-16-

Thus, Panama and the United States both have a vital
stake in the treaty arrangements governing the canal.

History, geography and the political imperatives of our time
now compel our two countries to design a new relationship
governing the canal.

Success in this effort requires recognition by our peoples --
and by the negotiators and legislative bodies of each side --
that there are limitations to what the other can accept. We
in the United States must recognize that a treaty negotiated
in 1930 does not meet the requirements of 1975. We must
acknowledge that Panama's desire to exercise jurisdiction over
its territory and to participate in the operation and defense of
the Canal are legitimate aspirations. We must analyze
which aspects of our presence in the Canal Zone are essential
to our interests and which are not. We must be prepared to

-18-

As the configuration of a new treaty becomes more clear, we will increase these consultations and discuss possible new arrangements for the canal in greater detail.

Americans traditionally test any new enterprise with the questions: Is it fair? Does it work? I am confident that the new treaty will meet these tests and will commend itself in principle and in detail to the United States Congress and the American people. It will also exemplify to the Latin American nations the type of new relationships we seek in this hemisphere.

## Cuba

The Cuba question remains an irritant in Inter-American relations. There are two aspects to this problem: Cuba's relationship to the hemisphere as a whole, represented by the

-19-

Organization of American States, and the bilateral relationship
between the United States and Cuba. The hemispheric dimension
illustrates the need to work for consensus. The bilateral
dimension reflects the lack of mutual accommodation.

In the early 1960's we in this hemisphere acted in concert
on the problem of Cuba. In 1964 the OAS called on all its
member states to take collective action against the Cuban
threat to collective security by severing diplomatic and trade
relations with Cuba.

Last September several countries proposed a meeting to
consider lifting the sanctions. We joined in the vote to hold
the meeting, but remained strictly neutral on the action to be
taken, believing that the Latin American countries concerned
are the best judge of whether Cuba still threatens their

-20-

security. Clearly Cuba represents no danger to the United States.

At Quito a majority, believing that the threat has faded and
that Cuba's isolation serves no purpose, voted in favor of
terminating the sanctions. But the Rio Treaty requires a
vote of two thirds and the sanctions thus remain as legal
obligations for OAS members.

Recently several Latin American nations suggested
informally that the next OAS General Assembly would provide
a new opportunity to achieve a consensus on this issue. All
OAS nations now agree that the Rio Treaty should be amended
to provide for the lifting of sanctions by majority vote.

At the next OAS General Assembly, the United States will
join with our Latin American friends in exploring whether this
agreement should be extended to the 1964 OAS sanctions against
Cuba.

-21-

In short, the United States does not seek to impose its views of the Cuba problem on others.

As for our own relations with Cuba, there can, of course, be no trade or diplomatic relations as long as the OAS mandate remains in force. But neither Cuba nor the United States gains by an attitude of perpetual hostility. Should the OAS sanctions be altered, the United States will consider changes in its relations with Cuba in light of our interests, and the attitude of the Cuban Government.

The United States has already taken some positive steps toward Cuba to demonstrate our good will and the direction in which we are prepared to move. But fundamental change will not come, either in the near or long term, until and unless there is a demonstrated readiness on the part of Cuba to assume the mutuality of obligation and regard upon which a new relationship must be founded.

-22-

Legislative Sanctions

The United States continues to face the dilemma of reconciling the legitimate roles of Congress and the Executive in order to achieve a coherent and purposeful foreign policy.

The recent series of international sanctions imposed by Congress through legislation have resulted in serious differences between nations of the hemisphere. To resolve these differences will require a sensitive attention to mutual accommodation as a means of reconciling the legitimate though conflicting claims of national sovereignies.

Legislative amendments which react to actions, such as the expropriation of American property without prompt compensation or the seizure of American fishing boats, by cutting off all U.S. aid have become a detriment to the conduct of our relations with Latin America.

-23-

On most of these issues there is no disagreement between the Executive and the Congress over objectives; nor do we disagree with Congress that such sanctions are a matter of sovereign discretion. The Administration is determined to ensure that American citizens -- investors, intellectuals, fishermen or tourists -- receive just and equitable treatment abroad under international law.

But sudden interruptions of normal relationships often harm the very interests they are designed to protect.

Legislative sanctions are drastic and undiscriminating.

They present the other government with a public ultimatum.

By seeming to challenge the recipients' sovereignty, the act of denying aid tends to harden positions, make diplomacy impossible, and often poisons the entire range of our relations with the country involved.

-24-

This is why President Ford and I made clear we opposed the Trade Act provisions aimed at OPEC. These provisions denied tariff preferences to Venezuela and Ecuador, as well as to other countries outside the hemisphere which had not participated in the oil embargo.

Latin American sensitivity to the United States' exercise of economic leverage has been finely honed by historical experience. If we are to avoid charges of coercion and intervention and if the nations of this hemisphere are to rid themselves of the psychological burdens of history, the United States has a special responsibility to act with forebearance. And the Latin American nations should recognize

-25-

that congressional sanctions stem from perceived injuries
to legitimate interests. Both sides have a responsibility
to seek diplomatic solutions to these problems.

THE ECONOMIC DIMENSION

The principle of mutual accommodation takes on
particular importance as we seek to shape the economic
forces that link us. Hemispheric progress requires the
creation of a new equilibrium of economic benefit. As a
leading industrial nation, the United States has a special
responsibility toward developing countries. Two questions
of particular concern to Latin America--trade and multi-
national corporations-- can play an important part in the
development of a more balanced international economic
order.

-26-

Trade

A new equilibrium in trade is today a vital aspect of global harmony and prosperity. It will require fair and steady prices for exporters of both raw materials and manufactured goods. As Latin American economies grow, so will opportunities for the United States to export more to Latin America. But we, in turn, must be willing to buy semi-processed and manufactured goods from Latin America.

In the next few days the President will send the Inter-national Trade Commission a list of products on which the Administration proposes to eliminate all import tariffs from eligible developing countries for 10 years. Latin America, as the most advanced developing region and the one nearest the U.S. market, will be in the best position to take advantage of these preferences, which will be extended to nearly $1 billion of Latin American exports.

