Tela, Atlantida, Honduras
Thank you very much. I am delighted to be here today to represent the Government of the United States.
I want to begin by recognizing President Juan Orlando Hernandez of Honduras; thank you for inviting me to be here today not only to participate in this important event but also so that I can experience the beauty of this resort for the first time, is a fantastic place. President Otto Perez Molina of Guatemala; thank you, and Vice President Oscar Ortiz of El Salvador, thank you very much as well.
I also want to thank all of you, our esteemed colleagues from the business community and other distinguished guests for joining us today.
As the State Department’s Special Representative for Commercial and Business Affairs, I appreciate the importance of open, trusting collaboration between governments and businesses. That is why I’m thrilled at the opportunity to participate in today’s event.
I joined Secretary John Kerry’s economic team almost a year ago after two decades in the investment business at one of the world’s leading global investment funds.
And, I left the private sector to join government because I believed in Secretary’s Kerry vision and strong beliefs that there is deep connection between economic and foreign policy. There is no place where that’s more true than right here in this region.
Back in Washington, my team helps to bring the work of the U.S. government and businesses together. One of our primary missions is to ensure that private sector business concerns are fully integrated into U.S. foreign and economic policy.
Why we are here today: The Alliance for Prosperity
It is refreshing to see a similar mission developing here today. The Alliance for Prosperity –developed by the Governments of El Salvador, Guatemala and Honduras to improve economic and social conditions– has great potential to change the trajectory of the Northern Triangle. The Plan itself notes that the region has experienced limited economic growth, lags in infrastructure development, and has significant portions of its population experiencing poverty. More importantly, the plan recognizes the potential of the Northern Triangle and is an action plan for change.
That is why today is so important. We must continue this conversation between government and business –governments that openly acknowledge their challenges while pledging action, and business that is ready to step in and do its part.
We know the important role that the state plays in fostering economic growth and development. Political leadership makes this happen. It is critical for everything from tackling corruption to streamlining regulations, from supporting a vibrant civil society to providing a world class education system. All three Presidents –Presidents Hernandez, Perez Molina, and Sanchez Ceren– have shown this leadership. They are committed to taking the steps needed to advance the region’s growth.
The Private Sector’s Role
But, as the private sector, your role here is just as important. Business can use its expertise to not only identify obstacles to economic growth, but also develop solutions to remove them.
All of you can contribute, and in doing so, have an immediate effect on not only your own bottom line, but your greater community. Companies and entrepreneurs need to continue to move into the formal sector, and in doing so significantly increase tax revenue. Businesses seeking to expand can look to expand locally, increasing employment opportunities and revenue in their communities. Business leaders can support labor rights as a means to reduce poverty. And businesses can pay the minimum wage, provide safe workplaces, and still remain profitable, all while providing workers with the opportunity to break the cycle of poverty.
Bearing this responsibility may at times may seem like a burden, but think about the benefits, especially in the long term. More markets, access to cheaper inputs, more security, less risk, and above all, greater opportunity for even larger success. This is the way forward for your countries. You have a role to play –we all do, and the key is to work together.
Envisioning the future – Areas of focus
Working together, we can promote and facilitate greater trade and integration under existing trade agreements. Central America has not yet achieved the integration potential of existing regional trade agreements. Since CAFTA-DR entered into force, Central American economies on average have doubled their GDP and unemployment has dropped two percent. Part of that growth was from trade with the U.S., but a good portion was local –trade between Central American countries has increased over 60% in the same time frame.
We need to work together to take advantage of the framework for trade and economic integration under CAFTA-DR. Working together, private enterprises and host nations can strengthen implementation of trade commitments. This will strengthen regional value-chains and address logistical impediments to trade.
Working together, we can ensure that Central America becomes more linked to an integrated North America. We must promote deeper regional cooperation that can bring benefits to our transportation, customs and energy distribution networks. This will increase the region’s ability to compete globally.
I know that later today Guatemala and Honduras will be signing a customs union. We look forward to learning more about this. The United States supports measures to improve the safety, security and efficiency of trade, consistent with regional trade commitments. This will foster greater regional competitiveness and more opportunities in the formal economy.
