Latin America, Spain, and the U.S.: Strengthening Transatlantic Partnerships

Keynote Speakers:

• Hon. Arturo Valenzuela, Assistant Secretary of State, Bureau of Western Hemisphere Affairs, United States
• H.E. Agustín Carstens, Governor, Banco de México
• H.E. Roberto Henríquez, Minister, Ministry of Commerce and Industry of Panama
• H.E. Juan Pablo de Laiglesia, Secretary of State for Ibero-America, Ministry of External Relations and Cooperation, Spain
• H.E. Luis Guillermo Plata, Minister of Trade, Industry and Tourism of Colombia
• H.E. Teresa Ribera, Secretary of State for Climate Change, Ministry of the Environment and Rural and Marine Affairs, Spain
• Hon. Sérgio Cabral, Governor, Government of Rio de Janeiro, Brazil
• Hon. Enrique Iglesias, General Secretary, Ibero-American General Secretariat (SEGIB)
• Richard Peach, Senior Vice President, Macroeconomic and Monetary Studies Function, Federal Reserve Bank of New York
• Javier Santiso, Director, OECD Development Center

Panel: Strengthening Transatlantic Partnerships: the Role of Investment in the New Decade

• Rafael Díaz-Granados, President and CEO, Spain and Portugal, General Electric
• Ricardo Martínez Rico, President and Chief Executive Officer, Equipo Económico
• Patricia Menendez-Cambo, Chair, International Practice Group, Greenberg Traurig, LLP
• Claudio Muñoz, Executive President, Telefónica Empresas América
• José Juan Ruiz, Deputy Director, America Division, Grupo Santander
• Santiago Roura, Executive Vice President of Operations, INDRA
• Moderator: Susan Segal, President & CEO, Americas Society and Council of the Americas

Summary

The Americas Society and Council of the Americas hosted their first conference in Madrid, Spain, entitled “Latin America, Spain, and the U.S.: Strengthening Transatlantic Partnerships,” on February 2, 2010. The conference, co-organized with the Ibero-American General Secretariat (SEGIB), explored the strong cultural ties and significant investment relations between Latin America, Spain, and the United States. Presentation focused on current economic and political issues in the Western Hemisphere. In addition, speakers discussed the prospects for greater economic integration in the telecommunications, infrastructure, finance and energy sectors, as well as economic opportunities and challenges for 2010.

“Less talking, more listening”

SEGIB’s Secretary General Enrique V. Iglesias, who provided the opening and closing remarks for the conference, voiced optimism about the future of transatlantic relations. He said that Latin America is weathering the economic crisis much better than in the past. Iglesias embraced the U.S. policy towards Latin America, which he described as “less pretentious, more realistic; less talking more listening.” He ended his remarks on a positive note, saying that the economic and social future of Latin America is bright.

Spain’s Secretary of State Juan Pablo de Laiglesia emphasized the need to strengthen the bonds between the three transatlantic actors. He envisioned a new era of relations based on international issues such as economy, trade, security, energy, climate change, and the participation of civil society. A change in perspective and attitude between the United States, the European Union, and Latin America can ultimately change the political landscape, facilitating cooperation and progress within and among all three, he said.

U.S. Assistant Secretary of State Arturo Valenzuela recognized that, over the course of history, the U.S. commitment to its neighbors has often been “sporadic and intermittent.” But time has come, he said, to reaffirm that there are common vital interests in the Americas that must be addressed strategically. He highlighted Washington’s firm pledge to fight organized crime alongside several governments in the region while recognizing U.S. co-responsibility on issues such as arms trafficking, narcotics consumption and money laundering while emphasizing the U.S.’s crucial role in Haiti and Honduras’ recent crises. Dr. Valenzuela said that, although trade is a vital, it is not sufficient and he called for more investment in infrastructure and education.