-27-

Steps are also underway to modify the exclusionary
portions of the Trade Act. Bills have been introduced by
various members of Congress to extend generalized special
 preferences to all Western Hemisphere countries or,
alternatively, to all those countries which, like those of the
Western Hemisphere, did not participate in the oil embargo.
The success of these measures or other approaches to the
same end is not assured. But our desire to approach inter-
national trade issues in a spirit of mutual accommodation is
clear.

Multinational Corporations

The impact of multinational corporations symbolizes the
economic interdependence of our time. Multinationals promote
trade, spread technology, provide employment and spur develop-
ment. Yet Latin Americans fear that their power can threaten domestic

-28-

development priorities. Strengthened cooperation among
our governments is essential if we are to harness modern
productive forces to the common good.

For nearly a year the United States has been working
with Latin American nations on the special problems created
by transnational enterprises and by the technological revolu-
tion. The United States is now prepared:

- to negotiate guidelines applicable to transnational
enterprises and the transfer of technology; and

- to facilitate and intensify scientific and technological
exchanges and cooperative technological development.

The operations of multinational corporations in organizing
production across national boundaries inevitably have created
complicated legal problems and conflicts of national juris-
diction and policy.

-29-

We have not resolved these issues in principle. But we
can make progress in practice. The application of U.S.
regulations on trade with Cuba to subsidiaries of our corpora-
tions abroad has been a source of friction in the hemisphere.
We do not seek to impose our policies on others. Nor do we
seek to use American corporations to do so.

In accord with our desire to reconcile conflicts of sovereignty,
the United States will no longer attempt to prevent the sub-
sidiaries of American corporations from trading with Cuba
if the host country policy is to promote such trade, and if
strategic items, high technology and significant components
manufactured in the United States are not involved.

-30-

What Latin America Can Do

What do we ask of Latin America? In asking this we must bear in mind that the nations of the Caribbean, Mexico, Central America and South America are all highly diverse. The stereotyped images of a hemisphere sharply divided between tradition and progress, between the rich, powerful north and weak, poor south are no longer valid. The images falsify rather than explain.

In the past decade, progress in science, industry, agriculture, education have done much to transform Latin America. Economic growth has been steady and sometimes spectacular. Political institutions increasingly have been adapted to particular social conditions and national traditions. A new sense of Latin American unity has promoted a common awareness of problems and opportunities.

-31-

We welcome this new strength, self-confidence, and
diversity. Latin America's new leadership has begun
to take significant initiatives toward peace and a new inter-
national order. For example, last December, the Andean
countries pledged themselves to seek ways to limit acquisi-
tions of offensive weapons. During the past year, Venezuela
has taken the lead in stimulating regional cooperation through use
of some of its new oil revenues. Indeed, new Latin American
leadership is seeking to revitalize regional cooperation --
in existing institutions such as the Inter-American Development
Bank and exploring the possibility of new Latin American organi-
zations.

These initiatives signify Latin America's maturity, but
maturity creates the expectation of new attitudes as well. Let
me outline some that are of importance to the United States.

-32-

POLITICAL

The temptation to blame national disappointments on the intrigues, strategems and excesses of foreigners is as old as nations themselves. And for understandable historical reasons, Latin America has been inclined to seek its independence and demonstrate its unity by criticizing the United States. Such attitudes and reactions may have served partisan purposes in the past. But they are incompatible with the international cooperation which the times demand.

We cannot expect total agreement, nor can we accept a new version of paternalism, in which those with obligations have no rights, and those with rights have no obligations.

What we seek in the hemisphere is a relationship in which both Latin America and the United States act in recognition of the fact that rights and obligations go together. The choice for

-33-

the United States is not between domination and indifference.

The choice for Latin America is not between submission and confrontation.

We therefore do not ask nor expect an end to Latin American criticism of the United States. But we do expect the quality of our discourse to reflect a reciprocal respect. Putting aside the slogans and rhetorical denunciations which have marred our dialogue in the past, we expect the new leadership in Latin America will recognize the growing need for inter-American and global cooperation.

More specifically, we ask that, in the months ahead, Latin America:

- direct its growing regional unity toward cooperation, not confrontation. The U.S. seeks to cooperate; but we will not be compelled to do so by bloc pressure.

- 34 -

-- use its new influence and maturity as a bridge for
cooperation between the Third World and the industrial-
ized nations.

-- recognize that mutual responsiveness must extend
to sensitive political as well as economic matters;
in particular, that the developing international con-
sensus on the protection of fundamental human rights
requires all countries to reexamine their priorities
and take action to foster our common values.

ECONOMIC

Economic questions will provide a severe practical test
of the new mutuality required for greater international
cooperation and equilibrium.

The United States does not seek absolute reciprocity in
the economic sphere from Latin America. But we do expect

Latin America to:

-35-

-- share the costs as well as the benefits of multi-lateral cooperation, by increasing their contribution to international organizations and development projects;

-- apply the principle of mutual accommodation to economic disputes by working with us to develop new inter-governmental procedures to help resolve controversies; and

-- accept that a new international economic order, if it is to be balanced, requires fair returns for manufactured goods as well as for raw materials.

-36-

What We Can Do Together

Whatever Latin America and the United States ask of each
other, we must ask what we can do together. We in this
hemisphere inherit the longest tradition of regional cooperation --
in security, in development, in negotiated agreement, in
cultural interchange.

But progress in a new era of challenge will require us to
reassess the framework of our past cooperation. Are former
priorities still relevant? Are programs fashioned in the
past still germane? Are existing instruments of cooperation
still useful? Or are they the vestiges of a bygone era?

Postponement of the Buenos Aires meeting and the
malaise that affects the OAS suggests that we are not respond-
ing effectively to present realities.

-37-

The difficulty is less with the concept of regional cooperation
than with the practice. The inter-American system continues to
reflect an earlier era. An era when the hemisphere was insulated
from the outer world; when Latin America looked primarily to
the U.S. for leadership; when the nations of the Americas relied
upon binding commitments largely aimed at influencing the most
powerful among them.

