Remarks by US Agency for International
Development (USAID) Director, Richard Goughnour
During Texas A & M Muster Ceremony
4/21/08 ● Santo Domingo Country Club
I feel honored to be invited to speak to this select group of Texas A&M Aggies from the Dominican Chapter of the Texas A&M Alumni Association and their guests. The decision of USAID to contract Texas A&M in the sixties has proven to be correct. The then Alliance for Progress decided to invest heavily in the agricultural development of the Dominican Republic, as it was the Dominican Republic’s main sector and the driver of growth.
In addition to providing support to ISA (Instituto Superio de Agricultura) to form technicians in agriculture, following the model of the Escuela Agrícola Panamerica in the Zamorano Valley in Honduras, USAID provided direct technical assistance with agricultural professionals from Texas A&M and designed a scholarship program for Dominicans to study at their campus in College Station, Texas.
I understand that in the late sixties and early seventies, there were more than 100 Dominicans attending A&M. Many of you here are part of that group that has seen the Dominican Republic grow with your participation and leadership in many economic and social activities, in addition to agriculture.
Texas A&M is not only an outstanding academic institution, but an institution that thrives for excellence. We understand that you not only learned science at Texas A&M, but the school’ spirit and traditions reaffirmed core human values, such as honor, integrity, honesty and solidarity.
The corruption index is one of the indicators that is limiting the Dominican Republic’s competitiveness ranking in the world, and it is also limiting its access to the Millennium Challenge Corporation (MCC) account. We sincerely expect that you continue to be model citizens and leaders that continue to be a catalyst for change in Dominican society, reaffirming those values of honesty, integrity, honor and solidarity that you shared while you were at Texas A&M.
After its initial emphasis in investments in agriculture, USAID diversified its portfolio in response to urbanization, the development of other sectors, and the increasing need to reduce the gap between the rich and poor. Our interventions in social programs such as health, education and governance expanded to reduce this gap, contribute to a balanced democratic system, and foster a stable environment for sustainable economic growth. The expansion in population during the last 40 years has placed a tremendous pressure on the natural resources and the environment, demanding our investments in this sector. Haiti is an example of how the natural resources could deteriorate if they are not managed adequately.
The end of the cold war in the early nineties opened the doors for the world to be more open. For the first time in history, agriculture was included in trade negotiations during the Uruguay Round of Negotiations of the General Agreement on Tariffs and Trade, known as GATT. The conclusion of this round in 1994 concluded with the birth the World Trade Organization (WTO) in 1995.
The agreements signed in Marrakesh had much to be desired, and they were highly unbalanced; however, they were a step in the right direction. Economic growth and development could only be achieved through international trade. Developing countries were caught on the trap of exporting low price commodities to import expensive finished goods. The import substitution model placed some countries in a vicious cycle of increasing balance of payments deficits with greater economic growth, requiring higher levels of foreign debt.
Protectionism had created economic inefficiencies that could only be corrected by opening the economy, as local interest groups in each society continually manipulated the democratic system to maintain their dominant position, avoiding competition from new entrants or from imports. This globalization process with increasing trade volumes required rules of engagement with an agile dispute settlement mechanism. This has been the major contribution of the WTO.
The WTO agreements were unbalanced, as they were reached with many compromises and concessions. Non-tariff barriers in agriculture were terrified, making the tariffs in some cases over 200%, some countries excluded access to products, and others had quotas. Rich nations consolidated some subsidies, eliminating only a few. In the mean time, most developing countries had no experience in negotiations and no money to subsidize their producers, which led to more justification for protectionism, as they rightly claimed that they were not competing in a plane field. That is why the present round of negotiations at the WTO is called the Doha Development Agenda, allowing for greater concessions for developing countries and least developed countries.
The US, in recognition to this unbalanced trade environment, provided unilateral trade preferences to the Dominican Republic and other 18 countries, through the Caribbean Basin Initiative (CBI). This initiative started as the Caribbean Basin Economic Recovery Act (CBERA) in 1983, and was substantially expanded in 2000 with the Caribbean Basin Trade Partnership Act (CBTPA), which started on October 1, 2000, and continues in effect until September 30, 2008.
Due to the importance of trade in sustainable economic development, the US and the rest of the countries in Western Hemisphere (except Cuba) launched the Free Trade Area of the Americas (FTAA) in 1994, recognizing that the WTO negotiations would advance very slowly.
Unfortunately, some countries wanted to include in the negotiations of the FTAA topics that could only be discussed at the WTO due to its global nature. One of these topics is the subsidies to the agricultural sector that the US maintains to be able to compete with the subsidies in Europe and Japan.
This lack of progress in those forums led to the negotiations of bilateral and regional trade agreements, following the experience in the North America Free Trade Agreement (NAFTA) between the US, Mexico and Canada. NAFTA followed the Free Trade Agreement with Chile in. This followed the Dominican Republic - Central America – US Free Trade Agreement (DR-CAFTA), the Free Trade Agreement with Peru, the Free Trade Agreement with Colombia, and the Free Trade Agreement with Panama.
