But I am greatly pleased to be here and to be back in Mexico. It's amazing how often I have come to Mexico in the first 22 months of this administration -- for an opening summit in Guanajuato at the beginning of the administration and then back here for the Monterrey Summit on Development, and then back again for the APEC Leaders Meeting not too long ago, and now for this Binational Commission meeting, and there are already additional meetings scheduled for next year where I expect to be back here.

I think this is a sign not only of a closeness that exists between the United States and Mexico, but increasingly, the role that Mexico is playing on the world stage as a leader and as a host for these kinds of events and showing its commitment to development, its commitment to the international community. And I'm deeply appreciative of this kind of offer on the part of Mexico to host such events, and I congratulate President Fox for his leadership in this regard.

Bill, thank you for that warm welcome and thank you, also, for inviting our new Ambassador to be here and welcoming him. In Tony Garza you have somebody who is close to the President and I think that's a sign of the respect that the President has for President Fox, but more importantly, it's a sign of the commitment that the President has to fostering better relations, the best relations we could possibly have with Mexico in every regard.

I would also like to recognize John Bruton who's here with us this evening, of course. I understand that he is finishing his tenure as the AmCham's Executive Vice President. And rumor has it that he is one of the founders of AmCham back to 1917, (laughter) but he doesn't look quite that old to me. But John, congratulations and I wish you all the best in future endeavors. (Applause.) Jack Sweeney will fill that role and I know he will also do a terrific job. So Jack, where are you so that you can be recognized as well. Thank you. (Applause.)

Because I am a little late, what I would like to do is just share some thoughts with you and then go to questions rather quickly.

I welcome this opportunity to sit with my Mexican colleagues once again. I'm especially pleased that I was able to bring a significant delegation with me -- a number of cabinet officers and sub-cabinet officers, and we will have a chance tomorrow to explore all the areas of mutual interest between our two countries, whether it is economic, whether it is migration, whether it is water issues, whether it is our joint effort against terrorism, our joint efforts against narco-trafficking, it's a sign of the strength of our relationship that we would come here with 40 members of the delegation to participate in this kind of effort.

There are lots of issues that are important to us. A lot of things have happened over recent years that demonstrate the vitality of this relationship. One of the greatest changes in recent years, I think, is NAFTA. It's a change exceptionally for the better. NAFTA has fueled export-led growth in Mexico and has resulted in tripling of the amount of capital flowing in. That capital then creates even more growth and development. And in today's difficult economic climate, NAFTA and Mexico's bold reforms -- economic and political reforms -- have helped to make this country increasingly a safe haven for investors; a place where investors can go and find that their capital will be greeted and will be safely dealt with and you can get a proper return on your investment and you can help the Mexican economy grow. And in turn, then, help the Mexican people.

Now the NAFTA partners must remain committed to completing the full implementation of the agreement. By meeting our commitment to a tariff-free exchange of goods, we can expand our export markets and help our citizens, help our businesses realize the full potential of NAFTA.

One of the important outcomes of this year's BNC will be our commitment to more progress in a number of areas: on migration, on law enforcement, on border security, and shared economic prosperity. Tomorrow we will sign a letter of agreement to fund some $25 million in programs to make the flow of goods and people between the United States and Mexico more secure and more efficient.

It is as part of our effort, as well, to deepen and broaden economic prosperity that the United States and Mexico have launched another important initiative, the Partnership for Prosperity. The Partnership, as you all know, is a public-private initiative to generate economic growth, to create jobs and to attract investment to the more remote areas of Mexico. The Partnership is a great example of how the private sector and the public sector are working together to expand the circle of development.

The wealth and know-how that businesses like yours create is ultimately what will put food on the table of a household in the remotest village of Mexico. The good governance and rule of law that you support in your business practices will help a parent to go out and perform a day's work, be compensated for that work, and then come home and provide for his or her family. And when that working person comes home at night and is able to provide for his or her family, it is not only food, it is not only shelter, it is not only education that comes into the home. What comes into that home that evening is hope. And armed with hope a person can believe in democracy and in the free enterprise system.

You are businessmen and women. You are concerned about running successful businesses, you are deeply interested in creating jobs for people, you are interested in generating wealth, in creating a profit that you can return to your owners or to your shareholders. We must never lose sight of the fact that the ultimate objective of all of this has to be to better society, to bring hope to the life of each and every person who is touched by your efforts, to make sure that people believe in their system, believe in their society, believe in their political system, believe in their economic system.

