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IMMIGRATION: RESPONDING TO

A REGIONAL CRISIS

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JULY 26, 2006

Serial No. 109–235

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.internationalrelations.house.gov/
(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE

DAN BURTON, Indiana, Chairman 

RON PAUL, Texas 

JERRY WELLER, Illinois, Vice Chairman 

KATHERINE HARRIS, Florida 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

CONNIE MACK, Florida 

MICHAEL MCCAUL, Texas 

ELIOT L. ENGEL, New York 

GRACE NAPOLITANO, California 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

MARK WALKER, Subcommittee Staff Director 

JASON STEINBAUM, Democratic Professional Staff Member 

DAN S. GETZ, Professional Staff Member 

BRIAN WANKO, Staff Associate 
(III)

C O N T E N T S 

Page

WITNESSES 

Ms. Elizabeth A. Whitaker, Deputy Assistant Secretary, Bureau of Western 

Hemisphere Affairs, U.S. Department of State ................................................. 9

The Honorable Crescencio Arcos, Assistant Secretary, Office of International 

Affairs, Office of Policy, U.S. Department of Homeland Security .................... 13

The Honorable Robert Charles, President, The Charles Group, LLC ................. 38

Mr. Eric Farnsworth, Vice President, Council of the Americas ........................... 42

Manuel Orozco, Ph.D., Senior Associate, Remittances and Rural Development 

Program, Inter-American Dialogue .................................................................... 47

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Dan Burton, a Representative in Congress from the State 

of Indiana, and Chairman, Subcommittee on the Western Hemisphere: 

Prepared statement .............................................................................................. 2

Ms. Elizabeth A. Whitaker: Prepared statement .................................................. 11

The Honorable Crescencio Arcos: Prepared statement ......................................... 15

The Honorable Robert Charles: Prepared statement ............................................ 41

Mr. Eric Farnsworth: Prepared statement ............................................................ 45

Manuel Orozco, Ph.D.: Prepared statement .......................................................... 50

APPENDIX 

The Honorable Eliot L. Engel, a Representative in Congress from the State 

of New York: Prepared statement ...................................................................... 81

(1)

IMMIGRATION: RESPONDING TO 

A REGIONAL CRISIS 

WEDNESDAY, JULY 26, 2006, 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE WESTERN HEMISPHERE, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:10 p.m. in room 

2172, Rayburn House Office Building, Hon. Dan Burton (Chairman 

of the Subcommittee) presiding. 

Mr. BURTON. Good afternoon. A quorum being present, the Subcommittee on the Western Hemisphere will come to order. I ask 

unanimous consent that all Members and witnesses’ opening statements be included in the record, and without objection, so ordered. 

I ask unanimous consent that all articles, exhibits and extraneous or tabular material to be referred to by Members or witnesses be included in the record, and without objection, so ordered. 

I ask unanimous consent that any Member who may attend today’s hearing be considered a Member of the Subcommittee for the 

purposes of receiving testimony and questioning witnesses after 

Subcommittee Members have been given the opportunity to do so, 

and without objection, so ordered. 

Today we will tackle perhaps one of the most difficult issues facing our hemisphere, immigration. From the beginning of its ‘‘New 

World’’ roots until this very day, the United States has served and 

continues to serve as a dream destination for countless millions. As 

a nation of immigrants, our culture, dreams, economic prosperity, 

and our many other strengths come from the people who have 

landed on our shores throughout the centuries, whether by choice, 

necessity, or coercion. 

Today the Subcommittee on the Western Hemisphere will examine immigration from a different perspective than we have seen to 

date. We do not intend to discuss building walls or deploying 

troops. Instead we intend today to engage our neighbors in the 

hemisphere in an effort to better understand the immigration problem and hopefully convince our neighbors that they too have a dog 

in this fight. 

On February 16, 2006, the Mexican Congress unanimously 

adopted a resolution entitled ‘‘Mexico and the Migration Phenomenon.’’ This historic resolution represented the first public acknowledgement by the Mexican Congress that they too are responsible for curbing illegal immigration into the United States. 

Within the February 16 resolution is the commitment of the 

Mexican Congress to improve border security on their side and to 
2

ensure that everyone who leaves the country does so through legal 

channels. It also commits the Mexican Government to secure its 

southern border where migrants from South and Central America 

are crossing into America on their way to the United States. 

These principles and the other accompanying recommendations 

represent a sharp departure from past practices in Mexico. We 

commend the Mexican Congress for this new approach. We must 

now build on this commitment with the new Government in Mexico 

as well as to engage the governments in all of Central and Latin 

America. 

In my experience, I have found that the majority of work-seeking 

illegal immigrants come from Mexico, Guatemala, El Salvador, 

Honduras and other nations throughout Latin America. They are 

looking for better paying jobs than those available in their home 

countries. If these economies were in better shape and the local 

population was able to find jobs with more competitive wages, they 

would not want to leave, and the number of illegal immigrants 

looking to come here would shrink dramatically. 

We can help these countries stimulate their economies through 

free and fair trade agreements, and we already are off to a great 

start. Congress passed the Central American Free Trade Agreement in 2005, integrating the economies of five of the Central 

American nations as well as the Dominican Republic with our own 

and greatly expanding their access to foreign direct investment. We 

have pending agreements with Colombia and Peru, and I think we 

have one that we are hoping to work out with Haiti, which should 

be taken up in Congress very soon. 

As Chairman of the House International Relations Subcommittee 

on the Western Hemisphere, I have seen the progress being made 

by many of our friends in Latin America. In many countries, jobs 

are being created and economies are being strengthened, but such 

progress is not enough. 

We should work with the leaders of these countries, many of 

whom I have come to know well and admire, to build on the economic strength that comes from these agreements and redouble our 

efforts to close the development gap. I have every hope and expectation that they will work with us in this endeavor. 

Today we will hear from witnesses from the State Department 

and the Department of Homeland Security, which are responsible 

for current U.S. immigration policy and enforcement. These agencies will implement the final immigration bill that will come out of 

Congress very soon. I look forward to hearing your testimony and 

asking you some questions in the not too distant future after we 

hear from my colleagues. 

And now, Ms. Napolitano, we will hear from you since Mr. Engel 

is on the Floor handling another bill right now. 

[The prepared statement of Mr. Burton follows:]

PREPARED STATEMENT OF THE HONORABLE DAN BURTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA, AND CHAIRMAN, SUBCOMMITTEE ON THE

WESTERN HEMISPHERE

Today we will tackle perhaps one of the most difficult issues facing our hemisphere today . . . Immigration. From the beginning of its ‘‘New World’’ roots until 

this very day, the United States has served and continues to serve as a dream destination for countless millions. As a nation of immigrants, our culture, dreams, eco-
3

nomic prosperity and our many other strengths come from the people who have 

landed on our shores throughout the centuries, whether by choice, necessity or coercion. 

Today, the Subcommittee on the Western Hemisphere will examine immigration 

from a different perspective than what we have seen to date. We do not intend to 

discuss building walls or deploying troops. Instead, we intend today to engage our 

neighbors in the hemisphere in an effort to better understand the immigration problem and hopefully convince our neighbors that they too have a dog in this fight. 

On February 16, 2006, the Mexican Congress unanimously adopted a resolution 

entitled ‘‘Mexico and the Migration Phenomenon.’’ This historic resolution represented the first public acknowledgement by the Mexican Congress that they too 

are responsible for curbing illegal immigration into the United States. Within the 

February 16th resolution is the commitment of the Mexican Congress to improve 

border security on their side and to ensure that everyone who leaves the country 

does so through legal channels. It also commits the Mexican government to secure 

its southern border, where migrants from South and Central America are crossing 

into Mexico on their way here. These principles and the other accompanying recommendations represent a sharp departure from past practices in Mexico. We commend the Mexican Congress for this new approach. We must now build on this commitment with the new government in Mexico as well as to engage the governments 

in all of Latin America. 

In my experience, I have found that the majority of work-seeking illegal immigrants come from Mexico, Guatemala, El Salvador and Honduras, and other nations 

throughout Latin America. They are looking for better-paying jobs than those available in their home countries. If these economies were in better shape, and the local 

population was able to find jobs with more competitive wages, they wouldn’t want 

to leave, and the number of illegal immigrants looking to come here would shrink 

dramatically. 

We can help these countries stimulate their economies through free- and fairtrade agreements, and we already are off to a great start. Congress passed the Central American Free Trade Agreement in 2005, integrating the economies of the five 

Central American nations as well as the Dominican Republic with our own and 

greatly expanding their access to foreign direct investment. And we have pending 

agreements with Colombia and Peru, which should be taken up this Congress as 

well. 

As chairman of the House International Relations Subcommittee on the Western 

Hemisphere, I have seen the progress being made by many of our friends in Latin 

America. In many countries, jobs are being created and economies are being 

strengthened. But such progress is not enough. We should work with the leaders 

of these countries, many of whom I have come to know well and admire, to build 

on the economic strength that comes from these agreements and redouble our efforts 

to close the development gap. I have every hope and expectation that they will. 

Today, we will hear from witnesses for the State Department and the Department 

of Homeland Security, which are responsible for current U.S. Immigration policy 

and enforcement. These agencies will implement the final immigration bill that will 

come out of Congress very soon. I look forward to hearing their testimony and to 

asking them questions. Thank You.

Ms. NAPOLITANO. Thank you, Mr. Chair, and as you have asked, 

we will submit his opening remarks for the record. 

Mr. BURTON. Without objection. 

Ms. NAPOLITANO. Thank you, sir. Mr. Chairman, immigration reform is a totally important, critical subject for many of us, and I 

welcome the opportunity for Congress to continue the discussion, 

open discussion, frank discussion, and transparent discussion. 

For the record, I would rather have some discussion also with the 

different entities on how we can have a conference so that we can 

move the bill on this side of the House and move on with what we 

need to do and provide a fair reform immigration bill before we 

leave on break. 

Americans, as you well know, are very concerned about what is 

happening in the United States, and they are looking for us to develop a solution with everybody at the table, not stalling, not ignor-
4

ing, not placing blame but actually getting together and coming 

forth with a solution. 

We are here today of course to talk about the international aspects of migration. I was born and raised in a border town and the 

fact that the focus it is going to take will allow us to discuss some 

of the main reasons for the migration, not just from Mexico but 

from the other countries south of the border, our neighbors. 

And I must state, Mr. Chairman, that everybody talks about 

Mexicans. They are also Americans because it is the Americas that 

we talk about. We all live in the United States. Any country in the 

Western Hemisphere is part of the Americas. 

As you well know, the primary drive of the migration to the 

United States is the lure of good paying jobs or at least jobs that 

they can send money home to be able to survive. That is where we 

failed, Mr. Chairman. We have not worked consistently with our 

neighbors south of the border to allow them to work on developing 

their economy to where there are working men and some women 

crossing the border to be able to maintain their family. 

Mexico, I believe is number three in remesas, which is remittances to that country. That is what sustains the economy. Now if 

they had the economy built up, if we were able to help them and 

the other countries, they may not have the labor that we hypocritically want in the United States, and not willing to get the employers to provide sanctions against those who would hire undocumented. 

It is a significant gap. It is an international issue that I am hoping that we would be able to discuss with the new coming President, the President-elect, whoever it may be, so that we can determine what Mexico can do, as you well say, to help us control the 

border on both sides. 

Considering that the per capita income in Mexico is less than 

one-sixth of the United States, it is very reasonable people come 

seeking a better future for themselves and their families. And, of 

course, as we all know, in 1994, NAFTA, which had a profound effect on Mexico’s economy, was not as beneficial to Mexico as everybody would have us think. 

Five million Mexican farmworkers lost their livelihood and were 

forced off their lands as our United States corn was dumped on 

their Mexican market. And despite the political promises from both 

sides of the border, the economy in Mexico failed to create the new 

jobs promised. The average Mexican wages have fallen, not risen. 

So half of the workforce now makes less than $8 a day, which is 

not even enough to sufficiently sustain their family. 

The vast majority of Mexican workers have not benefitted, and 

it is widely believed that the employed farmers and agricultural 

workers of 10 years ago have become the undocumented immigrants of today. 

In comparison, our economy is in dire need of new workers entering the labor market in order to keep growing. It is a wonder, Mr. 

Chairman, that the Mexican workers are compelled, or is it any 

wonder that they are compelled to seek their fortune in the United 

States to provide for their families? I do welcome the witnesses, 

and as a daughter of a Mexican mother and a Mexican father born 

in the United States, I have a great interest in this. 
5

I believe I still have relatives south of the border. Conditions are 

not getting any better, and I think notwithstanding the politics of 

the countries in the elections and other areas, I think we can play 

an important role, and I think we need to start talking turkey with 

Mexico at a level that we need to make those changes. So, with 

that, Mr. Chair, I thank you for allowing me to have these comments and look forward to the testimony, although I will have to 

leave as soon as Mr. Engel arrives. Thank you, sir. 

Mr. BURTON. Thank you. Mr. Paul. 

Mr. PAUL. Thank you, Mr. Chairman, and I want to thank the 

Chairman for calling these hearings. I think these are very important hearings. As most of you know, I advocate very minimal Federal Government. I think that our Government generally speaking 

does a lot of things that it should not be doing, and in the other 

sense, I think they do the things that they are responsible for rather poorly, and I would put border patrol into that category. 

And I think there are several reasons for this. The fast track to 

citizenship I think is a tremendous incentive, and if you give incentives or subsidies to anything, you get more of it. I do not believe 

we will ever be able to solve our problem on the immigration and 

the borders without dealing with the welfare state issues, because 

I think the welfare ethic both contributes to our employment type 

of problems here where jobs go begging and there are job needs. 

At the same time, if there are social service incentives for people 

to come over as well as citizenship, it is a tremendous incentive 

which none of us could resist if we were in the same set of circumstances. But the emphasis on border protection here I think is 

very proper. We have a problem. We need to deal with it. 

I would like to make just one other point, and that is that we 

deal with borders continuously, but for the most part, we deal with 

borders overseas, and I think more importantly we should be dealing with our own borders. But because we get so involved in borders outside of our responsibility, we spend a lot of money and use 

a lot of personnel, and then we come up short where our responsibilities lie. 

So not only will it require eventually to solve this problem a reassessment of the welfare ethic, I actually think that the way we 

spend our money and we run up our deficits in our foreign policy 

will also have to be addressed if we really want to do a good job 

in providing border security. And I yield back the balance of my 

time. 

Mr. BURTON. Thank you. The Chair recognizes the gentleman 

from Massachusetts for an opening statement. 

Mr. DELAHUNT. I have nothing. 

Mr. BURTON. Thank you. Let us see. Ms. Ros-Lehtinen. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman. I would 

like to thank the Committee, the Subcommittee, for holding this 

important hearing. I would also like to thank our witnesses for 

coming here today to share your perspectives. 

Immigration has been a highly visible issue this year with much 

of the discussion focused on securing our borders. However, not 

much has been said about the implications of this issue within the 

context of our bilateral relations with our partners. This issue cannot be viewed in a vacuum, but rather a broader more integrated 
6

approach needs to be taken that examines the interrelationship between our foreign policy, the response of the governments in the region, and the conditions that drive immigration from the Western 

Hemisphere into the United States. 

The United States has worked closely for years with our hemispheric neighbors to develop programs to address these conditions 

and focus on the ultimate goal of sustainability and prosperity for 

each of the countries involved. However, as the continuing increase 

in immigration has shown, we are falling short of our overarching 

goals. 

As such, the United States must make its assistance programs 

more effective to bring economic growth, success, and lasting viability to our neighbors and to ensure that recipient governments are 

meeting the requirements and conditions that we have set, conditions that will reap benefits for the people in these countries and 

for the security here in the United States. 

Implementing this method, we are able to transition our assistance efforts into a constructive partnership with the eligible democratic countries in the Western Hemisphere. This will also serve as 

antidotes to the frustration and the conditions that can breed 

Islamist extremist groups and other terrorist entities such as the 

FARC. 

In addition, our approach must include a strong law enforcement, 

counternarcotics, and counterterrorism component. Currently our 

local law enforcement officers have the ability, for example, to arrest illegal aliens or other aliens in violation of immigration status. 

This is of particular importance as three of the four hijackers from 

9/11 who were stopped by law enforcement officers for traffic violations were in civil violation of their immigration status but sadly 

our law enforcement officers did not have the tools to detain for 

these civil violations. 

In response to the grave lost opportunities, the Department of 

Justice issued a directive permitting state and local police officers 

to arrest deportable illegal aliens with either criminal or civil offenses. Unfortunately, included in the Senate immigration bill is a 

provision which will strip our local law enforcement officers of this 

authority. This would be a grave mistake that would effectively diminish the capacity of our law enforcement personnel to help keep 

our country secure and safe from Islamic extremists, other terrorist 

groups such as FARC, their enablers and their financiers. 

We must concern ourselves with gang activity also in the Western Hemisphere. According to a document prepared by the Congressional Research Service, the migration of working age men and 

women has created an imbalance in the society where children are 

often raised by family members other than their parents. This has 

led to a marked increase in gang involvement by these displaced 

children. These gang members create an environment of civil unrest, therefore undermining prospects for lasting stability and security in the region. 

This again reflects the need for a comprehensive, multi-tiered, 

interagency approach. We must continue to work with our counterparts in the Western Hemisphere so that we can gain partners 

with a shared vision on vital issues affecting our world. And I 

thank the Chairman for his time. Thank you. 
7

Mr. BURTON. The Chair thanks the gentlelady from Florida. The 

Chair recognizes the gentlelady from California, Ms. Lee, for an 

opening statement. 

Ms. LEE. Thank you very much, Mr. Chairman. I want to thank 

our witnesses for being here and just wanted to very briefly mention a couple things. One is the gentlelady from California, Congresswoman Napolitano, touched on NAFTA. And, of course, I come 

from California, but I was raised in a border city, El Paso, Texas, 

and have seen the impact of NAFTA. Unfortunately it has only 

really increased the race to the bottom and has continued to destabilize border communities. 

Loss of livable wages and jobs have forced many into lives of 

crime and gangs, really quickly replacing the drug cartel of the 

1990s. Unfortunately, the lawlessness is quickly spreading 

throughout Central America, where of course crime and poverty see 

no end. So I hope the witnesses will address how all of this is related and what you see as NAFTA’s responsibility or role in this 

increasing lawlessness and increasing rates of poverty and crime 

that we see in our border cities especially. 

Also, it is quite disturbing that in recent immigration debate 

where many tried to equate immigrants with terrorists, and I 

would like to hear from you what you think that is about. What 

do you see as the whole issue and how that weighs out when we 

try to look at some really reasonable immigration policies. Please 

explain the comparison of terrorism to immigration or terrorists to 

immigrants. 

And, finally, many of you know that we believe or some of us believe that the United States’ Haitian and Cuban immigration policies present a double standard for many of us. Haitians do not 

have immediate political asylum when they reach the United 

States, although many, including myself, would argue that the political and safety challenges are quite frankly much greater in 

Haiti than they are in Cuba. 

And so, as we look at immigration today, I would like to understand this whole rationale in terms of temporary protective status 

to Haitians who are currently here and why we will not make these 

immigration policies equal or why there is not a push to equalize 

both immigration policies as it relates to Cuba and to Haitians. 

Thank you very much. 

Mr. WELLER [presiding]. The Chair thanks the gentlelady from 

California for her opening statement and recognizes himself for a 

brief opening statement. 

First, let me just begin by commending Chairman Burton for his 

leadership in holding this hearing today on the international aspects of illegal immigration which I believe will focus on our own 

hemisphere today. 

Clearly the United States must have secure borders. We must 

improve our capabilities of preventing illegal immigration, and we 

must ensure that those who wish to do us harm are denied entry 

to our country. This issue for the United States is more than about 

illegal immigration. It is about our security, which cannot be ensured with a porous border. 

But this issue is also about our friends and partners in the hemisphere. At the core of illegal immigration is poverty and lack of eco-
8

nomic opportunity. The best solution for illegal immigration is a job 

for would be immigrants at home, and that really must be everyone’s goal, building economic opportunity across Mexico, Central 

and South America, and throughout the Caribbean. 

The United States is working in partnership with our neighbors 

toward this end. The partnership for prosperity is a public/private 

alliance of United States and Mexico Government and business 

leaders that promotes economic development in Mexico, focusing on 

areas with high immigration rates. 

The United States is also working to build investment in Latin 

America through President Bush’s innovative Millennium Challenge Account, which will encourage countries who govern justly 

and work to build their economies by providing development assistance that furthers economic growth and prosperity. 