The Americas can no longer be insulated from the outside
world. The need for a new political and economic world order
is clear; without it, and without our hemisphere as part of it,
we will face political frustration and economic decline. If we
are to master this challenge, we must abolish the fears of
dependence, the arrogance of paternalism, and the tactics
of confrontation.

-38-

The bedrock of inter-American relations must remain:

-- self-determination,

-- non-intervention,

-- peaceful settlement of disputes,

-- collective action against agression.

But solutions to new challenges and problems of the modern world will not be found in ringing resolutions of principles or by adding new juridical abstractions to our overburdened OAS Charter.

Instead, the nations of the Americas must develop new arrangements based on a recognition that no one nation can be expected to bear the full responsibility for adjustment and that conflicting interests and principles must be mutually accommodated.

-39-

The OAS should be restructured to reflect changed circumstances. Too often the instruments of our association have become the means of confrontation rather than of accommodation.

Both the United States and Latin America have at times acted as if inter-American cooperation is incompatible with cooperation among the Latin Americans themselves.

If the nations of this hemisphere are to work together effectively, the inter-American system must reflect the new, more equal, open, and diverse relationship which has come into being. Forums in which Latin Americans can carry out their own dialogue should be an integral part of the system.

-40-

In order to establish a new framework for cooperation
and restore confidence in our regional institutions, we and the
Latin Americans should:

- make the OAS an effective instrument of dialogue
  by increasing its flexibility and incorporating into
  its procedures the informality and candor that my
  colleagues and I found possible at Mexico City.

- strengthen its roots by locating it, in whole or in
  part in Latin America, so that the OAS is as
  visible from Buenos Aires or San Jose as from
  Washington.

-41-

Let me now turn to some of the specific priorities before
us, and the cooperative response they demand.

Our joint development efforts should further progress in all
spheres and draw upon the relative capacities of the American
nations. The forthcoming OAS General Assembly should consider
establishing a single Developmental Council combining the existing
technical councils of the OAS. Special procedures should be
established to achieve close coordination between the new Council
and all other inter-American and United Nations agencies working
in this hemisphere.

Our regional financial institutions must reflect a new
equilibrium of obligation and benefit. The United States will
maintain its support for the Inter-American Development Bank,
a major force for Latin America's development. And it will

-42-

seek a new equilibrium in the Bank's capital structure and its
lending policies to reflect the growing financial capacity of

other members. I would hope that in the near future an increase
in Latin American capital contributions will make it possible for
the United States to relinquish its veto power. The bank would
then become a truly multilateral institution.

We should foster closer and freer trade relationships.

Without prejudice to relationships with other
countries outside the area, the governments of our countries
should work closely at the current trade talks in Geneva to
promote greater access of Latin American products to the U.S.
and other industrialized countries.

We need to agree on principles applicable to transnational
enterprises and discuss inter-governmental cooperation to deal

-43-

investment disputes. The United States is prepared to explore
arrangements for combining national and third country equity capital
with United States technology to further the industrial development
of Latin American countries.

We must emphasize technology transfer. Taking the lead from
Venezuela's Project Ayacucho, we will seek $______ for
training programs to meet Latin America's rapidly expanding
need of scientists and technicians, as well as managers of
technology. In addition, the United States is prepared to explore
with interested Latin American governments the establishment
of functional research institutes to intensify cooperation in the
fields of marine sciences, food technology and energy.

-44-

We must strengthen our overall capacity to cooperate.

The relationships of an earlier era are no longer an adequate
basis for constructive and cooperative achievement.

Interdependence requires a new and wider range of
technical, intellectual and professional cooperation. The
United States is committed to broadening and strengthening
ties between universities, professional and other leadership
groups here and in Latin America to reinforce the networks
of communication which underlie our official relationships.

We must nourish and preserve our values. Increased
communication and understanding must not be permitted to
dilute the creative cultural diversity which has inspired man-
kind's progress, and which continues to nourish the values
and aspirations upon which our civilization rests. We share

-45-

with the nations of Latin America a concern for the preservation of national cultural heritage. There is an urgent need for cooperative action to preserve the irreplaceable artistic achievements of the great ancient civilizations of Mexico, Central and South America. This uniquely important archeological and cultural heritage is now subject to destruction and looting on an unprecedented scale. This administration will work with Congress for the rapid passage of the implementing legislation to enable U.S. ratification of the UNESCO Convention, which will do much to curtail the international market in stolen cultural property.

In addition, we will be prepared to meet and cooperate with Latin American Governments to discuss measures going beyond the UNESCO Convention to meet emergencies which

-46-

endanger culturally important monuments and to devise
cooperative programs for international exchanges of national
cultural treasures.

## Conclusion: Our Mutual Commitment

Last year in Mexico City, I described our objectives in
this hemisphere with these words:

"Our common impulse . . . is to fulfill the promise
of America as a continent which beckoned men to fulfill
what was best in them.

"Our common reality is the recognition of our diversity.

"Our common task is to forge our historical and geo-
graphical links into shared purpose and endeavor".

On this 'basis, the U.S. continues to stand ready to conduct
a genuine dialogue with its neighbors on the issues and in any

-47-

manner: multilaterally and bilaterally, in the OAS and outside
the OAS, with subregional groups or individual states.

If we are collectively conscious only of the burdens of
the past, and not the promise of the future, our own place
in history will be insecure. We can move into a new era of
cooperation or we can falter into disunity.

The dream of hope and opportunity that has served the
Americas for almost five centuries is still vivid. It is the
dream of the original promise of this hemisphere, the promise
of a new world. Now we are entering another new world, a new
era. Now we have the opportunity to fulfill the promise of this
hemisphere in a way that has global significance.

12th draft

2/25/75

THE UNITED STATES AND LATIN AMERICA:
THE NEW OPPORTUNITY

The central theme of our foreign policy is to develop

a new structure of international relations based on cooperation

rather than dominance, in which disputes are settled by

negotiation and peoples can focus on their positive aspirations

rather than the accumulation of arms.

