WEDNESDAY, OCTOBER 3, 2001

201 Kansteiner Reviews U.S. Policy Toward Africa After Terrorist Attacks
(FR) (Is optimistic about economic trends in talk at Freedom Forum) (960)
202 Text: U.S. Statement on Sudan Sanctions
(FR) (Sudan has taken substantial steps against terrorism) (670)
203 U.S. Approves World Airways for U.S.-Nigeria Air Service
(FR) (Will operate under Open Skies agreement signed in August 2000) (560)
204 Text: Bush Nominates Cameron Hume As Ambassador to South Africa
(FR) (Also announces nominations for Justice, Education, USAID posts) (750)
205 Transcr: Bush Briefs Congressional Leaders on War Against Terrorism
(Says international coalition is impressive and steady) (1670)
208 Fact Sheet: Ronald Reagan National Airport to Reopen October 4
(White House releases fact sheet on the reopening of airport) (590)
209 Transcript: Powell Says bin Laden, al-Qaida First Priority
("Bad things" already happening to Taliban, he says) (1100)
210 Text: NATO Says Conclusive Data Links Al-Qaida to Sept. 11 Attacks
(Robertson invokes Article 5 of Washington Treaty) (480)
211 Text: Interpol Condemns "Murderous Attacks" of Sept. 11
(Urges use of Interpol resources to fight terrorism) (350)
214 Text: Bush Adviser Hubbard on Economic Policy after Attacks
(He sees increased likelihood of recession) (3340)
215 Text: Trade Promotion Group to Deliver Export Plan in Early 2002
(Focus will be on small, medium businesses, Evans says) (2650)
216 Text: Senate Democrats Assail WTO Draft as Targeting U.S. Laws
(Letter to USTR Zoellick opposes draft language) (690)
217 Researchers Discover Greener Vegetation in Northern Hemisphere
(New data may help solve mystery of "missing carbon") (1090)

*AEF201 10/02/01
Kansteiner Reviews U.S. Policy Toward Africa After Terrorist Attacks
(FR) (Is optimistic about economic trends in talk at Freedom Forum) (960)
By Jim Fisher-Thompson
Washington File Staff Writer

Washington -- Assistant Secretary of State for African Affairs Walter Kansteiner gave journalists an overview of U.S. policy toward the continent September 28, including an optimistic assessment of the long-term effect of the recent terrorist attacks in New York City, aimed at the economic heart of the nation.

Speaking at a Freedom Forum luncheon co-sponsored by the African Correspondents Association, Kansteiner said, "My guess is that trade flows will not be heavily affected" between the United States and Africa because of the September 11 attacks on the twin towers of the World Trade Center in New York City, symbols of America's global commercial and financial power.

Kansteiner told an audience that included the ambassadors of Algeria, Malawi, Mauritius, and South Africa, "All of our lives changed on September 11 and a lot of our policies have changed in the foreign policy realm, and Africa is included in that.

"Twenty-five Africans died in the World Trade Center, and they came from 13 different African countries," Kansteiner said. "It demonstrates this was truly a global attack and an attack on all civilized countries.

"Times have changed in the last two and a half weeks, and the Africa Bureau at the State Department is changing with them," the official told his audience. "I and the entire Africa Bureau are spending a lot of time, as you can imagine, working on issues of counter-terrorism, issues that deal particularly with the Horn and eastern Africa. Sudan, Kenya, and Somalia have become very much our focus over the last two weeks. But that's not to say that we've lost focus on our other priorities, our other issues that we are keen to work on in Africa -- and those are economic development, HIV/AIDS, environmental preservation of the ecosystems of Africa, and, of course, also conflict resolution."

Asked about African cooperation with the U.S. war on terrorism, Kansteiner said, "The way we are working the coalition with Africans is in the areas of intelligence sharing, monitoring and watching financial flows [called forensic accounting], monitoring and watching people flows -- immigration and migration -- and also, in specific cases, the coalition is asking for overflight and [cooperation in other] military-related issues.

"In all of those areas, the African governments have been tremendously responsive and very supportive, and we expect in the weeks ahead that some of that cooperation will be very, very fruitful," Kansteiner said. And he pointed to Sudan as a prime example where "some very good first steps have been made."

After predicting the U.S. travel ban for Sudanese diplomats would soon be lifted because of anti-terrorist cooperation in the intelligence field, the official added, however, that "that does not impinge at all on our policy goal of seeking peace in that country."

On the economic front, Kansteiner was asked if the Trade and Economic Cooperation Forum, a meeting of African officials from 35 nations invited to the United States in October to discuss implementation of the African Growth and Opportunity Act (AGOA), would be cancelled. He replied: "It's not cancelled, just postponed. It's a very important event in the sense that it gives a forum for trade, finance, and foreign ministers to come to this country to meet with the highest levels of our government and talk about economic issues, and we look forward to hosting it."

Emphasizing his belief that trade flows with Africa would not suffer greatly from the attacks, Kansteiner said: "We've had tremendous trade increases because of AGOA. Some countries like Madagascar, for instance, are up 126 percent" in exports to the United States -- "terrific success on that, and we want to keep that going."

South African Ambassador Sheila Sisulu pointed out that all her countrymen grieved with Americans over the great terrorist tragedy and she said she hoped that the U.S. government would also take into consideration "the terror of poverty, hunger, disease, famine, and war" that plagues the world.

Kansteiner touched on possible motives for the attacks, saying: "We're not convinced that at the heart of bin Laden's eagerness to inflict damage on us is poverty, quite frankly." (Usama bin Laden is the Saudi-born tycoon and religious extremist who has been named by the U.S. government as the chief suspect behind the planning of the terrorist attacks.) "The root of it [the attacks] is that he has a number of issues with the American political positions and policies and he is trying to inflict as much damage as he can on us."

Asked how religion played into the terrorist equation, Kansteiner said: "We want to make it very clear to all those in the coalition that, in fact, this [ours] is a war against those who use terrorist activities and has nothing to do with Islam. In fact, we look to our brother Muslim nations as part of the coalition, and that is extremely important.

"President Bush and President Obasanjo of Nigeria had a long, very good conversation about this earlier this week, and that's an important message to get out."

Finally, Kansteiner pledged that with all the attention being paid to the war on terrorism, Africa would not fall off "the radar screen" of government officials in Washington. The goal of getting at the terrorists who wreaked havoc on Americans on September 11, he stressed, is "not divergent from the goals of alleviating poverty in Africa, raising the standard of living of all Africans, and increasing economic flows between our continent and Africa."

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF202 10/02/01
Text: U.S. Statement on Sudan Sanctions
(FR) (Sudan has taken substantial steps against terrorism) (670)

The U.S. government believes that Sudan "has taken substantial steps" to meet specific demands of the Security Council regarding terrorism, U.S. Ambassador James Cunningham told the United Nations September 28.

Speaking during a Security Council meeting to lift sanctions against Sudan, Cunningham said that the United States did not oppose the lifting of sanctions because Sudan has recently apprehended extremists whose activities may have contributed to international terrorism and is also engaged in serious discussions with the United States about ways to combat terrorism.

The council ended sanctions imposed in 1996 in an effort to get Sudan to extradite three suspects in connection with a 1995 assassination attempt against Egyptian President Hosni Mubarak. The council also demanded that Sudan stop supporting terrorist activities and giving shelter to terrorists. The sanctions required nations to reduce the number of Sudanese diplomats in their country, restrict the travel of Sudan government and military officials, and deny Sudanese planes from using or flying over their territories.

The resolution, which was adopted by a vote of 14 to 0 with the U.S. abstaining, also noted that Egypt and Ethiopia, where the assassination attempt took place, both supported lifting the sanctions.

Cunningham also said that it was not satisfactory that the assassination attempt suspects had not been turned over to the appropriate authorities, but noted that the United States, Egypt, and Ethiopia believe "they are no longer in Sudan."

"We expect the Government of Sudan to demonstrate a full commitment to the fight against international terrorism by taking every step to expel terrorists and deny them safe haven," the ambassador said.

Following is the text of the ambassador's remarks:

(begin text)

Explanation of Vote by Ambassador James B. Cunningham, Deputy U.S. Permanent Representative to the United Nations, on Sudan, in the Security Council

September 28, 2001

Thank you, Mr. President.

The U.S. Government believes that the Government of Sudan has taken substantial steps to meet the specific demands of UN Security Council Resolution 1054. We note with concern, however, that the suspects wanted in connection with the 1995 assassination attempt on President Mubarak in Addis Ababa were not turned over to the appropriate authorities. This was not satisfactory. However, we believe, as do the governments of Egypt and Ethiopia, that they are no longer in Sudan. In this regard, we take very seriously the letters sent to the Council by the Governments of Egypt and Ethiopia -- the victims of the incident that led to the UN Security Council actions on Sudan -- calling for a lifting of Council sanctions anyway. We strongly urge the authorities of all states to continue the effort to bring these suspects to justice.

