Transforming Partnerships Across Asia and the Pacific To Combat Corruption and Ensure Ethical Conduct: Open Government, Clean Trade, and Integrity in Markets and Supply Chains
I am honored to have been invited to New Delhi to attend the 16th Steering Committee Meeting of the ADB/OECD Anticorruption Initiative for Asia and the Pacific and to present this morning the work program in the Asia Pacific Economic Cooperation (APEC) forum on combating corruption, especially in my capacity as the 2011 Chair of the APEC Anticorruption and Transparency (ACT) Experts’ Working Group.
I would like to thank the Asian Development Bank (ADB), the Organization for Economic Cooperation and Development (OECD), and the Government of India for their invitation and warm hospitality, and I hope that together we can chart a vibrant partnership between APEC and your initiative – and among our respective membership – to promote greater integrity and to prevent, investigate, and prosecute corruption and bribery across Asia and the Pacific.
Before outlining the work of the United States as host of APEC in 2011 and our ACT anti-corruption initiatives and capacity-building programs – including priorities that we are advancing this year as we march towards the APEC Leaders Week and Summit in Honolulu, Hawaii, November 8-13, 2011 – I want to say what a privilege it is for me personally to return as a participant in your Steering Committee meetings. I recall fondly being part of the Advisory Group at the first meeting in Japan in 2001 and the meeting in Malaysia in 2003.
Over the years, I have met many good friends and am excited to meet new friends here this week and to explore continued synergies and collaborations that strengthen regional cooperation via collective action to combat corruption. It is also good to see some of my APEC ACT colleagues here at these meetings, including past and future ACT chairs: Korea (2005), Vietnam (2006), Australia (2007), Singapore (2009), Japan (2010), and Indonesia (2013). I would also like to give a special thanks to the Government of Thailand and my very good friend Professor Pakdee Pothisiri, Commissioner of the National Anti-Corruption Commission (NACC). It was because of Thailand’s leadership in 2003 that the APEC Leaders agreed to make the fight against corruption a priority, a commitment that led to the creation of the ACT and the Santiago Commitment in 2004.
APEC 2011: Economic Growth, Expansion of Trade and Investment, and Clean Markets
APEC is the premier Asia-Pacific economic forum through which 21 economies have united to build a dynamic and harmonious Asia-Pacific community by championing free and open trade and investment, promoting and accelerating regional economic integration, encouraging economic and technical cooperation, enhancing human security, and facilitating a favorable and sustainable business environment.
The 21 APEC economies are as follows: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; and Viet Nam. Twelve of our APEC members are also active in your initiative.
APEC’s 21 member economies today account for 55 percent of global GDP, 43 percent of world trade, and comprise a market of 2.7 billion consumers.
For the United States, APEC accounts for 58 percent of U.S. goods/exports, and seven of our top trade partners are in APEC. Last year alone, U.S. exports to APEC economies grew much faster than exports to the rest of the world. Due to the dynamism of APEC markets, a 5 percent increase in exports to APEC economies would add hundreds of thousands of jobs to the U.S. economy.
So as we embark on our collaboration with the ADB/OECD anticorruption initiative and other international partners to achieve shared prosperity and economic regional partnerships, we must ensure that we similarly develop a shared framework based on not only reasonable, rules-based approaches but also on open, free, transparent, and fair principles. We believe that such a regional architecture would benefit developed and developing economies alike by transforming and expanding markets, encouraging innovation, and ensuring cleaner forms of public and private governance for markets across the Asia Pacific region.
As the host of APEC in 2011, the United States is focusing on three priority themes for this year, reflecting many of the challenges and opportunities facing public and private sectors across the Asia Pacific region:
Strengthening regional economic integration and expanding trade;
Promoting inclusive, sustainable, green growth; and
Advancing regulatory convergence and cooperation.
With these priorities in mind, I would like to raise three questions for consideration: First, why are transparency and effective anti-corruption measures critical to our future? Second, why are they indispensable tools for long-term, sustainable growth and regional prosperity? And finally how can we partner to advance our mutually-shared agenda? I hope that today’s discussion will help us leverage our energies and harness our talents and capacities to achieve cleaner trade and more open governments.
Ensuring Greater Integrity in APEC Economies, Markets, and Supply Chains
Let me start with a well-known truism: Governments are most effective in promoting economic competitiveness, growth, and investment when their communities and its people have confidence in the stability and soundness of its institutions. Governments can faithfully and judiciously invest the public’s trust by adopting effective anticorruption policies that put accountability front and center, demonstrating to their people that they are working for their communities with the highest levels of integrity.
At the United Nations General Assembly meetings last week, the United States and other members of the Open Government Partnership acknowledged “that people all around the world are demanding more openness in government . . . and are calling for greater civic participation in public affairs, and seeking ways to make their governments more transparent, responsive, accountable, and effective.” Participating governments also agreed to accept responsibility for seizing this moment in time “to strengthen [their] commitments to promote transparency, fight corruption, empower citizens, and harness the power of new technologies to make government more effective and accountable.”
Through the Open Government Dialogue, India and the United States are working together to create “Data.gov-in-a-Box,” a joint, open source, e-governance application. It will be available for implementation by countries globally, encouraging governments around the world to develop open-data sites that promote transparency, improve citizen engagement, and engage application developers in continuously improving these efforts.
As ACT Chair, I can report to you that President Barack Obama and Secretary of State Hillary Rodham Clinton are working together with our APEC partners, and globally, to make anticorruption a priority. In remarks made at the OECD Session on Development and Gender this past May, Secretary Clinton observed that corruption, lack of transparency, and poorly functioning governance systems “not only deprive government of revenues; they inflict a quieter and in some ways an even more dangerous cost as well, because they corrode citizens’ trust in each other and in their government. And when those bonds of trust crumble, it becomes much more difficult for communities and countries to make progress.”
In APEC, we are addressing corruption by sharing our good governance practices and experiences with each other, including by exchanging information on our respective laws, what we do to publicize our enforcement efforts, and what our respective business communities are doing to ensure that they have effective compliance programs to prevent and detect corruption and bribery. Moreover, we are also investing in a broad array of capacity-building programs that help sharpen the capabilities of the APEC anti-corruption agencies and law enforcement communities to prevent, investigate, and prosecute corruption.
Reducing Illicit Arbitrage Opportunities for Cleaner Markets and Supply Chains
In November 2010, in Yokohama, Japan, APEC Leaders and Ministers agreed to leverage collective action to combat corruption and illicit trade by promoting clean government, strengthening relevant judicial, regulatory, and law enforcement systems, and enhancing regular reporting of our efforts to implement anticorruption commitments to build communities of integrity.
â€ªWe can appreciate why Leaders remain focused on good governance and transparency.
Corruption and bribery are not only barriers to economic growth, trade and investment, and market integrity, but also weaken the entrepreneurial spirit that nurtures innovation, openness, and competiveness.
Corrupt practices also corrode the pillars of free and accountable societies, especially at a time when our citizens are demanding more of our governments and expect to be governed with the highest levels of integrity.
By leading by example, APEC is demonstrating that ethical behavior among public officials can anchor the trust and confidence of the public and markets alike.
As Secretary Clinton emphasized at the 2011 APEC SOM I meetings in Washington, DC, as our communities demand greater accountability, transparency and participatory governance, we must deliver.
And we are. I have just returned from San Francisco where the APEC ACT discussed a robust plan of action for combating corruption in APEC economies as part of our 5-year strategy and discussed ways to advance our 2011 work program under the following three guiding principles: 1) combat corruption and illicit enrichment for more clean and open governments; 2) combat bribery through public-private partnerships that anchor market integrity; and 3) combat corruption and illicit trade to ensure greater supply chain integrity.
On the first guiding principle, through collective action, we are contributing to influence positively APEC’s open and transparent framework, including through the Santiago Commitment and Course of Action to Fight Corruption and Ensure Transparency, the APEC Code of Conduct for Business, the Conduct Principles for Public Officials, and the Complementary Anti-Corruption Principles for the Public and Private Sectors, as well as the development this year of principles to strengthen financial/asset disclosure systems that encourage officials to perform their duties in accordance with public interest, as opposed to self-interest. These principles, we hope, will also help investigators and prosecutors identify and corroborate illicit enrichment, providing greater accountability and building public trust.
Consistent with the APEC Santiago Commitment, in APEC, we are committing ourselves to implementing the UN Convention against Corruption (UNCAC) and undertaking a full review on a wide range of measures, including criminalization, preventive measures, and the recovery of stolen assets.
The ACT also continues to work on denying safe haven to kleptocrats around the world, to bar their illicitly-acquired assets, and to give notice that continued theft from our economies will not be tolerated. Following the money must be an integral part of our strategies to deny criminals and their networks access to entities and mechanisms used to hide and launder illicit criminal proceeds. Working with Peru and China in APEC, for example, we launched a very aggressive initiative to strengthen capacities to combat kleptocracy. In 2006, in Shanghai, the United States and China led APEC efforts to take strong enforcement actions to deny safe haven to corrupt individuals and prevent them from enjoying the proceeds of their illicit activities. The ACT commends Thailand and the National Anti-Corruption Commission (NACC), and others, for leading ACT capacity-building efforts in recent years to combat money laundering and help track the criminal proceeds of kleptocrats and illicit networks alike. Similarly, we applaud Indonesia for being co-Chair of the G20 Anticorruption Working Group, and for serving next year as a Vice Chair in the ACT (and host of APEC in 2013).
Depriving illicit networks of their profits and funding is one of the most effective ways to deter them. This requires a holistic, comprehensive anti-money laundering regime with the ability to trace, freeze, and seize assets related to illicit financial flows, while addressing both formal and informal financial networks.
Second, in the ACT, we are also taking a comprehensive and holistic approach to combat corruption and illicit trade to ensure integrity in global markets and supply chains and to sustain our shared prosperity. We must confront criminal entrepreneurs and illicit market actors that navigate between licit and illicit worlds, tainting supply chains and compromising the integrity of our markets and institutions. Moreover, tainted supply chains, compromised markets, and the corruption that accompanies illicit trade also hurt our legitimate businesses; diminish brand identities, reputations, and returns on research and innovation; and increase operating costs and investment risks to all market investors.
Working together in APEC, we are ramping up efforts to investigate and prosecute the illicit actors who produce and sell harmful counterfeits such as counterfeit medicines, and we are simultaneously strengthening the integrity of our supply chains, as well as our global financial system.
At the APEC September 2011 SOM 3 meetings in San Francisco, investigators, prosecutors, and regulators, from the U.S. Department of Homeland Security (DHS), the U.S. Department of Justice (DOJ) including Homeland Security Investigations (HSI) , the Federal Bureau of Investigations (FBI), the U.S. Food and Drug Administration (FDA), and others, coordinated with their APEC counterparts by organizing an APEC workshop on Investigating and Prosecuting Corruption and Illicit Trade: Stemming the Flows of Counterfeits and Dismantling Illicit Networks to impart best practices, law enforcement techniques, share case studies, and explore possible tools that can equip APEC economies to mitigate vulnerabilities, dismantle transnational illicit networks, and strengthen integrity in supply chains.
In the next month, we will submit to APEC Senior Officials the ACT’s recommendations to launch across APEC a public-private partnership to dismantle illicit networks at every link in tainted supply chains and prosecute criminal entrepreneurs who arbitrage weak and corrupt law enforcement systems and exploit internal border controls for illicit gain and enrichment.
Breaking the corruptive power of transnational illicit networks globally is a key objective for the United States. On July 25, 2011, the White House released the Strategy to Combat Transnational Organized Crime. We will work with international partners to attack the financial underpinnings of transnational criminal organizations; strip them of their illicit wealth; and sever their access to the financial system. In targeting illicit entrepreneurs and illicit networks that pose grave threats to our citizens’ safety—including those that sell and distribute substandard, tainted, and harmful counterfeits—we will also expose criminal activities hidden behind legitimate fronts and protect strategic markets, as well as the integrity of the global financial system. The United States will also work with other committed partners to disrupt crime-terror networks all around the world including in South Asia.
Combating Bribery and Forging Public-Private Partnerships on Market Integrity
Finally, when both public and private sectors work together, we can create a culture of integrity that has a lasting impact. The private sector can lead in ensuring that corruption does not corrode the foundations of an efficient and transparent market system, which is fundamental to economic security, sustainability, and prosperity for all economies. We can create a better future by uniting in our support of accountability and good governance and against corruption. Such action has been evidenced in recent years in India, where the Global Corporate Governance Forum has worked in partnership with the regulator, the National Institute for Securities Markets, and one of the country’s leading business associations, the Confederation of Indian Industry (CII), to raise understanding and awareness of the importance and modalities of good corporate governance. The regulator brings to this exercise the imprimatur of the government, while CII lends the weight of prominent Indian industrial concerns, creating a formidable alliance.
As the OECD and World Bank Group – key APEC partners – have underscored as part of their global corporate governance forum, “encouraging high quality corporate governance practices as a linked element of anti-corruption measures, are the twin pillars of developing fair and efficient markets. Both are relevant to broader efforts to promote sustainable economic development and democracy. They depend upon implementation by the private sector, with the active support of civil society and stakeholders, within a framework of law and regulation provided for by government. Achieving effective measures therefore requires the active partnership of all sides” in a full practical engagement for reform, modernization, and good governance.
Through our continued cooperation with the private sector, we are leveling the playing field across APEC economies. Moreover, in working with the APEC Business Advisory Council (ABAC), and other partners, we are ushering in a new era of cooperation between the public and private sector that will help forge a more connected, innovative, and dynamic Asia Pacific region. Combating corruption, achieving sustainable development and dismantling illicit markets and networks also requires collective action and a shared responsibility among APEC partners, as well as close coordination with relevant regional and international organizations that have important expertise and capacities to help improve the overall governance climate in the Asia-Pacific region.
The ACT has a strong record of achievement of strengthening cooperation with other international and regional organizations. We have leveraged new and exciting collaborative platforms with the United Nations Office on Drugs and Crime (UNODC), the World Bank, the Asian Development Bank (ADB), OECD, ASEAN, G20, INTERPOL, and the International Anticorruption Academy (IACA), as well as with civil society groups such as Transparency International.
I have already mentioned the good work that many of our APEC ACT colleagues are doing in combating corruption including, for example, Australia, Chile, China, Korea, Indonesia, Thailand and Vietnam. Next year, Russia will host APEC and we look forward to continue to advance our public-private partnerships to combat corruption and bribery especially tied closely to the expansion of our investment and trade agenda. In addition we would like to congratulate Russia for joining the OECD Working Group on Bribery; we look forward to its ratification of the anti-bribery convention itself. The rigorous peer review that is at the heart of the Working Group’s success will help Russia to intensify its efforts against foreign bribery. The fact that India, China and Indonesia all are participating in the OECD Working Group on Bribery as observers is another positive step and we hope that they will consider full membership in future.
The Way Forward: Greater Integrity in Economies, Markets, and Supply Chains â€ªAcross Asia and the Pacific
In closing, it is great to be meeting with you here in India, and I applaud the diversity of your ADB/OECD Steering Group membership.
Our institutions share many common goals. Similar to APEC’s approach, you are leveraging alliances with communities and civil society groups to mobilize public support to address corruption. I have also taken note of your recent efforts to promote more active judiciaries, parliamentarians, and your ideas on access to information tools and the promotion of social anticorruption and media campaigns that can help to support resiliency and stability and to build a culture of integrity. As we nurture the network of government and business leaders that support innovation in the vibrant sectors of tomorrow – such as computer and high technology, biomedical, energy and space – these issues become even more important to government officials and entrepreneurs to create the right governance conditions for new markets and investment frontiers to thrive across our regions.