In this task our relationship to our traditional friends

in the Western Hemisphere is central. The United States

faces no greater task than that of strengthening and building

upon the ties that link us to our traditional friends. And

there are no older international friends than those in this

hemisphere. The United States and Latin America share a

unique common bond -- we were born out of a common

struggle against tyranny, and we have shared a common

inspiration, the promise of a new world of justice, peace, freedom

and prosperity. This bond has linked our destinies

-3-

along the river, over the mountains, across the plains and
jungles. In the old world a frontier was a limit; in the New World
it was an opportunity. The frontiers we now face are
not geographical, they are frontiers of human need and
creativity. To conquer them is even more important --
and can be even more exciting -- than the adventure that
slapped our past,
marked our previous history.

At the heart of our contemporary challenge is a
new interdependence, which is both global and hemispheric
We have learned that peace is indivisible; that our well-being
is intimately tied up with the well-being of the rest of the world.

In the past, our economic relationships were largely
based on the exchange of raw materials from Latin America
for finished goods from the United States. Today's inter-
dependence is more complex, reflecting the internationalization

[v]

-4-

combines / of production with technology, labor and capital combined
across national boundaries.

As a result, the industrializing Latin American nations now need access to the U.S. market to sell manufactured goods as well as their traditional exports. And Latin America's markets are becoming as important to our own continued growth as its raw materials -- as indicated by our trade surplus last year of $1.2 billion, with Latin America.

As interdependence has grown within the hemisphere, it has linked the Hemisphere to other parts of the world. No/ Latin America has developed important trading relationships with other industrial nations and shares political, economic, and social perspectives with the Third World. The U.S. maintains its traditional alliances with the industrialized democracies, and its political and

-7-

This has been demonstrated by the latest controversy
in inter-American affairs, the Latin American postponement
of the Buenos Aires meeting of Foreign Ministers is a case in
point. The decision to cancel this meeting -- which was to
have been the next step in the new dialogue -- was taken ostent-
sibly in reaction to the Trade Act of 1974. Against the wishes
of the Administration, this Act excluded all members of the
Organization of Petroleum Exporting Countries from the new
U. S. trade preferences -- thus unfairly excluding Ecuador,
Venezuela, and other nations outside the hemisphere even
though they did not participate in the oil embargo. The
Administration has opposed this provision and continues to
oppose it. Indeed we support those members of Congress
including your own distinguished Senator Bentsen who have

introduced amendments to remove the inequality

The Latin American nations read into this act, a coercive intent which did not exist and asked for remedies beyond the capacity of our constitutional processes to provide rapidly. To use this issue to interrupt our dialogue just when it was most needed illustrates that the nations of America have not yet mastered their tendency towards artificial confrontations. But the times are too serious, the opportunities too vast to exhaust our energies in false suspicions.

Despite disappointments + temporary interruptions, The United States is ready to resume the dialogue in a spirit of friendship and conciliation. Next month I will make my first visit to South America as Secretary of State. Next week Assistant Secretary Rogers will visit six countries in South America for preliminary discussions.

We will try to convey, first, what the United States is prepared to contribute to a Western Hemisphere partnership, second, what we ask of Latin America, and finally what we can do together.

## What We Must Ask of Curselves

The United States will bring to this dialogue a commitment to the goal of bringing about a new relationship between the United States and Latin America.

If Latin America meets us in the same spirit, we shall surely resolve many of the problems of the past and master the opportunities of the future.

On the foundations of the principles of non-intervention, sovereignty, and mutual respect the U.S. is prepared to deal with the major issues that have risen between it and our neighbors: the status of the Panama Canal; the place of Cuba

-10-

and the canals of the hemispheres; U.S. legislative sanctions, the trade relations including the role of multinational corporations.

The Panama Canal

Since its opening, the peoples of the world have come to look upon the Panama Canal as an important life-line of commerce and international security. The United States has a vital interest that the canal remain open to the ships of all nations on fair terms.

In acquiring the rights to build the canal, the United States gained exclusive control -- the right to act as if we were sovereign -- over a ten-mile strip of Panamanian territory from the Atlantic to the Pacific. In the Canal Zone, we enforce U.S. laws, operate many commercial enterprises and control most deepwater port facilities that serve Panama.

The Panamanian people supported by the rest of the Hemisphere have come to view the perpetuation of this arrangement as an infringement upon their national sovereignty and principal resource -- their country's strategic location.

Clearly both Panama and the United States have a vital stake in the canal. The political imperatives of our time have led our two countries to seek to design a new relationship which combines the security needs of the United States with the aspirations to full sovereignty by Panama. These negotiations have

-12-

been carried on intermittently for eleven years. We are

prepared to conclude this agreement, but we believe an
agreement in terms of its terms is possible.

We have made progress because each side has
achieved its needs, but we recognize the essential requirements and the essential

limitations of the other. The United States is prepared to accept
that a treaty negotiated in 1903 does not meet the requirements
of 1975. We are ready to acknowledge that Panama's desire to
exercise jurisdiction over its territory and to participate in the
operation and defense of the Canal is reasonable. We are
prepared to modify arrangements which conflict with Panamanian
dignity and self-respect.

In turn we are confident that Panama understands our
perspective -- that the efficient, fair and secure operation of
the Canal is important to vital economic and security

-13-

interests; that a new treaty must provide for operation and
defense of the Canal by the United States for an extended
period of time; and that a new treaty must protect the legitimate
interests of our citizens and property in Panama.

Serious problems still must be resolved, but we are
confident that if both parties continue to display a forthcoming
spirit, we can overcome the remaining obstacles.

A new treaty based on these premises will make the
United States and Panama partners in the operation of the Canal,
and protect the essential national interests of both and ensure a
secure arrangement for the long term.

The Administration has been consulting ~~intensively~~ regularly with
~~on the basis of a spirit of cooperation~~ the Congress in a spirit of national partnership. As we approach
~~intensify~~ a new treaty, we will increase these consultations and discuss

-14-

each new arrangement for the Canal in great detail. If a
the delimitations encourage in great detail.

new treaty is to become a major symbol of Western

subtle
Hemisphere cooperation, it must reflect not only the advice

and consent of the Senate but the full understanding of the

American people will be a major symbol of cooperation
in the Western Hemisphere.

