 Good morning. Welcome. I'm Steve Johnson. I'm the guy that is supposed to tell you to put your cell phones on stun or thrill mode or turn them off altogether. I'm the director of the America's program and I'd like to welcome you to CSIS and thank you again for coming this morning. We have a very interesting program for you. I want to thank our guests, distinguished Alberto Aliman Zubieta, the chief executive officer of the Panama Canal Authority, Bill Lane, the director of government affairs for caterpillar equipment and our own Meredith Broadbent, a CSIS senior advisor and holder of the Shoal Chair in international business. To begin, no two countries have had histories more intertwined than the United States and Panama and probably no country is more associated with a wonder of the world than Panama. From the beginning of its existence it stood as a hallmark of man's quest to overcome geography and communicate with brothers and sisters all over the world. No surprise then that Panama is one of the world's great crossroads whose society reflects mankind's great diversity. Like many of you, I've stood in awe watching great cargo ships transit the canal. Personally, I reflect how that marvel brought my own family together. My great uncle was a managing engineer under General Goethels. My great grandfather-in-law was one of the West Indian laborers who dug the canal. For nearly a century it has served the world as a peaceful channel for maritime commerce between the East and West. During World War II it hosted the U.S. Caribbean Defense Command and for many years thereafter was a welcoming home for the United States Southern Command where I was assigned militarily. Today, Panama is a country that is doing a lot of things right. First among many visionary and forward-leaning projects is expanding the canal on the centennial of its original construction. Two-thirds of the canal's transits are bound to or come from U.S. ports, so we stand to benefit a lot. I could go on and tell you all about it myself and I'd love to do that, but instead I'd rather introduce you to the real expert. Alberto Aleman-Zubieta is, as I said before, the chief executive officer of the Panama Canal Authority, the autonomous agency that manages the Panama Canal and the leading inter-oceanic waterway that serves maritime commerce. Alberto is a native of Panama City, a graduate of Texas A&M University. He began his career in construction and for many years was head of the largest construction companies in Panama. From 1996 to 1999 he served as administrator of the former Panama Canal Commission, the U.S. government agency that was responsible until 1999 for the administration and operation of the canal. In 98, two years into his appointment, his head of the commission, he was named administrator of the Panama Canal Authority, the entity tasked with the administration of the waterway upon its transfer to the Republic of Panama on December 31, 1999. In 2005, the board of directors re-elected him to lead the authority for another seven years. Alberto's vision has been to transform the canal into a world leader in maritime services to be the cornerstone of the global transportation system and a model of excellence, integrity, and transparency. He's a member of various international organizations such as the International Advisory Board of Texas A&M University, the World Economic Forum, the Panamanian Chamber of Construction, and the Panamanian Association of Architects and Engineers. Ladies and gentlemen, it is my great pleasure to present the distinguished leader of the Americas and a great friend of the United States, Alberto Alamon. Well, thank you. Good morning. It's always very exciting to be here in Washington. I, as was mentioned, I had the distinct pleasure of actually running. I was the only non-U.S. citizen who actually runs a federal commission. I used to work for the U.S. government. I was a federal employee in a period of my life. And actually it was a very exciting year. And really, when I think about where we are today, I have to reflect back where we were maybe 14 years ago. And in those days, there was a lot of doubt, not only internationally, but also locally in Panama, because Panama was about to actually be transferred to Panama Canal from the most powerful nation in the world to a very tiny little nation in Central America. And this is a very key and important waterway for world commerce. So there was a lot of basically criticisms, doubts, and as we go back and reflect on that, in 1997, and I replaced a great engineer and a great person, Gilberto Guardia, who was the first Panamanian Administrator of the Panama Canal Commission then. And Gilberto actually was the one, the person that started in a very interesting way, the expansion of the Gellar Cut. And he did that because it was a requirement that you have to fund all the money in the budget to be able to do a project, and it was around $500 to $600 million project. So Gilberto was very intelligent and said, no, let's do this in small projects. So then he budgeted small, you know, removing projects. And that's how he started the expansion of the Gellar Cut. So he put maybe $50 million this year, and then next year we'll put some more and that way he started expanding the Gellar Cut. In 1997, in September of 1997, we were celebrating the signing of the Torrijos Carter Treaty. And we put together in Panama, and this is a very key issue, because we put in those, in those days what we call the Universal Congress of the Panama Canal in reference to a Congress that, for the Inandela Sep did back in when he was putting, or starting the idea of building the Canal in Panama. But it was a different Congress this time around. This time around, I had to face the different segments of the industry, and they were all saying that, you know, we were going to kill the, the, the chicken with the Golden X, that we were going to mill the Canal dry. And, you know, they said all those things in front of publics. And I, and I said, you know, what Panama is going to do with the tariff? Panama is going to raise the tolls. You know, it's going to be, you know, you're going to try to get all the money. And I said, well, look, very simple. I think that the market will define how, how much Panama can do. Because otherwise, if you go one penny above what you should charge, you know, you can move around and go somewhere else. Because that, that was this idea that Panama has a monopoly on the, on this route. And that if you don't like to go to the Panama Canal, you have to go around the, the horn and then, you know, go somewhere else. And that really was not the case. But more importantly, in that Congress, we, there were two studies presented on what, you know, what, what was the demand for the Panama Canal? One study was done by a US company and the other one was given to Panama by the European Union as part of the Congress. Both studies reflected or actually came to be about the same different, you know, not exactly the same, but very close that the Panama Canal was going to have a capacity problem in the year 2011, which is this year. And actually, that made me reflect in those days, just getting, you know, to, to know the turf and start, you know, making the changes in the canal. We were actually in that, in that, in that precise year, we were basically finishing in Panama, put into the organic law that created the Panama Canal Authority. So we were in that process of the transfer. We decided to put together a team of engineers in the canal and make a special office that we call the capacity office of the canal. And actually, we concentrated in that office, every single study that has been made, since the canal was started, on what the canal should do on solving this capacity issue. For it to see if it was for real. We were at that time basically starting a program to modernize the Panama Canal as part of the requirements of the transfer of the canal so that the US could transfer the canal back in good working condition. And that was a very interesting program itself. That we then continue, actually, after we took over. And in fact, Panama has spent over $1.6 billion in these 10 years, you know, upgrading the actual canal, you know, growing, maximizing his capacity, because we needed to basically be able to manage, you know, the need for the Panama Canal. When we did that, actually, it was the base for the study that we put together, eventually, we call the master plan for the Panama Canal. And that was a plan that actually defined what we needed to do in short, medium, and long term. And then start, you know, putting all these studies