*EPF310 02/26/2003
Text: Zoellick Says U.S. Moving Ahead on Regional, Bilateral Trade
(Bush administration is eager to promote liberalization on all fronts, he says) (2620)

The Bush administration's regional and bilateral trade agenda underlines its openness to trade liberalization with all regions -- Latin America, sub-Saharan Africa, the Asia-Pacific, the Arab world -- and with developing and developed economies alike, U.S. Trade Representative (USTR) Robert Zoellick says.

In February 26 testimony before the Ways and Means Committee of the U.S. House of Representatives, Zoellick said the administration's goal was to press ahead on the regional and bilateral trade fronts while simultaneously maintaining full U.S. participation in the multilateral World Trade Organization (WTO) talks.

In addition to bringing economic gain to the countries involved, regional and bilateral agreements "promote the broader U.S. trade agenda by serving as models, breaking new negotiating ground, and setting high standards," Zoellick said.

He cited as examples two free trade agreements (FTAs) negotiated in 2002 with Singapore and Chile, both of which incorporate new approaches to governing electronic commerce, labor, investment and the environment.

Also in 2002, the Bush administration launched free trade negotiations with Morocco, which Zoellick described as "a leading moderate and reformist Arab nation ... which can serve as a model and hub for a region that can gain enormously from economic reforms."

Other initiatives outlined by Zoellick include the launch of free trade negotiations with Australia, with the five nations of the Central American Common Market (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), and with the five members of the Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa, and Swaziland).

He also reviewed progress on negotiations to create a Free Trade Area of the Americas (FTAA) stretching from Alaska to Argentina and encompassing more than 800 million people. In those negotiations, the United States has advanced bold market access proposals for manufactured and consumer goods, agriculture, services, government procurement, and investment, Zoellick said.

Following is an excerpt from the U.S. Trade Representative's prepared testimony dealing with regional and bilateral trade initiatives:

(Note: In the text "billion" means 1,000 million and "trillion" means 1,000,000 million)

(begin text)

Advancing Hemispheric Trade Liberalization: The Free Trade Area of the Americas

On the regional front, the United States has been pressing ahead to create the largest free trade zone in history, covering 800 million people and stretching from Alaska to Tierra del Fuego: the Free Trade Area of the Americas (FTAA). This endeavor will be trying and difficult, yet when completed it will be historic -- a fulfillment of a U.S. vision dating to the 19th Century.

In November 2002 in Quito, Ecuador, we energized the FTAA negotiations by agreeing on a firm schedule and deadlines for specific offers to cut tariffs and reduce barriers. Ministers recommitted themselves to the 2005 deadline for completion of negotiations, delivered new instructions to negotiating groups, released an updated draft negotiating text, agreed to tariff reductions from applied rates rather than WTO bound rates, and launched a Hemispheric Cooperation Program to assist in building trade capacity for our poorer partners. Upon the close of the Quito Ministerial, the United States and Brazil assumed co-chairmanship of the FTAA process, providing an opportunity for cooperation with a key partner and economic power as the pace of negotiations accelerates. This month, the United States advanced bold market access proposals for manufactured and consumer goods, agriculture, services, government procurement, and investment. We will also host the next Ministerial meeting in Miami in November 2003.

President Bush, like his counterparts throughout the Americas, knows that the FTAA will be crucial in our quest to build a prosperous and secure hemisphere. Free trade offers the first and best hope of creating the economic growth necessary to alleviate endemic poverty and raise living standards throughout the Americas. The scope of our endeavor is grand: The FTAA will be the largest free market in the world, with a combined gross domestic product of over $13 trillion.

Hemispheric openness is important in its own right, but it will also have a multiplier effect on growth by encouraging fuller participation by those countries in the Americas that have been bystanders in the global trading system. FTAA negotiators are developing provisions that will provide trade capacity building and technical assistance to smaller economies in the Americas, especially in the Caribbean. Our FTAA offers also take into account the special circumstances of these small island nations by building on existing patterns of preferential openness.

Fundamental freedoms and human rights are core principles of the Summit of the Americas process, as reiterated in Quito this year. The FTAA will strengthen democracy throughout the Hemisphere -- a proposition that is not just theory, but fact. Time and time again, the world has witnessed the evolution from open markets to open political systems, from South Korea to Taiwan to Mexico. Free trade will likewise bolster young democracies in the Americas and the Caribbean. During the Quito summit, the governments of the Americas also affirmed their commitment to the observance of internationally recognized labor standards. This echoed the agreement by the hemisphere's heads of state at the Third Summit of the Americas to "promote compliance with internationally recognized core labor standards." The Inter-American Conference of Ministers of Labor (IACML) is responsible for implementing the labor-related mandates of the Third Summit of the Americas and represents a parallel process for addressing the labor implications of economic integration. The Department of Labor represents the United States in the IACML and co-chairs the working group charged with examining the labor dimensions of the Summit of the Americas process.