Cuba

-p14q.

In the early 1960's, the United States imposed its own
legislative sanctions against Cuba, in response to Cuba's
military ties to the Soviet Union and its "export" of revolution
to the Hemisphere. In 1965 the Hemispheric community,
through the OAS, agreed that Cuba had isolated itself from the
Hemisphere by those policies, and the member nations agreed
collectively to sever diplomatic and trade relations with Cuba.

More than ten years have passed. The countries of Latin
America have successfully resisted pressures and encroachment

-14a

each new arrangement for the Canal in great detail. If a new treaty is to become a major symbol of Western Hemisphere cooperation, it must reflect not only the advice and consent of the Senate but the full understanding of the American people.

Cuba

In the early 1960's, the United States imposed its own legislative sanctions against Cuba, in response to Cuba's policies. military ties to the Soviet Union and its "export" of revolution to the Hemisphere. In 1963 the Hemispheric community,

through the OAS, agreed that Cuba had isolated itself from the Inter-American community by its military ties to the Soviet Union and its export of revolution to the Hemisphere. In 1964 of the OAS Hemispheres by those policies, and the member nations agreed

a decade has

-17-

will agree to adopt procedures which OAS the U.S. will permit sanctions to be lifted by a majority vote.

A more difficult problem has been the role of U.S. subsidiaries domiciled in Latin America. Our insistence that these subsidiaries conduct their business in accordance with U.S. regulations -- which means they cannot sell their product to Cuba -- has become a source of friction with those Western Hemisphere host countries who have normalized their own trading relations with Cuba.

These nations have a point. No sovereign state -- including the United States -- can lightly accept that companies doing business under its jurisdiction must obey the laws of another state. Accordingly, the United States will no longer prohibit the subsidiaries of U.S. corporations from trading with Cuba if the host country policy promotes such trade, and so long as

-18-

strategic items, high technology and substantial components
manufactured in the United States are not involved.

We thus look forward to removing the Cuban issue as
an irritant to inter-American relations.

As for our own relations with Cuba, there can, of course,
be no change as long as the OAS mandate remains in force.

Our bilateral policy remains a matter of our own decision. We
see no virtue in perpetual antagonism between the United States
and Cuba. Our concerns have always related themselves to Cuba's
domestic system, but to its external policies and military
relationships. Should the OAS sanctions be altered, the United
States will consider changes in its relations with Cuba in
light of our own interests and the external policies of the Cuban
government. The United States has already taken some positive

-19-

steps toward Cuba to demonstrate our good will and the
direction in which we are prepared to move. But
fundamental change will not come, either in the near or
long term, unless there is a demonstrated readiness on the
part of Cuba to assume the

-20-

American, as the most advanced developing region and the
one nearest the U.S. market, will be in the best position
to take advantage of these preferences. Our list will
benefit nearly $1 billion of Latin American exports.

The Administration does not favor automatic sanctions.
The Administration before support the content of the bill.
Bills have been introduced by various members of Congress --
including your own distinguished Senator Bentsen -- to modify
the exclusionary portions of the Trade Act. They would
make it possible to extend generalized special preferences
to all Western Hemisphere countries or, alternatively,
to all those countries which, like those of the Western
Hemisphere, did not participate in the oil embargo. The
Administration strongly supports these proposals.

Among the economic issues affecting Western Hemisphere
relations none looms larger than the multinational corporation.

On the one hand, the multinational corporation has a demonstrated
indispensable record of achievement as an efficient purveyor
of products and indeed indispensable equipment.

-24-

What Latin America Can Do

What do we have a right to expect from Latin America?

In the past decade, progress in science, industry, agriculture, and education have done much to transform Latin America. Economic growth has been steady and sometimes spectacular. Political institutions have adapted to particular social conditions and national traditions. A new sense of Latin American unity has promoted a common awareness of problems and opportunities.

We welcome the new strength and self-confidence that this evolution implies. We have seen new leadership in Latin America and significant new initiatives in the international arena. Latin American leaders, Latin American and significant new initiatives in the international arena. Panamanian and Peruvian soldiers are part of the forces in the Middle East. Last December the Andean countries,

-27-

will surely prove a seedlot that are
This can only be self-defeating. It would be particularly
where it
inappropriate for the Western Hemisphere - for there it
would mean repudiating a tradition of cooperative relations
with the United States just at the moment when the United
States is more willing than ever in its history to turn our
to common
interdependence into an engine of common progress.

As the most developed part of the Third World, Latin
American nations will increasingly play roles in both the
industrialized and developing sectors of the globe. We welcome
this - because it is a unique opportunity for Latin America
to make a positive contribution to the accommodation of these
groupings, in a broader international system. Latin America
can make it tensier and serve as a link in a network of
a modernized system of communication.
It can be a bridge for communication and to ease confrontation.

But to play this role it is
above all necessary that the dialogue with
the most powerful industrial country - the
United States - be based on civility and good will.

-29-

This tendency is well demonstrated by the latest
controversy in inter-American affairs, the Latin American
postponement of the Buenos Aires meeting of Foreign
Ministers. The decision to cancel this meeting -- which
was to have been the next step in the new dialogue -- was
taken ostensibly in reaction to the Trade Act of 1974. This
Act excluded all members of the Organization of Petroleum
Exporting Countries from the new U.S. trade preferences --
thus unfairly discriminating against Ecuador, Venezuela, and
other nations outside the hemisphere even though they did not
participate in the oil embargo. The Administration has opposed
this provision and is working with the Congress to change it.
Distinguished Statesman, you have been very kind to me. You have
the ear of the President. The Latin American nations read into this act a
coercive intent which did not exist and asked for remedies
which would accomplish this purpose.

-30-

beyond the capacity of our constitutional processes to
provide rapidly. To use this issue to interrupt our dialogue
just when it was most needed, illustrates that the nations of
America have not yet mastered their tendency towards artificial
confrontations.

