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U.S. Official Urges Greater Economic Integration

U.S. Official Urges Greater Economic Integration in the Americas

Commerce secretary says free trade will boost regional prosperity

Within the Western Hemisphere, liberalized trading systems have provided substantial benefits to the countries that embraced them, and greater benefits almost certainly will follow with the elimination of remaining trade barriers, says U.S. Secretary of Commerce Carlos Gutierrez.

In his September 20 remarks at a U.S. Chamber of Commerce conference on Latin America and the Caribbean, Gutierrez extolled the advantages of economic integration while also praising countries throughout the Americas for assisting victims of Hurricane Katrina, which struck the United States' Gulf Coast region of Louisiana, Mississippi and Alabama at the end of August.

"We are grateful for the outpouring of compassion from our friends in the Western Hemisphere," said Gutierrez. "Hurricane Katrina dramatically shows how integrated our nations and our economies are. New Orleans and other Gulf ports are key gateways to the global economy."

In fact, "Hurricane Katrina underscores the importance of providing the highest common level of protection from man-made or natural threats," he added. And because they recognize their mutual dependence, countries such as Canada, Mexico and the United States already are "working together economically and to improve our respective security," said Gutierrez.

THE BENEFITS OF ECONOMIC COOPERATION

The commerce secretary pointed to the economic growth engendered by the North American Free Trade Agreement (NAFTA), which has yielded impressive results for Mexico, Canada and the United States since its passage in 1993. During the period from 1993 to 2004, Mexico's economy has expanded by 36 percent, Canada has experienced growth of 46 percent, and the U.S. economy has grown by 44 percent, Gutierrez said.

The free-trade agreement between the United States and Chile is another example of this pattern, according to Gutierrez. The U.S.-Chile pact has "been good for the United States; we've regained our position as Chile's number-one supplier of goods and services," he said. "It's also been good for Chile; U.S. imports from Chile are also up strongly."

Gutierrez cited the Security and Prosperity Partnership (SPP) initiative recently implemented by Mexico, Canada and the United States as "another example of our heightened level of economic and security coordination." This sort of partnership "is necessary for regions to be fully competitive within the global economy," he said.

In view of heightened global competition, the nations of the Western Hemisphere aggressively must pursue opportunities for growth, Gutierrez said. He urged hemispheric governments to help establish the proposed Free Trade Area of the Americas, which would eliminate trade barriers throughout the region.

Gutierrez praised the U.S.-Central America-Dominican Republic Free Trade Agreement (known as CAFTA, or CAFTA-DR) as "an enormous step forward in the process" of greater regional integration. He also announced that the U.S. Department of Commerce is organizing a business development mission to Central America, with the participation of several U.S. companies.

Countries that pay attention to global trends and adapt accordingly, will lay the foundation for long-term prosperity, he said. "We've got to move beyond the inward-looking mentality that opposes greater cooperation and ignores where our competitors will be in 10 or 15 years," said Gutierrez. "Integration can help us grow more efficient, more secure, and more competitive when measured against our global competitors."

Following is the text of Gutierrez's remarks, as prepared for delivery:

United States Chamber of Commerce
[Washington, D.C.]

United States Chamber of Commerce's Forecast on Latin American and the Caribbean Conference

Remarks by Secretary of Commerce Carlos M. Gutierrez
September 20, 2005

Thank you for that introduction, Jim [Fendell]. I very much appreciate this award. It is gratifying to be recognized by a group that has done so much to advance economic freedom in our region. Thank you.

Let me begin by expressing my thanks to all of the countries that have offered aid and donations for Hurricane Katrina relief.

This was one of the worst natural disasters to strike the United States and it struck a geographically vulnerable area. We are saddened by the losses but we're committed to rebuild our Gulf Coast. We are grateful for the outpouring of compassion from our friends in the Western Hemisphere.

Hurricane Katrina dramatically shows how integrated our nations and our economies are. New Orleans and our other Gulf ports are key gateways to the global economy.

Hurricane Katrina underscores the importance of providing the highest common level of protection from man-made or natural threats.

Canada, Mexico, and the U.S. are already following this path. We're working together economically and to improve our respective security.

Consider the strong growth in our countries since NAFTA passage. Between 1993 and 2004, our countries have grown 36 percent in Mexico, 44 percent in the U.S., and 46 percent in Canada (in real terms). We would never have grown this quickly with barriers blocking commerce between our citizens.

Consider the Chilean example. The U.S.-Chile FTA has been a powerful example of trade's power to build ties. It's been good for the United States; we've regained our position as Chile's number-one supplier of goods and services. It's also been good for Chile; U.S. imports from Chile are also up strongly. Our new FTA-driven exports vary from Alaskan coal to California citrus, to services provided by a Tampa-based construction management firm.

We're selling twice as many bulldozers. We're shipping more than five times as many tractors. We're sending twice as much fertilizer and 40 percent more business machines.