and work together to see what we could do. The idea of putting a third set of locks is not a no idea. In fact, the US started building the third set of locks in 1939. And I actually stopped that work in 1942 because of the war. And they spent $80 million of $1939. It's a lot of money. They did a lot of excavation back then. In fact, we're using most of those excavations in this project. I got to see in 1995 for the first time, when I was doing a pro bono work for the, actually, for the board of directors, by national board of directors of the Panama Canal, they show me in the district, district, peaceful district, sorry, of the US Corps of Engineers, they show me, you know, here's the third set of locks. And I saw, wow, you know, these are the plants, you know, for a complete set of plants who never get to be built. So when we decided this was because I found that, you know, running the canal and moving ships from one end of one ocean to the other, actually is, I will say, common things that we do every day. The canal has been working like that. And the people who run the canal, most of them were Panamanians. So I have no doubt that we have the capacity and the people to run the canal properly. But there was a different, actually, approach. And I have the opportunity and, actually, I've been blessed by the fact that I run the canal for the US and I also run the canal for Panaman. And I think this is one of the great success stories, actually, because there are people who, as I mentioned before, they have this doubt. And nowadays, the canal, I think, when people say that the canal is run better than the US, actually, is because we're running a different system. And we have a different approach. For the US, this was a break-in operation, basically. For the shipping industry, basically, they were paying only for the cost of the operation of the canal. So they were having a great time. And we have to match the incomes with the expenses. And in a corporation, it's very simple. If you're a manager, you're only managing a budget. And, actually, the idea is to spend all of the budget, you know, which is actually because otherwise they will cut it. When we got there, we said, no, actually, we need to manage the resource. In fact, a funny story is that in the last two years of the transfer, according to the treaty, if there were any excess of money, they should be transferred to the Republic of Panama. The first year, in 1998, fiscal budget, we had a surplus of about $8 million, if I recall correctly. And my deputy, a great guy, came and see me and said, Alberto, we have a problem. I said, you know, what do you mean we have a problem, Joe? And he said, well, we have these surplus, I'm supposed to know, we have, you know, they're now closing the books, and we got money, and we are supposed to be breakeven. I said, look, Joe, that's okay. You know, we actually budget for a breakeven, and so then the money will be transferred to Panama. So that's what happened. The next year, he came back and said, now we have a bigger problem. He said, what's the problem now? He said, well, we got some close to $30 million in, and I said, look, Joe, the way I see it, I think that the White House should call both you and me, you know, to the White House, and I should be given a price, because we are running an agency, breakeven, and actually we're making a surplus. And we have done exactly everything that we need to do. We haven't let, you know, any maintenance, everything we said to do, we did it, but we are managing its resources, so people in their mentality are no longer trying to spend all of the money, that they have the money, and now they have controls in which to make it work better. And I'll tell this, because actually we needed to change the culture of the place. It was different, it was difficult for some of the people over there to actually be able to manage that type of change, and there was also inside of the organization a lot of doubt. So when we started actually now, when we reflect about it, you know, Panama did not raise tolls when we received the canal in the year 2000. In fact, we raised tolls in the year 2002, because we did a lot of things first that actually provided a better service. We changed some of the reservation system, we started understanding our customers, we started talking to them, we started, you know, understanding what their needs were, and then we made a big decision, because, you know, there was a lot of pressure to maintain the canal as a utility. And we said no, we're going to run it as a profit center as a corporation, and it should be run as a corporation. And one of the big, the big part of the success story is that the Republic of Panama, and I think that the success of the canal is owned to the people of Panama. And when I say this, I said it, you know, because it was the, the, the, the, maybe one of the only times in which I see our country get together and then decide that the canal should be, you know, a change, a change in the constitution, which is not easy, and sometimes they try to change, you know, from time to time. But in this case, everyone got together and created a title in the constitution of the country that says this is the way the canal should be run. And then we went into a process that that is called the organic law, in which there was a lot of discussion with every member of the civil society of Panama, and we got a common goal. And that is why the canal has this structure, this legal structure, that define the way that it should, that it front today. So it was a decision of the society of Panama that gives this mandate to those who are, those who are working in the canal. Now, when we, when we get to the, to, to start doing this analysis, then you know, in, in those days, we decided then to, to set the goals in a different fashion the first time around. We understood that we were not dealing with one industry, we were dealing with many industries. In this breakeven operation on the, under the U.S., every ship was the same. You know, it didn't matter if it was a container ship, or it was a passenger ship, or it was a, a bulker, basically we measure the ships the same way. Once I fit so, okay, because we only needed to basically take the amount of tonnage that was going through the canal, charge x dollars per ton, per Panama Canal ton, and then basically that was it divided amongst everything was the same. And we said no, we are in a totally different industry because we understood that the container industry was totally different from the bulkers, from the passengers. They have different needs, and so on. So we basically decided to, that the first tall structure, we, we changed the structure into eight different segments. And we modified then the tall, you know, slightly up. Obviously there was a lot of cry, you know, you know, you are raising tolls and blah, blah, blah, okay. But we basically start sending a very important message, how we were going to run the canal. And we had huge discussions, which then, the same time we were preparing this program, which was also very interesting what happened over there. So in the tall structure, for instance, there was an issue with the container trade. Under the US, which could, we could not charge on deck, the on deck cargo. And that was done in the 30s, because someone decided in those days there were no container ships. And basically the on deck cargo, which used to be the captain's cargo, basically there were, basically was locks were put on top of the deck. And someone maybe in one of the states where they basically were logging and sending those for the world trade decided that, you know, there was a small amount of money to be charged by the canal and therefore you, we should take it out. And that was the decision, it was taken out. And therefore we could not measure any ship, anything above deck. Well in 1997, when we have a, the last toll increase by the US, and actually that was my first day at the job, by the way, in 1996, when I got in and I was sworn on Sunday, on Monday we have a board meeting and the board meeting decided to raise tolls. I said to me, well now you are going to raise tolls. Well we, in that, we decided that we wanted to charge for the on deck cargo for the container containers. They put a huge lobby here in Washington and I had to come to Congress and thanks to a great congressman, Herb Bateman, from Virginia Beach. We explained to him what was going on and Herb called this meeting and we explained and eventually they allowed us to do a reverse mathematics to put into the formula of how we measure the ship, a percentage of that