Interview With the Seattle Times Editorial Board

SEATTLE TIMES: Iraq aside, is there any discussions within the administration, on using capitalism as a way of bringing democracy to a country, or is it better to start with democracy first?

ASSISTANT SECRETARY SULLIVAN: To speak for the administration as a whole on that, I think, I’ll decline. But I think the FTAs are a great example. The rules and regulations that come through these very detailed, very significant free trade agreements that we have, clearly reinforce political democracy and political freedom. For example, our FTAs not only have environment and labor provisions, they have very strong transparency provisions, very strong anti-corruption provisions. And I think, and I’ve been told there is scholarship on this, but I think it’s not an accident of history that you have NAFTA, and then you had what became a true democracy in Mexico. I don’t think those two things were unrelated.

But, as I mentioned, and it’s quoted here by the Secretary, when we’re talking about the free trade agreements that she says, I left a quote for you – “Trade is an engine not only of economic growth, but also of political transformation.” And so, I think we’re seeing it in other areas. Once again, that’s why these Latin American FTAs are so important. These countries have all voted. Their legislatures have voted by very broad numbers -- it doesn’t matter if they lined up politically -- to trade with us. And they’re doing it for reasons of economic, but also to anchor some other political reforms. And we think it’s critical that our Congress reciprocates by passing the three Latin FTAs. These agreements were negotiated and completed under the trade promotion authority, so the rules that applied to free trade agreement under Fast Track apply to these agreements. So they’re up or down votes.

SEATTLE TIMES: And, we’re suppose to have something of a deal between the administration and democratic leaders in Congress.

ASSISTANT SECRETARY SULLIVAN: We did. On May 10^th, we describe it -- that this is the free trade agreement.

SEATTLE TIMES:Is it still there? Are we still honoring it?

ASSISTANT SECRETARY SULLIVAN: The Congress?

SEATTLE TIMES: Yeah.

ASSISTANT SECRETARY SULLIVAN: Our view has been that this agreement applies to all four of the FTAs. And, we have implemented elements of what came out of the May 10^th agreement into the free trade agreements. So we modified the agreements to fit with the May 10^th agreements with the Congress. And, part of that agreement from our prospective was the FTAs would be coming up in the order in which they were finished; so Peru, Colombia, Panama, and Korea. There is still some ongoing debate. We’re trying to work closely with Congress to make sure that happens. And, as I mentioned, we’re very, very focused on the retail work.

You know the one thing that I found, at least going up to the Hill, is that making the arguments both on the economic side, the development side -- which again why the Gates Foundation and IDG (Initiative for Global Development) and others are very supportive of these -- but also on the foreign policy side why these agreements are so important, we’ve seen significant numbers of Congressman start to say: “Okay, maybe I opposed to this initially, but his is helpful.” The other thing that we’re seeing is we’ve been very much encouraging and having our cabinet members lead congressional delegations, to Colombia in particular, to meet with the people, to meet with the President, to meet with the governors and mayors; and that is also where we see things start shifting, in terms of the view that Congress has had with regard to these agreements. So, a lot of work needs to be done still and we’re very, very focused on it. But we think that we’re getting there; we’re definitely not there yet.

SEATTLE TIMES: I’d like to ask a question about Africa. Obviously it’s part of the world where many of these diseases occur, at least in certain particular areas of the continent, and yet, you don’t hear about U.S. engagement on trade there. And we are hearing a lot more about the Zambians who visited Beijing a couple of weeks ago that potentially U.S. influence is being replaced by Chinese influence there, so why aren’t we more engaged there, and what would be the right strategy to address that?

ASSISTANT SECRETARY SULLIVAN: Well, I think the issue of China is a very important one. I would disagree that we’re not engaged in Africa. As I mentioned, we look at some of our MCC compacts, as a matter of fact, I was just there (at the MCC) with the President of Mozambique.

A lot of the MCC compacts have focus in Africa. Mozambique just signed a half a billion dollars compact. The other area where we’ve been very engaged with regard to the HIV/AIDS. To get the G8 to commit to 60 billion dollars focused on infectious diseases for Africa, this is just for Africa. And then also on the trade side – we authorized -- I want to make sure I get this right, either two or three times the Africa Growth and Opportunity Act, and we’ve reauthorized GSP (the General System of Preferences) these are critical preference programs, one of which is specifically focused on Africa. And, we have quadrupled development assistance (ODA) from the last year of the Clinton administration, quadrupled, ODA to subsidy in Africa.