As we continue building support for the FTAA, it will be important to point to the successful record of America's first regional trade agreement, the decade-old NAFTA [North American Free Trade Agreement]. Throughout the months ahead, we will continue to publicize NAFTA's substantial benefits and consider additional ways to deepen integration throughout the Americas. NAFTA has been a case study in globalization along a 2,000-mile border; it demonstrates how free trade between developed and developing countries can boost prosperity, economic stability, productive integration, and the development of civil society.

Pressing Other Regional and Bilateral Agreements

Whether the cause is democracy, expanding commercial opportunity, security, economic integration or free trade, advocates of reform often need to move towards a broad goal step by step -- working with willing partners, building coalitions, and gradually expanding the circle of cooperation. Just as modern business markets rely on the integration of networks, we need a web of mutually reinforcing regional and bilateral trade agreements to meet diverse commercial, economic, developmental and political challenges.

In 2002, the Bush Administration completed free trade negotiations with Chile and Singapore. Both of these agreements offer increased opportunities for U.S. businesses, farmers, and workers and send a message to the world that the United States will embrace closer ties with nations that are committed to open markets -- whether in the Western Hemisphere, across the Pacific, or beyond the Atlantic. As we moved these FTA negotiations toward completion, we worked closely with the Congress -- and the Senate Finance and House Ways and Means Committees in particular -- to determine how best to address the concerns and interests of the Congress and the American people. For example, the Chile and Singapore agreements successfully incorporate new approaches to governing e-commerce, labor, investment, and the environment that were articulated in the Trade Act of 2002.

In 2002 we also notified Congress and then launched FTA negotiations with a number of new countries:

With Morocco, a leading moderate and reformist Arab nation that offers commercial opportunity, which can serve as a model and hub for a region that can gain enormously from economic reforms, and has been a staunch partner in the global effort to defeat terrorism.

With the five nations of the Central American Common Market -- Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua -- to encourage economic development and democracy in a region that has shown its potential by already representing $20 billion trade with the United States and which has made great progress over the decade.

With the five members of the Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa, and Swaziland), which will be America's first free trade agreement with Sub-Saharan African nations. The 48 countries of sub-Saharan Africa represent a largely untapped market for American business. As these countries progress economically, they will require substantial new infrastructure in sectors as diverse as energy, agriculture, and telecommunications- areas in which U.S. firms lead the world. Thanks to the President's leadership on Africa, there is today a unique convergence of opportunities for us to promote African development and expand commercial opportunities for American businesses.

And with Australia, our 14th largest trading partner and a growing economy, a key U.S. ally, and an important center in the network of American companies doing business in the Asia-Pacific region.

These regional and bilateral FTAs will bring substantial economic gains to American families, workers, consumers, farmers, and businesses. They also promote the broader U.S. trade agenda by serving as models, breaking new negotiating ground, and setting high standards. Our agreements with Chile and Singapore, for example, have helped advance U.S. interests in areas such as e-commerce, intellectual property, labor and environmental standards, regulatory transparency, and the burgeoning services trade. As we work intensively on these FTA negotiations, the United States is learning about the perspectives of our trading partners. Our FTA partners are the vanguard of a new global coalition for open markets. These partners are also helping us to expand support for free trade at home. Each set of talks enables legislators and the public to see the practical benefits of more open trade, often with societies of special interest for reasons of history, geography, security, or other ties. The Bush Administration's FTA initiatives have helped shift the debate in America to the agenda of opening markets, and away from the protectionists' defensive agenda of closing them.

Our regional and bilateral free-trade agenda conveys the message that America is open to trade liberalization with all regions -- Latin America, sub-Saharan Africa, the Asia-Pacific, the Arab world -- and with both developing and developed economies. In October 2002, President Bush laid the groundwork for future market-opening initiatives by announcing the Enterprise for ASEAN Initiative [EAI]. The EAI offers the prospect of bilateral FTAs between the United States and those members of the Association of Southeast Asian Nations that are ready to meet the high standards of a U.S. FTA and also pledges to assist countries in joining the WTO. This past year we also signed Trade and Investment Framework Agreements with Sri Lanka, Brunei, the West African Monetary Union, Tunisia, Bahrain, and Thailand. In addition, the United States signed a Comprehensive Trade Package with Hungary in 2002 that lowered barriers to $180 million worth of U.S. exports per year.

