U.S. Under Secretary of Commerce for International Trade Christopher Padilla.

In an exclusive press interview with one of Uruguay’s major daily newspapers, El Observador that took place on March 31 in Punta del Este, U.S. Under Secretary of Commerce for International Trade Christopher Padilla said that investors look for “stability and predictability” in a country and pointed out that the United States does not do free-trade agreements in order to undermine regional accords.

Following is a translation of the text of the interview published in the April 1, 2008 edition of El Observador. Padilla's answers were in English; therefore, for the purposes of this article, his statements have been transcribed directly from the recorded interview:

[Original newspaper text in Spanish]

U.S. Sees Uruguay as “Safe” Country for Investments
The Under Secretary of Commerce says that companies should be able to do business even when their government is from the left
[By Leonardo Luzzi*]

U.S. Under Secretary of Commerce, Christopher Padilla, categorized Uruguay as a country “safe” for business, where investors will find “stability, security and predictability.”

[Readable page scan (Pdf)]

Padilla, who traveled from the United States specially in order to attend the Americas Innovation Forum that is taking place today in the Hotel Conrad pointed out that there are “no doubts that this country will receive new investments.”

“I think Uruguay is in a good position because it benefits from sound fiscal policies, low debt and high commodity prices,” said Padilla when asked about the repercussions stemming from the current financial crisis in his country. “The U.S. is the largest economy in the world, and is a significant purchaser of goods from Uruguay. Whenever there is an economic slowdown in a big country like the United States, that has impacts all over the world,” he added.

The official also spoke about the Trade and Investment Framework Agreement (TIFA) and the possible opportunities stemming from it.

EL OBSERVADOR: You are one of the U.S. government officials responsible for promoting access to markets.

U.S. Under Secretary of Commerce for International Trade Christopher Padilla interviewed by Uruguayan journalist Leonardo Luzzi.

PADILLA: I’m here to meet with Uruguayan government officials to discuss ways in which we can deepen out economic relationship; we have a very strong economic relationship with Uruguay. Last year, for the first time, we had more than one billion U.S. dollars in two-way trade between our countries.

EL OBSERVADOR: Yesterday you met with the Finance minister, Danilo Astori.

PADILLA: I did, I also had the chance to meet with the Foreign minister and the Industry minister. Yesterday, I listened to the very excellent speech by the president [Tabare Vazquez]. I want to say that we value our close relationship with Uruguay and we want to have even closer economic ties. This is a country that is doing all the right things in promoting competitiveness and serving as a model for the rest of the Western Hemisphere.

EL OBSERVADOR: Uruguay and the U.S. have signed a commercial agreement, the TIFA. Astori and the new Foreign minister want to go a step further. Have they indicated this to you?

PADILLA: We want to take our economic relationship as far as we both can, given the circumstances in both of our countries. We have the Bilateral Investment Treaty, now we are working on the TIFA, and I hope that we will have continued success with the TIFA, and that will allow us to discuss where we go next in our economic relationship. There should be no limits predetermined in our relationship; we should allow our relationship to be as deep as we can make it, on both sides.

EL OBSERVADOR: It was felt here in Uruguay that the United States was interested in a Free Trade Agreement (FTA) with Uruguay as a way of driving a wedge in Mercosur, given that Argentina and Brazil are very critical of the Bush Administration.

PADILLA: Let me say this very clearly: the United States does not do trade agreements with countries as a way to try and break up other arrangements. We only do trade agreements with countries because we want to deepen our mutual economic ties. In fact we welcome it when our trade partners have more agreements with other countries, for example, our partner Chile has free trade agreements with 40 other countries besides the United States, including an association agreement with Mercosur. We welcome this and we encourage it. Last month I was in Central America to review the success of the Central American free trade agreement which is been in effect for two years now. This agreement has been a great success; it is promoted investment and an explosion of trade in both directions. Central America is now negotiating a trade agreement with the European Union, and this is something that we encourage and welcome. So, our approach to trade agreements is not exclusionary, it is to include as many countries as we possibly can to promote prosperity.

EL OBSERVADOR: But you know that Argentina and Brazil practically refused to allow Uruguay to move ahead on an FTA with the U.S.

PADILLA: I won't comment on what other countries do, but it seems to me that the choice of Uruguay's economic future is up to the government and people of Uruguay, not to anyone else. Frankly, I hope that other governments would take a similar approach as the United States in encouraging an expanding circle of free trade and not to have competing blocks in trade.

EL OBSERVADOR: You said that the intention was not to undermine Mercosur, but it never occurred to you to propose a FTA to Argentina or Brazil, countries with much larger economies?

PADILLA: The United States is interested in expanding its economic relationships with almost all countries in the world, and we will do it with whatever means are best for the circumstances of those particular countries.

EL OBSERVADOR: Have you been meeting with Uruguayan business people?

Last night I participated in a dinner with many Uruguayan entrepreneurs from the software industry and the retail industry and you could sense the energy here in Uruguay, and that's something we want to have a close relationship with.

EL OBSERVADOR: Do you see Uruguay as a country that offers a secure climate for investments?

PADILLA: Yes, there is great stability here, not just political but also physical security. This is a safe place to do business. Investors seek stability, security and predictability, and they have that here in Uruguay. The Bilateral Investment Treaty that the United States signed with Uruguay helps to provide that kind of certainty and predictability. The biggest challenge we have in our relationship with Uruguay is making more American investors and consumers aware of the opportunities in this country, and that's one of the reasons why I'm here.

EL OBSERVADOR: Do you think that new investments could come?

PADILLA: Certainly. The opportunities are unlimited. This is an economy that is transforming itself from reliance in traditional agricultural commodities to high-tech industries, like software for example, it's an economy that is attracting investment from major foreign companies who are taking advantage of the educated workforce, the physical security and the geographic location to make Uruguay a hub for business in South America.

EL OBSERVADOR: Local business leaders have complained about labor policies. They say that the left wing administration favor the workers. Did the business leaders with whom you met convey this concern to you?

PADILLA: No, I did not hear any particular complaints. My message to companies is that they should be able to do business when their government is from the left or the right or the center, it doesn't matter, as long as those governments are committed to two things: first democracy and second, to free markets. And this government has shown through its sound fiscal policies that it is committed to the market and that's something that we welcome and it's one of the reasons why president Bush was very pleased to come here a year ago, why my boss, secretary Gutierrez, was here last year and why I'm here today.

*Leonardo Luzzi is the assistant editor for Economic Affairs of El Observador

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