Bureau of International Information Programs, U.S. Department of State
Washington File, USA
June 19, 2003
For the upcoming World Economic Forum in Amman June 21-23, Under Secretary of State for Economic, Business and Agricultural Affairs Alan Larson said the United States was bringing a vision it felt could provide “a pathway to progress and opportunity” to the Middle East region, but would only proceed if the countries themselves were willing to participate.
“[W]e are not coming to this conference with an elaborate blueprint that says, This is exactly how things should evolve over ten years step by step,” said Larson. “[I]t’s something that we would have to work out together.”
Larson was speaking June 19 with callers from Amman, Rabat and Cairo on the State Department’s “Dialogue” program.
He said a goal of the U.S. Middle East Partnership Initiative (MEPI) was to encourage all of the countries in the region to join the World Trade Organization and to have free trade agreements with the United States. Larson said a current problem of trade relations in the Middle East was that there was very little trade between the Middle Eastern counties themselves, and MEPI would also serve to expand trade ties within the region.
The under secretary pointed to the example of East Asia, which, over the period of one generation, has provided a “historical record we can all examine” for “tremendous growth in income as a result of greater trade within the region and between the region and the rest of the world.”
He also said that it was “not only possible but highly desirable” that Middle Eastern countries also pursue free trade agreements with the European Union and others.
“We have no problem with the fact that the European Union has an elaborate cooperation agreement with many countries in the region. We think that’s fine,” said Larson. “We don’t see the initiative that we are pursuing as in conflict with that. It’s just something that would provide for any country that participates in it expanded opportunity.”
The under secretary said the Amman meeting would “discuss ideas about how free trade, how promotion of small business, how expanded educational opportunities for women and young people can help create a better future and help create more opportunity for people in the Middle East.”
He said the meeting and MEPI were designed “to help the people of the region have the capabilities to participate effectively in a growing global economy that can bring prosperity for all citizens in the region.”
Following is a transcript of Under Secretary Larson’s appearance on the State Department’s “Dialogue” program:
“DIALOGUE” UNITED STATES DEPARTMENT OF STATE Office of Broadcast Services, Washington, D.C.
GUEST: Alan P. Larson, Undersecretary for Economic, Business and Agricultural Affairs, U.S. Department of State
TOPIC: Economic Components of the Comprehensive Middle East Initiative
POSTS: Amman, Rabat, Cairo
HOST: Rick Foucheux
DATE: June 19, 2003 TIME: 10:15 — 11:00 EDT
MR. FOUCHEUX: Hello, and welcome to “Dialogue.” I’m your host, Rick Foucheux.
The U.S. Middle East Initiative provides a framework and funding for the United States to work together with governments and people in the Arab world to expand economic, political and educational opportunities for all.
Today on “Dialogue” we will focus on the economic components of the initiative and the upcoming World Economic Forum’s extraordinary annual meeting in Amman, Jordan on June 21st to the 23rd.
Joining us now from the State Department today to discuss these topics, we have Alan P. Larson, assistant secretary of State for economic, business and agricultural affairs. Ambassador Larson was appointed in 1996 by President Clinton. Previously he served as deputy assistant secretary for international finance and development for more than two years. Thank you for joining us today on “Dialogue,” Ambassador Larson. It’s a pleasure to see you again.
MR. LARSON: Good to be with you.
MR. FOUCHEUX: We are also joined today by our participants who are joining us from Amman, Rabat and Cairo, and we will turn it over to you for some questions after opening remarks from Ambassador Larson. Please go ahead, Ambassador Larson.
MR. LARSON: Well, thank you very much. I’m very pleased to be with our audience today. In a few hours I will be leaving Washington for Jordan, where I will join Secretary of State Colin Powell and the United States Trade Representative Bob Zoellick, and many other Americans and officials from other countries for this special meeting of the World Economic Forum.
