Embassy of the United States

Topics of Interest

Economics and Trade

Remarks by Ambassador William B. Wood at the Council of the Americas Conference "Colombia in the Eyes of Wall Street"

Tequendama Hotel, Red Room

President of the Council of the Americas, New York, Susan Segal; President of ANIF, Doctor Fabio Villegas; Executive Director of Fedesarrollo, Doctor Mauricio Cardenas; representatives of the Colombian government, members of the private sector; ladies and gentlemen:

Good morning. It is a pleasure to be with you today.

For those of you here today from the United States, on behalf of your Embassy, I would like to welcome you to Bogotá.

The Uribe administration's policy of democratic security is creating a Colombia at peace, with a vibrant democracy, on a path of sustained economic growth.

The Uribe Administration has increased the size, capability, and professionalism of the Public Forces, which are carrying out operations today they were not capable of even 11 months ago, when I arrived.

In the south where FARC strongholds are located, the military has arrived, to stay. Government forces have discovered weapons caches, stores of cocaine, and cocaine production facilities, in addition to destroying large bases for the insurgents in the FARC's strongholds, leaving the FARC with only two options: to resist and lose, or to surrender. I think they are doing a little of both.

This year, for the first time in modern Colombian history, the government is present in all of Colombia's municipalities. The police are present in force in hardened stations.

For the second year in a row, the Public Forces, with U.S. assistance, are setting records for drug eradication and interdiction -- a total of some 300 tons in the last 12 months that will not arrive to the narcotraffickers' destinations -- as well as arrest and extradition of those who participate in or profit from the illicit drug industry.

Throughout the country, the improvement in security is palpable on a personal level. People feel safer in their homes, at their jobs, on the roads. This is the result of improved but still imperfect observance of human rights, better work by the Public Forces, and a firm political strategy never again to negotiate with illegal armed groups from a position of weakness.

In this regard, we welcome Mexican facilitation of negotiations with the ELN. And we support the peace process with the so-called self-defense forces, provided they adhere to their commitments at the negotiating table, eliminate their violence against civilians, and end their involvement in the narcotics trafficking.

On the economic side, the Uribe Administration has enhanced free market mechanisms and improved the climate for foreign and domestic investors. Major commercial disputes have been resolved, there is new confidence in the legal and regulatory environment for business, and commercial prospects for smooth, steady, sustained growth are good.

The Uribe Administration has been making important reforms. Tax, labor, and social security reforms were passed, and a second round of reforms is underway. These changes are not easy or painless. But they are helping to balance the budget, under heavy pressure from the nation's security needs, as well as increase employment and ensure fair benefits to Colombian workers.

Perhaps the most revolutionary of these reforms: the U.S. and Colombia, along with Peru and Ecuador, are working toward a free trade agreement by early in 2005. Unlike ATPDEA and other trade preference arrangements, a free trade agreement ensures access to the U.S. market that will not expire, as well as investment incentives, including predictable reductions in tariff rates, more certain dispute resolution mechanisms, and a more stable legal environment.

Free trade provides opportunities for producers to obtain inputs at lower prices and move up the technology curve for greater profit, higher pay for workers, and lower prices for their clients. Most importantly, it stimulates creation of new businesses, generating even more profits and employment, and enhancing the standard of living for all Colombians.

The U.S. is Colombia's largest trade partner. We receive 44% of all Colombian exports, of which more than three-quarters enter the U.S. tariff-free. Between 1992 and 2001, under ATPA, Colombian exports to the U.S. increased by USD 620 million. Since 2002, under the successor regime of trade preferences, APTDEA has opened up additional opportunities. Trade increased by $1 billion in a single year and trade-related employment in Colombia rose by over 100,000.

Colombia's excellent team of negotiators has performed ably through the Cartagena and Atlanta rounds of the negotiations. After Atlanta, where the Andeans set the pace and the focus of the discussions, no one should doubt that this is a negotiation among equals. No agreement will be initialed by the negotiators, signed by their governments, or approved by their congresses until they are convinced that it is in their nation's interest. I am optimistic.

