Speech

Draft 14 - Page 14

WDR Revision

(New language underlined)

Last September several Latin American countries proposed a meeting to consider lifting the collective sanctions. We agreed that a consideration of the Cuban issue was appropriate. And we remained completely neutral in the debate at the Quito meeting.

Our guiding principle then, as now, was to prevent the Cuba issue from dividing us from our Hemispheric neighbors.

A majority voted to lift the collective sanctions.

But the Rio Treaty requires a two-thirds vote and the sanctions thus remain in force. The United States considers itself bound by the collective will as a matter of international law, and so there can be no change in our bilateral relations with Cuba as long as the OAS mandate remains in force.

Since the Quito meeting, however, several Latin American countries have announced that they are prepared to resume trade with Cuba.

We do not seek to impose our views of Cuba on others. Accordingly, we will not attempt to bar sales by subsidiaries of United States parent companies located in those Latin American countries who have a policy favoring sales to Cuba -- or in Europe or Japan, for that matter -- of products which do not contain strategic goods, high technology or substantial United States-made components. In short, though we consider ourselves still bound by the OAS ban against direct United States trade with Cuba, we will not attempt to exercise our influence over legitimate trade in foreign goods between third countries and Cuba if those countries want to do business with Cuba.

Since the meeting at Quito, all the OAS nations have agreed that the Rio Treaty should be amended to permit the lifting of sanctions by a majority vote.

Several of my Latin American colleagues have suggested that this agreement in principle might be formalized as to the existing Cuban sanctions. I will be consulting with them with respect to this initiative during my trip to South America.

If the OAS sanctions are eventually repealed, the United States will consider changes in our own bilateral relations with Cuba and in... (To page 16 in original version of Draft XIV)

-- I am pleased to be in Texas tonight and to meet with such a distinguished group. 130 years ago an anti-slavery minister, Edward Everett Hale, wrote a pamphlet entitled "How to Conquer Texas before Texas Conquers us." Seeing the financial and intellectual power assembled in this room, I think it is time for us to surrender.

-- It is particularly pleasant to be here on the eve of the anniversary of Texas independence (March 2, 1836). The spirit of vigor and patriotism that Texas has always shown both as a republic and as a state is needed now more than ever in these days when some of our citizens seem to have lost faith in America.

-- I think that the beautiful city of Houston typifies Texas in many ways. It has great universities such as is here represented; handsome museums like the beautiful Meis van der Rohe building I saw this afternoon; and productive modern industry. But I must say I am glad that the Washington Redskins don't take their example from the Houston Oilers.

-- The Texas legend is full of superlatives: It's so hot here that the consular corps gets hardship pay; you need a mousetrap to catch mosquitos; here you find a man so hard-boiled that he sleeps in sandpaper sheets; the grapefruit are so enormous that 9 make a dozen; Davy Crockett fanned himself with a hurricane; if you spill some nails, you will harvest a crop of crowbars; and it's where Pecos Bill could rope a streak of lightening.

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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 needed to increase food 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

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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 with consumers and producers in a world-
wide context to develop mechanisms that meet these objec-
tives.

The United States believes that the time has come for
the countries of the Western Hemisphere to consider together
how this can be done. I propose that the Economic and Finance
Ministers of the Hemisphere use the forthcoming Washington
meeting next month of the Inter-American Economic and Social
Council to begin to identify how we can mutually assume the
reciprocal and balanced need for access to supply and
access to markets through appropriate producer and

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consumer cooperation in commodities.

Two fundamental principles should guide our joint
search for commodity policies. No longer can we rely on
the market alone as an adequate guide to outcomes. But,
equally we cannot expect unilateral unrestrained "begger
thy neighbor" actions, either by producer or consumer car-
tels, to determine a feasible and continuing equilibrium.
Within these bounds lies a range of rich possibilities
and stable outcomes that can make our interdependence a
vehicle for more rapid and more equitable global develop-
ment. We must seize this early opportunity for constructive
cooperative action.

CYJ

I would like to take just a moment to comment on yesterday's tragic death of John Egan. The death of this dedicated, courageous American has brought forth a sense of outrage and disgust throughout the entire Hemisphere. The contemptable and cowardly act that ended his life was a crime against all who hold dear the ideals upon which the countries of this Hemisphere were founded.

THE UNITED STATES AND LATIN AMERICA:
THE NEW CPPORTUNITY

The foreign policy of the United States has one over-
riding goal: to help shape a new structure of international
relations which promotes cooperation rather than force;
negotiation rather than confrontation; and the positive
aspirations of peoples rather than the accumulation of arms
by nations.

