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Remarks by
Dr. Samuel W. Bodman
U.S. Deputy Secretary of Commerce
Before the
Latin American e-Government and Information Technology Conference
August 16, 2001
Palo Alto, California
(as prepared for delivery)


Thank you for the kind introduction.  It’s a pleasure to be here with you.

(Ad lib experience with HP)

I’ve been in my current position for only a few weeks now, but in that short time, I’ve been impressed by the energy and direction of this administration.

President Bush has a profound vision for the future of our nation and for all the Americas that I would like to share you with today.

New Era of Possibilities

The President believes that we in the Americas have an historic opportunity to grow and prosper together.  The end of the Cold War was the end of centuries of conflict between the Powers of the Old World.  It also marks the end of an era in international politics.  In the old order, states made war, created alliances, and incubated colonies to advance schemes of global domination.  Today, there is a new paradigm in international politics, and it is distinctly American, a product of the New World.  The new paradigm of international relations is partnership.

Not coincidentally, we are in the midst of an economic revolution. Technology is fundamentally changing how we work.  In the era of agriculture, farm production depended on favorable weather and was restricted by the progress of the seasons, factors wholly beyond the control of men.   During the Industrial Age, factory production was limited by available resources, capital, and marginal cost.  Today, the revolution of information technology is the diminishing marginal cost of information products and the increasing efficiency in traditional modes of production using IT.

Nine days ago, the Bureau of Labor Statistics released revised figures indicating that productivity rose 2.6 percent per year from 1998 to 2000, well above the rate for the 70’s, 80’s and early 90’s.  Some skeptics believed that the productivity gains reported over the last few years were illusory. But as these numbers show, information technology is transforming how we live and work, and we are only at the beginning of this transformation. Increasing computational power and connectivity offer enormous potential to convey knowledge, transact commerce, and raise productivity. That means our economies can grow without inflation faster than ever before.

The other momentous development in economics is the emergence or, I should say, re-emergence of the global market.  As Alan Greenspan recently noted, the percentage of GDP of developed economies derived from international trade has only just regained the level that was achieved by those same nations in the year 1900.  Let’s consider that for a moment.  At the turn of the last century when the steamship and the telegraph were state-of-the-art technology for communication, we were doing roughly the same level of trade between nations as we are today, about 24 percent of GDP.  This fact alone fills me with awe of the prospects for growth in international trade.

The progress we have made in trade development over the last forty years has only just repaired the damage done to the global trading system by World War I; the protectionism, isolationism, and subsequent Depression of the 1930’s; World War II, and the Cold War.  The Bush Administration believes this is no time to rest on our achievements.  We can and should do better than we did 100 years ago. Our communication technology is certainly better. The key to further progress is lowering the barriers of isolationism and protectionism that remain. This administration is committed to free and fair trade policies.  We recognize that trade has been a key factor in the economic growth of the United States and, recently, that it spurred our longest economic expansion in the post-war period.

We also believe that trade benefits all nations that participate, and scholarly research bears that out. A recent study by World Bank economists demonstrated that developing nations participating in trade grew their economies and reduced poverty faster than both developed economies and developing economies not participating in international trade.

Furthermore, there is a dynamic virtuous cycle involving trade and democracy.  Take Mexico, South Korea, or Taiwan for example.  The opening of markets in those states was followed by the opening of their political systems.  When President Bush refers to trade as a “moral imperative,” he means that trade is how we can build a better future here at home and abroad.

21st Century Vision for the Americas

These are exciting times.  It is altogether fitting that we should be gathered here today in California, once a colony of the Old World, discussing the future of the new economy in the Americas, the New World.  We are at the confluence of important historic trends in politics, economics, and commerce.  It will be up to us to seize this opportunity.  Fortunately, we have a roadmap.  The North American Free Trade Agreement is an example of how American states can prosper in partnership.

Before NAFTA was implemented in 1994, trade between the United States and Mexico totaled $81 billion.  Last year, trade was $247 billion, or about half a million dollars per minute. Over the past five years, Mexico’s GDP has grown at an average annual rate of 5.5 percent. Former president Ernesto Zedillo (AIR-nest-o Zay-DEE-yo) said, “NAFTA has been crucial in transforming Mexico into one of the world’s biggest exporting powers.”

U.S. trade with Canada totaled $438 billion last year. Canadian exports to the United States increased 80 percent from 1994 to 2000, reaching more than $271 billion. Total foreign direct investment into Canada reached $217 billion, 68 percent of which came from NAFTA partners.

Since 1993, U.S. trade with our NAFTA partners has grown twice as fast as it has with the rest of the world. Employment in Canada has grown by 10 percent, generating 1.3 million new jobs. Employment in Mexico has grown by 22 percent, generating 2.2 million new jobs. And employment in the United States has grown by more than 7 percent, generating 12.8 million jobs.

NAFTA has had many critics, but the fact is that it has been an unqualified success. It has strengthened the economies of Canada, the United States, and Mexico, and it is a partnership that President Bush would extend throughout the Western Hemisphere.

The Bush Administration is working toward this goal on a number of different fronts. We are pursuing a bilateral free trade agreement with Chile. Our goal, expressed by both Presidents Bush and Lagos, is a state of the art agreement by the end of this year.