This is the that message that I bring to Mexico, but not just to Mexico; it's a message I bring everywhere I go in the world because I am absolutely persuaded that democracy and the free enterprise system, that's the system that works. For the last one hundred years, we saw clashes of ideology. We saw the clash between democracy and fascism. We saw the clash between democracy and communism. And democracy won. The free enterprise system won.

But it only will be a victor in the final analysis if it puts onto the table of every household food, a roof over people in need, hope in the hearts of young people, if people can see that democracy and the free enterprise system is not just something for business people but something for them. It's a promising world to longer have this clash of ideologies of the kind we used to have in the past. The real clash that exists now between ideologies is between terrorism and democracy and free people. Terrorism cannot destroy our system. It can destroy a building, it can take innocent lives, but it is no longer the kind of conflict that existed when we had communism and fascism that were literally trying to destroy our way of life. Our way of life prevailed.

But it will only be seen as prevailing in the minds of all of the people of the world who still are in need. It will only be seen as prevailing when their lives are better.

And so this is a wonderful time of opportunity for all of us. There are crises and I worry about these crises. I deal with them every day. We know that there is a problem with Iraq that we have to deal with. We know that terrorism is a problem. Narco-trafficking is a problem. We know that there are problems far away from here that could still touch us.

When you see a potential conflict between India and Pakistan, two nuclear-armed nations on the other side of the world, yet we know that if not dealt with, that kind of a crisis can affect us, affect our economies, affect the world that we know. We know that the crisis in the Middle East is also far away, yet it affects us because it creates instability throughout the world.

And there's a tendency in our daily activities to focus on these crises, but at the same time, I make it a point every day to lean back a little, lean back a little and look at the good things that are happening, look at the opportunities that have been created by our success in this clash of ideologies, by our victory over communism and totalitarianism.

I look at a western hemisphere that 15 years ago, when I was National Security Advisor to President Reagan, we saw such turmoil with generals running countries and with totalitarian regimes everywhere. Now, we're down to just one regime that is still totalitarian. We still have problems in the region. We still know that there are economic issues we have to deal with in so many countries throughout our hemisphere. We also know that democracy is still fragile in a number of places. But in all of these nations, with the exception of Cuba, there is hope, there is promise, people are moving, people are trying to learn how democracy is working, people are trying to get rid of that debt which is crushing them. People are reforming themselves, leaders are coming to the fore that will try to lead their country down the path of democracy and free enterprise and put hope in the hearts of their people by not ignoring the problems that they have, but dealing with them in a democratic way.

So I think that with initiatives such as our Community of Democracies, such as a Free Trade Area of the Americas and the other regional trading programs and initiatives that are underway, we see a promising future for the western hemisphere.

When I lean back late at night and reflect on the opportunities in the world, I see a better relationship with Russia and with China. President Putin met with President Bush last week in Moscow for about the seventh or eighth time in the past 22 months, and once again committed to working with Russia to bring Russia more to the West. And at the same time that President Bush was meeting with President Putin, we had just celebrated inviting seven more nations into NATO, seven more nations that just a few years ago were on the other side of an Iron Curtain, an Iron Curtain that I spent most of my life studying how to defend from these nations attacking across that Iron Curtain into Western Europe.

And now they all want to be part of this club. Many of these old Soviet, now Russian, retired generals that I knew from the old days used to say to me, "We got rid of the Warsaw Pact. Why don't you get rid of NATO?" And the answer simply was, "It's hard to close down a club when people are asking for membership applications every day."

And so seven more nations will join this alliance. Why? Because they want to have an alliance that includes North America. They want to be part of the European Union as well, but they want an alliance that includes a connection with North America, with Canada and with the United States, because they want to be part of that North Atlantic community.

And it will continue to grow. More nations will join NATO in due course and the United States is taking a leadership role in welcoming these new nations into NATO, making sure Russia knows it is not a threat to them. That war, that Cold War, is over.

I can say the same thing with respect to our relationship to that other large nation, great nation, China -- 1.3 billion people -- still a communist regime -- it says, but increasingly by its actions, by what it's doing, it is moving into a world of free trade, a world of open trade, a world that recognizes that you have to have investment if you want to take care of your people. You have to have an environment that will draw outside investment into your country.

Success no longer is viewed as coming out of the barrel of a gun. It's coming out of the hold of a ship -- the ship that is coming to China and the ship that is leaving China and going to the United States. Trade is what will help China take care of its 1.3 billion people.

This is not to say that we overlook problems with China such as human rights issues or proliferation issues. This is to say that we can deal with those issues honestly, but at the same time, there are so many issues we can deal with that are positive issues -- issues where we can increase the flow of trade and benefit both of our nations and make sure that the Cold War stays in the past, history and nothing that will come back.

