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E. Anthony Wayne,
Assistant Secretary of State for Economic and Business Affairs Remarks to the American Chamber of Commerce Lima, Peru, November 20, 2000 |
My responsibilities as Assistant Secretary of State are global in nature. Peru is very important to the U.S., economically, politically, and culturally. I can't claim to be an expert on this country -- my colleagues here at the American Embassy fill that need. However, I know enough about Peru to be confident that important global economic trends and themes are relevant to the situation here. Therefore, I would like to keep my remarks to you today very general, touching on issues that affect this Hemisphere and the global economy. Given the current political situation in Peru, I will also make some remarks on the role of the private sector as a force for rule of law, democracy ,and reform. Most important, however, I am here to listen and learn. So, I will keep my prepared remarks relatively brief, in order that we can have a dialogue afterwards -- I'd like to know what's on your minds. First, a word about economics in U.S. foreign policy. During the Cold War, economics often took a back seat to geopolitical and strategic concerns. But with the fall of the Berlin Wall and the collapse of communism, trade, investment, and other economic issues have taken on new importance in international affairs. We are turning our energies to more peaceful pursuits -- healthy cooperation and, yes, competition in the world marketplace The world faces other challenges, of course, terrorism, civil war, ethnic unrest, international drugs trafficking. This makes international economic stability and expanded prosperity even more important because, as Peruvians know only too well, poverty can lead to domestic or regional conflict. Let's put that thought in a positive context; greater prosperity can lead to greater stability, and stability can attract more international investment. When that happens, everyone wins. Looking at Latin America from the perspective of the North, I have to say the overall picture is quite encouraging. Democracy continues to make major strides. Democracy is always a work in progress -- as events in both Peru and the United States are making clear. But the fact remains that in a region where authoritarian dictators once were a prominent feature on the political landscape, today 95% of the hemisphere's population live under constitutional democracy. Only one nation, Cuba, is ruled by a dictatorship. Economic liberalization has kept pace with democratization. Import substitution and government controls on private enterprise used to be considered a viable economic model. Today, that notion is recognized as old-fashioned. Now most governments have adopted a market-based, trade-oriented model that sees the private sector as the key to growth, and have encouraged both foreign and domestic investment. Tariffs have dropped dramatically, from an average of around 45% in the 1960's to less than 15% today. The result? Intra-hemispheric trade has skyrocketed, and prosperity in the Americas has grown. Inflation in the region last year averaged less than 10%, the lowest rate in 50 years. Many enterprises once controlled by the state are now private concerns or are scheduled to be privatized - and service is better, subsidies are lower, and government revenues can now be directed to more important priorities such as health and education. Latin America and the Caribbean is the fastest-growing market for U.S. products: In 1999 our two-way merchandise trade with the region was over $300 billion. The U.S. invests more in Latin America and the Caribbean than in any other developing region of the world. And that investment has been rising steadily for years. In 1999 U.S. investments in the region topped $223 billion. That's almost 50% higher than in 1996. But we're not done yet - enormous potential for growth remains. In Miami in 1994, at the first Summit of the Americas, the Hemisphere's leaders committed themselves to a Free Trade Area of the Americas (FTAA) by 2005. That pledge was renewed at the second summit, in Santiago de Chile in 1998, and will be at the top of the agenda when the leaders next gather, in Quebec, Canada, in April of next year. In preparation for that summit, by the way, an important vice-ministerial meeting of the FTAA Trade Negotiations Committee will be held here in Lima early next year. And, trade ministers will be meeting in Buenos Aires in April to discuss FTAA, shortly before the Quebec meeting. While there is much to do, we have already made impressive progress: We expect the negotiators will have completed a first draft for each section of the planned agreement by the end of this year. The FTAA has been a key element in the U.S. Administration's economic strategy for the Western Hemisphere, and I am confident that it will remain a top priority of the incoming Administration. Up to now I have been talking mostly about what governments are doing to influence economic growth and promote stability. But that's only part of the picture. What you in this room do - you, who represent American companies or who do business with or on behalf of Americans - is crucial to this effort to build and sustain democracy, create a healthy investment climate, and expand prosperity to more and more citizens. Good corporate citizenship can be a tremendous force for democratic reform. As I mentioned a few moments ago, investors are attracted to