In seeing USAID’s work firsthand, I visited sites where we are 

empowering people to build goods suitable to the export market, 

such as furniture manufacturing in Honduras or projects in Colombia to encourage coca growers to switch to growing coffee as a profitable alternative to growing coca, an illicit crop. These are success 

stories. Our policies must continue to encourage providing economic 

opportunity at home to reduce immigration to the United States. 

Finally, we must continue to pursue our trade partnership with 

the Americas. The passage of the Dominican Republic/Central 

American Free Trade Agreement last year is bringing new economic investment to that region, which will create new jobs, again 

helping to stem the tide of immigration. But our work on the trade 

agenda is far from complete. 

In our Congress, we have begun the process of deliberations over 

the Peru Trade Promotion Agreement. The current trade preferences for Peru expire at the end of this year, so it is imperative 

that we pass the Peru Trade Promotion Agreement to sustain and 

build the jobs created under the Andean Trade Preference Drug 

Enforcement Act. The Association of Peruvian Exporters estimates 

that 2.2 million jobs could be lost in Peru without ratification of the 

Peru Trade Promotion Agreement. We must ensure this does not 

happen. 

Again, the United States must have secure borders, but we must 

also have solid policies that will encourage good governance, economic development, and job creation in our hemisphere if we are 

going to really stem the tide of illegal immigration. I look forward 

to our witnesses’ thoughts today on how best to accomplish this 

goal by working with our friends in our own hemisphere. 

At this time, I would like to introduce our first panel, the panel 

that is before us, beginning with Ambassador Crescenio Arcos, who 

is Assistant Secretary, Office of International Affairs with the U.S. 

Customs and Border Protection at the Department of Homeland 

Security. Our other witness on the first panel is Elizabeth 

Whitaker, who has served as Deputy Assistant Secretary for Mexico, Canada, and Public Diplomacy in the Bureau of Western Hemisphere Affairs at the Department of State since September 2005. 

She has served in Costa Rica, Honduras, Nicaragua, and has joined 

the Foreign Service in 1984 as a public diplomacy officer with the 

U.S. Information Agency. I do want to ask the witnesses to stand 

and raise your right hand to take the oath. 
9

[Witnesses sworn.] 

Mr. WELLER. Thank you. I would like to begin and ask the witnesses to summarize their written statement if they would, and 

they have 5 minutes. And, Ms. Whitaker, if you will begin. 

TESTIMONY OF MS. ELIZABETH A. WHITAKER, DEPUTY ASSISTANT SECRETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE 

Ms. WHITAKER. Mr. Chairman, Members of the Subcommittee, 

thank you for the opportunity to meet with you today to discuss the 

United States Government’s efforts with Mexico to address immigration issues. Today’s United States/Mexico relationship is 

marked by common values and interests, which allows us to work 

in close cooperation on the many issues that affect the well-being 

of our citizens. 

Recent years have seen an unprecedented level of bilateral cooperation in areas such as democracy, free trade, counterterrorism, 

law enforcement, the environment, energy, and transportation, 

some more challenging than others. Additionally, and most relevant to this hearing, we work together closely to keep our shared 

border secure while facilitating the flow of legitimate goods and 

people across it. With more than 1 million people crossing the 

United States/Mexico border daily, you have some sense of the dimension of the challenge. 

With Mexico, we have created institutions and infrastructure to 

enhance border security while making border transit easier and 

quicker for legitimate travelers and goods. The United States/Mexico Border Partnership established by agreement of Presidents 

Bush and Fox in 2002, and now largely incorporated into the Security and Prosperity Partnership, SPP, continues to pursue those 

goals. That program has established trusted traveler programs for 

both passengers and cargo, the SENTRI program, FAST lanes, to 

allow us to focus on real threats at the border. 

It is clear that with the trade relationship the dimensions of 

which we have with Mexico, over $270 billion per year, second only 

in size to our trade with Canada, we must continue to make those 

crossings even more swift and safe, and we are committed to doing 

even more to achieve that goal. 

The rise of border crime and violence largely due to the activities 

of narcotrafficking organizations remains a significant challenge. 

The Mexican Government has attacked this problem on its side by 

sending in military and Federal police forces to take temporary 

control over security and to purge and revamp local police forces 

in areas where the violence is acute, such as in Nuevo Laredo. 

We continue to strengthen and extend cross-border linkages 

among law enforcement agencies present on the border so that both 

sides are able to mount coordinated responses to breaking security 

events. Our Border Liaison Mechanism meetings, hosted by each of 

the Department of State’s border posts and their Mexican diplomatic counterparts two to four times a year, bring together United 

States and Mexican diplomatic, law enforcement, and other personnel from all levels of government on both sides of the border to 

discuss issues requiring operational and policy coordination. These 

efforts must continue. 
10

Mexico has taken its own measures to stem the flow of illegal immigrants on its southern border, people clearly headed to the 

United States. In 2005, Mexico deported 235,000 people who had 

crossed its border illegally. The Government of Mexico has tightened its visa regime to require that nationals from countries that 

were sending large numbers of illegal immigrants apply for Mexican visas before entering that country. Mexico has signed agreements with Guatemala and Belize to reinforce their shared borders 

against illegal crossings. 

We in the United States Government have supported Mexican efforts to control its southern borders by establishing, training, and 

equipping three specialized mobile interdiction teams and providing three highly sophisticated mobile inspection vans that can 

inspect cargo vehicles for contraband and hidden passengers. In addition, the United States Government has sponsored border safety 

training for Mexican officials in Chiapas. Such cooperation on so 

many fronts is critical on Mexico’s southern border, which is remote, sparsely populated, and essentially porous. 

President Fox took office in Mexico making immigration reform 

in the United States his number one foreign policy priority, but we 

and he know that immigration has domestic roots. We know that 

immigration from Mexico to the United States will not be permanently reduced until Mexico’s economy is more competitive and produces more jobs and the government improves education and infrastructure in Mexico’s poorest states. 

Indeed, this was the central thrust of immigration commentary 

by all of Mexico’s Presidential candidates during the recent campaign. The United States Government shares that view, that the 

best way to reduce illegal immigration is through economic development. 

Since NAFTA went into effect in 1994, trade between the United 

States and Mexico has almost quadrupled, and direct investment 

between the countries has flourished. There is substantial evidence 

that trade has played a very positive role in Mexico’s development. 

For example, Mexican firms that export have created more than 

half of Mexico’s new jobs since 1995, and those jobs pay on average 

40 percent more than jobs in Mexican firms that do not export. 

To help those who have not yet benefitted from NAFTA, however, 

the Partnership for Prosperity or P4P, a public/private sector initiative, was launched by President Bush and President Fox in September 2001. P4P projects focus existing resources primarily on 

Mexico’s poor migrant-producing states. For example, under it, 

Mexico and OPIC signed an agreement in 2004 for well over $800 

million in financing for projects such as affordable housing and potable water. 

USAID and the Department of Agriculture work with their Mexican counterparts on rural development projects in Mexico and expanding access for small entrepreneurs throughout the country to 

financial services and markets. All of this P4P activity is with an 

eye to increasing Mexico’s competitiveness, increasing employment 

and incomes, and decreasing the flow of immigrants. 

Mexico’s government invests heavily in its own development programs as well. One such program grants funds to indigenous cooperatives and individually-owned businesses for market develop-
11

ment and export promotion. Mexico’s Oportunidades Program, with 

assistance from the World Bank, provides money to poor families, 

which ensure that their children attend school and get regular 

medical checkups. 

This year Mexico’s national employment service began a program 

in border states called Deportees At Work, which rehabilitates repatriated Mexicans by giving them training and employment to 

keep them from migrating again. Mexicans of all political stripes 

recognize that development, jobs, and opportunities are the best bet 

for retaining the nation’s pool of talent. 

Recognizing that a transparent and efficient justice system is 

needed for business competitiveness, USAID and the Department 

of State’s International Narcotics Control and Law Enforcement 

Bureau support Mexican initiatives in state and Federal jurisdictions to develop criminal justice reforms, train judges, prosecutors, 

and public defenders, and enhance the investigative and forensic 

capabilities of Mexican civil authorities and investigative police. 

We are gratified by the number of states that are requesting assistance for such reform, recognizing that it will provide swifter, 

more equitable justice for all as well as a more level playing field 

for investors and businesspeople, thereby stimulating economic development. 

Mr. Chairman, this concludes my remarks. I would be happy to 

answer any questions you or other Members of the Subcommittee 

may have. Thank you. 

[The prepared statement of Ms. Whitaker follows:]

PREPARED STATEMENT OF MS. ELIZABETH A. WHITAKER, DEPUTY ASSISTANT SEC- RETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE

Mr. Chairman, members of the Subcommittee, thank you for the opportunity to 

meet with you today to discuss the U.S. government’s efforts with Mexico to address 

immigration issues. 

The modern U.S.-Mexico relationship is marked by common values and interests, 

and that allows us to work in close cooperation on the many issues that affect the 

well-being of our citizens. Recent years have seen an unprecedented level of bilateral cooperation. We are partners on issues such as democracy, trade, counter-terrorism, law enforcement, the environment, energy, and transportation—some more 

challenging than others. We share a commitment to democracy, human rights, and 

free markets in the pursuit of security and prosperity for our people. 

Certainly the cornerstone of this North American community was set twelve years 

ago in NAFTA. Since that agreement went into effect in 1994, trade between the 

United States and Mexico has almost quadrupled, and direct investment by the 

United States in Mexico and by Mexico in the United States has flourished. Mexico 

has passed Japan to become our second largest trading partner and export market, 

trailing only Canada. Today, value-added manufactured goods account for 90 percent of Mexico’s exports, and there is substantial evidence that trade has played a 

very positive role in Mexico’s development. For example, Mexican firms that export 

have created more than half of Mexico’s new jobs since 1995, and those jobs pay 

on average 40 percent more than jobs in Mexican firms that do not export. 

President Vicente Fox took office in Mexico making immigration reform in the 

United States his number one foreign policy priority. While for us, immigration is 

largely a domestic, not foreign policy issue, we have discussed the issue with the 

Mexican government on many occasions. Ultimately, we know that immigration 

from Mexico to the United States will not be permanently reduced until Mexico produces more good jobs, regains competitiveness, and improves education and infrastructure in its poorer states. Thus, our focus on reducing migration is linked in the 

long run to economic development and the rule of law. 

Despite the enormous success of NAFTA, North America—and Mexico in particular—still face significant economic challenges. The Partnership for Prosperity 

(P4P) is a public/private sector initiative launched by Presidents Bush and Fox in 

September 2001 that focuses on developing those parts of Mexico that have bene-
12

fited least from NAFTA. P4P is a pragmatic dialogue on Mexican development and 

U.S.-Mexico competitiveness. P4P projects focus existing resources primarily on 

Mexico’s poor, migrant-producing states. Many smaller United States Government 

(USG) agencies would have had difficulty reaching out to their Mexican counterpart 

agencies without P4P, and since many do not have an international mandate, P4P 

gives them a structure within which to collaborate with other USG agencies and 

Mexican counterparts. 

P4P has yielded significant successes. For example, a historic agreement in 2004 

allowed the Overseas Private Investment Corporation for the first time to offer its 

full range of services in Mexico—well over $800 million in financing for new projects 

so far. Peace Corps and two Mexican government entities signed agreements in 2003 

and 2006 to allow volunteers to work in Mexico, where they are active in information technology, small business development, science, and technology. 

Through P4P, the U.S. Agency for International Development (USAID) and the 

U.S. Department of Agriculture (USDA) work with their Mexican counterparts on 

rural development projects in Mexico. USDA has focused on sharing best practices 

on rural development with Mexicans and on bringing in buyer missions. USAID has 

undertaken a series of activities to increase Mexico’s competitiveness, thereby increasing employment and income and decreasing the flow of immigrants. For example, the agency works to expand access for small entrepreneurs throughout the 

country to the financial services and market linkages that they need to take advantage of economic opportunities. 

Also under P4P, a ‘‘Quadripartite Competitiveness Group’’ composed of U.S. and 

Mexican government and private sector representatives meets regularly to improve 

Mexico’s business climate. The American Chamber of Commerce (AmCham) in Mexico strongly supports this forum, which gives them access to senior Mexican officials, 

establishes closer ties between the AmCham and the Mexican business community 

and gives them both an opportunity to weigh in jointly on issues. USAID is working 

with the Mexican Association of State Secretaries of Economic Development to help 

Mexican states and cities to improve their regulatory policies and practices. 

Recognizing that a transparent and efficient justice system is needed for business 

competitiveness, USAID and the Department of State’s International Narcotics Control and Law Enforcement Bureau (INL) support Mexican initiatives in state and 

federal jurisdictions to develop criminal justice reforms; train judges, prosecutors, 

and public defenders; and enhance the investigative and forensic capabilities of 

Mexican civil authorities and investigative police. We are gratified by the number 

of states that are requesting assistance for such reform, recognizing that it will provide swifter, more equitable justice for all, as well as a more level playing field for 

investors and businesspeople, thereby stimulating economic development. 

Our ties with Mexico are increasingly framed by a trilateral relationship that includes Canada, as we all share a commitment to enhance the security, prosperity, 

and quality of life for our citizens. Created in March 2005, the Security and Prosperity Partnership of North America, or SPP, provides a framework for us to advance collaboration in areas as diverse as security, transportation, the environment, 

and public health. The Partnership has increased our institutional contacts to respond to our vision of a stronger, more secure, and more prosperous region. Indeed, 

SPP’s goals are in many ways a broader version of much of P4P. 

Presidents Bush and Fox and Canadian Prime Minister Stephen Harper celebrated the SPP’s first anniversary at a meeting in Cancun this past March. The 

leaders reviewed the progress made on the SPP agenda, and instructed their ministers to continue to move forward. The leaders also agreed on initiatives to 

strengthen competitiveness in North America (including the creation of a North 

American Competitiveness Council led by the private sector), to cooperate on managing the threat of avian and human pandemic influenza, to collaborate on energy 

security, to work toward smarter and more secure borders, and to develop a common 

approach to natural and manmade disasters. 

Let me turn now to our border with Mexico. Facilitating the secure flow of goods 

and people across our shared border is one of the greatest challenges before us 

today. We have worked closely with Mexico to create institutions and infrastructure 

to enhance border security while making border transit easier and quicker for legitimate travelers and goods. The U.S.-Mexico Border Partnership, established by 

agreement of Presidents Bush and Fox in 2002, and now largely incorporated into 

the SPP, continues to pursue those goals. 

That program has established trusted traveler programs for both passengers and 

cargo to allow us to focus on real threats at the border. SENTRI lanes (Secure Electronic Network for Rapid Travelers Inspection) at six ports of entry ensure expedited crossings for identified low-risk travelers. Two new SENTRI lanes were 
13

opened at border crossings into Calexico, California and El Paso, Texas in December 

2005, and three more are scheduled to open this year. 

A similar program of FAST lanes (Free and Secure Trade) for cargo shipments 

provides expedited crossings for cargo from participating companies who have demonstrated that their facilities are secure and their shipments low-risk. It is clear 

that with more than 1 million legal crossings every day on our southern border, 

more must be done to make those crossings swifter and safer, and we are committed 

to doing even more to achieve that goal. 

Our border region has witnessed increased crime and violence, largely due to the 

activities of narco-trafficking organizations and increased enforcement on both sides 

of the border. The Mexican government has made a sincere effort to attack this 

problem on its side, for example, by sending in military and federal police forces to 

take temporary control over security and to purge and revamp local police forces in 

areas where the violence is acute, such as Nuevo Laredo. We are continually extending cross-border linkages among our law enforcement agencies along the border 

deep into the operational level to be able to mount coordinated responses to breaking security events, and there are many examples of ongoing cooperation with the 

Mexican government on border security. 

Foremost among these are the Border Liaison Mechanism (BLM) meetings. These 

meetings are hosted by each of the Department of State’s border posts and their 

Mexican diplomatic counterparts two to four times a year. They bring together U.S. 

and Mexican diplomatic, law enforcement, and other government personnel from all 

levels of government on both sides of the border to discuss issues requiring operational and policy coordination. These meetings allow our diplomats on the border, 

as well as U.S. law enforcement officers, to get to personally know their Mexican 

counterparts. 

Operation Against Smugglers Initiative on Safety and Security (OASISS) also 

compliments the Customs and Border Protection strategic plan. OASISS is an alien 

smuggler prosecution program that was included as a priority under the Security 

and Prosperity Partnership (SPP) between the United States and Mexico. The 

OASISS program will align itself with the broader Border Safety Initiative, as well 

as the various enforcement initiatives in the United States focused on combating illegal cross border traffic. The Government of Mexico, specifically the Mexican Attorney General’s Office (PGR), is a critical partner in this prosecutions program, which 

is aimed at increasing safety and reducing migrant deaths, while targeting alien 

smugglers and human traffickers operating in the immediate border region. OASISS 

focuses on high-risk areas where migrant lives are in danger due to smuggling organizations utilizing our shared border for their illicit criminal activity. OASISS is 

operational in California, Arizona, New Mexico and the El Paso area of Texas. Over 

250 OASISS cases have been processed since the program began in August 2005. 

In addition, for the past three years our government has collaborated with the 

Mexican government in the Interior Repatriation Program, which returned over 

35,000 Mexican illegal immigrants apprehended in Arizona to their hometowns in 

the interior of Mexico. I know that my DHS colleague has further details on this 

program. 

I would also mention the latest such collaboration between out two governments: 

On March 3, Homeland Security Secretary Michael Chertoff and his Mexican counterpart signed the Action Plan to Combat Border Violence in Brownsville, Texas to 

establish operational protocols to govern coordinated, trans-border law enforcement 

action in response to violent security incidents along the border. 

Mr. Chairman, this concludes my remarks. I would be happy to answer any questions you, or other members of the Subcommittee, may have. Thank you.

Mr. WELLER. Thank you, Ms. Whitaker. Ambassador Arcos. 

TESTIMONY OF THE HONORABLE CRESCENCIO ARCOS, ASSISTANT SECRETARY, OFFICE OF INTERNATIONAL AFFAIRS, 

OFFICE OF POLICY, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. ARCOS. Thank you, Mr. Chairman and Members of the Subcommittee. It is a privilege and an honor to appear before you 

today to discuss our Government’s efforts to address immigration 

issues in the Western Hemisphere. 

As the Assistant Secretary for International Affairs in the Department of Homeland Security, I am particularly honored to de-
14

scribe the Department’s work to contribute to the comprehensive 

immigration reform that the Administration seeks. 

First, though, I want to express my gratitude to the Committee 

for its support of key initiatives with our Canadian counterparts, 

Mexican counterparts, and other neighbors in the Caribbean and 

Latin America. Your contributions have played a valuable role in 

our efforts to pursue programs of consequence with key partners in 

the Western Hemisphere. 

In the current immigration discussion, there is much talk about 

how to better secure our borders to prevent illegal immigration, but 

on its own, a secure border is an incomplete solution. Root causes 

of illegal immigration often arise from rampant poverty or lack of 

opportunity in the immigrant’s country of origin, and secure borders would hardly begin to address the illegal immigrants already 

living in the United States. 

This is why the Administration supports a comprehensive approach to immigration reform that accomplishes three objectives: 

Strengthened border security; a comprehensive interior enforcement strategy that includes worksite enforcement; and an established temporary worker program. Mexico has proven to be a critical partner in the last several years through ongoing work at the 

local level, regional border liaison mechanisms, and national bilateral fora. 

DHS has partnered with representatives of the immigration, law 

enforcement, security, and customs agencies of Mexico as well as 

many Mexican businesses. To elaborate, I would like to briefly list 

some of the initiatives and programs currently underway with our 

Mexican colleagues and other friends in the hemisphere. 

The first initiative is the Security and Prosperity Partnership, 

SPP. This executive partnership was announced by President 

Bush, Prime Minister Martin, and President Fox in March 2005 in 

Waco, Texas to enhance security, prosperity, and the quality of life 

for citizens within North America. Secretary Chertoff is responsible 

for the security pillar of the SPP. There are 10 security-related 

goals listed in the testimony I have submitted to the Committee. 

I might note that one of the key security goals is a screening of 

travelers to North America, and we are working with the State Department to coordinate visa policy with Mexico and Canada. 

Interior repatriation is another initiative. Interior repatriation of 

illegal aliens to their place of origin resulted from a 2004 memorandum of understanding between the Department of Homeland 

Security and the Government of Mexico. 

The interior repatriation program seeks to diminish the illegals’ 

attempts to reenter the U.S. immediately across perilous terrain 

and harsh summer heat while simultaneously limiting their contact 

with human smugglers who operate near the United States/Mexican border. For the past two summers, the United States and 

Mexican officials have collaborated to return nearly 35,000 Mexican 

nationals to hometowns in Mexico’s interior. We are also working 

with Mexican officials to update and implement local repatriation 

arrangements within DHS and Mexican consulates throughout the 

United States. 

