Deputy Secretary of State John D. Negroponte at the Business Council for International Understanding

Let me say that the programs that you carry out are important tools in promoting cooperation across governments and industries, and a major asset, as I've already indicated, to the Department of State. Our objective overseas has been and remains coordinating the policies and programs of the United States Government agencies, the private sector, and the NGOs to ensure stability, respect for the rule of law, and economic opportunity. We think this multi-faceted approach is the right way to combat poverty, to stimulate global economic growth, and counter proponents of extremism, violence, and out-moded economic thinking.

Under the President’s leadership, we and the other Departments charged with international economic engagement have a strong record on the fronts that matter most, including trade, investment, foreign assistance, and economic empowerment. We have negotiated more free trade agreements than all previous administrations combined. And I was struck by that sentence when I was reading a draft of this speech several days ago and asked for the names of the countries with whom we've done agreements and it really is quite an impressive list. We've done the Dominican Republic-Central America Free Trade Agreement; that's the DR CAFTA. We’ve done an agreement with Australia, with Bahrain, with Chile, with Jordan, with Morocco, with Oman and with Singapore. And there are four agreements pending approval of Congress, but which have been signed and those are with Peru, Colombia, Panama, and Korea. So when you think back of the number of years it took to negotiate our first couple of free trade agreements, first with Canada, then with Canada and Mexico, and we have the FTA and then the NAFTA and then the Israel and United States Free Trade Agreement. This is really a very, very impressive record, indeed.

We've also aligned our foreign assistance programs with our foreign policy priorities and more than doubled our overall assistance levels. I remember preparing when I was Ambassador to the United Nations to go down to the Monterrey conference in 2002 when we were -- which was about the Millennium Challenge goals and how various countries were going to face the foreign assistance challenges of the future -- and remember being so impressed by President Bush's decision to essentially increase our overseas development assistance levels by 50 percent over the next five years and we have more than fulfilled those pledges. We've invented a new assistance mechanism -- the Millennium Challenge Corporation -- to reduce poverty by encouraging developing countries to rule justly, to invest in their people, and to promote economic freedom. And we have reiterated America’s longstanding commitment to promote open investment policies and free trade on a level playing field.

Along the way, we have counted on BCIU and the business community to help us design and implement these initiatives. I cannot overstate the importance of the expertise which you have generously shared with us. The ancient Greek saying is true: He who does not go forward goes backward. And there are forces in the world that would take us backward. By this I mean terrorism, bigotry, and perhaps most simply, fear of the future itself. And that is why our communication and consultation with the business community is more vital than ever.

Since the 1960s, when I entered the Foreign Service, our exports have risen from some 6 percent of GDP to nearly 16 percent. Our imports have risen from some 5 percent of GDP to over 21 percent. Post-WWII trade liberalization has been good for us, playing a key role in transforming our former foes in Europe and Asia from nations at war to nations anchored to stability, prosperity, and peace. Commerce is better than conflict, but it is hard work, as we all know.

The Doha Development Round, for example, has been strenuous. From Doha’s outset, the United States championed a focus on helping developing countries to grow economically and alleviate poverty. Just last month, the Administration demonstrated considerable flexibility in meetings with the Europe Union, Brazil, and India. Even though convergence among these Members did not come to fruition, we have not given up. This negotiation is an endeavor among all 150 Members of the WTO, and the Administration remains committed to completing a successful Round that creates new trade flows. The fact is that the WTO multilateral trading system has greatly benefited our business community, our consumers, and our farmers. We intend to keep it healthy and invite you to lend us your support.

At the same time, we also remain committed to state-of-the-art free trade agreements, a vital strategic component of the United States’ foreign policy of peace and prosperity. Free trade agreements foster deeper, stronger, and more extensive bilateral relations between us and our partners. They promote understanding and goodwill. They underscore common values. They provide opportunities in important new markets for American businesses, farmers, and workers. They remove barriers to United States service providers and manufacturers. They provide a secure, predictable legal framework for United States investors, and they protect intellectual property rights. In addition, internationally-recognized labor principles now will be incorporated into our FTAs, one of the many ways in which FTAs promote important internal reforms in our partner economies.

