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I am delighted to be here with you. I think I am right in saying that the first public speech I gave after the President announced that I was going to be the new Secretary of the Treasury two years ago was to this very group. The issues I spoke about then are the issues I am going to speak about now, because our commitment to this is the same and unwavering.
From the beginning of the Administration, the President has spoken -- I think eloquently -- about the need and importance for U.S. leadership in the global economy because of the importance of that leadership to our economic and our national security interest. One of things that struck me about then-Governor Clinton when I first met him, and talked to him about economic issues, was that he had really internalized the importance of the global economy and it was really no different from the investment bankers I dealt with on a daily basis. Although the governor of a small state in the South, he understood that the world had changed; he understood that our economic success was going to be a function of a healthy global economy, and the United States was truly the only nation in the world that could provide leadership in the global economy. And that clearly has been his position since he's been President of the United States. We've had a coordinated strategy which has enabled us to promote our interests in the global economy and promoting global growth and reform in the global economy, which is also in our interest.
Opening markets and expanding trade have been a large part of this effort, and the most visible part of the effort. Nafta, GATT and scores of trade agreements have been the result of this strategy. At the same time that we've had trade agreements, the Administration has vigorously worked to help U.S. companies sell abroad, which I think is an appropriate function of government. In the President's second term, we will continue to pursue an active trade agenda. Even during the campaign, when trade was not a particularly popular subject politically, the President spoke about free and fair trade and opening markets around the world. In the second term, we will work to continue trade liberalization in Latin America and Asia particularly.
Important steps can be taken without Congressional action, they can be taken by the Executive himself, for example, trade agreements like the bilateral financial services agreement we have with Japan, customs simplification. On the other hand, major agreements, will almost always require Congressional approval. In order to enter into effective negotiations of major agreements, a predicate is fast track legislation. As you know, in the recent past, getting a renewal of fast track legislation has been hung up over the issues of environmental and labor standards. To be sure that is a very difficult challenge which lies ahead. I believe it can done, but it can only be done if the advocates of both sides of the issues are willing to move from the purity of their positions and work together to find common ground.
That said, there is another part to our strategy in the global economy, and one which receives far less attention in the public domain, but which is absolutely vital, and that is promoting growth and reform in the developing world. Bringing developing countries into the economic mainstream raises living standards, promotes political stability -- and it increases markets for U.S. exports. International financial institutions, which your group is so focused on, the World Bank, the IMF, and sister banks to the World Bank, are absolutely central to that effort.
I think relatively few Americans have a sense of how important developing nations have become to our economic well-being. The countries of the developing world already are the fastest growing U.S. export market, representing about 40 percent of our total exports. Developing countries in Asia alone account for 23 percent of world GDP, compared to the United States which is now at 21 percent of world GDP. Those Asian developing nations have had imports grow at an average annual rate of ten percent over the past two decades and imports this year will aggregate approximately $1.0 trillion. That is an enormous market. Other parts of the developing world also present exciting potential. Latin America is the second fastest growing economic region in the world. Central and Eastern Europe and the former Soviet Union are 25 countries with more than 400 million people. Each of these areas are already major markets, and each of these areas are, in their totality, the markets of the future for our country.
The President has strongly promoted private sector focus on the emerging markets. The late Secretary of Commerce, Ron Brown, had as his central focus in his efforts, an emerging market strategy. In addition, we have acted to further growth and reform in the developing and transitional world through the international financial institutions. However, without change and innovation, any institution will ultimately lose its edge. In that spirit, we have worked unceasingly for change and innovation in the international financial institutions. I believe there are three steps which should continue to guide us in that effort:
First, and I would say foremost, we must maintain U.S. leadership by meeting our financial commitments to the financial institutions. We are the only major nation in the world that is in arrears to the World Bank. We are in arrears to several sister banks. That must not be allowed to continue. The Administration has been committed and continues to be committed to working with the Congress to obtain the resources necessary to fund the these key programs and institutions, always working within the constraints of our balanced budget goals. But if past is prologue, obtaining Congressional support will be very difficult. Difficult, but doable. I have spent an enormous amount of time personally going up to the hill, working with Congress toward these ends. As I said a moment ago, it is a very difficult undertaking in these circumstances, but, in my view, if we all work together, we in the Administration, and you, who understand these issues so well, then it is doable.
There is, unfortunately, very little recognition in the public domain in this country, or in Congress that these institutions are not charities, but rather are critically important to our economic and national security interests. Multilateral development banks have worked to strengthen the economies of developing countries, which, in turn, results in wider markets for U.S. goods, as I mentioned a moment ago. For example, in 1995 U.S. exports to the 79 countries eligible for International Development Assistance aggregated something like $25.5 billion. And in that same period, IDA graduates imported from the United States roughly $60 billion worth of goods and services. At the same time, the IMF has contributed substantially, working with certain of our key U.S. trading partners, in this hemisphere, for example, Chile, Argentina and most notably, Mexico.
In the time I have been Secretary of the Treasury, one of things that I have done that has been most meaningful to me is to visit multilateral development bank projects in India, Indonesia, the Philippines, Argentina, and Brazil. I've seen these institutions working at the ground level. I remember in the Philippines, meeting a woman who had received a micro-enterprise loan and had bought some sort of little taxi and that opportunity had dramatically changed her life and the life of her family. In India we visited a very, very, poor village that had learned how to conserve water in a parched area, and, as a consequence, dramatically improved the standard of living. We can replicate those kind of examples across the developing and transitional world. They are not only having an enormous effect on those people, but, as I said a moment ago, they are creating markets for our goods and services and enhancing political stability enormously, which is in our national security interest.
