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the negotiations on the Free Trade Area of the Americas, made progress on our bilateral free

trade agreements with Chile and Singapore, and have resolved productively a number of disputes

with our trading partners.

The U.S. is Falling Behind

Yet we should not let this progress mask a more troubling reality: the United States is falling behind the rest of the world when it comes to trade liberalization. Years ago, U.S. involvement in international trade negotiations was a prerequisite for them to succeed. That is not the case today.

Globally, there are 130 free trade agreements. The United States is a party to just two: one is with Canada and Mexico - NAFTA - and the other is with Israel. The European Union has free trade or special customs agreements with 27 countries, 20 of which it completed in the last 10 years. And the EU is negotiating another 15 accords right now. Last year, the European Union and Mexico - the second-largest market for American exports – entered into a free trade agreement. Japan is negotiating a free trade agreement with Singapore, and is exploring free trade agreements with Mexico, Korea, and Chile.

We have no one to blame for falling behind but ourselves. And there is a price to pay for our delay. As Senator Graham of Florida has pointed out, during the last century, when it came time for countries to adopt standards for the great innovation of that era - electric power - Brazil

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turned to European models because the United States was not active in Brazil. So when you visit

Brazil, be sure to bring an electric adapter. Today, as Senator Graham points out, Brazil is

making decisions about standards for autos and other products - so the United States needs to decide whether it wants to stand on the sidelines again.

Our inaction hurts American businesses, workers, and farmers, as they find themselves shut out of the many preferential trade and investment agreements negotiated by our trading partners. To cite just one example, while U.S. exports to Chile face an eight percent tariff, the Canada-Chile trade agreement will free Canadian imports of this duty. As a result, U.S. wheat and potato farmers are now losing marketshare in Chile to Canadian exports.

Congressman John Tanner has summed up the big picture stakes to me as effectively as anyone I have heard: "America's place in the world is going to be determined by trade alliances in the next 10 years in the way military alliances determined our place in the past.”

The Benefits of NAFTA and other Trade Agreements

In any discussion of future free trade agreements, we need to highlight the benefits of previous accords. Together, NAFTA and the completion of the Uruguay Round have resulted in higher incomes and lower prices for goods, with benefits amounting to $1300 to $2000 a year for an average American family of four. That is real money for farmers, nurses, teachers, police officers,

and office workers, not bonuses for corporate executives.

Trade barriers hurt families. When trade is restricted, hard-working fathers and mothers pay the

biggest portions of their paychecks for the higher cost food, clothing, and appliances imposed through taxes on trade.

NAFTA has also produced a dramatic increase in trade between the United States and Mexico. When the Congress approved NAFTA in 1993, U.S.-Mexico trade totaled $81 billion. Last year, our trade hit $247 billion - nearly half a million dollars per minute. U.S. exports to our NAFTA partners increased 104 percent between 1993 and 2000; U.S. trade with the rest of the world grew only half as fast.

Increased trade supports good jobs. In the five years following the implementation of NAFTA, employment grew 22 percent in Mexico, and generated 2.2 million jobs. In Canada, employment grew 10 percent, and generated 1.3 million jobs. And in the United States, employment grew more than 7 percent, and generated about 13 million jobs.

I recognize that these benefits of open trade can only be achieved if we build public support for trade at home. To do so, the Administration will enforce, vigorously and with dispatch, our trade laws against unfair practices. In the world of global economics, justice delayed can become justice lost.

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The Administration will also be monitoring closely compliance with trade agreements as well as

insisting on performance by our trading partners. Thanks to the help of the Congress in its support of the Trade Compliance Initiative advanced last year, USTR received additional staffing to strengthen its ability to pursue a two-track strategy of negotiating agreements and ensuring that the terms of these agreements are fulfilled. With these added resources, USTR will increase the number of staff devoted to monitoring the practices of our trading partners under existing trade agreements and to litigating trade disputes in all sectors.

For the United States to maintain an effective trade policy and an open international trading system, its citizens must have confidence that trade is fair and works for the good of all people. That means ensuring that other countries live up to their obligations under the trade agreements they sign.

Moving Forward

The Bush Administration is promoting free trade globally, regionally, and bilaterally. We are working to help launch a new round of global trade negotiations in the World Trade Organization later this year, while pursuing regional agreements such as the Free Trade Area of the Americas and bilateral agreements with countries such as Chile and Singapore. By moving on multiple fronts, we can create a competition in liberalization that will increase U.S. leverage and promote open markets in our hemisphere and around the world.

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The Free Trade Area of the Americas provides a framework for the Administration's hemispheric strategy. This area, once completed, will be the largest free market in the world.

We have made real progress in turning the idea of an FTAA into a reality. At the Summit of the Americas in Quebec City, all 34 heads of state signed a declaration pledging to conclude negotiations on the FTAA no later than January 2005. The United States is committed to working with others to meet, or beat, that deadline.

Moreover, the draft text of the agreement will be released once it has been translated into the four official languages of the FTAA. This is an important, and perhaps unprecedented, step to build public awareness and support an open process. All 34 nations participating in the Quebec City summit also committed to help the smaller economies of the hemisphere - especially the nations of the Caribbean and Central America - address the unique challenges they face in moving forward with hemispheric integration.

The commitment to free trade was made in tandem with an unambiguous pledge to support democracy. Summit leaders agreed that any unconstitutional alteration or interruption of the democratic order in a state of the hemisphere would disqualify that government from further participation in the Summit of the Americas process. For a region that was home to the strict Calvo doctrine on non-interference by others in states' internal affairs, this democracy clause is a striking sign of a new political outlook for the hemisphere.

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