Remarks for

The American Chamber of Commerce of Nicaragua

12:30, February 27, 2008

AS DELIVERED

INTRODUCTION

Thank you, Mr. Garcia, for that very kind introduction. Esteemed Minister Solorzano, Ambassador of the United States, and Ambassador of Nicaragua, I am delighted to be here today, just one month before the two-year anniversary for Nicaragua’s entry-into-force of the CAFTA-DR. I appreciate this opportunity to discuss the progress our two countries have made since the implementation of that very important Agreement and some of the challenges we face, too.

All across Central America, we are witnessing a remarkable transformation. Over the last decade, a region once known for coups, civil wars, and poverty has been transformed into societies generally committed to democracy, markets, and trade.

Last month, I had the privilege of representing President Bush on a delegation of U.S. officials attending the inauguration of the new President of Guatemala, Álvaro Colóm. As we were flying down from Washington, it occurred to me that I was returning to Guatemala on behalf of my country a little more than fifty years after my father had left his country -- Guatemala -- to build a life in the United States. Back then, the only time Guatemala made the U.S. papers was when there had been a coup d’etat. I have a vivid memory of seeing tanks parked outside the Presidential Palace on a visit to Guatemala in 1970.

Decades later, at that very same Presidential Palace, lots of memories came back to me – not only were the tanks were gone, but I was there in Guatemala witnessing a peaceful transfer of power between elected civilian governments. Nicaragua – like other countries in Central America – is a country transformed by free markets and trade. This remarkable transformation is creating growth and investment, jobs, reducing poverty, and strengthening key institutions critical to democracy and a free market.

CAFTA – The Foundation of Our Relationship

Ladies and Gentlemen, CAFTA is the common ground in the relationship between the United States and Nicaragua. It is the core of our bilateral relationship.

CAFTA has brought to Nicaragua new investment and thus new jobs for Nicaraguans, as well as greater economic stability. My visits today highlight the very real benefits of free trade for citizens of this country. As Nicaragua’s largest trading partner, the United States is the source of approximately one-fifth of Nicaragua’s imports and the destination for approximately one-third of its exports. We rely on each other for growth and prosperity.

If you look at the numbers, the economic significance of Nicaragua’s relationship with the United States is very clear – remittances sent to Nicaragua from the United States plus U.S. imports of Nicaraguan products is valued at more than a third of Nicaragua’s total GDP.

Nicaragua has seen more export growth from CAFTA than any other Central American country. Nicaragua has the most flexible and open market treatment for textiles of all its Central American partners. Since CAFTA came into force, Nicaraguan exports to the United States, including free trade zone products, jumped almost 30 percent over 2005 levels. Thanks to CAFTA, American consumers are buying clothing and apparel, automobile parts, coffee, seafood, beef, tobacco, gold and vegetables produced right here in Nicaragua. Nicaraguan small businesses that export to the United States have grown 15 percent growth since CAFTA.

CAFTA has also led to significant new investments in Nicaragua. American companies have made new and long-term investments, creating jobs and new opportunities for thousands of Nicaraguans. U.S. investment in Nicaragua since CAFTA came into force is now more than $617 million.

But ladies and gentlemen, capital is cowardly. Investors do not come to places where they fear their money will be lost. That is why Nicaragua’s message to the world matters. International investors respond to a positive investment climate, but rhetoric that criticizes business can scare away investors.

CAFTA created the conditions for success, but it does not guarantee success. Like the Minister told us, CAFTA is not a panacea. Investors have the opportunity to go to other Central American nations if they do not have confidence that Nicaragua will stay on the path of democracy and free markets.

That’s why I’m looking forward to my visits throughout Central America – I’ll see the many successes and opportunities opened up by CAFTA. One U.S. investor, Cone Denim, is building a $100 million denim plant in Nicaragua – an investment valued at 2 percent of the country’s GDP. It will immediately employ 850 Nicaraguans and projects adding as many as 8,000 direct and indirect jobs.

People in the government, private sector, and investors around the world are eager to hear about Nicaragua’s path and its destination. If the world hears that Nicaragua is committed to democracy and free markets, the world will come here to invest and help Nicaragua grow.

It is very important that you know – that the world knows – that United States will engage in a cooperative relationship with any government that respects democracy and free markets with us regardless of its political orientation or its differences. CAFTA must be supported by democratic governance, respect for the market, and respect for investors, so that the business environment in Nicaragua is a friendly one -- so that Nicaraguans stand to profit from the global market for the long-term.

CAFTA marks a very significant “common ground” for the United States and Nicaragua. I look forward to strengthening this foundation, this common ground of CAFTA, which binds Nicaragua and the United States together. There’s no reason why Nicaragua can’t rise above poverty and enjoy prosperity. Nicaragua has prudently laid important groundwork for economic success including the implementation of CAFTA and the $175 million development Compact with the Millennium Challenge Corporation. Nicaraguans are also benefitting from generous disaster relief assistance and debt relief.

I know the concrete results of CAFTA: an improvement in our commercial relations, job creation, more investment, stronger economic growth, and more opportunities for Nicaraguans.

We know the important role CAFTA is playing in preserving our hemisphere’s competitiveness against growing competition from China. In the United States, there is much anxiety about competition from China. I know that China also poses a huge challenge to Nicaragua’s textile and apparel industry. So we can relate to the impact that market forces have on the daily lives of Nicaraguans, and together, we can work to strengthen our industries’ ability to compete with China.

CONCLUSION

Twenty-five years ago, Nicaragua and the United States stood on opposite sides of a great divide in the Western Hemisphere. Today, we have put in place institutions that form a strong foundation of shared economic and security interests. Standing on this foundation, we can work together for a better relationship, even though we disagree on some issues. But the foundation of our relationship rests on one non-negotiable principle for two crucial values: the sovereign respect of democracy and free markets.

Nicaragua’s commitment to CAFTA is a vital engine of economic growth. A continued public commitment to CAFTA is vital to attracting job-creating investment to this country. The United States is doing its part – we will continue to work for CAFTA’s success. I hope the Nicaraguan government will do its part, by sending out a consistently strong message that foreign investment is welcome.

For the prosperity of our citizens, it is critical that we work together – governments and private sectors – United States and Nicaragua – and continue down the path of economic partnership. This April 1 st will mark the 2-year anniversary of CAFTA for Nicaraguans. On our next anniversary, I hope we can point to an even greater track record of market results. This model works – it is a proven recipe for success.

Thank you.