India’s adoption of anticorruption commitments as part of the G20 and its ratification of UNCAC send an important signal to the public and to businesses that tackling corruption is a high priority. An even more important step is to implement those commitments, to put them into practice, whether they are about prevention or transparency or law enforcement. Our experience is that creating momentum for reform, for implementation of these kinds of commitments, requires government leadership as well as support and expertise and oversight from civil society and the private sector. A partnership between government and the public is essential. Partnerships among countries can also help by sharing experiences among peers. That is one hallmark of APEC ACT, and one important value added of the ADB/OECD initiative. The United States is pleased to partner with other economies through these frameworks and bilaterally.
Thank you for the opportunity to outline the APEC ACT’s work program. I hope we can develop pragmatic and collaborative joint workshops, from time to time, that will enhance our commitment to combat corruption and illicit trade and strengthen integrity across our respective economies.
It is an honor as the 2011 APEC Anti-Corruption and Transparency (ACT) Working Group Chair to co-host this workshop with Rodrigo Roque, the APEC Intellectual Property Experts Group (IPEG) Chair.
Over the years, the ACT, IPEG, and other APEC sub-fora have been pathfinders in developing innovative cross-fora approaches to addressing numerous illicit trade issues that are important to APEC economies. Earlier this year at the APEC SOM I meetings, for example, we partnered to advance a dialogue on combating counterfeit medicines and other cross-border illicit threats that impact our economies, especially in areas where they threaten human health and safety.
Corruption and illicit trade are not only barriers to the integrated commercial, transportation, and transactional systems that facilitate free trade and the movement of people throughout legitimate markets, but they also weaken the entrepreneurial spirit that nurtures innovation, openness, and competitiveness and contributes to prosperous economies. Indeed, combating corruption and promoting good governance nurtures the overall business climate and promotes cleaner and more dynamic sectors.
Illicit market actors easily navigate between licit and illicit worlds, investing in legitimate industry and integrating themselves into communities, where they erode supply chain integrity and destabilize institutions through bribery, coercion, and corruption. In some cases, they even establish themselves as seemingly altruistic providers of security and basic services.
Criminal entrepreneurs and illicit networks also engage in bribery, fraud, and violence to corrupt or intimidate vital government institutions in order to gain the upper hand against competitive business. This cycle distort our markets, damaging the ability of legitimate firms to compete, and drives some legitimate small- and medium-sized enterprises out of the market in the APEC region.
In the case of counterfeit or falsified medicines, medical products, and other dangerous counterfeits and defective and tainted products, illicit trade imperils the safety of our people and shakes confidence across our markets. Fake medicines often contain inactive or toxic ingredients than can increase drug resistance, prolong patients’ suffering, and even cause death. The “entrepreneurs” behind these counterfeits and other illicit activities are rapacious opportunists who profit from the low level of risk for this type of criminal activity where regulatory and enforcement structures are weak or ill equipped to address this challenge.
In our fight against the spread of counterfeit medicines, APEC economies must work together and with the private sector and other stakeholder interests not only to investigate and prosecute the illicit actors who produce and distribute counterfeits, but to ensure that all communities have access to safe and effective medicines.
Excising corruption and illicit trade from the global market for goods and services requires all market actors—from businesses to governments to consumers—to act in harmony to restore supply chain control to legitimate businesses that have both the greatest knowledge of their supply chains and the greatest stake in their integrity. We applaud our growing partnership with the private sector and other stakeholders across APEC sub-fora to develop a full-spectrum approach to combating illicit trade that targets not only actors, but also the economic, political, and legal conditions that enable them to operate.
Today’s Workshop on Investigating and Prosecuting Corruption and Illicit Trade: Stemming the Flows of Counterfeits and Dismantling Illicit Networks continues to build upon the partnership we began at SOM 1 and is a model for what we hope will be many more vibrant partnerships across APEC sub-fora to combat corruption and illicit trade and plug vulnerabilities in supply chains and markets.
We can no longer allow illicit criminal networks to hijack our prosperity and twist the globalized value chain. We cannot allow our businesses to experience a loss of profits, a loss of brand identity and reputation, diminished product quality, stifled innovation, and other harmful economic consequences. APEC economies risk an increasingly unstable investment climate, weaker governance structures, and less transparent communities.
The United States is committed to working with our APEC partners in government, the private sector, and other stakeholders to develop communities of vigilance that will promote greater integrity at every step of the supply chain and to ensure that only quality products enter our markets. We must ensure integrity throughout the complex web of producers, manufacturers, re-packagers and distributors, from raw materials to finished products.
As U.S. FDA Commissioner Margaret Hamburg underscored in March 2011 at our APEC SOM I dialogue on this issue in calling for us do everything that we can to prevent the entry of counterfeit, substandard or adulterated medical products into homes and health care facilities in our countries: “[a] supply chain is only as strong as its weakest link, and the proliferation of additional handlers, suppliers and middlemen creates new points of entry through which contaminated, and otherwise falsified medicinal products can infiltrate the legitimate medical products supply.” We must dismantle illicit trade networks at every link in tainted supply chains and prosecute criminal entrepreneurs who arbitrage weak and corrupt law enforcement systems and exploit internal border controls for illicit gain.
On July 25th, 2011, the White House released the Strategy to Combat Transnational Organized Crime. Breaking the corruptive power of transnational illicit networks globally is a key objective for the United States and we will work with international partners to attack the financial underpinnings of transnational criminal organizations; strip them of their illicit wealth; and sever their access to the financial system. In targeting illicit entrepreneurs and illicit networks that pose grave threats to our citizens’ safety—including those that sell and distribute substandard, tainted, and harmful counterfeits—we will also expose criminal activities hidden behind legitimate fronts and protect strategic markets, as well as the integrity of the global financial system.
Combined with a follow-up training, collaboration, and best practices initiative for APEC member economies’ law enforcement, this workshop is the first in a set of deliverables that is intended to promote the development of a harmonized approach to illicit trade and corruption in the APEC region.
Law enforcement tools such as the Illicit Trade Unit (ITU) that will be discussed by the United States will assist with detecting corruption, customs fraud, and counterfeits and can also positively contribute to our efforts to mitigate vulnerabilities, dismantle transnational illicit networks, and strengthen overall market resilience to thwart future threats at every phase of interconnected supply chains.
The presenters at this workshop will build on the themes that emerged in March 2011 at the APEC Dialogue on Corruption and Illicit Trade: Combating Counterfeit Medicines and Strengthening Supply Chain Integrity. I hope that our discussion today will help shape the deliverables that we would like to present to our Senior Officials and Leaders as we work our way to the APEC Summit in November.
Please allow me now to introduce Rodrigo Roque, the APEC Intellectual Property Experts Group (IPEG) Chair to deliver some brief remarks. Thank you.
Thank you very much, Mr. Chipman, and thanks to all of you for being here today. I also wish to acknowledge and thank Mr. Ronnie Chan, chairman of the Asia Society, and Mr. Norman Chan, chief executive of the Hong Kong Monetary Authority.
And I am so pleased to be here and to have this opportunity to speak with you today, and it was made possible by the U.S., Hong Kong, and Macau chambers of commerce and the Asia Society. And I thank the chamber very much on a personal level for its support of the U.S. Pavilion at the Shanghai Expo. I have been called the mother of the pavilion, which is actually one of the nicer things I’ve been called – (laughter) – during my very long public career.
And I am delighted to be back in Hong Kong, a city I have admired ever since I first visited about 30 years ago when my husband, who was then governor of Arkansas, led the first ever trade mission to East Asia from our small state. Hong Kong stood out then, as it does today, as a symbol of the open exchange of goods and ideas. People were drawn to this place from every part of the world, even far away Arkansas, as evidenced by a good friend of ours from Arkansas, Nancy Hernreich Bowen, who is here with us today.
Now, since that time, Hong Kong has changed a great deal. Certainly, the skyline attests to that. And after all, few things have stood still in East Asia. But one thing about Hong Kong has not changed – the principles that find a home here. Under the “one country, two systems” policy, this remains a city that bridges East and West and looks outward in all directions, a place where ideas become businesses, where companies compete on the merits, and where economic opportunity is palpable and real for millions of people, a place that defines the fierce and productive economic competition of our time.
That is why businessmen and women continue to flock to Hong Kong, and an opportunity to meet some of the Americans who have called Hong Kong home for 20, 25, even 30 years. And it is why I have come here today to talk about how the nations of this region and the United States can intensify our economic partnership on behalf of ourselves, each other, and the world, and how together we can work toward a future of prosperity and opportunity for people everywhere.
But before I talk about where we need to go together, let’s consider how far we’ve come. The economic rise of the Asia Pacific region is an astonishing historic achievement that is reshaping our world today and into the future. In Hanoi, bicycles and water buffalo have given way to motorcycles and internet cafes. Small Chinese fishing villages like Shenzhen have become megacities with their own stock exchanges. And while much work remains to improve labor practices and expand access to the formal economies, the numbers tell a powerful story.
Thirty years ago when I first came to Hong Kong, 80 percent of the people of this region lived on less than $1.25 a day. By 2005, that number had dropped to 20 percent. In the Lower Mekong Region countries, per capita GAP has more than tripled in the last 20 years. And in Thailand alone, the poverty rate fell from 42 percent in 1988 to 8 percent today. Never in history have so many people climbed so far, so fast.
And though this progress is largely due to the hard work and ingenuity of the people of Asia themselves, we in the United States are proud of the role we have played in promoting prosperity. Of course, we helped Japan and South Korea rebuild, patrolled Asia’s sea lanes to preserve freedom of navigation, promoted global shipping, and supported China’s membership in the WTO. Along with our treaty allies – Japan, South Korea, Australia, Thailand and Philippines, and other key partners like New Zealand and Singapore – we have underwritten regional security for decades, and that in turn has helped create the conditions for growth.
And the U.S. continues to contribute to Asia’s growth as a major trade and investment partner, a source of innovation that benefits Asia’s companies, a host to 350,000 Asian students every year, a champion of open markets, an advocate for universal human rights, and a guarantor of stability and security across the Asia Pacific. The Obama Administration has made a comprehensive commitment to reinvigorate our engagement as a Pacific power – shoring up alliances and friendships, reaching out to emerging partners, and strengthening multilateral institutions.
These efforts reflect our optimism and enthusiasm for what is happening in Asia today. Of course, countries in this region are grappling with challenges. We all are. But we are bullish on Asia’s future, and while the United States is facing its own difficulties, make no mistake: We are bullish on America’s future too.
America remains an opportunity society – a place to excel, a country of possibility and mobility where a brilliant idea hatched in a college dorm room or a product invented in a garage can find a global market and grow into a multibillion dollar company. Our workers are the world’s most productive. Our inventors hold the most patents. And today, we are reinvesting in our fundamentals – infrastructure, clean energy, health, and education. And we are doing the critical work of shoring up our financial system so that it protects investors and curbs excesses.
Now, as I have traveled around the region, a lot of people have asked me about how the United States is going to resolve our debt ceiling challenge. Well, let me assure you we understand the stakes. We know how important this is for us and how important it is for you. The political wrangling in Washington is intense right now. But these kinds of debates have been a constant in our political life throughout the history of our republic. And sometimes, they are messy. I well remember the government shutdown of the 1990s; I had a front row seat for that one. But this is how an open and democratic society ultimately comes together to reach the right solutions. So I am confident that Congress will do the right thing and secure a deal on the debt ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook. Through more than a century of growth, the American economy has repeatedly shown its strength, its resilience, and its unrivaled capacity to adapt and reinvent itself. And it will keep doing so.
As we pursue recovery and growth, we are making economics a priority of our foreign policy. Because increasingly, economic progress depends on strong diplomatic ties and diplomatic progress depends on strong economic ties. And so the United States is working to harness all aspects of our relationships with other countries to support our mutual growth. This is an issue I recently addressed at the U.S. Global Leadership Coalition, and will again in a larger speech about America’s strategic and economic choices this fall. But economic issues have been front and center in my travels during the past two weeks – to Greece, which is working to put itself back on the path to economic stability, and to four rising centers of economic growth: Turkey, India, Indonesia, and then China.
Now, naturally, much of our economic diplomacy is focused on East Asia and the Pacific. The American Chamber in Hong Kong represents 1,200 companies, and thousands more looking to this region for new customers and markets. Last year, American exports to Hong Kong totaled $26 billion – that’s more than the Indonesian export amount of $20 billion — and our exports to the Pacific Rim were $320 billion, supporting 850,000 American jobs.
Now, numbers like these reflect how closely America’s future is linked to the future of this region. And the reverse is true as well. Because the future of the Asia-Pacific is linked to America’s. We are a resident power in Asia—not only a diplomatic or military power, but a resident economic power. And we are here to stay.
Now, while the U.S. economy and those in the Asia-Pacific are well positioned to grow together, our success — neither of ours — is preordained. Prosperity is not a birthright, it’s an achievement. And whether we achieve it will be determined by how we answer a defining question of our time: How do we turn a generation of growth in this region into a century of shared prosperity?
The United States approaches this question with great humility, and with hard-won lessons learned from overcoming difficult economic challenges throughout our history.
We must start with the most urgent task before us: realigning our economies in the wake of the global financial crisis. This means pursuing a more balanced strategy for global economic growth – the kind that President Obama and President Hu Jintao have embraced, and the G20 is promoting.
This demands rigorous reform by all nations, including the United States and the countries of Asia. We in the United States are in the middle of a necessary transition: we must save more and spend less. And we must not only save more and spend less, we must borrow less, as well. Our partners must meet this change with changes of their own. There is no way around it: Long-term growth requires stronger and broader-based domestic demand in today’s high-saving Asian economies. This will raise living standards across the region, create jobs in America, improve business for many in this room, and help stabilize the global economy.
For years, my image of the global economy was an inverted pyramid resting on the shoulders of American women, since we are the primary consumers in the world. And therefore, it seems to me that that is no longer a sustainable model. And so we have to change how we do business internally and externally. And, above all, we must reach agreement on the rules and principles that will anchor our economic relationships in the coming decades.
Last March in APEC meetings in Washington, I laid out four attributes that I believe characterize healthy economic competition. And these are very simple concepts, easy to say, hard to do: open, free, transparent, and fair. Hong Kong is helping to give shape to these principles and is showing the world their value.
First, we must seek an open system where any person anywhere can participate in markets everywhere.
Second, we must seek a free system, one in which ideas, information, products and capital can flow unimpeded by unnecessary or unjust barriers. That is why President Obama has mobilized a government-wide effort to attract foreign investment to America. Now, in the past, foreign investment has been seen as controversial. But today we know it helps create growth and jobs, and it can attract American dollars held overseas back into the U.S. economy. As we welcome investors to our country, we hope that all investors, including those from America, will receive an enthusiastic welcome overseas.
Third, we must seek a transparent economic system. Rules and regulations need to be developed out in the open through consultation with stakeholders. They must be known to all and applied equally to all. Hong Kong is a testament to the power of transparency, good governance, the rule of law, freedom of the press, an independent judiciary, and a vibrant civil society, all of which help to explain why so many people choose to do business here.
Openness, freedom and transparency contribute to the fourth principle we must ensure: fairness. Fairness sustains faith in the system. That faith is difficult to sustain when companies are forced to trade away their intellectual property just to enter or expand in a foreign market, or when vital supply chains are blocked. These kinds of actions undermine fair competition, which turns many off from competing at all.