We do not expect agreement with all our views, but
neither can we accept a new version of paternalism, in
which those with obligations have no rights, and those that claim
rights accept no obligations. The choice for the United States
is not between domination and indifference. The choice for
Latin America is not between submission and confrontation.

Putting aside the slogans, we hope that the new leadership
in Latin America will accept as we do that reciprocity and
mutual respect are essential to inter-American and global
cooperation.

-31-

More specifically, we hope that in the months ahead

Latin American

-- direct its growing regional unity toward cooperation, not confrontation.

-- use its new influence and maturity as a bridge for cooperation between the Third World and the industrialized nations.

-- share the costs as well as the benefits of multilateral cooperation, by increasing their financial contribution to international organizations and development projects.

What is the chief heritage of this hemisphere?

More than Copernicus or Galileo, the discovery of America
ended the Middle Ages and revolutionized the thought of mankind.

It drew man beyond what had come to seem unchangeable.

brought an entirely new beginning, an escape from the burdens
of the past, from history itself. For nearly half a millenium the

Americas made their own history, only recently to rejoin the
mainstream of international affairs, the United States as part of a
system of alliances, South America as an increasingly self-
conscious member of what has come to be known as the Third

World. For four hundred years the horizons of the Americas were
ever-widening. A seventeenth century Brazilian epic poem described
the lure that beckoned the Americas onward:

"... to open new paths never trod, never known ..."
to push on despite obstacles through every zone ..."

-12-

In acquiring the rights to build the canal, the United
States gained exclusive control -- the right to act as if we
were sovereign -- over a ten-mile strip of Panamanian terri-
tory from the Atlantic to the Pacific. In the Canal Zone,
Today in the Canal
Zone we operate a full-fledged Government, enforce U.S.
laws, operate many commercial enterprises and control most
deepwater port facilities that serve Panama.

Understandably, ~~the Panamanian people~~ view the per-
petuation of this arrangement as an infringement upon their
national sovereignty and principal resource -- their country's
strategic location.

Clearly, both Panama and the United States have a vital
stake in the treaty arrangements governing the canal.

History, geography and the political imperatives of our
time have led
induced our two countries to seek to design a new
relationship governing the canal. These negotiations have

-14-

A treaty based on these premises will make the United
States and Panama partners in the operation of the canal
and protect the essential national interests of both.

On this important issue, the Administration has
been consulting with Congress in a spirit of national
partnership.

Thanks to the constructive attitude of both countries,
much progress has been made in recent months. Serious
problems still must be resolved, but I am confident that
if both parties continue to display a forthcoming spirit,
we can overcome the remaining obstacles.

A treaty based on these premises will make the United
States and Panama partners in the operation of the Canal
and protect the essential national interests of both and for a
semi-arrangement for the long term.

["-17-", "sanctions by a majority \\_\\_\\_\\_\\_\\_\\_

-18-

U.S.
American corporations from trading with Cuba if the host country policy promotes such trade, and ~~its~~ strategic items, high technology and substantial components manufactured in the United States are not involved.

We thus look forward to removing the Cuban issue as an irritant to inter-American relations. As for our own relations with Cuba, there can, of course, be no change as long as *Our bilateral policy remains a matter of our own decision. We see no the OAS mandate remains in force. But neither~~ Cuba nor~~ virtue in perpetual antagonism between the United States and Cuba. Our the U.S. can benefit in an atmosphere of perpetual hostility. concerns have always related it not to Cuba's domestic system but to its external policies and military relationships.* Should the OAS sanctions be altered, the United States will

consider changes in its relations with Cuba in light of
*our interests*, and the attitude of the Cuban government.

The United States has already taken some positive steps toward Cuba to demonstrate our good will and the direction in which we are prepared to move. But fundamental change will not come, either in the near or long term, unless there is a demonstrated readiness on the part of Cuba to assume the

-20-

But automatic interruptions of normal relationships often harm the very interests they are designed to protect. Legislative sanctions are drastic and undis- criminating. They present the other government with a public ultimatum. By seeming to challenge the recipients' sovereignty, they harden positions, make diplomacy impossible, and often poison the entire range of our relations with the country involved.

This is why President Ford and I opposed the Trade Act provisions aimed at OPEC. These provisions denied tariff preferences to Venezuela and Ecuador, as well as to other countries outside the hemisphere which had not participated in the oil embargo. As neither country would significantly gain from preferences the sanctions had no practical effect. But the result was to interrupt the inter-American dialogue.

Latin American sensitivity to the United States' exercise of economic leverage has been finely honed by historical experience. If we are to avoid charges of coercion and intervention and if the nations of this hemisphere are to rid themselves of the psychological burdens of history, the United States has a special responsibility to act with forebearance. It is the policy of the Administration to oppose automatic sanctions. As a matter of practical politics, our capacity to achieve modification of such laws as the Hickenlooper and Gonzales will request is a matter of practical politics. amendments will depend on our capacity to work with both a great deal of difficulty on new approaches. Congress and Latin America to find new ways of advancing our common interests. The Latin American nations must recognize that congressional sanctions stem from perceived injuries to legitimate interests. The Administration is prepared, within the framework of the New Dialogue, to search

-23-

In the next days the President will send the Inter-
national Trade Commission a list of products on which
to eliminate all import tariffs
the Administration proposes to
from eligible developing countries for 10 years. Latin
America, as the most advanced developing region and the one
nearest the U.S. market, will be in the best position to
take advantage of these preferences. Our list will affect
nearly $1 billion of Latin American exports.

Steps are also underway to modify the exclusionary portions
of the Trade Act. Positive bills have been introduced by
various members of Congress -- including your own distinguished
Senator Bentsen -- to extend generalized special preferences
to all Western Hemisphere countries or, alternatively, to all
those countries which, like those of the Western Hemisphere,
did not participate in the oil embargo. The Administration

-25-

What Latin America Can Do

What do we ask of Latin America? The first principle we must bear in mind is that the nations of the Caribbean, Mexico, Central America and South America are highly diverse. The sterotyped images of a hemisphere sharply divided between tradition and progress, between the rich, powerful north and weak, poor south are no longer valid.

