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Discussion on the Security and Prosperity Partnership

Thomas A. Shannon, Assistant Secretary for Western Hemisphere Affairs
Walter Bastian, Deputy Assistant Secretary for the Western Hemisphere, U.S. Department of Commerce; Alfonso Martinez-Fonts, Assistant Secretary for the Private Sector Office, U.S. Department of Homeland Security; and Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce
Association of American Chambers of Commerce in Latin America and Council of the Americas
Washington, DC
April 18, 2008

MS. ROTHKOPF: Good afternoon and welcome to the U.S. Chamber of Commerce. My name is Adrean Rothkopf and I am the Chamber’s Managing Director for North and Central America and the Caribbean. I’d like to thank everyone for joining us today for this public briefing and discussion on the Security and Prosperity Partnership in North America which we are co-hosting with the Council of the Americas.

It is also an honor and a privilege to introduce our speakers. Tom Donohue is, of course, President and CEO of the U.S. Chamber of Commerce. I’ll be turning the floor over to him in just a moment to make a few remarks.

Tom Shannon is the Assistant Secretary for Western Hemisphere Affairs and he has directed the State Department’s activities in the hemisphere since 2005.

Al Martinez-Fonts is the Assistant Secretary for the Private Sector Office at the Department of Homeland Security and is charged with providing our private sector with a direct line of communications to DHS.

Walter Bastian is the Deputy Assistant Secretary for the Western Hemisphere in the U.S. Department of Commerce where he advances U.S. commercial interests in the Western Hemisphere.

We are always happy to welcome each of them individually here at the Chamber, and we are especially delighted to welcome them together today just prior to the North American Leaders Summit in New Orleans next week.

Now without further ado, please join me in welcoming Tom Donohue.

[Applause].

MR. DONOHUE: Thank you very much and welcome to the Chamber. It is been a very exciting day here. We were up on the Hill, we have a hotel up there with our Small Business Council. We had the President, we had Chairman Cox from the SEC here at lunch. Now here we are talking about the Leaders Summit which will occur on Monday. I have done a great service to you. I ditched most of what folks wanted me to talk about because I really want to hear the people that are sitting to my left.

But I would like to make just three or four comments by way of seeing if we can stimulate some serious discussion.

First is, you met Adrean, but this Leaders Summit which, as you all know, includes the Canadians, the Mexicans and ourselves, which I will be attending, this Summit is a lot better than it would have been because of the extraordinary work that the teams from all three countries have put into this thing. And if you want to know who is making it go, it is Adrean. So if you have any complicated questions, don’t ask us. We don’t know. She does.

Second, some people have been talking about the trade routes operations that the Chamber has been running for many years, which is trying to explain trade to people and get them to a more sensitive position on it, have been doing a great job. But there’s something new we are trying to do.

We’ve given some serious thought to the fact that we are very good at corporate speak. That is companies can talk to each other, but I am not sure we do such a good job talking to government, talking to our fellow citizens, talking to the Congress, and we’ve been doing a lot of surveys to try and come up with the language that people understand and appreciate, which doesn’t change any of the substance of what we are trying to achieve.

I’ll give you one example about that. If you ask people what they think about protectionism, they think it is a great idea. Everybody wants to be protected. They want to be protected from the Chinese, want to be protected from everybody. You ask them what they think about isolationism, they’ll tell you it is terrible, it is a dumb idea. So I am not talking about protectionism any more. All I am doing is talking about isolationism. We can figure that out.

So now to the few points that I’d like to make before we go to our experts. This morning the President made some serious comments about the difficulty with the Colombia FTA. Obviously this is going to be an extraordinary discussion amongst the leaders of NAFTA countries. It is a simple issue. When people in Colombia sell us stuff, there is no tariff. When we sell them stuff it is 14 percent. It is the second issue. The second issue is the President of Colombia has taken on the most difficult drug gangs and all sorts of issues in a phenomenal way and has been very supportive of the United States. The third issue, we made a deal with them, and now the people who for the longest time have been criticizing others for not living up their deals and not participating in global agreements are for very simple terms, and that is to appease the labor unions, parking this thing when it needs to be done for our country. And finally, what a failure to move forward on this agreement does is hand Hugo Chavez of Venezuela who is trying to disrupt the whole region an argument that he shouldn’t have.

Now in case you don’t think we have views on the Colombia deal, those are our views.

Second, as we are going through the nominating part of the presidential elections. By the way, we have to always when we talk to our friends from abroad explain the nominating parts of the election are really pagan rights that people go through before we finally get down to talking about things that we want to talk about. The idea of renegotiating NAFTA is very very attractive to Mexico and Canada.

If you stop and think about it, and most people don’t focus on it, they are the two major suppliers of our gas and oil and they would like a much better deal on it and numerous other commodities. So if political leaders in this country want to renegotiate an agreement that has created millions of jobs, extraordinary economic growth, and benefits for America from coast to coast, if they want to do it, I don’t necessarily see it as the smartest thing they would do, but I would demand that when they got finished with it they stand up and give us a report card on what they’ve achieved, because it ain’t going to be much. And we need to say to people, that’s an agreement we made with our neighbors and we are going to keep it because it is a damn good agreement for us.