A growing number of countries in Asia are proving the value of these principles. And the United States deeply believes in them, because their value has been proven time and again, not only in times of prosperity but also in times of hardship, as well. At the end of the Vietnam War, there was a thriving commentary around the world on the idea of America’s economic decline. That seems to be a theme that kind of repeats itself every couple of decades. But all the while, then and now, these principles were nurturing a system of entrepreneurship and innovation that allowed two college students to found a small tech startup called Microsoft. And today, they are helping power companies like Solyndra, a green-energy startup in California that began producing solar panels in 2007 and now installs them in more than 20 countries worldwide.
Every time in history when the United States has experienced a downturn, we’ve overcome it through reinvention and innovation. Now, these capacities are not unique or innate to the people of the United States. They are activated by our economic model, which we work hard to keep open, free, transparent, and fair, a model that has its imperfections but remains the most powerful source of prosperity known to humankind.
Of course, no nation is perfect when it comes to safeguarding these principles, including my own. We all recognize the temptation to bend them. And we all recognize the inevitability of human nature’s capacity to look for ways around them. Some nations are making short-term gains doing that. Some developing countries—admirably focused on fighting poverty—might be slow to implement at home the same rules they benefit from abroad. And a number of nations, wealthy in the aggregate but often poorer per capita, might even think the rules don’t apply to them.
In fact, all who benefit from open, free, transparent, and fair competition have a vital interest and a responsibility to follow the rules. Enough of the world’s commerce takes place with developing nations, that leaving them out of the rules-based system would render the system unworkable. And that, ultimately, that would impoverish everyone.
The businessmen and women of Asia seek the benefits that these principles offer. Malaysian manufacturers want access to markets overseas. Indian firms want fair treatment when they invest abroad. Chinese artists want to protect their creations from piracy. Every society seeking to develop a strong research and technology sector wants intellectual property protections because, without them, innovation comes with a much higher risk and fewer rewards. People everywhere want to have the chance to spend their earnings on products from other places, from refrigerators to iPods.
Now, these four principles are easily uttered and embraced, but they do not implement themselves. So our challenge is always to translate them into practice. And my country is hard at work doing that, and we encourage other governments to join us in this effort.
The United States is taking steps to promote these principles around the world through multilateral and regional institutions, new trade agreements, and outreach to new partners, to enlist us all in the quest for inclusive, sustainable growth. These steps are connected to and build upon the work we are doing to revitalize our own economy.
First, we are working through regional and international institutions to achieve balanced, inclusive, and sustainable growth. That starts with our commitment to APEC, the premier organization for pursuing economic integration and growth in the Asia-Pacific region. And President Obama is pleased to be the chair and host of APEC this year in Hawaii.
We want APEC to address next-generation trade and competition challenges, like strengthening global supply chains; empowering smaller companies to connect to global markets; promoting market-driven, non-discriminatory innovation policy. We are pursuing a low-carbon agenda by working to reduce barriers to trade in clean-energy technologies, and we hope to reach agreement on implementing transparency principles to promote economic growth and the rule of law on a 21st century field of play.
Because burdensome regulations and incompatible sets of rules in different countries can hold back trade and growth every bit as much as tariffs, we are also working at APEC to find common ground on transparent, effective regulation, with broader public consultation and better coordination. The quality of the rules we put in place is just as important as our willingness to enforce them.
And I have to mention that discrimination against women is another barrier to fair competition and economic growth. A 2007 United Nations study found that the Asia-Pacific loses at least $58 billion of economic output every year because of restrictions on women’s access to employment and gender gaps in education. So, as host of APEC, we are organizing a high-level Summit on Women and the Economy in San Francisco this September.
We are also working though the World Trade Organization to address continuing challenges to fair competition. Take government procurement. The purchases that governments make represent an important part of the global economy, and citizens everywhere deserve to know that their governments are getting the best product at the best prices. Consistent with the WTO Government Procurement Agreement that we signed, America lets companies from other nations who have signed that same agreement compete for appropriate American Government contracts. We would naturally expect countries that want access to our government contracts to offer our companies genuine access to theirs in return.
Across the full spectrum of international institutions—the G8 and G20, the IMF, OECD, ILO, WTO, and others—we are working to level playing fields and encourage robust and fair economic activity. Just as the WTO eliminated harmful tariffs in the 1990s, today we need institutions capable of providing solutions to new challenges, from some activities of state-owned enterprises to the kinds of barriers emerging behind borders.
We also support innovative partnerships that develop norms and rules to address these new concerns. We should build on the model of the Santiago Principles on sovereign wealth funds, which were negotiated jointly by host governments, recipient governments, the World Bank, IMF, OECD, and the sovereign funds themselves. This code of conduct governing sovereign investment practices has reassured stakeholders – investor nations, recipient nations, and the private sector. And it may prove a useful model for other shared challenges, like ensuring that state-owned companies and enterprises compete on the same terms as private companies.
As a second step, we are pursuing new cutting-edge trade deals that raise the standards for fair competition even as they open new markets. For instance, the Korea-US Free Trade Agreement, or KORUS, will eliminate tariffs on 95 percent of U.S. consumer and industrial exports within five years. Its tariff reductions alone could increase exports of American goods by more than $10 billion and help South Korea’s economy grow by 6 percent. So, whether you are an American manufacturer of machinery or a Korean chemicals exporter, this deal lowers the barriers to reaching new customers.
But this trade deal isn’t simply about who pays what tariff at our borders. It is a deeper commitment to creating conditions that let both our nations prosper as our companies compete fairly. KORUS includes significant improvements on intellectual property, fair labor practices, environmental protection and regulatory due process.
And let me add that the benefits of KORUS extend beyond the economic bottom line. Because this agreement represents a powerful strategic bet. It signals that America and South Korea are partners for the long term—economically, diplomatically, people to people. So, for all these reasons, President Obama is pursuing congressional approval of KORUS, together with necessary Trade Adjustment Assistance, as soon as possible. He is also pursuing passage of the Colombia and Panamanian Free Trade Agreements as well.
Now, we have learned that, in our system, getting trade deals right is challenging, painstaking work. But it’s essential. We consider KORUS a model agreement. Asian nations have signed over 100 bilateral trade deals in less than a decade, but many of those agreements fall short on key protections for businesses, workers, and consumers. There are a lot of bells and whistles, but many of the hard questions are glossed over or avoided.
Beyond that, there is now a danger of creating a hodgepodge of inconsistent and partial bilateral agreements which may lower tariffs, but which also create new inefficiencies and dizzying complexities. A small electronics shop, for example, in the Philippines might import alarm clocks from China under one free trade agreement, calculators from Malaysia under another, and so on—each with its own obscure rules and mountains of paperwork—until it no longer even makes sense to take advantage of the trade agreements at all. Instead, we should aim for true regional integration.
That is the spirit behind the Trans-Pacific Partnership, the so-called TPP, which we hope to outline by the time of APEC in November, because this agreement will bring together economies from across the Pacific—developed and developing alike—into a single trading community.
Our goal for TPP is to create not just more growth, but better growth. We believe the TPP needs to include strong protections for workers, the environment, intellectual property, and innovation. It should also promote the free flow of information technology and the spread of green technology, as well as the coherence of our regulatory system and the efficiency of supply chains.
We are working to ensure that the TPP is the first trade pact designed specifically to reduce barriers for small and medium-sized enterprises. After all, these are the companies that create most of the world’s jobs, but they often face significant challenges to engaging in international trade. So, the TPP aims to ensure fair competition, including competitive neutrality among the state-owned and private enterprises.
The idea is to create a new high standard for multilateral free trade, and to use the promise of access to new markets to encourage nations to raise their standards and join. We are taking concrete steps to promote regional integration and put ourselves on a path over time to bring about a genuine Free Trade Area of the Asia Pacific.
Finally, we need to pursue strategies for achieving not just growth, but sustainable, inclusive growth. Now, it is a maxim of mine that foreign policy must deliver results for people. Because ultimately, our progress will not be measured by profit margins or GDP, but by the quality of people’s lives – whether men and women can work in dignity, earn a decent wage, raise healthy families, educate their children, and take hold of the opportunities to improve their own and the next generation’s futures.
The United States supports a number of endeavors to promote inclusive growth in the region. Our Millennium Challenge Corporation, for example, makes large-scale investments in partner countries to reduce poverty through growth. We have a compact with the Philippines to invest in roads, community development projects, and more effective tax collection. We are negotiating a compact with Indonesia to promote low carbon development, and we began a threshold partnership with Timor-Leste earlier this year to fight corruption and improve children’s health.
Across the region, we are partnering with governments to encourage and help them uphold their commitments to inclusive growth by practicing good governance, providing public goods like health and education, and creating tax systems that improve revenue collection and ensure that everyone pays their fair share. We are supporting civil society and citizens alike in holding governments accountable, supplying job training and networking, and being a strong voice for bringing opportunity to places where it is scarce.
And we are working very closely with the private sector. Two years ago, I created a Global Partnership Initiative to support a new generation of public-private partnerships focused on everything from protecting and developing the Lower Mekong region to helping more families gain access to clean cookstoves, to protect them from the harmful smoke that kills two million people worldwide every year, and puts black soot carbon into the atmosphere.
We also launched the Global Entrepreneurship Program, to identify promising entrepreneurs, training them, linking them with mentors and potential investors, advocating for supportive policies and regulations, helping spread best practices. And we are supporting initiatives like Partners for a New Beginning, which supports economic opportunity, education, science and technology exchanges between the United States and Muslim communities worldwide, and we just opened a chapter in Indonesia.
We are connecting entrepreneurs with Diaspora communities in the United States that are eager to help fund new projects in countries where they have family ties. And we are looking to the private sector to help us. There are so many ways that we are grateful to the private sector. After all, it drives what we are talking about today. But we do need to try to consider, even within the constraints of modern financial practices and expectations, not just short-term benefits but long-term consequences. The work that each of you do in your businesses can help lift people’s lives, promote human rights and dignity, and create new markets, creating a virtuous cycle. Or it can further ensnare people in poverty and environmental degradations, creating a vicious cycle.
So that’s our agenda, and you can see why I’ve come to Hong Kong to talk about it, because here, we have a perfect example of what can be done and how important it is to lead in the economic realm with the kind of principles that Hong Kong has developed on. Now, we know very well that the future is arriving at a breathtaking pace, and the choices we make today will define what is possible economically for so many millions of people
And so while the specifics are forever changing, many of the ideals that guided us in the 20th century are the same ones we need to embrace in the 21st – a belief that a good idea is a good idea no matter where it comes from or from whom, a willingness to embrace change, a culture driven by marriage, faith in the notion that a rising tide of economic growth and innovation can improve everyone’s quality of life whether they live in Hong Kong or Appalachia. It is up to us to translate those enduring principles into common practice, shared prosperity, the opportunity for as many people as possible on both sides of the Pacific to live up to their God-given potential.
And what is standing in the way of achieving that vision? Well, there are many issues and challenges we can enumerate, but ultimately, it comes down to leadership – leadership in both the public and the private sector. We were blessed over the last part of the 20th century with farsighted and effective leaders in many parts of the world, leaders who set the rules that created the economic growth that we enjoyed in the 20th century, leaders who changed course in their own nations and catalyzed the extraordinary growth that we have seen in a country like China, leaders who had visions, private sector leaders who were able to look over the horizon and understand the consequences of not just this quarter’s results but the decades. We need that leadership again. We need it everywhere. And we need it both in governments and in business. That’s why the partnership between the public and private sectors is so essential.
Sitting in the office of the Secretary of State and knowing that I’m here in this position after so many luminaries in my own country have held it, it is a very humbling experience. And I often marvel at what they achieved. And I think a lot about George Marshall and Harry Truman and the Marshall Plan. What an amazing decision – to rebuild former enemies with an eye toward the future. And I think about it in very personal terms, because at the end of World War II, my late father had served in the Navy, so when he left service as so many men of that time did and returned to private life, the last thing he wanted to hear his president or secretary of State say was, “Guess what? We’re going to still be taxing you to send money to Germany, to Europe. We’re going to rebuild Japan because we believe it is in the best interests of your children.”
But it wasn’t only our public leadership who sounded that note. It was also our business leadership as well who basically said, “Okay, we get it. And we’re willing to do our part as well.” In fact, when support for the program was flagging, the White House and the State Department called the heads of large corporations and universities and asked them to fan out across the United States making the case. So the United States invested $13 billion over four years, which in today’s money would be about 150 billion.
Imagine leaders today in either government or business going to their people and saying something similar. When the Berlin Wall fell, Helmut Kohl said, “We’re going to pay what it takes to reunify Germany and we’re going to rebuild our neighbors because the wall is gone,” and people said, “Oh, what a incredible investment of our money. We won; we should be the ones getting all the benefits.” But no; it was a decision that was supported by both government and business.
We face a lot of similar challenges today, and we need visionary leaders in both government and business. But those leaders need to be guided by these principles. Whether we’re talking about politics or economics, openness, transparency, freedom and fairness stand the test of time. And in the 21st century, every citizen who is now potentially connected with everyone else in the world will not sit idly by if those principles do not deliver, and if governments and business do not make good on when we’ll provide long-term opportunity for all.
This agenda is good for Asia, it’s good for America, it’s good for business. Most importantly, it’s good for people. And I absolutely believe it will help us create more a peaceful, stable, and prosperous world for the rest of this century. Thank you all very much. (Applause.)
Zambia has just completed hosting a follow-on conference to the highly successful 2010 African Women’s Entrepreneurship Program (AWEP) that took place in conjunction with the 2010 African Growth and Opportunity Act (AGOA) Forum. This year’s conference, hosted by Zambia’s 2010 AWEP Alumna, Sylvia Banda, took place in Lusaka, Zambia from June 8-10, alongside the 2011 AGOA Forum. First Lady of Zambia, Thandiwe Banda, served as leader of the conference.
The three-day conference focused on training on U.S. import requirements, access to finance, and advocacy. Speakers included representatives from the U.S. Government, Government of Zambia, and Zambian private sector. Secretary Clinton and Ambassador at Large for Global Women’s Issues Melanne Verveer also spoke at the AWEP conference.
African Women’s Entrepreneurship Program
AWEP was established in 2010 under the Bureau of Educational and Cultural Affairs’ International Visitors Leadership Program (IVLP), the premier professional exchange program at the U.S. Department of State. The women of the 2010 AWEP visitors program were accomplished entrepreneurs and leaders of small and medium–sized businesses in Africa. Many of their companies engage in exporting under the terms of AGOA, while others are working to increase their export capacity and establish business relationships with U.S. partners. All are leaders in their communities and many are active members of women’s business organizations in their countries.
Following the inaugural AWEP in 2010, follow-up activities continued in Africa. Some activities, hosted by Vital Voices and sponsored by ExxonMobil, included training opportunities and mentoring programs for the AWEP alumnae businesswomen. Another emphasis of follow-up programs was advocacy on eliminating discrimination against women in business and providing greater opportunities and support for Africa’s businesswomen.
This year, a new group of African businesswomen will travel to the United States from September 20 through October 7 for another AWEP IVLP. They will meet and network with U.S. policy makers, companies and industry associations, civil society groups, non-profit organizations advocating for women’s economic opportunities, multi-lateral development organizations, and business alliances.
Empowering Women Entrepreneurs
AWEP aims to empower African women entrepreneurs to become part of their national and global business network by:
Increasing opportunities for women to use the AGOA program
Expanding opportunities for exports and U.S. investment in sub-Saharan Africa
Recognizing and expanding the roles women play as advocates for changes in laws, regulations, customs, and incentives that support women in businesses in their countries
Instituting a follow-up program so that participants, in their role as community leaders, can pass on what they learn
SECRETARY CLINTON: If I didn’t know any better, Minister Mutati, I’d say that you have a future in preaching. (Laughter.) My goodness, I thought he was going to take up a collection. (Laughter. Applause.)
