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International Economic Leadership: Keeping America on the Right Track for the Twenty-First Century

by Madeleine K. Albright, Secretary of State

Address and Q&A Session before the Institute for International Economics
Washington, DC
September 18, 1997


As released by the Office of the Spokesman, United States Department of State.

 

SECRETARY ALBRIGHT: Thank you very much, Pete. Before I begin, I do have a very brief statement to make about a tragedy that occurred early today in Cairo.

Terrorists launched a grenade attack against a tourist bus in the downtown of the Egyptian capital, reportedly killing nine and injuring dozens more.

On behalf of the United States Government, I condemn this cowardly act of terrorism in the strongest possible terms. I offer our prayers and our condolences to the families of those who were killed or injured in this barbarous attack and to the governments of Egypt and Germany.

We must never give in to terror. The United States supports President Mubarak in his efforts to prevent terrorism in Egypt and to oppose it everywhere around the world.

I do, in fact, have a speech today on fast track and the global economy. And I, in fact, can begin a speech with some pleasantries. But before I do that, I would like to take as my text, The Wall Street Journal this morning.

It says, headline, "In Backyard of the US, Europe Gains Ground in Trade Diplomacy, South America is Hot Market for EU-Made Goods." Then it says, "While Uncle Sam sleeps, Europe is mounting a silent invasion. Combining savvy deal-making with velvet diplomacy, the European Union is angling to convert its thriving trade ties with South America into a full geo-political partnership. There is no guarantee that this trans-Atlantic bid for influence will succeed. But Europe is emerging as a potential spoiler in President Clinton's latest push to revive a long-stalled plan to create a common market extending the length of the Western Hemisphere."

"Whether Mercosur tilts toward Europe or the US may be decided by the hot debate over President Clinton's request for 'fast track' authority to negotiate trade pacts. If Congress rejects his plan, South America could be indefinitely ceded to the Europeans. 'No fast track—no concrete negotiations,' says Jose Batafogo Goncalves, the Brazilian Foreign Ministry's subsecretary general of commerce."

That was not written by my speechwriter. So it's a good way to begin today.

I would like to thank you both, Dick and Pete, for your kind words and for all you have done over the years to build American prosperity and extend American influence. I thank both the American Business Conference and the Institute for International Economics for participating in and arranging this event. And I am grateful that so many of you could be here. It's wonderful to see many friends in the audience.

This morning, I would like to discuss with you a goal that is at the heart of America's international economic and foreign policy. That goal is to take advantage of the empowering evolution in technology and trade to bring the world closer together around basic principles of democracy, open markets, law and a commitment to peace. By so doing, we can ensure that our economy will continue to grow, our workers will have access to better jobs, and our leadership will be felt wherever U.S. interests are at stake.

We will also fuel an expanding global economy that is creating new opportunities for people on every continent. And we will give more countries a stake in the international system, thereby denying nourishment to the forces of extremist violence that feed on deprivation across our planet.

We begin with the understanding that in an increasingly integrated global economy, the quest for prosperity is the opposite of a zero-sum game. "Beggar thy neighbor" doesn't work; "prosper with thy neighbor" does.

Second, the driving force behind economic growth is openness—open markets, open investment, open communications and open trade. This is fundamental. Protectionism is an economic poison pill. We cannot expect to gain access to new markets elsewhere if we put a padlock on our own.

Third, when we make progress on the international economic front, we make progress on all fronts. A world that is busy growing will be less prone to conflict and more likely to cooperate. Nations that have embraced economic reform are more likely to move ahead with political reform. And as history informs us, prosperity is a parent to peace.

Finally, if we are to lead effectively abroad, we must maintain a consensus here at home for that leadership. Our political leaders must approach the issue of trade on a nonpartisan basis. Our policymakers must make the case for international engagement persuasively, repeatedly and in language a non-economist, such as myself, can understand. And our business community can help by emphasizing to its employees and to the public the benefits that accrue from an open global economy.

In this connection, I happened to notice a recent article in The Wall Street Journal —I do read it every day—about a businessman in the Midwest who started trading internationally only to find that his workers had begun to worry about their jobs. So he decided to raise a flag outside his company every time a sale to a new country was made. Soon, he was flying the banners of more than a dozen nations -- each flag representing an additional market for the firm's goods and additional income for its employees.

The bottom line is that it will require a team effort to sustain a consensus for American leadership in the economy of the future. The President and I and the Administration's entire economic team are prepared to do our part. And we count on you to do yours.

The message inherent in those flags and the message that we must all do our best to get across is that movement towards a more integrated global economy is not a choice or an option; it is a fact of life. Integration is fueled by technology which is driven by knowledge which has no reverse gear.