Another initiative is the Border Enforcement and Security Task 

Force, which is known as BEST. On January 6, 2006, Secretary 
15

Chertoff announced the formation of BEST, which represents an integrated effort to combat border violence. This effort involves DHS 

components, state and local enforcement agencies, and Mexico’s 

Center for Investigation and National Security, known as CISEN. 

The first two test sites for it are Laredo, Texas and Tucson, Arizona. The goals are to reduce border violence and disrupt the violent organizations that are its cause. 

Another initiative is the United States/Mexico action plan to 

combat border violence, which was signed March 3, 2006, in 

Brownsville, Texas between Secretary Chertoff and his Mexican 

counterpart, Secretary of Governance and Public Safety Carlos 

Abascal. The action plan commits both governments to combat border violence and improve public safety while sharpening procedures 

for response to the incidence of violence and illegal crossings across 

the United States/Mexico border. 

Yet another initiative is the Operation Against Smugglers and 

Traffickers Initiative on Safety and Security, known as OASISS. 

OASISS ensures that criminal records for smugglers who were previously caught and released are used to detain those who previously escaped prosecution. Through OASISS, we have successfully processed 215 cases in cooperation with the Mexican attorney 

general’s office. OASISS is now operational all along the United 

States/Mexico border area. 

Mr. Chairman, Members of the Subcommittee, I have outlined 

key initiatives today that the Department of Homeland Security 

has taken with the Government of Mexico and other nations in the 

hemisphere to address the challenges to security and prosperity 

that the so-called immigration crisis presents. 

As noted today, our work has hardly begun. Only through comprehensive immigration reform which includes secure border, expanded domestic enforcement of our immigration laws, and the ultimate realization of a temporary worker program will we begin to 

ensure that legal immigration is regarded as the national boon that 

it is. Thank you, and I would be happy to answer any questions, 

Mr. Chairman. 

[The prepared statement of Mr. Arcos follows:]

PREPARED STATEMENT OF THE HONORABLE CRESCENCIO ARCOS, ASSISTANT SECRETARY, OFFICE OF INTERNATIONAL AFFAIRS, OFFICE OF POLICY, U.S. DEPARTMENT

OF HOMELAND SECURITY

Chairman Burton, Ranking Member Engel, Members of the Subcommittee, it is 

a privilege and an honor to appear before you today to discuss the efforts of the Department of Homeland Security to deal with immigration issues on a regional basis 

within the Western Hemisphere. 

I want to begin by expressing my gratitude to the Committee for the interest and 

support you have provided for important initiatives with our Mexican counterparts, 

and other efforts to increase the security of our homeland by cooperating with our 

neighbors in the Western Hemisphere. 

In the current debate in the United States over immigration, much of the public 

discussion has been over how we can better secure our borders against illegal immigration. But as you on this committee are well aware, the root causes of illegal immigration often begin in the originating countries, as poverty and lack of opportunity spur many to attempt the dangerous trek to the United States. This is why 

the Administration supports a comprehensive approach to immigration reform that 

accomplishes three objectives: strengthening border security, ensuring a comprehensive interior enforcement strategy that includes worksite enforcement, and establishing a temporary worker program. 
16

As the causes of illegal immigration are not solely our own, the solutions are not 

likely to be either. DHS is now, and must continue to reach out to immigrant-sending nations, beyond just our immediate neighbor of Mexico, to those in Central and 

South America as well. Human trafficking and smuggling networks are embedded 

throughout these sending nations, and uprooting them will require international cooperation. Transnational criminal organizations operate where they can establish a 

foothold and fraudulent documents and alien smuggling provide necessary means of 

funding: combating these operations requires regional and global partners. 

As our closest neighbor to the South, and the source of the majority of illegal immigrants to the United States, Mexico is a critical partner for DHS in controlling 

illegal immigration. And Mexico has proven to be a good partner in the last several 

years—through ongoing work at the local level, regional border liaison mechanisms 

and national bilateral forums. DHS works extensively with representatives of the 

immigration, law enforcement, security, and customs agencies of Mexico, as well as 

with many of the leading Mexican businesses. I would like to take this opportunity 

to describe some of the initiatives and programs that are currently underway with 

our Mexican colleagues. 

Security and Prosperity Partnership (SPP) 

On March 23, 2005 in Waco, TX, President Bush, along with Canadian Prime 

Minister Martin and Mexican President Fox, unveiled the Security and Prosperity 

Partnership for North America (SPP), a blueprint for a safer and more prosperous 

continent. The Leaders agreed on an ambitious security and prosperity agenda 

which will keep our borders closed to terrorists and open to trade. The three leaders 

instructed each nation to establish ministerial-level Security and Prosperity working 

groups. Secretary Chertoff chairs the security agenda while Secretary of Commerce, 

Carlos Gutierrez, chairs the prosperity agenda. 

The Leaders met again this year on March 31 in Cancun to review progress and 

renew commitment to enhance the security, prosperity, and quality of life of the citizens within North America. The leaders announced five priority areas: North American Smart, Secure Borders, North American Emergency Management, Avian and 

Human Pandemic Influenza, North American Energy Security, and the creation of 

a North American Competitiveness Council (NACC). The Council will comprise 

members of the private sector from each country who will meet annually with security and prosperity Ministers and will engage with senior government officials on 

an ongoing basis to enhance competitiveness in the region and ensure a secure home 

for our citizens. 

The Security agenda consists of ten security-related goals including Traveler Security, Cargo Security, Border Facilitation, Law Enforcement, Critical Infrastructure Protection, and Technology. Last June, Secretary Chertoff together with his 

counterparts in Canada and Mexico, delivered a detailed work plan for the security 

agenda. A second annual report will be delivered within the coming month. 

We continue to strengthen our ties to our Mexican and Canadian colleagues 

through a number of working groups that were expanded or established to implement the SPP. These working groups are critical to implementing important bi-lateral programs such as NEXUS and the Secure Electronic Network for Travelers 

Rapid Inspection (SENTRI), the Customs-Trade Partnership Against Terrorism (C–

TPAT), Fast and Secure Trade (FAST), the Operation Against Smugglers (and Traffickers) initiative on Safety and Security (OASISS), the Interior Repatriation program (IR) and other repatriation efforts, and Interagency Border Enforcement 

Teams (IBETS) on our northern border and Border Enforcement and Security 

Taskforces (BEST) our southern border which I will describe shortly. 

In addition to these initiatives, through the SPP DHS and the State Department 

are working on visa policy coordination with Canada and Mexico as an effort to implement policies and procedures that will lead to comparable decisions about travelers destined to North America. The end result of this coordinated work is designed 

to be that a traveler destined to a Canadian or Mexican port of entry experiences 

substantially the same screening as a traveler bound for a U.S. port of entry. 

Further, DHS and State Department are working with Canada and Mexico to further coordinate the list of countries whose nationals are permitted to travel ‘‘visa 

free’’ to or within North America. Since September 11th, some notable visa policy 

changes include Canada’s decision to impose a visa requirement on nationals of 

Saudi Arabia, Malaysia and Costa Rica while Mexico decided to require citizens of 

South Africa, Brazil and Ecuador to present a visa to lawfully enter Mexico. The 

reimposition last year by Mexico of a visa requirement for Brazilians has dramatically decreased the inflow of illegal Brazilians across the southwest border. 
17

Secure Electronic Network for Travelers Rapid Inspection (SENTRI) 

SENTRI is a ‘‘trusted traveler’’ program exclusive to the Southwest Border. The 

‘‘trusted traveler’’ concept assists law enforcement officials at our nation’s borders 

in distinguishing low-risk passengers from those who present a higher risk to U.S. 

homeland security. Working with the Department of State, this concept supports 

DHS’s strategy of using risk management principles and advanced technology to facilitate the entry of low-risk travelers across the border at selected crossings. 

SENTRI provides expedited CBP border processing for pre-approved, low-risk 

travelers who undergo a thorough biographical background check against criminal, 

law enforcement, customs, immigration, and terrorist indices; a 10-fingerprint law 

enforcement check; and a personal interview with a CBP Officer. Approved applicants are issued a Radio Frequency Identification (RFID) card that identifies their 

record and status in a CBP database upon arrival at Port of Entry. An RFID transponder is also issued for the applicant’s vehicle. 

SENTRI participants wait for much shorter periods of time than non-participants 

to enter the United States, even at the busiest times of the day. Critical information 

required in the inspection process is provided by the RFID technology to the CBP 

Officer in advance of the passenger’s arrival, thus reducing the inspection time from 

an average of 30–40 seconds to an average of 10 seconds. Currently, approximately 

75,000 individuals are enrolled in SENTRI, accounting for over 300,000 border 

crossings into the U.S. per month. 

Operation Against Smugglers (and Traffickers) Initiative on Safety and Security 

(OASISS) 

OASISS is a bilateral program between the U.S. and Mexico, which enhances our 

ability to prosecute alien smugglers and human traffickers on both sides of the border. Too often, smugglers responsible for life threatening behavior, and even deaths, 

on one side of the border were able to evade justice by escaping to the other side. 

OASISS is currently operational in all four states along the southwest border. 

Working with the Mexican Attorney General’s Office (PGR), we have been able 

to successfully process a total of 251 cases under the OASISS program. In 2005, the 

Border Patrol, in California and Arizona alone, assisted in the prosecution of 786 

smuggling cases, and the Office of Field Operations assisted in the prosecution of 

766 cases, a total of more 1,500 alien smuggling prosecutions. 

Interior Repatriation Program (IR) 

A 2004 Memorandum of Understanding between the Department of Homeland Security (DHS) and the government of Mexico established the framework for our two 

nations to work cooperatively for the safe and orderly repatriation of Mexican nationals. For the past two summers, the U.S. and Mexican officials developed and 

jointly administered the Interior Repatriation program to return nearly 35,000 

Mexican nationals who voluntarily agreed to be repatriated from the Arizona-Sonora 

desert to their hometowns in the interior of Mexico. The goals of the program are 

to reduce the loss of migrant life in the dangerous desert corridor and to break the 

human smuggling cycle along the border. The program has served as a model of binational cooperation at all levels. 

During summers 2004 and 2005, Customs and Border Protection funded and managed the operations of the Interior Repatriation program. Immigration and Customs 

Enforcement (ICE) is managing and funding the operations of this summer’s program that began on July 7 and is scheduled to continue until no later than September 30. This three month period typically presents the most severe climate conditions for individuals crossing the Arizona-Sonora desert. Those who volunteer for 

the program are flown to Mexico City and provided bus transportation to their 

places of origin in the interior of Mexico. 

By quickly and safely returning Mexican nationals to their hometowns rather 

than releasing them on the Mexican side of our shared border, both nations seek 

to save lives and discourage additional illegal border crossings through hostile, 

desert terrain. 

Further, we are working with Mexican officials to update and implement local repatriation arrangements between DHS and the Mexican consulates throughout the 

United States. For DHS, CBP officers—including those at ports of entry and in the 

border patrol—as well as ICE officials are responsible for the safe, orderly, and effective repatriation of Mexican nationals. At the end of June, the first two local arrangements went into effect in El Paso and Chicago. These local arrangements ensure that DHS officials and their Mexican counterparts have clear agreement on the 

locations, daily schedule, and advance notification for the secure repatriation of 

Mexicans, including those who have committed crimes in the U.S. and unaccompanied minors. These local arrangements ensure adequate personnel on both sides 
18

to effect the repatriation. After completion of the pilot program period, and a successful evaluation, the templates will be used to draft similar agreements between 

each Mexican Consulate within the United States and the local DHS Agencies within their jurisdiction. 

Border Violence 

On March 3, 2006, in Brownsville, Texas, Secretary of Homeland Security, Michael Chertoff, and his Mexican counterpart, Secretary of Governance and Public 

Safety, Carlos Abascal, signed a Plan of Action committing both governments to 

combat border violence and improve public safety. The commitment between our two 

nations will strengthen procedures between federal law enforcement agencies on 

both sides of the border to respond to a variety of incidents, including accidental 

crossings, incidents of violence, or other situations that present risks to those who 

live, work, or travel at our common border. 

Border Enforcement and Security Taskforce (BEST) 

On January 6, 2006, Secretary Chertoff announced the formation of the Border 

Enforcement Security Task Force (BEST) in Laredo, Texas. BEST represents an integrated effort to combat border violence and cross-border crime and involves the 

DHS components, State and Local law enforcement agencies, and the Center for Investigation and National Security (CISEN) in Mexico. We are working to empower 

our local officials to assess issues and craft solutions appropriate to local circumstances. Our first two test sites for this concept are Laredo, Texas, and Tucson, 

Arizona. The principal focus of these groups is to work together to reduce border 

violence and disrupt those violent organizations. Since their inception, the BESTs 

have achieved 54 arrests, 22 indictments, and 10 convictions and have removed over 

60 aliens. 

Border Safety Initiative 

This is a joint partnership between the U.S. Border Patrol and the Government 

of Mexico to reduce border risks and deaths. Immigration officials and the Border 

Patrol work together with Mexican consuls and Grupo Beta units along the border. 

This initiative includes training on safety and rescue techniques and information 

sharing. 

In Fiscal Year 2005, southwest border deaths increased by 41% (464 in FY05 vs. 

330 in FY04) and southwest border rescues increased by 91% (2570 in FY05 vs. 

1347 in FY04). These statistics indicate that a secure border will not only have an 

important law enforcement component, but also yield the humanitarian benefit of 

saving lives. Border Patrol Search, Trauma and Rescue units (BORSTAR) are elite 

special response teams with law enforcement search and rescue, and medical aid 

rapid response capabilities. In addition to its core focus of supporting Border Patrol 

operations, BORSTAR has become a highlight of a bilateral training initiative in our 

relationship with Mexico. In December 2005, BORSTAR conducted its first ever 

search, trauma, and rescue academy for 25 Mexican officials. The training was conducted in the southern Mexican state of Chiapas. 

Other Nations in the Western Hemisphere 

In addition to our extensive work with Mexico, we are also working with other 

countries in the Western Hemisphere to better manage illegal migration in the region. Through our work in several multilateral forums, and on a bilateral basis with 

specific countries, we continue to press for efficiency in the issuance of travel documents for the repatriation of apprehended migrants, and to better manage the 

transnational impacts of migration. I will mention only a few of these here.

• RCM (Regional Commission on Migration). DHS, together with our colleagues 

from the Department of State have participated in the Regional Commission 

on Migration. The RCM, launched in 1996, brings together migration and foreign policy officials from Belize, Canada, Costa Rica, El Salvador, Guatemala, 

Honduras, Mexico, Nicaragua, Panama, and the United States in a multilateral regional forum to discuss, share experiences about, and engage in collective undertakings in response to the dynamic impacts of transnational migration. Non-governmental organizations from throughout the region work with 

migrants and advocate for immigrant and refugee rights are also included. 

The RCM conducts annual Vice-Ministerial meetings, semi-annual working 

level meetings of the Regional Consultation Group on Migration, seminars, 

projects and other joint activities. The RCM also provides an important forum 

for the exchange of information on migration issues and allows members to 

voice concerns relating to their countries’ migration agendas.
19

• ICAO (International Civil Aviation Organization). The United States, Canada, 

Mexico and the Central American countries are members of ICAO, an international body that promotes standards and best practices for travel documents and aviation security. Through the ICAO, the United States has successfully pushed for incorporation of machine-readable documents, electronic 

passports and biometric standards for international travel documents that are 

now being adopted by many countries in the Hemisphere.

• U.S.-Mexico Binational Commission (BNC). The U.S.-Mexico Binational Commission brings together principal officials of the U.S. and Mexican governments annually to confer on a broad spectrum of issues affecting both nations. 

Secretary Chertoff co-chairs the Working Group on Consular and Migration 

Affairs and Border Security.

• GTIP Program. The President’s $50 Million Trafficking in Persons (TIP) Initiative was established to assist foreign countries in combating trafficking in 

persons. The Trafficking in Persons Conference held in Tapachula, Chiapas 

on June 14–15, 2006 resulted in an overwhelming response from government 

agencies (local/state/federal), NGO’s, civil society, and academia. The participants identified next steps and made specific commitments. DHS has established an excellent working relationship with the Policia Federal Preventiva 

(PFP), the Procuraduria General de la Republica (PGR), the Instituto 

Nacional de Inmigracion (INM), other governmental agencies, and several 

Non-Governmental Agencies (NGO’s) and now has two ICE Special Agents to 

provide technical assistance to the dedicated investigative unit. Additional 

training will be provided to Mexican Immigration authorities in Tapachula 

during the first 2 weeks in August 2006.

Mr. Chairman, Members of the Subcommittee, I have outlined a number of initiatives today that we have taken with the government of Mexico and other nations 

in the Hemisphere to allow us to protect America from the terrorist threat while 

performing our traditional enforcement and facilitation missions. While all of these 

initiatives are important and will continue, they are only one facet of the solution 

to the issue of illegal immigration. I urge Congress to pass comprehensive immigration reform that meets the President’s stated objectives. Only through a combination 

of border enforcement (working with our international partners), expanded enforcement within the United States, including an expanded employment compliance and 

enforcement program to address illegal employment, and a temporary worker program which will provide a legal avenue for employers to fill their labor needs when 

U.S. workers are not available, will we begin to change the current paradigm of migration in the region. 

Thank you again for this opportunity to testify. I will be happy to answer any 

questions you may have.

Mr. WELLER. Thank you, Ambassador Arcos. Ms. Whitaker, one 

of the common themes that I certainly heard from my colleagues 

on both sides of the aisle and frankly knowing their positions in 

the so-called immigration debate, one area of commonality I certainly heard was clearly good jobs at home discourages illegal immigration. And I think we would all say that all of us here on this 

dais would like to see the day that remittances are no longer the 

primary source of income in many national economies in Central 

and Latin America. 

How would you assess our partners and their efforts in creating 

the economic climates, particularly in the nations that currently 

are our source of illegal migrants, their efforts to create the economic climate at home that actually encourages, attracts investment, and creates jobs at home? 

Ms. WHITAKER. I am happy to comment on what Mexico is doing 

and make some general reference to the Central American countries. The Mexican Government has been quite clear both in statements which were mentioned in some of your statements earlier 

today and during the Presidential election. The campaign rhetoric 

of all three parties was focused on the need to create opportunities 
20

for Mexicans at home, which we found very much in tune with our 

thinking. 

Mexico is not a middle income country, but it is true that a large 

number of Mexicans continue to enter the United States illegally, 

and I think that is certainly because they are looking for better opportunities. The economic opportunities that exist in Mexico, even 

in a climate of current growth, which is about 3 percent or a little 

bit more so far this year, are not distributed evenly. 

What we are working and discussing with the Mexicans is that 

to try to broaden the base of opportunities, we are taking a twopart approach. One is the Partnership for Prosperity programs, 

which we talked about, a private/public sector partnership, to address some of the needs and create opportunities for those who 

have not been yet lifted up by NAFTA. Also we are working with 

the Mexican Government and urging them to focus on some additional reforms, whether in fiscal policy, energy policy or labor to try 

to foster broader-based growth that will give opportunities to all. 

Mr. WELLER. How about Central America? What is your assessment there? 

Ms. WHITAKER. In Central America, I believe we heard mention 

of the Central American Free Trade Agreement, the DR Free Trade 

Agreement, which we like to think will be like NAFTA in beginning 

to turn the tide in the countries of Central America. That, plus the 

Millennium Challenge Corporation, which is providing assistance 

to Honduras and Nicaragua, and I believe El Salvador and Guatemala are working on trying to qualify for some of those grants. 

Again, these are programs where we are trying to create economic opportunities. MCC is providing assistance according to 

plans that have been developed by the countries themselves, according to specific criteria of good governance that the Millennium 

Challenge Corporation has laid out. These are long-term solutions. 

Mr. WELLER. Now, Ms. Whitaker, you mentioned the Millennium 

Challenge Account and we have seen of course the MCA has generated a number of contracts, and I for one have been a very strong 

supporter of the goals that President Bush has outlined with the 

Millennium Challenge Account, and these contracts have been 

signed, but when are we going to see some concrete poured? 

In Honduras there is supposed to be a coastal road from one 

coast to the other to provide access to markets for farmers and 

small manufacturers. The same is true for northern Nicaragua. 

When are we actually going to see some fruit coming from these 

contracts? 

Ms. WHITAKER. I cannot give you a date. I do not have a date 

off the top of my head as to when we are going to see concrete 

poured, but I do know that in both Honduras and Nicaragua, we 

have identified specific projects, and they are indeed focused on infrastructure to bring products to market, I would be glad to try to 

get a better fix on that date and bring it back to you. 

Mr. WELLER. I would ask for a timetable. 

