Message to the Congress Transmitting Proposed Legislation To Implement the Administration's Enterprise for the Americas Initiative

To the Congress of the United States:

I am pleased to transmit a legislative proposal entitled the "Enterprise for the Americas Initiative Act of 1991." This proposal sets forth key measures to implement the investment, debt, and environmental components of my "Enterprise for the Americas" Initiative announced on June 27, 1990. It will build on the provisions in Title IV of the Agricultural Trade Development and Assistance Act of 1954 as amended by section 1512 of the Food, Agriculture, Conservation, and Trade Act of 1990 ("1990 Farm Bill") to grant the Administration the remaining authority needed to implement these aspects of the Initiative. Also transmitted is a section-by-section analysis of the proposed legislation.

This Initiative acknowledges the gains made for freedom in our hemisphere over the last year, as a resurgence of democratic rule has swept through the Americas. It also reaches out to support the realignment of economic policies that has paralleled this political shift.

As the people of Latin America and the Caribbean search for prosperity following a decade of painful economic adjustment, their governments are focusing on economic growth and the free market policies needed to nourish it. By reforming economies and rebuilding their strengths, each country will contribute to the prospects for the Americas as a whole in the coming years. My new Enterprise for the Americas Initiative aims to build a broad-based partnership for the 1990s to promote this process.

The Initiative rests on three pillars -- actions on trade, investment, and debt -- through which we can reach out to our neighbors and support economic reform and sustained growth. First, we want to expand trade by entering into framework agreements on trade agreements that will establish a hemisphere-wide free trade system. Second, we want to encourage foreign and domestic investment and help countries compete for capital by reforming both broad economic policies and specific regulatory systems. Third, we want to build on our successful efforts to ease debt burdens and to increase the incentives for countries to reform their economies by offering additional measures in the debt area. Building a strong future for the hemisphere also depends on preserving and protecting the environment. Accordingly, we also propose to create resources to support environmental programs as an important element of debt reduction.

The proposal I am transmitting to the Congress focuses on the investment, debt, and environment components of the Enterprise for the Americas Initiative. It reflects the mechanisms established in the 1990 Farm Bill authorizing the reduction of PL - 480 debt of eligible countries and the payment of interest in local currency to support environmental projects.

The proposal provides for contributions by the United States to a multilateral investment fund to be established by the Inter-American Development Bank (IDB) that would foster a climate favorable to investment in Latin American and Caribbean countries. This Enterprise for the Americas Investment Fund will provide additional support for reforms undertaken as part of the new IDB investment sector lending program. The Fund will advance specific, market-oriented investment policy initiatives and reforms and finance technical assistance.

The proposal establishes the Enterprise for the Americas Facility to support the objectives of the Initiative through administration of debt reduction operations for those nations that meet the investment reform and other policy conditions. Latin American and Caribbean countries can qualify for benefits under the Facility if they:

Have in effect, have received approval for, or in exceptional circumstances are making significant progress toward International Monetary Fund/World Bank reform programs and World Bank adjustment loans;

Have in place major investment reforms in conjunction with an IDB loan or are otherwise implementing or making significant progress toward open investment regimes; and

Have negotiated a satisfactory financing program with commercial banks, including debt and debt service reduction, if appropriate.

The proposal authorizes the reduction of concessional obligations extended under the Foreign Assistance Act of 1961. The Agency for International Development will exchange -- at the direction of the Facility -- new obligations for obligations outstanding as of January 1, 1991. Principal on the new obligation will be paid in U.S. dollars. Interest will be at a concessional rate and paid in local currency if an eligible country has entered into an Environmental Framework Agreement establishing an Enterprise for the Americas Environmental Fund; otherwise, interest will be paid in U.S. dollars.

The Environmental Fund into which local currency interest payments are deposited will be owned by the debtor country. The Environmental Framework Agreement negotiated with each country will provide guidelines for the administration of its Environmental Fund. This Agreement will be negotiated by the President in consultation with the Environment for the Americas Board, a Washington-based entity with both United States Government and nongovernmental representatives.

This Board will also ensure that appropriate local administering bodies are established and will review the programs, operations, and fiscal audits of each administering body. Local administering bodies will include representatives from the United States Government, the debtor government, and a broad range of environmental nongovernmental organizations based in the participating country. A majority of the members of each administering body shall be individuals from such nongovernmental organizations.

These administering bodies will be responsible for identifying projects and managing the use of the Environmental Funds in each country. They will prepare annual programs laying out their priorities and plans, which will be submitted to the Environment for the Americas Board for review. Grants in excess of $100,000 will be subject to the veto of the United States Government or the debtor government involved.

The proposal also authorizes the sale, reduction, or cancellation of loans made to eligible countries under the Export-Import Bank Act of 1945, as amended, and assets acquired under export credit guarantee programs authorized pursuant to the Commodity Credit Corporation Charter Act or section 4(b) of the Food for Peace Act of 1966. These sales, reductions, or cancellations will be undertaken only when purchasers confirm that they will be used to carry out debt-for-equity, debt-for-development, or debt-for-nature swaps in eligible countries.

We believe that these investment, debt, and environmental measures will provide significant support to the efforts of Latin America and the Caribbean to build strong economies.

The leaders of these countries have welcomed the Initiative and widely recognize it as the most significant opportunity -- and challenge -- in inter-American relations in recent years. These are the leaders who are facing difficult choices in reforming their economies and, in the process, turning the tide away from economic decline and environmental degradation.

Their efforts are not merely of theoretical importance to us in the United States. We have not gone untouched by the economic crisis faced by Latin America and the Caribbean over the last decade. As countries in the region cut imports, postponed investment, and struggled to service their foreign debt, we too were affected. We lost trade, markets, and opportunities.

Enactment of the Enterprise for the Americas Initiative Act of 1991 will permit the United States to support the efforts of Latin American and Caribbean leaders, increasing the prospects for economic growth and prosperity throughout the hemisphere.

George Bush

The White House,

February 26, 1991.