Enterprise for the Americas Initiative promotes economic growth - statement by Assistant Secretary for Inter-American Affairs Bernard Aronson - Transcript

US Department of State Dispatch, June 29, 1992

Bernard Aronson, Assistant Secretary for Inter-American Affairs

Thank you for this opportunity to join you for a discussion of the Enterprise for the Americas Initiative (EAI).

We in the Administration appreciate the invaluable support you have given this initiative at crucial times in the legislative process. We also appreciate your effort to advance the process of debt reduction through your legislation, HR 4059, and I join [Treasury] Under Secretary [David] Mulford in encouraging you to include authority for third-party sales to facilitate debt swaps as part of your legislation.

What is at stake in the Enterprise for the Americas Initiative is maintaining momentum in one of the best performing areas of the US economy today.

The US Export Boom

US exports to Latin America and the Caribbean have doubled in the past 5 years, from $31 billion in 1987 to $62 billion last year. That created about 620,000 new jobs in the United States. It has also nearly wiped out a trade deficit with that region that stood at about $11 billion in 1987.

Your state of Texas is in the lead, but this new export business is building in all states and reaching all the important sectors of our economy.

Between 1987 and 1990, US exports to the region grew by nearly $19 billion or 55%. Over $7 billion of that new business was in Texas; California and Florida each captured over $2.5 billion in new export sales; and New York, Pennsylvania, Michigan, Ohio, and New Jersey are among the 20 states which added $100 million or more. Nationwide, exports of foodstuffs to this hemisphere grew 47% (up $1.2 billion); raw materials 30% (up $427 million); cars, trucks, and parts 84% (up $1.9 billion); machinery 46% (up $4.9 billion); and consumer goods, ranging from radios and televisions to clothing, furniture, and sporting goods, 120% (up $2.6 billion).

The New Economic Model

This export boom did not happen by accident. It happened because our neighbors - first Chile and Mexico, now nearly every country in the hemisphere - decided to undertake revolutionary economic change. A new generation of leaders in Latin America and the Caribbean has made the political decision to replace longstanding protectionist and statist policies with a new model that relies on economic freedom and openness to international trade and competition.

This is not like other regions of the world, where the United States faces tough, often intractable negotiations to cut tariffs, remove non-tariff barriers, and dismantle subsidy schemes which price our exports out of the market.

In this hemisphere, countries are cutting tariffs unilaterally. They are removing barriers to foreign investment unconditionally. They are waiting in line to enter talks with us to liberalize trade. They stand shoulder to shoulder with us in calling for Europe to cooperate in liberalizing world trade through the Uruguay Round [of the General Agreement on Tariffs and Trade].

Consider these examples:

Sound Money. Lack of stable currencies has long blocked investment and growth throughout the hemisphere. But today, many countries have taken the strong fiscal and monetary policy measures needed to stabilize their currencies.

Hyperinflation has been contained in Argentina, Bolivia, Nicaragua, and Peru. Argentina's success has been particularly dramatic. Under President Menem's leadership, the Argentine peso is maintaining rough parity with the dollar as a result of fiscal discipline and a transparent monetary policy where the movement of key money supply indices is published daily in the newspapers.

Cutting Barriers to Trade. Chile, long a leader in tariff reduction, now maintains an across-the-board 11% tariff on imports. Since 1986, Mexico cut its maximum tariff from 100% to 20%. Average tariffs are one-half of what they were 6 years ago, and there are virtually no non-tariff barriers. In 1989, Argentina's tariffs ranged from 15% to 53%; 62% of the industrial output of the country was protected by trade restrictions. Today, many tariffs have been eliminated, the top tariff is 22%, and import quotas have been eliminated on all products except automobiles. Three years ago, the top issue in our relationship with Brazil was "informatics" laws, which blocked imports of computers and related technology in order to protect Brazil's computer manufacturers. Those restrictions have been cut substantially, and they will end in October. Most of Brazil's other non-tariff barriers have also been eliminated by President Collor. El Salvador reduced its tariff rate ceiling from 250% to 35% in 1989. As late as 1990, Ecuador's maximum tariff was 290%. Today, it is 40%.

Last December, the presidents of the Andean nations meeting in Cartagena, Colombia, approved more trade liberalization in 2 days than they had in the past 22 years of economic integration efforts. They seek a common market by the end of this year, and Ecuador just announced its decision to meet that schedule. That work is being repeated throughout the hemisphere, as sub-regional trade agreements are being negotiated in preparation for hemisphere-wide free trade.