Our relations with the Western Hemisphere are central
to this enterprise. The United States and Latin America were
born out of the struggle against tyranny. Our peoples are
bound not only by geography but by the common heritage of
Western civilization. We share a history of mutual support
in times of trouble and the promise of a new world of justice,
peace, freedom and prosperity. With courage and imagination

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we now have the opportunity to make inter-American cooperation a pillar of the global community which our era demands.

The discovery of America, more than any other single event, ended the Middle Ages and revolutionized the thought of mankind. It drew man beyond what had come to seem unchangeable, to a new beginning, an escape from the burdens of the past, and from history itself.

A Brazilian epic poem of the seventeenth century described the lure that beckoned the Americas onward:

"...to open new paths never trod, never known...

to push on despite obstacles through every zone..."

With the shield of one ocean at our backs and the dream of another before us, hope was always just a little farther along the river, over the mountains, across the plains and jungles.

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In the old world a frontier was a limit; in the New World it
was an opportunity.

Today's frontiers are not geographical, but frontiers
of human need and creativity. To conquer them is even more
important than the adventures that shaped our past.

At the heart of our contemporary challenge is a new
interdependence, both hemispheric and global. Until recently,
Western Hemisphere 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 reflects a different balance. The international-
ization of production combines technology, labor and capital
across national boundaries.

As a result, the Latin American countries now need
access to the U.S. market to sell their manufactured goods

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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.

As interdependence has grown within the hemisphere, so have the hemisphere's links to other parts of the world. Latin America has developed important trading relationships with other industrial nations and has come to share certain political perspectives with the Third World. The United States prizes its traditional alliances with the industrialized democracies, and maintains important political and economic relationships with many less developed nations around the world. Our generation has had to learn that peace is indivisible; that our national well-being is intimately tied to the well-being of the rest of the globe.

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The awareness of past achievement and faith in common
purposes led the United States in 1973 to begin a new dialogue
with Latin America. We had three objectives:

-- To promote with our friends a new spirit of communication tempered by realism, elevated by hope and free of distrust, despair or resentment.

-- To find new ways to combine our efforts in the political, economic and social development of the hemisphere.

-- And to recognize that the global dialogue between the
developed and less developed nations requires answers that
will be difficult to find anywhere if we do not find them in the
Western Hemisphere.

For this hemisphere to which men fled to escape from
injustice has a special obligation to demonstrate that progress
can go hand in hand with respect for human dignity, that

cooperation among nations is consistent with respect for
national sovereignty, that the most powerful political force
on earth is the voluntary collaboration of free peoples.

Any relationship as long and complex as ours
inevitably is haunted by the bitterness and suspicions of
old disputes. We must put these legacies of our past behind
us, for a dialogue dominated by the endless refrain of old
grievances cannot prosper.

Despite temporary interruptions, the United States
is prepared to continue 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 the region for
preliminary talks.

Let me now outline some of the issues that will face us

in these discussions. They include, first, what the United
States is prepared to contribute to Western Hemisphere
cooperation; second, what we ask of Latin America; and finally
what we can do together.

What We Must Ask of Ourselves

President Ford has asked me to reaffirm our commitment
to a new relationship between the United States and Latin
America based on the principles of non-intervention, the
sovereign equality of nations and mutual respect among
partners. Success will require a similar desire and attitude
on the part of the other countries of the hemisphere.

These principles will guide the United States' approach
to major issues that have risen between us -- the status of
the Panama Canal; the place of Cuba in the hemisphere; and
the various strands of our economic relations.

**The Panama Canal** -- Since its opening, the peoples of the world have looked on the Panama Canal as an important lifeline of commerce and international security. It is essential 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 was granted exclusive control -- the rights which it would possess and exercise "if it were sovereign" -- over a ten-mile wide strip of Panamanian territory from the Atlantic to the Pacific. In the Canal Zone, we enforce U.S. laws, operate commercial enterprises and control most of the deepwater port facilities that serve Panama.

Over time the nature of the U.S. presence has come to be viewed by the people of Panama -- and indeed by most of the rest of the Hemisphere -- an infringement upon their

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national sovereignty and their principal resource -- their
country's strategic location.

Clearly both Panama and the United States have vital
interests in the Canal. The challenge is to reconcile the
security needs of the United States with Panama's national
honor and sovereignty. Negotiations on this problem have
gone on intermittently for eleven years; in the last year
and a half they have moved forward rapidly. We now believe
that an agreement on terms fair to all is possible.

