheco; Prime Ministers Arthur, Christie, Gonsalves, Manning, and Patterson; Governor Bush; Federico Sacasa, Executive Director of CLAA; honored guests; ladies and gentlemen: it is a great honor to be here on this occasion with so many of our important friends and allies from Central America and the Caribbean.
Es un honor estar aquí con Uds. repesentando la Administracion del Presidente Bush y al Administrator de USAID, Andrew Natsios. Esta es una reunión muy importante para nostros porque es una opportunidad para diálogar sobre como mejorar el commercio entre nuestras naciónes y tratar otros asuntos importantes con los lideres de la región.
Let me begin with President Bush's National Security Strategy which defines the promotion of economic growth in developing countries as a key objective for the United States and a major goal for the U.S. Agency for International Development (USAID). Specifically, the President's Strategy states that "a strong world economy enhances our national security by advancing prosperity and freedom in the rest of the world. Economic growth supported by free trade and free markets creates new jobs and higher incomes."
The countries of Latin America and the Caribbean are America's "Third Border," and we are committed to helping them reap the benefits from trade liberalization initiatives. Therefore, my remarks will focus on trade as an indispensable element of national development.
Last year, USAID produced an in-depth report entitled Foreign Aid in the National Interest. One of the report's central conclusions - perhaps the most important -- was the need for USAID, as the leading bilateral development agency in the world, to continue investing in trade-related programs, because if poverty in developing countries is to be reduced, we must focus on promoting growth.
Achieving growth in the highly competitive economic conditions of today is not easy. But it happens -- when countries make the right choices, follow the right policies, and stick to them over time. There are a number of countries in Latin America and the Caribbean making significant strides, while others lag behind.
Each of the countries making these strides has seen their exports rise steadily over the last seven years. I am not speaking of the dramatic gains that countries sometimes make, but which are often not sustainable, but that of patient, sustained, year-by-year growth that people can depend on.
This long-term, equitable economic growth is the product of several important decisions made by governments. These begin with good governance: there is no substitute for democracy, transparency, and a committed fight against corruption.
Investing in people's health and education is critical to creating a capable workforce and a broad sense of equity and well-being. Also necessary is the establishment of a framework for creating economic opportunity, such as empowering the private sector, raising agricultural productivity, and creating a good climate for trade and investment.
Development is a long and often difficult process. Yet experience shows that over time, trade and investment are the principal mechanisms through which global market forces - competition, human resource development, technology transfer, and technological innovation -- have generated growth.
A recent World Bank study makes the same point: developing countries that managed to integrate their economies into the global market saw per capita income grow by five percent per year during the 1990's. By contrast, those that failed to do so -- those that did not learn to trade within the new rules-based global economy -- saw per capita incomes shrink by 1.5 percent per year.
That difference -- between growth and the lack of growth - obviously impacts on the livelihood of people and the development of countries. When trade grows, jobs and incomes grow, and countries prosper.
An interesting statistic: each year the countries of the developing world receive some $50 billion dollars in foreign aid from all sources. At the same time, exports earn these same countries $2.4 trillion dollars each year. That's over 40 times as much. This is one reason why an important goal of our aid is to keep the trade engine running.
The U.S. is an important destination for Latin America's exports. We trade more with Latin America and the Caribbean than we do with Russia, India, and Indonesia combined. Between 1998 and 2002, U.S. imports of merchandise from Latin America rose almost nine per cent per year. And because the United States still imports more than it exports to most of our hemispheric trading partners, capital keeps flowing to the region every day.
Trade is even more important for our close neighbors in Central America -- 50 percent of this region's exports find their way to the U.S market.
It is a fact, however, that much more can be done. And it will when the Central America Free Trade Agreement (CAFTA) and the Free Trade Area of the Americas (FTAA) negotiations are completed.
To help countries prepare for these Agreements and meet the challenges of global liberalization, the Bush Administration has consistently supported trade capacity building initiatives. Today, the United States is by far the largest provider of trade capacity building assistance in the world, larger than the World Bank and the EU combined. Last year the United States provided $162 million dollars to support trade capacity initiatives, most of it through USAID.
In Latin America and the Caribbean, U.S. funding for trade capacity building has more than doubled in recent years, rising to more than $71 million dollars in Fiscal Year 2003. This funding is focused on strengthening the capacity of countries to respond to trade opportunities. For example:
- Preparing countries for WTO accession and international trade negotiations such as the Doha Round, CAFTA, FTAA, and the Jordan Free Trade Agreement;
- Helping countries comply with the international rules-based trading system, such as customs reform, intellectual property rights, sanitary and phytosanitary codes; and
- Supporting trade and investment reforms in areas such as agriculture diversification and commercial and regulatory law.
Equally important has been our broad engagement with the countries of the Caribbean where we have tailored our trade capacity building efforts to meet their particular needs.
As you know, the CAFTA negotiations have made significant progress this year. A new and hopefully final round is under way in Washington this week. Achieving an agreement will not be easy given the complexity of the issues, but we are hopeful that an understanding will be reached by the end of the year. It would be a remarkable achievement and a great benefit to the countries of Central America - and the United States.
Experience and empirical evidence show that over time, free markets lead toward democracy, and democracy leads toward free markets.
Unfortunately, there is one nation in this hemisphere that is not part of this process, a country devoid of democracy: Cuba.
We all look forward to a time when this will change, a time when the Cuban government will embrace individual liberty and the rule of law, a time when a new Cuban government will lead Cuba into the modern world. We believe that the Cuban people desire a government that does not fear an open society, but welcomes it, one that is not based on one man's rule, but on freedom and individual initiative. It is time for Cubans to enjoy the freedoms that all of us take for granted.
Just as the U.S. government has helped many of the visionary leaders with us here today to build their democracies and improve their economies, we are prepared to provide the same kind of assistance to Cuba, once a true transition government is in place.
We all have a critical role to play in ensuring the growth of this Hemisphere. By working together we can improve the lives of many families here and around the world. This is why we are here today.
Thank you.
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