These meetings that we are going to have at the first of the week are going to raise issues that deal with visas and border crossings and immigration and each of these are questions that have to be looked at from the perspective of each of the people here at the table. What are we doing to protect our homeland security? What are we doing to acquire the workers that we need to run this economy? What are we doing in the geopolitical area to keep our relations with our two most important neighbors and allies in good shape? I think we are going to have a lot of talking down there on those subjects, and if anybody has some questions we also have some very strong views on those issues.

So just to wake everybody up, that’s what I had to say. Do we go to Tom now? You can go back to being more diplomatic.

[Laughter].

ASSISTANT SECRETARY SHANNON: Thank you very much. I want to thank the Chamber and the Council of the Americas for supporting and offering their goodwill and good cheer here today.

I would like to say a few words, my colleagues to say a few words and then we’d like to open it to you all, to your questions as quickly as possible.

As you know, Monday and Tuesday in New Orleans the leaders of the United States, Canada and Mexico will be meeting for the fourth time. The Security and Prosperity Partnership was launched in Waco, Texas by President Bush, by then President Fox, and Prime Minister Martin and has since met in Cancun and Montebello, and we are coming full circle back to the United States to be meeting in New Orleans. It is a pleasure to be hosting it and it is our hope that by hosting it for a second time we’ll be institutionalizing a North American Leaders Summit that’s badly needed. Both Mexico and Canada have gone through changes of political leadership during this process and have remained committed to the Security and Prosperity Partnership and remain committed to the North American Leaders Summit. We are the only country that has not yet gone through that change of leadership but we believe that by meeting for a fourth time we have committed the United States to a process that’s vitally important to US interests, but also vitally important to the well being of our relationship with Canada and Mexico.

As Mr. Donohue noted, North America is an incredibly rich and dynamic place. It is an economy with a combined GDP of about $15 trillion. It has an annual trade of nearly a trillion dollars, about $930 billion a year. It is a frontier area with over a million crossings a day, legally. There is not a more dynamic, more transited area of the world in terms of our northern and southwestern borders. They are vital to our prosperity, they are also vital to our security, as my partners here will note.

When the Security and Prosperity Partnership first started it was an effort to bring further structure to really dramatic changes that had taken place in our security relationships with Canada and Mexico following the attacks of September 11, 2001 and also to ensure that as we addressed security problems along the frontier we did not affect the security of the three countries, Canada and Mexico, relying on movement across that border, but also many many American businesses also rely on that border.

It started with a broad range of initiatives which over time have been worked I think in a successful fashion, but also have been pared down to five broad priorities. Those priorities were expressed in Montebello at last year’s summit. They are sustainable energy and environment; safe food and products; enhancing global competitiveness; smart and secure borders; and emergency management and preparedness. These are five areas where we believe that working together we can dramatically enhance the prosperity and security of the United States.

But at the same time it is important to understand that these meetings, while SPP remains the core of these meetings, they’ve really expanded beyond SPP to become leaders’ summits. As such, the leaders are discussing issues that go beyond the immediate issues on our frontiers but are really exploring ways to identify common North American interests, that we can take not only in terms of our actions here in North America, but also in the hemisphere and globally. And we believe that as these discussions deepen, we are finding broad areas of consensus in terms of consolidating democratic institutions, promoting prosperity, investing in people, and protecting the security of democratic states in the hemisphere and elsewhere. But especially the efforts to promote the linkage between democracy and free markets, the importance of economic integration, the importance of comprehensive immigration reform, and the necessity of free trade to drive economic growth.

Mr. Donohue highlighted the Chamber’s support for the Colombia Free Trade Agreement. It is important to note that three countries in the meeting in New Orleans, Mexico has a Free Trade Agreement with Colombia, the United States has concluded a Free Trade Agreement with Colombia and is awaiting congressional ratification, and Canada is negotiating a Free Trade Agreement with Colombia. In other words there is a North American position on free trade with Colombia and it is pro free trade.

I’ll stop there for the moment and turn to my colleagues to discuss prosperity and security.

ASSISTANT SECRETARY MARTINEZ-FONTS: Thank you very much. Let me thank Tom Donohue, Adrean Rothkopf, the whole Chamber family for this opportunity to be here with you who have been partners with the Department of Homeland Security over the last five years as we started up this office and started this initiative. I appreciate the opportunity. I also want to thank Tom Shannon and Walter Bastian for being here with me.

Let me talk a little bit about, as you know the Security and Prosperity Partnership kind of divides up into security very much within the purview of DHS and prosperity which very much is Department of Commerce.

But in effect that really reminds me of a joke, despite the fact that this is no joke. It is a question of an ad that appeared in the paper one time, a guy looking for a fast mathematician. It said, “Fast mathematician wanted. Good job. Well paying.” And it had a telephone number.