We have made progress because each side has
recognized the essential needs and constraints of the other.
The United States understands that a treaty negotiated in 1903
does not meet the requirements of 1975. We are ready to

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acknowledge that it is reasonable for Panama to exercise
jurisdiction over its territory and to participate in the
operation and defense of the Canal. We are prepared to
modify arrangements which conflict with Panamanian
dignity and self-respect.

In turn we will expect Panama to understand our
perspective -- that the efficient, fair and secure operation
of the Canal is a vital economic and security interest of the
United States; that a new treaty must provide for the 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.

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

Serious problems remain to be resolved in the
negotiation. But we are confident that they will be overcome
if both parties continue to display the seriousness and
mutual understanding they have shown so far.

The Administration has been consulting with the
Congress as our negotiations have proceeded. We will
intensify these consultations and discuss in detail the
arrangements which we envisage. A new treaty which
reflects the advice and consent of the Senate and the full
support of the American people will be a concrete and

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significant demonstration that with good will on both sides
cooperative solutions to the problems of the Western
Hemisphere are possible.

<u>Cuba</u> -- In January 1962 the Organization of American
States determined that Cuba had excluded itself from part-
icipation in the inter-American community by its military
ties to the Soviet Union and its export of revolution in the
Hemisphere. A year later the United States imposed its
own sanctions. In 1964 the member nations of the OAS
agreed collectively under the Rio Treaty of Reciprocal
Assistance to sever diplomatic and trade relations with Cuba.

More than a decade has passed. The countries of Latin
America have successfully resisted pressure and subversion;
nations that in the early Sixties felt most threatened by Cuban

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revolutionary violence no longer feel the menace so acutely.

This situation has generated a reconsideration of the OAS sanctions and raised questions about the future of our own bilateral relations with Cuba.

Last September several Latin American countries proposed a meeting to consider lifting the collective sanctions. We agreed that a consideration of the Cuban issue at a meeting in Quito of the Foreign Ministers of the Americas was appropriate. We determined to remain completely neutral in the debate and abstained in the vote. Our guiding principle then, as now, was to prevent the Cuba issue from dividing us from our Hemispheric neighbors.

A majority voted to lift the collective sanctions. But the Rio Treaty requires a two-thirds vote and the sanctions thus remain formally in force. The United States considers

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itself bound by the collective will as a matter of international
law, and so there can be no change in our bilateral relations
with Cuba as long as the CAS mandate continues.

Since the Quito meeting, however, several Latin
American countries have announced that they are prepared
to resume trade with Cuba. Also since the meeting at Quito,
all the CAS nations have tentatively agreed that the Rio Treaty
should be amended to permit the lifting of sanctions by a majority
vote. Several of my Latin American colleagues have suggested
that this agreement in principle might be applied to the existing
Cuban sanctions. I will be consulting with them with respect
to this initiative during my trip to South America with the
attitude of finding a generally acceptable solution

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If the CAS sanctions are eventually repealed, the United States will consider changes in its bilateral relations with Cuba and in its regulations. [ Our decision will be based on what we believe to be in our own best interests, and will be heavily influenced by the external policies of the Cuban government. ]

We see no virtue in perpetual antagonism between the United States and Cuba. Our concerns relate above all to Cuba's external policies and military relationships with countries outside the Hemisphere. We have taken some symbolic steps to indicate that we are prepared to move in a new direction if Cuba will. Fundamental change cannot come, however, unless Cuba demonstrates a readiness to assume the mutuality of obligation and regard upon which a new relationship must be founded.

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**Economic Relations** -- Old political disputes must not distract us from the long-term challenge of the Hemisphere -- the common effort to improve the lives of our peoples.

The expansion of trade, and the establishment of a new trading equilibrium are vital to economic progress and development in the Hemisphere. As Latin American economies grow, so will opportunities for mutual trade. As our own economy grows, we will be able to buy more semi-processed and manufactured goods from Latin America.

In the next few days the President will take the first step to implement the preference system established by the 1974 Trade Act. We will announce the list of products on which the Administration proposes to eliminate all import

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tariffs for developing countries for ten 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. The list will benefit nearly $1 billion worth of Latin American exports.