volume, because it was based on how much money they can actually charge to maintain the canal break even. So we put that small percentage over there. But I told the industry back then, I said, look, in the next three years Panama is going to take over and believe me that I'm going to charge a hundred percent of it. Okay. Actually we did that in 19, in 2004 because first we needed to segment the market because otherwise every time we will do a total increase has to do for all of the ships and they were a very specialized part of the industry. So I told them then, well, now we're going to charge the full volume so we can do it either by TEU, that's the way you manage your industry, or we can do it by volumetric measure. You have your, you know, select. So we got to an agreement and then we changed actually the way we measure those ships and we started measuring them by, per TEU of capacity. And we put a, and they came, and then they claimed that we were raising the total 65 percent, which was actually not true because we were only charging for that part that they were getting away with. Okay, that was about 65 percent that actually goes on deck. And then I'm making this to you so you can understand the, some of the issues that we were dealing with, with the industry and how we get to this program. So when we were analyzing, you know, how can we basically maintain the canal as a very important waterway. Our idea is not basically to take away the restriction the canal has today and make a bigger canal. It's not about that. It's actually to maximize what I believe is the biggest asset of my country that is our, our geographical position because otherwise we will become a secondary road and I don't want that to happen. And you see why, you know, and that's that's why I believe that it's so important because by doing this Panama is becoming and it will become the most important logistic interpretation center of the Americas. Some people try to, to, to say that Panama will be the next Singapore. And I believe that we have much more than Singapore to offer. And, and I explain later why. So we were putting this program together. We made some mistakes. We made mistakes as engineers. You know, one of them was that we went to the, to what we call the Western watershed and we started analyzing where we're going to get water. You know, nothing wrong to do a study. The other thing that we did not took into account that people who live in those places, you know, believe that we're going to inundate all of them. They thought that we're going to create a huge lake. Was not the case, but actually it helped us a lot in understanding a dimension that, you know, sometimes we were not seeing. And that is the social part of a program like this. And thank God that it really happens very early on. We contracted, we asked the, the, the United Nations through the Penu then an office over there to analyze, you know, what were our stakeholders? You know, what were the questions that we need to answer? And, and the person in charge came to me after going and talking to everyone in the country, you know, everyone you can imagine, you know, unions and Indians and native of all the country and went to look at areas and he presented to us, here's your stakeholders and it's huge. Everyone wants to know about, everyone is concerned. I said, Alberto, you have a lot of questions to answer and you don't have them ready yet. And I said, well, yeah, that's, that's true. And so we then engaged in doing more than 150 studies to put together a program that today, you know, it's, it's going well. I think it's, it's extremely well. But that program needed to go and be presented to the people of Panama in our national referendum. So people, you know, used to ask me, why do you want to, what do you have to present an infrastructure project to a natural referendum? And this is one of the streams I believe, a very important one because it shows that any project requires to have a, to be presented to those stakeholders of the civil society so that people can actually, maybe you don't like what they're going to tell you, but you at least need to hear them and maybe you can make decisions. And I don't think that you should be cutting corners in, in, in that, in those areas. And that's sometimes some, some of the frustrations people tends to happen when you want to do a project. And sometimes we engineers tends to want to do things very fast and we try to go around things when I think that it adds value and actually makes you a much better and stronger project when you do the things right. And for instance, environmental issues, talking to the people who's going to be affected. Because at the end of the day, when we went to a referendum with this program, we put it together at this master plan and we presented this in the year 2006 to the Republic of Panama, there was a lot of doubt. People asked me, okay, how much money is going to cost? They said it's going to cost 12, 12 billion dollars that it was, you know, it could not cost 5.2 billion. They said that there were a lot of risk, that why should we take the risk, you know, and that there were going to be, you know, awful things happening, that mega projects, you know, they were not okay. And there was, you know, valid criticism and it was valid concerns, you know, and you have to take it in that measure and you need to basically have the answers for those questions as far as they could be. It doesn't matter. The important thing is that actually you need to tackle them and actually understand, you know, what, you know, actually they'll bring to you and then you will have even a stronger project. So in 2006, when we presented this, we went to the people of Panama. We had six months to explain and we could not put propaganda and spend money of the canal into any of these saying, you know, please vote yes. Actually, we were constrained and the only thing we can do was to explain to the people of Panama what were the benefits and the reason why we were presenting this to them. Well, early on we thought that, you know, we could talk about Panama ships and post Panama ships and amount of monies and billions here, billions there and construction costs. They didn't care. That was not the question. The question was, what is it for me? And you need to answer that question. You need to answer to the people in the mountains of Chiriqui what this represents to them. What were the benefits for them? You know, for a people who was doing a pineapple farm, what it does represent for them. They don't understand that some of them have never seen the canal. In fact, the canal was felt away from, in those days, Panama was, you know, taking over an infrastructure as a canal. But we need to actually, it was off limits for most of the people of Panama. The canal was off limits. So even though we were very proud of the canal, the canal in itself, you know, people do not can touch it, you know, they, some of them have never been to the canal. They're afraid, you know, it was under the U.S. So that was a big challenge to go and do that. And I have, you know, to say that, you know, we had people from the canal from every areas and they were like a hundred and some of our colleagues in the canal who went out and talked to the people and they were, you know, they tell you everything, you know, some people were very hard in some of the questions that we went and talked to everyone. Every single person, every, every union, the construction union, which is very hard, very tough. I said to the people who lead that, I said, look, I'll go there, you know, and I'll present the case. Just, you know, hear me out. If you don't like it, you don't like it. That's okay. We can agree to disagree. No problem. Okay. So at the end, we had a great success and this was approved by a 78% approval rate. So we have now a very strong mandate. And we started, nine months later, we started the first program, the first construction project. Okay. And it started in September of 2007. The referendum was in October. So 11 months later, we started, actually, started digging the first program. And we've been working at that very diligently since then. And I would like, at this time, to take a break and show you a film that we did basically only we're going to have a go or two weeks ago on where we are in this, you know, very large and important project. So they just run this, this film. It's a five minute film. The Panama Canal, an engineering wonder of the world with nearly a century of service. To guarantee its competitive edge in the maritime industry, the waterway undertook since 2007 an ambitious expansion