The four FTAs we recently concluded with Peru, Colombia, Panama, and Korea will help create a platform for these countries to expand their participation in the international trading system while enhancing regional stability. These agreements will lower tariffs, improve legal protection for trade and investment in both directions, and increase transparency in government procurement, a conscious reform choice these societies have made through democratic processes. The benefits of these agreements -- that these agreements will generate for our foreign policy interests, our consumers, and our businesspeople are substantial. We hope the Congress agrees, and we hope the business community will continue to play an active role in supporting them.

As the world’s largest investor and recipient of investment, the United States also must remain committed to promoting an open international investment regime. That is why we encourage nondiscriminatory, open, and market-oriented environments for U.S. investment overseas and on U.S. soil though the negotiation of Bilateral Investment Treaties and investment chapters in Free Trade Agreements.

We see our Bilateral Investment Treaties as a means to protect United States investment and as a way to promote much-needed commerce with developing countries that are reforming their economies. Right now we have 40 Bilateral Investment Treaties in force. Just last month the Administration launched negotiations with Rwanda for number 41.

Increasingly, we are focusing on economic empowerment efforts that can play a vital role in supporting our national security while simultaneously advancing our trade and investment agenda. I’d like to conclude by mentioning three of these initiatives: The Economic Empowerment in Strategic Regions Initiative; the International Compact with Iraq, which we strongly support; and Reconstruction Opportunity Zones.

The Economic Empowerment in Strategic Regions Initiative seeks to add a private sector economic dimension to the Administration’s broader engagement in the global war on terror. Through the State Department’s Advisory Committee on International Economic Policy, senior representatives of U.S. corporations, policy institutions, trade and labor associations, and academia are advising us on how to harness the transformative power of the private sector in three pilot regions: the Pakistan/Afghan border area, Iraq, and Mindanao in the Philippines. The ultimate goal of this initiative is to create jobs and economic opportunity where poverty and isolation provide fertile ground for extremism and insurgency. This is a new initiative, still in its early stages, but it has been greeted with enthusiasm and offers great promise.

In parallel to the Economic Empowerment in Strategic Regions Initiative, I would point to the International Compact with Iraq as one of the most comprehensive and progressive economic reform efforts in the Middle East. The International Compact is primarily an economic initiative but it carries with it broad political, security, and social implications.

More than 70 countries and international organizations participated in the International Compact for Iraq's launch in Sharm el-Sheikh on the 3rd of May. Iraq’s international partners pledged to support Iraq’s efforts to achieve its goals by monitoring and assessing reforms and providing financial and technical assistance and, importantly, debt relief. As the Government of Iraq implements Compact reforms, it will become increasingly effective in providing the services that the Iraqi people expect from their government.

In a similar vein, President Bush has announced his intention to create Reconstruction Opportunity Zones throughout Afghanistan and in the border earthquake affected regions of Pakistan. This will require fresh legislation, which we hope will be introduced before the August Congressional recess. Reconstruction Opportunity Zones would allow certain products made in these zones to enter the U.S. market duty free. The goal is to create substantial job opportunities and stimulate investment as an alternative to extremism, drug and other illicit activities.

In sum, we are pursuing an economic engagement policy that seeks to enhance international stability, promote the rule of law and good governance, alleviate poverty, and bolster prosperity for both Americans and for our trading partners. The four free trade agreements currently awaiting congressional approval are the most concrete elements of that policy. The stakes are high and include substantial foreign policy interests. Simply stated, the defeat of the Latin American free trade agreements would be a victory for Hugo Chavez of Venezuela. That’s why we are mounting a concerted effort to persuade the Congress to support these agreements and welcome your efforts to help us highlight both their commercial and their strategic importance. Fortunately, the State Department’s historic partnership with BCIU makes our cooperation fluid, constant, and effective.

We are proud to consider BCIU not only our partner but our friend, and look forward to working with you to promote our shared economic policy objectives.

Thank you very much. (Applause.)

MODERATOR: The Secretary will take questions and I'll stand by in case he needs a referee but I think -- (Laughter.)

DEPUTY SECRETARY NEGROPONTE: Yes, sir.

