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Public Papers - 1990 - November

Written Responses to Questions Submitted by the South American Press

1990-11-30

Chile-U.S. Relations

Q. In the relations between the United States and Chile, what are the main items that you would like to see resolved and in what manner?

The President. More than anything else, I would like to convey to the Chilean people my most heartfelt congratulations and support for their transition to civilian democracy. It is a transition which was fraught with difficulties and challenges, but the people of Chile have carried it off with great courage, intelligence, and dignity. Those of us who hoped and worked for this objective feel that the democratic ideal throughout the world has been enhanced by Chile's example. Equally important, Chile has managed to bring about its democratic transition without undermining the economic progress that it has made in recent years.

It is important to keep this larger context in mind as we look at specific items on our bilateral agenda. It is no secret that our agenda during the first months of President Aylwin's term has been dominated by issues left over from the past, principally by the questions of restoration of GSP to Chile and a framework for settlement of the issues generated by the Letelier case.

Many Chileans have felt frustration or even irritation about the slowness with which these questions have been resolved. All I can say is that in democracies, things don't move as fast as they do under other systems; that is the price we pay for consultation and deliberation. The reassuring thing is that decisions do get made, however. I am happy that we have been able to begin the process of restoring GSP to Chile and that the Chilean Congress has passed the ``Cumplido'' law transferring jurisdiction over the Letelier case from military to civilian courts. This will make it possible to eliminate restrictions on defense cooperation, something we want to do.

Enterprise for the Americas and Trade Negotiations

Q. How do you plan to implement the Enterprise for the Americas Initiative, especially concerning trade, since you have a mainly Democratic Congress with protectionist attitudes and no trade agreement has been reached in Uruguay round GATT talks? How will you address both issues? How do you expect Latin America to believe in a free market economy if measures are taken in the U.S. Congress to protect your economy?

The President. The short answer to your question is that we have to work hard to get the results we want and believe are right, which will provide economic growth for both the United States and our hemispheric partners. We need our Congress to approve legislation for certain parts of the Enterprise for the Americas. This includes legislation for the restructuring of official debt and for the investment fund we would like to see in the Inter-American Development Bank. Fortunately, the reaction in the Congress to the Enterprise initiative has been very positive, which pleases me enormously. We have already succeeded in getting one piece of the Enterprise legislation passed through our Congress, regarding P.L. 480 debt, despite our budget problems and the crunch of legislation that we always face at the end of a legislative term. We are taking steps to implement this legislation, and we are prepared to enter into negotiations with countries eligible under the legislation to reduce their P.L. 480 debt.

You have my commitment that I will be back to the Congress when it reconvenes in January 1991, seeking passage of the other portions of the Enterprise legislation. I feel confident that a bipartisan spirit will prevail, because I am convinced that the vast majority of the Members of Congress recognize the mutual benefits such an agreement could bring and support good relations between the United States and our partners in this hemisphere. This is not to say that protectionist pressures do not exist. They do in our Congress, as they do in all legislatures of democratic countries. I have used my veto power (for example, with the textile bill earlier this year) to prevent protectionist pressures at home from hurting our economy or damaging important foreign policy interests.

The other point you touched on is the Uruguay round. I want you to know that I am making every effort to ensure that these talks produce an outcome that results in expanding world trade substantially. Our position is clear: We all need a successful conclusion to the Uruguay round, one that opens markets worldwide. I am glad that other countries in this hemisphere share this view and have worked hard to bring it about. We look forward to working closely with Chile and other trading nations to achieve good market-opening agreements and substantial agricultural reforms.

Brazil-U.S. Relations

Q. Mr. President, many Brazilians think that the prospect of better relations between Brazil and the United States that emerged from your personal contacts with President Collor earlier this year are fading under the difficulties of new trade frictions and the old debt problem. I would like to ask you two questions in this regard: Your government has recently joined the other G - 7 members in demanding that Brazil ``resolve its debt arrears problem with the commercial banks'' before any further long-term financial agreements can be negotiated. The Brazilian Government argues that this approach is not acceptable because it would compromise the market-oriented economic stabilization program that you have endorsed. The issue is likely to be central to your talks in Brasilia. How will you deal with it?

The President. You've posed a very complex question, and I will try to do it justice. In the first place, I would like to tell you that I have the highest respect for President Collor and what he is trying to do to reform and modernize the economy of Brazil. To bring about such dramatic change in a huge country like Brazil, which has more than 150 million people, deserves respect and admiration.

Our relations with Brazil are based on the solid appreciation that we share a common commitment to democratic civilian rule and economic prosperity for our citizens. With such large, competitive, and varied economies as those of the United States and Brazil, there will always be some trade frictions. What most of you may not realize is the progress we have made in addressing these trade issues. As other problems crop up, they will need to be worked on. As long as I am President, the United States will seek to address these problems in a spirit of creative problem-solving.