Sudan has recently apprehended extremists within that country whose activities may have contributed to international terrorism. Sudan is also engaged in serious discussions with my Government about ways to combat terrorism. We welcome those steps and expect this cooperation to continue. We expect the Government of Sudan to demonstrate a full commitment to the fight against international terrorism by taking every step to expel terrorists and deny them safe haven.

The United States also has continuing concerns about the enormous suffering of the Sudanese people. The civil war in the Sudan has lasted some 18 years and has caused immense human misery -- two million people have died, there have been massive displacements of civilians, human rights continue to be abused, and human beings there continue to be traded as slaves. My Government will continue to demand that the Government of Sudan address these issues, while we work to build greater cooperation in the international fight against terrorism. The President recently named a distinguished American, Senator John Danforth, to engage Sudan on these and other issues.

In light of these considerations the U.S. has abstained on this resolution.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
NNNN

*AEF203 10/02/01
U.S. Approves World Airways for U.S.-Nigeria Air Service
(FR) (Will operate under Open Skies agreement signed in August 2000) (560)
By Charles W. Corey
Washington File Staff Writer

Washington -- The U.S. Department of Transportation (DOT) September 21 granted World Airways' application to fly between the United States and Nigeria. World Airways, according to a DOT press release, will provide the first direct U.S. carrier service to Nigeria under the Open Skies agreement signed in August 2000.

"This new service is an indicator of the growing and deepening aviation relationship between the United States and the nations of Africa," U.S. Transportation Secretary Norman Y. Mineta said. "The Bush administration is committed to improving transportation ties with Africa, which are vital to development and economic growth on the continent," he added.

World may begin service with three weekly flights in April of next year to Lagos from Atlanta, Baltimore, or New York, and add a fourth flight by April 2003, according to the DOT release.

Randy Martinez, chief information officer for World Airways, told the Washington File that the airline was approached a year ago by an African airline -- which he would not identify. "We have had a number of meetings with these folks. We think that the concept is very viable. What we envision, from our perspective, is to fly the transatlantic routes for them."

The unnamed African airline, he said, would feed passengers from Central Africa into World Airways' transatlantic flights originating from Nigeria.

If the idea "comes to fruition," Martinez said, World Airways would also be looking for airline links inside the United States to transport passengers inside the United States.

"We are hopeful that their [the African airline's] concept will get them the funding to start this venture. We targeted the April timeframe primarily based on what their estimates were for trying to get something like this going, and also aircraft availability.

"In light of what has happened here recently [referring to the September 11 terrorist attacks on the World Trade Center in New York and U.S. Defense Department headquarters outside Washington], is that still a realistic time frame? I don't know. I have no idea," he said.

Martinez added, however, that World Airways went ahead and acquired the rights to fly the route on a "wet lease" basis -- which means World would supply the planes, crews, maintenance, and insurance. "So they [the African airline would] basically charter the aircraft from us and it is their responsibility to fill the seats.

"We think there is a potential market there, and they obviously think so too," he said.

World Airways, Martinez said, has similar operating arrangements with other airlines. As an example, he cited another deal in which World Airways is flying regularly scheduled service in partnership with Sonair Servico Aereo -- transporting oil workers twice weekly from Luanda, Angola, to Houston, Texas. Sonair is a subsidiary of Angola's national oil company, SONANGOL.

The U.S.-Nigeria bilateral agreement phases in additional U.S.-carrier service opportunities until March 2006, at which time all restrictions on services between the countries, as well as on beyond or intermediate flights, will be lifted. The United States has Open Skies agreements with 53 nations worldwide, 10 of them with African countries.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov/)
NNNN

*AEF204 10/02/01
Text: Bush Nominates Cameron Hume As Ambassador to South Africa
(FR) (Also announces nominations for Justice, Education, USAID posts) (750)

President Bush has announced his intention to nominate Cameron R. Hume, a member of the Senior Foreign Service, to be the United States' ambassador extraordinary and plenipotentiary to the Republic of South Africa.

A law graduate of American University in Washington, Hume is presently a senior advisor at the U.S. Mission to the United Nations in New York and has served in other capacities there as well as serving as political officer in the State Department's Office of Southern African Affairs and in multiple assignments overseas.

The White House also announced three other nominations for posts in the Departments of Justice and Education and the U.S. Agency for International Development.

Following is the text of the White House announcement:

(begin text)

THE WHITE HOUSE
Office of the Press Secretary

October 2, 2001

President George W. Bush today announced his intention to nominate four individuals to serve in his administration.

The President intends to nominate John B. Brown III to be Deputy Administrator of the Drug Enforcement Administration of the Department of Justice. Brown is currently the Special Agent in Charge of the Drug Enforcement Agency's Dallas Field Division, responsible for overseeing DEA enforcement and intelligence operations in North Texas and throughout the State of Oklahoma. Mr. Brown joined the Bureau of Narcotics and Dangerous Drugs, the predecessor agency of the DEA, as a Special Agent in 1972 and was assigned to the DEA Resident Offices in Mexico, from 1984 to 1988. Brown has also served as DEA Miami Group Supervisor in the Florida Joint Task Force, Group Supervisor of the Caribbean Enforcement Group and Inspector and Senior Inspector in the DEA Office of Professional Responsibility for the Southeast Office. In 1995, he was assigned to DEA headquarters serving as the agency's Deciding Official for Disciplinary matters, and in 1997 Brown was selected to direct the El Paso Intelligence Center. Mr. Brown holds a Bachelor's degree from the State University of New York at Brockport.

The President intends to nominate William Leidinger to be Assistant Secretary of Education for Management. Leidinger has served with Price Waterhouse Coopers since 1997, first as a Senior Principal Consultant and currently as Mid-Atlantic Business Development Manager. From 1992 to 1996, he served as County Executive for Fairfax County, Virginia. He was Executive Vice President of Security Federal Savings in Richmond, Virginia, from 1986 to 1991 and was Executive Director of the McGuire Clinic from 1981 to 1986. He was also a member of the Richmond City Council from 1980 to 1990. Leidinger received an undergraduate degree from Loras College in Dubuque, Iowa, and a Master's degree from the University of Iowa.

The President intends to nominate Cameron R. Hume to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of South Africa. A career member of the Senior Foreign Service, he is presently a Senior Advisor at the U.S. Mission to the United Nations in New York. Hume has served as Chief of Mission in Algeria from 1997 to 2000, Political Counselor at the U.S. Mission to the United Nations from 1994 to 1997 and Deputy Chief of Mission at the Vatican from 1991 to 1994. He has completed multiple assignments overseas and in Washington, D.C., including Chief of the Political Section in Beirut and political officer in the Office of Southern African Affairs. Ambassador Hume is a graduate of Princeton University and American University Law School.

The President intends to nominate Frederick W. Schieck to be Deputy Administrator of the United States Agency for International Development. Currently a private consultant, Schieck was with the Inter-American Development Bank from 1990 to 2000 where he served as Senior Deputy Manager of the Bank's Operations Department. From 1965 to 1990, Schieck served with USAID in a variety of positions in the U.S. including Deputy Assistant Administrator in the Bureau for Latin America and the Caribbean, Deputy Assistant Administrator in the Bureau for Program and Policy Coordination and Deputy Assistant Administrator in the Bureau for Asia. He has also held multiple posts overseas including Mission Director for USAID Philippines, Deputy Director and Acting Director for USAID Guatemala and Chief of the Loan Office for USAID Chile. Schieck received an undergraduate degree from Georgetown University and an M.B.A. from Harvard University.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
NNNN

*AEF205 10/02/01
Transcr: Bush Briefs Congressional Leaders on War Against Terrorism
(Says international coalition is impressive and steady) (1670)

President Bush, in remarks to reporters October 2 following a meeting at the White House with the top Republican and Democratic leaders of Congress, said he "briefed the members about the fact that we're beginning to make progress in freezing assets -- freezing assets of the al Qaeda organization.

"I also talked about that the net we're casting is wide and strong, that we've put together an international coalition (against terrorism) that is impressive and that the members of that coalition are staying steady."

Bush said he also informed the Congressional leaders that he was going to open Washington's Reagan National Airport later in the morning to announce that it would reopen. It has been closed for security reasons since the September 11 terrorist attacks on Washington and New York.

In response to questions from reporters, Bush said the ruling Taliban regime in Afghanistan "must turn over al Qaeda organization members living within Afghanistan, and must destroy the terrorist camps. And they must do so, otherwise there will be a consequence."

"We'll act on our time, and we'll do it in a manner that not only secures the United States as best as possible, but makes the freedom in the world more likely to exist in the future," said Bush.

Asked if he was prepared to recognize a Palestinian state as part of a broader Middle East peace process, Bush responded that "The idea of a Palestinian state has always been part of a vision, so long as the right of Israel to exist is respected.

"But first things first. When it comes to the Middle East, we've got to get to Mitchell, the Mitchell Accord. Senator Mitchell put together a viable blueprint that most of the world agrees is a necessary path to ultimately solving the problems of the Middle East. And we are working diligently with both sides to encourage the reduction of violence so that meaningful discussions can take place."