But I certainly agree with the message. It is the Africa AGOA Act. It is meant to stimulate all of the activities that the minister was referencing. And it is, for me, a great pleasure once again to address the AGOA forum. I’m delighted that you’ve already heard from the leader of our trade efforts in the United States, Ambassador Ron Kirk. And from what I heard from the minister, Ron has already made every commitment that could be made. (Laughter. Applause.) So in the spirit of preaching, I’m really saying amen. (Laughter. Applause.)
It is wonderful to be here in Lusaka for this forum. I had such a good time when I went to Nairobi in 2009, and there was some dancing there, as I remember. In fact, everybody else looked great dancing, and then there’s me. (Laughter.) And apparently, it was all over Kenyan television, and I got all these emails saying, “Are you alright?” (Laughter.) I said, “More than.”
And then last year, we were very proud to host the forum in Washington and in Kansas City. And now here we are in Lusaka. Now, I can imagine that sometimes it feels like Kansas City and Lusaka might be worlds apart, but the whole goal of this forum is to shrink that distance, to create those networks and those relationships that are really at the root of the strong and growing relationship between the people of the United States and the people of Africa. So I thank all of you for being here because you are addressing the importance of what we can do together. It is about the future and it is about the hard work that will take us from today until tomorrow.
And I want to begin by celebrating just how far we have come in the last 11 years together. When my husband signed the African Growth and Opportunity Act into law in 2000, there were many who questioned, both in my country and across the continent, as to whether this would really amount to anything. What did this legislation really mean? There were those who looked at the statistics and saw that poverty had been declining for two decades in Africa. There were at least ten major conflicts underway on the continent. And in the previous 40 years, only four leaders had peacefully accepted defeat in democratic elections.
That seemed like a pretty tough climate in which to expand trade. But we believed then and we believe now that this was in our mutual interests, and a relationship based on mutual respect for what we could do together needed to be forged.
So look at what we’ve seen. In the past decade, Africa’s exports to the United States have quadrupled, from 1 to 4 billion, and that does not count oil. And we have seen large increases in the export of clothing and crafts from Tanzania, cut flowers from Kenya, high-end leather goods from Ethiopia. The growth in trade over the past decade is an accomplishment worth celebrating—both because of what it has meant for the people of Africa, but what it says even more so about the possibilities that lie ahead.
Today, Africa is in such a strong position to build on this progress. Yes, there are still many challenges in many places, but the region is undeniably more stable, more democratic, and more prosperous than a decade ago. (Applause.) And thanks to the hard work of the African people, harnessed to the formal economy – because I hasten to add that African men and women have always worked hard, but not always connected to the formal economy in ways that could be measured – but now, thanks to that hard work, we see productivity rising. We see consumer spending in the region expected to grow by almost $600 million, and GDP by 1 trillion, in less than a decade. And some observers are now even referring to Africa as the home of “emerging emerging markets.” And that means that the economies participating in AGOA are poised to benefit even more.
Yet we can’t ignore the signs that not all countries have yet made the most of AGOA. African countries still export only a handful of the 6,500 products that are eligible for duty-free shipping. And the most common export is still a barrel of oil.
So we have the potential to do more. And the question is: Will we? Will we on both sides? Will we in the United States hear the words of the minister and many of you, learn the lessons that we can from the last years, and reshape AGOA? And will African countries and business leaders and entrepreneurs take advantage of what is available?
As we look to renew this trade agreement, let me say clearly what you heard from Ron Kirk yesterday, that the Obama Administration will work with Congress on a seamless renewal of AGOA beyond 2015 – (applause) – and on a renewal of the important third-country fabric provisions in the coming months so that we also have a consistent regimen. We are willing to do what is necessary, but we all have to acknowledge what we must change together. And that’s what I wanted to talk with you today.
Getting AGOA right plays an important role in President Obama’s new approach to global development. Because despite the best of intentions, for too long, in too much of our development work, the United States was not focused on the kind of partnerships that should be at the root of development. All too often, we were doing programs that continued year after year, and we, frankly, did too much of the talking and not enough of the listening.
The United States is a generous nation, a fact that makes Americans justifiably proud. But we have to be reminded that the purpose of aid is not to make us feel good about ourselves. It is to help people in developing countries improve their own lives, to have that paycheck. And by improving prosperity, one improves stability, and that does have a benefit for the United States to have a world that is safer and more prosperous.
That is why in this Administration we have embarked on a new way of doing business. And we have also put business at the center of our economic development work. Our approach is based on partnership, not patronage. It is focused not on handouts but on the kind of economic growth that underlies long-term progress. Ultimately, it is aimed at helping developing countries chart their own futures and, frankly, end the need for aid at all. It starts from the belief that the most successful development efforts will someday put themselves out of business, because there will be so much economic activity, there will be such strong democratic institutions, that people will be able to generate their own opportunities.
Now, this is not just for us a matter of rhetoric. It is reflected in our actions. You can see it in our new program called Partnership for Growth. We’re taking all the lessons that have been learned from around the world and working with a small group of countries, including, in Africa, Tanzania and Ghana, and one in Latin American and one in Asia, to identify the biggest barriers to growth and find ways to overcome them. You can also see that in our Global Health Initiative, our Millennium Challenge compacts, and our Feed the Future programs. And many of the countries represented here are involved in one or more of those efforts.
In every case, we want what we do to be country-led and country-driven. We want to deliver real results that people can see are making a difference in their lives. We want to empower people themselves. I mean, it’s easy for a company from some other country to come in and get a contract and build something and then not have improved the skills of workers, not have created small business suppliers, not have left anything sustainable behind other than perhaps a physical structure. Africa does not lack in physical structures. Africa lacks in infrastructure. (Applause.) Africa lacks in connections between countries and Africa lacks in people willing to invest in African people in order to have a win-win situation.
So let us hold each other accountable for the success of AGOA in the future. And let’s begin by recognizing – and I think the minister was very right about this – increasing access to American markets is an important step, but market access alone is not enough. There are obstacles that stand in the way of the kind of transformative change that I think we should seek.
First, there is the basic challenge of raising awareness. Too often, businesses in the United States and other countries simply don’t think to look for potential partners in Africa. And many African firms have no way of knowing which foreign businesses might buy their products or their services. So we need to do more to connect so what you have to offer we can perhaps connect up with those who are seeking it.
Now, the United States supports a number of efforts to forge these connections, including international trade shows, bringing delegations of private sector investors to this forum, as we have again this year. And tomorrow, I will be privileged, along with Ambassador Kirk, to help launch the Zambian-American Chamber of Commerce. (Applause.) I have found that where we have chambers of commerce in countries, we see advocates for more trade. We see people who are reaching out all the time looking to make those deals and connections.
And we want particularly to focus on two groups of entrepreneurs whose potential is not being fully tapped: young people and women. (Applause.) This year, for the first time, a group of young entrepreneurs is joining us, and I want to welcome them and tell them how much we need their energy and their ideas. You really are the future. People say that all the time. It happens to be true. You have the biggest stake in our success here. What you do will largely determine Africa’s economic growth curve.
Now, more and more young people in Africa of working age are moving to urban areas, where they hope to find good jobs. Too many are finding only disappointment. By 2025, which is not that far away now, one in every four young people in the world will live in Sub-Saharan Africa. Now, that fact alone has profound and far-reaching implications for Africa’s future. We have been seeing what happens when young people feel their governments do not meet their needs. Across the Middle East and North Africa, the Arab Spring is being led by young people, young people in Tunisia, in Egypt, and across the region are demanding not just more democracy but more economic opportunity. They say, look, we’ve studied, I’m willing to work hard, and yet there’s nothing for me here.
Creating opportunity and protecting freedoms for young people deserves our urgent attention. I will be discussing this in greater detail when I am privileged to be the first Secretary of State ever to appear at the African Union on Monday. (Applause.)
Now, the logic for connecting more women to the global economy is just as compelling. I’ve said it all over the world: No country can thrive when half its people are left behind. And the evidence is so persuasive: Small and medium-sized enterprises run by women are major drivers of economic growth. And I had a conversation with an economist some years ago who heard me say this, and he said, “You know, I just – I don’t see women’s contribution to the economy. I said, “Have you been to a market? Have you looked at fields being tilled? Have you watched children being raised? Women are holding up half the economy already. Let’s give them the opportunities to bring along all the rest of us with their hard work and their success.” (Applause.) Because when a woman prospers, she re-invests those earnings in her family, and the positive ripple effects cross an entire community.
And yet let’s be very honest. In too many places, it is still too difficult for a woman to start a business. Cultural traditions may discourage her from handling money or managing employees. Complex regulations may make it hard for her to buy land or keep land or get a loan. She has to balance the needs of her own family and somehow overcome all of these barriers. Now, lest you think this is only about Africa in 2011, I well recall what it was like in my own country not to long ago. Women couldn’t get loans. Women couldn’t get credit. I remember when I was a practicing lawyer and my husband was the attorney general of our state of Arkansas, I was making roughly three times the money he was making in the 1970s. I could not get a credit card in my own name. (Laughter.) Now, I will not mention the company that refused to give me a credit card in my own name, but I will hasten to add I’ve never done business with them since. (Laughter.)
So this is a problem that countries have had to face over the last 50 years, and the barriers have slowly but surely come down, either because governments passed new laws or courts said according to our constitution these barriers are not constitutional and they must disappear. Political action created that. But mostly, it’s because people woke up and said oh my gosh, we’re losing business and we’re losing economic growth, and we’d better make sure that women have the same opportunities to contribute to the growth of Africa that men do.
Now, at the State Department, we have made it a priority to help women break down barriers. And among our efforts, we are helping women entrepreneurs connect with potential partners. And we recently sponsored the first-ever delegation of American businesswomen from the technology industry to Liberia and Sierra Leone. That visit led to the creation of a new business incubator in Sierra Leone focused especially on women.
And last August, on the margins of our meeting in Washington, we kicked off the African Women’s Entrepreneurship Program, AWEP. And in just a few months, these remarkable women have already made lasting connections with American companies. They’ve begun trading with each other, and they’ve devised new ways of promoting their businesses. I just met some of them and saw some of the products that they are producing. And today, I am very happy to announce that the United States will contribute $2 million this year and next so they can continue their work. And thank you to Zambia for hosting them as well. (Applause.)
We will be inviting leading businesswomen from across the continent to attend leadership programs in the United States this fall and next summer, because we want to make sure they have the tools and the skills that they need, and then we will connect buyers and sellers, which is exactly what AGOA is intended to do.
But even when African companies make connections with American businesses, they may not yet have the capacity to make and ship products that are competitive in the U.S. market. So this is a second barrier. We need to get more out of AGOA by making sure we break down those obstacles.
Let me give you an example. A few years ago, a large American home-furnishing company placed a trial order of 5,000 baskets from a producer in West Africa. They wanted to see if he could deliver what they needed, and if he could, they might buy more. The producer was delighted to have the order, but he had never filled an order of more than 500 baskets.
Now, he put in 24/7 days, he hired extra workers, and he was able to deliver the goods. But when the American company placed their next order, they didn’t call him. Why? They called one of his competitors in Vietnam. Why? Because the Government of Vietnam offers basket makers low-interest loans and makes sure the supply chain for straw moves smoothly. The competitor, therefore, with the subsidies, with the supply chain support, could produce baskets for about half the cost.
So it wasn’t that the Vietnamese company worked harder. It was that their government helped pave the way for their success. (Applause.) It should not be that way. And if we are going to reach our goals, it can’t be that way. African entrepreneurs with the talent and the drive deserve the resources they need to compete for the highest-paying customers, whether they’re next door, in the United States, or anywhere else in the world.
That’s why the three regional trade hubs that USAID sponsors do much more than connect African and American businesses. They support African entrepreneurs in writing business plans, raising capital, increasing their productivity, improving their production processes so they can meet the export standards set by governments and companies around the world.
In fact, the staff at our regional hub in West Africa are helping that basket maker write a new ending to his story. With their support, he and his fellow producers are now working together to buy straw in larger quantities, which brings the cost down. That’s supply and demand. And they are exploring low-interest loans from nongovernmental organizations, which will help them level the playing field with their competitors.
But let me say I hope someday their own government will offer them these same opportunities. (Applause.) Let’s look at what is working in other countries like Vietnam. And it is not the work ethic. Do the Vietnamese people work hard? Yes, they do. Do African people work hard? Yes, they do. And as the minister said, yes you can. There is no reason not to be competitive. (Applause.)
So when we raise awareness and we increase capacity, we can produce amazing results. Just ask Caroline Sack Kendem, who runs Ken Atlantic, a clothing manufacturer in Cameroon. She employs 98 people—mostly women. And last month, thanks to the connections that she made through our networking program hub, as well as the training and support that she received from that USAID trade hub, she landed a major new client and signed a $2 million contract to make tens of thousands of knitted shirts. And soon, she won’t have 98 employees. She’ll have 200.
And we want to be able to tell far more success stories like this. That’s why Ambassador Kirk announced a new trade capacity building initiative that will provide up to $120 million over four years to intensify and focus the work of our African trade hubs.
But let’s acknowledge a hard truth. A business is only as successful as the environment in which it operates. A shipping company cannot thrive if it is overwhelmed by government regulations and drowning in paperwork. Buyers and sellers can’t do business if they are harassed by corrupt officials. A strong economy requires a supportive business climate that empowers every entrepreneur.
And we do need to confront poor infrastructure—roads, ports, and electric grids that drive up the cost of doing business in Africa. We are investing with our partners to improve infrastructure in places where it’s a bottleneck for trade. For example, with support from our Millennium Challenge Corporation, whose president, Daniel Yohannes, is here with us, Tanzania recently began upgrading 430 kilometers of road and installing nearly 1,600 kilometers of new power lines.
And let’s have a very frank conversation about corruption. It takes such a real toll on everyone. Every bribe paid to a customs official represents a hidden tax on the cost of doing business and a drag on economic growth. I am elevating in the State Department corruption as a major focus of our diplomatic efforts. And we are establishing an innovation fund to create incentives and boost political support for anti-corruption efforts. The United States now requires oil, gas, and mining companies that raise capital in our markets to disclose the royalties they pay to foreign governments, which will help ensure that Africa’s natural wealth benefits the people of Africa rather than corrupt officials. (Applause.)
And another challenge is armed conflict, which—in addition to its tremendous human toll— undermines the business environment by making it more expensive and more dangerous for goods and workers to cross borders. We work on this every single day and we will continue to do so because working with our African partners to resolve and prevent conflict is good for business.
And because healthy and productive people form the foundation of any thriving economy, we continue to join with partners to fight HIV/AIDS, reduce maternal mortality, and end hunger and malnutrition.
This is a wide-ranging agenda for strengthening the business environment in the long run. And all of these actions require commitment from all of us.
But finally, I want to stress again a point that the minister made that I addressed in 2009 and 2010, and that is the low level of economic cooperation, integration, and trade among African nations. I am very pleased that this had a prominent place on the agenda this year.
The benefits of economic integration are well known. It reduces food insecurity by allowing agricultural goods to move efficiently to the places where they’re needed. It gives landlocked countries new access to ports and harbors. And it allows African companies to tap into a very promising new market—their own.
In the United States, again, we often saw parts of cities or rural areas where our poor people lived really deprived of investment. And then somebody got smart and said these folks may be poor, but they still spend money, they just don’t spend it in their own communities. And we began trying to break down the domestic barriers that we had.