The Administration is also pressing for renewal of the Andean Trade Preference Act, which expires in December.  We are exploring ways to improve its benefits to Andean countries.

We intend to complete the implementation of the Caribbean Trade Partnership Act.  Very shortly, fourteen Caribbean nations and the United States will enjoy the benefits of efficient and increased trade.

The ultimate end of all our efforts and the President’s vision is the Free Trade Area of the Americas or FTAA.  The objective is to produce a comprehensive agreement that addresses every major industry, commodity and trade issue.  The pact would create a market encompassing 34 democracies, 800 million people, and an area covering one-third of the globe.  FTAA is an opportunity to fulfill the dreams of the Americas’ progressive spirit.  As Chilean patriot Bernardo O’Higgins wrote in the early days of his country’s independence,  “The day of liberty has arrived for the Americas from the Mississippi to Cape Horn….”

At the Summit of the Americas in Quebec City, all the Heads of State reached an agreement to conclude negotiations by January 2005, but the United States is committed to beating that deadline.

Technology and the Vision for the 21st Century Americas
 
As we proceed in constructing this new market in the New World, we must ensure that every nation participates in the new economy. Many of the obstacles to the growth of e-commerce in Latin America are problems in the more traditional areas of commerce.  Investments are needed in transportation infrastructure. Customs operations must be streamlined.  There can be no weak link in the chain from producer to consumer.  Many of these issues are in front of FTAA working groups today.  The commitment that many governments recently made to expedite express shipments is indicative of the value of these negotiations.
 
Once consumers and businesses get online, consumers need safe, reliable means of payment for online purchases and access to prompt, reliable and affordable dispute resolution, if a transaction goes wrong. Businesses need to know that contracts completed online are legally binding.  Governments should recognize the validity of electronic signatures, without rules and restrictions that would impose liability or licensing schemes.  Several countries in the region have passed laws recognizing electronic contracts.

The e-signature and e-contract law that took effect last year in the United States has been very positive for business and for consumers, giving all parties greater confidence in e-commerce.

Finally, the success of e-commerce in Latin American will depend on consumer participation. The Internet is a mass-market medium.  If the new economy in Latin America excludes the common man, e-commerce will fail to achieve its potential, even if all the other elements are in place. Competitive, low-cost access solutions are essential to the growth of e-commerce in Latin America.  These issues will be an integral part of the FTAA process as well.
 
Already, we are encouraged by many positive developments across the Western Hemisphere.  Reforms in Argentina, where privatization has opened telecommunications services to competition…and in Venezuela, where deregulation of the telecom industry has led to dynamic growth in diverse technologies, investment and improved customer service, represent substantial progress.

We’re also encouraged by the leadership of Latin American financial institutions, which have been very progressive and innovative. Brazilian banks, for example, lead the world in deploying secure e-commerce technology, online credit cards and virtual malls.

Our goal is for the New World to be a vital part of the new economy. President Bush has a vision for the future of the Americas. We have an example of how American states can prosper in partnership in NAFTA, and we have a plan to extend that prosperity and the benefits of e-commerce throughout the Western Hemisphere with FTAA.

Trade Promotion Authority

To achieve this goal, the President will need Trade Promotion Authority. As many of you know, Trade Promotion Authority is very simply an agreement between the Congress and the President as to what our goals should be in trade negotiations.

The Constitution gives the Congress the right to regulate international trade and confers the responsibility for conducting negotiations with foreign states upon the President, requiring the two branches to be in agreement on these matters. Trade Promotion Authority sets a framework for trade talks the President may conduct and limits the Congress to a simple up or down vote without amendment on any resulting agreement.

Many of our neighbors believe that the grant of Trade Promotion Authority is the litmus test of the United States’ commitment to trade negotiation. As Ernesto Zedillo said, “Without (Trade Promotion Authority) there will be little further progress. Latin American governments will not make trade concessions without assurance that U.S. trade offers are firm and cannot be withdrawn piecemeal by Congress.”

So you can see that a great deal hinges on Trade Promotion Authority.  We do not want to miss this historic opportunity. President Bush believes the 21st century will be “the Century of the Americas.” We look forward to working with Congress to make that possible, and I hope that we will have your support.

Partnership for the Americas

As I wind down today, let me leave you with a few final thoughts.

I think we can all agree that our governments have a responsibility to expand economic opportunities for our people. And you, as leaders, also bear a large measure of responsibility to the 800 million citizens who live within our hemisphere. We all must do our part to ensure a better life for future generations. In the final analysis, that is the goal of commerce and government. I know you take this responsibility to heart.

Let me close with the words of a key figure in the history of the Americas: Jose Artigas (HO-say ar-TEE-gus), the father of Uruguayan independence. Some 200 years ago he said that the nations of South America were linked by geography and mutual interests. I think if he were here today he would expand that view to include the entire hemisphere, from the northern reaches of Canada to the southern tip of Chile. I hope this vision will be our guide as we move forward.

I wish you every success in your business, and look forward to working with you to make this the “Century of the Americas.”

Thank you.