Following is the White House transcript of the President's remarks:

(begin transcript)

THE WHITE HOUSE
Office of the Press Secretary

October 2, 2001

REMARKS BY THE PRESIDENT IN PHOTO OPPORTUNITY WITH SPEAKER HASTERT, LEADER DASCHLE, MINORITY LEADER LOTT AND MINORITY LEADER GEPHARDT

The Oval Office

8:13 A.M. EDT

THE PRESIDENT: I want to thank the leaders of the Congress for coming down for breakfast this morning. We had a really good discussion, starting with the progress we're making on the war against terrorism. I briefed the members about the fact that we're beginning to make progress in freezing assets -- freezing assets of the al Qaeda organization.

I also talked about that the net we're casting is wide and strong, that we've put together an international coalition that is impressive and that the members of that coalition are staying steady.

It is my desire to make sure that, as this war unfolds, that the leaders of both the Senate and the House are fully informed of what the government is doing. I can't think of a better way to conduct foreign policy than to consult regularly with the leadership.

We also talked about airport security. I told the members that I'm going to be going to Reagan Airport today to announce its opening, and that we need to work together to make sure that the package that's evolving in the House and Senate is put together pretty quickly.

We talked about economic stimulus. There is agreement that we've got to come together with a vision about how big the package ought to be, to make sure that we affect the economy in the short-run in a positive way, but don't affect it in the long-run in a negative way.

We agree on principles, that we've got to make sure that demand for U.S. products stay strong; demand for products throughout our economic stays strong. Therefore, we talked about ways to stimulate demand. We understand that investment has fallen off in the corporate sector, and we talked about constructive ways to stimulate investments so that the manufacturing sector, for example, of the United States has got some added wind, in order to grow, to make sure that people find work. We talked about worker displacement. And we had a good discussion.

And there's one thing that the American people must understand, that as we work through these important subjects, we will do so in a spirit of cooperation and consultation.

And, finally, all of us want to get a budget done as quickly possible, get the appropriations process done. We're making very good progress on coming up with the size of the ultimate budget. And once that's decided, we pledged to work together to get the appropriations bills moving as quickly as possible. That would be a welcome relief from the old budget battles of the past.

And I'm most pleased with the conversations we've had. I admired all four Leaders prior to September 11th; I admire them even more after September 11th, because they're dedicated patriots, anxious to bring our government together to make sure that we respond to the American people in a positive way.

I'll answer a couple questions.

Q: Mr. President, is the time running out on the Taliban regime? Are you prepared, sir, to recognize the Palestinian state as a part of a broader Middle East peace process, itself?

THE PRESIDENT: Those are two questions, Major.

Q: It's been a while since I've seen you.

THE PRESIDENT: Don't take it personally.

Q: I never do, sir.

THE PRESIDENT: The idea of a Palestinian state has always been part of a vision, so long as the right to Israel to exist is respected.

But first things first, when it comes to the Middle East, we've got to get to Mitchell, the Mitchell Accord. Senator Mitchell put together a viable blueprint that most of the world agrees with is a necessary path to ultimately solving the problems of the Middle East. And we are working diligently with both sides to encourage the reduction of violence so that meaningful discussions can take place.

Secondly, there is no time table for the Taliban, just like there are no negotiations. I have said that the Taliban must turn over al Qaeda organization living within Afghanistan, and must destroy the terrorist camps. And they must do so, otherwise there will be a consequence. There are no negotiations, there's no calendar. We'll act on our time, and we'll do it in a manner that not only secures the United States as best as possible, but makes the freedom in the world more likely to exist in the future.

Q: Mr. President, to follow up on the Middle East, sir. Were you prepared to support the idea of a Palestinian state before the United Nations conference that was canceled?

THE PRESIDENT: Oh, I read all kinds of speculation about what this administration was or was not going to do. What I'm telling you is, is that we are fully committed to the Mitchell process. And we are fully committed to working with both sides to bring the level of terror down to an acceptable level for both. And I fully understand that progress is made in centimeters in the Middle East. And we believe we're making some progress.

Steve.

Q: How big a stimulus package do you think is needed, sir, and what do you think is the best way to stimulate demand?

THE PRESIDENT: Well, the definition -- a stimulus package big enough -- that what is needed is big enough to get the economy moving in the short-run, but small enough so it doesn't affect long-term interest rates, for example. We are -- all of us are listening to the voices of leading economists. We're all open for suggestions. The best way to stimulate demand is to give people some money, so they can spend it.

Q: Mr. President, out of this terror comes fear.

THE PRESIDENT: What? Out of what?

Q: Out of this terror on September 11th comes fear. Many Americans are still gripped with this fear, and they're buying gas masks in exuberant numbers. And they're also looking to -- for anthrax vaccinations. What do you say to those people? Is their fear warranted?

THE PRESIDENT: I say that America ought to be on alert, but we need to get back to business. That's why I'm opening up Reagan Airport. That's why we had Cabinet members get on commercial airlines over the weekend. The good news is, is that some of the load factors on American airlines looked like they increased over the weekend. Americans know their government is doing everything they can to disrupt any terrorist activity that may occur. We're following every lead, we're interrogating every possible suspect. We're on full alert in America.

But the good news is, Americans also realize that in order to fight terrorism, they're going to go about their lives in a normal way. And Americans are.

Q: Are we in a recession, sir?

THE PRESIDENT: Are we in a what?

Q: Are we in a recession?

THE PRESIDENT: You let the number-crunchers tell us that. But there's no question our economy is hurt as a result of September 11th. And the Leaders here understand that. These members go back to their districts and hear the plight of families who have been laid off. I, of course, hear it all the time, as well. And we're going to do something about it. That's exactly what these discussions are about.

In terms of how you call it, what the numbers look like, we've got statisticians who will be crunching the numbers and let us know exactly where we stand. But we don't need numbers to tell us people are hurting.

MR. JOHNDROE: Thank you all very much.

THE PRESS: Thank you very much, sir.

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
NNNN

*AEF208 10/02/01
Fact Sheet: Ronald Reagan National Airport to Reopen October 4
(White House releases fact sheet on the reopening of airport) (590)

Following is the text of a White House fact sheet on the reopening of Ronald Reagan National Airport October 4:

(begin Fact Sheet)

FACT SHEET: OPENING RONALD REAGAN NATIONAL AIRPORT

Ronald Reagan National Airport (DCA) will reopen on Thursday, October 4th for commercial operations. On Thursday shuttle service to New York and Boston will resume, and flights to the other six cities will begin as soon as the new security measures are in place -- which could be as early as Thursday. Resumption of flights at DCA will take place in phases over an initial two-month period and extraordinary security measures will be in place for all approved flights. The President has identified the initial two phases that will lead to a resumption of normal commercial operations, with details of subsequent stages to be announced after review of initial flight operations.

Phase I. Initial Shuttle and Hub Connections (Duration: approximately 3 weeks)

-- Extraordinary security measures - the most exacting in the nation - in place at DCA and all connecting terminals at connecting airports (see below).

-- Commercial airlines only.

-- Flights to eight hub airports served by six airlines, with slot restrictions determined by the Department of Transportation. The service will include:

-- New York LaGuardia - Delta Shuttle and US Airways Shuttle

-- Boston - Delta Shuttle, US Airways Shuttle and American

-- Atlanta - Delta and US Airways

-- Pittsburgh - US Airways

-- Chicago - American and United

-- Dallas - American and Delta

-- Minneapolis - Northwest

-- Newark - Continental

-- Aircraft size is limited to 156 seats or less.

-- Operations at DCA only between 7a.m. and 10p.m.

Phase I will allow approximately 190 flights-per-day (24 percent of the 792 scheduled commercial flights prior to 9/11).

Phase II. Expanded Hub Connection (Duration: 30-45 days following Phase I)

-- All Phase I operations and operational requirements remain in effect, with the exception that the number of flights to each location may increase to previously scheduled levels.

-- Direct flights to an additional 10 cities (18 total), with locations to be determined. If preexisting schedules were resumed, Phase II would allow approximately 450 flights-per-day (57 percent of the 792 scheduled commercial flights prior to 9/11).

Enhanced Security Measures

Security will be strengthened in numerous ways by the FAA, the Department of Defense, the Secret Service, other law enforcement agencies, the airport authorities and airlines. Many of the security measures will be visible and many will not. Examples of new security measures include:

-- Implementing the Federal Air Marshals program for DCA air traffic.

-- Limiting passengers carry-on baggage to one bag plus one personal item (a purse or briefcase).

-- Random hand-wanding of passengers at the gate.

-- Identification check and boarding pass match as passengers board aircraft.

-- Departures to DCA from approved cities allowed only from pre-designated, specially secured gates.

-- Expanded police and canine patrols of the secure areas.

-- Enhanced scrutiny of vehicles and employees that enter the air operations area.

-- Flight crews dedicated to DCA only, with mandatory pre-flight screening of crews.

-- Requiring straight-line flight approaches and departures, temporarily discontinuing the "river visual approach" used to mitigate noise.

-- DCA will implement a public security awareness program.

(end fact sheet)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF209 10/02/01
Transcript: Powell Says bin Laden, al-Qaida First Priority
("Bad things" already happening to Taliban, he says) (1100)

Secretary of State Colin Powell told a national television audience October 1 that "a lot of bad things" are happening to Afghanistan's ruling Taliban group, and that the pressure is going to increase.