Among the economic issues affecting Western Hemisphere relations none looms larger than the transnational corporation. These corporations have a demonstrated record of achievement as an efficient -- and indeed indispensable -- source of technology, management skill, and capital for development. At the same time, their transnational character raises complex problems of governmental regulation, and has aroused concern in Latin America over the relation of their activities to domestic political and economic priorities.

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Most Latin American nations take the position that the laws of the host country are conclusive, and that a foreign investor cannot appeal to his own government for protection.

The United States, on the other hand, has insisted on espousing the cause of U.S. investors when they are treated in a way which violates international legal standards. And the Congress has reflected this view in such acts as the Hickenlooper and Gonzalez Amendments which cut off aid in the event of nationalization without adequate and timely compensation.

The two legal positions are not easily reconciled. But the United States is prepared to make a serious effort to find a mutually acceptable solution which does not prejudice the principles of either side. A year ago, in Mexico City, at

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our initiative an inter-American working group was set up
to examine the problem.

The United States is prepared in the context of this

endeavor:

-- to work out a new declaration of principles to govern
the treatment of transnational enterprises and for
the transfer of technology;

-- to develop intergovernmental mechanisms to prevent
and resolve investment disputes and the problems
between governments that arise from them;

-- to fashion new modes of cooperation to deal with
conflicts of laws and jurisdiction relating to
transnational corporations; and

-- to encourage private enterprise to make its vital
contributions to Latin America in forms congenial

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to the economic and political needs of the host countries.

We have, in the past, made significant progress in these areas on a pragmatic, case-by-case basis. We should now seek more general agreement as part of the New Dialogue. The transnational Working Group which was interrupted by the postponement of the Buenos Aires meeting should resume its important work. A mutually acceptable solution would go a long way toward removing trade and investment conflicts from U.S. decisions respecting aid relationships with the host countries.

[This is important because Latin American sensitivity to the exercise of economic leverage has been finely honed by history.] Experience has [also] demonstrated that automatic sanctions -- including the 1974 Trade Act's denial of

preferences to such OPEC countries as Ecuador and

Venezuela, which did not join in the oil embargo -- are almost

always harmful. Automatic sanctions allow no tactical

flexibility. They present other governments with a public

ultimatum; by seeming to challenge the recipient's sovereignty,

they harden positions, encumber diplomacy and poison the entire

relationship.

The Administration supports the purpose of the various

bills which have been introduced into the Congress -- including one

by your own Senator Bentsen -- to modify the provisions of the

Trade Act which involve Venezuela and Ecuador. And it is prepared

to seek the modification of legislation requiring the automatic

cut-off of aid. But as a matter of political reality a great deal will

depend on our ability to work with the nations of Latin

America on new approaches which give practical assurance

of fair treatment to American corporations. They must

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recognize that Congressional sanctions stem from perceived
injuries to legitimate interests.

As part of the New Dialogue, the Administration is
prepared to develop new principles and practices which may
recommend themselves to Congress as a better remedy than
automatic sanctions.

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 the
Continent. Economic growth has been steady and sometimes
spectacular. Political institutions have adapted to new social
conditions and national traditions. A new sense of Latin
American unity has promoted an awareness of common
problems and opportunities.

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We welcome the strength and self-confidence that this evolution implies. We have seen new leadership in Latin America and new Latin American leadership in the international arena. Panamanian and Peruvian soldiers serve with the UN peace-keeping forces in the Middle East.

Last December the Andean countries, following a Peruvian initiative, pledged themselves to limit the acquisition of offensive weapons -- an initiative we support and encourage.

Venezuela has taken the lead in stimulating regional cooperation by offering oil revenues to the Inter-American Bank and the Central American Bank for Economic Integration.

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

However, with these welcome initiatives have come other less hopeful trends.

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The United States is concerned by the growing tendency
of some Latin American countries to participate in tactics
of confrontation between the developing and developed
worlds. We accept non-alignment as a necessary, largely
positive force. We believe that the developed nations --
and particularly the United States as the most powerful
industrial country -- have a special obligation to be sensitive
both to the legacy of history and to the imperatives of
change.

It is therefore ironic that some nations seek to exact
by confrontation what can only be gained through cooperation,
and that countries which once chose non-alignment to protect
themselves from blocs are now tending to form a rigid
bloc of their own. In doing so they obstruct the association
with the industrialized nations on which their own
economic and social progress ultimately depends.

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Such tactics are particularly inappropriate for the Western
Hemisphere where they threaten to repudiate a long tradition
of cooperative relations with the United States at the very
moment when the United States has dedicated itself to 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. They have
a unique opportunity to foster the mutual accommodation of
these groups globally.