We look forward to discussing these initiatives with the appropriate committees in Congress, and we will seek continued input on these and other possible FTAs.

Over the coming year, we intend to press the goals articulated in the Trade Act of 2002. The President's regional and bilateral free trade agenda -- combined with a clear commitment to reducing global barriers to trade through the WTO -- will leverage the American economy's size and attractiveness to stimulate competition for openness, moving the world closer, step-by-step, towards the goal of comprehensive free trade.

Building New Bridges: Preferential Trade Programs and Capacity Building

A free and open trading system is critical for the developing world. As President Bush has pointed out, "Open trade fuels the engines of economic growth that creates new jobs and new income. It applies the power of markets to the needs of the poor. It spurs the process of economic and legal reform. It helps dismantle protectionist bureaucracies that stifle incentive and invite corruption. And open trade reinforces the habits of liberty that sustain democracy over the long term."

Over the past year, the United States has matched its rhetoric on helping developing countries through trade with action. First, the Trade Act of 2002 renewed the Generalized System of Preferences (GSP), which enables some 3,500 products from 140 developing economies to enter the United States free of duties. We have invited countries to submit petitions for products that should be added to the GSP list.

Second, the new Trade Act extended and augmented the Andean Trade Preference Act (ATPA) -- first implemented in 1991 by President George H. W. Bush -- by increasing the list of duty-free products to some 6,300. ATPA is a vital program for the four Andean democracies on the front lines of the fight against narcotics production and trafficking.

Third, the Act expanded the Caribbean Basin Trade Partnership Act (CBTPA) by liberalizing apparel provisions, providing a vital economic stepping stone for some of the poorest countries in our hemisphere.

Finally, we continued the important implementation of the far-sighted African Growth and Opportunity Act (AGOA), which Congress enacted in May 2000 and expanded with the "AGOA II" provisions of the Trade Act of 2002. AGOA opens the door for African nations to enter the trading system effectively, increases opportunities for U.S. exports and businesses, supports government reforms and transparency, and widens the recognition of the benefits of trade in the United States. It extends duty-free and quota-free access to the U.S. market for nearly all goods produced in the 38 eligible beneficiary nations of sub-Saharan Africa. Moreover, by providing incentives for African countries to open their markets and improve the environment for trade and investment, AGOA has helped to boost American exports to the region. U.S. merchandise exports to sub-Saharan Africa are up by 25 percent since AGOA's enactment, to nearly $7 billion last year, led by aircraft, oil and gas field equipment, and motor vehicles and spare parts.

The second annual AGOA forum in January 2003 provided an opportunity to evaluate AGOA's achievements and address implementation challenges. Gathering in Mauritius, members of Chairman Thomas' delegation, Administration officials, and business representatives learned more about AGOA success stories, such as new jobs and investments in Cape Verde, Senegal, Rwanda, and Uganda. The real, positive experiences of American businesses and their African hosts provide models to emulate and help us better address the challenges inherent in promoting growth and commercial opportunities in Africa -- particularly the challenge of maximizing and realizing tangible benefits across all the countries in the region.

Moving forward, the Bush Administration is committed to expanding America's economic links with Africa. Most important, we are asking Congress to extend AGOA beyond its 2008 expiration date. We have opened Regional Hubs for Global Competitiveness in Botswana, Kenya, and Ghana in 2002 -- each staffed with technical experts who will provide support on WTO issues, AGOA implementation, private sector development, and other trade topics. We are adding a specialist to each Hub from the Department of Agriculture to help African farm exports meet U.S. health and safety standards. Finally, we have designated a new Deputy Assistant Trade Representative who focuses exclusively on trade capacity-building activities.

Through AGOA and our other preferential trade programs, the Bush Administration will lend increasing support to developing countries that desire to take part in trade negotiations, implement complex agreements, and use trade as an engine of economic growth. We will build on current partnerships among agencies of the U.S. Government -- such as AID [U.S. Agency for International Development], OPIC [Overseas Private Investment Corporation], and the Department of Agriculture -- and with multilateral and regional institutions. Continued advice, encouragement, and support from Congress are vital to this endeavor.

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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