Ms. WHITAKER. Certainly. 

Mr. WELLER. I am concerned that we are taking a long time to 

actually see some real results other than contracts being signed. 

Ms. WHITAKER. Of course. 
21

Mr. WELLER. USAID has had programs in place, particularly in 

the rural areas, and if you look at the areas in many of our friends, 

the countries which are sources of illegal immigration, a lot of 

these illegal immigrants are coming from the rural areas. 

I have seen the USAID programs. I remember being in a rural 

area in Honduras where USAID had a program and partnership 

with the Government of Honduras to encourage farmers to replace 

the traditional crops of corn, maize, and sugar where they really 

were not able to generate an income and replace them with plantains and tomatoes and other vegetable crops that can be used for 

exports. What is the direction of these programs? Can you just outline what your plans are? Do you feel this is a good investment? 

Do you plan to expand it? What direction do you plan to take? 

Ms. WHITAKER. My understanding is that indeed these programs 

will continue, but to give you a thorough and accurate answer as 

you deserve, I would like to consult with my colleagues at USAID 

and give you again a more concrete answer, if I may. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM MS. ELIZABETH A. WHITAKER TO QUESTION

ASKED DURING THE HEARING BY THE HONORABLE JERRY WELLER

With regard to the road projects you mention, both Nicaragua and Honduras have 

suffered from poorly planned and executed road projects. MCC is determined to 

build roads that last, which will take more time but pay off in the long-run because 

future generations will benefit from a sustainable transportation network throughout the country. 

It can take anywhere from nine to twelve months for study, design, and procurement activities prior to construction in order to build a road that is technically 

sound. Conducting feasibility studies on these roads is a high priority for MCA-Nicaragua and MCA-Honduras. They are both currently procuring these services and 

looking for ways to shorten their already aggressive timelines without cutting corners and compromising the quality of the roads. In Nicaragua, the procurement 

process for the studies and the construction management firm are currently underway, but it is unlikely construction will begin for another 9 to 12 months. Similarly 

in Honduras, actual road construction is expected to begin in late 2007, but work 

is already underway in reviewing environmental and social impacts and ensuring 

a committed budget for future road maintenance. In Nicaragua, MCC was instrumental in working with the Government of Nicaragua and other donors to ensure 

legislation was passed to fund road maintenance for the first time in many years. 

In both countries, important advances will be made on other Compact components 

in the coming months. In Nicaragua, the Rural Business Development project is already working with small and medium-sized beneficiaries, and early efforts have already yielded export commitments. The Property Regularization component will 

begin its initiatives to improve management of the titling process and MCA-Nicaragua, jointly with the World Bank project, will be delivering some of the first titles 

in the next month. 

In Honduras, the Millennium Challenge Account office has signed a $22 million 

contract with FINTRAC for crop diversification training. The Farmer Training Development (FTD) project is the first such MCC contract in Honduras and one of the 

first in the world. This contract directly builds on the best practices and farmer 

training methodology carried out successfully in Honduras through USAID’s current 

Rural Economic Diversification Program (USAID–RED) that you mentioned, which 

is also implemented by FINTRAC. Both projects aim to train and assist thousands 

of farmers to improve the production of nontraditional crops for domestic, regional, 

and export markets. The USAID project is presently reaching more than 16,495 

beneficiaries with technical assistance, most of them on a regular basis. USAID assistance is also helping these farmers access formal market outlets and increase 

their incomes through improved production technologies. Processors benefit from a 

more secure, consistent supply of high quality produce for their markets and for 

value added processing, as well as improved marketing techniques. 

MCC is quickly streamlining the Compact process to deliver in timely fashion 

measurable results that contribute to poverty reduction through sustained economic 

growth, as evidenced by the fact that it will have taken El Salvador only a year 
22

to move from selection to signing its Compact, which it is scheduled to do this November.

Mr. WELLER. Okay. Well, I would welcome some details. While 

we are on the subject of USAID programs in Mexico, I particularly 

want to ask about why USAID programs in the areas of anti-corruption, transparency and accountability are being cut, and programs that are promoting competitiveness are being underfunded. 

I for one think that programs of this nature are pretty important 

as we try and encourage economic growth. Transparency of law and 

eliminating corruption certainly has a significant impact in attracting investment, creating jobs and promoting a stable economy. 

And if that our goal is to create jobs at home to discourage illegal 

immigration, I wonder why this is occurring. Can you explain why 

these programs have been cut and underfunded? And is this a result of the decision in Fiscal Year 2005 levels of Economic Support 

Funds, developmental assistance for Mexico being cut in the Fiscal 

Year 2006 and Fiscal Year 2007 budget? I for one think these programs are pretty valuable tools if we want to discourage illegal immigration. And why does USAID and the Department of State, 

your agency, not consider these programs essential? 

Ms. WHITAKER. I think that we would agree with you that they 

are very important programs in terms of the anti-corruption and 

transparency programs that USAID has sponsored along with 

criminal justice reform, competitiveness, and also supporting a 

number of State initiatives. I think indeed the USAID programs 

have been very effective. 

My understanding is indeed that the ESF levels for 2006 may 

well be lower than 2005. I do not have a precise figure on that because we are in the midst of the fiscal year of course. My understanding, in general, of the budget process—and again, I am happy 

to try to get you more specifics—is that as the State Department 

looks at its overall foreign assistance planning, indeed this is a 

much bigger issue, and I think the Secretary is leading an effort 

to——

Mr. WELLER. No, again, Ms. Whitaker, I am looking for an answer. If these programs are a priority and our goal is to help our 

friends and allies eliminate corruption, why would we cut these 

programs? 

Ms. WHITAKER. That is a very good point, and what I would like 

to do is to get you a more concrete answer. 

Mr. WELLER. Because, again, it is your administration that is 

submitting this budget request that recommended the cuts in areas 

you say are a priority. 

Ms. WHITAKER. Yes, sir. I will be glad to get you a more precise 

answer, sir. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM MS. ELIZABETH A. WHITAKER TO QUESTION

ASKED DURING THE HEARING BY THE HONORABLE JERRY WELLER

Let me provide the context. Foreign assistance for Latin America has nearly dou- bled since the start of this Administration, from $862,452,000 in FY 2001 to 

$1,696,841,000 in FY 2007. Though the FY 2007 request for Latin America shows 

a one percent decrease from the FY 2006 request, it does not reflect a reduced commitment to Latin America. In fact, when new funds being made available via the 

Millennium Challenge Corporation are factored in, total resources to the region have 

increased. We have prioritized our foreign policy goals against available resources 
23

and competing demands for assistance. For example, a reduction for middle income 

countries where the need is not as great allows us to increase assistance in areas 

such as Africa, where the need is greater. 

With regard to Mexico specifically, the President’s FY 2007 budget request asks 

for $62.882 million in bilateral foreign assistance, the fifth largest bilateral program 

in the Hemisphere (behind Colombia, Haiti, Peru, and Bolivia). Due to Mexico’s ratification of the Rome Statute on the International Criminal Court at the end of FY 

2005, it became ineligible for FY 2006 International Military Education and Training funding under the American Service Members Protection Act (ASPA). Mexico’s 

ESF was similarly impacted by the Nethercutt Amendment. However, we will have 

sufficient funds with the President’s 2007 request to achieve our priority goals in 

partnership with Mexico-targeting the very areas you mention, including good governance, judicial reform at the state level, and competitiveness.

Mr. WELLER. Okay. The gentlelady from California, Ms. Lee. 

Ms. LEE. Thank you very much. Okay. Going back to one of the 

points I made in my opening statement. Ms. Whitaker, United 

States/Haitian versus Cuban policy, at least immigration policy, 

continues to remain a double standard. Haitians do not have immediate political asylum when they reach the United States, although 

I said I would argue that the political and safety challenges are 

much greater in Haiti than they are in Cuba. 

It is clear to me that this policy must change and we must provide temporary protective status to Haitians who are currently 

here in the United States seeking political asylum. I know there 

has been a lot of talk about it, but that is all that has happened. 

It is just a lot of talk. 

And I do not know why this Administration continues to uphold 

an unfair and oftentimes it is perceived as a racist policy against 

Haitians seeking refuge in the United States. Of course Haitians 

who come are Black, and for the most part, the majority of Cubans 

who come are White. I would like to find out why this talk is just 

talk and you do not move toward granting temporary protective 

asylum status to Haitians? 

Ms. WHITAKER. Again, I am not an expert in either Cuban or 

Haitian temporary protective status policy. I do know of course 

that the Cuban policy is the product of many years of deliberations 

under many different Administrations of both parties, but I would 

be glad to try to get back to you with a better sense of the status 

of the conversation over the difference in policy. I do not know if 

my colleague from DHS would like to add anything to that. 

Mr. ARCOS. I would just simply add, Congresswoman, the following, that the Mexicans tend to also complain about the fact that 

they do not have temporary protective status and some Central 

Americans do. And these were taken under extreme circumstances 

in the late 1990s for temporary protective status for some countries. But the fact remains that in terms of Haiti and Cuba, the 

Cuba Adjustment Act is legal. It is legislation that was made here 

in Washington years ago and creates for the different treatment. 

So it is not just a policy issue. It is a legal issue. And Haitians 

are treated like all other immigrants, illegal immigrants that do 

not have a Cuban Adjustment Act to afford them the treatment 

that is given to them as opposed to the rest of the world. 

Ms. LEE. That is the point. Haitians are treated as illegal immigrants, and they are fleeing for the most part political repression, 

and they land here on our shores, and well, you know what happens. I would think that regardless of the Cuban Adjustment Act 
24

and the history of all this that you would try to equalize some of 

this at this point, or that this Administration would, given the fact 

that we have so many Haitians living here, grant temporary protective, political asylum status. 

With regard to the issue of the percentage of immigrants who 

you have found under Homeland Security that you would consider 

potential terrorists, do you track those that you turn back based on 

whatever formula you use that would identify immigrants coming 

across the border as possible threats? 

Mr. ARCOS. We have several different mechanisms for that, Congresswoman, and let me just say that when we talk about terrorist 

versus normal, honest, economic seekers that come to the United 

States either as tourists or for business or students that seek to 

emigrate to the United States, the vast, vast majority, 99 percent, 

are honest people. They are not having anything to do with being 

criminal or terrorists. 

What we do have is different systems in place. We have different 

watch systems that whenever people apply to a visa in the Embassies around the world, we can figure out who they are as long as 

we have a record of them. And we have caught many. We have 

stopped them from coming into the United States, and some of 

them slipped by, and some are in countries that already maybe 

they have had a visa and they have been recruited. But they are 

on our watch list, and we intercept them before they board a plane 

or we can catch them at the border as they enter the United 

States. We have different mechanisms for that. 

Ms. LEE. Well, Mr. Ambassador, I am very glad that you were 

very candid with us on your response to that question because 

maybe you should have weighed in a little bit more on this immigration debate, because you know central to this debate unfortunately was the notion that we needed tough immigration reform 

because immigrants for the most part could be considered or are 

considered terrorists, and I think that really took the debate in a 

direction that it should not have gone when most of us know that 

is just not the case. And you just said 99 percent are people who 

want to come and get a job and see their families. 

Mr. ARCOS. That is probably true, Congresswoman, but let me 

just point out one thing. Terrorists have to be right only once. We 

have to be right 100 percent of the time. 

Ms. LEE. I understand that 1 percent. I understand that. 

Mr. ARCOS. And basically what we see in illegal immigration in 

this country right now is a concern because it is a vulnerability to 

us in terms of a threat. 

Ms. LEE. I understand that, but that 1 percent, my question was 

what percentage of the immigrants that you see coming across that 

you have to turn back who are undocumented could be potential 

terrorist threats, and if it is 1 percent, that is a serious 1 percent. 

But, I mean, if it is 1 percent, it is 1 percent. 

Mr. ARCOS. To be exact, I am not sure if it is 1 percent or maybe 

more or maybe less. I will get back to you. 

Ms. LEE. Yes. And our immigration policy should not be just 

based on that 1 percent is the point I am trying to make. 

Mr. ARCOS. But it is a vulnerability because we had 19 to 22 people do what they did on 9/11. 
25

Ms. LEE. Right. It is a huge vulnerability. But when we are talking about immigration reform, that is a huge piece of it, but that 

should not be the overriding factor to drive immigration reform. 

Thank you. 

Mr. ARCOS. Thank you. 

Mr. WELLER. Mr. McCaul. 

Mr. MCCAUL. Thank you, Mr. Chairman. I want to thank you for 

holding hearings on this particular issue and that is economics. I 

think that when we look at the root cause of illegal immigration 

into this country—I happen to come from a border state—I think 

it boils down to jobs and the economy. We do not have this same 

phenomena with Canada. 

When I was down at the United States/Mexico interparliamentary, we talked about this very issue. Their congress actually 

passed a resolution recognizing that they have a problem and they 

are exporting their people. They do not necessarily want to do that, 

and they called for greater cooperation between our two countries, 

which I think is essential, particularly when it comes to law enforcement, Ambassador. 

But one thing I asked them at the conference was the economic 

policies, because I view a lack of incentive for businesses to invest 

not only in Mexico but in South America and Central America 

largely due to the tax policies, the regulatory policies, the level of 

corruption, and the educational system that I do not think helps 

either. 

My short question, which probably will merit a longer answer, is: 

How do you view the elections in Mexico bearing in on this, number one? And what can we do in the Congress to help foster or lift 

up the economies south of the border so we can get to the root 

cause of the problem? 

Ms. WHITAKER. I guess that is my question. 

Mr. MCCAUL. I guess it would be. And if I have time, Mr. Chairman, I have a question for the Ambassador if that is okay. 

Ms. WHITAKER. At this stage, we, like all of you, await the decision of the Mexican electoral tribunal in making a final determination of who has won the Mexican elections. What we found heartening was listening to the campaign discussion of immigration, 

which really without exception from all of the three major candidates focused on the things that Mexico had to do to keep its talent at home and to create opportunities for the Mexican people. 

The other part of this, of course, was an acknowledgement that 

any country, the United States, Mexico, or any country has the 

right to protect its borders and keep its people secure. Mexico, with 

a 700-mile border to the south, which, as you know, sir, is pretty 

remote and porous, I think is well aware of the fact that they have 

many of the same concerns that we do with regard to border security. 

Given that, I think we are quite optimistic that whoever is finally declared through the decision of the electoral tribunal—and 

we indeed believe that we will see free and fair results coming out 

of the tribunal—that whoever is the new President of Mexico will 

indeed embrace the rhetoric which all three espoused during the 

campaign. 
26

I think that points us to a future of Mexican leadership working 

with the Mexican Congress to continue making some of the difficult 

decisions on economic reform, energy reform, labor reform, which 

complement some of the international programs that exist, such as 

our P4P program and some of the AID programs which are trying 

to address the pockets of Mexican society where perhaps the benefits of free trade have not yet arrived and create opportunities for 

the Mexicans who do not yet have them. 

Mr. MCCAUL. Why the disparity in wealth in Mexico? 

Ms. WHITAKER. I think it is the unequal distribution of opportunities. They talk often about the rising tide of NAFTA lifting all 

boats. I think it is not lifting all of those boats equally, and that 

is why we have been working with international financial institutions and with our Mexican counterparts and also with the private 

sector on both sides of the border in P4P to try to create some complements to free trade to address some of the areas that again are 

not yet lifted up by the benefits of free trade. 

Mr. MCCAUL. Do you think there is any openness to changing 

their tax structure, particularly when it comes to foreign investment? 

Ms. WHITAKER. I think it is something that certainly any new 

government will look at. It would be irresponsible of me to try to 

predict it at this time, but certainly economic growth and reform 

is an ongoing discussion we are having with our Mexican counterparts. 

Mr. MCCAUL. We will continue to press that in the Congress. 

Ambassador, we met with the Ambassador from Mexico who put 

together a group of deputy attorneys general for organized crime, 

the secretary of foreign affairs, and they gave us a briefing on the 

cooperation with respect to law enforcement. I do believe it is improving, but I wanted to get your thoughts on that. Also if I could 

ask the question, I agree with you the majority are coming here to 

work, but it only takes one mistake to be fatal, and that is the 1 

percent we are most concerned with. 

Can you comment on the level of cooperation both in terms of 

military, police, and intelligence, and then secondly, comment on 

the numbers of OTMs and special interest aliens crossing into this 

country? We talk a lot about OTMs, but really the special interest 

aliens are really the core of what should be the focus in terms of 

who is getting in. Is that number rising or going down as we ramp 

up our enforcement measures? 

Mr. ARCOS. Thank you, sir. Thank you, Mr. Congressman. Let 

me begin by talking a little bit about when I came on board Homeland Security well over 3 years ago with Tom Ridge, and one of the 

things that we discussed in terms of our southern border and our 

northern border in terms of comparison is, how do you measure the 

success at the end of a period of time? And I think that after 3 

years, there has been enormous success in terms of dealing with 

Mexico. 

We still have a long way to go I think in terms of the institutionalization of the relationship with the law enforcement community. We have a very established relationship with the Canadian 

counterpart institutions in Canada with their counterparts in the 

United States. We would hope at the end of the day when we have 
27

metrics to measure the success with Mexico that we have institutionalized those relationships that are not based just on personality 

and the given crisis of the moment but that they be truly institutional. 

And during the Fox administration for the last 6 years, we have 

seen tremendous strides in terms of institutionalizing these relationships, particularly with our border patrol, our customs people, 

and our immigration people, and I think there is plenty of data I 

can get to you in terms to quantify the specifics of that and how 

it has improved. 

In terms of the OTM, other than Mexicans, clearly that was a 

concern 3 years ago. The number is not as alarming as it was 3 

years ago for one simple reason. We worked very closely with the 

State Department to unify a North American visa policy, and we 

worked with both Canada and Mexico in terms of dealing with a 

visa policy that is more uniform and suits our interests in terms 

of addressing the concerns that we see in terms of threats, particularly in the case of Brazilians. 

We saw that up until about a year ago we were catching thousands of Brazilians a year, and now that number has been drastically reduced, and I can get those numbers to you, but drastically 

reduced in terms of getting the Mexican Government to do away 

with visa waiver for the Brazilians, because we were also finding 

a lot of South Africans and a lot of other ones that had used fraudulent documents to get to South Africa and then get to Brazil and 

then come on up in through Mexico. So that has been stemmed 

considerably, and I can get those numbers for you, sir. 

Mr. MCCAUL. Special interest aliens? 

Mr. ARCOS. I am sorry? 

Mr. MCCAUL. In terms of special interest aliens? What about the 

numbers on those? 

Mr. ARCOS. I could get you those numbers as well. 

Mr. MCCAUL. Okay. Has there been an increase or decrease? 

Mr. ARCOS. A decrease. 

Mr. MCCAUL. Okay. Thank you, Mr. Chairman. 

Mr. BURTON [presiding]. Thank you. Let me just ask a few questions that I hope have not been asked yet. I have been out of the 

room for a little bit, and I apologize for that. There are a lot of false 

or counterfeit passports that are being manufactured in Mexico. Is 

the Mexican Government doing anything about these illegal or 

fraudulent passports being manufactured to give to people to cross 

the border? We are not only concerned about it because of the illegal immigration, we are concerned about it from the standpoint of 

terrorists. We have been told that there is an industry, if you will, 

that produces these passports, and we do not want a bunch of terrorists getting in on passports that are fraudulent. 

Mr. ARCOS. Mr. Chairman, if I may start that comment, and then 

perhaps Betsey may have another contribution to make on this 

issue. We have worked very closely with the Mexican Government 

as we are working worldwide in Homeland Security with different 

governments to make sure that we deal with fraudulent, lost, and 

stolen passports, because this presents an enormous threat to all 

of us in the community, not just the United States but our partners, our foreign partners. 
28

Clearly with the technology that is available today, it is easy to 

make fraudulent passports. With Mexico, we have not seen so 

much in terms of the violation of fraudulent passports. It is basically the illegal crossings but we do know that there have been 

counterfeit passports in South America and Latin America in general, and we are trying to address that with the negotiations we 

have in the ICAO, the International Civil Aviation Organization by 

trying to get biometrics. With good biometrics, we will be able to 

stem that. Machine readable passports and biometrics, that is a 

digital facial——

Mr. BURTON. Well, I am concerned about it primarily because of 

the terrorist threat, and I have been told that there is an industry 

down there where they are producing these passports. Have you 

had cooperation with the Mexican Government? 

Mr. ARCOS. I do not have personal knowledge of the quantity. I 

just know anecdotally that there have been counterfeited passports 

and documentation. 

Mr. BURTON. How do you catch them? 

Mr. ARCOS. Well, basically through our ports of entry. 

Mr. BURTON. I know, but how do you catch a person with a foreign passport or a fraudulent passport? Do you have any kind of 

a system or any technology? 