program that will enable the transit of post-Panamax vessels. One challenge in the expansion program is turning the existing entrances and canal navigational channels into suitable channels to enable the 50 foot draft required by post-Panamax ships. On the Pacific side, Belgian company Dredging International brought in the D'Artagnan, one of the world's most powerful dredges, featuring a 6,000 kilowatt cutterhead. On the Atlantic side, activities are also non-stop. At one time, Belgian contractor, Jan de Nul, had up to seven dredges working simultaneously in the area. By the end of March 2011, both contractors had dredged 18 million cubic meters of the planned 26 million. ACP in-house forces have not hesitated when it comes to investing in dependable equipment to conduct dredging activities in Gatun Lake and Culera Cut. At a cost of $95.9 million, the new cutter suction dredge keeping it right this year to support dredging work in the area. In total, the ACP forces and the contractor have dredged 10.6 million cubic meters through March and thus achieving a 46% progress. In 2011, the toughest part of the construction of the new post-Panamac locks will begin, the concrete pouring. This is one of the crucial stages of the contract for the design and construction of the third set of locks, and the Panama Canal Authority is working hand in hand with the contractor to guarantee that the execution maintains its momentum. The magnitude of what the site will become once the post-Panamac locks are completed is already noticeable. These, for instance, are the cutouts where the lock heads, the recesses that will house the 4,000 ton gates will be built. The design of the different components of the third set of locks progress along parallel with the civil construction. In Lyon, France, the Compagnie Nationale du Ronde is conducting the final test on the filling and emptying system of the locks using two additional scale model vessels. These tests will validate the information detailed in the Grupo Unidos por el Canal proposal and in the performance specifications. Through March 2011, Grupo Unidos por el Canal reported an overall 10% progress. To connect the third set of locks in the Pacific with Culebra Cut, a new access channel is under construction since September 2007. By the first quarter of 2011, the contractors have excavated 27.4 million cubic meters of the planned 50 million. This year, we'll also witness the beginning of the construction of the Borinquen Dam. This 2.3 kilometer long barrier will separate the waters of Miraflores Lake from the new channel that is being constructed, enabling its operation 9 meters above the level of the lake. In achieving this task, a 1.8 kilometer long cellular cofferdam system is required first and it was completed this April. As a complement to the dry excavation, dredging mogul, Jean de Nantes is conducting dredging and excavation work along 1.6 kilometers at the north entrance to the new channel. These works began on November 2010 to accomplish the removal of 4 million cubic meters. At this time, the contractor has reached excavation levels that are 12 meters below Gatun Lake level. But this project is not just about construction, reforestation, wildlife, archaeology, and paleontology are also linked to the expansion program. Along with local environmental authorities, the Panama Canal is currently referencing some 565 hectares of land distributed in protected areas all along the country. Trashers have also been dug out along the footprint of the program, including this dagger dating back to the 16th century or this fossil tree more than 10 million years old. Currently, there are nearly 5,000 workers in the expansion program and it is expected that another 2,000 job opportunities will be created. They're working around the clock day and night in order to complete the project. The Panama Canal expansion, the commitment of Panamanians to complete this project with a sense of national pride and setting an example for the international community. Well, that's where we are today. But also, I would like to reflect on getting to put a program of this magnitude together. There's a very important issue that has to be how you're going to manage a project like this. And we contracted through a big process, CH2M Hill, which is actually doing an integrated team with the Panama Canal. We also needed to prepare our own engineers. We had a program in which we provide MBAs first to 100 of our engineers from Incai and you wonder why I want engineers to be MBAs because, well, basically, you are running a project, you are running a corporation and you need to know more about engineering and you need that part. And I think there are very few companies in all of Latin America who can have 100 MBAs and engineers at the same time working for you. But also, we prepare people and make them more than 100 of them are actually 35 program managers from PMIS certificate because we needed to be prepared. Also, Panama put together INADE, which is an institution that was created basically to train Panamanians and that's why today we have most of the people who are working in the expansion are Panamanians. You know, some of us operate on very, very large equipment. Those cat equipment, in fact, cat also put some training facilities to train people in managing or actually operating these very huge equipments that were not the norm in Panama. So, and I think at the end that's it will be a very, very important transfer of technology and I think that we will have even a much better workforce for other projects that Panama will also have to do. As we move forward, then in the year 2007, we haven't contracted yet the funding for the financing for this program. And we had a unique effort. We put together five multilateral banks, the IDB Bank, IFC, JBIC, the European EIB and CAF. And in a single turn sheet, they got together and they revised and they did the due diligence on this program. And we were able to show some of the times in some of the issues which prohibit the practices very important in those institutions as well as the area of environment. And I have to say today and I can say it and we are very proud of it that the way in which we contracted this program actually today is the norm in which very large infrastructure projects should be contracted because we negotiate with the contractors the terms before and not after. We don't negotiate anything after. And that is very different. Usually it's important to do an analysis of who should get what risk because it's about risk taking. Who should be the ones taking the risk if it's better for the owner to manage that or it's better for the contractor to manage the risk. And it took us 14 basically 14 months to do the contracting of the main works. And I have, I can report that we have already contracted most of the, I would say close to 96, 97 percent of this contract already of this program has been contracted. We already have finished two projects. We are basically the third one of the excavation of the Pacific side excavation already being almost completed. And we are well advanced in all of the dredging programs in this very complex program. And all of them without exception has been under the budget of the Panama Canal Authority. And we don't do the budget to win the projects. We do the budget that I think that it's a good price in which we can actually contract this program. And we have done things that are different which we learned from the industry and actually talking to them. For instance on dredging we design all of the dredging of this program has been designed by the Panama Canal Authority. All of the excavation that is done all of those actually 50 million cubic meters of excavation in this program has been designed by the our engineers. When you do in the case of dredging which is about 55 million cubic meters of dredging we do something that is very well actually it's the norm in a lot of the contracting internationally is that we sat with the possible contractors. And we gave them here is what we want you to build. This is the design. This is how many cubic meters of material have to be dredged. And here's kind of the type of material you will find. But you need to contract between yourselves a company that should do the analysis of what type of material you're going to find. So then between themselves for instance on the first dredging project in the Pacific entrance they did a 1.5 million dollar study among themselves there were six contractors this was all contracted and each one paid his part. Everyone received the same information now the risk of the material they will find during