Thank you Ambassador Thomas E. McNamara for that kind introduction. I would also like to thank The Miami Herald and Mr. Alberto Ibarguen, for the organization of this conference and especially for inviting me to speak to such a distinguished audience of entrepreneurs and government experts. This forum affords us an invaluable occasion for reflecting upon and sharing our experience, knowledge and information on both the opportunities and challenges resulting from globalization.

Before addressing the topic of regional integration in the Americas and, specifically the creation of the Free Trade Area of the Americas, I would like to reflect a bit on the larger process of increasing interdependence among our countries. I will also make some comments on the obstacles that we have faced in the last few months.

This interdependence that has accompanied the phenomenon of globalization affects the destinies of individuals as well as nations. Globalization transcends borders, social classes, religion and race. In our hemisphere, for example, despite vast differences in size, wealth and power, societies across the continent share a number of problems, challenges and hopes. The fate of the countries of the Americas is intertwined. We are tied to one another, for better or for worse, through economic and political ups and downs, by geography, history, culture and commerce. For these reasons, we in the Americas are increasingly aware that issues on the domestic agenda may also have an international dimension. Such issues must be addressed nationally -- but also collectively, since stable and lasting solutions cannot be achieved separately. Progress cannot be gained at the expense of one’s neighbor’s dreams and aspirations.

The regional political scene has changed significantly since the end of the Cold War. You all know that perhaps the most important change is how we have buried decades of authoritarianism, of confrontational language and of mistrust. We have moved away from gaping differences and disagreements and now share a set of common, political, economic and social values.

The countries of the Americas are now working together towards a framework for stability and prosperity . This will provide us with a platform from which we can address the challenges of our Hemisphere: In the last decade we have been working to defend democracy. Paraguay, Haiti, Guatemala, Peru are but four cases in which we have successfully upheld democracy thanks to the political will of all the countries of the Hemisphere. We have been strengthening our system of Human Rights, advancing the implementation of the principles of sustainable development; and ensuring that education plays a pivotal role in our efforts towards development and social justice. We have also advanced in strengthening the pillars of our collective security. We are working hard on the removal of antipersonnel land mines.

Next week in Montevideo we will announce an agreement that will establish a Multilateral Evaluation Mechanism for the anti-narcotrafficking policies of our countries that aims to create a better environment to confront the problem collectively. We are also confronting terrorism and a few days from now we will install, here in Miami, the first permanent group that will address this tremendous challenge to our hemisphere, taking the lessons of the good experience of CICAD. We developed the first convention to deal with corruption and establish a framework for international cooperation.

We must also recognize that this second conference is taking place at a time when global markets have recently experienced profound turmoil. Over the past year the economies of the region have been affected to varying degrees by adverse shocks, in particularly the decline in demand from Asian countries, the volatility of capital flows, and the sharp decline in many commodity prices (although they are now moving in the opposite direction, at least in the case of oil). In these few years we have learned that the road towards prosperity and growth is not without obstacles, and there are no miracles or simple or easy solutions to the problems we deal with. As we have already mentioned, globalization offers vast opportunities, but also presents many challenges that must be overcome.

In the recent financial crisis, for example, many of the countries of our Hemisphere were affected by events in other parts of the world. In such times of volatility, economic agents participating in financial markets may react too quickly, and may fail to distinguish sound from bad policies, temporary imbalances from structural ones, good companies from insolvent ones.

But our countries have emerged from each crisis stronger and better prepared, with more effective instruments and sounder institutions. We can also say unequivocally that almost all of our policy-makers have reacted with speed and steadfastness and have moved beyond tired polemics and, within a few months, returned to a path of stability and growth. We hope that with our participation, the industrialized world can move to a more secure, more transparent, and better-regulated international financial system.

One of the most pressing tasks that we currently face, in my opinion, is that of keeping financial crises from undermining the positive steps that countries have taken over the past decade to liberalize and integrate their economies.

It is essential that countries not react to present circumstances by implementing protectionist measures. No matter how tempting it is to try to mend immediate problems by turning away from competition, it is important to recognize that the costs of nonparticipation in the global economy are higher than any temporary benefits of protectionism. As Secretary of Commerce William M. Daley recently emphasized regarding the Asia crisis and its relation to Latin America, "The message was clear: closed economies, with burdensome regulations and lack of transparency, suffer dire consequences in a global economy."

In our view, we should proceed swiftly, with clarity and firmness, so that these episodes not lead to confusion, fear of change, yearnings for insularity, and nostalgia for the past. Within the multilateral system of institutions, we should provide more orderly, collective, and assertive responses that offer guidance and help to restore faith in the process of modernization and reform we have adopted.

Now is the time to move forward with a second generation of more broadly-based social and political reforms building upon the first generation of economic reforms that have provided the basis for countries’ participation in the current global economic system. The objective of the Summit of the Americas process, which brings together all of our 34 countries, is to provide a framework in which countries can work together to achieve these goals.