So it's a wonderful time to be Secretary of State of the United States of America. It's a wonderful time to see these opportunities at the same time that we deal with the challenges of Iraq and the Middle East. And I'm sure we'll talk about that in our question and answer period. But I want to make this point. There is no area in the world that is more important to us than our own neighborhood. President Bush made that point early on in his administration. He has reinforced it with us every time we have talked about issues in this hemisphere. It is a priority for him. He has demonstrated that by his efforts to push along the Free Trade Area of the Americas. He has demonstrated that by his reception of President Fox and other Latin American leaders. He has demonstrated that by putting in place a strong team to deal with issues in the hemisphere and he has demonstrated that, I think, time and time and again.

You are our neighbors. This is our neighborhood. And if we don't take care of our neighborhood, no one else will do it for us. The issues that are of concern to my Mexican colleagues will be dealt with. Migration -- I look forward to a good discussion with Foreign Secretary Castaneda tomorrow.

Things have changed over the last year with 9/11, with a new Homeland Security Department that was signed into law today and Governor Tom Ridge will be the new Secretary for Homeland Security.

A new Congress is in place. A number of things have happened which caused us to slow down our movement toward migration efforts and migration reform. But we have not lost our desire to move forward on migration and I hope that in the year ahead we will see progress and Foreign Secretary Castaneda and Attorney General Ashcroft and others who are with me will engage with their colleagues on the Mexican side to lay out how we should go forward to show to the American people and the Mexican people that this is not something that is not a priority for us. It is a priority and we will push forward, but we have to do it in light of 9/11 and in light of some changed circumstances and new reality.

And so I think I will end at this point merely to say that we value greatly the relationship that we have with Mexico. We want to improve it. We want to build upon it. And I look forward to continuing that process tomorrow in our meetings of the Binational Commission.

Thank you very much.

(Applause.)

Now I would be delighted to take your questions and we'll wait for the microphones, please. I think I can hear you without the mikes. Why don't you try that. Yeah.

QUESTION: Thank you. A lot of Mexicans leave Mexico and die in their attempts to get to the United States (inaudible) Cuban (inaudible). And so my question is why do Mexicans have fewer human rights than Cubans upon reaching US territory?

SECRETARY POWELL: I wouldn't say that they have fewer human rights. I think what we are trying with our policies in the United States is to find a way forward so that migration into the United States is legal, secure, safe and regularized. And for those who are in the United States in an undocumented status, we want to find ways to fix that over time. We understand the contribution that Mexicans make to the American economy, but more than just to the American economy, but to the American family.

Mexicans are treasured members of our family. They become our citizens. They bring more children into the world to become American citizens and it enriches our country. But they have rights in our nation and the problem exists with those who are undocumented. And one of the big challenges we're going to have in the years ahead is to find a way to regularize this population so they can be fully integrated into our society or put in a situation where they can return to Mexico and come back to the United States.

What we're looking for is regularizing the movement back and forth. Because we think if we can do that, then what is learned in the United States about business, about the skills that are required in the United States can be brought back to Mexico and benefit Mexican communities all over. And so we're looking for a way to control this, regularize it, make it safe, make it legal and to make sure that all who come to the United States enjoy the rights that God has given them.

And so I don't think it's fair to say that there's a comparison between Cuba and Mexico in this regard. There are different situations -- it's a different situation relating to Cuba that rests on our history with Cuba of the last 40 years or so. And so I don't think it's a direct comparison.

Yes, sir.

QUESTION: Mr. Secretary, my name is John (inaudible). My question is doesn't the United States feel somewhat that it was ill-timed and very inopportune for Mexico not to back us on the question of Iraq recently? And is it true that the meeting in Cabo was not as enthusiastic as the previous meetings have been between the two Presidents?

SECRETARY POWELL: Well, Mexico, after considering the resolution that we put forward and after adjustments that we made in the resolution did support UN Resolution 1441. President Fox and President Bush had a good discussion at Los Cabos. It was a major item of discussion at Los Cabos, and Foreign Secretary Castaneda and I stayed in very close touch in the days and weeks after Los Cabos as we worked on the resolution.

And I'm pleased that Mexico found that the accommodations we were able to make to satisfy Mexico and other members of the Security Council produced a resolution that they could support and did vote for. They helped shape that resolution. They played a very useful role with other members of the Security Council.

The United States and 14 other members worked for an intense seven plus weeks to come up with such a resolution and Mexico supported it as part of the unanimity that we were looking for. I also expect that as we go forward and as we see the declaration Iraq submits next week and we see the inspectors go in to do their job, Mexico will be supportive of the implementation of the resolution and all the requirements in the resolution. And should Iraq not comply with the resolution, I'm sure Mexico will play a role in any further discussions that the Security Council has on what consequences should follow.