The guy calls up and says I’d like to apply for the job. He says are you really, really really fast? He says I think I am pretty fast. The other end of the phone says I am not sure pretty fast is going to make it. He says well, I think I am really fast. I am really, really really fast.

He said look, this shouldn’t be so hard. Can you just give me a test to figure out how fast I really am? He said good idea. How much is 14,325,780 divided by 12,000,014? The guy says it is 72,894. He said sorry, but that’s completely the wrong answer. He said, well, what do you want, speed or accuracy? [Laughter].

When you think about what we are trying to do on our borders, we are faced with that challenge every single day. Do we want speed? Do we want to make sure that everything comes across our borders -- by the way, that would include not just the legitimate trade of people and travel, goods and people coming across our borders, but it would also mean letting in guns, illegal merchandise, drugs, human trafficking, et cetera. Or do we want to have security? Do we want to stop every single truck? Do we want to empty out those trucks? Do we want to frisk every single person as they come across our borders? And particularly if we are talking North America and we are talking about our land neighbors of Mexico and Canada?

I’d like to see a show of hands. How many of you think we need to make sure we have speed or expedited people getting across? I see very few. How many of you think security is what we need to do? How many of you think the answer is both? Hopefully that’s the answer we need.

We really need to make sure that we are looking at both security and prosperity. We need to make sure we are looking at security and we are looking at speed and facilitation as we try to get across our borders.

So what are the issues that are within the purview of the Department of Homeland Security that we will be talking about? We talk about smart and secure borders. I can talk about border enforcement, nuclear and radiological screening, investing in trusted traveler programs.

Let me just talk about one group that has been put together at the President’s level of both U.S. and Canada as well as the U.S. and Mexico, and that is the Border Facilitation Working Group. This is a group that has been led by the HFC and NSC at the White House level here in the United States, but has included Commerce, it has included State, it has included DOT, Transportation, GSA, the Department of Homeland Security, and we have met with our counterparts in both of these countries so there was no sort of hiding. And when a question came up and they said well that’s something that Commerce takes care of or that’s something at CBP (Customs and Border Patrol), well, everybody was there at the same table, and what we’ve been looking at is what is it that we need to do to make sure that we can get stuff, goods, and people across the border better. We’ve made some very good progress in that area. We’ve toured the border, again on both sides, probably have done more work with the Mexicans than we have with the Canadians at this moment, but we’ve done both sides of the border. I believe that some of the recommendations that have come out of that group will be the kinds of things that will continue to keep us safe and security, to look at the security part, that we’ll continue to expedite. What is it that you need to expedite? You need to make sure that the roads are coming into the right place, the roads are wide enough, that the points of entry are big enough, that CBP is not only having enough booths but has enough people to man those, that we have the right kind of equipment, et cetera, to make sure that we get across.

That’s just one very good example of the kinds of things that are being discussed. Again, real work is taking place and it is making things work better.

The second area that is within the purview of the Department of Homeland Security is the North American Emergency Management issue. I like to break this issue, I’ll call it into three areas. I like to think about it in terms of catastrophic disasters, what happens if you were to have another 9/11, at which time the borders were closed? What happens if you were to have a pandemic influenza or something like that that would really, really strain our border procedures and the like?

The second one is emergency management. What happens when we need to get the fire department from Detroit to go up to Windsor, Canada, or vice versa? And those things actually happen. We do have a lot of communities that we line up together.

The third area is one of recovery. What happens when we have -- and by the way, it doesn’t really have to be [inaudible]. It could be an ice storm like we have around this part of the world, or Oklahoma and Texas. Crews from Canada and

Mexico literally come in, linemen come in and help us get the wires back up again.

So how are those protocols working? How can we get people across? We’ve had a few hiccups. We have hiccups all the time on the emergency procedures, but I believe we’ve been able to work out some things that will be very beneficial.

On the recovery side, the issue that we have is at what point is it an emergency and at what point are we now basically, I don’t know if you’d call it taking advantage, or hired someone who could be hired locally because it was nice of the Canadians or nice of us to send someone down here to help us, or we could be going up there and doing the same thing. So we need to weigh all of these factors very often. And just like we talked about security and prosperity, we need to weigh all those factors of how long we do these things for, and the like. So there are many of these issues that will be discussed. We heard Tom talk about the five. These are the two that we are working on in the Department of Homeland Security. I look forward to getting your questions as soon as Walter is done.

Walter, talk fast. Or maybe slow. [Laughter].

DEPUTY ASSISTANT SECRETARY BASTIAN: Thank you.

Mr. Donohue mentioned the levels of trade among the countries and NAFTA. I think to put it in a little perspective. The amount of trade that goes back and forth across the southern border probably comes about a half a million dollars a minute. Try to figure that out. Per minute, every minute of the year. As impressive as that is, what goes back and forth across the northern border is about twice that. We are talking about huge volumes of trade. I mentioned this because Al was pointing out the relationship between security and prosperity.