This means that, more and more, what happens anywhere will matter everywhere. Whether the anywhere is the financial markets of Southeast Asia, the croplands of Latin America, or the factory floors of Europe, developments there will be felt here, by US workers, farmers, investors, and businesspeople. Because we are a global power with interests and connections on every continent, we have a vital stake in creating and sustaining the conditions for global prosperity.

It is true that the accelerated tempo of change that results from globalization has its downsides. Some industries expand, but others contract, as we move toward higher and higher value-added industries. Our consumers benefit and our overall economy grows. But it is no consolation to a worker displaced by foreign competition to know that he or she is part of a global phenomenon.

Still, the best course for our nation is not to curse globalization, but to shape it, to make it work for America. It would be foolish to get up from the table and leave the game to others, for we are competing very, very well.

With leadership from the White House and bipartisan support on Capitol Hill, we have put our fiscal house in order. More U.S. jobs were created during the first Clinton Administration than in any other Administration in history. And because of the genius and enterprise of our people, we have the most competitive economy and most productive workforce in the world. To maintain our edge, we must continue sound fiscal policies that drive deficits down and keep interest rates low.

And we must invest in our people by striving for excellence in the classroom and by ensuring that our workers enter the 21st century with 21st century skills. On the global chessboard, we want more and more of our citizens equipped to be bishops or knights, rather than pawns. That is why we're lifting educational standards nationwide and investing in training as never before.

Finally, we must use our diplomatic tools to sustain momentum towards an increasingly open and fair system of global investment and trade.

Consider that trade accounts for twice as much of our economic activity as it did a quarter-century ago, and has fueled the remarkable period of sustained economic growth we have enjoyed these past 5 years. Today, 11-12 million American jobs are supported by exports and this number is rising rapidly. And these are good jobs, paying on the average 13% more than others.

Since President Clinton took office, we have negotiated more than 200 trade agreements, including NAFTA and the Uruguay Round. We have forged historic commitments to achieve free trade and investment across the Asia-Pacific through APEC and across the Americas through the Miami Summit process. We are working to expand our economic ties with the European Union through the Transatlantic Business Dialogue and in Africa through our proposed Partnership for Economic Growth and Opportunity.

We have also been doing everything we possibly can to ensure that agreements made are agreements kept. Like Secretary Christopher, I have made it clear to our diplomats that one of their principal jobs is to see that the rights of American companies are respected and their opportunities enhanced. Whenever I travel abroad, I make it a point to meet with the American Chamber of Commerce where I am, in order to talk about our common interests. To that end also, our trade negotiators are making full use of every available enforcement tool, including a strengthened WTO.

We do not intend to stop here. We are determined, as President Clinton has said, to keep growing our economy. That is why we have asked Congress to renew the Executive's traditional fast-track negotiating authority this fall.

The President needs this authority to negotiate smart new agreements that will break down barriers to American exports, create better jobs, and raise our standard of living. With that authority, the President can pursue free trade with Chile, a free trade area for the Americas, and new market access agreements in the Asia-Pacific. We can also work towards agreements to open up whole new sectors of the global economy in fields where our nation is highly competitive. These agreements work to our advantage because our tariffs are currently lower than those of other countries.

For example, we are preparing to negotiate a further opening in agricultural markets. Our farmers are by far the world's most productive. They help feed the world. But they do so despite tariffs on U.S. products that in some cases are as high as 100%. They also confront many non-tariff barriers. In gaining access to this $500 billion a year market, we want a level playing field for American agriculture. But to get it, we need fast track.

During the next quarter-century, the world will invest trillions of dollars, yen, marks, francs, and other currencies in the infrastructure of a modern economy. They will pour money into sectors such as energy, information systems, and environmental technology. We want to open these sectors to free and fair trade. But to do so, we need fast track.

We want to protect our intellectual property and stop the rip-off of billions of dollars worth of American products illegally copied every year. But to make that happen, we need fast track.

Latin America is a market of half a billion people. Their incomes are rising and they buy what we sell. More than 40% of the region's imports come from the U.S. Even though Latin tariffs average four times our own, we would like to negotiate agreements that push their tariffs down and lift our exports up. But for that to happen, we need fast track.

We know that sectoral agreements benefit the United States. Last year's information technology agreement will produce an estimated $5 billion reduction in tariffs on American computers and related equipment. In Colorado, where I grew up, we would call that a tax cut. Where I live now, we would call that five billion good reasons why restoring traditional negotiating authority deserves bipartisan support.