Mexico is able to make its own judgments about the rightness or wrongness of a particular resolution and whether they wish to support it or not, and I think was a case of good, solid back and forth dialogue with the Mexican Government and making accommodations on both sides so that they could support it.

At Los Cabos, the Presidents had a good meeting on this issue and on all of the other issues on the agenda. They have subsequently talked on the telephone and I think the relationship between President Bush and President Fox is as strong as it's ever been.

Yes.

QUESTION: Mr. Secretary, I would imagine that if there is a war with Iraq, there will be enhanced border measures and border security between the United States and Mexico. How do you see that playing itself out and how do you see the ability to guarantee the movement of goods across the borders in the event of a war? Thank you.

SECRETARY POWELL: I don't know that we will be doing anything differently than what we're trying to do now in the process of putting in place with the Smart Border Program. First of all, we hope there won't be a war. It's the last resort. President Bush has made it clear that he is looking for a peaceful solution and I don't know that there would be any particular new threat coming across the border that would give us additional concern. At least I don't see that at the moment.

It's been a very challenging year, and I face that challenge everyday. We have to protect our country and our people. We were shocked by 9/11. It's the first time a foreign force had had that kind of an effect in the United States, frankly, since the British burned Washington back in 1812 or thereabouts.

It was a shock to have terrorists able to penetrate the United States that way using visas, getting access into our country. And it told us that we had to do a better job of knowing who was coming into the country and checking out people who were coming into the country. And we've been working hard for the past 14 or so months to do that.

In the process of tightening up our system, in the process of merging all of our databases -- intelligence and law enforcement databases -- we have taken some actions which make it more difficult to get into the United States, to obtain a visa. We will get through this period where it is more difficult, I think, when our databases are fully integrated, when we put in place some new systems that we have coming online, and when we train this new force of agents who will be working on this matter as well as the new transportation force that we'll have at all of our airports.

We want to make sure that in the process of protecting ourselves, in taking all of these actions and tightening up, we don't convey to the world that the United States is not a welcoming place. We are a country of countries, touched by every country and we touch every country. We would be giving the terrorists a win and hurting ourselves if people stopped coming to our schools, if people stopped coming to our attractions, if people stopped coming to see New York or to Disneyworld, if people stopped coming for healthcare, if people stop immigrating to the United States to become United States citizens.

So we will find the right balance between protecting ourselves and also making sure that we remain an open and welcoming society. And if conflict comes, and let's hope it does not come, we will try to conduct that conflict in a way that it will be over as quickly as possible. I believe there will be many nations who will join in that conflict if it comes, and get it over with as soon as possible. And when it's over, I think it will be a conflict that will show that the world is united and that the regime had to be disarmed of its weapons of mass destruction, and there will be a better life for the people of Iraq after.

And with us, we're trying to do it peacefully. And I don't expect that any extraordinary circumstances might come about that would cause us to do anything that is not already included in the Smart Border Program.

Yes.

QUESTION: Mr. Secretary, what role do you perceive for Mexico in pursuit of the Free Trade Agreement of the Americas, given the fact that Mexico's sort of been seen as having gotten its deal with NAFTA, and Brazil is pretty well seen as not moving very quickly toward that concept. What role do you see for Mexico in that?

SECRETARY POWELL: I think Mexico can plan an important role by showing the benefit of these kinds of agreements. NAFTA has benefited Mexico. There are problems, I know. And I know there are particular problems in the agricultural sector. And they are going to become more difficult in 2003. And we're very sensitive to that and I will be talking to Foreign Secretary Castaneda about that tomorrow.

But I think the example of what NAFTA has done for Canada, the United States and Mexico is a powerful argument that these kinds of agreements, despite the dislocations they cause in their implementation, will benefit all of the nations. And I think Mexico can demonstrate that by experience and also can be a leader in persuading other nations of the hemisphere that this is the way to go.

I am not an economist, I'm an infantry officer. But I've learned a lot about the economy in the last 22 months. Most of my work as Secretary of State is economic as much as it is geopolitical in matters of war and peace. I get involved in all sorts of trade disputes and I've become something of an expert -- whether it's maple syrup imports from Canada or tuna in Mexico. You name it, I know something about it.

But the one thing I have seen over the last 22 months is that the world is opening up more and more. Trade restrictions are dropping just as all those political restrictions that used to exist because of the Cold War are dropping. Those borders of the Cold War don't mean as much as they used to. And those same kinds of borders used to restrict trade. Tariffs are dropping. Everybody is coming to the understanding that you must move forward. And the Free Trade Area of the Americas is one example of that. And I hope that Mexico will be a leader in that effort.