Interviewed by Dan Rather on the CBS Evening News, Powell noted that two of the only three governments in the world that had recognized the Taliban have cut off diplomatic relations with them. Further, financial support to Usama bin Laden's al-Qaida terrorist network -- which supports the Taliban "to some extent" -- is being cut off around the world, and a considerable U.S. military buildup in the region is occurring, he said.

Powell said the focus of U.S. policy is not the overthrow of the Taliban, but rather the pursuit of bin Laden and the al-Qaida network in Afghanistan. "And if the Taliban does not realize that this could cause them a great deal of difficulty as well and might lead to their demise, they will soon come to that conclusion," he said.

Asked about bin Laden's guilt in the terrorist attacks of September 11, Powell said, "We think he's guilty and all roads point to him."

Following is the transcript of Powell's interview:

(begin transcript)

U.S. DEPARTMENT OF STATE
Office of the Spokesman
Secretary Of State Colin L. Powell
With Dan Rather On The CBS Evening News
October 1, 2001

QUESTION: Mr. Secretary, the President said in his address to the nation and to the joint session of Congress, and I quote, "The Taliban must act and act immediately. They will hand over the terrorists or they will share their fate."

Now, they have not acted. They certainly have not acted immediately. They have not handed over the terrorists but nothing bad has happened to them. Why not?

SECRETARY POWELL: Well, I think a lot of bad things have happened to them. First, they have had diplomatic relations cut by two of the three countries in the world that recognize them. Secondly, we are working hard with our allies around the world to shut off financial support to the al-Qaida organization, which, to some extent, supports the Taliban. The entire international community has mobilized against them. They are going to find more pressure being applied to them. And, at the same time, the United States is preserving its military options, and there is a considerable buildup taking place in the region.

Q: Mr. Secretary, I know that you are acutely aware, as every American is, we have 13,000 casualties, dead, missing and wounded, if you put all of those together. And it is -- if you forgive me for saying so, it's fine to talk about coalitions, fine to talk about financial pressure. But with 13,000 U.S. casualties, surely sometime we are going to do more than just put together coalitions and talk about cutting their finances.

A: Well, it's a lot more than that. What we really have to do is shut down terrorism, not just find a single place to take revenge out on or a group of people to take revenge out on. What the President has done, and I think he has the full support of the American people, is to put this coalition together to put in place a campaign that will go after terrorism so that these sorts of things never happen again.

Q: Mr. Secretary, is or is it not administration policy to replace the Taliban dictatorship in Afghanistan?

A: Administration policy is to go after the al-Qaida network and Usama bin Laden in Afghanistan. And if the Taliban does not realize that this could cause them a great deal of difficulty as well and might lead to their demise, they will soon come to that conclusion. But we are doing first things first. And first things first, in this instance, is to go after al-Qaida, Usama bin Laden, and terrorist networks.

Q: Has it been ruled out for at least the time being something such as bombing targets in Iraq?

A: The President is focused on the first phase of this operation that deals with al-Qaida and deals with Usama bin Laden and deals with the general issue of terrorism around the world. He has ruled nothing out with respect to second, third, or fourth phases of our campaign militarily.

Q: General, there has been a lot of talk about presenting evidence against Usama bin Laden. But we now know, it's been confirmed, that bin Laden, while he says he wasn't responsible for these attacks, he did praise them and say, in effect, he was happy for them. Given that fact, do we need to present any further evidence? What other evidence would anyone need?

A: Well, we think he's guilty and all roads point to him. And we have assembled quite a bit of information -- not evidence for a court -- but information, information concerning his past actions with respect to the bombing of our embassies in Africa a couple of years ago, connections to the bombing of the USS Cole, connections going back to earlier acts of terrorism, his statements.

And a lot of the information, frankly, is in the public domain. We read it in the newspapers every day, and we see it as arrests are made in different countries throughout the world with these arrests increasingly tightening, tightening the ring around Usama bin Laden and al-Qaida, making clear to anybody who has an interest in it who is responsible for this.

Q: Mr. Secretary, the Taliban now has indicated that it has bin Laden, it knows where he is, and he is still in Afghanistan. Do you believe that?

A: I don't know what to believe with the Taliban. A few days ago, they were saying they didn't know where he was. If they know where he is, then I would suggest it would be their best course of action to go knock on his door, pick him up, go get all of his lieutenants, turn them over to us and then destroy all the camps that were left behind.

Q: Is there a time line on that, a deadline?

A: The President has established no deadline but I can assure you we are moving forward rather deliberately.

Q: Secretary of State of the United States and retired US Army General Colin Powell. Thank you.

A: Thank you.

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
NNNN

*AEF210 10/02/01
Text: NATO Says Conclusive Data Links Al-Qaida to Sept. 11 Attacks
(Robertson invokes Article 5 of Washington Treaty) (480)

NATO Secretary-General Lord Robertson says information received in classified briefings by American officials "points conclusively" to a role in the September 11 attacks in the United States by the Al-Qaida terrorist network headed by Osama bin Laden.

On this basis, Robertson said October 2 at NATO headquarters in Brussels, "It has now been determined that the attack against the United States on 11 September was directed from abroad and shall therefore be regarded as an action covered by Article 5 of the Washington Treaty, which states that an armed attack on one or more of the Allies in Europe or North America shall be considered an attack against them all."

Following is the text of his statement:

(begin text)

NATO Headquarters
2 October 2001

STATEMENT BY NATO SECRETARY-GENERAL, LORD ROBERTSON

This morning, the United States briefed the North Atlantic Council on the results of the investigation into who was responsible for the horrific terrorist attacks which took place on 11 September.

The briefing was given by Ambassador Frank Taylor, the United States Department of State Coordinator for Counter-terrorism.

This morning's briefing follows those offered by United States Deputy Secretary of State Richard Armitage and United States Deputy Secretary of Defense Paul Wolfowitz, and illustrates the commitment of the United States to maintain close cooperation with Allies.

Today's was classified briefing and so I cannot give you all the details. Briefings are also being given directly by the United States to the Allies in their capitals.

The briefing addressed the events of 11 September themselves, the results of the investigation so far, what is known about Osama bin Laden and the Al-Qaida organisation and their involvement in the attacks and in previous terrorist activity, and the links between Al-Qaida and the Taleban regime in Afghanistan.

The facts are clear and compelling. The information presented points conclusively to an Al-Qaida role in the 11 September attacks.

We know that the individuals who carried out these attacks were part of the world-wide terrorist network of Al-Qaida, headed by Osama bin Laden and his key lieutenants and protected by the Taleban.

On the basis of this briefing, it has now been determined that the attack against the United States on 11 September was directed from abroad and shall therefore be regarded as an action covered by Article 5 of the Washington Treaty, which states that an armed attack on one or more of the Allies in Europe or North America shall be considered an attack against them all.

I want to reiterate that the United States of America can rely on the full support of its 18 NATO Allies in the campaign against terrorism.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF211 10/02/01
Text: Interpol Condemns "Murderous Attacks" of Sept. 11
(Urges use of Interpol resources to fight terrorism) (350)

The 135 member countries of the International Criminal Police Organization (Interpol) have condemned the "murderous attacks against citizens of over 80 countries" September 11 in New York and Washington, and called for "making full use" of Interpol's resources in the fight against terrorism.

The resolution was approved at Interpol's General Assembly meeting in Budapest September 25.

Following is the text of an Interpol press release:

(begin text)

Interpol press release
25 September 2001

September 11 attacks

135 Interpol countries demonstrate historic and unanimous solidarity against terrorism

On Tuesday, two weeks almost to the hour after the terrorist-piloted aircraft attacks in the United States, 135 countries present at Interpol's General Assembly meeting in Budapest, unanimously passed a strong resolution in condemnation of the murderous attacks perpetrated against citizens of over 80 countries.

Representing every region of the world, senior police and government officials honoured the memory of the many law enforcement officers, firefighters, emergency workers and private citizens who selflessly gave their lives to save others. Their resolution demonstrates the outrage of the global Interpol 'family' at the abhorrent violation of law and of the standards of human decency of September 11.

The resolution emphasizes the importance of making full use of the services available through Interpol. It also requests the creation of an international Interpol database of counterfeit, forged and stolen identity documents. Furthermore, it urges Interpol's 179 member countries to develop robust systems for the monitoring of suspicious financial transactions linked to terrorist activities.

In a joint statement Interpol's leaders, President Jesus Espigares Mira and Secretary-General Ronald K. Noble said:

"We are proud to announce this historic show of solidarity and resolve by police professionals from all over the world. Two weeks after the horrific events on U.S. soil Interpol's General Assembly has demonstrated its firm and powerful commitment to fighting terrorism in defense of the world's citizens."

(end text)

(Distributed by the Office of International Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF214 10/02/01
Text: Bush Adviser Hubbard on Economic Policy after Attacks
(He sees increased likelihood of recession) (3340)

The chairman of President Bush's Council of Economic Advisers (CEA) says the September 11 terrorist attacks "increase significantly the likelihood that the economy is in a recession."