DR-CAFTA consolidates for the DR the benefits of the CBPTA that will end on September 30, 2008. This assures a legally binding trade relationship of the Dominican Republic with its major trading partner, the US. Trade is essential to Dominican Republic’s economic growth, reduction of poverty, improved standard of living, and job creation.
DR-CAFTA reduces the uncertainty for investors who look at the Dominican Republic as a platform to produce goods and services for export to the Unites States and Central America. The CBI program was a unilateral concession of the US to its Caribbean trading partners that was approved for a limited time period and could be lost in any moment. DR-CAFTA is a firm commitment of the US to continue its fruitful partnership with the friends of the Dominican Republic and Central America.
DR-CAFTA is an agreement that fosters growth and development in the Dominican Republic not only by expanding trade, investment and the creation of jobs, but by fostering an environment to improve institutionalism, governance and the rule of law in the Dominican Republic.
DR-CAFTA is not only about market access, reducing the tariffs of goods. The agreement has 22 chapters, regulating many business aspects, such as labor, environment, investment, dispute settlement, rules of origin, customs administration and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade barriers, government procurement, unfair trade practices, cross border trade in services, financial services, telecommunications, electronic commerce, intellectual property rights, transparency, other rules, and for the first time, trade capacity building.
Trade capacity building is a term used to describe the assistance provided by the US Government to the other six trading partners in DR-CAFTA to help them in the process of negotiation, entering into force, implementation, transition to free trade, adjustment and taking advantage of the benefits of the agreement. This is where USAID has its major role to play in DR-CAFTA.
We assisted the Government of the Dominican Republic during the negotiation stage of DR-CAFTA by providing assistance to train the negotiators; before congressional ratification through public outreach; and to enter into force through the preparation of legal documents and identifying the commitments made by the country. Now, we are assisting the public and private sector in implementation, and the private sector in adjusting to the changing market forces and to take advantage of the benefits of the agreement.
DR-CAFTA has also provided already other direct benefits that have contributed to the business climate and the Dominican Republic’s competitiveness. Import costs have been reduced not only by the reduction of tariffs, by the elimination of the consular invoice, and the foreign exchange surcharge, that was 13%. For the agreement to enter into force, the country had to reform many laws and regulations that were making Dominican businesses less competitive. Such is the case of the intellectual property laws, and the regulation on the administration of tariff rate quotas, jut to name a couple.
With DR-CAFTA, USAID is investing in agriculture again. The US Congress appropriated ten million dollars a year to invest in agriculture for each one of the DR-CAFTA countries that do not have a program with the MCC. This includes Guatemala and the Dominican Republic. USAID has invested these resources in three projects that will assist the Dominican Republic agricultural sector in its process of adjustment towards free trade.
Dominican farmers, like the farmers in every country, responded to the price signals dictated by the farm policies implemented by the governments throughout the years. Some of these policies were the right ones at a given moment. Some of you here are responsible for designing and implementing these policies. Some of them are lessons learned from your time at Texas A&M. I understand that some of you were the creators of INESPRE and IAD.
Those were the right policies of the time, when protectionism was the norm, markets were highly imperfect, and self-sufficiency was the goal of every nation. Times have change, and agricultural policies need to change as well. They need to change not only in the Dominican Republic, but in my own country, the US, as well. We need new policies that create economic efficiency by a allowing the farmer respond to the long term price signals.
With open trade and the free flow of timely information, markets become more efficient, and the farmer needs to adjust their production processes to respond to the needs of the markets.
Recognizing that adjustment takes time, the Dominican negotiators very wisely negotiated long periods of transition for sensitive agricultural products, such as rice and beans. This transition will allow farmers adjust to become more competitive producers and marketers in a highly competitive environment.
This transition allows for up to 20 years for a gradual reduction of rice import tariffs, a system of tariff rate quotas for certain products, and a special agricultural safeguard that automatically increases the tariff of a list of products once imports reach a predetermined critical point.
We don’t think that these measures are enough for the Dominican farmers to adjust to the changing pressures of the market, and that is why we have designed these programs with an assistance of 10 million dollars a year.
The Rural Economic Diversification project will assist producers groups, known as clusters; increase their competitiveness to export or to diversify their production in cases they are in marginal lands for the crop they produce.
The DR-CAFTA Implementation Project is assisting the Government of the Dominican Republic and the private sector implement the 22 chapters of the DR-CAFTA, resulting in a more favorable environment for the agricultural sector to develop.
The Sustainable Tourism project is strengthening local small, medium-sized and community based tourism enterprises to a stronger, more capable Dominican tourism institutions. To achieve this, USAID is helping in the development of a common vision of sustainable tourism. In addition, improve local production capacities while enhancing the quality of local tourism offerings, product, services and handicrafts in selected areas. And finally, connect small, medium, and community-based entrepreneurs with the global market place.
Once more, I would like to express my satisfaction for my agency, USAID, to have invested in many of you during your training at Texas A&M. You have made a difference and we expect you continue to do so. Please continue contributing to the development of this great country, not only with your knowledge, training and experience, but with your values.
Thank you.
|