Transport vehicle sales are up over 700 percent and passenger vehicle sales are up 75 percent. Take whatever measurement you choose; people in Chile and people in the United States are better off because we are trading freely with one another. The message is clear: together, we are stronger.

Chile opened its markets, welcomed competition, and it produced the strongest growth record in Latin America. Roughly half the people in Chile lived below the poverty rate in 1987.

Following market reforms during the late 1980s and 1990s, that number had fallen to less than 20 percent. We need to expand those opportunities to the poor living throughout Latin America. The way to do it is through greater trade, investment, and economic cooperation.

Last year Chile grew at 6.1 percent with inflation in check at 2.4 percent. Can you imagine how economic performance like that could transform lives if it could be replicated across Latin America?

The Security and Prosperity Partnership (SPP) initiated by Presidents Bush and Fox and Prime Minister Martin is another example of our heightened level of economic and security coordination. This is necessary for regions to be fully competitive within the global economy.

It's also an opportunity to build more competitive business communities for strong economies. Last June in Ottawa, we discussed strategies to raise regional competitiveness. Some have asked why, with the successful North American Free Trade Agreement already in place, are our leaders so focused on integration?

In Europe and Asia, countries are working together regionally to improve their competitive positions.

China is negotiating free-trade agreements with regional trading partners, including the Association of South East Asia Nations and Australia.

Japan and Korea each have an FTA agenda of their own with countries in the region.

Through the SPP, we are ensuring that North America is the world's most open and competitive market. I would like to see that cooperation and integration extend from pole to pole in our hemisphere.

The SPP and NAFTA have been opportunities to build more open and secure societies in North America, but the spirit behind these initiatives responds to the reality of 21st-century economic competition. Their lessons should be applied across our region.

CAFTA is an enormous step forward in that process. Many of you played an important role in our victory. You worked extremely hard to pass this agreement. You've overcome opposition in the CAFTA countries.

Local Latin American AmChams were a key asset in building momentum for passage. We've succeeded despite protectionist pressures in the U.S. This win was a critical building block for the future of free trade, and I congratulate everyone who earned this victory.

Our upcoming business development mission to Central America is showing us that there is strong interest among U.S. companies for opportunities in the CAFTA markets. Next month, I will lead this group to Guatemala, Honduras, and El Salvador.

We are targeting a wide range of industry sectors. This includes everything from automotive parts and services equipment to textiles.

We're going to take some 15 to 20 companies. The interest extends to companies of all sizes, from small and medium-sized entrepreneurial enterprises to the largest multi-national corporations. We saw interest on the part of companies from across the country.

These companies all have one thing in common: they recognize opportunity in Central America and they are eager to begin doing business in those markets. Their interest will mean more investment, more trade, and eventually added job creation in the U.S. and Central America.

We've got to move beyond the inward-looking mentality that opposes greater cooperation and ignores where our competitors will be in 10 or 15 years.

Integration can help us grow more efficient, more secure, and more competitive when measured against our global competitors.

The Americas can be the foremost economic region in the world. There are unnecessary barriers that compromise our regional competitiveness. We can do better.

Our driving objective should be to make the flow of commerce within the Americas both safe and seamless.

The memorandum of understanding we saw signed this afternoon is a positive sign. This cooperation will help American companies navigate legal challenges and will, in turn, help bring more foreign direct investment to Central America.

Another objective is to further integrate sectors that comprise a significant portion of our economy. We can make progress together through cooperation and joint research in areas like food processing, transportation, and information technology, to offer only a few examples.

The SPP is showing us how to eliminate the distortions that skew North American markets, and reduce the costs of trade and promote innovation and market development.

CAFTA was also a critically important step in the advance of economic freedom. These young democracies are fragile. They needed our support. And I'm proud to say the United States met our responsibility to stand with their democratic, free-market aspirations.

The borders among Canada, the U.S., and Mexico have long been bridges between neighbors and commerce.

The hopeful optimism of our new CAFTA partners and the Chilean example showing trade's uplifting power argue against tariffs and trade barriers. President Bush challenged the world at the United Nations to extend trade's benefits to people everywhere. As the president said: "The United States is ready to eliminate all tariffs, subsidies and other barriers to the free flow of goods and services as other nations do the same."

We are committed to a successful conclusion of the Doha round. Here in the Americas, NAFTA's success, CAFTA passage, and Chile's strong growth should encourage countries to put aside divisions to seize our potential through a Free Trade Area of the Americas.

Our opportunity is to redefine our borders within the Americas. We must look beyond our present economy. Our challenge is to redefine regional integration by setting a bold new standard for the 21st century.

Isolated and apart, we will never approach our economic potential. Together, we can make our hemisphere the most potent economic engine in the world. We can master the new realities of global competition while lifting up our people to greater prosperity and opportunity.

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