In October 2 testimony before the Senate Budget Committee, CEA Chairman R. Glenn Hubbard said emergency federal spending and Federal Reserve pursuit of easier monetary policy should mitigate somewhat the effects of the attack and support economic recovery in 2002.

He made what he called general comments about devising economic policy after the terrorist attacks on the World Trade Center and Pentagon without stating a Bush administration position on any specific stimulus package.

Any policies should improve the long-term fundamental economic environment, Hubbard said, describing what he views as the advantages of a long-term corporate tax cut.

He also advocated a change in business tax law for accelerating depreciation of capital investments -- that is, giving businesses bigger tax breaks in earlier years after investment spending than in later years.

Any economic stimulus package should not hurt the long-term U.S. federal budget balance, he said. He did indicate, however, that allowing some deterioration of that balance now to bolster public confidence and raise asset values should increase economic activity and thus produce more tax revenue in the future.

"It is important ... to remind ourselves that budget surpluses are the product of a strong underlying economy -- not the other way around," Hubbard said.

He warned Congress against spending money on bailouts of economic sectors in an attempt to "preserve a lost status quo." Any federal spending should be cost-effective in line with market forces and aimed at improving security and productivity, not aimed at imposing excessive regulation, he said.

Following is the text of Hubbard's testimony as submitted for the committee's record:

(Note: In the text "billion" equals 1,000 million.)

(begin text)

Testimony of R. Glenn Hubbard
Chairman
Council of Economic Advisers
Before the Committee on the Budget
United States Senate
October 2, 2001 10:00 A.M.

Mr. Chairman, Senator Domenici, and members of the Committee, it is a pleasure to appear before you today to discuss the outlook for the U.S. economy. The terrible tragedy associated with the terrorist attacks on New York and Washington exacted an economic toll on the United States as well as a human toll.

Growth in the U.S. Economy and the Outlook Prior to September 11

Prior to the tragedy on September 11, the United States was experiencing a growth slowdown: Real GDP [gross domestic product] growth slowed to only an average 1.2 percent annual pace during the past four quarters, with a low of 0.3 percent in the second quarter of 2001. While the probability of an outright recession was low, the fact that the economy was growing slower than its potential rate of growth dictated that the unemployment rate was likely to rise in the near term. Economic disruptions emanating from the bombings in New York and Washington certainly worsened the short-run growth prospects.

Even prior to September 11, growth rates this much below their potential levels were not acceptable. Accordingly, monetary and fiscal policy moved decisively to reverse pre-September 11 recessionary pressures. The Federal Reserve cut the target federal funds rate by 300 basis points from the beginning of the year through September 11, and $41 billion was returned to taxpayers during the third quarter as a down payment on a large permanent tax cut.

Looking outside the nation, the United States continues to have an interest in the resumption of economic growth in Japan and accelerated growth in Europe. During the first half of 2001, GDP declined in Japan, and the rate of decline accelerated. In Europe, the rate of GDP growth remains positive, but has decelerated. Moreover, European Commission surveys of the outlook for new manufacturing orders, industrial production, and consumer confidence indicate recent declines. From a direct U.S. perspective, more rapid growth in the major economies will raise our growth prospects as well. More broadly, it will enhance the likelihood of stability and progress in the rest of the world, such as developing Asia and Latin America. In the absence of resumption of global growth, trends in output and asset prices may force painful adjustments in these economies.

Economic Consequences of the Events of September 11

To analyze the effects of the terrorist attacks on the World Trade Center and the Pentagon, it is instructive to consider two steps. First, the collapse of the World Trade Center and surrounding buildings acted as an adverse supply shock to the economy -- that is, an adverse effect on the economy's productive capacity. The physical damages from the attacks likely were not sufficiently consequential to affect the underlying potential growth rate of the economy. However, the loss of life, the damage to the financial sector, and the interruption of commercial aviation temporarily restricted the economy's ability to supply goods and services in the short run. These "supply shock" consequences of the attacks substantially reduce the growth rate of GDP during the third and fourth quarters of 2001 and increase significantly the likelihood that the economy is in a recession. These consequences also imply a greater gap between the economy's actual and potential growth rate, with adverse consequences for employment.

This first step treats -- for strictly analytic purposes -- the attacks as a contained physical event. Of course, there is a second, and more important, effect. Because the destruction on September 11 arose as a result of terrorism, the economic aftermath includes shocks to household and business confidence, and increased uncertainty regarding the overall environment. The effects on confidence and uncertainty give rise to a number of additional supply-side costs of transacting business -- ranging from enhanced security to more costly insurance -- which reduce output growth.

On the demand side, the attacks and their potential repercussions lowered household and business confidence about the future, and along with it their willingness to spend and invest. Prior to the attacks, a focus of policy was to ensure a continued flow of resources -- incomes, cash flow, and so forth -- to households and businesses to provide a base for sustained growth in aggregate demand. If confidence effects are substantial, the attacks must necessarily shift our focus somewhat -- away from simply providing dollars to households, for example, and toward buttressing the confidence of households to make purchases out of those dollars.

What is the outlook for consumer confidence? To gain a sense of the magnitudes involved, one can derive estimates of the expected decline in confidence by utilizing the changes to the Blue Chip consensus forecast due to the terrorist attacks. The implied drop in confidence appears substantial and likely incorporates effects of recent equity price declines. Using the most recent Blue Chip consensus forecast as a guide, the implied decline in confidence is expected to be temporary -- following roughly the path of the confidence decline and recovery during the Gulf War -- and is essentially eliminated by the second half of 2002. The Blue Chip Consensus forecast is, of course, only an estimate. More shallow declines in confidence would permit a more rapid recovery. Larger and more sustained declines in confidence would suggest a longer downturn and slower recovery, particularly if accompanied by prolonged weakness in equity prices.

To be concrete, the consensus economic forecasts of private sector economists (as reflected in the September 20, 2001, special survey of the Blue Chip Economic Indicators) indicate a modest recession, again fueled by a decline in confidence and equity values. (While a recession is declared officially by the National Bureau of Economic Research, I use the term in its common association with two quarters of negative GDP growth.) The consensus estimate is for a decline in real GDP of 0.5 percent and 0.7 percent in the third and fourth quarters, respectively, of this year. Consensus estimates of GDP growth rebound in 2002, with growth of 1.4 percent and 2.8 percent, respectively, in the first two quarters of 2002, and 3.7 percent in the second half of 2002. Even with this recovery, the unemployment rate is likely to rise through 2002.

A range of estimates underlies the Blue Chip forecasts, and that range reflects a divergence of views about the depth of the initial decline in confidence and the persistence of that decline. For example, the range between the average of the top ten and bottom ten estimates is 0.4 percent to -1.5 percent for the third quarter of 2001, 1.5 percent to -2.4 percent for the fourth quarter of 2001, 3.3 percent to -0.8 percent for the first quarter of 2002, 4.0 percent to 1.0 percent in the second quarter of 2002, and 3.8 percent to 1.8 percent for growth during 2002 as a whole. This range suggests the need to think seriously about downside risks and policies that address the source of the economy's vulnerability in the quarters ahead.

Existing public policies also continue to buffer against the downward pressure on aggregate demand. On the monetary side, the Federal Reserve reduced its federal funds rate target on September 17 by 50 basis points, and interest rates were reduced in Europe and Canada. From a fiscal perspective, the $40 billion general emergency appropriation and the Aviation Disaster Relief bill will provide additional stimulus later this year and throughout 2002. These policy moves will mitigate somewhat the effects of the terrorist attack on output growth and unemployment, and should aid a recovery in 2002, though again downside risks remain.

Implications for Public Policy

This simple analysis of the short-term economic consequences of the events of September 11 suggests important lessons for public policy. Consumer and business confidence is a key factor in calibrating the depth of any downturn occurring as a result of the terrorist attacks and the pace of the subsequent recovery. Indeed, improvements in confidence are themselves a potent stimulus; a rapid rebound of household and business sentiment will hasten the arrival and pace of recovery in 2002. A longer decline in confidence could lead to a significant period of mediocre output growth and rising unemployment, as I noted earlier.

Hence one way to evaluate policy responses is by their effect on household or business confidence. What is the framework for policies?

First, the tragedy of September 11 is a seminal event and policies should be forward-looking, not attempting to simply replicate the world of September 10. Policies should provide consumers and businesses with confidence that the policy infrastructure is in place to ensure the conduct of economic activity in this new environment. As an example, consider the response of the Administration and the Congress to the immediate problems in commercial aviation. The problem is not simply one of keeping commercial aircraft flying. Instead, a key feature of the policy response is the provision of funding for enhanced security, thereby addressing the root cause of the airline industry downturn -- diminished confidence by travelers. This funding should address aircraft security, security personnel and screening of passengers and baggage. Prudent investment in aviation security can restore confidence in air travel, and a more secure infrastructure in aviation will also support the numerous industries related to the travel and tourism sectors of the economy.

