39th Washington Conference

Speakers (In order of appearance).

• Thomas Shannon, Assistant Secretary of State, Western Hemisphere Affairs, United States
• Francisco Santos, Vice President, Colombia
• Jim Prentice, Minister of the Environment, Canada
• Jane Holl Lute, Deputy Secretary of Homeland Security, United States
• Fernando Gómez-Mont, Secretary of Government, Mexico
• James B. Steinberg, Deputy Secretary of State, United States
• Agustín Carstens, Secretary of Finance, Mexico
• Paulo Bernardo, Minister of Planning, Budget and Management, Brazil
• Gary Locke, Secretary of Commerce, United States
• Robert Menendez, Senator, United States
• Jose Miguel Insulza, Secretary General, OAS
• Hillary Clinton, Secretary of State, United States

Thomas Shannon, Assistant Secretary of State, Western Hemisphere Affairs

“[The Summit] highlighted a new approach to multilateralism by the U.S.”

In opening the Council of the Americas 39th Washington Conference on the Americas, Assistant Secretary Shannon reflected on the outcomes of the recent Summit of the Americas and what that means for improving tenuous relationships with Venezuela, Bolivia, and Ecuador. One of the most important results for the hemisphere was the emergence of the Caribbean—through the leadership of the Summit host, Trinidad and Tobago—as a key player in inter-American affairs.

Taking place amidst the economic crisis, growing calls for the reintegration of Cuba, and in a period of greater sub-regional integration, the Summit’s success is attributed to three factors: the goodwill created by U.S. President Barack Obama; the commitment of Canada, Mexico, Brazil, the United States, and Argentina to making sure that pledges made at the G-20 meeting were carried forward; and an understanding among leaders that more is to be gained from reconciliation rather than confrontation.

For the United States, the Summit created an opportunity to take a new look at certain bilateral relationships and make “important process steps” with Venezuela, Ecuador, and Bolivia. Caracas and the Washington will once again exchange ambassadors—a “big step” and one that is needed to build confidence. At the same time, “opportunities for collaboration are strong” with Ecuador. Secretary of State Hillary Clinton and President Rafael Correa had a “very positive” conversation in Trinidad and Tobago, and she called him after his electoral victory on April 26. The United States and Bolivia have recognized that the status quo does not work for either country. Both sides need to “work out years of history,” but a positive step forward is the creation of a five-point meeting process.  

For Shannon, the two most important hemispheric issues for the Obama administration involve addressing drug trafficking/security and pulling out from the economic crisis, especially reinforcing the role of trade for promoting social and economic development. He concluded by noting that the White House last night sent the U.S. Senate the nomination of Arturo Valenzuela as the next Assistant Secretary of State for Western Hemisphere Affairs. Shannon praised the nomination, calling Valenzuela a “very good choice by the president,” and thanked President Obama for allowing him to serve.

Francisco Santos, Vice President, Colombia

Since the 1970s, Colombia has lived through four generations of drug cartels, with each becoming smarter and building a greater global presence. Today, the cartels seek greater mobility, rather than territory, and have moved operations to border areas. These increasingly agile operations mean that “designing a [drug] policy requires adopting one that takes into account cartels’ flexibility.” Rigid policies will not work.

Colombia’s counter-narcotics experience has shown the importance of taking a strong, active role in stemming the drug trade through actions such as increasing support for the police and military, improving the judicial system, strengthening institutions, and supporting manual eradication—a strategy that has borne results. He also cautioned against underestimating the ability of the cartels. Short-term successes will not guarantee a long-term end to the problem. Looking across the hemisphere, the vice president emphasized that solutions will depend on cooperation and multilateral answers and a shared sense of responsibility. No country can solve the spread of illicit drugs on its own. Like the world has displayed in coming together to defeat the Somali pirates, so too must it do to combat the drug trade. And while some may talk of decriminalization as a solution, the world is “not ready for legalization.”

Jim Prentice, Minister of the Environment, Canada

“Green protectionism should be the road not taken, that will make all the difference.”

Canada’s Minister of the Environment Jim Prentice delivered remarks emphasizing the twin needs of reaching a multilateral climate change agreement while keeping an eye to warding off protectionism. In particular, he warned against “trade protectionism in the name of environmental protectionism.”

Prentice spoke optimistically about the opportunity for moving forward on climate change, pointing out that the final declaration of April’s Summit of the Americas called for a post-Kyoto climate change agreement to emerge in the December conference on the environment in Copenhagen. He also said that “we are engaged in a marathon, not a sprint.” An effective agreement will thus require the leadership of developed countries as well as a commitment from emerging economies.

Yet the minister also stressed Canada’s commitment to trade and that efforts to support climate change should not be used to disguise protectionist movements. He spoke of “carbon leakage,” the possibility of exporting carbon emissions to countries with lower regulations. Prentice noted that Ottawa plans to offer rebates to Canadian industries to offset the cost of meeting environmental regulations.