As economists and businesspeople, you know that if we fail to participate in shaping the global trading system, we will, nevertheless, be shaped by it. Earth is, after all, the only globe we have, and only one out of every 20 of the world's consumers live on our share of it.

If we choose to hide behind walls rather than tear them down, our products will face higher tariffs; our services will be harder to sell; our businesses will find it more difficult to win contracts; our economy will create fewer jobs; and because we are absent from the bargaining table, we will have no success at all in promoting higher environmental and labor standards.

Whatever we decide, others will move forward. Since 1992, in Latin America and Asia alone, our competitors have negotiated more than 20 free-trade pacts that exclude the United States. Some of our leading trade partners have reached agreements that will vastly expand trade among themselves. As supporters of economic integration and trade, we should be on the inside shaping these agreements, not on the outside looking in.

Fast track is an essential and proven tool of diplomatic leadership. Until it lapsed 3 years ago, it was an instrument every President for the past two decades has had and has used to the benefit of the United States. It does not in any way detract from the constitutional authority of Congress to approve trade agreements. In fact, the legislation that has just been submitted by the Administration includes language that would make Congress a full partner in setting our trade objectives and our priorities.

What fast track does is assure our trading partners that there will be an up or down vote on any deals we strike and that those deals will not be unraveled provision by provision. Our partners argue that this is the only sensible way to conduct business; and they are right. Without fast track, America will find itself alone. With fast track, America can lead.

This matters because of the economic dividends that well-designed trade agreements generate. But fast track is about more than dollars and cents; it's a foreign policy imperative. It is indispensable to U.S. economic leadership, and that leadership is indispensable to US influence around the globe.

America's prestige is not divisible. If we want our views and interests respected, we cannot sit on the sidelines with a towel over our heads while others make the trade and investment plays that will determine the economic standings of the 21st century.

In many capitals, if we have nothing to say on trade, we will find it harder to have productive discussions on other issues of direct importance to American interests. In contrast, strong economic ties can be a foundation for cooperation across the board.

In the Asia-Pacific, our efforts to expand investment and trade have helped to deepen understanding among our partners of their shared stake in security.

In Europe, economic integration is a major contributor to our strategic goal of a continent that is becoming—for the first time in history—wholly united, wholly at peace, and fully free.

In Latin America and the Caribbean, our initiatives on trade are a vital part of a larger process of cooperation that includes working together to fight narcotics trafficking, crime, pollution, illegal immigration, and other threats to the well-being of our citizens.

For decades during the Cold War, we Americans spread the gospel of competition, free trade, free enterprise, and open markets. Today, people and governments everywhere are converting to this faith. But make no mistake, they will be watching the fast-track debate closely to see whether we continue to practice what we have so long preached.

That is why, as Secretary of State, I will do everything I possibly can to persuade members of Congress to be true to America's own philosophy, to say yes to restoring the President's traditional negotiating authority, and yes to continuing American prosperity at home and leadership abroad.

Of course, fast track and trade are not the only economic tools we use to help create an international system that is more open, democratic, and respectful of the rule of law.

For example, China is seeking to enter the World Trade Organization. We are negotiating with Beijing to ensure that it does so only under commercially viable rules that would require it to end unfair trade barriers, enforce trade laws uniformly, and use WTO procedures to settle disputes.

We are using our foreign assistance program—modest as it is—to enlarge the circle of market democracies by helping newly free nations to create a better climate for investment, curb corruption, and reduce crime.

We are using our economic aid to make the benefits of lasting peace more tangible for people in the Middle East, Bosnia, and Northern Ireland.

And we are relying on you, the American business community, to help spread the word from Manila to Moscow to Maputo to Mexico City that the path so many countries have chosen—the path of openness, participation and integration—is the right path for the 21st century.

The connections we make through increased investment and trade complement our efforts to spur development and prevent conflict. As we encourage reform, expand markets, and forge new agreements, we give more and more nations an equity interest in peace. In this way, shared prosperity yields the golden dividend of shared security.

Despite this, there are many in our own country and overseas who oppose or resist the trend towards a more integrated world economy. They disregard its role as a great stabilizer in international affairs and focus instead on the fear that globalization will put downward pressure on wages and reward employers who cut corners on working conditions and environmental protection.

These are serious concerns that must be addressed seriously if we are to maintain a consensus in favor of free trade and open markets in the United States and around the world.

To do so, we must remember that opening the world economy is not an end, but a means. Our purpose is not simply to increase the volume of global commerce; it is to improve the quality of peoples' lives. The evidence is clear, however, that globalization is not lowering standards around the world; it is raising them. Open economies are more likely to lift people out of poverty than economies that are stagnant and closed.