the dredging is on their contractor not on the ACP if we were the ones providing that information if there was any change in the type of materials then we could be claimed against but if it's there if there is there if it's theirs own information they have to bear that risk and everyone has the same information which is very important. Well we had a fantastic prices in every single project and that's the way we've been doing it and that is a modern way to do it in fact the winner has to pay the other contractors the percentage that they each one pay for this study. So that's the way and everyone knows the rules and we know exactly and we have had all this work done and there hasn't been any claims and most of those products are basically finished. For instance Jan Denul in the Pacific in the Atlantic site he would he put seven dredges at one given time. Why? Because when they bid this program it depends on if they have dredges available if they they have already been working in in the country Dredging International brought to Panama the largest deeper dredge I mean construction dredge in the world to do a project that it's requires a lot of rock excavation in the Pacific entrance. Well it's a very powerful dredge. They have the equipment they have the capacity let them bid for that. We are not the ones who should be telling within what to do and how to do it. They have to take their own risk. So this program and actually I sat with the core of engineers they went to visit me in Panama and they I asked for me to explain to them Panama now explaining to the core how we were doing this because they want to use this model to actually bid for very large infrastructure project even in the U.S. So we are very proud of that. I think that we put together a program that actually is being contracted and contracted very efficiently and it's doing very well. In fact, we are about 400 million dollars below the expected budget. Hopefully everything will finish there's still a lot of work to do. There's a lot of things that can happen but we will try to maintain this very much under budget and ahead of time. And those are very difficult tasks to do on a very large and complex project like this one. This is a project that is basically being done around the world. For instance, the designer of this program of the of the locks is Montgomery Siwazun Harza from Chicago with Tetra with Tetra Tech. Those are the two largest designers in the world. They are the ones designing this and but they are also designing this with companies in Belgium that are specializes on the gate for instance and they are doing what you saw over there. One of the largest ever built hydraulic models to test the water serving basins, the water flowing from an upper lake to an ocean that actually changed 18 foot in ties a lake that actually will move from 89 feet down to 81. So we need to look at all of those hydraulics and this company companion as we are to run it's being contracted by them to do these studies and actually I have to also report that the what it came out of those so that we basically are already finished is very exciting and very good. You know it's because they could not start building anything unless we pass the uh the test not only on on mathematical models but also on physical models like this one that they built over there. They are also designing the actually the mathematical models are being done in Buenos Aires Argentina on a company owned by Montgomery Watson Harza and they specialize in these hydraulic mathematical models and those that are working with you know with France with Chicago with Belgium and with Panama you know and the for instance the gates are being built in Italy all the buffs and equipment is being built in in Korea by Hyundai so this is a project that actually span the world it's not only you know the contractors is actually you get you get Belgium contractor from Holland doing dredging so you got all type of of of workers and type I'm sorry of contractors working in this in this very exciting program now what will happen when we open the canal in in 2014 when we expect this to be open in fact I think that we have said it is a game changer and why is a game changer because actually by allowing now a ship that the Panamax in terms of container for instance is a 4,400 TEU ship well we'll be able to actually already the industry is designing a Panamax the new Panamax ship that actually we call the design vessel to be able to carry over 14,000 containers feeding the dimensions that we have as our design we were thinking about a 12,000 TEU ship now they're already gone up to 14,000 when we talk about valkers in the canal we can only move a 60,000 dead weight on ship we're going to be looking at a ship that is about 170,000 dead weight on ship three times more almost three times more now what happens there is there for instance there in energy we cannot move LNG through the Panama Canal because the size of the ships doesn't fit the LNG tankers are not Panamax in size are larger than Panamax well there's a lot of gas even here in the U.S. in Peru in the Caribbean and now you can actually be transferring from one ocean to the other when we look at what happened in Panama in terms of transshipment in the year 1995 in Panama 96 we only moved 200,000 containers a year this past year we moved 5.6 million TEUs we became the number one port in Latin America we surpassed Santos in Brazil this tiny country of Panama we have more cranes in Panama because we have 52 overhead cranes for containers well it just happened that's 23% of all the cranes in Latin America we have more cranes in Panama container cranes that Mexico has we got more cranes than Brazil has we got more cranes than Chile see and that is about basically being able because when I said that we have better things than Singapore in in basically location and position because we have a long way to go to get to Singapore that is because we can connect two oceans Singapore do not connect two oceans we connect the Pacific and the Atlantic and we actually can actually get to a very large market that is Latin America and that is why Panama is a game changer because we now allow larger vessels to go from one ocean to the other and therefore you can have great economy of scales huge economy of scale and that should benefit and that's why there's a huge discussion going on today and that's what I am so glad about because we are here now talking the Panama is now presenting to the U.S. and to the world a game changer in terms of infrastructure change and now the discussion around the all these is a seaboard in the U.S. is who's going to be the winners where should the investment be made here in the U.S. the same thing happened in the Gulf see there's a huge difference between being able to move soybeans in Panama size ships than moving soybeans in three times the capacity it gives the U.S. soybean exporters or corn exporters a huge advantage to get to the market in a more efficient way because when you have a low cost product or commodity the cost of transportation is very large and if you can reduce that part then you make it you actually made it much more efficient then what happened to Panama for all the same thing we have the capacity to go to any market that's why when we are basically selling pineapples to Europe we have the capacity to basically contact or transport that pineapple in a very efficient way because we have the poor system we have the not more important the poor system we have the lines connecting to those ports so we are we can have access to that that connectivity because Panama is the country with more connectivity in Latin America and in fact the number two in the Americas number one is the U.S. besides the U.S. then it's Panama so that is why when I said early on that for us the important about the expansion of the Panama Canal is not about allowing larger vessels to go through it's actually to maximize what we can offer as a country and maximize that location that we do have and it's about adding value at the end of the day it's about adding value and how it shows so we how we can capture value from the value that we offer and that is why nowadays we have these discussions and that's why the Canal has been able to price itself properly and actually to get money to be able to do what we're doing and it actually just as a reflection we had an interesting discussion one time just to close out with the industry and during the the debate for the expansion some of them said to me you know I'm really sure about why are you charging us the industry now you know for something that we are not the