When we have a disaster in this country like 9/11 and our border shuts down immediately, as it should, it has a huge impact on the economy. It affects the auto industry. It affects virtually every institute in this country. You can begin to see the ripple through the economy in a matter of hours, and it is devastating on the U.S. economy. Nobody is suggesting, of course, that we allow cars to go back and forth across the border at this time, but what we are trying to do is to mitigate the impact, the negative impact on the U.S. economy. Or if it is a Hurricane Katrina, the same thing. I think Al did a good job. We cooperate very well with our neighbors, with our Canadian neighbors and our Mexican neighbors, ensuring that we can get the kind of assistance that we need, that they get the kind of assistance that they need when they have natural disasters and just on the off chance that there’s somebody here from Mexico or Canada, I would tell you this is the best neighborhood in the world to live in when it comes to assistance.

Tom mentioned very quickly the issues that we are going to be dealing with in New Orleans. Competitiveness is one. It is not going to surprise you since I represent the Department of Commerce. Intellectual property is a major component of that. We are trying to see what we can do in developing regulatory frameworks.

Second is food safety. I don’t think anybody’s going to argue with that. We know there are people out there, critics of NAFTA, critics of SPP that say this is the lowest common denominator [inaudible]. That’s what [inaudible] decide to do or result in. Nothing could be further from the truth. We are trying to find a way that we can protect all of our consumers in all three countries with high standards, but to get around the necessity to have different testing mechanisms in each country. That’s why we need the best standards we can get, and let’s implement those.

The third which is very topically today deal with energy, alternative energy sources. How do you bring new technologies to the marketplace, things of that nature that are extremely important to all of us.

A lot of challenges out there. Our critics, and I won’t say there are more critics than there are proponents, but there are critics out there and they seem to have access to platforms that we don’t have. We need to find a way to get our message out. I believe all of us at this table believe strongly that NAFTA works, that all of our Free Trade Agreements work, the ones we will get to eventually will work. The stories are sensational.

But I am concerned that we are not getting the word out to people that are actually living off the economy today, but also to future generations. I’d just close with one example.

I was at a large southeastern university not too long ago and I was addressing a group of about 150 people in the audience. There were professors, business, economics, it was graduate students in economics and business. So I was a little intimidated. These were obviously really smart people. So I asked the question, so what’s a Free Trade Agreement? There was complete silence. People talk about deafening silence. That’s what this was. He reframed the question, he tried different ways to get it, and after about four or five formulations somebody about halfway up said tariffs. Well, I could work with that one. That’s good. I should have dropped it there. [Laughter]. I keep going. What would you put in [inaudible], what you really think a Free Trade Agreement is about. Go back and forth. Not back and forth, it was a one-way conversation at this point. And finally somebody way up in the back said, the good neighbor policy. I am older than most of you here in the room, but this goes back to Franklyn Roosevelt and had very little to do with free trade, trust me.

But that’s kind of what we are confronting today. I think part of what we need to do is we need a better effort at getting out the success that these agreements are having and what it is we are trying to accomplish with security, prosperity, partnership. We are not out there violating the Constitution. We are not creating a new currency, we are not undermining the Constitution of the United States.

I told a story earlier today that my mother was 90 years old, called me up, she was listening to a talk show. It had to do with NAFTA and STP. She called me up and said I have one question for you. Are you a traitor? A spy? No, mom, I am not. But that’s the kind of thing that we confront. I’ll leave it at that. Thank you.

MS. ROTHKOPF: Thanks very much. I think we’ll now take questions from all of you including the press. We do have microphones. If anyone has a question they can step up.

MR. DONOHUE: Can we use Donohue’s rule? That is before you ask the question tell us who you are and who you represent, then we’ll know what the question really means. [Laughter].

QUESTION: Eric Blossom, Inside U.S. Trade. This is a question for Mr. Bastian.

Can you detail in more specifics the types of advances on the problems of IPR and food safety and perhaps other trade-related issues you expect to make in New Orleans?

DEPUTY ASSISTANT SECRETARY BASTIAN: To a degree I will, because some of this is going to come out as a leaders’ statement, and one of the things I am not going to do is obviously reveal what my leader’s going to say.

But as an example of the type of thing we are trying to do. One is, take sight of what we are doing in intellectual property protection. What kind of a metric? We need a metric, we need to know what kind of progress we are making, what the seizures are, the confiscation of products are. So that’s one.

Two might be something in the area of pesticides and trying to come up with the standards that apply to [inaudible]. What I can tell you is we’ve got a very lengthy list of achievements I think the leaders are going to hear, and I also expect, of course, that in return if stock is taken of what we have managed to accomplish we’ll get new instructions back from that.

MR. DONOHUE: I hope they don’t ask me about pesticide standards. I am sure that really needs to be done by technical people that understand that. But boy, you’re right on target on the intellectual property question and counterfeiting.

QUESTION: Luiza CH.Savage from the Macleans Magazine in Canada.

I have two questions. One for Mr. Martinez-Fonts -- I hear a lot of complaints from Canadians that shows that DHS takes more of a frisk everyone approach rather than a risk management approach.