It is no accident that as East Asian nations have reformed their economies during the last quarter century, the percentage of their citizens who are poor has plummeted, and large, educated middle classes have emerged. This, in turn, has created new pressures for decent wages, environmental protection, and greater democracy. A similar trend is gathering steam in Latin America.

These trends will continue to spread as more nations embrace economic reform. The World Bank estimates that, during the next decade, developing countries will grow collectively at an annual rate of more than 5%—double the pace of the 1980s. Growth is expected in every region, including Africa, where the continent's best new leaders have embraced policies designed to help private enterprise take hold.

As the world's economies grow, a variety of tools will be available to shape that growth in socially constructive ways.

For example, the fast track legislation submitted by the Administration reflects the President's commitment to promote workers' rights and responsible environmental protection.

It is vital to bear in mind, however, that trade is but one very limited instrument for promoting higher environmental and labor standards. The Administration can—and is—pursuing these goals through other avenues such as the International Labor Organization, the WTO, the international banks, the Commission on Sustainable Development, and the Montreal Protocol. Also important are the initiatives that consumers and businesses can take.

Last spring, the President personally invited business, labor, and other NGOs to come together around an apparel industry initiative that will bring "no sweat" garments and footwear to America from workplaces that are monitored overseas. Similar labeling initiatives make it possible for consumers to purchase South Asian rugs and soccer balls and know that these products were not made with child labor.

It is also encouraging to see the competition that has begun in many segments of American industry for bragging rights about which company has done the most to help the environment, improve working conditions or train employees. This competition is good for our friends overseas; it advances the goals of U.S. foreign policy; it helps us here at home; and it is a trend that consumers welcome and will reward.

The pursuit of free trade places a responsibility on the business community to conduct itself in a way that preserves the consensus for free trade. And I am certain that most Americans would agree that profits should come from inspiration and perspiration, not exploitation.

For more than half a century, the United States has played the leading role within the international system, not as sole arbiter of right and wrong—for that is a responsibility widely shared—but as pathfinder; as the nation able to show the way when others cannot.

Our predecessors had the foresight to forge alliances such as NATO, institutions such as the World Bank, and initiatives such as the Marshall Plan to defend freedom and build prosperity. They did so on a bipartisan basis.

Today, under President Clinton, we are constructing a new framework to address the challenges of our time, based on principles that will endure for all time.

In so doing, we are heeding the lessons of this century that economic strength is essential to national strength; that open markets are essential to prosperity, which is a friend to security; that there can be no progress without the rule of law; and that problems abroad, if left unattended, will all too often come home to America.

We look out upon a world no longer held back and driven apart by divisions between east and west and north and south—a world in which the benefits of the international system are open to every nation able to accept its responsibilities and willing to play by its rules. We anticipate a tomorrow not without danger or free from disappointment; but we also see an opportunity we must seize—an opportunity to create a future liberated by freedom of thought, empowered by freedom of enterprise; a future of greater promise and possibility than any generation has known.

America is not a slow-track society. Although tempted at times to rest, we cannot stand still, nor can we merely move. Like the great explorers of half a millennium ago, we must embark upon a new Age of Discovery.

We must strive not merely to stay afloat, but rather raise our sails high and catch the propelling winds of change at their fullest. And with economic and political liberty as the North Star by which we navigate, we must chart a course to the far horizon so that we may disembark in the new century free and respected, prosperous, and at peace.

Thank you very much.

(Applause)

MR. SYRON: We all want to thank the Secretary of State for that extraordinary lucid description of the context of this debate about fast- track authority and its importance to all of us, and the importance of the context to all of us. One is struck about the tragic irony that could ensue, with the United States having become the one world military and political super-power, which would relegate itself to the status of an also-ran or secondary power, economically, because many of the things that the Secretary talked about were not to be brought to fruition.

The Secretary has kindly agreed that she will take three questions. So we will go forth and do that. Let's have the first question right here.

QUESTION: Could you share your thoughts on what might be the consequence to the United States should the Canadian—should the Quebec population vote for separation from Canada?

(Laughter)

SECRETARY ALBRIGHT: Well, I think that we have found it very useful and good, in terms of our relationships with Canada, to have a united Canada. I think it's not appropriate for us to interfere in Canadian domestic affairs. But I do think that we have an exceptionally good relationship with Canada, as it is.

MR. SYRON: I think we'd prefer to take questions that relate directly to the issue at hand.

(Laughter)

And you're also not quoting the odds on the next presidential election?

SECRETARY ALBRIGHT: No.

MR. SYRON: Sir.

QUESTION: Madame Secretary, how do you put the sanctions against some countries of the world in the same line that you explained excellently to us today?