The new Latin America has many dimensions. The peaceful alternation of power between government and opposition in Colombia,

-27-

with Bolivia, Paraguay and Uruguay, Argentina and Brazil are pooling their
technology and resources to harness the vast potential of the River
Plate Basin.

The search for new international relationships has found
organizational expression in the Andean Pact and universal elaboration
in Mexico's advocacy of a Charter of Economic Rights and Duties of States.

NOP

Indeed, Latin American foreign policy today may be characterized by
the search for revitalized international cooperation -- on a regional
basis through existing institutions such as the Inter-American Development
Bank and possible new organizations, and on a global basis, through
a strengthened voice for the Third World.

These initiatives signify Latin America's maturity, but
some of them demonstrate a lack
as Latin America becomes more active in world affairs. South as
well as North America must rethink some traditional attitudes.

-29-

 sectors of the globe. We welcome this *ambivalence* because it can make a positive contribution to the accommodation of these groupings in a broader international system. Latin America has a unique responsibility and opportunity to serve as a bridge for communication rather than confrontation.

If this opportunity is not taken, self-indulgent nationalism will continue to assert itself and the Western Hemisphere will fail to achieve the goal of our political relationship - after decades of swinging between euphoria and disilhouette, between hegemony and neglect. In a time of progress and partnership that are within its grasp, equality and mutual respect, our dialogue should reflect realities, *We are concerned* about the quality and civility of the dialogue between not rhetoric.

the United States and Latin America. The temptation to blame national disappointments on the intrigues, strategems and excesses of foreigners is as old as nations themselves. And for understandable historical reasons, Latin America has been *tempted* to seek its independence and demonstrate its unity by making the United States the whipping boy. Such attitudes and reactions may have served *partisan* purposes in the past--but never have they been more divorced from reality than today.

-7-

This has been demonstrated by the latest controversy
in inter-American affairs, the Latin American postponement
of the Buenos Aires meeting of Foreign Ministers, is a case in
point. The decision to cancel this meeting -- which was to
have been the next step in the new dialogue -- was taken osten-
sibly in reaction to the Trade Act of 1974. Against the wishes
of the Administration, this Act excluded all members of the
Organization of Petroleum Exporting Countries from the new
U. S. trade preferences -- thus unfairly excluding Ecuador,
Venezuela, and other nations outside the hemisphere even
though they did not participate in the oil embargo. The
Administration has opposed this provision and continues to
oppose it. Indeed we support those members of Congress
including your own distinguished Senator Bentsen who have

introduced amendments to remove the inequality.

Next week Assistant Secretary Rogers will visit ____ countries
in South America for preliminary discussions.

-30-

They are a distraction from our problems and
But they are incompatible with the opportunities before us and the
incompatible with our solutions.
interdependence which history has imposed on us.

Putting aside the slogans and rhetorical denunciations which have
marred our dialogue in the past, we expect the new leadership in Latin
accept as we do, equality + mutual respect are
America will recognize that mutuality is essential to inter-American
and global cooperation.

More specifically, we hope that in the months ahead Latin America:

not confrontation. It is senseless to seek to

compete with the United States by bloc pressure into a

-31-

cooperation which our values and convictions have
caused us to effect freely.

recognize that mutual responsiveness must extend
to sensitive political as well as economic matters; in
particular, that the developing international consensus on
the protection of fundamental human rights requires all
countries to take action to foster our common values.

-32-

The United States does not seek precise reciprocity in the economic sphere from Latin America. The United States recognizes that as the richest nation in the hemisphere it has special obligations. But experience teaches that the problems of development cannot be resolved by any one country acting alone. The nations of the Americas need cooperation more than generosity, trade more than aid. We must harness both public and private resources and give management, technology and imagination as high a priority as capital flow. This will require a new era of cooperation between North and South America.

To meet their obligations in forging a more balanced international economic order, we therefore expect that Latin American countries will:

- approach economic problems by seeking a dynamic equilibrium in trade and investment that will provide fair returns for manufactured goods as well as raw materials, and protection for investors as well

-33-

as workers; producers as well as consumers;

-- accept that interdependence inevitably projects some
economic disputes from the domestic to the international
arena; that to minimize clashes of sovereignies will
require new inter-governmental procedures to separate
matters of fact from matters of law;

-- share the costs as well as the benefits of multilateral
cooperation, by increasing the financial contribution to
international organizations and development projects.

What We Can Do Together

The ultimate test is in what the Nations of the Western Hemisphere
can do together.

I see four areas in which we can move imaginatively and boldly:

-34-

-- to accelerate the ~~physical integration and industrial~~ *The Hemispheres*,
development of Latin America;

-- to expand cooperation in science and technology;

-- to pioneer new arrangements in the production and
marketing of commodities; and

-- to strengthen our capacity to cooperate, by broadening
~~our common~~ *the rich and the past* our vision of the future and preserving the riches of the past.

-35-

NEW pages
35-37

Hemisphere
Physical and Industrial Integration and Development

Over the past two decades Latin America -- more than any other area of the developing world -- has made real progress in economic integration. The Central American Common Market, the Caribbean Common Market, the Andean Pact, and the Latin American Free Trade Association have begun to translate abstract hopes into physical realities. Roads, hydro-electric plants, pipelines, power grids and industrial plants have started to break down the natural barriers that have impeded the flow of people and goods ever since the first settlements sprang up in the wilderness of the New World.

We welcome these efforts. Latin American integration serves the interests of world peace and order. And we are persuaded that more could be done to accelerate its course.

The recent increase in world energy prices has generated a vast new pool of savings, and thereby creates

-36-

a major opportunity to spur regional development.

Those who hold the savings are looking for ways to put
their money to work, with reasonable security and with
appropriate protection against monetary devaluation.

At the same time,

In turn, those among the developing countries who are
not petroleum exporters desperately need additional capi-
tal for growth.

The United States is prepared to make a special
effort to combine its technology with the oil-generated
savings available to countries of this hemisphere in a
new program to further Latin America's industrial and
physical integration and development.