Here in Sub-Saharan Africa, there is less trade between and among the countries than in any other region in the world. Why is that? Well, some of it is because we need to improve infrastructure, but the most important limiting factor is not roads or airports. It’s people. Trade officials are under pressure to protect their own home-grown industries. Government leaders of smaller countries are concerned that larger countries will gain too much influence. Business owners worry about losing out to competitors across the border.
Now, these are not problems are not unique to Africa, but they have a disproportionate impact on Africa. So ultimately, it is up to the leaders of this region to decide if you want economic integration. It does mean you have to take on entrenched interests and respond to concerns about new competition, while making the case over and over again as to why the people in your country will benefit from expanded trade. I know this is difficult. Although I am out of politics now, I understand how hard it is to tell a longtime supporter something he doesn’t want to hear. But sometimes it is the right and important thing to do.
This week’s summit in South Africa to discuss a tripartite free trade agreement that would cover 34 countries is a very important step toward deeper integration. So is the East Africa Community’s common market protocol, which is making it easier for goods and workers to move among the five member nations. The United States will support the East Africa Community in its efforts to achieve a common market. We are still in the early stages of planning, but if our approach is successful, we will look to replicate in every regional economic community in Africa that is as committed to integration.
So the EAC and the tripartite talks have created real momentum for integration. And I urge you to make the most of this momentum—continue it and accelerate it, because expanding trade within Africa is one of the best ways to promote growth, to put more paychecks into more pockets.
Now, in all the areas I’ve discussed today, we do face hard choices. And we have to decide: Do we foster more connections and give them the tools that people need to compete globally, or not? Will we fight corruption and improve the business environment, or not? Will we speed up regional integration, or not? And will we hold ourselves accountable for delivering results, or not?
When the United States Congress considers renewing AGOA, they will be asking tough questions like these, and I want us to be ready with answers. I believe in Africa’s future. I believe with all my heart that the best days are ahead. But it doesn’t happen by hoping for it or wishing for it, but only by rolling up our sleeves and working for it.
So let’s move together into that future. And as we do, let’s remember the people whose talents and energy we are trying to unlock: the farmer in Tanzania, the basket maker in West Africa, the clothing manufacturer in Cameroon, the technology entrepreneur in Zambia. Because our work together is not about us; it is about the people who get up every day trying to make their lives better. And it is particularly about the young people who, given technology, expect so much more of us.
I am committed to doing everything I can to help every man and woman, every boy and girl, live up to his or her God -given potential. And I want to work with you to make sure that we have real results to be able to demonstrate.
It is now my pleasure to declare that this session of the AGOA Forum is closed. Thank you all very much. (Applause.)
PRESIDENT BANDA: Thank you. Thank you very much. I would like to take this opportunity, once again, to welcome you to Zambia and your delegation and to tell you how happy we are that you were able to come to the AGOA forum in our country and that we’re able to receive you here, the guest of honor, and all the Americans who have come here to participate with the African commonwealth in this forum.
With regard to our country, Zambia, I think that the (inaudible). We hope that you will come here some more times. And I’m sure that the Zambian people are very happy to see you in person. Our country is going through a very exciting period in terms of the economy. We believe that as a result of our mining activities, our agricultural activities, our tourism, for our country’s (inaudible) transformation. And, yes, so happy that you came. As (inaudible) American brothers and sisters so we can work together, transform our country.
I’d like also to remind you, it is a very special year for Zambia. When you say 2011, every Zambian knows what you are about to talk about, namely that this is our election year. And I can assure your Excellency and all your colleagues that we’re very proud and impressed that, since 1964, when we had our independence, to date we have had good and fair and free and transparent elections. Of course, the country has grown, for the election has moved from three million plus in 1964 to 13 million now. The economy itself has grown, but, of course, the problems have increased.
The opposition parties also have increased. We have many of our countrymen challenging us in this election, as it should be. It is their right and good for the country that we should have open (inaudible), and that’s when we start showing excellence, in that real elections will be held within the next few months and that they will be transparent, that we will work with all our collaborating partners, including the United States, to ensure that these elections are free and fair and transparent and held in a peaceful atmosphere.
We will have the little hiccups; when we (inaudible) violence. I personally made sure that I went to court to challenge the results of one these elections where the most violence was observed. This is the – in the northwestern province. And my reason for going to court was in order that the courts should pronounce themselves, which they did, against violence. It doesn’t serve anybody any good, and the Zambians should know better. We are surrounded by some of our less fortunate brothers and sisters who have violence, and for now we are struggling to win back on their dreams. So we do need more peaceful – and I want to assure your Excellency we are going to continue to work with you and all other countries to ensure peace on our continent.
So if I may be allowed to pause here so that you can ask questions later.
SECRETARY CLINTON: Thank you very much, Mr. President, for the warm welcome to Zambia. And I also want to acknowledge Mrs. Banda, who was with me earlier as we celebrated the African Women’s Entrepreneurship Program, which Zambia has agreed to host. We just attended the closing ceremony of the AGOA forum, and I want to congratulate you, Mr. President, and your government, for hosting such a successful conference. Ambassador Ron Kirk, our trade representative, has told me, and in our meeting with you repeated, what he said about how successfully organized and executed this conference was. I’m looking forward also tomorrow to helping launch the Zambia-U.S. Chamber of Commerce that will help to create more jobs in both of our countries.
We’ve always valued our partnership with you, globally and regionally, as well as bilaterally. Zambia has joined the United States and the international community in many principled stands in support of human dignity, freedom of speech and religion, and the fight against nuclear proliferation. I particularly want to thank Zambia for joining in the international community’s strong stance on behalf of the rights of the people of Syria and Iran at the Human Rights Council.
The United States also values your role as a regional leader. Since your independence, Zambia has been a bulwark for southern Africa, and you have evolved into a strong advocate for peace, stability, and tolerance across the region. Thank you for hosting thousands, hundreds of thousands of refugees, including many Angolans who seek refuge and peace inside your country. Thank you for supporting calls to stop state-sponsored violence, including in Zimbabwe. Thank you for supporting a peaceful transition in Madagascar.
When the people of Zambia adopted multi-party democracy in 1991, you sent a powerful message to Africa and the world: Political leaders are answerable and accountable to their people, not the other way around. Candidates may express passionate differences in campaigns, but then must accept the people’s vote and join together for the sake of the country. And as Zambia approaches another national election, once again, you have the chance to set a model for the rest of the world.
I see many positive (inaudible) on Zambia’s resilient state and confidence in your democratic process. As the president has just said, in our meeting we discussed the importance of conducting the upcoming national election peacefully, transparently, fairly, and freely, in a manner that reflects the will of the Zambian people. The president has invited both international and local observers to monitor the election, and during his campaign, he has spoken out repeatedly against election-related violence. That is an important message for all Zambian citizens, including the one million young people voting for the first time. I congratulate Zambia on registering more than 82 percent of your eligible voters.
Too often the news is dominated by what’s wrong with Africa, not about what’s right. Zambia has shown it is on the right path to tackle its challenges. We have achieved important results together through our close collaboration on health issues, particularly in the fight against HIV and AIDS. And yesterday, the United States joined with other global leaders in calling for action towards eliminating pediatric HIV by 2015. We are getting close to the virtual elimination of mother-to-child transmission of HIV in Zambia, and we see people living with this disease now increasingly productive lives.
There is a lot of work ahead of us. This is a country that is moving ahead. And, Mr. President, the United States is fully committed to supporting Zambia’s progress in the years to come.
Thank you (inaudible).
PRESIDENT BANDA: Thank you.
MODERATOR: Our first question (inaudible).
QUESTION: Madam Secretary and Mr. President, is the U.S. trade approach outlined today going to be sufficient to counter growing Chinese influence in Africa? And Madam Secretary, if I may, if you care to address the report that you’re considering a move to the World Bank? And if I can squeeze another one in, you spoke to Secretary Gates’ comments that NATO is irrelevant unless the U.S. contributes more? And thanks.
PRESIDENT BANDA: Very smart. And to repeat my question just a little slower, the question about Chinese investment stuff.
QUESTION: Yes. The U.S. today outlined the trade approach for Africa, and my question was whether it was going to be enough to counter Chinese influence in the continent?
PRESIDENT BANDA: You mean the involvement of the United States?
SECRETARY CLINTON: They talk so fast, Mr. President, they get three questions in.
PRESIDENT BANDA: Yeah, yeah, Hillary. (Inaudible)
SECRETARY CLINTON: I’d be happy to if you want me to.
PRESIDENT BANDA: Yeah. (Inaudible.)
SECRETARY CLINTON: Let me also begin by answering the question on China, and then I’ll go to the World Bank and then end with Secretary Gates.
China’s presence in Africa reflects the reality that it has important and growing interests here on the continent, including access to resources and markets, as well as developing closer diplomatic ties. The United States does not see the Chinese interest as inherently incompatible with our own interest. I told President Obama, and I have made clear on numerous occasions, we do not see China’s rise as a zero-sum game. We hope that it will become successful in its own economic efforts on behalf of the Chinese people, and that it will assume a greater and more responsible role in addressing global challenges. Now, we are, however, concerned that as China’s foreign assistance and investment practices in Africa have not always been consistent with generally accepted international norms of transparency and good governance, and that it has not always utilized the talents of the African people in pursuing its business interests.
We want to work more closely with China and other countries to make sure that, when we are engaged with Africa, we are doing it in a sustainable manner that will benefit the nations and people of Africa. And therefore, we have begun a dialogue with China about its activities in Africa. We’ve instructed our missions in Africa to reach out to Chinese colleagues in order to explore potential areas of cooperation and assess China’s overall role in their respective countries.
Now secondly, with respect to the World Bank, I have had no discussions with anyone. I have evidenced no interest to anyone. I do not have any interest and am not pursuing that position. It’s a very important institution, and obviously we want to see the World Bank well-led. We work closely with the World Bank, but I am absolutely dedicated to my service as Secretary of State. We have a lot of work ahead of us and we are doing all we can to implement the vision of our improved and growing relationships around the world, including right here in Africa, on behalf of our country.
Finally, Secretary Gates’s recent remarks underscored how this alliance, the greatest alliance in history, cannot get complacent. We all have to step up and share the burdens that we face in responding to 21st century threats, and many members are doing just that. Every country in the alliance – including, of course, our own – is under financial pressure. We are being asked to cut spending on national security at a time when we are living in an increasingly unpredictable world. And I fully agree with Secretary Gates that we all bear a responsibility to ensure the safety and security of our citizens, and that requires that we maintain an adequate investment in defense, and that often we have to bolster our investments in security to face these new threats. Now, as the events in the Middle East and North Africa have shown, we cannot predict where threats will occur and we have to be ready, willing, and able to work together.
But Secretary Gates also underscored his personal commitment, over the course of a very long and distinguished career, to NATO. And as he said, through the challenges that NATO has faced, we have managed to get the big things right time and time again. We’ve always come together to make the tough decisions. I don’t think that’s going to change. So we are confident but we are not complacent.
PRESIDENT BANDA: Thank you. Can I just say something about the Chinese? The – our country has been in a close relationship with China from those early years before our independence. So we got our independence in 1964 and we worked closely with the Chinese, as indeed with any other country that’s supported our desire to be independent. (Inaudible) African countries. And earlier on, after our independence, (inaudible) build another route in the 1940’s. So one of the problems that we are facing is the result of the routes to the south. At that time, as we all know, there were problems in South Africa, but there are problems and programs of UBI and Zimbabwe and so on. And so we have always worked with the Chinese.
And then during the recent financial crisis in the world, we were fortunate at the time that the Chinese were still able to continue their appetite for what we were producing here in Kopa. And I think that the whole world benefited from that and we were able to emerge from the financial crisis in the world sooner than later.
I agree with Secretary Clinton that those who wish to come and work with us and invest in our country, and I want to take this opportunity to actually invite everyone to come, and particularly the United States of America, because I know you have the know-how, you have the ability, especially in agriculture, and you have the excess money to take holidays of tourism and in many other places, that Zambia will benefit a great deal. And it’s true that our governments are very sensitive about their people. We are very sensitive here in Zambia about employment for our people, how they are treated when they are working in your various institutions. So I agree with Secretary Clinton, but those who come here to do business must respect our laws and must look out for our people in a different manner. And China is managing a very strong economy, and we know that they have done business with everybody. And the United States, we appreciate their being this country that we don’t exempt them from making sure that they follow the laws of our country. Thank you.
QUESTION: Good evening. My name is Angela Chishimba from Zambia Daily Now. And just please – and I would like to find out how you rate Zambia’s economic performance. And I would also like to find out what assistance you are going to give in terms of skill transfer and capacity building to our Zambian entrepreneurs who are finding it difficult to add value to their goods for export to the U.S. Thank you.
SECRETARY CLINTON: Excellent questions. One of the goals of the AGOA conference this year was to look at ways that the United States could better assist entrepreneurs across the continent, but in particular in Zambia as the host of this very successful conference. At the conference, Ambassador Kirk announced that the United States will be investing significant dollars – I think up to $120 million – to try to assist over the next four years the acquisition of skills, the ability to do business plans, understand how to get into markets, so that we are not just coming and saying we’d like to do business or we’re going to just bring Americans here to do business. We want to stimulate more Zambian business.
I also very much appreciate that Zambia has agreed to host the African Women’s Entrepreneurship Program, because we have credible evidence that the more women are able to start and (inaudible) businesses and small and medium-sized enterprises, the more a country will actually prosper economically.
And finally, Zambia is a country that we are focusing on in our Feed the Future program, which is an effort to cooperate jointly between the United States and Zambia on improving agricultural productivity, creating more value-added products that can be not only exported to the United States but exported within Africa and Asia and everywhere else. So we’re quite committed to working with you.
And then finally, tomorrow, I will have the great honor of transferring a pediatric AIDS hospital to the Government of Zambia. We have worked for a number of years in Zambia, and we have seen tremendous progress in the skills of the Zambian health professionals. As I said, we have practically eliminated mother-to-child transmission of HIV. That is because we, again, have partnered with you. So the United States intends to remain – in fact, we hope even become a better partner in helping to build the economy of Zambia.
QUESTION: Thank you very much.
MODERATOR: One more question from Voice of America, and I hope (inaudible). (Laughter.)
PRESIDENT BANDA: That’s pretty good. (Laughter.)
QUESTION: Madam Secretary, have you received any assurances from the Chadian foreign ministry these evening that President Deby supports the decisions of the Contact Group on Libya? And are you asking the Government in N’Djamena to do anything specifically toward those ends?
SECRETARY CLINTON: Another important question. Let me begin by saying that I met with the foreign minister from Chad primarily to talk about Sudan because he had just come from meeting with the leaders of both the North and the South as an effort by President Deby to mediate the conflict. We are quite concerned at the outbreak of violence along the border, not just in Abyei, but other places in Sudan. And we are conscious that the clock is ticking on Southern Sudan’s independence. So in working with the African Union, with Prime Minister Meles of Ethiopia, whom I will see in a few days, with Thabo Mbeki, the envoy, we’ve encouraged the Chadian initiative. We think that it could be quite value-added.
In addition, with respect to Libya, the Chadian Government does not support Qadhafi. They have made that very clear. They want to see a peaceful resolution to the conflict. We are very supportive of their efforts to reach out to the TNC, which they have been doing – the Transitional National Council – which they have been doing in a more sustained way in recent days. So again, we think – Chad has its own difficult history with Libya because Qadhafi tried to seize part of the territory some years back. They are cautious about the outcome and wanting to see it move toward a point of resolution, and we think, again, they can be valuable in sending a clear message that Qadhafi must go.
SECRETARY CLINTON: Speak up just a little bit.
PRESIDENT BANDA: A little bit more.
QUESTION: Good evening.
SECRETARY CLINTON: Perfect.