On a broader scale, a policy focus on security -- the hardening of American economic activity against terrorist intrusions -- will be a linchpin in institutional setting for restored confidence. This kind of security is not merely physical; it has economic dimensions as well. For example, we must pay attention to the need for financial insurance against increased risks and ensure that private insurance markets are able to function as well in the future as they have served us in the past. These considerations require great deliberation -- as I argue below, there are pitfalls in pursuing these policies, as an inappropriately heavy-handed approach may impede the private sector's inherent speed and flexibility in responding to new challenges.

Second, policies should minimize to the greatest extent possible the increased transactions costs induced by the terrorist attacks. Again, consider the recent disruption in commercial aviation, which contains elements of higher transactions costs for the airlines -- greater security costs. However, it also contains higher transactions costs -- greater cargo transport costs, loss of speed and flexibility in transport and business meetings, and so forth -- for the business sector as a whole. A policy response that addresses the underlying need for security infrastructure in a cost-effective way will reduce overall transactions costs in supply and minimize the loss in economic efficiency in adapting to this new environment.

Cost-effective responses are an important aspect of this adaptation. As an example, consider the need for increased security of economic activity, both physical security and the security of transactions -- backup computer systems and the like. To the extent that our economic response results in duplicative security efforts by multiple parties, or excessive mandate of security policies, we will wastefully siphon funds that could be devoted to productivity enhancements and other investments into this effort.

The key to our recent economic success -- and the foundation of economic performance in the future -- is productivity growth. The historical lesson is that private markets are resilient, efficient, and flexible in meeting new challenges. We should seek as our objective new standards for the security of the economy, but should be wary of dictating how to achieve our objectives. One of the success stories of the past thirty years has been the productivity benefits of deregulation. We should be wary of losing these benefits via excessive new regulation.

The third aspect of policy is to provide support for the transition to new features of economic environment. Toward this end, it is no accident that the Administration, the Federal Reserve, and financial regulatory authorities focused attention in the aftermath of the tragedy on the smooth functioning of securities markets and financial institutions. More generally, my remarks above on transactions costs are part of a focus on reducing disruptions on the supply side. The President has displayed leadership in enhancing security and building the infrastructure for the supply of goods and services.

It is important to distinguish between forward-looking policies and investments that smooth the transition to a new environment and backward-looking attempts to compensate industries and activities that may grow more slowly or contract. A source of tremendous economic benefits is market-driven restructuring, and its associated reallocation of capital, workers, and ideas to new uses. Bailouts that attempt the preserve a lost status quo can be tempting, but will interfere with this valuable market function.

However, there are transition issues on the demand side as well. While I am not advocating an Administration position on what should be in a specific economic stimulus package, some general comments on economic recovery are possible. Businesses face uncertainty along many dimensions, among them the overall state of aggregate demand, and policies may be helpful in this dimension as well. As I noted earlier, the key aspect of policies is not merely dollars. To some, it might be appealing to follow a Japanese-style public works program of construction outlays. However, this does not address the issue of confidence -- it instead covers it in an unproductive and economically wasteful fashion. Prudent supplements to unemployment insurance and health insurance are stabilizing. However, augmenting aggregate consumption demand through one-time transfers to households is less likely to be successful. The evidence from a similar effort in the 1970s is that households largely save -- not spend -- such one-time transfers. In the current environment, the decline in confidence has the potential to produce even stronger precautionary instincts.

To draw the distinction more sharply, consider the recently enacted tax cut. Despite all the talk about "rebates," the underpinnings are quite different from one-time fiscal stimulus. Americans received checks that are a down payment on a large, permanent tax cut. Put differently, these dollars are part of a larger policy that enhances the security of their long-term disposable incomes. By addressing both the flow of resources and their "security" this policy can support the growth of consumption demand. The tax cut is a model for any further policies to address transitional shortfalls in consumption demand. In this light, accelerating provisions of the tax law changes for individuals enacted in June will be stimulative, as well as good tax policy.

Similar considerations apply on policies to bolster business investments in physical and human capital. To the greatest extent possible, such policies should be consistent with the support of long-term fundamentals. In the corporate sector, a reduction in corporate income tax rates raises corporate cash flow for investments, employment, and restructuring; if enacted for a significant period of time, such tax reductions will also reduce the present double taxation of equity-financed investment and raise equity values, reducing the cost of capital for investment and raising household net worth. Corporate income tax rate reductions also raise after-tax profitability for a broad cross-section of companies, including both physical-capital-intensive and human-capital-intensive firms. To be effective, such a tax change should be accompanied by a reduction in the corporate Alternative Minimum Tax rate. In the noncorporate sector, similar benefits could be obtained by accelerating the reductions in marginal personal income tax rates recently enacted.

Also in the corporate sector, a promising change in business taxation would be to lower the cost of capital for investment by shifting toward expensing of fixed investment. Partial expensing -- in which a proportion of investment is expensed and the balance depreciated -- would stimulate fixed capital investment and would be consistent with many economists' vision of fundamental tax reform. Sound tax policy requires that such expensing be permanent; a permanent change would not generate large long-run budget costs, as expensing is a form of accelerated depreciation.

Finally, any discussion of confidence-building proposals is likely to stimulate debates over fiscal responsibility. Proposals for action should be fiscally responsible, in that they should not lead to a deterioration in the federal government's long-term budget position. It is important, however, to remind ourselves that budget surpluses are the product of a strong underlying economy -- not the other way around. Particularly in the current context, policies to bolster confidence and asset values may mitigate declines in economic activity, and corresponding declines in revenue, in the future.

Going Forward

The events of September 11 represent a human disaster and an economic loss to our nation and the world. Going forward, the potential for terrorism raises concerns about the ability of the economy to produce goods and services and household and business demand for goods and services. It is appropriate to view the terrorist attacks as an important historical demarcation, and I have stressed the role that appropriate policies can contribute to addressing the need for security and confidence, the reality of new transactions costs, and the strains of transitions.

However, it would be an oversight to fail to point out that another part of confidence in the transition is not losing sight of those things that remain unchanged. Even in this new environment, an open global trading regime and a more efficient tax system remain a route to increases in our standard of living. The United States would gain substantially from further reductions in world barriers to trade in agricultural and industrial products and services. To take another example, significant economic gains for the United States remain possible from fundamental tax reform -- in particular, from reducing the multiple layers of taxation on productive capital and the complexity associated with those layers of taxation.

To conclude, the U.S. economy is very resilient, and, with prudent investments in security and public policies to promote confidence, I have little reason to suspect that the economy's long-term fundamentals have been shaken by the tragedy of September 11. Thank you again, Mr. Chairman, for the opportunity to appear before you today. I am happy to answer your questions.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF215 10/02/01
Text: Trade Promotion Group to Deliver Export Plan in Early 2002
(Focus will be on small, medium businesses, Evans says) (2650)

The interagency Trade Promotion Coordinating Committee (TPCC) will deliver to Congress in March 2002 a plan to help the nation's exporters compete more effectively in the global marketplace, the group's chairman, Secretary of Commerce Donald Evans says.

The plan will particularly target small- and medium-sized business enterprises (SMEs), which now account for only 1 percent of U.S. exports, Evans said in October 2 testimony to the Senate Banking, Housing and Urban Affairs Committee. In contrast, SMEs account for 5 percent of France's exports, he said.

The plan also will focus on increasing U.S. exports to developing countries, where economic growth is outpacing growth in "more advanced, but mature countries", Evans said.

Evans added that Congress should grant President Bush trade promotion authority (TPA), formerly known as "fast track," so that negotiations on trade agreements can be completed. New agreements could lead to nearly 2,000,000 million dollars in economic growth over the next five years, Evans said. "The question is, what slice of this growing pie of commercial opportunities will belong to U.S. companies?" he stated.

Also testifying October 2 were TPCC members John Robson, president of the Export-Import Bank of the United States (Ex-Im Bank) and the group's vice chairman; Hector Barreto, administrator of the Small Business Administration (SBA); Peter Watson, president of the Overseas Private Investment Corporation (OPIC); and Thelma Askey, director of the Trade and Development Agency (TDA).

Saying that the United States' major competitors have made export promotion a priority, benchmarking their programs and even duplicating some U.S. practices, Evans stressed that U.S. export promotion programs "should be reevaluated from the ground up."

Evans said the TPCC plan will include recommendations for "world-class" trade promotion standards to be in place by 2004. It will be based on results of customer service surveys and business focus groups in major U. S. cities in coming months.

It will incorporate information about successful export promotion services offered by the governments of United States' major competitors, including the Group of Seven (G-7) countries, South Korea, the Netherlands, Spain and Sweden. For instance, Evans said, U.S. competitors are targeting initiatives to developing countries and using technical assistance and the Internet to promote exports. The G-7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Evans said that the economic slowdown following the September 11 attacks on the World Trade Center and Pentagon "make it even more imperative that we move our trade agenda forward."

The Trade Promotion Coordinating Committee was established by the Export Enhancement Act of 1992.

Note: In the following text, billion equals 1,000 million; trillion equals 1,000,000 million.