What makes this meeting an especially good opportunity for us is it will be a chance for us to amplify on a speech that President Bush gave in May, when he talked about a vision of partnership and cooperation between the United States and the countries of the Middle East. We are interested at the meeting in Jordan in a few days to discuss ideas about how free trade, how promotion of small business, how expanded educational opportunities for women and young people can help create a better future and help create more opportunity for people in the Middle East. We are prepared to work with countries as well on issues like judicial training — and one of our Supreme Court justices, Sandra Day O’Connor, is involved in this activity. We also are prepared to work with countries on issues related to media. All of this is designed to help the people of the region have the capabilities to participate effectively in a growing global economy that can bring prosperity for all citizens in the region. I am very much looking forward to my trip to Jordan and to the discussions we will have there. And I am also looking forward to the discussion we will have right now with the journalists. So I thank you for your questions.
MR. FOUCHEUX: Well, ambassador, we know you must be very busy planning for your trip, and we thank you for taking time out of your schedule to join us here on “Dialogue.”
We’d like now to have our posts ask their opening questions. Amman, we’ll begin with you. Hello in Amman. Please go ahead with your opening question for the ambassador.
Q: I would like to ask you, sir — I would like to ask Mr. Larson about fears that Jordanians have, fears and concerns about the announcement of a free-trade zone in the Middle East might have a negative influence on the free-trade agreements between the United States and Jordan. How can you assure Jordanian businessmen and business women that this initiative will not affect their rights and the opportunities they have, and will also in fact improve Jordanian-U.S. relations, and U.S.-Arab relations in general?
MR. LARSON: Well, I thank you for that question. Certainly Jordan is a country that has benefited tremendously from freer trade, including the free-trade agreement with the United States. And your exports to the United States have grown from a very, very small number of four to ten million to something over $400 million today. So you have had a wonderful record.
I think the expansion of trade within the region, as well as between the broader region and the United States, is only going to bring more opportunities for Jordan. One of the things that’s very unusual — and not positive — about the trade relations in the Middle East is that there is so little trade between the countries of the Middle East. There is very little intra-regional trade. And I think the president’s initiative, if it is embraced by the leaders of the region, would have the effect of expanding trade ties between countries in the region and their neighbors. And in every country that has had strong — in every region that has had very strong prosperous growth over one decade or two decades or more, there has been very strong intra-regional trade. So I see Jordan as a big winner. And the reforms that have been taken in Jordan have positioned Jordan well to take advantage of this opportunity.
MR. FOUCHEUX: Thank you in Amman, for that opening question. Rabat, we’ll turn to you now for your opening question. Hello there in Rabat. Please go ahead with your question for Ambassador Larson. (Technical difficulties.) All right, we are waiting for Rabat to get the signal cleared up. And we will go instead, Mr. Ambassador, to Cairo. Hello in Cairo and welcome to the program. Please go ahead with your opening question for Ambassador Larson.
Q: Undersecretary Larson, thank you very much for joining us here in Cairo. And my question is about the priorities there in that meeting. Would you be interested mostly in establishing bilateral relations with each country separately, or you will be creating sort of a free-trade zone between the countries of the region themselves?
MR. LARSON: I think our first priority will be to have an opportunity to hear the views of leaders in the region — government leaders and business leaders — about what is the right path moving forward. We have had an opportunity to set forward some ideas and to make some offers, but we would like to see what the views in the region are. Certainly one of the things that we are doing is working with individual countries on their own trade opportunities. We are working with countries that are not yet members of the WTO to become members of the WTO. We are pursuing free-trade negotiations with Morocco. But, as I said in response to the question from Amman, we also believe that it is not enough to have bilateral trade relationships between the United States and individual countries of the region. We think trade within the region and among the countries of the region is also very important. And that is something that could be pursued on a broader basis, if that is the wish of the countries in the region.
MR. FOUCHEUX: Okay, we thank you very much for that question in Cairo. And now let’s move on to Rabat for its first question. Hello in Rabat. Please go ahead.