Nevertheless, a number of issues have been singled out for special comment in the press here:

• Intellectual property. The U.S. does not seek to limit access to necessary drugs or exploit traditional forms of knowledge. The U.S. recognizes the WTO rights of countries to provide medications to their populations. Moreover, only a small fraction of the world's drugs are under patent, and less than 10 of the WHO-developed list of necessary medications are patented.

  Some argue that the pharmaceuticals under patent are the newest and most effective, and should be the most widely available. This is inaccurate in terms of the drugs relevant to the diseases that kill the largest numbers of people in the developing world.

  And we believe that the reason they exist at all is the patent system, which provides incentives for research and development, and enables scientists to share information with other scientists without fear that they will lose the benefits of their discoveries. Colombia is a country capable of creating its own intellectual property; we think it has a stake as both producer and consumer in the protection of intellectual property.

   

• Agriculture. The FTA will provide opportunities for many agricultural products in which Colombia has a comparative advantage, including fresh fruits and vegetables. One of Colombia's greatest modern trade successes was an innovation in the agricultural sector: flowers. Production of such products often employs more workers per hectare than traditional crops such as grains. Flower production employs approximately 15 people per hectare. Over 800,000 Colombians depend on the flower sector for their livelihood. We also are working with Colombian cattlemen to contain hoof and mouth disease, which could eventually increase the U.S. market for Colombian beef.

  The U.S. seeks to limit agricultural subsidies and supports on a WTO-wide scale. In late 2003 we presented an aggressive offer to reduce our subsidies and supports in exchange for similar reductions by other WTO members. USTR Zoellick spent several weeks this year traveling to WTO-member countries to re-ignite the Doha negotiations. We are hopeful that we can reach an agreement in the near-term that will effectively resolve the issue of agricultural subsidies. But until a multilateral solution can be found so that reductions benefit consumers and not unreformed producers, we will support our agricultural programs.

   

• Competitive infrastructure. It is not enough to develop positions for the free trade negotiations, Colombia must also prepare for the day when the agreement enters into force.

  Business should be working with the government to correct the rigidities in the Colombian economy that hamper competitiveness. They need to look at both micro- and macro-level issues.

   

  • Financing, for example, especially for small or new businesses, is easier to get in the U.S. than in Colombia. This is easy to correct and should be corrected now. Colombia should also improve the transparency of and participation in their capital markets to stimulate investment in productive assets of all sizes and levels.

     

  • Broadening the tax base to strengthen the macro economy. More of the U.S. productive sector participates in the tax base, on a more even basis, than in Colombia. In Colombia there are also tax benefits to protect traditional sectors for the economy, which create an incentive against innovation and modernization.

     

  • Labor-management relations. The readiness of the U.S. private sector to share the proceeds of production with all sectors that contribute to production has created a more stable and profitable marketplace for all U.S. stakeholders.

  A free trade agreement is simply the codification of opportunity.

  The implications of all this are enormous. Early birds can reap profits from shrewd investments in the country; we are seeing some of that now. Local and foreign investors are putting money back into Colombia - showing that these policies are working. Consumer confidence is increasing at an even faster pace. Colombians are demonstrating that they trust in their future by investing in it. The result - robust growth in both GDP and employment.

When I arrived in Colombia almost a year ago, I found many things that I had been told to expect. And I found one thing I did not expect: optimism. Optimism that leads citizens, as well as political and economic leaders, to address issues squarely and accept the costs of laying down a solid foundation for the future. Today may be difficult, but tomorrow can be magnificent.

Colombia enjoys an open, stable political environment, a growing economy, and increasing security. The U.S. will continue to invest in Colombia through our counter-terror, counter-drug and social assistance programs, and initiatives such as the FTA. We are convinced we have joined forces with a winning team.

Thank you.

Bogota, D.C.
July 15, 2004