With regard to your question about Brazil's debt, the United States is eager to see a long-term solution that is consistent with the international debt strategy and will give Brazil the opportunity to grow and trade its way to economic health. This is a process of negotiation and has to be seen as such. While I will want to discuss this issue with President Collor, I do not see it as central to my discussions in Brazil. This is one of many issues we will want to discuss, with the goal of understanding each other's position well and looking for ways to advance common objectives.

U.S. Trade With South America

Q. The United States has proposed a framework trade agreement to Brazil and three other South American nations but has rejected a Brazilian proposal to discuss such an important issue as the access to advanced U.S. technology in the context of the agreement. Why? Is it a commercial problem or a security related problem?

The President. First of all, I must point out that the inspiration for doing a five-country framework agreement came from Brazil, Argentina, Uruguay, and Paraguay. Much as I might like to claim credit for this innovative suggestion, I cannot; it came from South America. We were pleased to move forward on this suggestion because it clearly advances the goals of regional and hemispheric economic integration that are at the heart of the Enterprise for the Americas proposal.

Second, I think you may be reading more into our position than there really is. The framework agreements we have negotiated with other countries are directed at trade and investment. There is plenty that we can do and need to do in these areas. While we are indeed willing to talk about trade-related technology questions, we were concerned that if we tried to do too much, we would end up with a structure that was too difficult to manage. There's a saying in English which says, ``Don't bite off more than you can chew.'' I understand there is a similar phrase in Spanish which says, ``El que mucho abarca, poco aprieta.'' We want the framework agreements to work on difficult issues, but not to have them solve all the issues.

Latin America-U.S. Relations

Q. Mr. President, in Latin America there are numerous questions about the motives and objectives that led you to launch the Enterprise for the Americas Initiative. Would you explain your view of Latin America today, the motives that brought you to propose the initiative and, if you could be more specific, in what fields and during what time period do you expect the most important aspects of the initiative to be achieved?

The President. With regard to this hemisphere, the first year of my administration was devoted largely to two subjects: restoration of democracy in Central America and the war on drugs. With the triumph of democracy in Nicaragua, the end of dictatorship in Panama, and with the drug strategy launched, I became convinced that the United States needed to take a longer range look at relations in this hemisphere. In part, I was also reacting to concerns expressed to me by the region's leaders, who told me they worried that the amazing events in Central and Eastern Europe would cause us to forget this hemisphere and devote all our resources to Europe.

I gave these Latin American and Caribbean leaders my commitment that the United States would remain engaged in this hemisphere. As I told several leaders, the Americas are our common homeland, and we cannot forget this. For this reason, I asked my top economic and policy advisers to examine our policy in the region and give me ideas on innovative approaches the United States could take to complement economic reforms being implemented by Latin American and Caribbean governments.

The result of this review was the June 27 Enterprise for the Americas Initiative. My goal was to propose a mix of long-term and short-term objectives, covering the areas of trade, investment, debt, and the environment. In trade, I set out a challenge: that we act together to create a free trade area for the entire hemisphere. To get there, we are already working on a free trade agreement with Mexico, and we have signed bilateral framework agreements with Bolivia, Colombia, Ecuador, Chile, Honduras, and Costa Rica. In response to a suggestion from Brazil, Uruguay, Paraguay, and Argentina, we have agreed to negotiate a multicountry framework agreement.

In the investment area, we suggested creation of new Inter-American Development Bank programs and an additional multilateral investment fund and to improve the hemisphere's investment potential. We are seeking congressional approval of funding to contribute to multilateral. On debt, we have secured passage through the U.S. Congress of the first element of our package for reducing official debt. As you know, one of the features of this proposal is to use interest paid on the remaining debt stock to fund environmental projects. As soon as the U.S. Congress reconvenes in January, we will be working for passage of the rest of the legislative package.

As we look to the future, however, we should not be doing so in terms of unrealistic deadlines saying that ``on such-and-such a date, all of the region's problems will be solved.'' What we are offering is a commitment to work actively and creatively with this hemisphere, to consult frequently, and to seek solutions which lead to greater prosperity and well-being for all, in what we hope will be the world's first ``hemisphere of democracy.''

Uruguay-U.S. Relations

Q. Uruguay is a tiny country that, despite its important democratic tradition, [seems] many times to have been ignored by the United States. This Presidential visit, for example, is the first one in 30 years. What brought Latin America to your attention, created an interest in visiting Uruguay, and what benefits might Uruguay gain from this new relationship with the U.S.?

The President. It has been too long since a President of the United States visited Uruguay. President Eisenhower visited Montevideo in 1960, and President Lyndon Johnson made a brief trip to Punta del Este in 1967, I believe.