QUESTION: Mr. Secretary, John --

DEPUTY SECRETARY NEGROPONTE: John Glassman, how are you? (Laughter.) This fellow is a real -- he was a hero back in the days when the Soviets were occupying Afghanistan. He was our Chargé d'Affaires for how many years?

QUESTION: I was there for two years.

DEPUTY SECRETARY NEGROPONTE: Yeah, two years. Can you imagine a Representative of the United States -- (Applause.)

QUESTION: Don't want to go back. (Laughter.) But anyway, John, thank you very much. You were returning to State. The first thing you did you went out to Asia and perhaps not coincidentally, Asia looks like a very bright spot in our diplomacy. And I was wondering if there's any lessons to be derived from what we have done in Asia in the last few months under your tenure and Chris Hill's work and so forth that could be applied in the Iraq-Middle East situation.

DEPUTY SECRETARY NEGROPONTE: You're referring to the diplomacy there, I take it, yeah.

QUESTION: Yes, of course.

DEPUTY SECRETARY NEGROPONTE: Well, let me first of all, say with regard to my trip, the Secretary asked me after I was sworn in, as my first foreign trip to go to Japan, China, and South Korea to show the importance we attached to our relationships with those countries, to give Japan -- I see Tom Hubbard is here today -- a noted alumnus to the State Department and one of our leading Japan experts -- to reassure Japan of the strength of our friendship towards that country and the importance of the alliance, to go to China because we have an interest in developing this important dialogue on many fronts with China.

Secretary of Treasury Paulson is leading what's called the Strategic Economic Dialogue and I'm sure it didn't escape your notice that they had a meeting here a couple of months ago with some 15 or so cabinet members on each side, covering the whole range of economic issues on our agenda with China. And I lead a political dialogue with China, which is designed to, first of all, compare notes about the situation in the neighborhood, and then also talk about interests, mutual interests that we have with China, with regard to more global issues in such areas as, for example, the Sudan, in Africa generally and trying to encourage as my predecessor Bob Zoellick used to say, to encourage China to be a responsible stakeholder on the international scene.

And then I went to South Korea, which is of course an important alliance, and we've got this breakthrough situation, if you will, where North Korea has stated at least that it is prepared to end its nuclear programs and they have taken some encouraging steps in that direction. Just this week, they shut down this Yongbyon facility which is where they were producing nuclear materials and now we're moving on to the next phase of that negotiation where we are hoping that North Korea will declare its nuclear facilities on the one hand, and then move towards the disablement, that's the term of art that is used, of those facilities, on the other hand.

I think all of this points to a hopeful -- I don't think we can yet say that success is assured -- but I think we have a hopeful diplomatic horizon in East Asia. We have the prospect and possibility of a -- nuclear disarmed North Korea and I think that will make a very important contribution to the security atmosphere in the region and that could be accompanied or followed by the achievement of a definitive peace between North and South Korea and an end to the Korean War. And then hopefully, that will lead over time to a new framework, if you will, and a new environment for peace and stability in the East Asia region, so that maybe we could ultimately realize the hope that I think many of us have had over the years of the East Asia region evolving from a part of the world that Americans in the past, in my generation and in my parents' generation associated with war, to a region that is not only associated with economic growth, because there's huge economic opportunity out there, but also with peace and stability.

Now, you know, how do you transfer those lessons to Iraq. I think first of all, you've got to have a little bit of patience, John. I don't think it's going to happen overnight. But I think the Iraq issue is sufficiently distinct from what's happening in East Asia, that I think I would leave it at that for the moment, unless there's a follow-up question about Iraq.

Yes, ma'am.

QUESTION: Hi. I'm Laura Lane with Citigroup. We serve as the co-chair of the U.S.-Latin America Free Trade Agreement coalition, as well as the co-chair of the U.S.-Korea Free Trade Agreement Coalition. We couldn’t -- I'm sorry -- we couldn't agree with you more that it's critically important that we move the Latin America Free Trade Agreements, given the importance for them from the economic basis as well as the geopolitical importance.