This committee or organization has played a major role in obtaining resources for the Bretton Woods institutions in the past. I know Henry says you are not a lobbying organization, and I recognize that, but it is also true in my judgement that we are at a turning point with respect to American involvement with these institutions and you are a unique group of people. You have an understanding of the importance of these institutions, and you also have the ability to be effective in helping obtain the necessary support. I would suggest that there may not have been a more important time for you to get involved in that effort than today and that we work in the months ahead to keep our commitments and to help fund these vitally important institutions.
The second step we must take to strengthen the international financial institutions is to make them more effective in combating corruption throughout the developing and transitional world. We have stressed increased transparency. We have stressed a focus on encouraging good governance. Corruption, and the more general criminality it supports, is a major impediment to political stability and growth. When I go around to these countries and visit the American Chamber of Commerce, I hear over and over again how much of an impediment that kind of activity, corruption, is.
Jim Wolfensohn, in my judgement, deserves enormous credit in focusing on this issue, as does Michael Camdessus at the IMF. The challenge now is to develop practical mechanisms for combating corruption in these parts of the world.
Third, we must continue, as Henry suggested, to focus on the appropriate roles of the international financial institutions, the governmental institutions, and the private sector.
Clearly, we are in a new world with a global economy and also the availability of large amounts of private sector capital for developing countries. The dimension of the capital markets did not exist ten years ago. The private sector can meet many of the capital needs in these countries and to the extent that they do meet these needs, they can, in my view at least, meet them more efficiently than public sector capital and, more importantly, free up the scarce capital they have in their financial institutions for education, health care, and the other areas which the private sector will not, by its nature, get involved in.
However, the ability to attract private sector capital, even in the more advanced developing countries, has been hampered by a lack of developed capital markets and a shortage of sophisticated financial instruments, as well as, in certain of these countries, continued uncertainty about the commitments to economic and political reform.
Multilateral development banks play four critical roles in attracting private sector capital to developing and transitional countries. First, they help create an overall macro economic and structural policy environment that is conducive to private sector activity. Second, they help build the necessary financial capital market regulatory and legal institutions through lending and technical assistance. Thirdly, the multilateral development banks can provide direct financing for parts of projects that will then attract private sector capital for the other parts. They can also make equity investments, and they can provide guarantees or insurance. Finally, international financial institutions play a critical role in areas where the private sector will not, by its nature, participate in, which is health care, women's programs, education, promoting the rule of law and the other underpinnings of the economy and society that are so important to private sector activity.
In the poorest developing nations, the attraction of private sector capital is a particular problem. Africa is clearly the most difficult part of the world in this respect for many reasons. At least one reason is the last two or three decades, the public sector, the governments, have become vastly involved in all aspects of the economy. And I'll tell you, there is little attention paid to the underpinnings of economic activity, from the development of capital markets to education and health care. An example of a type of program that I think would be particularly suited for attracting private sector activity in the poorest nations is micro enterprise lending, the kind of thing I mentioned before with the example in the Phillippines. There is a micro enterprise summit that is going to be held in February and that I am going to have the opportunity to attend. We will attempt there to further the development of these programs around the world in the poorest countries.
Another area in which the World Bank can increase activity in order to attract private sector capital to the poorest nations, at least in my judgement, is to expand the current guarantee program. I believe that guarantees and other kinds of more sophisticated financial mechanisms are an effective way to leverage the World Bank capital and maximize the infusion of private sector capital into these poorer nations.
Let me close, if I may, by discussing a subject I alluded to earlier, in my view, a subject absolutely critical to the economic well being of this country, and that is the importance of building a strong domestic constituency to continue U.S. engagement and leadership in the global economy.
Many observers feel that there is a growing resistance in this country, and, for that matter, many of the other nations in the developed world, to engagement in the global economy. There is a considerable question of whether Nafta or GATT could have been passed in the environment that now exists. When we came forward with our Mexican support program, and that program was designed to help Mexico, but to help Mexico because it was in our economic interest and our national security interest to help Mexico, that Mexican support program was met with vigorous Congressional, Republican opposition. And in the primary elections, there was, as you well know, a candidate who argued vigorously for protectionism, and found a distressingly large audience for that argument. On the other hand, the two major candidates -- President Clinton and Senator Dole -- took the internationalist position. The lesson that I at least draw from all this is that there is great unease in the American public about American engagement in the global economy. And that there is a large segment of the public -- maybe not a majority, hopefully not a majority, but nevertheless, a large segment -- that believes international financial institutions and trade agreements don't work in their interest. I know, and all of you know, that simply is not so. But I also believe we ignore these views at our peril.
I said a moment ago, and I'll say it again, this organization, and the members of this organization are in the rare position of having a sophisticated understanding of the importance of engagement and leadership by this country in the global economy to our well-being, combined with the ability to actually to do something with that understanding, to work with your employees to promote a better understanding both with the American public and in Congress the critical importance of our continuing to be effective leaders, continuing to be effectively engaged. I think it is absolutely critical that you work to spread that message. I strongly urge that you do so.
Let me close by saying that I believe we need to convey to all Americans that one of the great lessons of the 20th century is that withdrawal from international affairs cannot work. When we withdraw, we suffer; when we engage, we prosper. I thank you and I look forward to working with all of you in the months ahead in this critically important area.