Q: Ahmed Adrisi (ph) from Morocco. I believe that the situation in Morocco is different from that in Jordan. Morocco has a partnership agreement with the European Union, and it is now about to conclude a free-trade agreement with the United States that is supposed to be concluded later this year. But as you very well know, Morocco is facing certain difficulties and recently a French — the French minister of foreign affairs stated that Morocco has to choose between free-trade relations with the European Community and a free-trade agreement with the United States of America. We here in Morocco don’t think that the two are mutually exclusive. So what can the United States do to maintain Morocco’s interests in sustaining relations and maintaining its relationships with the European Community and also improving relations and cementing trade relations with the United States?
MR. LARSON: First of all, we agree with those of you in Morocco who believe that it isn’t necessary to choose between your relationships with the United States or your relationships with Europe. We are living in a world where it is important to be creating more opportunities to creating an open regionalism, if you will, where each of us can expand our trade relationships with all of our partners. And I think we are long past the days when we thought that trade was some sort of exclusive right that we would only practice with certain selected partners. That’s not an approach that we believe in the United States makes sense, and I am glad to hear that you also agree that there is not a need to choose between important friends and important partners.
MR. FOUCHEUX: Thank you, Rabat. We are going to return now to Amman for further questions. Hello again in Amman. Please go ahead.
Q: This is Mohammad Jouisi (ph) from Al Dostur (ph) newspaper. I have two questions, sir. The first question — you may have noticed that the subject of Iraq’s debt will not be covered at all at the upcoming meeting in Amman. Can you comment please on that? And I also — my second question also, which is addressed, whether there will be another agreement for free trade between Jordan and the United States, whether that will be considered in the course of the meeting.
MR. LARSON: On the issue of Iraq, there will be some discussion at the conference about the tasks that lie ahead of helping the Iraqi people reclaim their future and build their country after 25 years of terrible governance under the departed regime of Saddam Hussein. So that issue is on the agenda. I think you are right in suggesting that the debt issue as such is not. But there has been an acknowledgement among most of Iraq’s major creditors that for the time being and through 2004 it would be — it would not be reasonable to expect that Iraq would be making payments on its official debt. So I think to that extent there is a path forward on the debt issue.
I would also add that shortly after the conference in Jordan, on June 24th, in New York, there will be a first preparatory meeting on the issue of reconstruction for Iraq, and that will provide another important opportunity for all countries that are interested in being a part of helping the Iraqi people reclaim their future to get together and begin to assess what needs to be done.
With respect to Jordan and FTA, I mean we have a free-trade arrangement between Jordan and the United States, and it is hard to have freer trade than free trade. I do believe that we are always looking for ways to strengthen our economic partnership with Jordan. I expect to have meetings with some of your ministers to discuss where we stand. We have come a long way. We started with an open skies aviation agreement and a bilateral investment treaty, a QID, the free-trade agreement. We have a very, very robust relationship, and we will be looking to see how we can carry it to an even higher level.
Q: I would like to ask on behalf of my colleague — (inaudible) — from Jordan Times — he does not speak Arabic — Jordan’s foreign debt is about 80 percent of the GNP. Last May you mentioned — in your testimony in Congress early last month you said that development in the country must come from within the country. How can that come about with this large volume of debt?
MR. LARSON: We’ve worked very hard with Jordan to address the debt issue. One of the things that the United States did in the 1990s was to forgive a large share of the debt that Jordan owed to the United States. More recently than that we have worked with Jordan and other creditor countries in the Paris Club to negotiate a path-breaking exit agreement, a very generous agreement that has lessened dramatically the weight and burden of Jordan’s external debt.
I think for Jordan right now the crucial issue is attracting more capital — equity investment like foreign direct investment. You have really come to the point where with your trading relationships with the United States and Europe, and with the opportunities for expanded trade in the region that are now being opened up, I think what Jordan’s attention should be focused on is not debt relief — because I don’t think your debt burden is that great anymore — I think it’s finding ways to mobilize capital from within your country as well as from outside of your country, to expand your productive capacities and take advantage of the real growth opportunities that you have lying ahead of you.