QUESTION: My name is (inaudible), and I write for (inaudible) television. I would like to draw your attention to the issue of climate change and how the U.S. Government (inaudible) the developed countries, what practical assistance developing countries like Zambia (inaudible). How do you look at the possible achievements or better progress in as far as (inaudible) 2015, very close by. Thank you.
SECRETARY CLINTON: Thank you. Again, I appreciate both questions. The president and I discussed climate change, the importance of addressing climate change here in Africa. As you know, the next conference will be held in Durban, South Africa. We think that there was progress made in Cancun last year that we want to see built on, and part of that progress was the establishment of a Green Fund that would channel financial assistance to countries that were unable to adapt and deal with the effects of climate change or mitigate against potential effects. We’re very hopeful that the Green Fund will be firmly set up by Durban or as part of the Durban agenda. The United States is committed to working through that fund. And we have also been working closely with the African representatives with respect to the necessary support that Africa deserves in dealing with climate change.
So I think you’ll see continuing efforts to build on the progress in South Africa, but we all have much more to do. We are not doing enough, and this is one of President Obama’s major points about why we need to move towards clean renewable energy, why we need to all look at how we can adopt agricultural practices and other behaviors that will lessen the impact of climate change. So the world has to do more, and we stand ready through our aid programs to assist on that.
Your second question – can you remind me?
MODERATOR: She has meant to ask two questions in one. (Laughter.) They are very good.
QUESTION: Well, I wanted to get you on that (inaudible) –
SECRETARY CLINTON: Oh, yes. The –
SECRETARY CLINTON: Well, we’ve made progress, but not enough. At the 2010 United Nations General Assembly, we reviewed the progress that has been made, but I certainly am not satisfied. I don’t think anyone should be satisfied. We’ve made progress in certain statistical areas, but we have not crossed the threshold on education or healthcare the way that we need to. So I think as we move toward 2015, a lot of the lessons that we tried to analyze in 2010 need to be applied. And that’s one of the reasons why we’ve reorganized a number of our aid programs, our health programs, our food and agriculture programs. We’re trying to really zero in on results. We want to see results. So we want to set targets for decreasing maternal mortality and infant mortality, deaths from malaria, tuberculosis, HIV/AIDS, so we can set some standards and push towards those Millennium Goals. But the United States and this Administration remain very committed.
MODERATOR: Thank you very much. Just for the background of the press, 34 years ago, the president of Zambia was the minister of foreign affairs, and he had the privilege of hosting dinner for the visiting U.S. Secretary of State Mr. Henry Kissinger. Today, he is the president of Zambia and has another opportunity to host a U.S. Secretary State.
SECRETARY CLINTON: (Laughter.) From 1976 to 2011. (Laughter.) Thank you.
QUESTION: Welcome to Zambia.
SECRETARY CLINTON: Thank you very much. I’m delighted to be here in the country and to have this opportunity to talk to you.
QUESTION: How do you find the stay so far?
SECRETARY CLINTON: It has been one of the warmest welcomes that I could imagine. The AGO conference was a great success by everyone’s measurement. In fact, our Trade Representative, Ambassador Kirk, said it was the best ever, very well organized. And I had an excellent set of meetings with the president and other government officials and then, of course, had the opportunity to be part of this dedication ceremony where the United States Government is turning over the Paediatric Centre of Excellence to the Zambia Government.
QUESTION: Okay. Now, African countries are calling for the extension of AGOA beyond 2012. Does the American Government share this opinion?
SECRETARY CLINTON: Yes. We are committed to extending it and we will be working with the Congress to get that done. We’ve learned a lot from our African friends about what can be done to improve it, and we are committed to doing that.
QUESTION: Does the calling for the extension of AGOA signify the importance the African leaders are placing on developing Africa and reducing poverty, and what does this mean to your government?
SECRETARY CLINTON: I think you’re right that clearly AGO is, first and foremost, an effort to increase economic opportunity within Africa through trade and investment. We want to see more jobs created, greater development occur, and we think that AGOA is one of the tools that African governments can use. And I was very pleased by my discussions with President Banda and other ministers in the government as to their understanding of what is possible to make life better, especially in rural areas and especially among the poor.
QUESTION: Well, one of the major concerns – I’ll draw you to the issues of economics here. One of the major concerns by people of this treaty is the fact that the economic indicators are showing that the economy is growing, but the people on the street are not feeling it. What will be your view on that, especially the fact that the International Monetary Fund has placed Zambia as the force in Africa in terms of economic growth?
SECRETARY CLINTON: Well, first, I think that growth is occurring but it’s not broad enough and it doesn’t include enough people. It also isn’t broadly spread across the country so that the rural areas can feel the benefits to the extent they should.
There are several things that have to be done. Regulations have to be removed or limited. There have to be more support systems for businesses so that they can grow. There must be an absolute full-out attack on corruption, which is like a hidden tax on businesses preventing businesses from growing. There has to be the breakdown of barriers between countries in Southern Africa so there can be more trade, which would benefit everyone. And unfortunately, Sub-Saharan Africa is the region in the world that trades the least with each other.
So we’ve been talking with the government, as we do in every country where we’re working with AGOA, about the steps that can be taken at the governmental level. At the business level, we’re helping businesses learn how to do business plans, learn how to get better access to credit, learn how to use technology in their businesses, learn all of the ins and outs of exporting. So it’s a two-tiered approach: The government has to change policies and be more supportive of business and the investment climate, and businesses themselves have to increase their skills to be more competitive. And through that, we will see the creation of more jobs.
QUESTION: In view of the post-election violence that has rocked most African countries, how does this affect American investment confidence in the continent of Africa?
SECRETARY CLINTON: Well, first and foremost, we regret any post-election violence because of the toll is takes on the people of the countries that are affected. We also want to see democratic elections that are free, fair, transparent, and where the losers honor the outcome. That’s an important step not just for Africa but around the world.
And so we’re working to try to make sure that we offer whatever help we can. We’ve been working closely in Kenya, in Nigeria, and elsewhere. We’ve offered help here in Zambia. We think there are a number of steps that can be taken to make sure that the elections run smoothly here. Because you’re right; if there is violence, investors say, wait a minute, maybe I should think twice, and we don’t want that to happen.
QUESTION: Well, and finally, this is an election year for Zambia. Zambia goes to the polls this year. Now, in view of the post-election violence, obviously, that we’ve just talked about, what is your advice to the Zambian youths who are in the majority of the electorate and, obviously, the political leaders themselves?
SECRETARY CLINTON: If you are a young person in Zambia, this election is much more about you than about your parents and your grandparents. But if you don’t vote, leaders will not think you care and they won’t pay attention to your view.
So we know that more than a million young people have been registered for this election here in Zambia, and I would urge your listeners to take the time to educate yourself about the candidates and to actually go and vote, because you should have the right to be sure your voice for change is heard.
As you know, President Obama appealed to young people, and young people responded, because there are more young people in the world than any other age, but they don’t vote like it. The biggest voting bloc nearly in any country are people over 65 because they’re used to voting and they think they have something to vote for or against.
So I hope that young people here will take advantage of this opportunity and that the elections, as the president has certainly told me and I expect to see, will be free, fair, transparent, so young people, your votes will be counted.
QUESTION: U.S. Secretary of State Madam Clinton, thank you very much.
SECRETARY CLINTON: Thank you. Very good to talk to you. Thank you, sir.
QUESTION: Thank you very much.
Deputy Assistant Secretary Yun’s testimony on the Block Burmese JADE Act and Recent Policy Developments
Chairman Ros-Lehtinen, Mr. Berman, and Members of the Committee, thank you for inviting me to testify today. I am pleased to have the opportunity to discuss the central aspects of our Burma policy, including elements of our two-track approach that comprises pressure coupled with principled engagement. In light of my recent visits to Burma in December 2010 and again two weeks ago, I would also like to provide an overview on the Administration’s efforts to promote democracy and human rights in Burma and on key recent developments in Burma including the release of Aung San Suu Kyi from house arrest, the 2010 elections, and the formation of a government headed by former top regime general and now President Thein Sein.
After a comprehensive policy review, which Assistant Secretary of State Kurt Campbell outlined for your Committee in October 2009, the United States launched a dual-track Burma policy, combining pressure with direct dialogue with the regime. We are currently pursuing these parallel and complementary tracks in a full-scale effort to advance progress on core concerns of the United States and the international community, including the unconditional release of all political prisoners, respect for human rights, and an inclusive dialogue with the political opposition and ethnic groups that would lead to national reconciliation. We also urge the Government of Burma to respect its international obligations, including adherence to all UN Security Council resolutions on nonproliferation. We have made these representations repeatedly in the context of Burma’s nontransparent relationship with North Korea. Although meaningful progress remains elusive, I believe we must continue to bring the full range of diplomatic tools to bear and use both dialogue and pressure to promote positive change in Burma.
First, let me start with the pressure side of our policy. We play a leading role in the international community in shining a light on the regime’s dismal human rights record and signaling to Burmese authorities that the world is watching. We support an annual resolution at the UN General Assembly on Burma that draws attention to human rights abuses and calls for cooperation with the international community to achieve concrete progress with regard to human rights, fundamental freedoms and political processes. In 2010, this resolution passed by a higher vote margin than in any previous year. More recently, in March of this year, we supported the annual resolution on Burma at the UN Human Rights Council to renew the mandate of the UN Special Rapporteur on the situation of Human Rights in Burma, Mr. Tomas Ojea Quintana. We continue to call upon the Burmese government to fully cooperate with Mr. Quintana, including by allowing him to visit the country again, which authorities are refusing. Secretary of State Clinton has also expressed our commitment to pursuing accountability for human rights abuses through establishing a commission of inquiry for Burma in close consultation with our friends, allies, and partners at the United Nations.
Coupled with this international pressure, we maintain extensive, targeted sanctions against senior leaders of the Burmese government and military, their immediate family members, their key supporters, and others who abuse human rights. We work closely with our key allies such as the European Union (EU) and its member states, Canada, Australia, Japan, Korea, Southeast Asian nations and others to encourage them to impose sanctions and to press the regime to make meaningful changes. We were pleased that in April 2011, the EU renewed its Common Position on Burma, which authorizes EU sanctions on key regime officials. U.S. sanctions are based on a series of executive orders and key legislation passed over the past 20 years, including the Burmese Freedom and Democracy Act of 2003 and the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008. Successive Administrations have cooperated closely with Congress to ensure that these restrictions, whether economic, financial or travel related, have the same purpose: that the United States will not allow the use of its resources to perpetuate abusive, authoritarian rule.
The Block Burmese JADE Act of 2008 is the most recent piece of Burma-specific legislation and it constitutes an important component of the U.S. sanctions regime. There are several key aspects of the JADE Act, which is more than a ban on Burmese jade: it focuses on stopping anti-democratic activities in addition to preventing the regime from profiting from trade in precious gems.
The JADE Act includes provisions for financial sanctions and bans the issuance of visas for travel to the United States by former and present leaders of the regime, officials involved in the repression of human rights, other key supporters of the regime, and their immediate family members. These provisions complement already existing economic sanctions and travel restrictions.
The JADE Act also required the appointment of a Special Representative and Policy Coordinator for Burma to ensure high-level, dedicated focus on improving the situation in Burma and promoting genuine democratic reform. I am very pleased to highlight that on April 14, the President nominated Derek Mitchell for that position. He is the right candidate for this tough job. He brings a formidable blend of Asia expertise and senior government and civil society experience to the table. If confirmed, we have every confidence that Mr. Mitchell will fully carry out his mandate to advance all aspects of our Burma policy, pursuing both pressure on and engagement with Burmese authorities as warranted by their actions. If confirmed, he will further strengthen ties with key Burmese stakeholders in civil society, including the National League for Democracy (NLD) and ethnic groups, and coordinate our efforts with Congress, allies, and the NGO community for the benefit of the Burmese people. We look forward to his leadership and hope that his Senate hearing and confirmation will take place as soon as possible.
Finally, the JADE Act bans the import of Burmese jadeite, rubies, and related jewelry into the United States. The first line of defense is our Customs and Border Patrol certification requirements, issued through a joint DHS/Treasury final rule. We have been very successful in enforcing this prohibition through the final rule, which requires every importer to have written certification at the time of import from the exporter affirming that none of the imported jewelry contains jadeite or rubies mined or extracted from Burma. Our prohibition has been most effective for Burmese rubies and jewelry, as the demand for jadeite in the United States is virtually nonexistent. The second line of defense is the jewelry industry itself; industry sources note that the most valuable rubies from Burma are high quality and very distinctive and that no one in the United States is importing rubies or related jewelry from Burma. The Jewelers Vigilance Committee has conveyed to us its confidence that no rubies imported into the United States were mined or extracted from Burma and that no importer in the U.S. would want to risk losing their goods or reputation by violating what they refer to as a well-known ban.
Burma’s regime continues to reap significant revenues from its tightly controlled gemstone industry, and the JADE Act does not cut off all international trade in Burma’s gemstones. Burma’s export of rubies and jadeite is doing well, in particular because China’s domestic market for jadeite and related jewelry is on the rise. We will continue to call on China and India and other neighboring countries to cooperate with us on this issue.
Before I turn to the engagement track, I would like to note that we regularly hear claims from neighboring countries and a variety of other partners that our sanctions negatively affect the Burmese economy and help to impoverish the Burmese people. Following Burma’s elections, some Southeast Asian nations as well as some political parties in Burma called on the United States to ease or remove sanctions. The Administration firmly believes that easing sanctions at this time is premature, absent fundamental reform or other regime actions to address core international concerns, and that Burma’s poor economic performance is primarily due to the regime’s gross economic mismanagement and pervasive corruption.
While sustaining pressure on the Burmese regime, we have initiated efforts to engage in direct dialogue with senior leaders in the Burmese government over the past 18 months. Assistant Secretary of State Campbell traveled to Nay Pyi Taw, Burma’s capital, in October 2009 and May 2010 to meet with senior officials and demonstrate our willingness to embark on this new path of principled engagement. He also met with Burma officials on the margins of UN General Assembly sessions in 2009 and 2010 and in several forums held by the Association of Southeast Asian Nations (ASEAN). During every visit to Burma, we always consult Aung San Suu Kyi, leaders of the NLD, and other civil society leaders.
Building on the dialogue Assistant Secretary Campbell began, I have also made two visits to Burma: one in December 2010 and one more recently, in May 2011. In those meetings, Burmese authorities continue to express a desire for improved relations with the United States and identified several confidence-building measures that they would like from the United States, including our use of “Myanmar” instead of Burma as the official name of the country and our direct assistance toward achieving the country’s Millennium Development Goals. The Government of Burma, however, has been opposed to taking any of the steps we, the UN, and others have raised to address core human rights concerns and to begin an inclusive dialogue leading to national reconciliation and real democratic reform. The regime continues to insist that all of these issues are “internal issues.”
We are disappointed by the lack of any results from our repeated efforts at dialogue. When we embarked on our dual-track policy, we went in with our eyes wide open and we expected that efforts on engagement and real reform would be a long, slow process. We will continue to try, while also seeking concrete ways to ramp up pressure on the Burmese government both in private and in public, to undertake genuine reform. We expect that the Special Representative and Policy Coordinator for Burma will play an essential role in furthering all aspects of our policy and determining if there is a viable way forward.
Against this policy backdrop, I will briefly provide an update and assessment on the political dynamics in Burma, highlighting the government’s election process and its results, the future role of former regime leader Senior General Than Shwe, and the release of leading opposition figure Aung San Suu Kyi.