ones going to use it you know why don't you charge that money later I said you know I think that you got it all wrong because you know I provide you a service and when you use that service is like when you go and buy a coke you drink your coke okay and you don't tell coke what to do with the money in which they sell you that coke okay so I provide you a service today the canal provides you a service today that I am sure that you pass that on to your clients and you charge for that service today we are the ones taking the risk you are not paying for any Panama Canal expansion you got it all wrong we are paying for the Panama Canal expansion ourselves we are the ones putting we are the ones betting for that we are the ones who are actually burying that money in our country expanding the Panama Canal because I believe that we are going to supply you with service that we can actually gain from from doing that we are the ones putting 5.25 billion dollars in this infrastructure because you have one big advantage over me and that is that you have ships that you have engines and you can move them around so I am going to offer something that I am sure that it's going to be of benefit to you and that's why you're going to be using it and that actually is what really happens you know we are basically providing services and we will continue to provide service and I think that that has value and today we see the industry actually moving and contracting bigger vessels new Panama size ships and everyone is now trying to position themselves to get advantage of the Panama Canal expansion which is fantastic and I love it I actually I think that our bet is going to be a very safe bet and actually I think that it will enhance Panama even further so with that I just like to thank you again for your time and for allowing me to basically explain to you what's going on in Panama thank you very much thank you very much Alberto very very interesting and just to set your comments in context I'd like to call on Bill Lane the director of government relations for caterpillar tractor to provide a sense of of what this means in terms of construction and jobs Bill yeah first of all thank you very much you know you know sometimes you get to deal with projects that touch history sometimes you get to deal with projects that actually make history and this is one of the things that I think we all can be most proud of I was really eager to accept this invitation because it's very rare where you really get a chance to talk about the nexus between infrastructure and trade you know we live in a time where there's been all sorts of chatter about expanding infrastructure in the United States and it's usually within the rubric of a jobs program and I would say if that's the theme it's really short-sighted because you know if you're borrowing money to just sort of make work that's really not improving the efficiency of your economy but if you're borrowing money to improve the efficiency of your economy that's a dividend that's going to pay or that's an investment that's going to be dividends forever I mean when you think of the U.S. probably the most transformational infrastructure project was the Erie Canal which ultimately resulted in the commercial center of the U.S. moving from Philadelphia to New York because it linked the Midwest but what's going on Panama is equally is great and within a Washington context we spend almost all of our time talking about trade agreements and ways to remove trade barriers from a tariff or a quota standpoint what's going on in Panama is really removing trade barriers the canal expansion is the most visible manifestation of that but there's more going on in Panama than just that I mean and think about this the airport in Panama city is being quadrupled in size Copa is being upgraded to truly a world-class airline over 30 new American Boeing jets are going to be purchased all with GE engines and all of a sudden you're going to see as a transportation hub Panama for the entire hemisphere from a caterpillar perspective first of all I have to tell you we really get excited when we see our equipment on I mean we really do I mean moving dirt really I mean that's what we're all about I mean it's you know everybody else has other things it's fashion or money or I mean we just like dirt and we even like mud mud's good too so I mean but this works out really good so the fact that that caterpillar was championing the Latin FTAs shouldn't be come as a surprise a couple of things we learned in this exercise one is we all have to do a lot better job communicating with the even with the administration and the administration always had a propensity to move forward they just didn't want to take on some interests that were anti-trade but what really I think shocked the administration was when a number of businesses pointed out that well from a catapult perspective Columbia we export more to Columbia than we do to India or Germany or Japan that's not to say they're not bigger markets but most American companies tend to service their Latin American clients through exports from the United States whereas when you're servicing Asia it tends to be more of a mix between what's made in Asia and what's made in the United States what really shocked the administration was when we pointed out that last year we exported more American made products to Panama than we did to Korea and that's not to take anything away from Korea but that's just to say that when you have an opportunity to open three markets versus one you want them open three markets and as a result of that we we played a very leadership role I just got word this morning that and some of you may know this story but let me just tell it anyway because it's sort of fun in December we made a real push to make sure the administration didn't lose sight of the opportunity to open all three markets and in a way to sort of visualize that we took an ad out in Politico and you'll have a copy of the ad when you leave here and it showed a football a field goal post and the headline was this is not the time to kick a field goal on trade and the operative line which quite frankly the administration didn't find all that funny was passing the Korea or passing the Korea free trade agreement while keeping Panama and Columbia on the sidelines is the equivalent of kicking a field goal on second down we just got word that that won the highest platinum award for advertising this morning for create creativity so you know don't ever let it be said a 5000 ad can actually make a difference but it really did coalesce people's views that you know maybe we need to think bigger rather than smaller and in a period of three months to the administration's credit to the republican leadership's credit and the business community's credit folks did coalesce around the notion that we need to do more not less let me just wrap up by saying a couple of things Meredith's going to talk at length about the trade agreement but let me just put this more in a U.S. perspective and Alberto talked about it I don't care if you don't make anything that has to do with with earth moving equipment if you do that's even better but think about this from a from a supply chain standpoint a more efficient Panama Canal reduces your supply chain which means almost all American manufacturers become more efficient and better able to compete in the global economy don't think in a micro standpoint don't think that this is the be all and end all as was pointed out this is going to result in an awful lot of construction projects along the coast of the United States and in the Gulf as ports have to expand to be able to handle the larger ships that's going to generate jobs that's going to make U.S. the U.S. infrastructure more efficient think in terms if you have a goal of doubling exports we're going to have a lack of infrastructure to accomplish that now so far the goal of doubling exports only or it really should be doubling trade but for now let's handle just exports you need to have more capacity of the ports you need to have more feeder roads and railroads in order to actually accomplish that because if you're doubling exports you're doubling the amount of goods you're selling you're also going to have to increase imports and I think sometimes we lose sight of the fact while exports are very very important imports are important too and in many times it's the imports that give you the the vitality of your economy and it allows you to ratchet up your your level of competition so you really are more competitive let me just say two things I'd like to leave you with and this is one thing that