WASHINGTON - US Senator Robert Menendez (D-NJ), Chairman of the Senate Foreign Relations Subcommittee on the Western Hemisphere, Peace Corps, and Global Narcotics Affairs Subcommittee today chaired a hearing on doing business with Latin America to discuss the existing opportunities and challenges American companies face in engaging with the region, and identify ways in which the United States government can help promote American trade and investment in the region.
At the hearing, government and private sector officials testified on what they considered the primary challenges businesses face in engaging with the region, including increased competition from China, weak rule of law, market access barriers, and potential steps that can be taken to strengthen the investment climate in the region. Witnesses included Mr. Francisco Sanchez, Under Secretary for International Trade, U.S. Department of Commerce; Mr. Matthew Rooney, Deputy Assistant Secretary for Economic Affairs, Western Hemisphere Bureau, U.S. Department of State; Eric Farnsworth, Vice President of the Council of the Americas; and Ms. Jodi Hanson Bond, Vice President, Americas Division, U.S. Chamber of Commerce.
Click here for a video of Senator Menendez's opening remarks: http://youtu.be/UWQgPH51Z3g
Full text of Senator Menendez's opening remarks as prepared for delivery:
Doing Business in Latin America: Positive Trends but Serious Challenges
Opening Remarks Senator Robert Menendez
Western Hemisphere, Peace Corps, and Global Narcotics Affairs
Washington, DC - July 31, 2012
Good Morning, and welcome to our hearing on the positive trends and serious challenges of doing business in Latin America. Our goal today is to examine ways that the United States government can help promote American business and trade opportunities in the region, while also considering the challenges - the impact of a growing Chinese foothold in the hemisphere... trade barriers to market access... and the impact of weak institutions and marginally democratic governments in some countries on American investments.
It is my view that we have been necessarily distracted by events in the Middle East and around the world and simply have not put enough emphasis on Latin America.
But, it is also my view that we ignore our neighborhood at our own peril.
While most countries in Latin America have escaped the worst of today's global downturn, there are too many troubling signs in the hemisphere to ignore.
Our government has to aggressively engage in the region, and working with the private sector, it must leverage all available opportunities to increase trade, promote American companies, and create jobs -- jobs in New Jersey, jobs in Florida, jobs throughout the hemisphere.
During the last decade, changing economic policies, globalization, energy discoveries, and a myriad of other factors in Latin America have given rise to promising regional economies with robust exports and an expanding middle class.Not only has trade between the United States and Latin America expanded 46 percent since 2009, but there are other positive trends --relative political stability and mostly open international trade policies in the region -- that American companies should take advantage of in the near-to-midterm. Elected, civilian governments encourage foreign investment and foster economic growth. Brazil, Colombia, Chile, and Peru, for example, enjoy stable democracies favoring foreign capital and investment.
With 56 million Latin American households joining a rapidly growing middle class over the last decade, consumers in these countries enjoy greater buying power and discretionary spending than ever before. This is an opportunity for American industry.
And yet, as positive as these developments are, the region is not immune to the debilitating effects of the global recession. The International Monetary Fund recently lowered its economic growth forecast for Latin America and the Caribbean to 3.7 percent this year, down from 4.5 percent in 2011.
A greater and unfortunately renewed concern is the weakening of democracy in the hemisphere by leaders who use their elected offices to grow their power by weakening democratic institutions, civil society, the rule of the law, and independent media.
Investors who fear instability are reluctant to place their trust and their resources in countries like Venezuela, Nicaragua, Bolivia, and Ecuador.
The ongoing constitutional crisis in El Salvador is an example of market response to political instability.
Last week, Fitch Ratings downgraded its economic outlook for the country from stable to negative. And in Argentina, the government imposition of 1980s style rules to limit market access, failure to pay past debts, and nationalization of assets without compensation has shocked investors. It will almost certainly take many years for the country to recoup the loss of market confidence resulting from these policies.
Looking at the broader geo-political picture, China has taken note of the positive economic and political trends in the region and has seized the opportunity to find a foothold in the region -- while our primary attention has been on events in other regions around the world.
Since 2000, China has made significant diplomatic and economic inroads in Latin America.
Overall, Sino-Latin American trade has increased from $12 billion in 2000 to over $140 billion today, with China supplanting the U.S. as Brazil and Argentina's largest trade partner.
The truth is that the deals offered by China are often too good to pass up.
In addition to offering unprecedented loan terms and investments, China's mercantilist policies are not conditioned on labor or environmental conditions...making them in many cases a more attractive partner than western investors. And that brings us back to the purpose of this hearing. We are here to examine existing and future opportunities for American companies in Latin America.
We're here to consider opportunities for the United States government to promote American business and trade in the Latin America. And we're here, with some of the leading experts on Latin American business and trade to help put both the positive trends and the challenges we face in the region in clear perspective so that we can move toward policies that maximize the positive trends and mitigate the challenges.