I would like to underscore, though, that it's equally important that we stress and have the Administration out there very loud and vocal in terms of the importance of the Korea Free Trade Agreement. This is the commercially most significant agreement ever negotiated since NAFTA. And the Koreans are watching very carefully some of our internal politics and looking at it as if the U.S. is rejecting that partnership. The geo-strategic importance of our relationship with Korea really needs to be underscored, and we appreciate that Secretary Gutierrez and a number of senior government officials are out there talking about Latin America. We also need a very loud voice on Korea, because we cannot let this agreement fail. And with the democratic leadership coming out against this agreement, we need a very strong voice, saying we cannot let this fail. And we need to not delay in considering these agreements. So just a comment.

DEPUTY SECRETARY NEGROPONTE: Right. No, and I'm with you. And I think that it's -- I think it's also very important that they deal with those agreements during this year because I think once we get into 2008, it just becomes that much more complicated for reasons that we all understand. And the other point I would add because I think it's kind of intriguing is that, you know, shortly after we signed the agreement with South Korea, Japanese friends and colleagues started coming in and saying, well, you know, after all, we might be interested in a free trade agreement and that was not the line previously. So I think it's caused Japan to have second thoughts about that. And I would have thought if we were over time to be able to successfully negotiate a free trade agreement with Japan, whenever that happens, that would represent significantly enhanced opportunities for the American economy because we all know about some of the kinds of barriers that exist in terms of access to the Japanese economy that hopefully would be dealt with in a free trade discussion.

So I think that, too, is an exciting opportunity. But we need to approve the Korean agreement first. And I take your point about it being from an economic point of view-- a strictly economic point of view -- the most important of the four pending agreements. Although I got to tell you, I went down to visit Colombia, Peru, and Panama, and it's a really impressive economic story down there. But I think it's time now to build on those successes, and I think it would be a huge disappointment to those three counties if those agreements didn't go through and a setback to our relationships.

Yes, sir.

QUESTION: Thank you, Mr. Secretary. Fred Tipson with Microsoft. My question has to do with UNDP, the United Nations Development Program. I serve in a personal capacity on the U.S. Committee for UNDP. And whereas I'm a very strong supporter of the Millennium Challenge Account, I think you'll agree that there are certain things in the development area that multilateral organizations are best placed to take. But there have been signals recently from the Administration that in various ways there seems to be a -- some reservations about UNDP continuing in its strong role in various sectors. And particularly some criticism around the events in North Korea which don't seem to -- some of the information that's been leaked to the press -- doesn't seem to square with the facts, as if there's an agenda of some kind to undercut UNDP. I just wonder whether there is such a rethinking of support for that organization within your administration and what you're able to say about that.

DEPUTY SECRETARY NEGROPONTE: Of course, over the course of my career, plus the time I was ambassador to the United Nations, I've had numerous opportunities to interact with the UNDP or its field offices around the world. And if you ask me, UNDP is one of the premier entities of the United Nations system. If you had to name several of these UN agencies that contribute significantly to the world's situation, I would have said UNDP has got to be on that list, as does the UN High Commission for Refugees, UNICEF, and several others. So I certainly think of UNDP as an important organization that has a solid record of accomplishments around the world. I think to the extent that there have been problems in North Korea, they need to be looked at, but they ought to also be kept in perspective.

Yes, sir.

QUESTION: I'm Richard Douglas with General Electric. My company and I might argue, many others are interested in India and the opportunities that are there, as it expand and builds out its infrastructure. The topic, de jure is of course, the Civil Nuclear Agreement. Could you give us your perspective on the importance of that agreement to the overall relationship? And then to the extent that you can, share with us your assessment of where you think we are in those negotiations?

DEPUTY SECRETARY NEGROPONTE: Yeah. Well, on the latter, I'd be reluctant to comment, just because they're kind of ongoing right at the moment. At this very moment, there's a delegation from India that's here in Washington and they've been holding discussions with Under Secretary -- our Under Secretary for Political Affairs, Nicholas Burns. So I wouldn't want to get in the middle of that at this particular point. And it's a particularly sensitive moment.

I think reaching an understand -- well, first of all, I think the important point to make about India is that since the early 1990s, it has entered into a period of important economic reforms and that process has been accelerated in recent years and there's, as you know, better than I probably, it's -- there's a growing middle class in this country of more than a billion people. It's a democratic country. And I think that there's been a fundamental shift in attitudes between the two governments as compared to the Cold War period to the point where I think you could say that we have -- are now developing a very strong friendship and even some kind of a strategic partnership.

