1:00 P.M. EST
(In progress.)
QUESTION: (Inaudible.)
UNDER SECRETARY PADILLA: Well, it's never happened before, so we don't know. But under the fast-track procedures, the Congress basically made a change in the rules of the House and the Senate to say that they would consider these agreements without any amendments and under expedited procedures. There is some question as to whether they could change those rules and extend the period of time or decide not to take up the agreement. So it's unknown. It's never happened before. I hope we don't ever get to that point because what we're trying to do is to negotiate in a bipartisan way with the Speaker, so that the agreement can go up for a vote and be considered on its merits. We're not asking that the Speaker has to support the agreement. We're just asking her to allow all the members of the House to vote according to their conscience. And I think if we get that, I believe we will have sufficient votes to pass it. Because I think there are a large number of Democrats who have seen for themselves the transformation in Colombia who would support the agreement if they're allowed to vote according to their conscience and not the party line.
QUESTION: What about the Speaker's power to (inaudible)?
UNDER SECRETARY PADILLA: Well, I - my understanding is that there would have to be a rules change, which would require a vote of the House.
QUESTION: Oh, I see.
QUESTION: Do you have a number for those votes? You said that it's by a majority or --
UNDER SECRETARY PADILLA: I believe it would be a good bipartisan majority. I never predict votes as a general rule. But I can say that my boss, Secretary Gutierrez, has traveled to Colombia now four times, I think. And he's going a fifth time.
QUESTION: His fourth --
UNDER SECRETARY PADILLA: This will be his fourth. I'm sorry. I'm going with him this - next weekend at the end of this trip. And we've taken more than 20 members and we generally hear from members of both parties. When they come back they say, "I would like to be supportive."
So I think if we can get a bipartisan agreement with the Speaker to allow this agreement to be considered on the merits, I think we'll win. I really do. And in fact, I'm glad you asked that question about Colombia because one of the big reasons why I'm going to Central America next week is to try to highlight the message that CAFTA worked. It has been a tremendous success for the United States and for Central America. And we now have the opportunity to have a similar success with Colombia and with Panama. You know, I was at the Trade Representative's office three years ago when we were debating the CAFTA in 2005. You remember? Everybody said, "Oh, it's impossible. You don't have the votes. It'll be bad for the United States. We will lose jobs."
And in fact, what happened was after the agreement passed, in the very first year, our exports from the U.S. to Central America exploded by 16 percent. We went from a trade deficit to a trade surplus with Central America in one year. That's really remarkable and it's unprecedented. And the good news is that the agreement has also worked well for our partners in Central America. I was in Guatemala a few weeks ago for the inauguration of President Colom. And you see there, exports have expanded, investment has more than doubled. Confidence in the economy is high. They had the highest economic growth in 17 years in Guatemala last year.
The same is true throughout most of the region. And so I'm going to take the opportunity to go to Honduras and Nicaragua and Costa Rica to try to demonstrate how this agreement has been a success. And then I have different issues in each of those three countries that I'll raise while I'm there as well.
QUESTION: What other issues are you going to --
UNDER SECRETARY PADILLA: Sure. Well, in Honduras, I'm going to discuss with the government there, first, generally what a success the agreement has been, particularly for the apparel sector in Honduras. Honduras is one of the largest apparel producers in the region for all kinds of different cotton apparel and other garments. I'm going to visit San Pedro Sula and I'm going to see some of the investments there in the apparel sector. I'm also going to talk with the government about the recent action we have taken to begin discussion of the safeguard on socks because we've seen a surge of imports of socks from Honduras. And under the CAFTA, we have the right to put a temporary tariff on sock imports and that's something they want to talk to me about.
In Nicaragua, my goal there is to emphasize that Nicaragua has actually benefitted perhaps more than any other Central American country from the CAFTA. Its exports have grown significantly to the United States. I'm going to visit the Cone Denim factory, which will be the largest apparel investment anywhere in Central America, a $100 million factory to produce blue jeans, I believe, and other apparel.