Following is the text of Evans' testimony as prepared for delivery:

(begin text)

Testimony of Secretary Donald L. Evans
Senate Banking, Housing and Urban Affairs Committee
October 2, 2001

Mr. Chairman, and other Members of the Committee, my colleagues and I appreciate this opportunity to share with you our vision for the Trade Promotion Coordinating Committee (TPCC) and the work we will be doing over the next several months.

Let me say at the outset that it is my belief and that of the President that the events of September 11 make it even more imperative that we move our trade agenda forward and encourage U.S. firms to enter international markets. We have seen the impact of recent events on a number of industries -- and the truth is that no one will escape from this tragedy unaffected. Small companies are no exception, and our trade promotion agencies need a coordinated response to the new environment U.S. exporters now face.

Whether it is a higher perceived risk in international markets, slower growth abroad or less available financing from the private sector, it is now even more critical that our trade promotion agencies are aware of the needs of our customers and can quickly respond to them with appropriate programs and initiatives. While all of us are making adjustments after last month's events, we cannot let the scourge of terrorism become an obstacle to America's and the world's economic growth and progress.

The Administration has made Trade Promotion Authority (TPA) a priority for this legislative session. We believe TPA will speed the negotiation of trade agreements that are fundamental to our country's and the world's economic future.

The agreements that TPA will let us conclude over the next five years could contribute as much as $1.9 trillion to world economic growth. The question is, what slice of this growing pie of commercial opportunities will belong to U.S. companies?

Of course the answer to that question will primarily depend on the innovation and ingenuity of our companies. But it will also be affected by our ability to deliver necessary state-of-the-art export promotion programs to help our exporters realize the benefits from the agreements we negotiate.

From the perspective of a small U.S. company wanting to export, negotiating new trade agreements is really only part of the battle. New agreements are meaningless to a company if it does not have the information, expertise, and financing it needs to do the deals.

As a former businessman, I am well aware of two things: that U.S. companies are the most competitive in the world, and that they have to slug it out everyday in the global market to keep ahead of the curve. On everything ranging from major project competitions to small product sales, our exporters are competing not only on the basis of price and quality of their products, but also against the quality and government support behind their foreign competition.

We know today that our major competitors have made export promotion a priority, both in terms of the resources they put behind it and the strategic approach they take. Many of their programs are customer-driven and focused on satisfying their customer's needs.

And we know that despite gains in many markets, we are losing market share in the world's fastest-growing markets. Over the last ten years, our overall share of total exports to developing countries dropped from about 14 to 12 percent. This is a significant change.

These high-growth markets are also the markets where trade barriers are highest, especially for small companies. And many of our trading partners have an edge in these markets, because they have already negotiated trade agreements to help their companies get in on the ground floor.

But while some of our small exporters have discovered these markets and see their potential, many more could. We still face an export gap for small- and medium-sized companies. Only one percent of U.S. Small and Medium-Sized Business Enterprises (SMEs) export, compared to 5 percent of French SMEs.

For all of these reasons, the strategic approach of our competitors, falling market share where our commercial opportunities are greatest, and the unmet export potential of our small firms, I believe our export promotion programs should be reevaluated from the ground up.

I would like your support over the next several months as we undertake a benchmarking exercise to help us learn more about what our customers really want from their export promotion programs and to examine best practices of export promotion services. This study will give us more information to answer the question of why more U.S. companies do not export and how best to take advantage of fast growing markets.

Our vision, in short, is to use the TPCC as a management tool to improve our programs so that they respond to customer needs and the competitive environment. Our goal is to make sure our companies can take full advantage of the new commercial opportunities we expect to see in the next decade resulting from new trade agreements negotiated with TPA. At the outset, we want to make sure that we have the right programs, and that these programs are effective, strategically focused and coordinated. At the end of the day, we want to deliver the world's best export promotion services.

March 2002 National Export Strategy

Our goal is to deliver to you in March a set of recommendations we believe will get us to world-class standards in export promotion service by 2004. Between now and March, we will develop information on three fronts:

First, we will spend the next several weeks assessing customer satisfaction with our programs. We will do this in two ways.

We have commissioned a survey of the business community -- respondents will include exporters, some who use our services and some who do not, and businesses who are not exporters. The goal is to get a handle on a number of issues related to the question of why more small businesses do not export. For example, among other things, the survey will try to discover what else government programs could be doing to encourage exporting, and what does government do best? What is government's comparative advantage vis-a-vis private sector providers of similar services?

We will also meet with numerous "focus groups" -- made up of users of all of our agencies' services -- to try to understand what aspects of our programs work and what aspects do not. We will meet with small, medium and large exporters, trade associations and banks. We plan to talk to companies in Los Angeles, Baltimore, New York, Atlanta, Chicago, Boston and Philadelphia. We will ask questions that will help us get to broader issues holding back our export potential, such as finance risk and underutilization of our trade finance programs. We will ask all of these exporters about the competitive environment they face and what they think the world's best export promotion services should look like.

The second part of this exercise will be a search for best practices, looking at how the governments of our major competitor countries go about promoting exports. We already know they dedicate more resources -- that is not the only issue. We want to learn more about their most effective programs, and apply any lessons that are appropriate to our own programs. We will be looking for best practices in the private sector as well, and applying any lessons we learn.

We have already gathered initial data from embassy posts on the export promotion services of our G-7 trading partners, plus South Korea, the Netherlands, Spain and Sweden. This information will help us send out a more specific request for [Department of] State economic officers and our commercial service officers to provide a more detailed analysis of some of the most intriguing best practices.

One of the first things we already know is that many of our competitors have benchmarked their programs and are copying as best practices some of our own programs. South Korea's trade promotion agencies have adopted the products and nomenclature of U.S. business matchmaking services such as our Gold Key, International Company Profile, Customized Market Analysis and International Partner Search services. Italy has established a network of regional "one stop shops" similar to the U.S. Government's Export Assistance Center strategy. And nearly all the competitor governments we are looking at have established centralized call centers and Internet portals similar to our own.

We have developed some excellent programs, and validation of some of these efforts is important. But the main purpose of looking at programs in other countries is to learn how we might improve our programs. Governments in these countries have many of the same goals and face many of the same challenges as the United States. To the extent they have developed innovative solutions, we should be open to learning and to change.

We have discovered some interesting themes. A core mission of all of these countries is to promote the exports of small business. For example, despite recent budget cuts, the French have modernized their export promotion services and focused them on SMEs. The South Korean government is now committed to moving away from the dominance of "chaebols" (conglomerates) as its foundation of export strength and is focusing its programs on small business. They have a number of innovative programs, including a Small Business Corporation (with a budget of $4 billion funded through lottery tickets) to provide SMEs with financial and technical assistance to improve their competitiveness.

Not only do these governments focus their programs on small business, but in many cases they target these initiatives to developing countries. In 2000, the French targeted Eastern Europe and other emerging markets for the export of high-tech services. Canada has packaged services to help exporters enter emerging markets, and recently focused on South America. Spain has a "Master Plan" for increasing access to the Asia Pacific region, coordinated through a number of ministries.

A second theme is that a number of countries' export and investment promotion programs are more integrally linked. For example, Japan's new "region to region investment promotion program" links complementary regions rather than working with individual firms. Recently they matched a Japanese region known for making eyeglasses with an Italian city known for high fashion.

Third, there is an enormous emphasis on leveraging the Internet to promote exports. In Sweden, the Trade Council's Web sites have become the most important source of information to exporters. The free-to-user advice service has become increasingly sophisticated since it was initiated in 1996, with over 80 percent of users responding that they always find what they are looking for. The British also have a comprehensive e-business strategy, including e-business services, e-business infrastructure, Market Access Online and Trade Partners UK.

It will be very interesting to see how our recently launched "Buyusa.com" on-line matchmaking operation stacks up. By applying U.S. leadership in Internet utilization to export promotion, this unique partnership with IBM puts the full network of the U.S. and Foreign Commercial Service's 1,800 experienced professional trade specialists around the world and throughout the United States behind each business relationship and transaction.

Fourth, a number of competitors place a heavy emphasis on technical assistance to promote exports. In the United Kingdom, the government helps toward the cost of bringing decision-makers in key countries to the United Kingdom for training by British companies. It is designed to help new business contacts in export markets familiarize themselves with British technology, production methods and management skills. Japan's International Cooperation Agency -- with a budget of $1.9 billion -- administers grants that fund technical training of potential foreign buyers in Japan and dispatches technical experts abroad.

The final phase of our benchmarking study will be our analysis and comparisons of our programs with other best practices. We have broken down all of our programs into a short list of export promotion "processes," such as providing information, marketing, small business trade finance, investment insurance, linking policy and promotion, and evaluation of our services and coordination. Our goal is to benchmark each of these processes with the best practices we identify, and develop recommendations that will put us on a course toward world class export promotion services. We expect these recommendations will be both strategic and programmatic and identify what we do best while responding effectively to our competition. They will address both duplication and gaps in our services and attempt to leverage opportunities between agencies, the private sector and other export service providers. We intend for this to be an ongoing program of review that will provide us with continuous feedback on the scope and quality of our programs, so that they reflect the changes our exporters face everyday in the global marketplace.