I think the Panamanians have done better than any and it's something I think we have to regain we've got to regain a sense of urgency when it comes to projects when it comes to change when it comes to making the big fixes that's going to improve the economy you can avoid eye contact and tough issues and sort of drag things out I think the Republicans like to say kicking the can down the road but you know people talked about the Panama Canal expansion five years ago six years ago and I remember when I was first hearing about it really it was actually 10 years ago and they said this is going to be a five billion dollar project and of course in my mind I said oh that means it's going to be a 10 billion dollar project because that's what happened to the US it's still a five billion dollar project it's ahead in some ways I think I think you're you're actually ahead of cost you're on time we used to do things like that and there's no reason why we can't do it again our equipment is more efficient than it's ever been our workers are more productive than they've ever been yet every day we commute to work and we hear about the inner county connector being a couple more decades away and I guess eventually we're getting there now but the point is we need a sense of urgency as far as addressing our issues and we can learn from from Panama in that regard secondly CATS made some investments in Panama and some of it has to do with supporting the activities as far as the expansion but some of it has to do with our own policies you know we used to like to bring workers into the US to be trained but it's very hard to get visas and so if you want to be a diesel engine mechanic or if you want to learn how to service some of our equipment it really takes a Herculean task to get folks to come in for a couple weeks to get that kind of training from Latin America we're now setting up a training center in Panama it's a good investment it's employed a lot of Panamanians but what it does it allows us to stay in touch with our customers and the folks that run our machines so you know there's other issues we have to address dealing with immigration issues and business travel issues and things of that sort and let me just end with a phrase that we've probably heard for a long time that you know you know Panama has always seen itself as someday being the Singapore of the Western Hemisphere you know I was in Asia recently and in Singapore they're now saying someday we're going to be the Panama of Asia so I think you've accomplished it we're proud to be part of the expansion we're proud to be one of the leaders of the the free trade agreements with Panama and Colombia and I really think that when we we look out 90 days from now we're going to see that an awful lot has been accomplished and when you when you think in terms of countries where there is really a bright future in Latin America we used to just focus on Chile now it's Colombia and Panama folks are showing the way that other countries can follow and so not only are we benefiting directly but I think we're going to be benefiting over the intermediate and long term is what you're doing is you're setting an example for others to follow and that's going to be good for Latin America and that's going to be good for the United States thank you very much Meredith the floor is yours and then we'll have about probably about 10 minutes for questions and answers thank you very much the you sort of think about what you how you want to put a into context a trade agreement like this which is has actually been in thought and in construction since November 18th 2003 when President Bush actually notified the Congress of his intent to negotiate a free trade agreement with the Republic of Panama and I was just thinking back I have a son who's a junior in college he was in seventh grade at that point and he's now an engineering student and I'm hoping that he Alberto may consider him as as a intern this summer where you can learn a little bit about this you know all American market segmentation that we've got going at the Panama Canal very very gripping story and an exciting thing for all of us to hear about and we're lucky that Alberto would come and and give us his down to earth assessment of what's going on there on the ground the the update I have on the free trade agreement for all of you who I know are following this closely and know this as well but but just to sit back and appreciate some of the mile markers that we've come to at this point since 2003 you know we now have legislative language for implementing a free trade agreement up on the hill that's there transmitted informally sitting in front of the the congressional staff and the attorneys along with administration attorneys you know looking at these agreements and coming up with the right language and that is just a huge accomplishment that we've got and we're we're well on our way and things are going quickly is my my impression on on implementing this long overdue free trade agreement it will stand as I think as a symbol to a country that that is really a peaceful crossroads for maritime commerce both east and west they've been a long time ally of the united states a friend and a very difficult part of the world where we worry about drug interdiction and organized crime and keeping the roads and the the maritime ways safe coming up from the from Latin America so it is a vibrant place that offers an awful lot of opportunities I think we've missed some unfortunately I think if if this agreement had been implemented a bit earlier we would have been in a better position as a country to have some of our our companies take advantage but there is a renewed sense of urgency I think that that bill alluded to that's that's very important and we're well on the road to to having its success some of the the statistics are just huge and I'm not going to bore you because I know folks here have followed them closely but Panama is one of the fastest growing economies in the Americas it's expanding at more than six percent a year its forecast to sustain that performance for probably the next four or five years this the United States needs to participate as fully as possible in this economy so that we can take advantage of the growth that the Panamanians are joining and make it a mutually reciprocal beneficial relationship as we know we all worked a lot of folks I see familiar faces in the room that worked on the Caribbean Basin Trade Partnership Act that was instituted in the 90s we give duty free treatment on a permanent basis to most of Panama's exports to the United States Panamanian producers and service providers don't face any any barriers here but our goods going into Panama at this point face tariffs from seven to some are 260 percent so getting those phased out is is crucial for for this economy that's looking for job creation and this is job creation that doesn't cost anything over 80 percent of us exports of consumer and industrial products to Panama will become duty free immediately with the remaining tariffs phased out over 10 years we're going to be able to cooperate our consolidate our partnerships and cooperate cooperative relationships and really strengthen our deep cultural and historic ties with this this very important ally so I think we've got a good kickoff today for what is going to be a really exciting couple of months on Capitol Hill as as we see the United States kind of come back and get in the game on trade you know and get more U.S. companies with their banners doing a big full scale production projects in the hemisphere thank you Meredith very much for that perspective Meredith is the a senior advisor for CSIS and and holds the shoal chair in international business like to open it up for questions that you might have for either Mr. Aleman Zubieta Bill Lane or Meredith Broadbent I'd just ask if you'd raise your hand so that our intern scholars that have microphones could come and give you the mic so that everybody can hear what you have to say thank you very much Andrew BT from the AFP news agency we've seen in recent months that the trade deficit between the U.S. and China has narrowed slightly I'm wondering if you're seeing that in traffic flows and secondarily if you do you think there's any long term risk for the canal that in China becoming a less less export driven economy thank you oh yes yes we have seen this year I think that we're going to go to a record year in the Panama Canal so far we're about 20 million tons more in the first six months of our fiscal year than last year which we had in those that last year we were about over 300 million the maximum