When speaking about the possibility of carbon adjustments at the border, he commended the Obama administration for recent remarks against them. Prentice referred to carbon adjustments as an “impediment to wealth creation” and that “he who aims to shoot an arrow across the border inevitably shoots himself in the foot.”

Jane Holl Lute, Deputy Secretary of Homeland Security

The deputy secretary from the Department of Homeland Security (DHS) outlined three current priority areas: response to the H1N1 outbreak, the southwest border strategy, and the Western Hemisphere Travel Initiative. “The department has the responsibility to lead not just a government effort, but a national effort,” she said.

Talking about the recent H1N1 flu outbreak, Jane Holl Lute said: “Our response was swift, it was coordinated, and it was international in scope.” She emphasized lessons learned, from the importance of coordinating messaging at a senior level early on to working with local governments as well as Canada and Mexico in terms of sharing information.

On the new southwest border strategy, the deputy secretary applauded the government of Mexican President Felipe Calderón for its efforts in combating drug trafficking. She stressed that Washington works in partnership with Mexico to tackle organized crime through the Merida Initiatve. She also noted that the DHS had increased personnel at the border, both in terms of enforcement and intelligence.

Finally, Lute discussed the Western Hemisphere Travel Initiative going into effect June 1. This program will require consistent documentation at U.S. ports of entry. The deputy secretary noted that such regulations require striking a balance between security and trade and that the public sector can learn lessons from the private sector on this issue.

Fernando Gómez-Mont, Secretary of Government, Mexico

Referring to the recent flu outbreak, the secretary stressed that Mexico acted transparently to handle diagnosing the new virus while trusting the public “to act responsibly in the face of the challenge.”

On the issue of organized crime, Gómez-Mont cautioned against simply focusing on drug cartels without noting the efforts to strengthen Mexican institutions. “There may not be a solid democracy without a solid rule of law,” he said, pointing out that a weak government cannot protect the right and liberties of its people. As part of this, the Calderón administration approved new regulations for federal policing and for creating archives of relevant criminal information to help build precedents for dealing with criminal threats. “We are recognizing the basic foundations for a national security agenda,” said Gómez-Mont.

“We believe in governance by example,” said the secretary, who noted that Mexico has taken steps in order to be respected as a responsible partner and that it counts on international cooperation to fight organized crime. He discussed the Merida Initiative, saying the most important aspect of the program is that it demonstrates a shared responsibility with the United States. It will also allow Washington to share technology and technical assistance to professionalize the fight against trafficking. These efforts, coupled with a transparent outbreak response, show the country is serious about facing problems.

James Steinberg, U.S. Deputy Secretary of State

But leadership also means looking around the hemisphere to find answers to challenges such as reducing poverty. For example, conditional cash transfer programs in Mexico (Oportunidades) and Brazil (Bolsa Familia) have helped a combined 16 million families. Another important step to promoting growth and reducing poverty is continuing trade integration. However, trade alone is not sufficient. Trade policy must take into account the poor along with labor and environmental standards.

On the security front, the United States recognizes the role it must play in stemming drug demand and reducing weapons trafficking. Steinberg cautioned that while the United States acknowledges its share of “responsibility for common problems,” it still needs partners to step up and work together in facing these shared challenges. Steinberg clarified that the United States’ willingness to engage with countries does not imply support of policies. This is the case with the relaxation of restrictions affecting Cuba, where the United States “seeks a new beginning.”

He noted that the economic stresses seen today are partly a result of uneven growth over the last decade, with too many people not sharing in the benefits of economic prosperity.

Agustín Carstens, Secretary of Finance, Mexico

The secretary opened by noting the Mexican economy was harmed by the U.S. downturn and could shrink by 4 percent this year. Still, he said, his country was better prepared to handle a financial crisis than in the past. “This negative shock that we have received from the outside world arrived at a time when Mexico’s fundamentals were strong and Mexico has been able to face this from a position of strength,” said Carstens.

Positive signs have developed, according to the secretary. “In the last six weeks or so we have welcomed the incipient signs of recovery in the U.S. economy,” said Carstens. In Mexico during the first quarter of 2008, total expenditures rose by 25 percent while investment increased by 33 percent, he noted.

Carstens then turned to address the economic consequence of April’s H1N1 outbreak in Mexico that caused a global health scare. “If I had given this talk 15 days ago I would stop here and I would go into analyzing the prospects for the Mexican economy,” said the secretary. He predicted that the outbreak will contribute to a further 0.3 percent GDP decline.

But even with the impact of the outbreak weighing on Mexico’s economy, the secretary predicts short-term consequences. “The good news is that the Mexican government responded quickly, in a transparent fashion, and in a very decisive way,” said Carstens. Using the example of the SARS outbreak in Asia, he noted that economic effects were felt hardest there for three months and then began to taper off. While industries such as international tourism and entertainment feel the brunt, he believes Mexico’s efficient response to the outbreak means the effects will be transitory. Given the country’s ability to handle H1N1, “Mexico is the safest place to be right now,” he said. “Even though we have been navigating in turbulent waters, we are making progress.”