SECRETARY ALBRIGHT: Well, thank you for asking that question, because I think it's a very important component of this.

I believe that the United States has global responsibilities, as I stated in my remarks. And I think that those include trying to assure that the world—the nations of the world and the peoples of the world are able to prosper into the 21st century, which means that we need some kind of a tool to deal with rogue states - those who, for one reason or another, do not feel that they should cooperate with the rules that have been established by other nations of the world.

I think that while sanctions may be an imperfect tool in many ways, it is a useful tool. What we try to do when we have sanctions imposed on a nation is to deal in some way with the problems caused for the people.

If I might just actually take that question to give you a short-hand version of how I have seen the world divided in terms of groups of countries. My previous job was at the United Nations, and when I got there, there were 183 countries. There are now 185. And I tried for myself, being a professor, to establish some kind of conceptual basis to what I was seeing. So I thought that perhaps there were kind of four different groups of countries.

The largest group are those that understand that it is important to have some kind of rules of the game within the international system; that understand the value of working together. That is the largest group. We may not agree with the governments in all those groups—in that group. But generally, there is an agreement about the importance of abiding by international systems.

The second group was basically the countries transitioning to democracy that wanted very much to be a part of the first group but did not yet have all the institutional structures to do that.

The third group of countries was the rogue states, who not only did not want to be a part of the first group, but deliberately were doing everything they could to undermine it.

The fourth group was the so-called failed states that for some reason or another were basically eating their own seed grain.

The purpose of what we see in the 21st century is to ultimately move everybody into that first group. That is the long-term vision that has to exist. Those countries - the rogues - against whom we use sanctions, is our attempt to make clear that their behavior is such that it has to change in order to be part of the first group.

MR. SYRON: We'll take one last question on trade and trade agreements.

QUESTION: I would like to —(inaudible)—diplomatic and economic efforts by the United States in supporting the women in the developing countries. Thank you.

SECRETARY ALBRIGHT: Well, obviously we have a whole program in terms of trying to support development for women throughout the world—more than half the population—and determining the fact that many countries, in fact, are dependent on the labor of women in order to move forward in their economic development.

Portions of our aid program are related in this way, certain aspects of bank programs. I made a statement earlier in my tenure about the importance of placing economic opportunities for women and political opportunities for women as central to our foreign policy, because women are the underpinning of so much that goes on in the world.

I thank you very much for asking that question.

MR. SYRON: One last question.

SECRETARY ALBRIGHT: Okay, to make up for the Quebec question?

(Laughter)

Okay, go ahead.

QUESTION: Madame Secretary, you will be accompanying President Clinton down to South America shortly, and visiting one of our most important trading partners in that region in Brazil.

We've long had a very important, though ambiguous, relationship with Brazil. I wondered if you could comment on what we need to do to strengthen our trade investment ties with that country to ensure that we can pursue the initiatives that you talked about in the Western Hemisphere.

SECRETARY ALBRIGHT: Well, I think there's no doubt about the importance of our relationship with Brazil, and the fact that the President is going to make that one of his stops underlines that.

I think that it is essential for us to develop a variety of steps and pass fast track. I think that the point here is that we need to make sure that the markets are open and that we're able to negotiate a series of agreements with them and work with them very closely.

I have spent a lot of time on diplomatic relations with Brazil. We see it as a keystone within the Latin American system. And I think, as I quoted from The Wall Street Journal that our ability to really negotiate with Brazil is in many ways dependent on us being at the table and being integral to what is going on in Latin America.

But the truth is that it isn't just Brazil. What the President wants is to work towards a free trade area in Latin America by 2005. We have a summit next year. It's very important for us to be in the right place and for us to play a leading role.

I felt, when I was in New York and also now that I have my job as Secretary of State, that we have such a natural affinity. There has to be the solidarity of the Americas. I feel that it is essential that we do everything we can to build that relationship, and then to make sure that the solidarity of the Americas is translated to greater interaction with other parts of the world.

What I think would be difficult to live with at the moment is if, in fact, we do create various regional economic partnerships, and that those then turn inward rather than turning outward; that the regional partnerships that we're now developing in many ways are akin to the security pacts that we had at the end of the Second World War. They are basically the building blocks that were for a secure system in terms of military strength.

We now need to develop the economic building blocks for a secure economic system. So it builds good relationships with Brazil, then moving on to larger relationships within Latin America, and then making sure that all those blocks integrate with each other and that the U.S. remains true to our principle—which is that open markets are the best for the American people. And the American people need for us to have fast track and to be able to lead the way in shaping the new global environment.

Thank you.