First, I would like to thank you for your kind invitation to address this Conference and for the very warm welcome I received into this distinguished company of executives. It is truly a pleasure and a wonderful opportunity for me to meet with so many influential experts and top-level regulators and policy-makers from across this Hemisphere to discuss our roles in charting a brighter and more prosperous future for the peoples of the countries of the Americas.

This conference, ladies and gentlemen, could not be more timely, coming just one month after the second Summit of Heads of State and Government of the Americas, where our leaders strengthened their political resolve to expedite the ongoing process of hemispheric integration through stronger democracies, intensified political dialogue, economic stability, and progress towards social justice.

Since the rekindling of the long dormant summit process in Miami three and a half years ago, much has changed. The decades of isolationism, confrontation, and distrust are a distant memory. We have reached a hemispheric consensus not only on basic elements of democracy and how to defend it, but also on the promotion of civil liberties. We share the conviction that peace, prosperity, and regional stability constitutes the best basis for free and non-discriminatory trade.

Equally, in the time that has passed since the Miami Summit, we have learned to better understand and to appreciate our weaknesses and uncertainties, as economic challenges like the Mexican peso crisis and the Asian financial crisis have put some pressure on our economies. For example, monthly flows of private capital to Latin America and the Caribbean have fallen since November to nearly one half the record levels realized since October 1997.

Besides the reduction in capital flows, the region has had to face the consequences of a decline in its exports to Asia, along with heightened competition from exports from the latter, and the fall in prices of nearly all primary products. As a result, governments throughout the region are adopting more moderate growth predictions for 1998. It is estimated that the slowdown in growth will shave around one and a half point of the regions average growth, which was projected to be 4.5 percent, and it is now 3%.

However, the region has not suffered the severe contagion effects of the Asian crisis, nor would the policies now in place suggest that such developments would be replicated in the region. This is because regional economic authorities, especially those form Brazil, acted quickly and decisively to avoid the transmission of the Asian crisis to the Hemisphere.

The democracies of Latin America and the Caribbean have not only stayed the course with free market reforms, trade liberalization policies, and efforts at economic integration, but deepened them. They have taken bold steps to advance in the areas of regulatory reform, supervision, restructuring and capitalization, and entry of foreign banks. Latin American and Caribbean countries also have made an effort to raise their levels of reserves, reduce external debt, extend re-payment terms, and discourage the contracting of short-term debt, including capital controls. They have adopted more flexible exchange rate regimes and do not have the very high levels of current account deficit evident in many Asian countries. Nonetheless, the experience in Southeast Asia is a call to vigilance for every country that taps, or hopes to tap, the international capital markets.

While the road we traveled from Miami to Santiago was not always easy, we had the political commitment of the 34 countries and we have made significant advances. Still, for us as public and private decision-makers, the challenge of rapid change and dramatic shifts in regional economic and financial trends, at times, can be difficult to assimilate and to address. Thus, occasions like this for reflection and open and insightful dialogue with stakeholders, like your selves, are of great value.

In spite of faster economic growth, lower inflation, expanded opportunities, and increased confidence of Latin American and Caribbean countries, in facing the global market place, the region is still struggling to find answers to the many perplexing strategic questions that confront all of us. How can we make sure that integration is not only an economic process, but also one of real social and political change? How can we preserve the political will of the governments, congresses and parliaments, and public opinion in the Hemisphere to ensure sustainability of this effort? How rooted is the democratic process? How can we equip our citizens with the tools, skills, knowledge, and values necessary to compete in the global economy?

Of course, I cannot provide definitive answers to all of these questions. But, through collective reflection, we can offer new insights as to how we can harness the forces of globalization to work for all our citizens.

In charting this new hemispheric course, we assumed that globalization, prosperity, progress, and economic reform were permanent trends because everyone shared basic economic values. But many of us underestimated the impact of political and social problems.

Of course, globalization offers great opportunities for progress to our countries and opens up new areas of cooperation for the hemispheric community. But it also can heighten the differences among countries and within our societies. We have seen evidence of this fission, as public opinion in some of our countries has become more restless and more demanding of our attention.