There's just no doubt in my mind. One can argue about whether globalization is good or bad, and many people do. But I think it's a fact of life and it's going to continue, it's going to spread, and ultimately it will benefit all nations.

One thing we also understand is that nations have to get ready for globalization. You have to find out what you have to contribute in a globalized world. For many nations, especially those nations that we're most concerned about in the developing world, massive investment is needed in infrastructure to educate young people for the kinds of jobs that are out there -- not the kinds of jobs that you might have thought about 50 years ago. That's one reason why President Bush created what's called the Millennium Challenge Account. This really is a 50 percent increase in the amount of money we will be providing in foreign assistance and development assistance. And it will come into effect in about two or three years, once Congress fully appropriates the program, but every year thereafter, $5 billion additional dollars will go into developing nations.

And it will go to those nations that have demonstrated they are committed to democracy, they are committed to the free enterprise system, they are committed to the rule of law. They are committed to rooting out corruption. In other words, they're committed to good governance. And if they're committed to good governance you can make the case the United States will use this additional $5 billion a year to help them to encourage even more good governance, to invest in school systems and in communications systems, transportation systems, that infrastructure that is needed to participate in this globalizing world.

And I think Mexico is a perfect example of that and, frankly, some of our migration policies are for the purpose of making sure that as we move forward we help control and manage migration back and forth so that we are not creating conditions in Mexico that encourage migration, but regularize migration so people come to the United States, spend time, do it in a legal, safe, secure way, and do it in a way so that they can go back and forth and bring those skills back to their villages, their towns, their communities, bring resources back to the villages, towns and communities and spur development there to keep people home, so they don't feel a need to go to the United States unless they have other desires to go to the United States, and not just an immediate economic need.

So I think Mexico can provide and perform a leadership role as we move toward the FTAA.

Yes, ma'am.

QUESTION: Thank you. Thanks for sharing your time with us. As it relates to the energy sector, we see that most US-based companies in Mexico have a hard time competing, primarily because --

SECRETARY POWELL: Have a what?

QUESTION: They have a hard time competing, primarily because they have a hard time competing with the European companies that are subsidized. And the question is these binational energy development on consumption being considered in your agenda in the next couple of days?

SECRETARY POWELL: I'm sure it will come up tomorrow. I don't have any specific programs or proposals or issues to bring to Foreign Secretary Castaneda and I'm not sure if any of the other members of my delegation have any specific items they're going to talk to their counterparts about that President Bush is committed to doing everything possible to enhance energy cooperation between the two nations, not only in terms of the production of energy and the use of the fuels, but distribution systems which are also an essential part of our energy agenda. And he and President Fox have discussed this a number of times, but I'm not aware of any specific programs or proposals that we have to present tomorrow.

MODERATOR: I think we have time for one more question.

QUESTION: My question is what is your sense, personal sense, on the Partnership for Prosperity, which I think is of the essence here, between the two nations, Mexico and the US?

And the other one is how can Mexico become really an active or proactive member of homeland security for the benefit of the US and the benefit of Mexico, because both countries are threatened by the same thing, basically?

SECRETARY POWELL: The Partnership for Prosperity, I think, is just getting up and running and we're now starting to see benefits flowing from it -- investment, public-private ventures. I'm very pleased with the progress that has been made so far and I think we ought to encourage it in every way and find creative ideas that we can put under the umbrella of the partnership.

With respect to your second question, terrorism is not restricted to any country. We have seen after 9/11 terrible things happen in Moscow, in Bali, Tunisia. No country is immune from this. And so I think as we go forward we have to go forward seeing this as an international effort. It's a campaign that all nations have to be involved in.

And I think as we work on our smart border initiative, as we find new ways to cooperate with Mexico on the terrorism front, it will benefit both of our countries.

I also hope that with the Foreign Secretary tomorrow we can spend a little time describing the mission of our new Homeland Security Department and how it can cooperate with Mexican authorities in a more effective way.

Another institution we've created is the Northern Command, military command that deals with some Homeland Security efforts and whether there are any opportunities for it to work with Mexican authorities, as well.

This is a challenge to all of us and I'm so pleased that President Bush has announced that Governor Ridge will be the new Secretary because he has been down here a number of times, he's already in close contact with Mexican authorities, and I think we'll have a very, very productive relationship between Mexican authorities and Governor Ridge in the new Homeland Security Department.

Thank you very much.  (Applause.)

MODERATOR: Thank you very much, Secretary Powell. We would like to present you with this certificate of our appreciation for being with us here today. Thank you so much.