ASSISTANT SECRETARY MARTINEZ-FONTS: Sorry, what approach?

QUESTION: I used the phrase “frisk everyone” versus a risk management approach at the border. I’d like to hear your views on that.

And for Mr. Bastian, you were talking about the communications problem. I am sure this has happened in the past, but just to let you know that on the NAFTA super highway, try being a reporter on that and getting someone from the SPP Transportation Working Group to answer questions on a legitimate mainstream article that tries to look at what is actually happening on transportation. So, maybe you can just give us a sense of what are the transportation, commerce-related transportation, according to the SPP, and what you’re actually working on and how much and what is being discussed with regard to say the trans-Texas corridor and creating a NAFTA super highway. Which part of that is fact versus fiction? We never manage to actually get the official SPP government line on that. I’ve done a lot of writing on the subject, talking with other experts. Thank you.

ASSISTANT SECRETARY MARTINEZ-FONTS: Let me talk about risk management. I would say that risk management is something that Secretary Chertoff probably mentions at every single one of his public presentations. There is no way that we can [inaudible] without doing risk management.

In my particular case, I was a banker [inaudible]. I try to apply those skills to what it is you do in the department. But there would be no way you would end up with completely [inaudible] orders, the inability to get both people and goods across. So there’s a theory that we have been pursuing, is we would like to see you and know about you ahead of time. Get you enrolled in a program like CPPAT or FAST or [inaudible], Nexus, Sentry, trusted traveler programs, and so on. We like to make sure that we have the opportunity to do a background check on you so we are not seeing you or learning about you for the first time.

Now a little bit of the Ronald Reagan “trust but verify.” We do hold onto the ability to do even the trusted travelers, to check them once they’re there if we see something suspicious and so on. But I believe that risk management is in fact what everything we do is based on, and without going into detail, which I’d be glad to share with you or [inaudible], some of the things that we are doing whether it has to do with travelers or goods and how we are handling it in the department.

So I would think the answer to the question that risk management is not only a core value that we use in everything we do in homeland security, but it is what allows us to continue to have that security as well as that expedited or that speed that I talked about during my presentation.

DEPUTY ASSISTANT SECRETARY BASTIAN: On the NAFTA super highway and comments people are making [inaudible], articles that are being written, books that are being written on the subject. It is not just NAFTA super highway. Are we as a federal government planning a NAFTA super highway? No. Are we creating a common currency? No. Are we subverting the Constitution of the United States? No. Have we been transparent in the process? I think the answer is absolutely yes, even though we’ve been accused of holding meetings with our Canadian and Mexican counterparts behind closed doors, private meetings. [Inaudible] from the private sector. We’ve been up to the Hill, talking to members of Congress and SAT about what it is we are doing. I don’t think there’s anything that we are doing here that is underhanded or in any way smacks of lack of transparency.

Let me add to that, however, that there are a number of communities, community leaders, governors and mayors out there that see business development and job creation as a good thing. Surprising, huh? They are very happy, recognizing the benefits of trade, trade to their communities, jobs, doing everything they can, one to attract foreign investment in there; two, to attract foreign business in there. And maybe if you’re somewhere in the Midwest, Wichita, Kansas or Kansas City or St. Louis or some place and you think you’ve got an advantage because you’ve got transportation up there and you want to be part of the action, you take advantage of it. At least you try to. That’s what competition is about. But a master plan, do we have, have we gone in the basement with the National Security Council and pulled a map out and drawn the NAFTA super highway? You know, [inaudible] -- it would be better than the Wilson Bridge. The answer is no, we have not. We don’t have these discussions.

These are about things we can do within the law, within the spirit of the law, to do what we can. Integrate our econs, have common standards where it is applicable, where it is practical, without giving anything away in the process. I don’t know if I can be any more blunt than that.

QUESTION: Jessica Ackery with [People Tomorrow].

On the issue of transparency, there has been some success in getting documents directly related to the Security and Prosperity Partnership meetings revealed to the public through various watchdog groups, but there hasn’t been a tremendous amount of success in getting documents from the North American Competitiveness Council. Will those be available? Will they be forthcoming maybe next week?

MS. ROTHKOPF: I am going to go ahead and take that.

I think everyone when they walked in the door found a little flyer that said everything that has been up on the North American Competitiveness Council on our web site. For the US section that web site is www.uschamber.com; and www.counciloftheamericas.org. All of these documents have been public since the North American Competitiveness Council was first established. All of our documents are on line, have been. We do have other reports from leaders which we will be presenting on Tuesday. As soon as that has been presented it will also be available on-line. Thank you.

QUESTION: [Inaudible] from the [inaudible]. There’s one [inaudible] addressed [inaudible].

MS. ROTHKOPF: Would you repeat your question?

QUESTION: Sorry, what environmental-related issues are to be addressed at the meeting in New Orleans?