Working together, we can develop a more efficient, more affordable, and more sustainable energy system. With sound and complementary regulatory regimes, you can increase modernization and attract more investment –both domestic and foreign.
Central American leadership has been instrumental in moving forward the Connect 2022 initiative. With the completion of the SIEPAC line in 2014, six Central America countries are now connected. But more needs to be done to see the benefits of interconnection reach consumers. Private sector investment is vital to addressing the energy challenges in Central America, and integration is a powerful tool to attract that investment, especially in a region with small individual power markets.
Working together, we can reduce poverty by focusing on rural development programs. We can also increase efforts to raise high school graduation rates, improve reading scores, and provide more vocational training opportunities. The United States is proud of its 100,000 Strong in the Americas program. It seeks to increase the numbers of U.S. students studying in Latin America, and the number of Latin American students studying in the United States. These exchanges –which the private sector helps to support though the program’s “Innovation Fund”– allow our countries to develop stronger ties and create a better environment for the exchange of ideas.
Finally and perhaps most importantly, working together, the private sector and government can improve the prospects of business development and job creation. We should build on existing efforts to promote small businesses, encourage entrepreneurship, enhance access to financial services and develop the next generation of job creators and business leaders. This is a key way we can foster broad-based economic growth.
For example, my government partners with others in the region to facilitate adoption of our small business development center model throughout Latin America. We complement this effort with President Obama’s Small Business Network of the Americas initiative which links development centers throughout our hemisphere. According to El Salvador’s national small business agency, in one year their small network of just 12 centers using this model, created well over one thousand full time jobs, over 700 temporary jobs, and increased sales by over $6 million. I had the opportunity to visit one of these centers a couple months ago and was impressed to see what they have achieved.
The need to act on commitments
So, now is the time for all of us –companies, business networks, citizens– to contribute to the initiative of the Alliance for Prosperity.
Many of you participated in the November meeting in Washington at the Inter-American Development Bank where we first heard in some depth about the Plan. Many of you also participated in subsequent panels which broadly discussed the work ahead and focused on our goals, commitments, and the need for change. But that can’t be where the conversation ends.
We have to put our ideas into action. Talk is one thing; what matters is result.
The United States is a Partner
I hope it is widely known that the United States sees great potential for Central America, and we are excited to partner with the region’s governments, businesses and people to create a safe, well-governed and economically prosperous region. President Obama’s most recent budget request included $1 billion for Central America, three times the level of similar requests in previous years. We’ve asked for this increase in resources because we are committed to the cause and we recognize the value of this investment. As a demonstration of this commitment, next week in Guatemala, Vice President Biden will meet with the three presidents who are here today, along with private sector leaders.
As the Vice President has said many times, there is no reason Central America can’t become Latin America’s next success story. He has stressed that the United States is ready to work with other donors and, crucially, the private sector. We want to help Central America train its young people, make it easier and more predictable to start and operate a business, and ensure that local enterprises get the most out of the existing free trade agreement with the United States.
My government has been working with many of you in this room to share with the U.S. Congress and with the American public the message about what each of your countries is already doing to take ownership of your problems. We see signs of political will in all three countries and are partners with you in telling your good stories.
The United States recognizes the benefits that can come from a revitalized Central America. Not only is a more secure and prosperous region in our own national security interests, but we see this as an opportunity for us too. We are your neighbors and friends. We share many ties between our peoples, our economies. Strengthening and creating an economically integrated regional market for the 43 million people of Central America will not only produce benefits for local businesses. It will also attract foreign investors.
The ultimate beneficiaries of economic integration will be the next generation of Central Americans. The future bankers, industry executives, and doctors of Guatemala, El Salvador, and Honduras will enter a world with vastly expanded horizons and opportunities. Your children will be able to work in your companies, to learn local trades, and to start businesses of their own. We are committed to partnering with you all to make this vision a reality. We are excited to be a part of this plan and we will be there with you.
Your plan –the Alliance for Prosperity– is what can help make this vision a reality. And your participation today is proof that progress has already been made. I look forward to hearing from the three Presidents here today, as well as from you all, about what we can do to take the next steps and make this plan a reality. Thank you so much for having me here today.