And I hope to also speak with President Ortega and others about the fact that even if we have political differences between our governments, CAFTA is an economic foundation for our relationship that draws our countries closer. And my message will be that the United States is prepared to have a relationship with any country in this region regardless of its political orientation as long as that government is committed to democracy and free markets. And so long as Nicaragua remains committed to democracy and free markets, we will be pleased to continue to have a good economic relationship with Nicaragua.
In Costa Rica, you may know that the deadline for the implementation by Costa Rica of the laws to implement the CAFTA is coming up on March 1st. And I will be in Costa Rica the day before that - on the last possible day, which was not my plan. It just worked out that way. And so I will talk with them about where they stand in the process and the possibility of an extension of time. But my main message for Costa Rica will be that, you know, we have come so far together in this process. Costa Rica was actually one of the countries to initiate the CAFTA negotiations and was a leader in those negotiations. And it is strange for Costa Rica now to be the one country that still has not implemented the agreement.
And so I will do everything I can to deliver a message that we want a partnership. It's good for Costa Rica. It would not be good for Costa Rica to be the only one left out, when all other countries - all of its neighbors who have free trade agreements and permanent access to the U.S. market. So those will be my specific messages. But my overall general message will be that despite all the controversy and difficulties of negotiating this agreement and getting it passed in the U.S. Congress three years ago, the agreement has been a huge success and we need to build on that.
QUESTION: About Costa Rica, President Arias said last week that it was a fact that it would come up with the - all the (inaudible) you need to approve before actually having CAFTA passed in the Congress. And they said they were planning to apply for an extension to the U.S. Government. Do you know if they already have filed this?
UNDER SECRETARY PADILLA: Yeah. We've been in consultations with the Costa Rican Government about the possibilities of an extension. We have not finalized any sort of agreement yet. Those discussions are going on now, even as we speak. I believe there's negotiations between the U.S. Trade Representative and the Costa Rican Trade Ministry. I hope that those discussions will be finished by the time I arrive in Costa Rica next Thursday. We'll see.
QUESTION: What are the chances of getting this extension?
UNDER SECRETARY PADILLA: You mean from the United States?
QUESTION: Yes.
UNDER SECRETARY PADILLA: Well, the United States - our basic feeling is we've come this far. We need to do what is necessary to get this agreement implemented in Costa Rica. I would hope that we use every possible day between now and March 1st to push for implementation. If they're not going to meet that deadline, then we'll discuss with them a possible extension. And of course, we will discuss it as well with the other CAFTA partners because all partners have to agree. But the basic message is we want Costa Rica as part of CAFTA and it would be good for Costa Rica to be in CAFTA. And we will - we've come this far. We should do what it takes to get them into the agreement.
QUESTION: So basically, if all the other countries agree, you wouldn't have any --
UNDER SECRETARY PADILLA: Well, I think - I don't want to get ahead of where my colleagues at USTR are. These negotiations are going on right now. I hope they'll be concluded by next week and then I'll have more to say about it then.
QUESTION: Yes. Because Costa Rica has already asked --
UNDER SECRETARY PADILLA: I know.
QUESTION: -- all the other countries to support this --
UNDER SECRETARY PADILLA: Right.
QUESTION: -- petition and they all agree, actually.
UNDER SECRETARY PADILLA: I know that there's been a request. I know we're discussing it. Until we have a finalized position in agreement, I'm going to just say all I've said so far. I hope that we will have made more announcements on this by the time I get to Costa Rica next week.
QUESTION: On Panama, do you anticipate that the Administration will submit this to Congress by now - between now and January?
UNDER SECRETARY PADILLA: Well, that depends on Panama.
QUESTION: Yes?