Mr. ARCOS. They have to be machine-readable or they have to 

have a visa, an American visa, U.S. visa in it which contains biometrics. I have not heard recently of American visas being counterfeited. So if it has an American visa, we are pretty sure that it is 

the person that is going to——

Mr. BURTON. They cannot counterfeit those? 

Mr. ARCOS. No. 

Mr. BURTON. The American visas? 

Mr. ARCOS. Not that I know of, sir. 

Mr. BURTON. Is there any way you could check to see if you have 

caught any like that? 

Mr. ARCOS. I can check to see that with the State Department 

perhaps. 

Mr. BURTON. I would like to find out. Also, is there any progress 

being made enhancing law enforcement cooperation among Mexico 

and Canada and the United States through maintenance of some 

kind of a database that would track suspected terrorists? 

Mr. ARCOS. We do share intelligence. We share information at 

the law enforcement and at the strategic level with both countries, 

and we work very closely on the Homeland Security with our counterparts in Canada and Mexico and the State Department through 

their diplomatic channels and the intelligence community through 

their channels. We are able to disseminate information and share 

information, as we do with advance passenger information systems 

on aircraft. 

The Canadians let us know who is coming in from other parts 

of the world into North America, and the Mexicans give us advance 

notice of who is flying into the United States from Mexico. We get 

lists and we run them through our databanks. CBP does. 

Mr. BURTON. So you do have the cooperation and you are reporting? 
29

Mr. ARCOS. We do. What we need to do is enlarge the databank, 

and that is why it is important to get as much biometrics as possible and documentation worldwide. 

Mr. BURTON. Let me go back to Ms. Whitaker real quickly. You 

were talking about a disparity in the growth of economic prosperity 

in Mexico. And you said that there is more money and more trade, 

but the money is not necessarily reaching the lower or middle 

classes, if there is a middle class down there. 

We have gone from a $1 billion trade surplus with Mexico prior to NAFTA to a $50-some billion trade deficit, a very large trade 

deficit. That money has got to be going someplace because they are 

benefitting to the tune of $51 billion a year from the United States 

since NAFTA was passed. Why is it that industry is not being able 

to provide more lucrative jobs and helping bring more prosperity if 

you will to the people in the lower income classes down there? 

Ms. WHITAKER. I think to some degree, again, all of the benefits 

of that trade have not reached every Mexican yet. 

Mr. BURTON. I know, but since we were so proud of NAFTA and 

there were a lot of us who did not like the NAFTA approach, why 

is it that the money is going down there, the jobs are supposedly 

going down there, we have opened the border for trade, free trade, 

and we have got a $51 billion change, and yet you still have this 

tremendous amount of poverty? Everybody is coming up here hell 

bent for leather. 

Ms. WHITAKER. I think it is really a question of it has been just 

12 years since NAFTA was signed—so we are talking——

Mr. BURTON. 12 years is a pretty long time. 

Ms. WHITAKER. Yes, sir, it is. I think the issue is indeed that on 

the Mexican side they still need a number of structural reforms, 

economic reforms to try to lubricate the economy so that additional 

investments can be made and businesses can be started up in a 

shorter period of time. 

Mr. BURTON. Okay. But how do you lubricate the system so to 

speak so that the jobs are getting to the people that need the income so that we can stop the massive flight and immigration in the 

Unites States? I mean, we are getting as many as a million or more 

people a year coming across that border illegally. 

Ms. WHITAKER. Right. 

Mr. BURTON. And we have a $51 billion change in trade. It seems 

to me something is amiss because we have not slowed down the 

amount of illegal aliens coming across the border, and yet we have 

put $51 billion more into their economy. It does not make any 

sense. 

Ms. WHITAKER. I think it is a question of making some of the 

very difficult decisions in terms of structural reforms, whether they 

are labor, economic, or——

Mr. BURTON. Well, where are we on structural reforms, and who 

is making them? Mexicans? Us? Or are we doing it in cooperation 

with one another? 

Ms. WHITAKER. Well, Mexico did make some structural reforms 

at the time NAFTA was brought into effect, as you know. There is 

still certainly more to be done, whether on the fiscal side, the energy side, the labor side, and while those are certainly sovereign 

decisions for Mexico to make——
30

Mr. BURTON. Well, I do not want to belabor this point, but are 

we pressing the Mexicans to make the structural reforms necessary 

so that the NAFTA benefits that they are getting are going to create more jobs in the middle classes or lower classes? 

Ms. WHITAKER. Yes, we are. 

Mr. BURTON. We are pushing them on that? 

Ms. WHITAKER. Yes. 

Mr. BURTON. Well, can I see some manifestation of that in some 

kind of documentation? Is there anything you can send us on that? 

Ms. WHITAKER. I will be glad to get that to you. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM MS. ELIZABETH A. WHITAKER TO QUESTION

ASKED DURING THE HEARING BY THE HONORABLE DAN BURTON

Both President Fox and President-Elect Calderon have committed to deeper structural reforms that will accelerate economic growth and ensure that its benefits are 

shared by all Mexicans. We are supporting Mexico’s commitment to reform in many 

ways. Most importantly, President Bush launched the Security and Prosperity Partnership (SPP) together with his Mexican and Canadian counterparts in 2005. A 

number of trilateral working groups have been set up to implement the SPP’s prosperity agenda of providing greater economic opportunity for all our citizens and enhancing the global competitive position of North America as a whole. In response 

to your request, I would like to submit for the record the 2006 Report to Leaders 

from Secretaries Rice, Chertoff, and Gutierrez and their Mexican and Canadian 

counterparts, together with the Prosperity Agenda annex. 

In addition to the SPP initiative, Presidents Bush and Fox inaugurated the bilateral ‘‘Partnership for Prosperity’’ (P4P) in 2001 with a focus on bringing foreign investment and development to those areas of NAFTA that benefited least from 

NAFTA. Under P4P, our governments signed an OPIC agreement, which has 

brought $800 million in new financing to projects in Mexico. Through P4P, the U.S. 

Embassy, the American Chamber of Commerce, the Mexican Business Chamber, 

and the Mexican government have established a ‘‘Quadripartite Competitiveness 

Committee’’ that makes recommendations to improve Mexico’s ‘‘Doing Business’’ environment. Furthermore, a range of U.S. officials, from Cabinet members and Ambassador Garza to our Assistant Secretary for Western Hemisphere Affairs Thomas 

A. Shannon and below, have consistently encouraged their Mexican counterparts’ efforts to continue down the reform path. Also via P4P, USAID has funded programs 

in Mexico to expand access to credit for small enterprises and farmers, encourage 

community-based conservation of energy and natural resources, conduct educational 

exchanges (known as the ‘‘Technology, Internships, Education and Scholarship’’ or 

TIES program) for poor and indigenous Mexicans working on development issues, 

and advance judicial reform. I would also like to submit for the record the USAIDMexico country profile which discusses these initiatives in greater detail.

Mr. BURTON. Okay. I have a request from the Vice Chairman for 

one more question, and I think she left. But if you have one more 

question, go ahead. 

Mr. WELLER. Actually, Mr. Chairman, I have two quick questions. 

Mr. BURTON. Okay. Stretch it. 

Mr. WELLER. Thank you, Mr. Chairman. Ambassador Arcos, I for 

one have raised concerns regarding the concept of selling economic 

citizenship where there are certain countries in our hemisphere 

which to this day for a fee you can go and say that you are going 

to invest in that particular country and then they will in return 

give you essentially documentation suggesting that you are a citizen of that particular nation, including passports even under an 

assumed name. The concerns are obvious. What is the status of 

your agency’s efforts to address this issue? 

Mr. ARCOS. Congressman, we are aware that this has happened 

in a very sizable business type of situation in the 1980s and 1990s. 
31

Increasingly that is not the case with the countries we are talking 

to in the region. We have manifested our concern about how citizenship—it is not so much the citizenship as passports that were 

being given to noncitizens of these countries in return for investment, and there was not much due diligence, and that has been a 

concern for years. Since I was even in the State Department, we 

were concerned about this back in the 1980s and the early 1990s. 

Because what has happened in the last 6 years in the world in 

terms of terrorism, countries have now begun to tighten up. I can 

get you the figures in terms of which countries are the ones that 

still do this. 

Mr. WELLER. It is my understanding there are two or three countries that are in the Caribbean that still to this day continue this 

practice. Is that the case? Is that true? 

Mr. ARCOS. My understanding, it is true, but I do not know the 

numbers or have any specifics on it. 

Mr. WELLER. So why would we accept a passport from one of 

those countries if they were? 

Mr. ARCOS. Well, first of all, if they have a passport, it does not 

mean that they get into the United States. They have got to go get 

a visa, and then there are different checks. They go through a 

whole process in obtaining a U.S. visa. So it is not because they 

have a passport of a certain country in the Caribbean that they are 

allowed to enter the United States. 

Mr. WELLER. Now is this a priority for your agency to seek an 

end of this practice? 

Mr. ARCOS. Certainly it is part of the concern that we get proper 

documentation, worldwide proper travel documentation. 

Mr. WELLER. Okay. Well, you know, Ambassador, I would very 

much welcome greater details on the status of your efforts——

Mr. ARCOS. Thank you. 

Mr. WELLER [continuing]. As well as the current status of who 

is continuing this practice, and also I would be interested in knowing who has taken advantage of it. It would be interesting to see 

who are these individuals from elsewhere that are coming to these 

particular countries and pursuing documentation that would suggest they were a citizen of that particular nation. 

Ambassador, one of the other questions I would like to ask you, 

it was once said to me that we do not station the Coast Guard outside of Baltimore or Washington in the Chesapeake Bay to stop 

drugs from coming into these cities, but we are concentrating our 

current immigration enforcement assets pretty much solely on our 

border. 

A lot of us believe that we need to do a better job of engaging 

the source nations, the source and transit nations, to develop a 

comprehensive strategy to discourage illegals from making that 

trek north. Can you tell us what is the status of our partnership 

on developing a comprehensive strategy and whether or not we are 

having any success? 

Mr. ARCOS. If I understand your question correctly, Mr. Congressman, you are asking a comprehensive strategy to deter smuggling, human smuggling? 

Mr. WELLER. Well, I am interested in knowing what are we doing 

in partnership with our friends in Mexico and Central America and 
32

elsewhere to develop programs which discourage their citizens from 

making the trek north to come to the United States as illegals? 

Mr. ARCOS. Well, from the Homeland Security point of view, we 

work directly with our counterparts, the law enforcement community, in terms of having public information programs to advise 

them of the dangers, first of all, if they are coming by sea or coming across deserts or dangerous terrain and the threats that are 

presented there. We work in terms of closely trying to monitor and 

cooperate with each other in terms of the information that we get. 

And we also have this OASISS program that we have now, as I 

mentioned in my prepared remarks, with Mexico in terms of addressing the traffickers and smugglers on both sides of the border. 

And we have gotten very good cooperation from the Mexican attorney general’s office in terms of addressing this issue. 

Mr. WELLER. Ambassador, can you share some initiatives? There 

is a famous comic book that many of us heard about about a year 

ago that suggests the Mexican Government was actually giving 

people tips on how to cross our border. Have you seen a change? 

Have there been other materials they have been distributing to actually discourage——

Mr. ARCOS. Well, the biggest change has been that there are virtually no reports of anybody having these comic books anymore, sir, 

which is encouraging in fact that anybody was putting these comic 

books out and putting people in danger and basically encouraging 

them to violate U.S. law. 

Mr. WELLER. Thank you, Ambassador. 

Mr. Chairman, you have been very generous. Thank you with the 

time. 

Mr. BURTON. Okay. How many questions was that? Was that 

two? 

Mr. WELLER. It was two. 

Mr. BURTON. It was two. Okay. Mr. Engel. 

Mr. ENGEL. Thank you, Mr. Chairman, and my apologies for not 

being here at the start of the hearing. I was on the House Floor 

managing two bills, and although I was told it would come up at 

least an hour or 2 before our hearing, it came up right as our hearing was starting. 

So I do apologize, and I am going to turn it over to Ms. Lee for 

a minute to ask a question, but I just want to say that I know my 

opening remarks have been submitted into the record. I am happy 

about that. And I want to talk a little bit about NAFTA and some 

of the other things, but I am going to yield to Ms. Lee, who has 

not completed her questions. 

Ms. LEE. Thank you very much. Let me just ask Ms. Whitaker 

about the correlation between CAFTA and NAFTA and illegal immigration in terms of the trends that you are seeing. Has there 

been a decrease in illegal immigration from Central America since 

CAFTA was passed, and has there also been a decrease in illegal 

immigration from Mexico since NAFTA’s implementation? 

Ms. WHITAKER. Congresswoman, I do not have those numbers 

offhand. I would be glad to check. NAFTA, of course, we have 12 

years of experience. CAFTA is a more recent phenomenon, but I 

am glad to see if I can get you some data. 
33

Ms. LEE. Thank you. Mr. Ambassador, would you happen to 

know just the general trends? I mean, you indicated earlier, Ms. 

Whitaker, I think that 40 percent of the jobs under NAFTA were 

higher wage jobs. 

Ms. WHITAKER. Higher paying, yes. 

Ms. LEE. So you have that information, but in terms of what has 

happened in terms of illegal immigration, do you have an idea? 

Mr. ARCOS. Well, we have figures in terms of what has happened 

in the last 10 years. Clearly we can get these figures to you, Congresswoman, in terms of NAFTA. In terms of CAFTA, it was just 

approved this year, and it has not been instrumentalized yet, so it 

is not really in full force, and there is still one country that has 

not approved it, Costa Rica. 

Ms. LEE. Okay. So you will give us the information on NAFTA? 

Mr. ARCOS. Well, ever since NAFTA came on. 

Ms. LEE. Yes. Okay. Thank you very much. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM THE BUREAU OF WESTERN HEMISPHERE AFFAIRS/OFFICE OF MEXICAN AFFAIRS (WHA/MEX), U.S. DEPARTMENT OF STATE, TO

QUESTION ASKED DURING THE HEARING BY THE HONORABLE BARBARA LEE

We note that during the hearing Ambassador Arcos replied to Congresswoman 

Lee that he could get her post-NAFTA immigration numbers, but then pointed out 

that CAFTA has not yet fully entered into force, thus making post-CAFTA immigration numbers impossible to obtain at this time. Congresswoman Lee took his point 

regarding CAFTA and confirmed that she would still like to get the post-NAFTA 

numbers, which Ambassador Arcos committed to do. As a result, WHA/MEX believes State does not need to provide an insert on this subject.

Ms. LEE. Thank you, Mr. Chairman. 

Mr. ENGEL. Yes. Thank you. Thank you, Ms. Lee. And I am glad 

you raised those issues because they are foremost in many of our 

minds as well as the balance of trade that the Chairman pointed 

out regarding NAFTA. You know, the bottom line is that if we can 

do something, and I know it is easier said than done, to create good 

paying jobs and creating a middle class in the rest of the hemisphere, they will not want to come here illegally because they will 

have opportunities in their own country. 

Everything we are talking about doing from a wall to everything 

else is really just a stop gap situation, and it is treating what is 

happening rather than the causes of what is happening. So, you 

know, we have had a frustration, many of us, that NAFTA has not 

had more of a positive effect on the average Mexican worker so 

that there is a greater incentive to pursue employment there rather 

than here. 

I know you have commented on it, but I just wanted to add my 

voice to the frustration that you have heard from both Ms. Lee and 

the Chairman, and I do not know if you have any further comments. I would be happy to hear them. 

Ms. WHITAKER. I hate to repeat myself. I do not know if you 

heard me, so stop me, please. I think we have seen some encouraging developments in Mexico’s political position. One is, of course, 

the published statement, bipartisan or multipartisan statement, 

nonpartisan statement on the part of the Mexican Government, all 

parties, in which they indicated their understanding of the importance of the immigration issue to any country, the right of any 
34

country to protect its borders, and also in terms of Mexico’s own 

responsibility to create opportunities so that its own talented people will not leave that country. 

We have a political position there. And I do not know if you 

heard me mention that in the most recent Presidential campaign, 

all of the candidates were not focused on many of the other issues 

related to immigration, but rather, all were one in saying that indeed Mexico’s responsibility is to create opportunities to keep its 

people employed and at home. 

Mr. ENGEL. Thank you. Ms. Whitaker, last time you were here 

I had mentioned—I am going to mention it again because I would 

like your comments—my chagrin at the President’s Fiscal Year 

2007 foreign operations request. His request proposes slashing 

overall core development spending in the region by 22 percent, 

which is over $40 million, from the last 2 fiscal years, which I 

think continues a shortsighted post-September 11 trend to redirect 

foreign assistance to other regions. 

Given the fact that 25 to 40 percent of the region’s population 

still toils in grinding poverty, how do we justify another consecutive year of drastic cuts in core development accounts in the Western Hemisphere? Given that such cuts certainly undermine U.S. 

immigration objectives by cutting efforts to promote economic jobs 

and economic growth elsewhere in the hemisphere, how can the 

Administration assert that immigration reform is a policy? 

Ms. WHITAKER. I remember the question from before, and it is 

good to hear it again. It is still a very important one. I think the 

best answer is that we respect the President’s budget proposal for 

the Department of State and foreign assistance, and that guidance, 

of course, is established by the President. 

Within that amount that is set, which is I know a very difficult 

decision to make, additional decisions are inherent therein as to 

how to divide up that pie. And while I will speak for myself only 

as someone who served her entire career in the Western Hemisphere, I have often thought we should be spending more. But I am 

also well aware of the fact that we have an entire world to assist. 

And all I can tell you is I know our leadership has been heard 

on this. I know the discussions are ongoing as we look into outyears. We continue to try to put forward the accomplishments that 

the money we have put into the region so far have made with the 

understanding that we do live within a particular ceiling and that 

the decisions as to how to apportion that pot are very, very difficult 

ones indeed. I am happy to take your comments back with me of 

course to my leadership as well. 

Mr. ENGEL. Well, I appreciate that. I am wondering if the Ambassador would care to comment. 

Mr. ARCOS. In terms of the resource issue, I do not have much 

comment to make on that, sir. We are 3 years old in terms of 

Homeland Security, and we have been up on the Hill many, many 

times in terms of dealing with resources. In terms of specifically 

the issue that you raised here, we do not deal with it in terms of 

Homeland Security. 

Mr. ENGEL. Okay. I just think it is just so evident and obvious. 

And I know resources are scarce all around, but I just think that 

if we are really serious about trying to stem illegal immigration to 
35

this country that the key is having job development in other countries. And if we are going to cut core assistance, that makes it 

harder for us to help create those jobs. Then I think we are becoming our own worst enemies, and I think that we really need to have 

another look at these cuts, and I just would hope that we can restore some of them. 

The Congress’ immigration debate has prompted, and I think regrettably, some harsh anti-immigration rhetoric by some who have 

little tolerance for immigrants or appreciation for their contribution. I think surely the present U.S. domestic immigration debate 

has a diplomatic spillover and I believe in a negative effect. 

So I am wondering if you can tell us how has our heightened 

U.S. immigration debate affected U.S. bilateral relations and public 

opinions of our country in the hemisphere, and to what extent has 

the United States immigration debate impacted Presidential campaigns in Mexico and elsewhere? 

Ms. WHITAKER. In this age of global interconnectivity and 24/7 

news cycle, the Mexicans, of course, are listening and watching the 

immigration debate here with great interest. While indeed there 

have been some statements which have been more critical than 

others in response to some of the harder edge statements on the 

part of different Americans, the Mexicans with whom we deal on 

an official basis have been quite clear that they understand this is 

an internal debate, that this is for the American people and its government, its representatives to decide. 

The government itself has done nothing to encourage any kind 

of protest on the part of Mexicans who are disaffected with the 

rhetoric they are hearing. What we have found encouraging is the 

number of nonpartisan statements from various parts of the Mexican Government which have indicated an understanding based on 

their own southern border and based on an understanding of the 

depth and breadth of our relationship, that this is a very complicated question and one for the Americans to decide. 

I do know also that the Mexican representatives here, the Ambassador and company, are quite active in speaking with you all 

and providing their perspectives and providing information on the 

kinds of things that they have done to try to stem the flow of illegal 

immigration. 

Mr. ENGEL. Well, I would add that immigration problems we 

have is not obviously just a Mexican issue. 

Ms. WHITAKER. Yes. 

Mr. ENGEL. It is more than that, and anything that impedes our 

ability to establish good bilateral relations with other countries 

worries me. 

I have a final question, and it is not all that much connected to 

immigration, but it is. And it is a concern that both the Chairman 

and I share, and we in fact had a meeting last week discussing it, 

and that is the international criminal court, Article 98. 