To do so there is no better guidepost than the Declaration
signed by all Western Hemisphere nations in Mexico City last
year: "...peace and progress, in order to be solid and
enduring, must always be based on respect for the rights
of others and the recognition of reciprocal responsibilities

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and obligations among developed and developing countries."

The tendency to blame disappointments on the intrigues
and excesses of foreigners is as old as nations themselves.

Latin America is perennially tempted to define its independence
and unity through opposition to the United States.

The Latin American postponement of the Buenos Aires
meeting of Foreign Ministers, ostensibly in reaction to the
recent U.S. Trade Act, is a case in point. Some Latin
American nations chose to read into this legislation a coercive
intent which did not exist; and asked for immediate remedies
beyond the capacity of our constitutional processes to provide.

As a result, the next step in the new dialogue was delayed
just when it was most needed. The nations of America face

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too many challenges to permit their energies to be expended in
such fruitless and 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 who
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.

[Instead we should steer between those extremes toward
a new equilibrium.] After decades of oscillating between moods
of euphoria and disillusionment, between charges of hegemony
and neglect, it is time for the United States and Latin America to learn
to work together, calmly and without confrontation, on the

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challenges to our common civilization.

The United States does not seek precise reciprocity.

We recognize our special obligations as the richest and most powerful nation in the hemisphere. But experience teaches that international problems cannot be resolved by any one country acting alone -- or by any group of nations acting as an exclusive bloc.

## What We Must Do Together

With a new attitude, the nations of the Western Hemisphere can dedicate themselves to an agenda for the future.

In the coming months, the United States will make proposals for such an agenda and present it to its partners in various forums including the meeting of the OAS General Assembly this spring.

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Today I shall confine myself to two critical areas:

hemispheric development and food.

**Hemispheric Development** -- In the past decade, Latin America's overall growth rate has exceeded the economic targets of the Alliance for Progress. The region has also made greater progress than any other developing area toward 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 realities.] Nevertheless, Latin America's relative share of global trade has fallen. And economic progress has been unevenly distributed, both within and among countries.

Some Latin American countries have only recently begun the process of development. As with poor countries everywhere, they require large amounts of concessional

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assistance. The United States will continue to contribute its
share.

The Administration will ask Congress to replenish
the U.S. contribution to the Inter-American Development
Bank, both concessional funds and ordinary capital. Assum-
ing other nations in the hemisphere are willing to do their
share, we will seek a U.S. contribution as large as the last
replenishment, or $1.8 billion.

The proposal will be considered by the House of
Representatives Subcommittee whose Chairman is the
distinguished Henry B. Gonzalez -- from San Antonio.
Coupled with the contribution of $755 million from twelve
new members -- the European countries, Japan and Israel
-- and a $500 million trust fund established by Venezuela,

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these fresh resources to the IDB will give a major new
impetus to Western Hemisphere development.

But because the poorest countries must have first
priority, concessional assistance is available only in
limited quantities to a new and growing group of Latin
American countries that have reached an intermediate stage
of development. They have a diversified industrial sector,
a significant consumer class, and an increasing capacity to
compete in world markets. Their need for foreign exchange
is growing.

Therefore, they require greater access to the markets of
the developed countries, for exports are the chief source of
their external funds. To this end, the Trade Act and the multi-
lateral trade negotiations in Geneva are of great significance.
As we have pledged in our New Dialogue, we will, in these

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negotiations, work in close collaboration with the countries
on the Western Hemisphere.

But these countries also need investment capital.
Significant amounts of capital continue to flow to the
intermediate countries from the United States private sector
through investment and from commercial bank lending.

But these countries could also benefit substantially from
improved access to capital markets.

While the United States long-term bond capital
market is the world's largest, few developing countries
have been able to borrow successfully in it.

To ease this problem, the United States has taken
the initiative for a study by the IMF and World Bank
Development Committee, of ways to promote the increased

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use of capital markets by developing countries. These will
be neither aid programs nor recycling devices, but will
facilitate independent access to such markets. The United
States is prepared to explore ways in which it can be help-
ful to those Latin American countries with higher levels of
income and credit standing to move toward self-reliance.

The countries of Latin America, regardless of their
stage of development, are vulnerable to violent swings in
the prices of their exports of raw materials. There is no
more critical issue of economic relations in the Hemisphere
today than commodities policy.

This issue has been extremely divisive in the Hemi-
sphere -- partly because our attitude has been ambiguous.