I have spoken to the Secretary General of the
Organization of American States, and to the President of
the Inter-American Development Bank. They are prepared
to help us determine how credits may be extended, and be
secured, for the planning and construction of the high-
important and promising ways, river systems, dams and transport entities which
Latin America needs to carry its development efforts for-
ward in the years to come, and how generous inputs of
know-how and science from the United States can enhance
this effort.

The United States is also prepared to facilitate
Latin America's independent access to capital. The
US capital market has been the world's largest, with a
steady flow of private savings seeking investment

-37-

outlets in the form of long-term obligations. Only a
very few developing countries have been able to borrow
successfully in this market.

We will soon be sending to the Congress a proposal
for a new program designed to help additional countries in
gain access to the US long-term capital, ~~market~~. The program
would consist of an authority to extend guarantees to the
bonds of participating countries up to a cumulative global
total of $500 million. The guarantees would be provided
for a limited number of issues, ~~while the institutional
relationships between borrower and lenders were being con-~~
~~structed~~ to enable the borrowing countries to draw on
this market at their own convenience, and on their own
initiative in ~~future years.~~

This is ~~an innovative institutional program~~ that will be
facilitating a flow of private savings. It is not an aid
program as traditionally conceived nor is it a recycling
device. It is a program consistent with the needs, and
greater self-reliance, of countries that have achieved a
higher level of income and credit standing. Thus while
the legislation we shall be proposing ~~will not be~~ have global
~~application~~ restricted to any one region, this new capital market
access program will clearly be of greatest benefit to the
countries of this Hemisphere, and will increase their
capacity for sustained growth. ~~we~~

To support these and similar projects I propose that the

-38-

forthcoming OAS General Assembly consider establishing a single
Developmental Council combining the existing technical councils
of the OAS. Special procedures could then be established to
achieve close coordination between the new Council and all other
inter-American and United Nations agencies working in this
hemisphere.

Our regional financial institutions ~~should also reflect this~~ need to be strengthened
~~new equilibrium.~~ The United States will maintain its support for
the Inter-American Development Bank. And it will seek a new
equilibrium in the Bank's capital structure and its lending policies
to reflect the growing financial capacity of other members. ~~We~~
would hope that in the near future an increase in Latin American
capital contributions will make it possible for the United States to
relinquish its veto power, thereby trans forming the Bank into a
truly multilateral institution.

-42-

To meet the challenge of the food crisis, the farmers of this Hemisphere must be assured of a fair and stable income for their products. Boom and bust cycles of food prices will not bring out the investment and farmer effort needed to increase production to the levels we can and must attain in this hemisphere.

The same is true for the raw materials on which the factories of the world depend.

In the past, the attitude and policy of the United States on commodity prices has been hesitant and ambiguous. Latin America has misread our doubts as opposition to their efforts to assure stable and fair prices for their products on the world market.

Let there be no doubt of our views. We strongly favor a world trading system which will meet the needs of consumers for

-43-

increasing supplies of commodities at reasonable prices and
the needs of producers for stable and remunerative prices.
We do not oppose arrangements dedicated to these ends. And
we will cooperate fully with consumers and producers to
protect their common interests,
develop mechanisms that meet these objectives.

The United States believes that the time has come for
the countries of the Western Hemisphere together to shape
specific agreements in this area, in which they have such
a great common stake.

I propose that the Economic and Finance Ministers of
the Hemisphere use the forthcoming meeting of the Inter-
American Economic and Social Council to begin to identify
the specific commodities that could lend themselves to
stabilization agreements. Such agreements could cover
model agreements relating to these commodities can also
model agreements relating to these commodities can also
provide access to supply, access to markets, producer or

-44-

consumer collusion, and other rules of the game.

Two fundamental principles should guide our joint search.

No longer can we rely on the market alone as an adequate guide to outcomes. But, equally we cannot expect unilateral "beggar thy neighbor" actions to determine a feasible and continuing equilibrium. Within these bounds lies a range of rich possibilities and stable outcomes that can make our new interdependence a vehicle for more rapid and more equitable global development.

## Strengthening Our Capacity to Cooperate

Interdependence requires a new and wider range of technical, intellectual and professional cooperation. In concentrating on the immediate political and economic needs of the peoples of our hemisphere, we must not neglect their intellectual, cultural and spiritual growth and spiritual heritage.

-45-

Perhaps nothing is more generally
needed in the Western Hemisphere to-day,
together than we do today. One looks to the future, the other
a common vision of the future.
to the past.

One of our chief problems today is that we do not have a
common vision of the future. What will life in our hemisphere
be like at the turn of the century and beyond? The best
independent minds in our countries should be working now on
the future implications of current trends in education,
nutrition, housing, transportation and urban renewal.
Recommendations that will flow from the exchange of national
experiences and viewpoints can serve as guide posts to our
leaders +
politicians as well as our planners as they address the practical
problems that lie ahead.

We urge + a new
The Organization of American States could provide a

-47-

In addition, we will be prepared to meet and cooperate
with Latin American Governments to discuss measures going
beyond the UNESCO Convention to meet emergencies which
endanger culturally important monuments, and to devise
cooperative programs for international exchanges of national
cultural treasures.

-48-

"Our common task is to forge our historical and geographical links into shared purpose and endeavor."

On this basis, the U.S. continues to stand ready to conduct a genuine dialogue with its neighbors on the issues and in any manner: multilaterally and bilaterally, in the OAS and outside the OAS, with subregional groups or individual states.

If we are collectively conscious only of the burdens of the past, and not the promise of the future, we will negative opportunities in history will be insecure. We can move into a new era of cooperation or we can falter into disunity.

The dream of hope and opportunity that has served the Americas for almost five centuries is still vivid. It is the dream of the original promise of this hemisphere, the promise of a new world. Now we are entering another new world, as strange

-49-

and is challenging us that which brought the original settlers to this hemisphere. Now we have the opportunity to fulfill the promise of this era. We can build new in this Hemisphere the prototype of that larger world community which must be our ultimate goal.

Hugo once said, in praise and encouragement of enlightened

South American policies, "The main highway lies open. May

America travel it, and the world will follow.