Q: Now that the hostilities and the war in Iraq has come to an end, we have noticed that only American firms are participating in the reconstruction efforts in Iraq, particularly in the area of reconstruction of buildings. What I want to ask you is this: Will there be a discussion at the conference about Arab companies, Arab firms and European firms participating in the reconstruction effort in Iraq?
MR. LARSON: Well, absolutely, both at the conference in Jordan and the subsequent conference in New York. We want to have other countries actively involved in reconstruction. There’s been a little bit of confusion about the contract issue. Basically what happened at the very beginning of the process is that it was the United States through an act of Congress that provided the funds that have been available to take the early steps on reconstruction. And under our procurement laws there were competitive bids, but among American contractors. Now, even there the American contractors. Now, even there the American contractors are free to work with sub-contractors that come from other countries. And I believe many of them are quite actively pursuing that. In Afghanistan, for example, where we also have had a significant amount of U.S. tax money at work in helping Afghanistan rebuild its country, much of the sub-contracting, much of the work, is being done by non-Americans. So we certainly with respect to our own money we are opening up sub-contracts to non-American contractors.
What hasn’t really been noticed is that there’s an entirely different set of issues that arises when one is using other people’s money. One of the things that we would like to do is encourage other donors than the United States to become active in helping the reconstruction of Iraq, in which case I am sure their procurement rules will be at play. When it has to do with using the development fund for Iraq, that is the resources that are coming from the sale of Iraqi oil, then one is going to have a very open and transparent process that will be open to competitive bidding from countries other than the United States I am sure.
MR. FOUCHEUX: Okay, we thank you very much in Amman for those questions. Let’s move on once more now to Rabat. Hello again in Rabat. Please go ahead.
Q: Good evening, Mr. Larson. This is — (inaudible) — from the daily newspaper, the Morocco — (inaudible). As we all know, the Amman conference is being convened under very special psychological and emotional circumstances, particularly in the wake of the terrorist attacks that happened in Rabat and in Saudi Arabia. And these feelings and this environment encouraged many countries to escalate and to intensify their efforts to combat terrorism. Do you think it is useful and feasible at this time to convene such a conference around trade and improving trade relations and trade exchanges in this atmosphere where there is much concern and much caution and much fear about terrorism?
MR. LARSON: I certainly do. I believe that we have to fight terrorism with many different tools. Certainly one of the tools we have to use is cooperation among law enforcement officials and among intelligence officials; cooperative action among financial officials to cut off the flow of financing for terrorists and terrorist organizations. And so that is work that is going forward.
But, at the same time, it is also important to show that there is a way forward that will bring people greater opportunity, and that by bringing people greater opportunities and hope and economic advancement and jobs, that too is a way of fighting terrorism. And I believe that at this moment, when there is so much important effort going on to encourage peace in the Middle East, and to fight terrorism
– – wherever it may strike and against whoever it is targeted against
– – it is also absolutely essential to have a positive agenda of economic cooperation of trade and investment to show that we really do have a program where we are helping people improve their lives.
Q: My question relates to the Middle East peace initiative. My first question is this: How do you plan to take into account on a regional basis the fact that many of these countries have different political regimes and difficult practices and different economic realities?
My second question is this: Free trade is important, but it should not be the final goal. That is why I think the opening of markets should be under control and appropriate support should be given to these efforts. Is there any coordination envisaged or any plans envisaged for doing such a thing?
MR. LARSON: We do want to work with each country on its own terms, and starting where that country finds itself. We do believe that in most countries there is a very strong interest in supporting the growth of small business, and we have come forward with a proposal for a Middle East finance corporation that could help promote the development of small business. We don’t think that there is anything particularly ideological about this. It’s only about creating jobs and helping business people expand economic opportunity.