Economic Outlook: Latin America and the United States

Mexico’s Central Bank Governor Agustín Carstens presented his outlook for the Mexican economy. He said that, although the United States exerts a strong magnetic force on Mexican trade, it is imperative that his country establishes stronger agreements with the European Union, Latin America, and other untapped markets. He shared Iglesias’ optimism about the future. With regard to Mexico, he spoke of a multi-sector recovery with strong exports, modest consumption and growth in public investment, which will balance the drop in last year’s private investment. The Mexican economy is expected to grow 4 percent this year with creation of 350,000 jobs, he said.

Javier Santiso, director of the Organization for Economic Cooperation (OECD) Development Centre, discussed the differences in development trends between Latin America and OECD countries over the past half-century. He explained that, up until 1980, Latin America and OECD countries grew in tandem at about 3.3 percent per year. In light of the most recent downturn, Latin America remains a very important partner to OECD countries, with trade flowing in from the United States and Spain amounting to $244 billion. Looking ahead, the region is ready to avoid a new recession trap by consolidating growth in the medium and long terms.

Richard Peach of the New York Federal Reserve gave an overview of the U.S. economic outlook. Peach argued that, since 2008, financial conditions have greatly improved. While the growth of real GDP in 2009 was stronger than expected, the condition of the labor market and the level of unemployment were worse than expected. As 2010 begins, growth of real GDP is likely to remain below the economy’s potential growth rate. The unemployment rate will be even slower to change and will hover at or around 10 percent for most—if not all—of the year. Ultimately, the U.S. economy is steadily recovering. However, it will take years for employment rates to reach pre-recession levels.

Climate Change, Trade, and Growth

Addressing the challenge of climate change, Secretary of State Teresa Ribera made a call to strengthening transatlantic partnerships as a way to fight the effects of global warming. The relationship between the United State, Spain, and Latin America is central to achieving the global goals to reduce carbon emissions. To succeed, she said, it is necessary to combine domestic policies, carbon markets, and international public financing. This transformation will bring new benefits, including investment opportunities, new markets, and job creation.

Along these lines, both Ministers Luis Guillermo Plata of and Roberto Henríquez discussed investment opportunities in Colombia and Panama, respectively. Minister Plata was optimistic about President Obama’s recent comments regarding efforts to move forward on trade agreements with Colombia, Panama. and South Korea. He also voiced confidence about completion of the EU trade agreement with Colombia and Peru. Minister Henríquez also voiced optimism about progress on the stalled U.S.-Panama trade deal and noted Panama signed trade agreements with five countries in Central America as well as Singapore, Chile, Taiwan, and Canada.

Strengthening Transatlantic Partnerships: the Role of Investment in the New Decade

In a roundtable moderated by Susan Segal, panelists discussed the role of investment over the role of the next ten years, with senior level executives representing the private sector in Spain, Latin America, and the United States. José Juan Ruiz of Santander’s Americas Division said Latin America holds a more solid position than any other region in the world. Despite the differences within the region, Santander is betting on increasing its business by tapping on the 60 percent of the population that has no access to financial services.

Ricardo Martínez Rico of Equipo Económico discussed Spanish investment in the United States and Latin America. He said Spain has become a global player in the international scene and one of the main international investors. He added that Spain’s largest and more internationalized firms are overcoming the global economic and financial crisis with the aid of investments abroad, particularly in Latin America. Moreover, General Electric’s Rafael Díaz-Granados talked about the important role of innovation in Spain, Latin America, and the United States. Also, Greenberg Traurig’s Patricia Menendez-Cambo discussed mergers and acquisitions, explaining that, for the first time, Latin American companies are buying U.S. companies. Furthermore, Claudio Muñoz from Telefónica said that Latin America “is not a promise but a reality in terms of growth” and mentioned how mobile market penetration is almost at 100 percent in the region—greater than in the United States and several European countries. Finally, Indra’s Santiago Roura emphasized that investing in Latin American human capital is key to enhancing innovation and growth.