So bottom line, India is an important country. It's changing in the right direction and the relationships between the two governments and societies are getting much better than they used to be during the Cold War period. And I think it's in that context that you have to look at this Civil Nuclear Agreement which would be just another way of cementing, if you will, and consolidating this process. But I do think it's important to us and to them, and I think it would be an important signal about the importance of the relationship to the two sides.

There was somebody in the middle here. Yes. British Petroleum. (Laughter.)

QUESTION: Thank you. (Laughter.)

QUESTION: Mr. Secretary --

DEPUTY SECRETARY NEGROPONTE: If you ask a question about textiles, I’ll be very surprised. (Laughter.)

QUESTION: I will. The great work that you and Secretary Paulson are doing on the U.S.-China relationship came up in an earlier question. As businesses I know we all appreciate that and in particular, the -- one of the great results of it, which is that any problems that come up in the relationship -- and let's face it, they do and will -- no longer turn into immediate crises in the business-operating environment in China, for the most part. And so turning to China's neighbor to the North, Russia, where there still are problems of unpleasant surprises in the bilateral relationship and they do affect the business-operating environment, I wonder if you feel that the China experience may provide some suggestions for the Russia relationship in terms of the advisability of strategic, economic, and political dialogues that keep us talking at multiple levels on a regular basis.

DEPUTY SECRETARY NEGROPONTE: Yeah, it's an interesting suggestion. Of course, we certainly give a lot of attention to the United States-Russia relationship. The President himself has a very -- he has an ongoing relationship with Mr. Putin. Secretary Rice is, in addition to being extremely interested in the relationship from the point of view of her current responsibilities, is a Russia expert.

We have a very capable ambassador. We were talking about at our table, as a matter of fact, we have an extraordinarily capable ambassador representing the United States in Moscow, so I don't think that the relationship is neglected, although the precise structures of the relationship may be slightly different. And for all I know, I'm just not entirely certain. There may be some similar structures out there in -- that promote some aspect or other. Maybe Dan Sullivan, our Assistant Secretary for Economic Affairs knows. Is there a U.S.-Russia economic dialogue?

ASSISTANT SECRETARY SULLIVAN: There’s nothing along the lines now of what -- at the level or the intensity we have with the Chinese, but it is a -- it's a very interesting suggestion. And some people have already been thinking about that.

DEPUTY SECRETARY NEGROPONTE: Mm-hmm. Now on the question of what's happening in Russia, I remember hearing somebody say only half in jest a couple of years ago -- was talking about Russia saying, "If you're an economist, you're optimistic. If you're a political scientist, you're pessimistic about Russia."

And that may be a bit of a caricature, but I think it's another way of saying that the economic situation is moving along quite smartly, and Russia has obviously recovered substantially from an economic point of view in the past decade, whereas there are areas for political concern, both with respect to the domestic situation there and what's happening to the prospects for freedom and democracy. And then on the other hand, the question of what's happening to Russia's relationships, particularly with its -- what they call their near-abroad and especially in countries that have had colored revolutions, where Russia seems to have reacted in an antagonistic way to some of those situations.

And so those are the things that we have to be attentive to and be alert to, but having said that, I think that it remains a country that we must take seriously and deal with in a very, very measured and careful and deliberate way. And I think that where there are opportunities, such as in the economic area, we definitely should pursue them. I mean, the -- Russia's record in the last five or six years of -- the growth of its GDP, the growth of its financial reserves is really an impressive record indeed and the thriving nature of the business environment.

Sir. Don.

QUESTION: Well, thank you, Mr. Ambassador for these great remarks. Looking at Europe for a moment, we have - you know, something close to a blessing, I think, with Nicolas Sarkozy out in a very activist mode, with Gordon Brown now on the stage with -- and of course, Angela Merkel, who has already developed outstanding relationships and did a great job steering G-8 and other vehicles.