Burma’s 2010 elections were its first in 20 years. These elections were based on a deeply and fundamentally flawed process with highly restrictive regulations that excluded Burma’s largest pro-democracy party, the National League for Democracy (NLD). They took place while Aung San Suu Kyi, the NLD’s key leader, remained under house arrest, and many other NLD leaders were in prison. The regime cancelled voting in several ethnic minority areas and heavily skewed the playing field in favor of the regime’s proxy Union Solidarity and Development Party (USDP). The few pro-democracy and ethnic political parties that did compete won only a small number of parliamentary seats and mostly at the regional level. Amid widespread media and well-substantiated claims of vote rigging and manipulation, the regime’s USDP won the majority of contested Parliamentary seats, while 25 percent of all seats were reserved for military appointees. The United States clearly and consistently condemned the elections as neither free nor fair.
Not surprisingly, the elections resulted in a government comprised almost entirely of either active or former military members of the regime. Together with military appointees, regime-affiliated members occupy 89 percent of all seats in the legislative bodies. This legislature convened in Nay Pyi Taw to rubber stamp approval of Burma’s President, two Vice Presidents, and key Presidential appointees. With few exceptions, all of those positions were filled by former military leaders and members of the government’s proxy party. The formal regime State Peace and Development Council (SPDC) dissolved and President Thein Sein,
the former Prime Minister within the SPDC structure and a top regime military leader, assumed power on April 1, 2011.
The convening of Parliament and the formation of a so-called “civilian” government marked the completion of what the regime refers to as its seven-step roadmap to a “disciplined and flourishing democracy.” We strongly disagree with this assessment and believe that many questions remain. Specifically, the extent of Senior General Than Shwe’s influence is still an important question. He previously held simultaneous titles as Chairman of the State Peace and Development Council, Commander in Chief of the Armed Forces, and Minister of Defense. In the government announced on April 1, he no longer holds any official title. Some observers believe he will still control the political sphere from behind the scenes while others claim that he has truly retired. Therefore, a significant degree of uncertainty exists regarding Than Shwe’s role and the respective power of the various institutions that emerged such as the Presidency and cabinet, the Parliament, the United Solidarity and Development Party and the military.
With former regime officials occupying most key positions in all branches of government, the United States is not optimistic that we will see any immediate change in policies or progress on our core concerns. There has been some positive rhetoric but it has not translated into concrete action or changes by the regime. In his inaugural address, President Thein Sein used terms such as good governance, transparency, and economic development, a departure from the regime’s typical focus on stability and security and threats posed by opposition figures and entities. President Thein Sein’s statements have addressed the need for economic reforms and his economic advisors recently organized a National Poverty Alleviation Seminar. Whether any of this seemingly positive rhetoric will eventually transform into concrete action toward poverty reduction and a free, open society is deeply uncertain.
There is also the noteworthy development of Nobel Laureate Aung San Suu Kyi’s release on November 13 from seven-and-one-half years of house arrest. Though welcome, her release came only at the end of a sentence that we always maintained was unjustified. She has spent 15 of the past 23 years in detention or under house arrest. We have pressed the Government of Burma to ensure it provides adequately for Aung San Suu Kyi’s safety and security as well as for all residents of Burma. Members of the international community, when allowed to visit Burma, are now able to consult with her on a regular basis, as is our Embassy
in Rangoon. I have had the opportunity to discuss a wide range of issues with her during my own visits to Rangoon.
Burmese authorities have dissolved Aung San Suu Kyi’s political party, the National League for Democracy, for refusing to re-register as a political party under Burma’s restrictive electoral laws. Although officially disbanded, NLD headquarters remains open and activities continue. Recently, the NLD has become more involved in social welfare activities such as HIV/AIDS support and care, education, and provision of clean water to address humanitarian needs. We are committed to fully supporting Aung San Suu Kyi’s efforts to seek reinstatement of the NLD as a legal, political party and to hold a direct, meaningful dialogue with senior government authorities.
I would also like to highlight the range of humanitarian assistance activities that we are undertaking inside Burma, which have been authorized consistent with or are exempted from JADE Act sanctions. Managed by USAID and the State Department, we support health and education projects targeting Burma’s most vulnerable populations and initiatives to strengthen civil society and promote democracy. Assistance includes livelihoods, water and sanitation projects, a teacher training program and activities to combat infectious diseases and grave public health threats, such as avian influenza, HIV/AIDS, tuberculosis, and malaria.
It is important to mention the effects of the ongoing civil conflict in Burma between government forces and ethnic armies that are fighting for greater autonomy. In the conduct of these wars, the military has destroyed thousands of villages and subjected civilians in these areas to pillage, forced labor, killing and rape. This ongoing internal conflict and the regime’s repression have created significant refugee flows and serious burdens on neighboring countries that are hosting Burmese refugees.
While regime-created humanitarian crises, large-scale displacement and human suffering will only come to end through political change that promotes genuine democracy and respect for human rights, we must do what we can in the meantime to provide humanitarian assistance and protection to those who have had to flee their country of origin. For more than 20 years, we have provided crucial support to UNHCR and NGOs for humanitarian assistance and protection to Burmese refugees who have fled from persecution and violence to neighboring countries. Since 2005, the United States has resettled approximately 70,000 Burmese from Thailand, Malaysia, Bangladesh, and India, almost 50,000 of whom were from the Thai-Burma border region. Later this month, the Department of State’s Assistant Secretary for Population, Refugees and Migration will be in Bangladesh to address serious issues of Burma’s ethnic Rohingya refugee population in that country. We also support the International Committee of the Red Cross, which facilitates family member visits to political prisoners and provides orthopedic and prosthetic services to landmine victims. These initiatives enable us to tackle immediate humanitarian issues that affect some of the most vulnerable people in Burma.
Our challenges in Burma remain daunting and the human rights situation deplorable. Though Aung San Suu Kyi is free, over 2,000 political prisoners languish in detention, the conflicts and the attacks against civilians continue in the ethnic minority areas, and millions of Burmese citizens are denied basic rights including freedom of speech, assembly, and association. The United States alone cannot achieve progress in Burma, and as I noted at the outset of my testimony, we are tirelessly working with our European allies and our ASEAN and regional partners to urge the Burmese government to constructively engage with the international community and address these long-standing issues. India and China remain important to this issue and we regularly discuss our concerns with them about the Burmese regime. We are in complete agreement with the JADE Act’s call for a unified and comprehensive approach to promote long-overdue change for the Burmese people aspiring for genuine and meaningful progress.
Thank you for inviting me to testify before you today. I welcome the opportunity to answer your questions.
MS. FULTON: Good afternoon, and welcome to the State Department. I’m very pleased that you could join us for a special press brief this afternoon on the 2011 U.S. Africa Trade and Economic Cooperation Forum, known as the AGOA Forum. We’re very fortunate today to have with us Ambassador Demetrios Marantis, who’s the deputy U.S. trade representative, Assistant Secretary Johnnie Carson, assistant secretary for the Bureau of African Affairs, and Patrick Fine, the vice president of the Department of Compact Operations at the Millennium Challenge Corporation.
At this time, I’m going to turn it over to Ambassador Marantis. Each of our speakers will make a brief statement, and then we’ll open it up for questions. Thank you.
AMBASSADOR MARANTIS: Hi, everybody. This is much more snazzy than what we do at USCR in terms of room. We’re really excited to be here today and talk to you about the upcoming AGOA Forum, which, as you know, will take place in Lusaka, Zambia next Thursday and Friday. The AGOA Forum, as many of you know who have been involved in it before, is an amazing opportunity to gather together U.S. and African senior officials to really take stock of where we’re going on our trade and investment relationship.
As you all know, the U.S.-Africa trade and investment relationship rests on two very important pillars. The first one is AGOA, which has provided incredible access for exporters from Africa to take advantage of the many opportunities in our huge consumer market. AGOA opens up the U.S. markets at 98 percent of Africa’s products, and it’s – there have been success story after success story of exporters and the employees that work for those exporters that have been able to take advantage and really build lives on the basis of the opportunities that have been provided under AGOA for products to be used here in the United States.
AGOA, as many of you know, expires in 2015, and there are key steps that we need to take over the course of the short term and the long term as we look towards 2015. Two major things that we hope to accomplish in the very near future, which we will talk to our African partners about next week, is there’s a provision of AGOA called third country fabric that expires in 2012. And that’s a provision that allows many African countries to use fabric from third countries in order to export apparel products to the United States. It’s been a really important provision in helping to grow the apparel sector in many African countries, which, as you know, the apparel – textile and apparel sector is oftentimes the foundation – foundational sector that really helps to boost economic development and leads to growth in other sectors. That provision expires in 2012. We are committed to working with Congress to getting that renewed as quickly as possible and hope to do so as early as this summer in order to provide the predictability and stability that investors need in both the United States and Africa to ensure a smooth flow of textile and apparel trade from Africa to the United States.
Another really important provision that we’re working on as part of AGOA this summer is to ensure that when South Sudan becomes an independent country that it will be able to be eligible for AGOA benefits. That will require Congress to add South Sudan to the list of AGOA-eligible countries. And so those are two very important things that we hope to do in the course of the next upcoming weeks and months in order to make sure that AGOA works as well as it can and to reaffirm our important commitment to Africa under AGOA.
We also plan to talk to our African counterparts next week about AGOA generally – what have we learned from the past 11 years of AGOA, what’s worked well, what hasn’t worked well. And we’re going to need to really have a very in-depth and candid conversation as we look towards a seamless renewal of AGOA when it expires in 2015. So that’s one pillar of our relationship, our trade and investment relationship with Africa that we will have extensive conversations next week in Lusaka.
The other pillar, which is as important, is trade capacity building. And AGOA opens the door to the U.S. economy. But with an open door, exporters need help in being able to avail themselves of the opportunities that AGOA provides. That’s why trade capacity building is so important. We – through USAID, we fund four hubs around Sub-Saharan Africa, and these – trade hubs is what they’re called – are what help African exporters learn how to take advantage of AGOA. They learn how to market their products in the United States, they learn what types of products are most commercially viable in the United States. And through the work of these hubs, we’ve developed – have been able to work very closely with various countries throughout the continent to really develop some very interesting and exciting products that have benefited from AGOA.
The challenge that we face now is how to take what we’ve learned in terms of successes and multiply them. One of the downsides or one of the challenges of AGOA is it’s not used as much as I think either Africa would like or we would like. And so the challenge that we have – and this is going to be a fundamental element of our discussions next week – is how can we work together bilaterally with our African partners as well as regionally through the regional economic communities to help increase the diversification of what Africa sends to the United States under AGOA.
So we’re really excited about the forum next week. It’s an opportunity for Secretary Clinton and Ambassador Kirk to meet with their counterparts. It’s an opportunity for me, for Ambassador Carson, for all of the agencies that are going to be there, to work with our counterparts in various – and our various African partners – to really see how we can take the trade and investment relationship that we’ve developed under AGOA to the next level, and that’s our goal next week, and we’re very excited about it. So with that, let me turn it over to Ambassador Carson.
ASSISTANT SECRETARY CARSON: Demetrios, thank you. Ladies and gentlemen, thank you very much. We’re here this afternoon to talk about the AGOA Forum, which will take place in Lusaka, Zambia next week. But before I do that, I would like to take note of some of my recent travels.
I returned Monday from Nigeria, where I had the honor to lead the presidential delegation to the inauguration of President Goodluck Jonathan, Nigeria’s new president. That event signified substantial progress in Nigeria’s democratic development and a new beginning for the Nigerian people. We in Washington look forward to working with President Jonathan and the people of Nigeria to help them build on the 2011 elections to create a just, strong, and more prosperous future for all Nigerians.
I would also like to draw your attention to the current situation in Southern Sudan. The United States condemns the offensive operations being undertaken by the Sudanese Armed Forces in and around Abyei town and the presidential decree dissolving the Abyei administration. The actions being taken by the Government of Sudan are blatant violations of the Comprehensive Peace Agreement of January 2005, and they threaten to undermine the mutual commitment of the CPA parties to avoid returning to war. We call on President Bashir and First Vice President Salva Kiir to meet immediately and to agree on a way forward that restores calm, upholds the CPA, and recommits both sides to negotiated political settlements on the future of Abyei.
Let me now turn to AGOA. AGOA is an important part of the overall engagement of the United States with Africa. We seek to help the nations of Sub-Saharan Africa become important partners in the global economy, and the trade opportunities offered under AGOA provide the means to help that happen. Just as Africa can profit from taking further advantage of AGOA opportunities, stronger economies and markets in Africa offer opportunities for American companies and workers as well.
In 2010, AGOA-eligible countries exported some $44 billion in products to the United States, although petroleum products continue to account for the largest portion of AGOA imports with some 91 percent of the share of overall AGOA imports. The program has also helped promote new non-traditional and value-added exports from Africa. This includes products such as apparel, footwear, processed agricultural products, and other manufactured goods. Increased trade is one of the fastest ways to expand economic growth, spur development, and reduce poverty across Africa. Building effective regional trade relationships promotes overall economic growth and contribute to increased U.S.-African trade.
AGOA plays an important role in the Administration’s priorities in Africa and helps support regional economic integration and provides incentives for beneficiary countries to improve their overall investment climates, reduce corruption, improve infrastructure, and harmonize trade standards to help them become more competitive in the global marketplace. We strongly support AGOA and look forward to working with African countries to strengthen the AGOA relationship between the United States and Africa.
MR. FINE: Since we’re here to talk about AGOA and trade and investment between the U.S. and Africa, I brought some – an import, an African import with me. I personally imported this. (Laughter.)
My name’s Patrick Fine. I’m the vice president for Compact Operations at the Millennium Challenge Corporation, the MCC. I want to say a word about the MCC and one of the resources that the U.S. Government has for supporting increased trade and investment in Africa with the U.S. and with other parts of the world.
For those of you who aren’t familiar with the MCC, we are a development agency of the U.S. Government that focuses on reducing poverty through economic growth, so our focus is very pertinent to the objectives of AGOA. We provide development assistance through a non-traditional approach, and by non-traditional, what I mean is we have a specific focus – economic growth. We have a selective process where countries have to qualify in order to be eligible for MCC financing. That process is rigorous and it’s done by – through independent third-party indices. We have – and that selection process creates very powerful incentives for governments to improve their policy performance, and that – I’ll say a word about that, because that’s very important to creating the environment that supports increased trade and investment.
We put a very strong emphasis on country ownership. So countries are responsible for preparing investment ideas and submitting them to us once they’re deemed eligible, and for implementing the programs themselves. That also creates a powerful incentive for good performance in carrying out the programs.
Now, where our programs support the objectives of AGOA and the increasing international trade and investment are, first, we work with well-governed, poor countries. The majority of countries that are in – we have a global portfolio, we work with countries around the world, but the majority of the countries that we work with, over half are in Africa and two-thirds of our total financing is in Africa. African governments – as I said, we put a high priority on country ownership, so African governments identify the investments themselves; investments that will reduce the constraints to economic growth. Not surprisingly, most of the investments that they’ve identified are investments to build the infrastructure and the capacity to allow them to export more, to grow their economies through investment and the exporting.
So there are two principal ways where MCC serves as a very powerful resource for supporting the objectives of AGOA. One is through the incentives that I mentioned, that create powerful incentives for good policy performance to create the business environments that allow businesses to flourish and allow African countries to provide the kind of environment that attracts private investment so that it can be responsive to the incentives that are created by AGOA for exporting to the U.S.
An example from Cape Verde, which was the first country we had a compact with, is that their – Cape Verde is the second or third best performer in terms of business environment in Africa, and much of the reforms that they’ve undertaken were specifically done to qualify for MCC assistance. So you can see it’s a strong influence to getting the kind of environment that supports business activity.