Uruguay may be a small country, but it is one which has throughout its history played a creative and innovative role in world affairs. It is also a nation of immigrants, a fact that serves as a point of linkage with the United States. For example, I recently accepted the credentials of your Ambassador to the United States, Eduardo MacGillycuddy. Ambassador MacGillycuddy is a distant cousin of a United States Senator from Florida, Connie Mack. Ambassador MacGillycuddy's grandfather was a brother of the Philadelphia Phillies baseball legend by the same name.

Let me offer another example. As I mentioned above, we are in the midst of trying to complete the most ambitious trade expansion program in decades. If this effort succeeds, it could expand world trade by 0 billion. It is no accident that this round of world trade talks is called the Uruguay round, after the country which served as sponsor for its launching.

I can point to other things as well. President Lacalle was the first President of this region to telephone me after I announced the Enterprise for the Americas Initiative on June 27. His support has been a strong stimulus to me to make this proposal work. To make it work, we will need the help of institutions such as the Inter-American Development Bank, which is headed by another Uruguayan, Enrique Iglesias.

For all these reasons, I am eager to visit Uruguay, to consult with President Lacalle, and speak to the Uruguayan Congress. I would not speak only in terms of benefits to Uruguay from the visit. We are looking for answers that will benefit the whole hemisphere, such as the ones we can derive from a successful Uruguay round and a free trade area stretching from Alaska to Tierra del Fuego.

Argentine Economy

Q. Argentina is working on the economic integration with Brazil and other countries in the Southern Cone and, at the same time, has started a process of deep restructuring of its economy and its institutional frame. What is your impression of the fact that privatization of two big state corporations (an airline and a telephone company) has been achieved with the participation of American capital, but not of American management or technology?

The President. I think the most important part of your question relates to what is going on in Argentina today. Difficult, sometimes painful, economic choices are being made by President Menem. These choices involve the transformation of very large sectors of the Argentine economy. Like many other leaders of this hemisphere, President Menem is making the difficult choices and implementing economic reform policies to make Argentina more competitive and guarantee the country's long-term economic health.

Privatization has played a part in this economic restructuring. As your question noted, instead of continuing to have the economy dominated by an inefficient state apparatus, which has stifled initiative and blocked economic growth, the Government of Argentina has adopted policies aimed at privatizing businesses such as the airline and the telephone company. This has reduced Argentina's debt burden and brought back to these companies the incentive to compete for investment and for clients. Quite frankly, I believe that good airlines can and should depend on their passengers for their revenues and not depend on the taxpayers.

As for the participation of United States investors -- whether this be in the form of capital, of technology, or of management -- as long as there is a level playing field, and by that I mean that the rules are the same for all investors, I think that rational economic choices will be made. That's what freedom to compete is all about, whether it is in Argentina or Alaska.

U.S. Trade Policies

Q. At the final stage of the Uruguay round of GATT, the U.S. is standing again against subsidies and all kinds of protectionist trade barriers for agricultural products. Nevertheless, the Government is subsidizing some grain exports, with potential harm for Argentina and other countries in the hemisphere, and is keeping some tariffs that make difficult the entrance of products like, for example, Argentine leathers. Is it possible that the administration could modify these policies in favor of a more consistent attitude with respect to all forms of protectionism?

The President. I know that the Commerce Department's decision to impose countervailing duties on Argentine leather was unpopular with the leather industry in Argentina. But here are some economic facts: By forbidding the export of hides from Argentina, prices for these hides in Argentina are driven down because they can only be sold in the domestic market. This means that leather exported from Argentine commerce to other markets, such as the United States, is priced artificially low.

Argentina's competitors in the U.S. thought this was unfair and complained to our authorities. Following a very detailed and open process in accordance with our law, in which the Argentine industry was represented by experienced counsel, the Commerce Department agreed that a subsidy was being provided by virtue of the Argentine Government's policy prohibiting the export of hides. This is not an issue where the President of the United States can intervene to tip the scales one way or another. The solution is for Argentina to allow exports of hides, so that its leather will be priced according to the forces of the international market.

I should note that this has been a longstanding sore point in our bilateral relationship. Several years ago, we had negotiated a solution under the section 301 provision, but because the agreement was not fulfilled by Argentina, U.S. industry felt it had no recourse but to seek relief under U.S. trade laws.

With regard to wheat, I assume you are referring to the Export Enhancement Program. This program was designed to keep U.S. wheat competitively priced with the wheat being sold by other producers, primarily the European Community. We hope that a successful outcome of the agricultural talks in the Uruguay round will make this and other export subsidy programs superfluous.

Petroleum

Q. Venezuela has increased its oil production by half a million barrels daily to help in the Gulf crisis and is opening its doors again to U.S. private investment in the oil sector. Recently, President Carlos Andres Perez stated that his country deplored the speculation which was driving oil prices up and hurting the American consumer. He said it was not in Venezuela's interest, either, to be subject to ups and downs in prices and appealed for a meeting between the major oil producing nations and the leading consumer countries to work out some kind of stabilization program for international oil prices. The U.S. has not reacted to this proposal, made first 2 months ago.