So I'd just be interested to get your perspective on how United States diplomacy can really take advantage of this special moment, try to broaden that circle. And then just one other little question about it here is a challenge which we're all faced -- and that's Turkey and its future in the European Union with Nicolas Sarkozy taking a pretty strong --

DEPUTY SECRETARY NEGROPONTE: Right.

QUESTION: -- “No” position for now.

DEPUTY SECRETARY NEGROPONTE: I think on the first point, changes in government that have taken place in recent months as -- between Germany on the one hand, France on the other, plus the evolution of our own thinking, I think, argues well for better cooperation between the United States and Europe on a whole host of international issues. I think there’d already been a fair amount of progress in that regard if you look at the fact that we were cooperating together or are cooperating together in Afghanistan.

I mean, think about it; a decade or two ago, would it have been conceivable for NATO to be operating so far afield from Europe? But I think that's a symbol, if you will, of the opportunity for cooperation with Europe across the international scene. The importance of cooperating with Europe was brought home to me through my experience at the United Nations and especially in the General Assembly. Because when you think of it, Europe represents a bloc of some -- 27, is it -- the European Union is 27 votes, not to mention those who are not in the European Union, but just the European Union alone.

And my rule of thumb was that -- in New York -- was that if we could reach a consensus view with the Europeans on how to deal with an issue, the rest would be a heck of a lot easier in terms of bringing the rest of the international community along. So for a whole host of reasons, alliance relationships, common values, commitment to democracy, like-mindedness, plus their sheer economic power -- I think there are just many, many reasons for wanting to deepen this cooperation with Europe and I'm optimistic about that.

Turkey is a very challenging situation and as you say, Mr. Sarkozy has come out, at least in the past, has said that he did not favor Europe -- Turkish entry into the European Union. We are strong advocates of Turkish membership in the EU. I, as a Greek-American, am a strong advocate personally, of Turkish membership in the European Union. And I think you may recall that many of the Greek leaders in their body politic have been strong advocates of that as well over the years, try to get them embraced by this process. It would be to Turkey's economic benefit. I think it would surely also be to their political benefit to become part of the EU.

Maybe Mr. Sarkozy, now that he's in power and in office, maybe one can hope that he'll take another look at his position on that question. I would hesitate to predict, but certainly one can hope that and despite all the different challenges, I think it would be very important if Turkey were to become an EU member. The concern I have, and this I take back to my time as Director of National Intelligence when I looked into some of these issues. My concern, if they are rejected or not taken into the -- definitively rejected -- for membership in the European Union, I think that could have a polarizing political effect inside of Turkey. And I think it would be a setback, or could be a serious setback for the forces of modernization in that country.

One last question. There we are. Right here, okay. And then I'm going to make my escape.

(Laughter.)

QUESTION: Secretary, Ian Davis with Occidental Petroleum.

DEPUTY SECRETARY NEGROPONTE: Right.

QUESTION: One of the successes that you didn't mention in your speech was Libya. And I'm wondering, knowing you were just in Libya and given the likely resolution of the issue relating to Bulgarian nurses, do you think there's a likelihood of deepening the relationship with Libya in the near term? From a business perspective, where things stand now is becoming increasingly challenging for the companies that are doing business on the ground. So we hope to see further deepening of the relations possible, possibly even a visit by Secretary Rice or other senior Administration officials.

DEPUTY SECRETARY NEGROPONTE: We were talking about that at lunch at our table. I mean, we would like to see improved relationships with Libya. There are pending issues. As you mentioned, the nurses and doctors issue is not fully resolved yet, although it seems there may have been a couple of steps in the right direction in recent days. We've recently announced the nomination of a candidate to be Ambassador to Libya, which I think is a positive development. When I visited Libya, we certainly were looking and had the prospect of eventually building a new embassy there and making plans, in general, to beef up our presence in that country so that we can promote all aspects of the relationship: political, economic, and so forth.

It tends to move in fits and starts. These things always do and as -- particularly when you're in that insipient phase and after having been through a period of what, almost 40 years without diplomatic relationships. But I'm optimistic and I know the Secretary is committed to trying to improve those relations, as are all the colleagues supporting her in the Near East Bureau of the Department of State.

Once again, let me thank you very, very much for this opportunity. I appreciate it very much and thank you to the BCIU.

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