The intersection of economics and diplomacy remains at the heart of the United States' foreign policy agenda. The great challenge now, said U.S. Secretary of State Hillary Clinton, is advancing our global leadership at a time when power is more often measured and exercised in economic terms.
Recognizing this fact, the United States is focusing increasingly on the Asia Pacific region and emerging powers. The newly approved free trade agreement with South Korea and the United States' commitment to the Trans-Pacific Partnership are demonstrations that the United States is not only a military and diplomatic power in Asia, but an economic power as well.
In Latin America, the United States Congress also recently approved free trade agreements with Panama and Colombia; so the United States has a free trade agreement with every country on the Pacific coast, from Canada to Chile, except Ecuador.
The United States is also honing its ability to develop economic solutions to strategic challenges. Aid alone is not enough to make democracy take root in Egypt, Tunisia and Libya. A sophisticated effort is needed to integrate the region's economies, to promote investment, and to assist in economic modernization. Likewise, in Afghanistan a viable economic plan will help stabilize the country and give its neighbors a stake in its success through greater regional trade and integration.
Another aspect of economic statecraft is to build and enforce a system of rules that apply equally to everyone. Enough of the world's commerce now takes place in the developing nations that exempting them would render the whole system unworkable. One example of an unsustainable approach is China's currency policy. "China has been gaming the trading system," said Secretary Clinton, "to hold down the value of its currency to give its companies a leg up. Its currency has appreciated," she said, "but not enough."
And finally, governments are entering markets directly through their cash reserves, natural resources, and businesses they own and control. And they are shaping these markets not just for profit but to exercise power on behalf of the state. What is needed, therefore, are international rules and norms that set boundaries, police bad behavior, and require transparency so that state-owned entities are clear about their intentions and their actions.
America's core belief, said Secretary Clinton, is that everyone should have the chance to succeed. So, in the century ahead, the goal is to build a stronger economy that will provide more prosperity more broadly.