UNDER SECRETARY PADILLA: The fate of that agreement rests in the hands of Panama and not in the hands of the United States. The issue is clear. We discussed it when my boss, Secretary Gutierrez was in Panama in -- last September. I was with him. I met with President Torrijos in Guatemala in mid-January when I was there.
We all know what the problem is. The bipartisan leadership of the Congress has made clear to the Panamanian Government that there is this obstacle that needs to be removed - addressed. And until that happens, I think it would be difficult to get approval of the agreement in Congress.
QUESTION: Well, it looks like he is going to stay in that post until September 1st. But perhaps - I don't -- I don't understand the procedure for this as well as I should. But won't time be very close to running out by September 1st?
UNDER SECRETARY PADILLA: You know, I have heard that the term runs until September 1st. Although I also understand - well, I'm not sure what the procedures are in their Panamian National Assembly. What I said to President Torrijos when I met with him was that the - this Administration is committed to try to get the Panama agreement passed by Congress as soon as this issue is resolved. The sooner it's resolved, the better the chances of getting the agreement passed.
And you know our political calendar in September. The Congress will not be in session for very many weeks during September before they adjourn for our elections. And then we'll have a new Congress in January of 2009. So I think the question really rests with the Panamian Government and with the National Assembly.
QUESTION: Just one more procedural question. Does the fast track authority attach only to this Administration? That is, once Bush leaves office, it's gone?
UNDER SECRETARY PADILLA: No.
QUESTION: No?
UNDER SECRETARY PADILLA: It attaches to any agreement reached and signed by the United States prior to whatever the date was. I believe it was - was at the end of May or the end of June?
QUESTION: The end of June.
UNDER SECRETARY PADILLA: Any agreement signed prior to that date --
QUESTION: It runs with the agreement, not with the Administration?
UNDER SECRETARY PADILLA: It runs with the - it runs with the agreement. That's right.
QUESTION: Thank you.
UNDER SECRETARY PADILLA: And so Colombia, Panama and South Korea are the three agreements signed before that date that have yet to be considered by Congress.
QUESTION: And sorry, but just to clarify something, you said that it lies in the hands of the Panamian - in Panama and that concerning this issue, it's a threat to them considering you could profit. Would that mean also not respecting this bank lender that you had sent yourselves; Colombia, Panama, and South Korea?
UNDER SECRETARY PADILLA: No.
QUESTION: Hypothetically, if this issue was addressed, could Panama go before Colombia?
UNDER SECRETARY PADILLA: Well, Colombia is the next one up. We've been clear that we would like to submit these agreements to Congress in the order that they were signed. That order would be Colombia, Panama, and South Korea. We've been doing a lot of work on Colombia.
You know, since January, we've had - several Cabinet Secretaries have taken missions of congressmen down to Colombia. I've been traveling around the United States. I go to a city around the United States every week. This week, I was in Michigan. Last week, I was in Arizona and Colorado and the week before that, I was in Illinois to talk about the Colombia Free Trade Agreement. So we're laying a lot of groundwork. That one is the one that's ready to go next. I hope that we'll be in a position to submit the Panama agreement, but as I say, it really depends on Panama.
I think one other thing I would say about the Panama agreement; you know, it's a very rare and unique opportunity to have a free trade agreement with the largest economy on the planet. And these opportunities do not come along very frequently and politics change, administrations change. I can't predict what the political environment in the United States will be for the Panama agreement one year from now. I don't know who the President will be. I don't know if that President would submit the agreement to Congress as negotiated or not.
What I can say is that this Administration is committed to try to get it done and I hope that the Panamanian people and government understand that when you have such a rare and unique opportunity, it's important to seize it because it may not be there six or 12 or 18 months from now.
QUESTION: Going back to Costa Rica, President Arias has had a really hard time trying to pass the bill that has to do with the opening of the telecommunications sector.
UNDER SECRETARY PADILLA: Right.
QUESTION: Have you discussed this issue specifically?