Our citizens are making clear that they are not only interested in the manner in which the government will defend their economic and political freedoms. They also want to know how it is going carry out its equally important public responsibilities of ensuring equality and social justice, respect for individual rights, more democracy, greater participation, and better public supervision over the conduct of public affairs.

Beyond the economic adjustments, therefore, we must work to improve the wellbeing of our people through the combined action of the market, the government, and the private sector. We cannot afford, as President Clinton stated in his address at the Santiago Summit, to create conditions where ordinary people lose faith in the ability of this system, not only to produce wealth in the aggregate, but also to actually change their lives and to give their children better lives than they had.

The Presidents and Prime Ministers of the countries of the Americas recognize the complex and multifaceted nature of this challenge very well, as was reflected in the Santiago Summit agenda and the resulting Declaration of Principles and Plan of Action. In response, the leaders broadened the scope of their discussions to encompass non-economic matters, such as education, democracy, and the eradication of poverty. They embraced an agenda that genuinely, and for the first time, connected the process of economic integration with civil society reform and investment in our citizens. The message resoundingly delivered in Santiago was their recognition and acceptance of a model of hemispheric integration where social justice, equity, human and labour rights, and sustainable development are central goals.

Ladies and Gentlemen:

From Miami to Santiago, we made progress from words to actions, with the most significant being the start of the negotiations for the FTAA. But, in line with the demands of their citizenry, the leaders also took an unprecedented step to broaden participation in the construction of the FTAA, by creating a special civil society committee that will hear the views of labour unions, environmentalists, consumer groups, business, and others on trade issues. Through this medium, we hope to address the growing public anxiety about globalization and free trade and build broad public understanding of, and support for, the FTAA. We need strong leadership, not only from governments, but also from the private sector and the rest of civil society, to mobilize public awareness within their respective constituencies of the importance and benefits of the integration process, and for the legislative and policy changes that are necessary to bring it into being.

Now, as we move towards the first meeting of the FTAA Trade Negotiating Committee in June, which will define the objectives of the nine negotiating groups, and the first meetings of these negotiating groups in September, we proceed with an even higher degree of political will and a more realistic and mature attitude towards the virtues and weaknesses of our economic structures.

And we have a very firm platform on which to construct the FTAA. The preparatory work carried out by the sectoral working groups over the past 40 months, supported by the OAS Trade Unit and the other two members of the Tripartite Committee -- IDB and ECLAC -- contributed to the creation of a common language and to a convergent technical discussion of the principal areas that will constitute the negotiations. The working groups compiled databases and inventories, collected statistics and regulations, and they carried out a systematic comparison of the various sub-regional integration agreements, which helped to identify areas of convergence and divergence in the various subjects that will characterize the negotiations.

This preparatory work has contributed to guarantee greater transparency around the functioning of the various trade and investment regimes of both individual countries and sub-regional groupings, and to ensure a common understanding of these regimes as a crucial step leading to the negotiations.

The negotiations for the FTAA, once they commence in September, will be guided by certain fundamental principles. First and foremost, one of the strengths of this process has been the commitment to consensus in the decision-making process, which will ensure the opportunity to attain a transparent, balanced, and comprehensive agreement that is fully consistent with the multilateral trading order and the rules of WTO.

Another very important element is that the discussion about trade in these negotiations will seek to improve upon the WTO disciplines. This is of great importance as it will send a strong positive signal to our trading partners outside of the region that this is not an inward-oriented integration, but an endeavor aimed in part towards increased trade with the rest of the world.

The agreement also will go much further than those issues directly related to trade in goods to include themes that were called in the Uruguay Round, "new issues". These include such matters as investments, services, financial and capital markets, competition policy, intellectual property, technology transfer, among others, which will play a determining role in the negotiation of freer trade in the Hemisphere.

From the outset, we also agreed that the negotiations would consider the differences in size and levels of development of the participating economies, to create opportunities for the full participation of the smaller economies and to increase their level of development.