Ms. Whitaker, when you testified this spring about United 

States/Mexican relations, we discussed the negative impact of the 

international criminal court sanctions against countries that have 

not exempted U.S. citizens. And today 11 or so countries in the 

Western Hemisphere have not signed the bilateral immunity agree-
36

ment with the U.S., thereby triggering U.S. economic, political, and 

military sanctions. 

Do United States sanctions impede our ability to assist Mexican 

law enforcement efforts to stem immigration? And again, how do 

the sanctions impact our ability to support programs that address, 

and we talked about the root causes of immigration, such as poor 

governance, poverty and issues like that? 

Ms. WHITAKER. Indeed Mexico has made it clear that it will not 

sign an Article 98, and I do not know that we have a final determination on what funding will be in terms of Economic Support 

Funds. 

According to United States legislation, the Foreign Operations, 

Export Financing, and Related Programs appropriations acts for 

2005 and 2006, the Nethercutt Amendment, Economic Support 

Funds can no longer be provided to Mexico. Those funds indeed 

were used to support the reform of the criminal justice system in 

six Mexican states and to help implement anti-corruption, government transparency, and competitiveness measures at the state 

level. 

As I said, my understanding is that we do not have a final determination as to how this will be implemented. I understand this is 

being discussed at the highest levels at this particular time, but it 

is certainly on our screen, and if indeed ESF is suspended, it will 

cut off many of the sources of funds that we were using to support 

law enforcement, criminal justice reform, and a number of the anticorruption measures that we discussed earlier. 

Mr. ENGEL. Let me just conclude by saying that in terms of the 

Article 98, Secretary Rice has said that in essence, we are cutting 

off our nose to spite our face, and I would agree with that statement. And I believe that Congress inevitably may have to step in 

to change the policy if we cannot get it changed any other way. So 

I thank both of you, and I thank the Chairman. 

Ms. WHITAKER. Thank you. 

Mr. BURTON. Well, I have a number of questions I would like to 

submit to both of you for the record, but before you go, Ms. 

Whitaker, I cannot understand. It has been 12 years since we 

passed NAFTA. I would like to just go through this one more time 

in my mind, and you can make a final comment if you would like. 

We have gone from a $1 billion trade surplus to over $50 billion 

in trade deficit, and I believe you are going to find and we are 

going to find when you send us the figures that we are probably 

still getting well over a million people we estimate coming across 

that border. 

I do not think there has been an appreciable change, and if there 

has been a change, it is probably on the negative side. And so we 

are putting all that money in the industry down there. The 

Maquiladora Program we came up with was designed on the border 

to create industry on the Mexican side so people would stay there 

and work. So we put a Maquiladora Program in. 

Now we put NAFTA in. We have got a $51 billion trade at least, 

maybe $53 billion, trade deficit that has been created, which is a 

pretty large one, not the largest in the world, but it is pretty big, 

and they are still coming across the border in droves. And you are 
37

telling me that the money is not really getting down to the people 

in poverty down there. It is staying up near the top. 

It seems like there ought to be some way that our Government 

in concert with the Mexican Government can say hey, look, if we 

are encouraging industry to go down there and we have got a free 

trade agreement that is really helping, and because of your lower 

wage structure over there, people should be able to get jobs, you 

guys have to do something to make sure that the money is filtering 

down to the people that really need the jobs and they are getting 

the jobs so they do not come to the United States. 

I mean, I just do not get it. And the deficit continues to go up, 

and the immigration continues to remain constant or go up, and 

Maquiladora did not help much. NAFTA did not help, not much. 

What are we going to do? Throw the kitchen sink down there next 

and still have the problem? I mean, you guys that are the experts 

need to come up with some kind of an answer for us, because I do 

not know if anybody in Congress is looking at this as closely as I 

am, but I just do not understand it. 

Ms. WHITAKER. I agree with you absolutely, sir. I mean, more 

needs to be done. 

Mr. BURTON. I know. I know you agree. You said that before, but 

that is not cutting it. I mean, I really would like to know what are 

we going to do about it? We are putting the money and the industry and everything else down there and they are still coming, and 

we need to find out why. 

Ms. WHITAKER. I would, as I said, come back to the point that 

while indeed Mexico I think—and I am not an economist, so let me, 

you know, just warn you there. I am happy to try to get you a better economic explanation of all of this, but my understanding is 

that while Mexico did make some structural reforms at the time it 

acceded to NAFTA, there is still lots more to be done. 

There is still lots more to be done in terms of the investment climate, in terms of making Mexico as competitive as other countries. 

There are still areas of structural reform, labor reform, fiscal reform that need to be taken on, and as you know, those are very 

difficult questions. Am I saying that it should have taken 12 years? 

Mr. BURTON. Well, are there ongoing negotiations with the Mexican Government and their industry, their commerce people, down 

there to discuss this problem? 

Ms. WHITAKER. Absolutely. Absolutely. We again are coming presenting issues, presenting the situation, and again, I think the 

Mexicans are quite well aware of this. They have, as you know, a 

very sophisticated business community that is aware of the various 

points of competition from many different nations around the 

world, in particular China, and trying to determine what they need 

to do to make themselves more agile to create more opportunities. 

They do have a terrific labor source there. The question is, how do 

they create the opportunities to do that? And we need to continue 

to press that. 

Mr. BURTON. Well, if NAFTA and other mechanisms are not 

working, they are going to end up with a labor force that is all up 

here before too long, and then they are not going to have to worry 

about Mexico. 
38

Ms. WHITAKER. No, I hear you. And I think that is why we also 

have things like P4P and we have international financial institutions trying while we are still waiting for a number of those reforms to be made to try to fill in some of the gap. 

Mr. BURTON. Okay. Well, we will submit a number of questions 

for the record. We appreciate you and Ambassador Arcos for being 

here. 

Mr. ARCOS. Thank you, sir. 

Mr. BURTON. And we will see you again before too long. Thank 

you very much for being here. 

Our next panel—where is our next panel? Okay. You have to forgive me. I have to fight my way through all this. Our next panel 

consists of—where is my next panel? Okay. The Honorable Robert 

Charles, President of the Charles Group. He has served as Assistant Secretary of State for International Narcotics and Law Enforcement, the INL, under Secretaries Colin Powell and Condoleezza 

Rice from 2003 to 2005, and he has served as Staff Director and 

Chief Counsel for the National Security International Affairs and 

Criminal Justice Subcommittee and as a chief staffperson on the 

Speaker’s Task Force on a Drug-Free America. It is nice to see you 

again. 

Eric Farnsworth is Vice President of the Council of the Americas 

with over 170 corporate members. The Council has promoted a policy in commercial interests in the Western Hemisphere for over 40 

years, and he has testified before the Subcommittee before, and we 

welcome him back. 

And Manuel Orozco is a Senior Associate at the Inter-American 

Dialogue specializing in remittances and rural development. He is 

Chair of the Central American and Caribbean at the U.S. Foreign 

Service Institute and a senior researcher at the Institute for the 

Study of International Migration at Georgetown University. Would 

you please rise so I can swear you in like we usually do? 

[Witnesses sworn.] 

Mr. BURTON. Okay. Let us see. We will start with Mr. Charles. 

What happened to your arm? 

TESTIMONY OF THE HONORABLE ROBERT CHARLES, 

PRESIDENT, THE CHARLES GROUP, LLC 

Mr. CHARLES. Shoulder operation, sir. 

Mr. BURTON. Rotator cuff? 

Mr. CHARLES. I could tell you it is the result of my opinions, but 

I will hold off. 

Mr. BURTON. But is it rotator cuff? 

Mr. CHARLES. It is rotator cuff and a tendon sewn back. 

Mr. BURTON. Yes. I have had two of those on each side, so you 

will be all right. It is just a matter of going through the rehabilitation. 

Mr. CHARLES. Yes. Thank you. 

Mr. BURTON. Keep plugging. Do not let it freeze on you. 

Mr. CHARLES. Right. Thank you. Mr. Chairman and Members of 

this distinguished Subcommittee and Committee, thank you for inviting me to testify today. Please know that sitting before you on 

a topic as vital as this one, immigration, is a distinct privilege. I 
39

want to just make four quick observations, and then I will be very 

eager to hear questions. 

First, we live in a land of laws, as John Adams and some of the 

founding fathers were quick to put into writing and to say, not of 

men, but of laws. When we choose to depart from fidelity to these 

laws, we lose something more important than votes. We lose the integrity of the law. 

As inconvenient as it is to enforce the law when there are those 

who violate it with impunity, our own experience in this country 

and the experience of democracies worldwide reinforce the importance of abiding by the rule of law. 

If we choose to water down cornerstone norms and enduring established practices long viewed as fair because it is convenient to 

do so, we lose the very thing we are seeking. We lose the content 

of citizenship, of being an American. 

So, on the homefront, we cannot diminish the process of legal immigration and naturalization without diminishing the sacrifice of 

those who over some 20 generations have hoped, struggled, and assimilated and worked for their citizenship. If we fail to secure our 

borders or fail to hold high the standards of American citizenship, 

we diminish the meaning of citizenship and the sacrifice of those 

Americans who have defended this country over generations. 

Second, the rule of law is not a principle that applies to Americans alone. No democracy can sustain the will of its people, the 

protection of lives, liberty, or property without a serious commitment to the rule of law. 

John Locke in his Second Treatise made clear that a democracy’s 

social contract involves first securing the nation. When security has 

been established and there is an expectation that laws will be honored and enforced, people begin to mix their labor with the land, 

his words, or in modern terms, they invest themselves with confidence in the future of their country. 

In short, establishing the rule of law in a representative democracy and maintaining fidelity to it are the foundation stones on 

which greater economic prosperity and political liberty are built. 

Full stop. 

Nations which have struggled with violence but which have 

leaped the pit to land on the side of representative government like 

Panama and El Salvador, Poland, the Czech and Slovak Republics, 

former East Germany, Romania, Russia and of course the CIS 

states, all have found that consistently protecting the individual 

leads to greater investment by that individual in his or her society. 

Nor do all good and democratic things come in the packaging of 

a democratic revolution. Allies in this hemisphere, in Europe, Africa, the Middle East, and Far East have often by degrees evolved 

toward greater reinforcement of democratic institutions. Required 

has been a strong political will internally in that country and at 

times stronger U.S. support, which leads to the third observation. 

Our allies, rich and poor, admiring and envious, dependent and 

independent, near and far, sources of legal and illegal immigration, 

all of them have within their own borders the same inherent potential for self-determination, greater economic prosperity, widening 

circles of political contentment, and a future built on pride in their 

own sovereign status, flag, and fellow citizens as much as we do. 
40

Too often recently what has been missing is the leadership necessary to keep people from fleeing their own home countries, the 

leadership necessary to unify and secure, solidify and build, attract 

and maintain the allegiance of people to the country in which they 

were born. In short, the problem of so-called brain drain from these 

countries must be addressed at least in part by the home country. 

Far easier it has been to allow them to bleed north or south, east 

or west into another country’s thriving economy, to send remittances back, a poor second best to self-sufficiency, pride in one’s 

own economy, or holding onto one’s citizens by the appeal of a prospering state. 

When a nation encourages illegal immigration, they encourage 

the leaching of their own body politic. They lose their best and 

brightest, the ones with the entrepreneurial spirit, the work ethic, 

the commitment, courage, intelligence, and ambition to succeed. 

Those who dare to succeed elsewhere by definition have chosen 

not to dare to succeed at home. The loss is all to the country that 

has not invested itself in retaining, attracting, inspiring, and affirming their future on its own soil. 

So what is needed? A mutual commitment from our allies to invest and commit, encourage and appeal to the best in their own 

people, to get them to stay and build stronger states, economies, 

and political systems at home rather than giving that talent and 

energy to another nation. 

Finally, because all nations are not equal, even if all people are 

equal in the eyes of their creator, Americans do have an obligation 

to help those who labor to help themselves. Here we can get more 

concrete. 

At the State Department’s nearly $2 billion Bureau of International Narcotics and Law Enforcement, we often underwrote institution building, capacity creation, the writing of laws, the implementation of those same laws, the creation of well trained law enforcement forces, prosecutors, judges, and even defense counsel. 

We worked to reinforce the best efforts of nations that struggled 

to tamp out public corruption, kidnapping, homicide, drug trafficking, and terrorism on their own soil. We began programs that 

seeded democratic values such as the Culture of Lawfulness, which 

has taught tens of thousands of kids worldwide in places like Colombia and elsewhere in this hemisphere the respect for law. 

We taught human rights and restraint, proportionality and nonlethal riot control even as we also taught counterterrorism and the 

ways in which the rule of law must be retrieved when it has begun 

to slip away. We believed in and we still believe in our allies, in 

their peoples, in the men, women, and children who want to have 

a better, safer, and more prosperous life. 

Most of all, we encourage those who work to restore the ballast 

of their own economies and political systems, securing individual 

rights, trying to establish those conditions, as John Locke said, 

which permit a safe and secure democracy to thrive. 

We do that today, but what is now needed more than ever is a 

collateral commitment, a mutual commitment, a rejoined commitment by many of our closest allies to reflect on what it will take 

to keep their own best and brightest from leaving. 
41

When we round that corner, we will be on the home stretch. 

When we round that corner, this hemisphere and those outside this 

hemisphere will have recalibrated themselves to truly and 

sustainably succeed. Thank you. 

[The prepared statement of Mr. Charles follows:]

PREPARED STATEMENT OF THE HONORABLE ROBERT CHARLES, PRESIDENT, THE

CHARLES GROUP, LLC 

Mr. Chairman and Members of this distinguished subcommittee and committee, 

thank you for inviting me to give testimony today. Please know that sitting before 

you on a topic as vital to our national security as immigration is a distinct privilege. 

While there is much to say, I will limit my remarks to four short observations this 

afternoon. Within that four-cornered frame, details can be debated. Without that 

frame, it seems to me that meaningful debate is lost, or at least left aimlessly wandering. 

First, we live in a land of laws. Not of men, but of laws. When we choose to depart 

from fidelity to these laws, we lose something more important than votes. We lose 

the integrity of the law. As inconvenient as it is to enforce the law when there are 

those who violate it with impunity, our own experience in this country, and the experience of democracies worldwide, reinforce the importance of abiding by the rule 

of law. If we choose to water down cornerstone norms and enduring, established 

practices, long viewed as fair, because it is convenient to do so, we lose the very 

thing we are seeking. We lose the content of citizenship, of being an American. So, 

on the home front, we cannot diminish the process of legal immigration and naturalization, without diminishing the sacrifice of those who—over some 20 generations—have hoped, dreamed, loved, aspired, struggled, learned, assimilated and 

worked for their citizenship. If we fail to secure our borders or fail to hold high the 

standards of American citizenship, we diminish the meaning of citizenship, and the 

sacrifice of those Americans who have defended this country over generations. 

Second, the rule of law is not a principle that applies to Americans alone. No democracy can sustain the will of its people, the protection of lives, liberty and property, without a serious commitment to the rule of law. John Locke, in his Second 

Treatise, made clear that a democracy’s social contract involves first securing the 

nation. When security has been established and there is the expectation that laws 

will be accepted, honored and enforced, people begin to mix their labor with the 

land—or in modern terms—invest themselves with confidence, in the future of their 

country . . . They begin to believe that all they work for is not in vain, that property can be fairly earned, protected and passed to their children. 

In short, establishing the rule of law in a representative democracy and maintaining fidelity to it are the foundation stones on which greater economic prosperity and 

political liberty are built. Nations which have struggled with violence, but which 

have leaped the pit to land on the side of representative government—nations like 

Panama and El Salvador, Poland, the Czech and Slovak Republics, former East Germany, Romania, and of course Russia and the CIS states, all have found that consistently protecting the individual leads to a greater investment by the individual 

in his or her society, and in time to greater economic growth and political freedom. 

Nor do all good and democratic things come in the packaging of a revolution. Allies in this hemisphere, in Europe, Africa, the Middle and Far East have, often by 

degrees, evolved toward greater reinforcement of democratic institutions, generally 

designed to protect the individual from an oppressive government, with the salutary 

effect that they have seen both growing economies and widening circles of political 

contentment. So, in short, the promise of fighting for, establishing, and maintaining 

the integrity of self-government and rule of law is not confined to any one nation, 

but is available to all. 

Which leads to the third observation. Our allies—rich and poor, admiring and envious, large and small, dependent and independent, near and far, young and ancient, approving and disapproving, populous and spare of people, sources of legal 

and illegal immigration, those always at the ready or reluctant to stand by us—all 

of them . . . have within their own borders the same inherent potential for self determination, greater economic prosperity, widening circles of political contentment 

and a future built on pride in their own sovereign status, flag and fellow citizens—

as we do. 

Moreover, whatever the economic conditions at any given time, there is always 

room for improvement of those conditions—providing the rule of law exists and can 

be maintained—by the collective dedication of a people to their own future. Aside 

from natural disasters and the scourge of war, both of which challenge the very ex-
42

istence of an economy and a nation, there is always the great potential of a unified 

commitment to the nation and its future. 

Too often, recently, what has been missing is the leadership necessary to keep 

people from fleeing their home countries—the leadership necessary to unify and secure, solidify and build, grow, inspire, attract and maintain the allegiance of people 

to the country in which they were born. In short, the problem of the so-called brain 

drain from these countries must be addressed at least in part by the home country. 

Far easier it has been to allow them to bleed north or south, east or west, into another country’s thriving economy, and to send remittances back—a poor second best 

to self-sufficiency, to pride in one’s own economy, or to holding onto one’s citizens 

by the appeal of a prospering state. When a nation encourages illegal emigration, 

they encourage the leaching of their own body politic; they lose their best and 

brightest, the ones with the entrepreneurial spirit, work ethic, commitment, courage, intelligence and ambition to succeed. Those who dare to succeed elsewhere, by 

definition have chosen not to dare to succeed at home. The loss is all to the country 

that has not invested itself in retaining, attracting, inspiring and affirming the future on its own soil. So, what is needed? A mutual commitment from our allies to 

invest and commit, encourage and appeal to the best in their own people—to get 

them to stay and build stronger states, economies and political systems at home, 

rather than giving that talent and energy to another nation. 

And then, the last side of the frame. Because all nations are not equal, even if 

all people are equal in the eyes of their Creator, Americans do have an obligation 

to help those who labor to help themselves. Here we can get more concrete. At the 

State Department’s nearly two billion dollar Bureau of International Narcotics and 

Law Enforcement, we often underwrote institution building, capacity creation, the 

writing of laws, the implementation of laws, the creation of well trained law enforcement forces, prosecutors, judges, even defense counsel. We worked to reinforce the 

best efforts of nations that struggled to tamp out public corruption, kidnapping, 

homicide, drug trafficking and terrorism on their own soil. 

We began programs that seeded democratic values, such as the Culture of Lawfulness taught to tens of thousands of kids worldwide, in places like Colombia and elsewhere in the hemisphere. We taught human rights and restraint, proportionality 

and non-lethal riot control, even as we also taught counter-terrorism and the ways 

in which the rule of law must be retrieved when it has begun to slip away. 

We believed in—and we still believe in—our allies, in their peoples, in the men, 

women and children who want to have a better, safer and more prosperous life. 

Most of all, we encouraged those who worked to restore the ballast to their own 

economies and political systems, securing individual rights, trying to establish those 

conditions—as John Locke said—which permit a safe and secure democracy to 

thrive. 

We do that today, but what is now needed—more than ever—is a collateral commitment, a mutual commitment, a rejoined commitment—by many of our closest allies to reflect on what it will take to keep their own best and brightest from leaving. 

When we round that corner, we will be on the homestretch. When we round that 

corner, this hemisphere and those outside this hemisphere will have recalibrated 

themselves to truly and sustainably succeed. 

Thank you.

Mr. BURTON. Thank you, Mr. Charles. Mr. Farnsworth. 

TESTIMONY OF MR. ERIC FARNSWORTH, VICE PRESIDENT, 

COUNCIL OF THE AMERICAS 

Mr. FARNSWORTH. Mr. Chairman, thank you for the opportunity 

to be with you today and the Members of the Subcommittee. It is 

a privilege to be here before you again, and I thank you for your 

kind words of introduction. 

Let me go right to the heart of the matter if I might. Migration 

we believe is not an issue that can be resolved per se. It is only 

an issue that can be managed in an orderly, safe, and humane 

manner, and the reason for that is elegant in its simplicity. The 

perceived economic benefits of migrating from Latin America or the 

Caribbean to the United States and increasingly Canada outweigh 

the perceived security and economic risks in addition to the emotional cost of separation from family and community. 
43

It is fairly well established in fact that all other things being 

equal, many migrants would prefer to remain with their families 

in their countries of birth where language, customs, and social patterns are well known and comfortable. 