Although your country supports a market economy, it has joined in stabilization agreements in the past for various products. Would you consider this for oil, especially now that the market has been disrupted by the Gulf crisis, and the future well-being of the Gulf nations as well as other producers such as Venezuela, not to mention various of your own States, which produce oil and are dependent upon a steady and reasonable oil income?

The President. You have posed a detailed question which requires a detailed reply. In the first place, I must pay tribute to the extremely positive role that Venezuela, and particularly President Carlos Andres Perez, has played in the months since Iraq invaded Kuwait. He worked hard with Saudi Arabia to ensure that members of the Organization of Petroleum Exporting Countries (OPEC) increased supplies to cover the shortfall caused by the loss of Kuwaiti oil and the embargo on Iraqi exports. Venezuela and CAP have been a force for stability in oil supplies.

We have also welcomed President Perez' efforts to prevent wild swings in world oil prices. As he has correctly pointed out, these are bad for producers, and they are bad for consumers. A recession in the industrialized world will not help OPEC members such as Venezuela, and far-sighted leaders such as President Perez have been among the first to realize this.

I know that Venezuela has suggested convening a meeting between oil producing countries and oil consumers. Our reaction has been rather guarded. If there were an absence of communication between producing countries and consuming countries, bringing the two sides together might be worth studying. In the case of the oil market, however, producers and consumers are talking to each other all the time, sharing statistics and projections regarding both supply and demand, and doing so in a number of different contexts. These bilateral and other channels are in my opinion working sufficiently well that we do not have to create another formal medium of communication.

As for your suggestion for joint action by producers and consumers to stabilize the price, I do not believe this is an idea which is workable. Even if producers and consumers could agree on what a stable price should be, and I think this in itself would prove impossible, I have a more fundamental objection. I believe that in general market mechanisms are more efficient and effective, and this includes the market for oil.

One final point. I agree with President Perez that we need to increase the production of oil from areas of the world such as Latin America and the Caribbean in order to diversify world supplies. I believe that private investment funds are available for this effort and will go to countries which have hospitable investment climates. There is more that we can do in this area, and I look forward to discussing this issue with President Perez and his advisers when I am in Caracas.

Persian Gulf Crisis

Q. Reliable opinion polls in Latin America reveal that people condemn Saddam Hussein [President of Iraq] but are against the U.S. going to war and favor a diplomatic resolution of the conflict. Will you reject any political settlement in the Gulf?

The President. As you know, I just returned from a visit to Saudi Arabia, during which I visited with U.S. forces. So, let me try to answer your question in the following way. On August 2, 1990, Saddam Hussein attacked the tiny nation of Kuwait, occupied it with extreme violence, and then announced that Kuwait had ceased to exist -- that it had been incorporated into Iraq. Since August 2, there have been a flood of reliable reports that Iraqi occupation troops have been engaged in a systematic looting of Kuwait, dismantling buildings, seizing assets, and driving private cars back with them to Iraq.

The response by the international community has been based on two premises: first, that Iraq has committed naked and unprovoked aggression against Kuwait, and second, that Kuwait's status as a sovereign state must be restored. The only way that Kuwait's sovereignty can be restored is for the occupying Iraqi troops to leave Kuwait.

This position has been embodied in numerous resolutions of the United Nations Security Council. The community of Latin American and Caribbean States spoke out strongly in condemnation of the invasion of Kuwait and in support of the sanctions that the United Nations imposed. Argentina has sent a force of two ships to the Gulf to cooperate with the multinational force, an action which we applaud.

The United States is not eager to see armed conflict in the Gulf. As President, I ordered American forces to the area to block Iraqi aggression and to support the demands of the international community for restoration of Kuwait's sovereignty. We have not rushed to use force, preferring to give the international sanctions a chance to work and to let the Iraqi leadership see clearly that they have the whole world arrayed against them.

However, for the international community's sanctions to be credible, they must be backed up with the possibility of coercion. Those who rule by force frequently understand only the language of force. The United States, acting in concert with countless other countries, has taken actions to ensure that Saddam Hussein understands that the international community can indeed use coercion against him if he remains unwilling to understand the voice of reason and diplomacy. Force is not our preferred option, but it is a real option. Our preference is for Saddam Hussein to order his troops out of Kuwait, and thereby make possible the restoration of full Kuwaiti sovereignty.

Note: The questions were submitted by El Mercurio of Chile, Estado de Sao Paulo of Brazil, El Pais of Uruguay, La Nacion of Argentina, and El Nacional of Venezuela. The Office of the Press Secretary issued the press release on December 3.

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