THE WHITE HOUSE
Office of the Press Secretary (Sarajevo, Bosnia-Herzegovina) ________________________________________________________________________ For Immediate Release July 30, 1999
Promoting Trade And Investment In Southeast Europe
At today's Summit, President Clinton and the other Stability Pact leaders recognized that trade and investment, even more than donor assistance, will drive long-term economic growth in Southeast Europe. With this in mind, the Stability Pact countries agreed to two significant initiatives reflected in the Summit Declaration:
An Investment Compact. Countries of the region pledged to take concrete action to improve the investment climate. This includes intensified efforts by government action to create a predictable and fair business environment, fight corruption and crime and press on with market-oriented reforms. In exchange, the other Stability Pact partners committed to assist the region in this effort and to work together with the international financial institutions (IFIs) to develop appropriate vehicles to mobilize private finance and mitigate risk.
A Trade Expansion Initiative. Stability Pact leaders underscored the importance of Southeast Europe's integration with and access to the European Union's more developed markets and integration into the global trading system. Partners recognized the great economic benefit to the region of providing unilateral trade preferences, joining the World Trade Organization (WTO) and adhering to its disciplines. All leaders committed to pursuing such expanded access rapidly to catalyze development and growth in the region. They also agreed to bolster assistance to those regional countries seeking to enter the WTO, which will speed integration into global markets.
President Clinton will announce, as America's contribution to the two initiatives, his intention to work with the Congress and appropriate international organizations to set up a series of bilateral and multilateral investment funds, and to spur access to developed markets such as the U.S. and Europe's and ultimately integration into the global trading system; to have Secretary Daley, OPIC Chairman George Munoz and Export-Import Bank Chairman Jim Harmon organize a major commercial development mission this fall in the region, and to facilitate regional participation in reconstruction. The U.S. proposals are meant to encourage and accompany significant new efforts by the European Union and its member states. It is access to and integration with the European Union that can provide the greatest economic benefit for the region.
To promote economic growth in the region, we will encourage the active participation of firms from Southeast Europe in the reconstruction efforts, including where appropriate, through partnerships with Western companies. In that context, we believe that all procurement related to reconstruction and economic development in the region, including Kosovo, be open and fair and based on principles of transparency and integrity.
OPIC Fund and Credit Line
The Overseas Private Investment Corporation (OPIC) is a U.S. government sponsored entity that provides political risk insurance to U.S. businesses, financing through loans to companies with substantial U.S. participation, and support through guarantees for private sector investment funds in emerging markets. Under its Chairman George Munoz, OPIC will use its investment guarantees to mobilize private equity financing by:
Creating one or more private sector investment funds which will mobilize up to $150 million in financing;
Providing a $200 million credit line for companies or commercial partnerships with significant U.S. participation;
Establishing an OPIC on-the-ground presence in the region to serve as a resource for the U.S. investment community.
EBRD Small and Medium-Sized Enterprise Support Fund
The President will propose, after consulting closely with Congress, to work with the European Bank for Reconstruction and Development (EBRD) to develop an initiative for providing up to $130 million to support small and medium-sized enterprises (SMEs) in this region.
A U.S. contribution of $34 million would leverage an additional $80 million from the EBRD in debt financing for SMEs. We are also urging the Europeans to make additional bilateral contributions.
The U.S. would contribute $16 million over the next four years to provide technical assistance to accelerate the transition of these countries to more market-oriented economies. Specifically, this would finance an EBRD team to identify legal and regulatory constraints for private sector development and provide technical assistance to promote sound business practices and good governance.
IFI Regional Equity Fund
We will work with the IFIs, the private sector and other institutions to establish a regional equity fund up to $200 million using financing from institutions such as the European Bank for Reconstruction Development (EBRD) and the International Finance Corporation (IFC) to catalyze private investment. This fund would take equity holdings in economically and commercially viable companies in the region as a means of boosting growth and promoting private sector developments.
Southeast Europe Trade Initiative
The President will work with Congress to establish a Southeast Europe Trade Initiative. The initiative will promote economic development and stability in Southeast Europe by increasing access to the U.S. market and stimulating regional investment.
The program will provide trade preferences, allowing for duty free access on an expanded list of products under GSP for the following Southeast European countries: Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, Romania, Slovenia, as well the areas of Kosovo and Montenegro.
The program will be established for a five-year period to ensure a predictable environment for businesses and allow adequate time for sustainable trade flows to develop.
As part of the program, we will continue our important work of promoting accession of countries to the World Trade Organization on commercial terms. We plan to expand technical assistance to the counties in the region on WTO disciplines and hope that other countries will do likewise. Accession is an important tool in fostering economic transition to market economics. Adherence to WTO disciplines can help remove barriers to all trade - global and regional.
Southeast Europe Commercial Development Mission
The President will ask Secretary Daley, OPIC Chairman George Munoz and Export-Import Bank Chairman Jim Harmon to organize a major commercial development mission this fall in lead a delegation to the region to bring together American businesses leaders, with regional government officials and business leaders.
The mission will allow regional officials and businesses to meet with American companies and provide a forum to discuss impediments to investment in the region as seen through the eyes of the private sector.
It will also provide a forum for regional officials and local businesses to hear from U.S. investors and businesses what they feel are the challenges that must be overcome to attract private sector investment.