In response to a question about which critical structural reforms are necessary for growth, Carstens said Mexico’s banking system is strong but that, to achieve a sustainable GDP growth rate of 5 percent, a situation needs to occur in which financial institutions contribute to growth.

Paulo Bernardo, Minister of Planning, Budget and Management, Brazil

With its solid macroeconomic fundamentals, Brazil continues to focus on economic diversification. It has reduced the amount of debt held in U.S. dollars and continues to diversify its trade partners. In April, China became Brazil’s largest trading partner—a feat accomplished after the United States had held that position for approximately 70 years.

Despite the economic crisis, Brazil is growing and is in a situation now that “will allow it to be stronger after the crisis than before.” Inflation is under control, with projections estimating that inflation will remain at 4.2 percent this year, a fall from the 5.6 percent inflation seen in 2008. The fiscal situation is good and the internal market, Brazil’s engine for economic growth, remains strong. At the same time, credit has again climbed to the levels last seen in September 2008. These positive economic indicators should allow Brazil—a country with the second smallest deficit among G-20 countries—to climb out of the economic crisis in a relatively short period of time.

Gary Locke, Secretary of Commerce, United States

North American Free Trade Agreement (NAFTA) partners conduct $2.7 billion in trilateral trade each day, said the secretary. He talked about pending agreements, commenting that he believes Colombia will work on human rights related to labor leaders in order to push through a bilateral trade deal. He also said the Obama administration is working with Panama to resolve issues related to labor and international tax policies to gain passage of that trade agreement.

In March, the Department of Transportation suspended a cross-border, U.S.-Mexican trucking pilot program guaranteed under NAFTA. “The U.S. has concerns about safety and those concerns are legitimate for any country,” said Locke. Yet he said President Barack Obama remains concerned about the project’s cessation and has charged his administration with solving the impasse.

Robert Menendez, Senator, United States

Increased engagement also opens the door to shift a dialogue that has long been based on “personality politics” and “gossip column conversations” that oversimplify hemispheric relations. The recent Summit of the Americas presented a space for deeper discussion of select hemispheric priorities, but it was a “missed opportunity to act on a broad agenda.” Menendez is looking at how to address the broad hemispheric agenda through possible legislation that would focus on social development, energy, counternarcotics, and public security in the hemisphere.

Turning to the recent opening in U.S.-Cuban relations, the senator emphasized that it “would be wise to see if recent overtures are reciprocated and then take it from there.” He reminded people that the Castro government has denied the Cuban people rights that we would never give up. Menendez cautioned that, at the June OAS assembly, some may advocate for Cuba to participate in the OAS without any advancement in liberty or human rights. To do so would be a grave mistake, he said, and he questioned whether the United States should continue to pay 60 percent of the OAS budget if it were to admit Cuba, a violation of the Inter-American Democratic Charter. Inviting Cuba to join the OAS would send the wrong message to the rest of the hemisphere.

As for the pending U.S.-Colombia Trade Promotion Agreement, Menendez noted that a vote on the agreement may be possible before the end of the year. As of right now the United States and Colombia are working on a set of labor benchmarks.

Jose Miguel Insulza, Secretary General, OAS

With an eye to the last 30 years of inter-American relations, OAS Secretary General José Miguel Insulza said the region has reached a crossroads in terms of addressing issues with a multilateral approach. “The recent Summit of the Americas showed that Latin American countries expect to see their views included in the picture.”

The secretary general rejected the notion that Washington had neglected the Western Hemisphere in recent years. Instead, Latin America was ready for a period of change in 2000 after the turbulent times of the previous two decades. But he also praised President Barack Obama’s message to hemispheric leaders: “I don’t want to make policy for you, I want to make policy with you.”

Fast-forward to April’s Summit in Port of Spain. Insulza remarked that the event demonstrated a commitment to a common agenda and to tackling difficult tasks in the coming months.

Hillary Clinton, Secretary of State, United States

As part of the effort to combat regional inequality, Clinton highlighted Obama administration initiatives across the Americas but noted that “We’re not interested in rhetoric without results.” The administration will work to build pragmatic partnerships that “move beyond one-size-fits-all” and embrace “positive interdependence.” Signaling its commitment to the region, the administration has proposed a $320 million increase in the 2010 U.S. federal budget to support democratic governance in the Americas and new initiatives including the U.S. State Department taking the lead on food security issues.

“We intend to be flexible and innovative to deliver more material improvements to more people in more places,” said the secretary, who outlined her upcoming trips. In June, she will travel to El Salvador for the inauguration of President-elect Mauricio Funes and a Pathways to Prosperity summit, as well to Honduras for the OAS General Assembly.