On the issue of trade, we are here to help and work with countries that see freer trade as an avenue to prosperity. We have seen in other parts of the world — East Asia, for example — that over a period of one generation there has been tremendous growth in income as a result of greater trade within the region and between the region and the rest of the world. Now, that is an historical record we can all examine. But it is not for the United States to say, This is the path that any country must follow. That’s the choice of the people of that country and the government. But where countries do want to use this pathway as a way of improving the lives of their people, this proven pathway, we will be there to help, whether it’s through capacity-building and technical assistance, or working with them to get into the World Trade Organization, pursuing various types of trade arrangements. This is an offer, but it’s an offer that will only be pursued if there’s a willing partner on the other side.
MR. FOUCHEUX: We thank you very much for those questions in Rabat. And we move on again now to Cairo. Hello again in Cairo. Please go ahead with your questions for Ambassador Larson.
Q: Undersecretary Larson, welcome again and thank you. My question actually is related to the FTA, the free-trade agreement, with Egypt. Now, we do know that Egypt and the United States have signed earlier on a few years back a TIFA agreement — that is, a trade and investment framework agreement, and we saw that as a precursor to an FTA. Yet discussions are still ongoing with the FTA. Now, my question is twofold: One, where do we stand now regarding an FTA agreement? And, two, would a bilateral agreement with the United States, or FTA agreement, overlap with what you are proposing; that is, creating a free-trade zone by the year — in another 10 years from now — so could you just tell me how you would reconcile these two aspects together?
MR. LARSON: Let me start with the second part of your question, because I think it’s important to underscore the fact that we are not coming to this conference with an elaborate blueprint that says, This is exactly how things should evolve over ten years step by step. What we are coming with is a vision that we think if embraced by the region would provide a pathway to progress and opportunity. But it’s something that we would have to work out together. We would have to work out the details together. And we recognize that many of the countries of the region find themselves in different positions right now with respect to free trade. Some are not even members of the World Trade Organization, for example.
Our philosophy on trade has been rather pragmatic. We have made clear that we are interested in pursuing the expansion of markets and free-trade negotiations on a global, on a regional and on a bilateral basis, because we think in the area of trade the important thing is to always be moving forward. And if one is able to move forward, then you can later on in the process examine how you can relate a bilateral agreement to a broader regional agreement. And you can take account of the way in which all of this ties in with the agenda in the WTO.
I think it is important to remember that the greatest aspiration that we all have for expanded trade will come as a result of the successful conclusion of the Doha development agenda. It was after all in the Middle East, in Doha, that we agreed on a global plan for trade expansion. So the point is to fit these pieces together: the global liberalization agenda, regional agenda, as well as bilateral initiatives. And we will be coming in part to listen to the ideas of the leaders of the region about the best way to move forward.
Q: So, again, now you didn’t tell me exactly where Egypt stands regarding signing an FTA agreement. So — and let me ask you — you answered that one. Please, then let me ask the following one, which is the European association agreement between the European Union and many of the Middle Eastern countries, many countries and also North African countries — this is something that everyone is asking, and people are kind of confused with the partnership agreement or the association agreement with the EU overlapped with a free-trade agreement with Middle Eastern countries or with creating a free-trade zone as proposed.
MR. LARSON: Let me come back to the Egypt question, which — you are quite right, I got so enthusiastic about answering your second question I didn’t really get to the issue of the status of the bilateral negotiations between Egypt and the United States.
Basically where things stand is that the two governments — on our side led by the United States Trade Representative — have been holding technical talks in a number of different working groups on the specific building blocks of a free-trade agreement. It has been our experience that it’s very important to have a detailed understanding of the perspectives and interests that each country brings into negotiations before you actually launch. And so that work is going on in the context of the teeth of the trade and investment framework agreement. And I think that some progress is being made, but I think that there is more work that we need to do in identifying where each party stands and what would be necessary if we were to actually launch a negotiation. There may be more that Ambassador Zoellick can say about this when he comes to the region.