Mr. Chairman, we hope this vision is consistent with what you intended the TPCC to be when you created it in 1992. I am sure I speak for my colleagues when I say that we appreciate the fact that there is such a vehicle available to help us improve and better coordinate our programs at this important juncture.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF216 10/02/01
Text: Senate Democrats Assail WTO Draft as Targeting U.S. Laws
(Letter to USTR Zoellick opposes draft language) (690)

Three Senate Democratic leaders on trade issues have criticized a draft text for launching a World Trade Organization (WTO) round of negotiations because of language they view as threatening to U.S. dumping and other unfair-trade laws.

In an October 1 letter to U.S. Trade Representative Robert Zoellick, Senators Max Baucus of Montana, John Rockefeller of West Virginia and Jeff Bingaman of New Mexico said the draft negotiating text continues what they view as an assault on U.S. trade remedy laws begun in WTO dispute-settlement panels.

"If anything, our focus should be on rolling back some of the dispute-settlement decisions in these areas, not exacerbating the problems they engendered," the letter says.

The draft released by WTO General Council Chairman Stuart Harbinson aims to serve as a guide to WTO trade ministers for achieving consensus on launching a round at their November meeting in Doha, Qatar.

The October 1 letter to Zoellick cites an earlier letter signed by 63 of the 100 senators that opposes any trade negotiations that would weaken U.S. trade laws.

Baucus is chairman of the Senate Finance Committee, which has jurisdiction on trade issues including any congressional grant of trade promotion authority (TPA), otherwise known as fast track, to the president to participate in trade negotiations such as a WTO round.

The letter asserts that any TPA bill will likely contain language aimed at protecting U.S. trade laws from negotiation.

Following is the text of the senators' letter:

(begin text)

October 1, 2001

The Honorable Robert B. Zoellick
United States Trade Representative
600 17th Street, N.W.
Washington, DC 20008

Dear Ambassador Zoellick:

We write to express our strong concern about the Draft Ministerial Declaration issued last week by the Chairman of the WTO General Council, along with the Chairman's Draft Decision on Implementation-Related Issues and Concerns. The Chairman's Drafts, if adopted by the WTO, would open the door to a weakening of the agreements on antidumping and subsidies rules. We must not permit this.

In particular, paragraph 24 of the Draft Declaration calls for "negotiations aimed at clarifying and improving disciplines under the existing [Antidumping Agreement and Agreement on Subsidies and Countervailing Measures]." Regrettably, for many countries, "clarifying and improving" really means weakening. This is made plain by the various measures proposed to be undertaken under the guise of "implementation." These proposed measures, set forth in Annex II to the Draft Decision on Implementation, would unnecessarily restrict the ability of the United States to use WTO-consistent tools to address unfair trade practices. As you know, U.S. trade remedy laws already are under assault in the WTO. Over the past year, we have lost a number of key disputes challenging our antidumping law, our countervailing duty law, and our safeguards law. The Chairman's Drafts would allow other countries to continue by negotiation what they have begun to do by litigation. If anything, our focus should be on rolling back some of the dispute-settlement decisions in these areas, not exacerbating the problems they engendered.

You will recall that last spring 63 Senators sent you a letter setting out a bright line when it comes to trade remedy laws. Simply put, these laws must not be weakened in future negotiations. We are confident that this objective will be firmly embedded in whatever fast track legislation eventually passes the Congress. We strongly urge you to demonstrate your commitment to that objective now, by opposing any language in the Chairman's Drafts that would run counter to that objective.

We are at a critical juncture, both for fast track and for the upcoming WTO Ministerial. In both endeavors, it is important that we stand by our core principles, one of which is preserving the integrity of our trade remedy laws. We will be following this matter very closely over the weeks leading up to the Ministerial and hope that you will keep us informed of any and all developments.

Sincerely,

Max Baucus
Jay Rockefeller
Jeff Bingaman

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF217 10/02/01
Researchers Discover Greener Vegetation in Northern Hemisphere
(New data may help solve mystery of "missing carbon") (1090)
By Jim Fuller
Washington File Science Writer

Washington -- Researchers from Boston University and the National Aeronautics and Space Administration (NASA) report that a gradual greening of the Earth's Northern Hemisphere has occurred over the past two decades -- believed to be caused by rising temperatures linked to the buildup of greenhouse gases in the atmosphere.

The researchers used satellite data in correlation with temperature data from thousands of meteorological stations in North America and Eurasia to confirm that plant life seen above 40 degrees north latitude -- representing a line stretching from New York to Madrid to Beijing -- has been growing more vigorously since 1981.

The scientists, whose report appeared in the September 16 issue of the "Journal of Geophysical Research - Atmospheres," also said that the growing season in parts of the Northern Hemisphere has increased by several days over the same time period. Further, Eurasia appears to be greening more than North America, with more lush vegetation flourishing for longer periods of time.

"This is an important finding because of possible implications to the global carbon cycle," said Ranga Myneni, associate professor of geography at Boston University.

Carbon dioxide -- from the burning of fossil fuels -- is a main greenhouse gas and is thought to play a major role in rising global temperatures. The gas also promotes the growth of vegetation. Scientists believe that a warming of the Earth could also result in significant impacts such as sea level rise, changes in weather patterns and health effects.

Under the 1997 Kyoto Protocol, developed countries can use so-called carbon sinks, such as forests and croplands that absorb carbon from the atmosphere, to meet their commitments for reducing greenhouse gas emissions.

"If the northern forests are greening, they may already be absorbing more carbon than expected," Myneni said. "As to how much and for how long, that needs more research."

But the researchers believe that the gradual greening of the northern latitudes could help solve the mystery of the so-called "missing carbon." During the 1980s, fossil fuel use, deforestation and other land-use changes should have accounted for a total annual carbon dioxide emission rate estimated at about 6,000 million tons of carbon. Monitoring stations indicate, however, that only about 3,000 million additional tons of carbon are accumulating in the atmosphere each year.

Some scientists have recently suggested that the "carbon dioxide fertilization effect" may be causing land vegetation to absorb much more of the excess carbon dioxide than was previously thought. The idea is that plants -- especially those in the Northern Hemisphere where most man-made carbon dioxide is produced -- will grow faster, and so absorb more carbon dioxide.

"Basically scientists are not able to balance the global carbon cycle -- there's less carbon in the atmosphere than we thought," said Robert Kaufmann, a researcher at Boston University, in a interview. "Our estimate, based upon the satellite images of increased biomass in the Northern Hemisphere, is roughly consistent with what scientists think is missing from the atmosphere."

The researcher said the latest findings "may be the first step toward some kind of monitoring system where you could keep track of how much carbon is being absorbed by biomass in different countries."

Looking at the Northern Hemisphere, researchers found that plants have been growing more vigorously in Eurasia compared to North America.

They found that the Eurasian greening was especially persistent over a broad contiguous swath of land stretching from central Europe through Siberia to eastern Russia, where most of the vegetation is forests and woodlands. North America, in comparison, shows a fragmented pattern of change notable only in the forests of the East and grasslands of the upper Midwest.

The data showed that only about 30 percent of the vegetated areas between 40 and 70 degrees north latitude in North America show a high amount of greening. In contrast, more than 61 percent of the same region in Eurasia showed high greening. The area of vegetation has not extended, but the existing vegetation has increased in density.

The researchers also report a growing season that is now almost 18 days longer, on average, in Eurasia, compared to two decades ago -- with spring arriving a week early and autumn delayed by 10 days. In North America, the growing season appears to have become 12 days longer.

"When we looked at temperature and satellite vegetation data, we saw that year-to-year changes in growth and duration of the growing season of northern vegetation are tightly linked to year-to-year changes in temperature," said Liming Zhou of Boston University.

The researchers reported that differences in temperature change could account for the differences in vegetation between Eurasia and North America. While the Earth's northern latitudes have warmed by about 0.8 degrees Celsius since the early 1970s, not all areas have warmed uniformly.

The warming rate in the United States is smaller than in most of the world, while data for Eurasia suggests an increasingly greener region as temperatures continue to warm. Kaufmann says the difference may also be due to forest regrowth. "In large parts of Russia and former Eastern Europe you have people abandoning plots of land, and these plots are growing into forests," he said.

If the global average climate continues to warm, scientists predict that growing seasons will continue to extend. Northern areas that are now sparsely vegetated could become much more lush, and capable of absorbing far more carbon dioxide.

"The implications are that the further north you go, the longer the growing season is becoming," said Compton Tucker, senior Earth scientist as Goddard's Laboratory for Terrestrial Physics, in an interview. "So, for example, places like Canada, Sweden and the northern part of Russia should be able, if this continues, to have a better growing season. Whereas before their growing season was more limited by temperature."

Tucker developed the Normalized Difference Vegetation Index (NDVI) to help determine the "greening" of plant life. This index uses red and near-infrared solar radiation reflected back to sensors aboard polar-orbiting satellites. The sensors observed every patch of land on the Earth, at least once a day, continuously from July 1981. The vegetation index shows the greening and browning of plants as they relate to seasonal changes and conditions such as drought and abundant rainfall.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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