It is a matter of the economic desperation that some people feel 

in their home countries and the lack of economic opportunity at 

home and the economic opportunities they perceive in el Norte that 

they will actively seek legal or, if necessary, illegal means into this 

country. 

It is also well established, Mr. Chairman, that migrants do not 

necessarily have to be unemployed or without any job prospects at 

home in order to attempt to travel to the United States or increasingly Canada or for that matter from Bolivia to Brazil and Argentina or Nicaragua to Costa Rica or Guatemala to Mexico. 

Rather, with the exception of political persecution, which is 

thankfully no longer a significant issue in Latin America outside 

of Cuba, it is the prospect for economic advancement that potential 

migrants perceive for themselves and for their children that weigh 

heaviest in the minds of intending migrants. Most of the recent migrant community in the United States, for example, is concentrated 

in low skill, low wage industries, agriculture and meat packing, 

landscaping, hospitality, construction, and other jobs which tend to 

be harder to fill at prevailing wages. 

On its face, this situation might indeed appear paradoxical. Why 

would anyone, the thinking goes, leave home and hearth if they already had a job in order to travel north to take work that might 

be seasonal, episodic, or lacking in job security or may even be subject to law enforcement actions? The answer appears to be that this 

allows workers the opportunity to send significant support back 

home in the form of remittances until such time as family members 

can join the original migrant in the United States. 

Once families are reunited in the United States, children of migrants then have the opportunity to improve themselves through 

education and training unavailable to them in their home countries—and I want to come back to that in the question and answer 

period if I can—that will allow them to pursue even greater economic opportunity than their parents. 

In fact, the Inter-American Development Bank has done some excellent work on remittances and has found that these cash flows 

make up a significant portion of national accounts in Latin America and the Caribbean. And I give statistics in my testimony submitted for the record, so I will not go into it here, but it is significant. 

Ultimately migrants want what we want, the opportunity to 

make a better life for themselves and even more so the opportunity 

for the children to move up the economic ladder, which due to social, labor, or political rigidities they may not have at home. 

The key question then is how to encourage opportunities for upward mobility in Latin America and Caribbean nations themselves. 

In reality, there are numerous actions that governments can take 

with the understanding that there are no magic bullets and there 

are not any short-term solutions. 

Rather, there is only a long-term commitment to economic 

growth, competitiveness in the global environment, and actions to 
44

reform labor codes, political access, and the rule of law which will 

improve labor market flexibility, encourage workers to enter and 

remain in the formal economy, and keep any nation’s most valuable 

commodity, its people, at home. 

For its part, the United States has only limited means to address 

these matters at their source. Fundamentally reforms must be 

made in the nations themselves. Regional development is the most 

effective means to reduce and manage migrant flows to the United 

States, not to eliminate them, which I believe would be impossible 

and frankly unwise. But trade policy is one of the most effective 

means to be able to do that, and we had the discussion in the earlier panel about direct assistance and ESF as well, and I think that 

is also an important element. 

But regional development is crying out for a more focused attention to several priority areas that go well beyond trade liberalization, which is a necessary though not sufficient by itself element 

to engender the long-term sustainable growth that will create those 

jobs required to keep citizens at home. 

In fact, in one particularly chilling statistic that you all have 

probably already seen, the World Bank recently reported that between 1980 and 2000, Latin America grew in total less than 1 percent. China over the same period of time, 1980 to 2000, grew 8 percent per year, and that is the challenge that Latin America as a 

whole faces. Clearly the region as a whole must do better. 

Latin American and Caribbean nations, as elsewhere, find themselves fighting to excel in a global economy. Foreign and domestic 

investment that might normally have flowed into the region, one 

of the most important ingredients of long-term economic growth, 

now has other options, especially in Asia and eastern Europe. 

Those nations which do not take direct steps to improve their respective investment climates will fall increasingly behind. 

As a start, greater attention must be paid to formal education, 

which now averages a mere 6 years across the region, worker training and workforce development, personal security and security of 

property, the rule of law, and social inclusion, which strengthens 

democracy. These are basic investment climate issues. 

I would like to give in the question and answer period perhaps 

some examples of some countries that are trying to do the right 

thing and some examples of some countries where there might be 

room for progress. 

Finally, Mr. Chairman, let me make one final point if I might. 

Beyond investment climate reforms, Latin American and Caribbean 

nations would do well to take direct steps to liberalize their labor 

markets in order to create greater incentives for job creation while 

bringing greater numbers of their people within the framework of 

a formal economy where they would enjoy greater social protections, job security, and not coincidentally be more fully vested in 

the success of democratic governance at home. 

We have tried to do a lot of work in terms of labor reforms across 

the region, and there are some interesting facts and figures that 

are coming out of that, and it really is an area that requires a lot 

of further investigation. By bringing workers more actively into the 

formal economy, that is going to create some of these protections 
45

for the labor market which will have the incentive as well of keeping some workers at home. 

Mr. Chairman and Members of the Subcommittee, as you know 

and as we have discussed already, migration issues are complicated, difficult, and longstanding. They cannot be addressed 

overnight because the solutions are long-term, and in the meantime, migration pressures will likely continue, but that is no reason 

not to work in conjunction with our hemispheric neighbors, who, to 

be sure, recognize their joint responsibilities in these matters, to 

find ways to address the underlying economic calculus facing numerous individuals across the Western Hemisphere. 

For our part, we can and should be supportive through trade expansion and other means even as the sending nations more aggressively take steps to improve their respective investment climates, 

focus significant attention on education reform and social mobility 

and liberalized labor codes. So, Mr. Chairman, thank you again for 

the opportunity. I look forward to your questions. 

[The prepared statement of Mr. Farnsworth follows:]

PREPARED STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, COUNCIL OF THE

AMERICAS

Good afternoon Mr. Chairman and members of the Subcommittee. It is a privilege 

to be with you to discuss a topic of long-standing and growing significance in hemispheric relations. As you know, the Council of the Americas (‘‘Council’’) is a leading 

policy voice in Latin America, the Caribbean, and Canada. Our members include 

over 175 companies invested and doing business every day in the Western Hemisphere. For over 40 years, the mandate of the Council has been to promote open 

markets, democracy, and the rule of law throughout the Americas. Thank you for 

the invitation to speak before you today. 

Patterns of Migration are Well Established 

As you have heard from the government witnesses earlier, migration is not an 

issue that can be ‘‘resolved,’’ per se; it can only be managed in an orderly, safe, and 

humane manner. The reason is elegant in its simplicity: the perceived economic benefits of migrating from Latin America or the Caribbean to the United States and, 

increasingly, Canada, outweigh the perceived security and economic risks, in addition to the emotional cost of separation from family and community. It is fairly well 

established, in fact, that all other things being equal, many migrants would prefer 

to remain with their families in their countries of birth, where language, customs, 

and social patterns are well known and comfortable. It is a matter of the economic 

desperation that some people feel in their home countries, and the economic opportunities they perceive in ‘‘el Norte,’’ that they will actively seek legal or, if necessary, illegal means into this country. 

It is also well established that migrants do not necessarily have to be unemployed 

or without any job prospects at home in order to attempt travel to the United States 

or Canada (or, for that matter, from Bolivia to Brazil and Argentina, or Nicaragua 

to Costa Rica, or Guatemala to Mexico). Rather, with the exception of political persecution which is thankfully no longer a significant issue in Latin America outside 

Cuba, it is the prospect for economic advancement that potential migrants perceive 

for themselves and for their children that weigh heaviest in the minds of intending 

migrants. Most of the recent migrant community in the United States, for example, 

is concentrated in low skill, low wage industries: agriculture and meatpacking, landscaping, hospitality, construction, and other jobs which tend to be harder to fill at 

prevailing wages. 

On its face, this situation might appear paradoxical. Why would anyone, the 

thinking goes, leave home and hearth if they already had a job in order to travel 

north to take work that might be seasonal, episodic, and lacking in job security or 

may even be subject to law enforcement actions? The answer appears to be that this 

allows workers the opportunity to send significant support back home in the form 

of remittances, until such time as family members can join the original migrant in 

the United States. Once families are reunited in the United States, children of migrants then have the opportunity to improve themselves through education and 
46

training unavailable to them in their home countries that will allow them to pursue 

even greater economic opportunity than their parents. 

The Inter-American Development Bank has done excellent work on remittances, 

and has found that these cash flows make up a significant portion of national accounts in Latin America and the Caribbean. In 2005, it is estimated that total remittances to Latin America and the Caribbean reached nearly $54 billion, including 

over $20 billion to Mexico, over $6 billion to Brazil, over $4 billion to Colombia, over 

$2 billion each to Guatemala, El Salvador, the Dominican Republic, Peru and Ecuador, and almost $2 billion to Honduras and over three quarters of a billion dollars 

to Nicaragua. These figures are staggering in magnitude, when one considers that 

the total level of Mexico’s exports in 2005, for example, was $217 billion, while El 

Salvador’s was $3.6 billion, Honduras’ was $1.7 billion, and Nicaragua’s exports are 

barely $1.5 billion per year. It also explains why the Temporary Protected Status 

program for El Salvador, Honduras, and Nicaragua, which covers over 300,000 people, is seen as such a lifeline, and why its continued renewal is always such a priority for affected Central American governments. 

Ultimately, migrants want what we would want: the opportunity to make a better 

life for themselves, and even more so, the opportunity for their children to move up 

the economic ladder which, due to social, labor, or political rigidities, they may not 

have at home. 

Regional Development is the Key to Better Management of Migration Flows 

The key question is how to encourage opportunities for upward mobility in Latin 

American and Caribbean nations themselves. In reality, there are numerous actions 

that governments can take, with the understanding that there are no magic bullets, 

nor are there short-term solutions. Rather, there is only a long-term commitment 

to economic growth, competitiveness in a global environment, and actions to reform 

labor codes, political access, and the rule of law which will improve labor market 

flexibility, encourage workers to enter and remain in the formal economy, and keep 

any nation’s most valuable commodity-its people-at home. 

For its part, the United States has only limited means to address these matters 

at their source; fundamentally, reforms must be made in the nations themselves. 

Regional development is the most effective means to reduce and manage migrant 

flows to the United States (not eliminate them, which would both be impossible and 

unwise), and trade policy is the most effective means we have to impact regional 

development. As the Council’s North American Business Committee showed based 

on US government statistics, for example, NAFTA has had a moderating impact on 

the flows of illegal migrants from Mexico. We would anticipate the same to occur 

with the DR-CAFTA agreement with Central America once that agreement is fully 

in force. 

This linkage, in addition to US counternarcotics policy, has also been at the heart 

of trade preference programs in the Andean region. Specifically, the Andean Trade 

Preferences Act and its successor ATPDEA program for Colombia, Peru, Ecuador, 

and Bolivia were originally designed to help narco-source nations to develop jobs in 

legitimate sectors to wean workers away from the coca and marijuana fields. This 

program is set to expire at the end of this year unless re-authorized by Congress 

in the context of an overall hemispheric trade expansion strategy as a bridge to free 

trade agreements in the Andean region. 

Development and job creation is also at the heart of the Security and Prosperity 

Partnership for North America that was launched by the three North American governments in Waco, Texas, in 2005 and solidified in Cancun last March. The purpose 

of the SPP, which the Council fully supports, is to identify and promote specific 

areas where actions by the three governments can make each nation more competitive globally, thus improving development prospects individually and collectively. 

This is particularly pertinent for the southern half of Mexico, which is the most underdeveloped region in North America and which, not coincidentally, also voted most 

heavily in Mexico’s recent presidential election for populist candidate Andres 

Manuel Lopez Obrador. As President Vicente Fox said during the Cancun meeting, 

the Government of Mexico recognizes that it shares responsibility for security along 

the border as an element of the overall migration picture, but the economic development of Mexico’s southern half will be the most effective element, over time, in moderating the flow of migrants north from Mexico. 

Regional Development Goes Beyond Trade 

More broadly, regional development is crying out for a more focused attention to 

several priority areas that go well beyond trade liberalization, which is necessary 

though not sufficient by itself to engender the long-term, sustainable growth that 

will create those jobs required to keep citizens at home. In fact, in one particularly 
47

chilling statistic, the World Bank recently reported that Latin America as a whole 

grew less than one percent from 1980-2000; over the same time period, China grew 

over eight percent per year. Clearly, the region as a whole must do better. 

Latin American and Caribbean nations, as elsewhere, find themselves fighting to 

excel in a global economy. Foreign and domestic investment that might normally 

have flowed into the region, one of the most important ingredients of long-term economic growth, now has other options, especially in Asia and Eastern Europe. Those 

nations which do not take direct steps to improve their respective investment climates will fall increasingly behind. As a start, greater attention must be paid to 

formal education, which now averages a mere six years across the region, worker 

training and workforce development, personal security and security of property, the 

rule of law, and social inclusion which strengthens democracy and social stability. 

In this regard, countries like Bolivia that have recently taken steps to nationalize 

foreign investment or nations like Ecuador where some investments are subject to 

a fluid interpretation of the law will find that the international business community 

will look elsewhere, as indeed is already happening, to make those direct investments that drive job creation and improved economic performance. Countries like 

Chile, Colombia, the Dominican Republic, and Uruguay which take global competitiveness seriously will continue to reap the benefits of strong investment flows. Ultimately, of course, investment-led development in the region is the key to developing 

broad-based economic growth, and such growth is the sine qua nonof moderating regional migration flows. 

Beyond investment climate reforms, Latin American and Caribbean nations would 

do well to take direct steps to liberalize their labor markets in order to create greater incentives for job creation, while bringing greater numbers of their people within 

the framework of the formal economy where they would enjoy greater social protections, job security, and, not coincidentally, be more fully vested in the success of 

democratic governance at home. 

My colleague at the Council, Dr. Christopher Sabatini, who just testified before 

the International Relations Committee on the state of democracy in the region, has 

been doing some outstanding work on labor reforms in Latin America and what it 

will take to broaden the economic base. This is critical as Latin America and the 

Caribbean face a demographic time bomb in terms of significant numbers of youth 

coming of age. Over one third of the population is under the age of 16. In a few 

short years, this will be the population cohort which tends to be most likely to migrate when good jobs in the formal economy simply do not exist. Conversely, were 

Latin American job markets liberalized, perhaps in exchange for greater social protections for workers, jobs would be created by the private sector which currently 

faces perverse incentives in hiring and firing. As a result, additional workers would 

be drawn into the formal economy, thus decreasing incentives for migration. 

Mr. Chairman, members of the Subcommittee, migration issues are complicated, 

difficult, and long-standing. They cannot be addressed overnight, because the solutions are long term, and in the meantime, migration pressures will likely continue. 

But that’s no reason not to work in conjunction with our hemispheric neighbors, 

who, do be sure, recognize their joint responsibilities in these matters, to find ways 

to address the underlying economic calculus facing numerous individuals across the 

Western Hemisphere. For our part, we can and should be supportive, through trade 

expansion and other means, even as the ‘‘sending’’ nations more aggressively take 

steps to improve their respective investment climates, focus significant attention on 

education reform and social mobility, and liberalize labor codes. 

Mr. Chairman, thank you again for the opportunity to be with you today. I look 

forward to your questions.

Mr. BURTON. Thank you, Mr. Farnsworth. I will have some questions about your statement in just a minute. 

Mr. Orozco. I will get that right before we are through. 

TESTIMONY OF MANUEL OROZCO, PH.D., SENIOR ASSOCIATE, 

REMITTANCES AND RURAL DEVELOPMENT PROGRAM, 

INTER-AMERICAN DIALOGUE 

Mr. OROZCO. That is okay. My boss still calls me Miguel. My 

name is Manuel. Thank you very much for inviting me to come to 

speak to you. 

Mr. BURTON. As long as your wife does not do it, that will be 

fine. 
48

Mr. OROZCO. I will not give you the name of my boss of course. 

Thank you for inviting me to speak to you. I am very encouraged 

that you want to address the question of how the United States can 

encourage and assist Latin American countries to address the problem of poverty. What I am going to do is point to three policy recommendations that I think may shed some light as to how we move 

forward. And before doing that, I think I want to point to three 

issues that were highlighted by Mr. Farnsworth. 

One is the challenge of economic growth in these countries, in 

Latin America and the Caribbean, are far more greater than we 

think they are, and in fact, there is a chance that there might be 

possible economic recession coming up in the next 5 years. But in 

practical terms, the very low economic growth rate that these countries are achieving, which is about 3 percent, do not meet the necessary growth that it should have, the region, which should be in 

practical terms about 10 percent for 10 consecutive years. 

The second issue is that the cost of living in practical terms does 

translate to the fact that the cost of living of people living in Latin 

America is three times greater the average wages that people earn. 

The average wage a person makes in most of these countries is less 

than $200 a month; yet the cost of living is about $500 or more a 

month in order to survive. And in fact, when you look at the volume of remittances in terms of the average amount sent by an immigrant, they almost mirror the equivalent to the cost of living in 

these countries. 

For example, take Haiti. The average amount of money that an 

immigrant sends to Haiti is about $200, and that is more or less 

the cost of living in Haiti. The same thing with Mexico. Three hundred and seventy dollars a month are sent by immigrants in the 

United States, and that mirrors more or less the cost of living in 

these countries. 

The problem is that even though the impact of remittances, for 

example, and other economic activities of migrants are quite important, the reality is that these are not the solutions for development, 

but at the same time, we have the reality of migration and remittances. 

So I think three policy approaches that we can look into is first 

of all, at the level of leveraging the already existing economic activities that migrants are having with their home countries and increasing access to financial institutions to increase the savings 

ratio of the household as well as the country. 

The experiences that we have had implementing policy in those 

fields have been very successful. Basically there has been a transformation rate of a person who does not have an account to a person who have a 30 percent among those people who withdraw their 

money at the financial institution. 

Another area of importance is education. We need to increase the 

standards of education by providing education services to remittance recipient households, and that can be attached to education 

loans, education funds, tutoring classes, et cetera. 

Second, I think the work that the developing agencies, USAID as 

well as Inter-American Foundation and other international financial institutions have done, has been very important, and I think 
49

the urgency to work even more in this region is quite critical and 

imperative. 

One of the areas of work that USAID has done is providing financial services to small and medium enterprises. They are the 

critical linchpin of building a middle class, but unfortunately, in 

most of Latin America, anyone who has to invest and needs to have 

a loan that goes between 20 to $100,000 is unable to get that. You 

can have access to micro loans or you can have access to the 

wealthy loans. That explains why, for example, a few people in 

Mexico have not been able to enjoy the benefits of NAFTA. 

Another area is continued deepening strategies of diversifying exports. The Caribbean-based initiative in Central America has been 

very successful, was very successful in diversifying exports, but 

still, in most of Central America and the Caribbean, 70 percent of 

exports to the United States are based on less than 20 commodities. 

So the challenges are still remaining there, and that means we 

need to pay attention to strengthening free trade not just simply 

by reducing tariffs but also by providing technical assistance to improve the competitive capacity. If you do not improve the competitive capacity, it does not matter how much trade you open because 

these countries are not going to be able to sell their goods at high 

quality product. 

And, finally, there is the issue of education. Education matters. 

Most of Latin America has a sixth grade education when in practical terms, in order to compete in the global economy, you need to 

have a 12th grade education. And in the event that a guest worker 

program is addressed, I think a program such as that needs to be 

attached to conditionality, to conditions that those countries participating in it need to perform better economically and need to 

also invest in a return migration program for those who are returning after the program has been implemented. 

And thus policies can be dealing again in issues relating to investment as well as with increase in savings ratios to those who 

receive remittances. Thank you very much. 

[The prepared statement of Mr. Orozco follows:]
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Mr. BURTON. Let me start the questioning with you, Dr. Orozco. 

It was interesting where you said that the ability of people, entrepreneurs, in the very low class can get some loans, and the ones 

who have the more affluent businesses can get loans, but the people in the middle cannot. Can you elaborate on that a little bit? 

It seems to me that may be a big part of the problem or the crux 

of the problem, because there are probably people down there that 

would like to start businesses but do not have the wherewithal to 

do it. If we could figure out a way that they can benefit from the 

trade surpluses that Mexico now enjoys, maybe we can start dealing with the immigration problem. 

Mr. OROZCO. I think one of the problems is that most of the 

banking industry in Latin America has focused predominantly on 

large exporters, so they have reduced their investment portfolios 

and the loan portfolios for the small and medium enterprises. 

There is almost like a glass ceiling, and sometimes there is a practical ceiling for the small businesses to prosper. 

Mr. BURTON. Well, how can we change that? 

Mr. OROZCO. Well, I think we need to go back to conditionality. 