One of the most important elements of this process is the commitment to achieve concrete progress in the negotiations by the year 2000, and to agree on specific business facilitation measures by then that will make it easier for businesses to engage in hemispheric commerce. If the private sector can begin to reap some benefits of this integration as soon as possible, it will reinforce the public support for free trade initiatives, which, by their very nature, tend to produce longer-term results.

Finally, the FTAA will coexist with the bilateral and sub-regional agreements that are already in place. The FTAA does not conflict with sub-regional integration efforts as some suggest. Rather, it is a complement to, and culmination of, such efforts and the economic expression of our Pan-American ideal.

The OAS, which, through its Trade Unit, provided extensive technical support to eight of the 12 preparatory working groups, will continue to lend technical support to the negotiating groups and to the Consultative Group on Smaller Economies through the conclusion of the negotiations.

But I must emphasize that the FTAA forms part of a much broader, comprehensive, and mutually reinforcing plan. The FTAA commitment is complemented by other economic initiatives, very significant among which is the effort to strengthen, modernize, and integrate financial markets.

Since Miami, the Hemispheres finance ministers, through the Committee on Hemispheric Financial Issues, have launched a series of initiatives to strengthen financial systems further, in order to ensure continued stability and growth. These include a regional commitment to implement the Basle Core Principles for Effective Banking Supervision; programs to train the Hemispheres bank and securities market supervisors, examiners, and regulators; a program to support the hemispheric anti-money laundering effort, coordinated by the OAS and financed in part by the IDB; an initiative to improve banking and securities clearance and settlement systems in the Hemisphere in order to facilitate the transparency, efficiency, and security of internal and cross-border transactions; and an initiative to facilitate access to finance by micro-entrepreneurs and small businesses. In addition, many individual nations have taken significant steps to develop and liberalize their financial system and to facilitate the process of regional financial integration.

But as I mentioned earlier, the Second Summit of the Americas was not only about economic issues. For the first time in decades there is a very strong consensus in this Hemisphere that effective democracy is the condition "sine qua non" to participate in the benefits and opportunities offered by the hemispheric community of nations. In contrast with the past, departure from democratic rule will be strongly censored by the international and the hemispheric communities.

In this regard, and aware that elections constitute only one crucial element of democracy and that the democratic culture must encompass our entire population, the leaders identified specific measures aimed at achieving greater democratic participation, strengthening municipal and regional administrations, as well as legal systems and judicial entities, promoting education for democracy and education for peace, eliminating corruption, and preventing and combating terrorism, among others.

Very high priority was also given to education, because, as we all know, in this era of globalization, the most important resource available to a country is its people. In order for our citizens to obtain greater access to better education systems, we must resolve problems related to resources, institutions, educational processes, and teaching quality, especially for those marginal urban and rural areas, for ethnic minorities, and for those who have special education needs.

Widespread poverty, income inequality, and the generally slow pace of social progress, however, remain the worst enemies of democracy at home and of integration in the Hemisphere. The positive growth shown in the Americas in the last three and a half years has yet to resolve the problems of inequity and social exclusion. At least one quarter of the total population in the Americas -- or somewhere in the order of 150 million people -- continue to live in poverty. Perhaps another quarter lives just above the poverty line and, thus, is extremely vulnerable to any economic shocks affecting their employment and incomes.

This data reveals the central challenge for Latin America and the Caribbean -- poverty in the midst of abundance and growth. We have to join hands and start now on a crusade to tackle this seemingly intractable problem in order to improve the conditions of the poorest of the continent. In doing so, special efforts will be required to address the problems of especially disadvantaged and vulnerable groups, including women and children, the elderly, and minorities and indigenous populations.

The importance of elevating the priority assigned to the struggle against poverty and of focusing our reform efforts on improving social policy in Latin America and the Caribbean, however, will not be a simple task because, in general, governments are not properly equipped to meet social needs. Nearly all of our countries -including the U.S.- continue to rely on the same jaded investment and social policies of the past. With very few exceptions, reform of the state in Latin America has not reached the critical area of social policy and institutions.

Dear Friends:

I am very optimistic about the future of integration and collective action in the Americas. The magnitude and complexity of the task before us, however, calls for all of us to work together for the prosperity, and union of our peoples

Thank you