As I have often said, the economic agenda in the Americas cannot advance "unless we understand the political economy of integration – the combination of economic, social and political forces needed to make integration viable in the concrete reality of decision-making in our countries."

An important element of the Summit process – and one that is certainly of interest to you – is the creation of a hemispheric area free of barriers to trade and investment. At this point, I would like to bring you up to date on the progress in the negotiations towards a Free Trade Area of the Americas. I will also share with you some of my views on the challenges that the process is facing.

The economic geography of the Hemisphere has changed over the last few decades. In the 1990s, the countries of the Americas have made great strides towards achieving macroeconomic stability, strengthening their domestic financial systems, and making the transition towards more open trade and investment regimes. Lower tariffs and less complicated regulatory regimes have helped to reinvigorate trade and integration efforts. As a result we are trading more than ever before. Much of this trade and the accompanying investment is with each other. Trade among the countries of the Americas more than doubled between 1990 and today, and of the $1.5 trillion exported in 1997 by the countries of the Western Hemisphere, over 55% were sold within the Americas.

I do not need to remind the Miami business community of the importance of business relations within the Hemisphere. Miami not only hosted the first Summit of the Americas and is the current site of the FTAA negotiations, but is widely known as the "gateway to the Americas." Initiatives such as the Free Trade Area of the Americas, which will build a framework for smoother or easier or better commercial relations, are the result of the efforts of entrepreneurs like you and your colleagues all over the Americas, who are actively promoting trade and investment amongst our countries. And it is you who will both benefit from and provide the stimulus for the FTAA.

The FTAA can provide a framework for transparency and stability in which our countries can conduct their economic relations. For this reason, to reach our shared goal of prosperity, it is necessary to continue to build an infrastructure -- not only to facilitate trade, but to enable the accomplishment of other linked goals.

Over the past five years, governments in the Americas have been laying the technical groundwork for the FTAA negotiations. At the Second Summit of the Americas, held in Santiago de Chile in April 1998, the leaders of the Hemisphere launched the FTAA negotiations --- which aim to create an economic space, free of barriers to trade and investment, by 2005. A major step will likely be a package of Business Facilitation Measures. These measures represent "concrete progress" that will provide a strong impulse to further advance the process in the next millenium.

At the technical level, a great deal of work has been done – and continues - as Negotiating Groups meet in Miami. The FTAA negotiations are based on a wealth of information and analysis compiled during the preparatory phase. Negotiators from 34 countries have begun to discuss issues ranging from tariffs and nontariff barriers to agriculture and to intellectual property, competition policy investment and services. An advisory group of public and private sector experts has begun to examine the issue of electronic commerce and the role it will play in hemispheric trade. A consultative group is looking at the needs and conditions of the Hemisphere’s smaller economies. Also, a mechanism has been developed through which members of civil society can express their views.

The Trade Negotiations Committee (TNC), made up of the vice-ministers, is at the helm of the process. These vice ministers have made important decisions and provided guidance to assure that the negotiations remain on track, and will meet in two weeks to pave the way for Ministers to make their recommendations at the Ministerial meeting in Toronto.

In early November the Ministerial meeting will be immediately preceded by the America’s Business Forum, in which entrepreneurs from around the Hemisphere will gather to exchange information and to formally present their views to the Ministers. This mechanism provides the private sector with a direct and substantive line to the process.

Although talks are clearly progressing and countries are committed to the creation of a Free Trade Area of the Americas, a number of challenges remain.

One challenge is the domestic political will of the countries of the Americas. Another element that is often held as a challenge is the new "Millenium Round" that many expect will be launched at the Seattle Summit in December. While some believe that this new round may divert energy from the FTAA, I believe that the two processes are compatible -- indeed complementary. The FTAA, by definition, will provide deeper market access, and the agreement aims to eliminate – not just reduce – all barriers to trade and investment. The FTAA negotiations will be a complex exercise in defining in which areas the FTAA will establish stronger disciplines than the WTO.



CONCLUSIONS

The deadline for negotiations is the year 2005. This may sound too far in the future to take action now. But we must remember the complexities involved in such a deep and comprehensive negotiation. The FTAA will be a state of the art agreement. The agreement will be balanced and comprehensive and will take into account the needs of the smaller economies. To give you an idea of the complexity involved in this process, each round of negotiating group meetings has brought together to Miami more than 900 trade negotiators from the 34 countries participating in the FTAA. And remember that at the multilateral level, the Kennedy Round took four years (1963-67), the Tokyo Round six years (1973-79) and the Uruguay Round seven years (1986-94).

Our main challenge now is to sell the FTAA to the people of the Americas. We have to help our citizens overcome fear and skepticism about the FTAA. I am not asking you to have patience and wait passively, on the contrary I am asking you to be active and supportive. Remember that the Americas was discovered by a joint venture of traders, bankers, and the government of Castilla.

By working together, Ladies and Gentlemen, we in the twenty-first century can build a wealthier future for all of the Americas.

Thank you very much.