Aside from the incentives, the way that African countries have chosen to use MCC financing is in large part to invest in infrastructure that supports exporting and supports investment. For example, African nations are using MCC financing to build ports in Benin and in Cape Verde, to build an airport in Mali, to build roads in Tanzania. Those investments provide the basis within the country for business to grow, for products to move, and for the countries themselves to have the capacity to take advantage of the incentives that are provided for under AGOA. It works very well in combination with other parts of the U.S. Government, with our interagency partners, with USAID. Ambassador Marantis mentioned the trade capacity work that USAID has been doing.
Some MCC work also focuses on trade capacity, for example, on customs work, on justice – there’s some justice sector work. But it’s a good match between the building out the infrastructure so that countries have the wherewithal for their businesses to be responsive with the work that USTR and USAID and the State Department are doing. Thank you.
Oh, let me say one more – sorry. I always think of one more thing to say. One more thing to say is that we’re particularly excited about this AGOA being in Zambia, because we’re in the process of developing a program with Zambia right now. We expect that program to be finalized within this calendar year, and our CEO, Daniel Yohannes, is going to be going out to the AGOA Forum and he’ll be participating there.
MS. FULTON: Thank you, Mr. Fine. With that, I’ll invite all of our speakers back to the podium, then we’ll open up for your questions.
QUESTION: Can I just ask one – I do have an AGOA-related question, but I wanted to – since Assistant Secretary Carson brought up the other two issues, can I just ask a very brief one on your comments on Southern Sudan?
One, the White – John Brennan was in Khartoum today meeting with Sudanese officials. Can we assume that the message that you delivered to us right here was the same message that he delivered to – or at least part of the same message that he delivered to Sudanese officials on the condemnation of the invasion of Abyei and the demand for – or the call for an immediate meeting between Bashir and Kiir?
MR. CARSON: Thank you very much. I can confirm that John Brennan was in Sudan. He is a part of the same administration; the message is uniform throughout the Administration. We are deeply concerned about the situation in Abyei and in Southern Sudan. We want to do as much as we possibly can between now and July 9 to ensure that the Comprehensive Peace Agreement is fully complied with. We want to see a withdrawal of Sudanese troops from the areas of Abyei and we are looking for both senior leaders to meet together to discuss how to defuse tensions between the two parties and to fully implement the remaining items that have to be complied with to complete the CPA. But the message is the same and is consistent.
QUESTION: Okay. And then just the last thing on that is that the other thing the White House statement said was that he was going to talk to them about the review of the State Sponsor’s designation. And I’m just wondering is this a – have the Sudanese been told or are you – will the situation in Abyei have any effect on the review or possibly taking them off the list?
ASSISTANT SECRETARY CARSON: The review and the basis for taking them off of the list are defined legislatively. And that will be the most important guidepost. They have to meet the legislative requirements for being taken off of SST, but there is no doubt that the events of the last several weeks do undermine people’s confidence in the commitment to follow through on the roadmap that was laid out some months ago.
QUESTION: Can I follow up on that one? I was just wondering, in the past the statements have been relatively evenhanded, the message being both to Khartoum and to Juba that they need to follow and uphold the basic precepts of the CPA. Why isn’t Brennan going to Juba? Are you now assigning more blame for the situation on Khartoum?
And secondly, Khartoum itself has said, I think on May 28th, that military operations in Abyei were at a halt, but your statement had it in the present tense. What’s our understanding of what’s going on now?
ASSISTANT SECRETARY CARSON: Mr. Brennan is in Khartoum because that is the capital of Sudan. He went to talk primarily to leaders, among other things, about SST. That is an issue that has to be resolved in Khartoum and not in Juba. But it did offer an opportunity for him to have complete discussions with the Sudanese about our policy issues and concerns.
I think I’m going to – if I could, say let’s –
QUESTION: Can I ask my AGOA question now?
MS. FULTON: Yes. (Laughter.)
ASSISTANT SECRETARY CARSON: Yeah. Okay. I think we –
QUESTION: One of you mentioned MCC and roads and Tanzania specifically. And I’m wondering if any of you can answer does the U.S. have a position on the Tanzanian Government’s plan to build this trans-Serengeti highway?
MR. FINE: We’re not – I mean, we’re not involved in that. The MCC’s not involved in that at all.
ASSISTANT SECRETARY CARSON: Let me say that we are fully aware of the concerns that have been raised in this country and in other countries about the environmental impact that the trans-Serengeti road will have on the very large, spectacular, and almost unique migration of animals from the Serengeti up to the game parks in Kenya. We have discussed this issue with senior leaders of the Tanzanian Government. When I was last in Dar es Salaam approximately five weeks ago, I raised this issue both with the president of Tanzania as well as the foreign minister. They are clearly aware of the concerns and are trying to address them in the most appropriate fashion. They are – they know the value of the wildlife, the importance of the Serengeti. They have no desire to destroy that, but they also are looking for ways to stimulate economic development in other parts of the country. But we do discuss it with them. It is an issue that’s been brought to our attention, and we have, in fact, brought it to the attention of the Tanzanian Government.
QUESTION: Do you expect Secretary Clinton to raise it with President Kikwete and others when she’s there in ten days or whatever it is?
ASSISTANT SECRETARY CARSON: Let me just say that Secretary Clinton is planning to travel to Dar es Salaam immediately after the end of the AGOA Forum in Lusaka. We are looking forward to that trip, Secretary Clinton is looking forward to that trip. Tanzania is, as my colleagues have probably said, Patrick and others, is a model development partner. It is a strong multi-party democratic state. It is one of our strongest partners – yes, sir – it is one of our strongest partners in the development field, and we are pleased to be going there. This is a friend of the United States and a stable partner.
MS. FULTON: Our speakers’ time is a bit limited, so I’d like to bring it back to AGOA-related questions while we (inaudible).
QUESTION: I have an AGOA-related question. Looking back over Secretary Clinton’s comments about AGOA over the past couple of years, it seems like she’s had a fairly consistent message, which is that yes, this is a great thing but Africa’s got to do more to reduce its own trade barriers, fight corruption, and figure out ways to diversify. So as you’ve already mentioned, 90 plus percent of their exports to the U.S. are petroleum. What evidence is there that they are doing any of these things? And what – I mean, you’re talking about extending AGOA in 2015. Is it just going to be more of the same, you’ve got to do this and it never happens? What’s the lever whereby this is actually going to happen?
AMBASSADOR MARANTIS: We’ve been – and Ambassador Carson will have some comments as well. I mean, we’ve been working very closely with our African partners on trying to, for instance, spur regional economic integration, which is one of the key ways that Africa will help spur its own economic development. We have work underway with the East African Community, with COMESA, and with others, to help provide assistance to knock down internal barriers. And there are some really interesting statistics – I don’t remember them off the top of my head – on if you send a container from Dubai to Mombasa, it costs $1,000, and then it costs $3,000 to send the same container from Mombasa to Kampala. I mean, those are the kinds of things that we want to work and are working on with Africa to help, particularly as the EAC integrates, to create a more regional whole where the customs barriers that have so far impeded trade go down. That’s good for U.S. exporters exporting to Africa because they’re able to export to a more seamless market. It also will exponentially increase the development prospects of Africa as the regional economic communities really continue to make progress.
MR. FINE: Let me just say a word. The – first, it’s difficult to talk about Africa as a whole. There are many countries in Africa that have made tremendous progress in improving the business environment, improving their policy environment, in better managing their own finances. The kind of customs barriers that Ambassador Marantis is talking about, there’s been a tremendous change. If you look in East Africa, for example, it used to be at the Kenya-Uganda border, to cross that border, for a truck to cross that border, the truck driver would have to go to seven different offices and in each office fill out papers in triplicate or quin-triplicate and have them processed separately, and it took maybe half a day to do that. Now there’s – it’s – you go to one office, you fill out the papers, you go.
So it’s still not perfect. There are still delays at those borders, but they’re far less than they used to be. So there’s been real progress, and that progress you can see reflected in the growth of African countries. The GDP growth or the economic growth in African – in many African countries has been quite high. And you see increased trade and increased regional trade. In West Africa, the level of increased regional trade has gone up substantially in the last 10 years. So I – there is real progress. AGOA contributes to that because countries want to be eligible, and so do programs like the MCC that set up specific policy targets that countries have to meet in order to qualify.
QUESTION: Okay. Maybe just one little quick follow-up. I mean, just to put it another way, is the Secretary going to have a different message for AGOA this time around or is it going to be the same message that we’ve heard the past two years running? Is there something new to be said about AGOA at this stage?
AMBASSADOR MARANTIS: I mean, I can speak for Ambassador Kirk because at USTR and I’m in it, and it’s a consistent message throughout the Administration. I mean, one of the key things that we really need to focus on in this AGOA forum is what’s worked well and what are the – what have been the successes, what are the challenges, and what do we learn from them as we together in this government work with Congress and work with stakeholders to ensure a seamless renewal in 2015? There are a lot of questions that have come up over the course of the past 10 years about the eligibility criteria in AGOA, how much is AGOA helping to promote regional economic integration, questions that you raised about petroleum and other things. We need to take stock of those and think about those in partnership with the beneficiary countries in Sub-Saharan Africa. And that’s one of, I think, the key goals for both Ambassador Kirk and Secretary Clinton, is to really foster and engage in a really candid and honest discussion about what have we learned in the 10 years – what’s worked, what hasn’t worked well, and how can we make AGOA better?
QUESTION: How long an extension of the third-country fabric provision are you seeking?
AMBASSADOR MARANTIS: So it expires right now in 2012, and what we’re seeking is a three-year extension until 2015, which is when the current AGOA program is set to expire.
QUESTION: Mr. Carson, when you think about the renewal of AGOA, how do you factor in the question of China as a rival for African raw materials, for African labor, for its own trade relationships with African countries in – I mean, we’ve already seen it, particularly in West Africa, and it doesn’t seem that Beijing is going to be backing off from looking to Africa as a source to supply its own economy. (Laughter.)
ASSISTANT SECRETARY CARSON: There sure are. And let me just say, if I could follow up on Ambassador Marantis’s response to the previous question and also what’s new, one of the things that we are doing is not going out and simply talking to and lecturing to Africans about trade. AGOA provides an opportunity for us to hear from Africans, as Ambassador Marantis pointed out, what they’ve learned as well as what we’ve learned. This is a discussion, it’s a dialogue, it’s a conference, and we want to be able to benefit from their observations so that our observations and our actions are more meaningful moving ahead.
We want to see Africa become a larger, more significant, and active partner in the global economic community. We think that the capacity in Africa to do so is there. Despite its large petroleum exports and mineral exports, Africa today still accounts for only about 1.5 percent of global trade. We see Africa in the years to come as a economic powerhouse, very much the way we have seen Latin America transformed as well. Our desire is to ensure that Africa can, in fact, grow economically. If it grows economically, it is also going to produce greater stability for Africa. Greater stability means fewer conflicts and a greater contribution to their people and to the world community. Our desire is to see a stronger Africa economically, and I think AGOA and MCC help to provide that foundation.
China question: China is, in fact, a strong and aggressive economic competitor in Africa. It is clearly concerned about trying to acquire for its own robust economic engine significant oil, mineral, and natural resources to help feed its industrial growth. We see that not as a threat to us but simply as strong, aggressive, economic competition. And what we say to Africa about that is that they should, in fact, hold China to the same high standards that they hold American, German, French, Spanish, Japanese, or other developed economies to when they’re doing business.
MS. FULTON: I think we have time for maybe one more question. Right here.
QUESTION: I understand there’ll be some kind of pre-conference consultations at a very high level. I wonder if you could talk about that, and do you think that those consultations will sort of set the agenda at the meeting itself?
AMBASSADOR MARANTIS: So the forum – the ministerial-level events at the forum start next Thursday and Friday. The day before, there is a day of interaction between the government and the private sector, and the Africans have their own consultative group where they have sort of a high-level discussion amongst themselves as they prepare for the ministerial discussions at the AGOA forum. So there will be a high-level – and that is usually amongst the African ministers. From time to time, we will participate in certain aspects of it, but that’s really more for the African ministers to sort of consolidate their views as they meet with Secretary Clinton and Ambassador Kirk.
MS. FULTON: Okay. Thank you very much, everyone. We appreciate your time. Thank you.
The 2011 U.S.-sub-Saharan Africa Trade and Economic Cooperation Forum (“AGOA Forum”) will take place on June 9-10, 2011, in Lusaka, Zambia. The theme is “Enhanced Trade through Increased Competitiveness, Value Addition and Deeper Regional Integration.” Secretary of State Hillary Rodham Clinton will attend the Ministerial Forum on June 10th, where she will engage with government, private sector, and civil society representatives from 37 African countries.
AGOA has succeeded in helping sub-Saharan Africa become further integrated into the global economy. In 2010, AGOA eligible countries exported $44 billion in products to the United States. Although petroleum products continued to account for the largest portion of AGOA imports with a 91-percent share of overall AGOA imports, the program has also helped promote new, non-traditional, and value added exports from Africa. This includes products such as apparel, footwear, processed agricultural products, and manufactured goods.
Increased trade is one of the fastest ways to increase economic growth, spur development, and reduce poverty. Building effective regional trade relationships promotes overall economic growth and contribute to increased U.S. – Africa trade.
AGOA also helps support regional economic integration and provides incentives for beneficiary countries to improve their overall investment climates, reduce corruption, improve infrastructure, and harmonize trade standards to help them become more competitive in the global marketplace.
The AGOA Forum is the only annual U.S. government ministerial meeting with sub-Saharan Africa. The 2011 AGOA Forum will bring together over 1,600 participants, including senior U.S. government officials, African government ministers and officials from the 37 AGOA beneficiary countries, African regional organizations, as well as U.S. and African business and civil society representatives. In addition, there are private sector and civil society activities, as well as youth and women’s entrepreneurship events.
AGOA gives trade preferences to sub-Saharan African countries, provided they meet the program’s eligibility criteria, including those related to economic, legal, and human rights issues. Under AGOA, eligible countries can export products to the United States duty-free – nearly 6,500 products from apparel to automobiles, and footwear to fruit. AGOA also provides a framework for technical assistance to help countries take advantage of the trade preferences.
In just a short time, AGOA has achieved demonstrable results, helping increase U.S. two-way trade between the United States and sub-Saharan Africa to $82 billion in 2010 and diversifying the range of products being traded. Currently, 37 sub-Saharan African countries meet AGOA’s eligibility criteria and may take advantage of the trade benefits the Act offers.
AGOA Helps Africa:
AGOA provides African countries with trade preferences, which in turn makes it easier to export African products to the U.S.
AGOA assists African governments, businesses, and prospective entrepreneurs by providing trade preferences to countries that are making progress in implementing economic, legal, and human rights reforms. Under AGOA, eligible countries can export thousands of products to the United States duty-free. Nearly 6, 500 products are covered—from apparel and automobiles to footwear and fruit. As a result, substantially all African exports to the United States now enter duty-free either under AGOA, the U.S. Generalized System of Preferences (GSP), or under a non-preference (normal trade relations) zero rate of duty. AGOA has also helped facilitate sub-Saharan Africa’s integration into the global economy.
AGOA provides benefits to all types of companies and individual entrepreneurs wishing to do trade with the United States, provided those companies are operating in an AGOA eligible country. The U.S. government, through USAID, has sponsored training workshops throughout Africa to foster interest in trade with the U.S. and to educate African entrepreneurs on how to best leverage the benefits offered by AGOA.
USAID also offers firm-level assistance, advises governments on improving the enabling environment for trade, helps African countries overcome infrastructure constraints, and works to improve access to finance to enhance Africa’s competitiveness for trade and investment.