DEPUTY ASSISTANT SECRETARY BASTIAN: I think some of the ones we are looking at, we are trying to figure out fuel emissions, automotive emissions, how to cut back on those, taking a look at what can be done with the technologies, what are the technologies can be developed, what’s out there that [inaudible]? A lot of that is -- I don’t mean to say a lot of that, it sounds dismissive. Those are the kinds of things that we’ll be looking at, the leaders will be looking at.

MR. DONOHUE: Those discussions, which will include a lot of the carbon issues, are going to be accentuated or affected as well about the talk, the prices of energy, and the options in a world where the demand for commodities is going up significantly. You’ll recall we are at a time in Mexico where they’re considering in their own legislature their longstanding rules on using contractors or assistance from outside the country to make their oil and gas fields more productive for the benefit of Mexico and also for the benefit of their customers. And whether we’ll get to the discussions of electrical generation, nuclear power, coal fired plants and all that, I am not really sure. Sometimes I look at the list of things that everybody wants to talk here and I wonder if we are going for a day and a half or a week and a half. But there’s been a lot of good preparation by these departments and by the staffs of all the participants. I am hopeful that some productive things will come out of that as well.

QUESTION: Pat Forb from the Canadian Press.

I am wondering what you think the impact is of the anti-NAFTA rhetoric on the campaign trail, the Democrats, what kind of impact that’s having. And secondly, what role there might be, if any, for the leaders at the trilateral summit next week on [inaudible].

MR. DONOHUE: I remind everybody that we are not in an election yet. We are in, as I said, the pagan rite of nominating activity, and we’ve been trying to assuage the worry of Canadians and Mexicans and also contain their appetite about opening such a negotiation. I think when people get down to seriously thinking about the great benefits that this has provided and separate it away from the cross-border issues of immigration and visas and so on, but on the actual trade issue, I don’t think we are going very far. But it certainly is frightening, folks, and it is something that we have to be very careful about. It is also the same thing with the discussion about basically leaving the Middle East as a force and an influence there. I just came back from there and there’s an extraordinary amount of worry. It just shows you how important America is to the global activities, both economic and geopolitical, because when we get a cold, a lot of people seem to think they’re going to get pneumonia. We need to be very thoughtful and careful about that. I would not be surprised to see the leaders make some comments about it.

ASSISTANT SECRETARY SHANNON: Adrean, if I could add to that, I think the leaders will emerge with a very strong commitment to free trade. And to the economic growth that it drives, to the job creation that it drives, to the increase in hourly wages that it drives, and will underscore the point that the North American Leaders Summit in the Security and Prosperity Partnership is about deepening the economic relationship but also protecting it. And making sure that by linking security and prosperity we are in a position to protect a common economic area while respecting the independence of the three countries that occupy North America.

Again, from our point of view, this is vitally important to the United States, but it is broadly important to North America and to our ability to transform relationships between Canada and the United States and Mexico, address the issue of global competitiveness, but at the same time show the rest of the world that we are capable of working together to protect our common prosperity.

QUESTION: Timothy Tau, retired Foreign Service officer.

I just came back this morning from two weeks in Argentina, Brazil and Uruguay, read in all those foreign papers that the Congress of the United States has just shot free trade in the back, the Colombia Free Trade Agreement is dead until [inaudible]. And I read in those papers down there that every political candidate, including the candidates for dog catcher, are attacking free trade, making [inaudible] sound like a free trader.

Are we over here under Tom’s leadership, just whistling in the dark and saying rah rah until January 20th? Or is commerce, free trade, and mature relationships in this hemisphere, especially with our neighbors to the north and south, is it still alive and well?

MR. DONOHUE: After a very simple review of the numbers, trillions of dollars of trade between Canada, Mexico and the United States, extraordinary numbers of jobs, a great amount of economic growth, and then looking around the world at the same thing, that 95 percent of the people we want to sell something to live somewhere else; that a third of the whole economy, almost a $14 trillion economy, that a third of this economy is tied into trade and tied into direct foreign investment, you sometimes shift from wondering about people’s political objectives to their intelligence. But we are going to have debates on trade. And by the way, you remember when you were not a retired Foreign Service officer that we always had debates on trade and trade bills are usually passed in this country by one or two votes so that everybody else can go home and participate in the farce that we don’t really need trade and we’ll do everything we want to do right here in good old downtown USA.

The rest of the world is going on. Half of the economy is now in Asia. The global economy. And we are not simply rah-rahing. If you go look at what’s happening with trade routes and the programs that we are doing with and between ourselves and the government, we are making extraordinary progress. I think the Colombia thing is very discouraging. Last night we had a dinner here with the President of Korea and he announced basically, it didn’t get signed up today, they fixed the beef thing and we are going to move on that. I believe the political [inaudible] on Nancy Pelosi, who by the way is doing this simply for domestic politics with the unions, is getting pretty hot. I am going to try to figure out how to get her asked all the time when is Chavez coming to dinner? [Laughter].