I think, in response to your second question, it really — my answer would be an amplification to what I said to the questioner from Rabat. That is, we believe that it is not only possible but highly desirable that countries pursue freer trade arrangements in more than one direction. We have no problem with the fact that the European Union has an elaborate cooperation agreement with many countries in the region. We think that’s fine. We don’t see the initiative that we are pursuing as in conflict with that. It’s just something that would provide for any country that participates in it expanded opportunity. Opportunity is not something that needs to be rationed. Trade isn’t something like a scarce commodity that you can only have so much of. Trade is something that is a win-win proposition and that the more opportunities we create the more we are able to expand prosperity for all participants in the trading system. So we welcome what the Europeans are doing. I would hope they would welcome what we are doing. And certainly if you are in the Middle East you should welcome both initiatives because they provide you with a broader menu of opportunity.
MR. FOUCHEUX: Thank you, Cairo. Let’s move on once more to Rabat. Hello again in Rabat. Please go ahead.
Q: This is — (inaudible) — from Le Matin newspaper, a daily newspaper published in French. There has been considerable negotiation on free trade on a variety of different levels. What is your view of this kind of cooperation between the United States and Morocco, particularly as it applies to weapons and arms?
MR. LARSON: Maybe you could amplify in your question — I am not sure
– – you are talking about the relationship between free trade and arms?
Q: I apologize. I misheard. We’re talking about agriculture — agricultural products.
MR. LARSON: Well, thank you for clarifying. I think in the area of agriculture we know that that is a sensitive sector for many countries, including Morocco. We also feel that it’s a very important sector in those negotiations in the World Trade Organization. We know that for many countries in the world agriculture is the sector that employs most of the people, and that many of the poorest people in the world live in rural areas. And so it is important on a global basis to eliminate agricultural export subsidies and to drastically reduce and harmonize other trade-distorting subsidies and market-access barriers. And so this is part of the global agenda of the United States. And, to be sure, in a bilateral free-trade agreement we also will be trying to make sure that there are significant new market access opportunities that are created for both sides. We believe in having comprehensive free-trade agreements. We don’t believe in having a free-trade agreement that only covers a few sectors, because we don’t think that’s compatible with the spirit of free trade.
Another part of our agricultural trade policy is to believe that any restrictions that are justified on the basis of health or safety considerations should be very soundly scientifically based. So that’s a perspective that we bring into any negotiation. We don’t think that it is right to use — to invoke health or environmental issues as a cloak or a disguise for protectionism. And so that’s one of the approaches that we bring into negotiations, whether it’s at the global level at the WTO or in a regional or bilateral negotiation.
MR. FOUCHEUX: Thank you, Rabat. Back to Amman now. Hello again in Amman.
Q: (Off mike.)
MR. FOUCHEUX: I wonder in Amman if you could repeat the question — your microphone was not open, and do it briefly.
Q: I’m asking about the Iraqi currency. When will the time come for the Iraqi currency to be used and stable? And is there going to be a chance to restore the Iraqi currency that was taken out of circulation in 1993 and referred to as the Swiss Iraqi dinar?
MR. LARSON: You are asking a very specific and technical question. That’s one that really needs to be addressed by the coalition provisional authority and the Iraqis that are working with it. I mean, right now there are multiple currencies that are in circulation in Iraq. The so-called Swiss dinar that you referred to is being used along with other currencies, including the U.S. dollar. And so that what you have now is a situation that I think is an acceptable short-term situation, which is that there is more than one currency and more than one medium of exchange.
I think the issue about what sort of future currency there should be is one that will have to be addressed by the Iraqi people over time. In the short run the coalition provisional authority is working very hard on that, but this is not a World Economic Forum issue, and so I don’t really think I should go further into it than that.
MR. FOUCHEUX: All right, and I am afraid we have run out of time and we’ll have to end the questions there. But we have a great thank-you to our guest on “Dialogue” today, Ambassador Alan P. Larson, assistant secretary of State for economic, business and agricultural affairs. Thank you, ambassador. And thank you as well to all of our participants in Amman, Rabat and Cairo for joining us. For “Dialogue,” I’m Rick Foucheux. Good day.
(Distributed by the Bureau of International Information Programs, U.S. Department of State)
Categories: Iraq's Odious Debts, Odious Debts
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