UNDER SECRETARY PADILLA: Well, yes. I mean, we certainly dealt with it in the negotiations. As you probably know, it was a controversial aspect of the negotiations and the provisions of the agreement, I think, are clear. You know, I think with regard to Costa Rica, I would note this. The Costa Rican people considered the question of CAFTA. The entire population of the country considered this issue and voted, in a national referendum, to move ahead with the agreement. And I think it's unfortunate that some of the opponents of the agreement have used legislative maneuvering to delay an agreement that was approved by the people of Costa Rica. And I think that's unfortunate and I hope that Costa Rica will take the opportunity to implement the remainder of the laws.
QUESTION: (Inaudible) in El Salvador, how would you evaluate the two years of the implementation of CAFTA?
UNDER SECRETARY PADILLA: Tremendous success for El Salvador. I met with President Saca also when I was in Guatemala. El Salvador was perhaps more ready than any other country in Central America to take advantage of the CAFTA. It had spent a long time putting in place policies to promote investment, to improve infrastructure, to modernize port facilities, and as a result, I think El Salvador has been able to benefit greatly.
Now there has been an increase in investment in El Salvador. On the export side, El Salvador has done pretty well. All of the countries have seen a challenge in the apparel area. Some of the countries have seen, actually, a slight decline in their exports to the United States of apparel. That's not because of CAFTA; it's because of China. You may remember that one of the reasons why we did CAFTA was to help strengthen this hemisphere against the coming onslaught of Chinese competition. And so while there have been some small declines in the sales of the apparel sector in El Salvador and in Guatemala, it would have been a lot worse without CAFTA.
And if you look, then, at exports in areas besides apparel - coffee, fruits, vegetables, wooden furniture, other types of things, exports have actually grown significantly from El Salvador. So I think we've had a government there that was ready to take advantage of it and has benefited tremendously.
QUESTION: However, the Minister of Economy of El Salvador said there are still issues going around, especially those dealing with the rules of origin and also with the dispute - the (inaudible) of dispute.
UNDER SECRETARY PADILLA: Dispute settlement?
QUESTION: Mm-hmm.
UNDER SECRETARY PADILLA: Mm-hmm. Yes, and that's normal. In any trade agreement, it's normal for there to be issues over implementation, particularly things like rules of origin or customs administration. That's not unusual. We have mechanisms to work those out where the vice ministers get together on a regular basis and try to address these issues.
Those are sort of the normal implementation issues that we face in all of our trade agreements. In fact, we still - we just had, this past week, a vice ministerial - or maybe it was a ministerial-level meeting in Mexico for NAFTA. And they get together and they discuss what's the problem with the rules of origin, do we need to change the certificates, should we accelerate some of the tariff reduction. These are normal things that we work through.
QUESTION: On the Honduras case that you mentioned earlier, the socks issue --
UNDER SECRETARY PADILLA: Yes. Everyone smiles when they say socks. (Laughter.)
QUESTION: Yes.
UNDER SECRETARY PADILLA: It's a huge issue in Honduras, also a big issue in Alabama. (Laughter.)
QUESTION: I'm laughing (inaudible). Well, first of all, could you roughly explain what the issue is and --
UNDER SECRETARY PADILLA: Sure.
QUESTION: -- two, what's going to be your message? Is there any room for negotiation?
UNDER SECRETARY PADILLA: Yes. Well, the issue is that since the CAFTA went into effect, we've seen a huge increase in the imports of socks from Honduras, about - in fact, about a hundred percent increase. I think the last year, yearly, the numbers were something in the order of 94 percent year over year increase. We negotiated, as part of CAFTA, a provision called a safeguard that allows us to temporarily reimpose a tariff for up to three years if we find that there has been a surge of imports that has harmed our domestic industry. And we have made that determination that our domestic industry has actually shrunk and imports from Honduras have grown significantly and so we've begun a negotiation with Honduras on how to address this issue.