But this is an interesting issue that we have to deal with in this country. One of the points I think we’ve not done well on, and we’ve let Lou Dobbs have the whole air time on this, is we’ve got to work on our language and we’ve got to become more aggressive and we’ve been talking to companies all over this country who are global players about getting their employees involved. I’ll tell you one story and then I’ll --

They had a terrible problem out at Caterpillar in Peoria. All the unions complaining about trade and all that. So then as they started building these earth movers and these tractors, as they get the first assembly, when they now had a body on it, they put a sign on it. This earth mover going to Indonesia. This earth mover’s going to be sold in Brazil. All of a sudden those guys out there figured out if they weren’t selling all that stuff there they wouldn’t be working. And we’ve got to do a much better job on that.

You asked a great question. We ask it here every day.

ASSISTANT SECRETARY MARTINEZ-FONTS: If I could just put a little finer point. When we [inaudible] earlier I said I am going to give you four numbers. I am now going to give you eight numbers. Mexico-U.S. trade in 1982 was $25 billion; last year it was $334 billion. Twenty-five to 334. And some of the Canadians gave me a number, 1982, two-way trade, U.S.-Canada was $170 billion; 2002, the latest number they could remember, was $486. So those numbers and all of those export dollars from these countries represent jobs and we have to make sure that message gets out there.

DEPUTY ASSISTANT SECRETARY BASTIAN: Tom, I am sure, the Assistant Secretary, certainly has a better sense of what foreign government leaders are thinking, but I can take it down a level. I am impressed today by how many, the number of contacts that we’ve got with local leaders. I am talking about governors and mayors throughout Latin America that are saying to us, forget what you’re hearing from the head of state, I need business, I need job creation. I can give you some very concrete examples.

One is the governor of Cordoba, Argentina, who actually targeted three major U.S. firms and said “I want the three of you to come down here and invest in my country. I am going to do whatever is necessary to get you down here. What skills do you need? What’s going to make Cordoba, Argentina attractive?” They told him what they needed and he provided all those. Most of these are in the way of technical education, vocational training. He went to universities and had them develop the curriculum so the students were provided scholarships. He got all three investments in. Each one double the amount he was looking for. But this was something he came up with on his own. He didn’t go through the federal government, didn’t go through the embassy here. He went off on his own.

There’s a mayor of a little place called Yanawata, Peru, outside of [inaudible]. This is, I know his first name, it is very Andean. His name is Milton. Milton said “Hmm, I haven’t been outside of Yanawata very often, but I think I need to be able to communicate with the outside world, you know?” He budgeted for it and installed a cellular phone system so his people could contact the outside world. Now he’s got people, natives that are selling to places like Bloomingdale’s and Macys, with not a clue of what Bloomingdales and Macys are, but selling there.

Mayors in Nicaragua, The mayor of Medellin, Colombia, these people know what business is about. They understand the relationship. This is just to show their thinking that I want to get reelected, I want to grow the economy in my state or in my county. So I think you’ve got to look at it --

MR. DONAHUE: The same thing is going on in the United States. You go to any local or state chamber, the three things they’re interested in is work force, education and economic development. They’re all over the world trying to figure out how to sell their products to people around the globe. And they’re very successful at it. One of our problems is that the press and the government and others think that all the traders in this country are great big multinational companies. That’s malarkey. Ninety percent of the companies that are trading around the world from the U.S. are small and medium sized companies all over the country. But with computers and FedEx and UPS, these guys have gone into the global trading business. It is a huge deal.

You heard some of the numbers down there, we can go on all day with numbers. Just the raw numbers on the NAFTA deal are a million incremental jobs here in the United States. Millions of them, if you start matching them up to Canada and Mexico, it is just amazing. And to think about these guys that pander to the unions and other people are going around saying we should -- I think the great thing is to see the difference of opinion in the Clinton family. I just think it is great. The old man, and I gave him huge credit for what he did as President to get that agreement through when there was opposition from the same people. She’s now around talking about maybe not doing it, but he’s going back out and saying oh yeah, we are going to keep doing it. I think it is great. Then I guess Obama I guess sent somebody to Canada to tell them don’t pay any attention.

Look, the bottom line is when we get down to serious business we are not going to change it.

QUESTION: Toby [inaudible] from GE.

I was hoping to get you to comment on some more of the strategic aspects of the SPP. We tend to get bogged down in the weeds here, and in particular one of the weeds that’s most important to us is IPR and I’ve been pleased to hear all of the remarks on IPR. I think it is the perfect issue where the three business sectors in all three countries have come together and identified both law enforcement priorities as well as prosperity policy priorities which is really the magic of this process.

On another level, however, the IPR issue and others, it is really about dealing with external threats, whether they be from criminal organizations that are counterfeiting goods or third countries like China or Thailand or Vietnam that are undermining some of our most important brands and other issues.

This gets to how the U.S. and Canada and Mexico work together to deal with these common external threats from other countries and organizations. I was wondering if you could give us some of the flavor, the importance of the three countries working together as a block against external threats.

MR. DONOHUE: We spend a lot of money on the fight against the theft of intellectual property and counterfeiting. If you take regular crime in the United States, they rob your house, they steal your car, they snatch your purse, you’re talking about $16 billion a year. The theft of intellectual property in this country is north of a quarter of a trillion dollars a year.