We need to condition for economic assistance, free trade, guest 

worker programs, to provide access to the middle class or to the potential middle class. For example, one of the areas that we can pay 

attention to is implementing or motivating the countries in Latin 

America to implement the equivalent of our Community Reinvestment Act. It does not exist. 

For example, 15 percent of the revenue of Salvadoran banks in 

El Salvador comes from the remittance transfers that the poor people here, 40 percent of them who are undocumented, are sending. 

They live here in precarious conditions. The banks are becoming 

very wealthy. What percentage of that is invested in those communities? Zero. And I think we need to put as far as our cooperation 

strategies——

Mr. BURTON. Are there any things that our Government in concert with the government of these countries like El Salvador or 

Mexico could do to encourage the banking and investment industries to make sure that the money that is going back there is in 

part loaned out to the potential entrepreneurs in the middle class? 

Mr. OROZCO. Yes. I mean, there are three ways. One is what 

USAID did, for example, in Jamaica. They invested in credit unions 

and microfinance institutions there to reduce cash transactions and 

instead promote card-based transactions so that you could increase 

your access to savings, and that was very successful. Jamaica is 

the only country in the world where 25 percent of the remittance 

recipient population withdraws the money with a debit card. That 

is very important. So that is one area, forwarding assistance, paying attention to financial access. 

The second is that conditionality works. If you condition further 

cooperation to reforms that deal with this type of financial democracy, you can get quite far. And the third area is sharing the lessons that we have here in the United States about how we have 

been able to be successful to provide economic citizenship to minorities, and that can be done in those countries, too. 

There is not reluctance of governments not to do it. Sometimes 

they do not know how to do it, and sometimes the private sector 
75

is very powerful. But the reality is that the private sector wants 

NAFTA, wants CAFTA, and wants free trade. So if you condition 

those reforms, more cooperation to those reforms, I think you can 

go quite far. 

Mr. BURTON. Could you provide maybe an outline of your suggestions to the Committee? I would like to see that. I do not know if 

we could do anything legislatively to encourage that, but we can 

sure look at that avenue as a potential. 

Do you gentlemen have any comments that you would like to 

make in regard to that? Mr. Farnsworth? 

Mr. FARNSWORTH. Just a couple things to focus on if I could. I 

fully agree that access to capital remains one of the limiting factors 

in terms of development in the region. I think that is absolutely the 

case. You know, access to capital or the building of capital can take 

several forms, and one is the domestic stock of capital and another 

is direct foreign investment. 

And I think the two are not obviously the same, but they are related, and ultimately the growth profile of the country in question, 

whatever country that may be, is going to be directly linked to the 

stock of capital over time in that country. I mean, that is just a 

basic economic equation. And so the key question is how do you 

build a stock of capital in those countries. 

One of the ways to do that—and we have been talking a little 

bit about, you know, harnessing the remittances into Latin America over this past year, 2005. We have had almost $54 billion of remittances go into Latin America and the Caribbean as a whole. 

About $20 billion of that has gone to Mexico itself. Brazil was next 

with over $6 billion. I mean, that is real money. 

I think there is a question of how can government harness what 

is essentially private sector or personal transactions. I mean, people sending money to their own family is really what you are doing, 

to your brother, sister, mother, what have you. So there is a question there, but I think working through USAID programs, working 

through the MCC, Millennium Challenge, which we have talked 

about, frankly working with the Inter-American Development Bank 

to create if you will incentives in the local banking industries to 

provide loans based on money that may be coming in through remittances. 

I mean, it is basically subsidized lending. You can then begin to 

push some of that resources out into the local communities. I think 

that——

Mr. BURTON. But that is not taking place at the present time. 

Mr. FARNSWORTH. No, not in any systematic way. 

Mr. BURTON. Along with Mr. Orozco—see, I got that right that 

time—along with Mr. Orozco, if you could give us a suggestion on 

how we could encourage that from the Congress. 

Mr. FARNSWORTH. Sure. Absolutely. 

Mr. BURTON. I would like to see it. 

Mr. FARNSWORTH. I would be happy to. 

Mr. BURTON. I would like to see that personally. 

Mr. Charles. 

Mr. CHARLES. The only thing I would add to that is that I do not 

think there is a grain of disagreement here at the table. I think 

conditionality is something that works. As you know, the United 
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States Congress tries many times to condition things when an 

international accord is underway. 

We have direct and indirect ways of conditioning the banking 

system. We have certainly regulated far more directly our own 

banking system than we have tried to regulate some of these foreign banking systems, but you have the World Bank, the IMF, the 

IFC, lots of international instruments through which you could 

simply say that support by the United States Congress for various 

initiatives is going to be conditioned upon breaking down certain 

clear barriers of entry such that a percentage of investing will be 

done at a level which allows or encourages entrepreneurship by the 

middle class. 

Mr. BURTON. So we could contact these various worldwide financial institutions that do have a tremendous amount of influence 

over these various countries and their lending institutions and 

maybe by jawboning get them to put pressure on them to loosen 

up so that the funds would be more available. 

Mr. BURTON. I think you could. 

Mr. BURTON. Yes. Mr. Engel. 

Mr. ENGEL. Thank you, Mr. Chairman. Dr. Orozco, I do not have 

trouble with your name, you see, because I root for the New York 

Mets in baseball, and the last time they won the World Series was 

in 1986, and the best relief pitcher was Jesse Orozco. So I never 

have trouble with your name. 

Mr. BURTON. The New York? What was that again? 

Mr. ENGEL. See, that is the difference between coming from New 

York and coming from Indiana. You see, we can mention, we can 

pronounce those names, but the Chairman did a good job actually. 

Could you explain, Dr. Orozco, what is the relationship between 

remittances and microfinance? Can remittances be used as steady 

income for the purposes of qualifying for loans or mortgages or 

property? 

Mr. OROZCO. The relationship is twofold. First, what we are 

doing, for example, we had a big substantive fund with Inter-American Development Bank and International Fund for Agricultural 

Development where you provide $200,000 in technical assistance to 

enable microfinance institutions to be payers of remittances. That 

is, instead of going to a supermarket to pick up your money, you 

pick the money at a microfinance institution. 

And the funding goes to design financial products to those remittance recipient households. Those products are marketed in a way 

that are attractive to the recipient of money. So you offer them savings accounts, health insurance, life insurance, body repatriation—

we all die at some point—and that becomes an interesting approach. 

So, by providing those financial services, microfinance institutions are able to attract this volume of money, and then they can 

mobilize the savings that are kept as well as the cash flow that 

comes through the remittances for lending to the local community. 

So everybody benefits, not only the remittance recipient but also 

the local entrepreneur that needs to borrow money, and that is basically the relationship that we are looking at. 

We have microfinance institutions, for example, that use the history of receiving remittances as a source of income or sometimes 
77

as credit history, and so that is used then to provide a loan. Either 

it is a loan for productive activities or for consumption. 

Mr. ENGEL. Mr. Farnsworth, I saw you were nodding your head 

when I asked that question, so do you have any comments on that? 

Mr. FARNSWORTH. Mr. Engel, nothing to add. I think he summarized it pretty well. 

Mr. ENGEL. If someone wants to buy a home and they have this 

money, but they have it because of remittances, right now it is very 

difficult, if not impossible, to get them to qualify for a loan or anything else, am I correct? 

Mr. OROZCO. Yes. And that is one of the areas that we are working on. There has been an increase in mortgage lending as a result 

of financial intermediation through remittances. 

Mr. ENGEL. Dr. Orozco, do you believe that illegal immigrants 

should have access to U.S. banking services? I think I know your 

answer, but how can the informal remittance flows which exist 

largely on a cash transfer basis be regularized through account-toaccount transfers, and what specific banking sector reforms would 

you recommend that you have not already mentioned? 

Mr. OROZCO. Well, I think yes, my answer is that anyone should 

have access to a financial institution. It is actually a good security 

measure because you can track the identity of the individual that 

has the financial resources stored in a bank, but more importantly 

is that it has an effect in the local economy in the U.S. and in the 

home country. 

The Federal Reserve Bank of Atlanta’s program, Dinero a` Mexico, that is, it is a network of United States banks connected to 

banks in Mexico, has been very successful. You can open an account and send money back home, but at the same time, you have 

access to loans and different kinds of opportunities. The reality is 

that anyone who improves their economic citizenship eventually 

will have more value added to our U.S. economy than anyone who 

is in the margin of the economy. 

Mr. ENGEL. Dollar for dollar, which has a greater impact, funds 

from the migration remittance sector or U.S. foreign aid and development programs from your observations? Do they achieve similar 

objectives, or do they complement each other? 

Mr. OROZCO. Let me put it this way. Remittances can keep you 

out of poverty, but they cannot get you out of it. To get you out 

of poverty, you need to have a systematic strategy of development, 

and if you assume that the remittance issue is a strategy of development, you are failing as a state. So, in my view, I mean, I work 

on remittances, and I think we need to focus more on policy 

leveraging, but the reality is that you have to go back to the constraints of developing in these countries. So foreign aid is more important to a large extent. 

Mr. ENGEL. Thank you. The Inter-American Development Bank 

has done work on remittances’ ability to, and I quote them, ‘‘promote financial democracy.’’ Could you elaborate on what they 

mean? 

Mr. OROZCO. Yes. Right now in most of Latin America, 20 percent or 2 out of 10 people have access to financial institutions. That 

is what we call effective financial disenfranchisement. That pre-
78

cludes you from, for example, having access to a loan but also having the opportunity to build savings systematically. 

So what we have been advocating is using the transfer of money 

as a way to provide greater access to financial institutions to remittance recipients. Somewhere between 10 to 20 percent of people in 

Latin America are receiving remittances in that area. So we speak 

of financial democracy in a way that you provide this access to savings, to loans, and to expand to the local economies. 

Mr. ENGEL. Thank you. Mr. Farnsworth, you refer to efforts by 

the Council for the Americas to address the issue of labor reform 

in Latin America. Could you please elaborate on how labor reform 

might broaden the economic base and address Latin American 

youth unemployment? 

Mr. FARNSWORTH. I would be happy to, and if I could just beg 

your indulgence to make two very quick points on remittances. 

Number one, to go back to your question about can you use remittances to leverage other that lending for regular payments, for example, mortgages, it is very, very interesting what the statistics 

tell you, that remittances on average are sent back 10 to 14 times 

per year, in other words, on average, about once a month, give or 

take, and they average between $240 to $250 per payment. It is a 

regular payment to the extent that the loan is given on those 

terms, something very creative and interesting to have a look at. 

The second thing is in terms of the viability of these as a development strategy, I would agree that if remittances is a development strategy, it is certainly incomplete. But the size of the remittance flows is much larger than the foreign aid that the United 

States is sending to Latin America. Again, $20 billion last year to 

Mexico alone. We do not give $20 billion to Mexico in terms of official assistance, so it is something to keep in mind. 

To your question very briefly and thank you for the opportunity, 

labor market reform is probably one of the most pressing issues we 

believe facing Latin America as a whole, and the reason why is because right now for the private sector to create jobs, which we believe is the sine qua non of keeping workers at home, in other 

words, reducing migration pressures to create jobs, labor markets 

have to be made more flexible to bring workers into the formal 

economy. 

On average, 50 percent of nonagricultural workers across Latin 

America are in the informal economy. That is astounding. That 

means people who are outside of the official statistics, they do not 

have the labor protections, they do not have access to Social Security, they are essentially outside of the protections of the state. 

That is unacceptable. Even Chile, which has the best record there, 

has over 40 percent of nonag sector in the informal sector. That has 

got to change. 

The way to do it we believe and we have been doing some work 

on this, much more work has to be done, but is to reduce the disincentives for the private sector to create jobs by, for example, allowing the ability to reduce the workforce for cause. 

So, for example, in many countries in Latin America, if a worker 

is to be fired, even if the worker is incompetent, the law states that 

the company has to pay sometimes multiples of the person’s salary 
79

over a period of many years to be able to essentially buy out their 

labor contract. That could be even if the worker is incompetent. 

Well, if you know you are going to have to do that by hiring an 

incompetent worker, the alternative is simply not to hire the worker, and so the worker has one of two choices. He or she can work 

in the informal economy, which is to say provide the labor in a way 

that is not a formal job maybe on a consulting contract or something like this, or to try to be self-employed, and you see that all 

over Latin America. 

This is going to become particularly acute in the next few years 

because right now there is a huge demographic bubble facing Latin 

America where the percentage of workers that will be entering into 

the labor force in the next couple years is going to far exceed the 

ability of the economies to actually create jobs even with growth 

projected as ECLAC, the Economic Institute for Latin America, 

came out on Tuesday with projections for 2007 that Latin America 

would grow at 41⁄2 percent, which is fairly robust. But the fact of 

the matter is even with sustained growth rates that high, the countries will not be able to soak up this demographic bubble that is 

rising to the surface. 

So labor markets have to be made more flexible so that jobs can 

be created. It is not a magic bullet. It is not a panacea, but it is 

one thing that needs to be addressed. 

Mr. ENGEL. Thank you. I have no further questions, but I wanted 

to give Mr. Charles an opportunity if there is anything he wanted 

to comment on, what the other two gentlemen have said. 

Mr. CHARLES. Not that they have said but just to add and I appreciate the opportunity to do so. I would just point out that we 

have focused a lot of this discussion today on the remittances, and 

they are an important component. The foreign aid is of course 

leveraging things that you seek. You target that money at something, whether you are building courthouses or training prosecutors 

or training law enforcement. So it is much more significant. It is 

like a fulcrum under the board rather than just sprinkling it across 

the board. 

The second thing is I think we omit to our peril two huge sources 

of revenue or problems in this hemisphere. The first is drug money. 

The Chairman has said $51–53 billion in remittances back to Mexico. The rough estimates on the drug economy the market the 

United States represents is $600 billion. That money flows back to 

many of the countries here, and it is something you cannot look 

away from. You must stare down the barrel of that problem and 

keep at it, which incidentally I think the United States Congress 

has effectively, perhaps very effectively done in the last 5 years. 

The second thing is public corruption, which is very closely tied 

to that drug money, and you cannot look away from those two 

issues. That is why the law and the rule of law are so fundamental 

to future investment. 

There is a critical distinction which seems to me forever lost in 

the media and sometimes on the Floor and certainly outside between illegal immigration and legal immigration, and I just want 

to make the point that you can be heartily in favor of strong, progressive, encouraging immigration on a legal basis and dead set 

against permitting further illegal immigration, something we have 
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all talked about and thought about, but I find they are blurred 

again and again and again to no good. 

And the last point is an issue Ms. Lee raised, which is the linkages between illegal immigration—and I want it to be clear it is 

illegal immigration—and terrorism. I do not want to get into classified things here, but let me say for more than a year and a half, 

I read the CIB every morning, and there are very clear ties. It is 

absolutely indisputable that there are situations arising in this 

hemisphere that put the United States of America at peril as a result of weaknesses in our bilateral and multilateral relationships 

on the security front. 

And what I am saying there very specifically is you have passport fraud in the extreme in places like Bogota where they took 

down 17 operations with 34 individuals, some of whom were actually processing, so they reported al-Qaeda-related linkages to the 

al-Qaeda organization. You have situations in which we have 

picked up weapons, caches that have nothing to do with human immigration in California off Calexico, things like man pads. Drug 

traffickers do not use man pads. Shoulder-fired missiles are not 

used by drug traffickers. So there is something else going on there. 

On the Texas border, you have things being picked up that seem 

very directly tied to radical Islam, things like lots and lots of prayer robes and Korans. They do not tie to the traditional hemispheric 

patterns of both materiel and people, and I think the point I make 

there is we have to be aware of the interconnectivity. 

Going to your point about a 22 percent cut in the budget in this 

hemisphere, it seems to me we have to see that these issues are 

tied together. Drugs and public corruption, the fact that illegal immigration is tied to terrorism and ultimately also even if it is only 

1 percent, yes, a 1 percent chance of a suitcase nuclear device going 

off in an American city is big enough for me to be concerned. I just 

leave you with that, that I think there is a wider circle of interest 

and concern that circles the remittances. 

Mr. ENGEL. I thank you. I thank you, Mr. Chairman. 

Mr. BURTON. Let me thank you all for being here. We will have 

some questions we would like to submit for the record. I really 

would like to have your outline on how to solve the problem of 

lending money to small businesses and the middle class down 

there. If you could get that to me, we will see if we cannot either 

write a letter to the world financial institutions and/or try something legislatively that will do that job. 

Thank you very much for being here. We stand adjourned. 

[Whereupon, at 4:28 p.m., the Subcommittee was adjourned.] 
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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE ELIOT L. ENGEL, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW YORK

Mr. Chairman, as we’re all aware, today’s hearing is part of a series of Republican-called summer hearings to spotlight the issue of immigration, an important 

and serious topic. 

Immigration affects not only Americans, but just about everyone worldwide. As 

you recognize, the challenge of immigration is a global phenomenon that is connected with international events and the opportunities and freedoms (or lack thereof) that exist elsewhere. 

As a global issue, we all have a story to tell. Each story is different; and, yet, the 

patterns and lessons are remarkably similar. 

Mr. Chairman, my family came here from Europe to seek the freedom and promise of the United States. Similarly, most immigrants to this country come for a better life. Lacking freedom and/or opportunity in their home countries, immigrants are 

driven by a desire to improve conditions for themselves and their families. 

For instance, I represent sizeable Irish and Irish American populations who came 

here in large numbers when jobs at home were unavailable. As Ireland’s conditions 

have improved, immigration flows to the United States have slowed or even reversed. Today, Ireland is not a source country. Rather, in a remarkably short timeperiod, Ireland has become a destination for immigrants fleeing other troubled 

lands. 

But, while large-scale Irish immigration to the United States and elsewhere has 

now ended, new immigrant communities are forming, as people flee poor conditions 

elsewhere. For example, I also proudly represent a large Haitian community that 

has emigrated from Haiti because of its history of political and social unrest and 

severe poverty. As in the case of the Irish, once Haiti becomes stable, frees itself 

of violence, grows its economy, and creates jobs, Haitians will no longer risk their 

lives to come to the United States. 

Until we recognize the interconnection between immigration, global freedom and 

economic opportunity, we will never solve the problem of illegal immigration. But, 

in today’s highly-polarized, political environment, our immigration debate glosses 

over the basic facts. 

At a recent Senate hearing, the Mayor of New York City, Michael Bloomberg, said 

it well: ‘‘It’s as if we expect border control agents to do what a century of communism could not: defeat the natural market forces of supply and demand and defeat the natural human desire for freedom and opportunity. You might as well sit 

on your beach chair and tell the tide not to come in.’’

So, I agree with you Mr. Chairman: Illegal immigration is NOT just an American 

problem. That is why this can be a useful hearing. When thinking about the issue, 

it is both important and refreshing to look outside our borders on the root causes 

of immigration to the U.S., such as poverty, lack of economic opportunities, low 

wages, political instability and unrest, and other causes. Unless we address these 

root causes, the problem of illegal immigration will remain. 

Similarly, source, transit and recipient nations of our hemisphere all have a dog 

in this fight and they too are responsible for curbing illegal immigration. As they 

work to address their own internal problems, particularly through economic expansion and job creation, illegal immigration will diminish. 

The lessons are so simple they’ve somehow been overlooked. For example, the primary driver of migration from Mexico to the United States is the significant wage 

gap between our two countries. Thus, lowering the wage gap will help stem the 

problem. 
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Of course, there is much more to be said about the international aspects of immigration, as it’s a complex relationship. For example, immigration, legal and illegal, 

often benefit source countries by easing pressure on social service systems and labor 

markets. Remittances—money sent home by immigrants in the United States—can 

help in reducing poverty, especially in low-income households and communities. In 

fact, at $50 billion per year, remittances from immigrants in the U.S. to countries 

in the Western Hemisphere represent substantial portions of our neighbors’ GDPs. 

These are the exact kinds of immigration issues I look forward to hearing about. 

Mr. Chairman, I would also like to hear our witnesses address what the U.S. and 

the international community can do to promote more sound economic circumstances 

in the nations to our south. What types of aid programs can help? What has been 

the result of free trade agreements? Can micro lending fill the gap? What else can 

be done? 

Mr. Chairman, immigration is, indeed, a global phenomenon, and illegal immigration stemming from the Americas is a problem that requires a broader perspective 

than the current immigration debate has previously allowed. 

Ultimately, a wall on the border is a mere band-aid. It will not stop the flow of 

illegal immigrants to our country. Only by changing circumstances inside of source 

countries will immigration begin to slow. So, I suggest that for an International Relations Subcommittee, this is the proper focus. And, there is no more important or 

relevant Sub-committee to explore the regional implications of immigration than 

ours. 

I thank you, Mr. Chairman, for your leadership in framing the immigration issue 

as you have, and for calling this important hearing. I look forward to today’s testimony.

Æ