countries that guarantee the rule of law and a level playing field for all investors. Moreover, investors increasingly see strong democratic institutions as important elements of long-term stability. Companies will only invest and help boost the number of jobs and other economic opportunities in countries where contracts are sacred, and where legal authority consistently and fairly enforces their provisions. Likewise, companies will do business in countries where the rules and laws -- and the procedures for making those rules and laws -- are fully transparent. This is why we worked hard to bring into being the antibribery convention of the Organization for Economic Cooperation and Development -- to guarantee a fair deal for U.S. businesses in their international dealings while cementing into place an important principle of good governance. That's also why last September, President Clinton signed the Organization of American States' Inter-American Convention against Corruption, joining the U.S. with Peru and 18 other Western Hemisphere taking a step forward for good government and fair competition. We welcome this recognition by Peru and other OAS members of the need to put an end to the corruption that so damages the economies of the region. We hope all countries will get on with the important work of implementing and enforcing the provisions of this convention. Business leaders are often tempted to believe they just have to live with the imperfections in their democratic institutions. But you can play an important role in helping cement democracy in place and making it relevant and tangible for the average citizen. It takes a commitment on your part to: -- Help make justice systems more efficient and responsive. -- Eliminate corruption so that government services are provided efficiently and impartially. -- Work to make quality education available to all. This helps you get a more productive work force, and it allows citizens to make informed decisions about government. -- Control crime by supporting efforts to ensure an efficient, law-abiding police system. -- And perhaps most importantly at this moment in Peru, encourage the political process to respond to dialogue and be willing to compromise. While democracy has a strong foothold in this hemisphere, free and fair elections cannot yet be taken for granted. There is another area in which your help is needed to secure prosperity for Peru and the Hemisphere. Latin America needs to appreciate the importance of participating fully in the global economy. I would like to spend a little time discussing the issue of globalization, because it is sometimes a misunderstood concept, both in the United States and around the world. As we saw in Seattle, in Washington, DC, and in Prague, globalization is perceived by some as having destructive effects. The evidence does not support this view: Since 1950, world trade has increased 16-fold. World per capita income has doubled; 20% of global economic output is due to trade. In the U.S. this year, trade accounts for one quarter of U.S. GDP, compared to 9% in 1960. Export growth has accounted for over 25% of recent U.S. economic expansion. Between 1994 and 1998, an estimated 1.3 million new jobs supported by exports of goods and services were created in the U.S. I am urging you in the business community to make your voices heard on the important potential benefits afforded by globalization. It is true that globalization has created economic dislocation for those sectors of society that are ill-equipped to take advantage of the opportunities accompanying the rapid economic growth of the past decade. The challenge governments are facing is to ensure that the tangible benefits of globalization reach their citizens to the maximum extent possible. Popular support for globalization will continue only as long as it is relevant to the broad range of society. Moreover, as the world's economies open up, the need for clearly established rule of law, more transparency, and stricter governmental accountability will increase. And as we have noted, these are vital ingredients for a healthy democracy. As economies become more integrated, there will be some painful adjustments. But globalization can succeed if potential investors believe that a country encourages productive investment, respects the rule of law, and is able to respond quickly to changing technology and evolving consumer demands. And, globalization can succeed if it can be demonstrated that workers' rights will be respected, the environment will be protected, and that there will be a safety net to take care of individuals and areas which are not able to take advantage of change. So, globalization is a reality. It is up to us to make sure that people understand its benefits - and that those benefits do not accrue only to the privileged few. Let me close by emphasizing that the international business community can be an important force for democracy, not only in Peru today, but wherever your business interests take you. You have the position and the prestige to work for change, and to help citizens understand how transparency and good governance go hand in hand with prosperity and progress. You can be ambassadors representing the best practices in creating a healthy economy and a free society. I would like to hear your views on these thoughts, and I'm happy to take your questions. Thank you for your attention. [end of document]
All Remarks | Economic and Trade Policy | Western Hemisphere Affairs | Department of State |