We have problems amongst ourselves, that is Canada, Mexico and the United States, we are all working to resolve. But they are very very insignificant when you begin to figure out what’s happening with Russia and China and lots of other places around the world. And a collaborative approach to this in many ways between the NAFTA and the American context, is very very important. Because you can’t fix this by yourself. When you go and attack it in one place they move it to some place else. It is the same thing as the drug trade. You shut them down in one country, you wake up two days later and it is in the other country. We need a collaborative effort here.

The most encouraging thing about this is that four years ago there wasn’t anybody across the world talking about this. Now you don’t have a leaders meeting anywhere -- Asia, the America, Europe -- that one of the first topics on the agenda, you’ve got to stop stealing our intellectual property as well as our government secrets and everything else.

I think we are making progress on this. We have a long, long way to go. I can assure you of this, I’ve talked to all these guys recently, I assure you this meeting will not happen without at least, whether it is on the agenda or off the agenda, without these leaders taking stock of what kind of progress they’re making on that issue, and for two reasons. One, it is become a part of their lexicon and what they want to report on and progress; and two, the private sector is beating the drum every day.

ASSISTANT SECRETARY SHANNON: If I could add to that, I think the question’s a very useful one. There is a certain ordinariness, a certain dailiness about life on the frontier, about dealing with goods and services as they move across, and dealing with checking of people and automobiles as they also cross in either direction. But there’s a larger strategic point underlying the security and prosperity partnership, and the North American Leaders Summit which is really for the first time in North American, security and prosperity are co-joined. They’re being linked. As they’re linked, the meaning of both changes. And it is now understood, at least among the leaders and among the governments and I think among the businesses that work within North America, that in order to have prosperity we have to have good security. This means recognizing that we cannot protect our borders at the frontier. What we can do at a frontier is regulate the movement of people, regulate the movement of goods and services, or facilitate them. But ultimately good security requires cooperative relationships among the countries of North America to identify external threats and to intercept them well before they get to our borders and in many instances well before they get to North America.

As Dell noted, external threats come in different shapes. Sometimes they’re terrorists, sometimes they’re ecological, environmental or natural disasters, sometimes they’re pandemics, but sometimes they’re things like IPR violations and theft. And this is one of the reasons why as we link prosperity and security we understand it in terms of increasing competitiveness. And also from a strategic point of view it is about transforming the relationship between Canada, Mexico and the United States. It is about recognizing that we do live in a common continent, that we live off of common economies and markets, and that while we are independent countries, while we have enormous racial and cultural and ethnic diversity, we share fundamental political values and fundamental economic understandings, and that our ability to take advantage of this commonality, our ability to take advantage of these understandings and work together will enhance our position in the world and send a very strong signal to those who want to be partners with us that they have to understand these agreements in terms of strategic alliances and they have to meet our standards.

DEPUTY ASSISTANT SECRETARY BASTIAN: On intellectual property, there’s a lot in the news, it seems like it is almost every day now. We’ve got a problem in this country because somebody’s selling knock-off pharmaceuticals or knocked-off DVDs or music that they pirated. And particularly what concerns me is the area of health, the pharmaceutical area, issues of where some product, consumer protection. It is amazing to me, it is a good story, that for the volume of trade that we’ve got with Canada and with Mexico, how few the problems are and how quickly we can resolve them. People say what about all these other countries? Part of the answer is no Free Trade Agreement. There are no set of rules that other countries have to abide by. And we manage, where we do have problems we manage to get things resolved fairly quickly. I would say the majority of the problems we’ve got, lead-based paints on toys and so forth. We don’t have those coming out of Canada or Mexico. These are coming from other parts of the world that we don’t have those agreements with.

MS. ROTHKOPF: Closing comments?

ASSISTANT SECRETARY MARTINEZ-FONTS: I appreciate very much the Chamber holding this event. Let me just mention, we really can’t lose sight of the forest through the trees. We’ve got to make sure that we do have a security prosperity mantle, that is very, very large. There is a lot of work that goes on underneath to break that stuff down to make this work. So while I want you to know that we are not losing sight of the big picture, we’d also like you to have a bit of understanding that the work that needs to go in down below to make sure that all of those security and prosperity measures get put into place.

MR. DONOHUE: I just want to thank everybody for coming, and particularly my colleagues here. They’ve got a million things going. If we had done this two weeks ago that would be fine, but they’re on a real short leash because we are all heading to New Orleans very soon and they have the problem that the principals keep changing their mind what they want to talk about. So there’s a lot of work to get done, and I really appreciate it.

But I think the most important thing when you look at the press on Monday and Tuesday is that three people that are friends, three leaders that are friends, three countries that are friends and that are totally interdependent in their economic and geopolitical interests are getting together to see how to do it better. I very much appreciate what these fellows here are doing. They’re under a lot of heat, but we enjoy working with them, and I thank you all for coming.

[Applause].



Released on April 22, 2008

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