We have the right, under the agreement, to reimpose those tariffs. As I said, we could do it for up to three years. However, we have already announced that if we impose a tariff, we will only impose it until the end of 2008, the end of this year, because that is when a similar safeguard on China is set to expire. And so if the Chinese are going to be allowed to sell us an unlimited amount of socks, we didn't feel it would be fair to have a continued restriction on our free trade partner, Honduras.
So now the question is whether we impose a tariff and if so, what level of tariff that would be. And that's what I'll discuss with the government when I'm there.
QUESTION: It's that big, the (inaudible) of socks from Honduras?
UNDER SECRETARY PADILLA: It's very big. They - Honduras is actually the third largest source of socks in the United States. The first is China, second is Pakistan and third is Honduras.
And you know what it is that they do? I have to tell this because it's interesting. We actually knit the socks. A lot of - about half of the socks are knit in the United States and they're sent to Honduras where they stitch the toes together and then they send them back. And because of the structure of the business, it makes economic sense to send them all the way to Honduras - put them on a boat, send them down there, people stitch the toes together and then they send them back and sell them in the U.S. So who knew? Amazing what you learn in this job.
QUESTION: Yeah.
UNDER SECRETARY PADILLA: I mean, you know --
QUESTION: What about our jobs?
UNDER SECRETARY PADILLA: (Laughter.)
QUESTION: I have two questions.
UNDER SECRETARY PADILLA: Yes.
QUESTION: And the first one on Nicaragua. And among these three countries you are going to visit, Nicaragua was the only one you mentioned some political --
UNDER SECRETARY PADILLA: Yes.
QUESTION: -- concerns. What is your main concern, politically speaking, in Nicaragua?
UNDER SECRETARY PADILLA: Well, actually, it's not a concern as much as a message that despite differences we may have politically with the Government of Nicaragua - and, you know, the Nicaraguan Government has criticized us on some things politically. I remember President Ortega's speech at the United Nations last fall was fairly critical.
My message is that despite those political differences, CAFTA forms an economic bond that goes beyond politics. And our message is, we're prepared to put aside the political differences and work on strengthening the economic ties as long as there are - there is a commitment to two fundamental principles: democracy and markets - free markets. And so far, the Nicaraguan Government has respected those two principles and therefore, we're pleased to work with them to strengthen the economic ties between us.
QUESTION: The last question from (inaudible) and it's on Colombia. And the Secretary of Commerce is traveling down to Medellin and Bogota in a week from now. And after this visiting of Congress members to Colombia and also (inaudible) officials from the Uribe administration to Washington, what is the real prospect for the agreement to be passed by Congress at this time? Do you need more? What kind of travels or more --
UNDER SECRETARY PADILLA: Well, we've done a lot of travels.
QUESTION: Are you lobbying?
UNDER SECRETARY PADILLA: We've done a lot of travels. As I said, this will be the Secretary's fourth visit to Colombia in six months, I think. It'll be my second in six months. I think the prospects for passage of the Colombia agreement are good if the agreement is given the chance for a fair up or down vote. You know, a lot of people say, "Well, we're concerned about union violence in Colombia." Well, union violence has decreased in Colombia significantly and I don't think that defeating the free trade agreement would help to save the lives of any more union members. But if the democratic leadership wants to talk to President Uribe about how to reduce union violence, President Uribe has said, "Please come. Please come to Colombia and meet. I'd be happy to talk with you." So far, the Democratic leadership has not engaged with him.
And so the question is, do they really want to see progress on union violence or is this just a reason for not taking up a trade agreement? I hope it's not the second one. And that's why I think if we can get an agreement on the merits, I believe it'll pass because there's a long history of bipartisan support for Colombia. Now Plan Colombia, we spent billions of dollars investing in helicopters and drug eradication and assistance to the Colombian military and counterterrorist operations against the FARC. These kinds of things - we've done this on a bipartisan basis, so why wouldn't we also support a free trade agreement?
Okay. Well, thank you all for coming.