So, I think were bringing a lot of different tools to bear -- and I talk about broad deep sustained economic growth -- you were seeing growth rates in Africa that are historic. We think in a lot of ways that’s going to be the ultimate way in which the poverty’s reduced.

And, I think with regard to your question in China, it’s an important issues we have had several meetings on. Our senior officials who focus on Africa and our officials that focus on Asia talk about Chinese involvement in Africa, which in some ways we see as being positive at creating jobs, and have had their companies have foreign direct investment in African that help create African jobs that’s beneficial. But, one area we’ve been concerned is on the transparency, what there doing to address a big part of Africa’s economic issues is to have had a big focuses on the debt relief area. The Highly Indebted Poorest Countries (HIPC) initiative, and we’re concern that if we do that, debt on Chinese lending has complicated that and in some ways hasn’t been transparent to us. But we are working with regard to the Chinese on trying to address these issues. But it’s a very good question.

SEATTLE TIMES: Sir, are we concerned that they owe us money, so we let them off the hook and so then they pay the Chinese.

ASSISTANT SECRETARY SULLIVAN: No, we’re concerned that we have just cleared the debt, the books for what has been very significant debt payments and that if they come in with lending that is really puts these countries back in the hole it kind of undoes what, it wasn’t just us, the whole G8 kind of undoes what we were trying to do with regard to the debt relief and the responsible lending practices we think are important in that region.

SEATTLE TIMES: What are the other countries that you mentioned that are interested in the Millennium Challenge Corporation and getting involved in by becoming more transparent threshold programs?

ASSISTANT SECRETARY SULLIVAN: First of all the threshold programs and those are the programs that are the smallest programs that work with countries with regard to meeting the conditions for the large compacts and the example that I reference here was Yemen that was one in particular, and I’ll tell you the story because it was story that was I had personal experience with. I think it was constructive. They were in a threshold program, they had kind of fallen off the – they’ve done poorly, very poorly on their indicators particularly with regard to judicial reform areas and I think it was in the anti-corruption area. They were suspended from there threshold program because of this. And the Yemenis instituted reforms in these areas. I was the US representative at a big donor conference for Yemen, which was put on by mostly Gulf countries. At the conference I met with this very senior UK developer, and he mentioned to me that it was their analysis that really the main driving force behind Yemen’s recent reform efforts was almost primarily driven by their desire to get back into the MCC, which to me is kind of a dual example from both a developed country and developing country of this MCC effect having a positive impact of what were trying to do in terms of – the indicators we use are not U.S. government – there are some U.S. government but mostly kind of third party indicators.

SEATTLE TIMES: I was wondering what you’re doing is in conjunction with the Gates Foundation or are you thinking of ways that you could sort of bolster each other?

ASSISTANT SECRETARY SULLIVAN: I think it a great question, as a matter of fact, I raised it at the breakfast today, because it’s in Seattle, which is so interesting the influence and importance of these growing NGOs whether it’s the Gates Foundation or IDG or others. It’s obviously very dramatic I think when they see us, for example on the PEPFAR (the President’s Emergency Fund for Aids Relief) issue focusing on these things, there’s ways in which, I think there’s an interest in people and kind of these developing notions of public private partnerships where how you could leverage what the government is doing or what a foundation is doing in a way that can be mutually reinforcing. I think in a lot of ways that’s really just beginning. But one of the things that I wanted to do was just again, with these groups essentially do that to exchange information with what we’re doing in this part of the world, here’s what we have the G8 to commit to in terms of 60 billion dollars for PEPFAR. You guys should make sure you hold the G8’s feet to the fire -- and ours by the way. So, I think it’s an area of clearly increasing positive engagement between the private sector, NGOs, and the government, which is going to be increasingly important.

It’s been great to be here. I’ve had fantastic meetings. But this debate on the future of U.S. leadership on open trade policies -- it’s not unusual, it’s not the first time, as I’m sure you know better that I do. I know with the WTO ministerial it was a big debate on this particularly in Seattle in 1999. It happens, but its happening again. One the things we’re trying to do is explain why we think it matters.