the canal has ever had is 312 million Panama Canal tons so I think that we're going to basically break that record this year and we are you know moving we have seen the basically every segment of the in the canal actually has a very positive flow in the canal that's to answer that question you know we have seen that that improvements basically is reflected in the canal traffic on China I think that that the canal not only serve that trade you know it's we serve a Asia to East Coast of the U.S. is the main trade of the canal for sure but we we will be seeing not only that I don't think that China is going to simply disappear of the of the world market obviously it will be competition there will be some there are some movements to Vietnam and to India to look at the infrastructure that China has actually allows it's not only about and some people tends only to look at the cause of of labor and I think there's a lot other things besides labor that actually impact more the supply chain than the cause of labor itself I think that also as China it's becoming in itself a consumer also provides benefit for actually being you know building parts or products in China so I don't see China going away anytime soon or in the future in the back oh thank you for your time um could all of you per address some potential security concerns with the increased flow of traffic well the the security is always paramount there is a I have actually I've been to Congress before when I was the the Panama Canal Commission administrator and I believe strongly that the best way to project the Panama Canal is for intelligence you know we do have a very sophisticated system for all kind of cameras and things like that you know hardware but at the end of the day it's about intelligence you know and I think that's where we need to focus and be ready to actually prevent right and actually react after the fact and that's what I will have to say on that Bill that's go ahead if I don't have anything to add well I think Steve you may want to respond to this because you know my sense is that we have very high level security relationships with the Panamanian government but I haven't studied those closely well I didn't want to have to say anything today but I'll be happy to add add on to that I think it's very important to obviously with increased traffic flows there are increased vulnerabilities and also the need to be able to to track those flows Panama I think with this project stands at the forefront of being able to do that some of the other ports in the Americas are probably a little bit less prepared to be able to participate in that and I being I mean by that being able to track what's inside containers being able to track the the containers themselves and being able to secure their own port facilities then there's the question of what actually goes through the canal itself fortunately we have exercises that are hosted jointly by Southcom and the government of Panama called Panamax exercises that that test some of these vulnerabilities and and exercise ways with host coast guards navies in being able to meet some of these threats so I I think that we're cognizant that these things are going to continue to increase they're not things that we can eliminate they're not threats that anybody can stop but they're situations that require control and being able to to be technologically and in terms of personal proficiency ready to to be able to meet them and I think that we're on the way to doing that as long as we cooperate well among the countries of the hemisphere and these exercises are draw participants from different countries in the hemisphere I think we're just about at the end but we'll take two more questions what we'll do is if we could take them one right after another then we'll allow the the panelists to answer both of them so the gentleman in the back and then lady in the front hi this question is for Mr. Aman what what changes have you seen in terms of shipping based on the higher price of oil are companies adjusting to the way that they're shipping because of that fewer fewer boats coming through or just a different strategy in terms of how to get things from point A to point B well the answer to that one is that there's there's been a lot of consolidation in the industry that happens and it happens not only because of oil but actually when the we got into the crisis in 2008 and 2009 but one other thing is that that there is a what they call slow shipping in the slow movement of the ship they now are moving at lower speeds and that it's to reduce the cost of of energy and that that's that that type of is affecting somehow they need to put more vessels in the in the system but at the same time they're saving a lot of money in the in the cost of energy and that that slow steaming as it's called is a is an ongoing um was a procedure that the shipping slides are are taking to basically reduce the cost of of fuel and that will be the major change they have done hello Betty Brannon from La Penza of Panama my question is China has announced its intention to build a canal through Colombia that would compete with the Panama Canal I wonder how Mr. Alemán reacts to that well they also announced at one time that we're going to do the one in Nicaragua yes the the atrato the canal in atrato actually and and the one in Nicaragua and many others in in the region are not new to us the in fact this is a rail supposedly a rail that will connect the productions for coal basically and also they are talking about that actually putting a city or something like that to for the export of containers we don't see it honestly I don't think that and every expert in the industry actually has reacted to that so yes there are this type of announcements that come from time to time what I do believe and I have said it because I have seen you know canals dry canals in and I don't think they post a competition to the Panama Canal Betty if you are moving even if you're moving coal okay and you have to move the coal from the Atlantic in Colombia all the way in a very long rail and then you have to do the ports you will need a lot of cars to move the amount of cargo that we can move in the Panama Canal and actually there are some issues very interesting that can happen because now we are talking about maybe the possibility of actually topping off you know and that means that to basically fuel ships that actually are even we can come through the Panama Canal but they are not let's say fully loaded even with the expanded canal what you can do is actually you top that off and you mean that you will have another vessel in Panamanian's water after they cross the canal and then you finish filling it up so they will go fully loaded into the into the long long length so there's a alternative that now we even can explore that were not there before and that will do away with a lot of these these ideas okay what I do believe though and I and I I am strong about this is that Latin America just like in the U.S. we need to invest very heavily in our own infrastructure sometimes and I think that is even more when I just mentioned in my remarks that we are still away from being Singapore you know and I point out more in the system that Singapore has adopted and took them about four years to do in which now you can be and you are exporting out of Singapore importing you can do that all the paperwork and requirements permits you know from your desk and you will get that in maybe in 10 minutes when you usually it takes you you know weeks and even months to get the permits before now that's a very you know large program because there's a lot of cost in that bureaucracy that doesn't add any value and then we tend to have different elements saying you know I want to say you know yes on this yes on that and we need to work on that but also in the infrastructure because we now we have regions like Central America having free trade agreements with the U.S. well how are we going to compete you know efficiently if we cannot get our products out of in an efficient matter and there is a study by the World Bank in how much is lost in the production in our countries because of lack of real good infrastructure and lack of or the excess of bureaucracy in some of these issues there's no reason why Betty we could not have you know and there's the advantage of getting the Panama Canal or this infrastructure we're putting because I when I look at moving a container from let's say Guatemala okay to the city of Panama or even Costa Rica which is actually near well you never know how much how long it's going to take it depends if the if the border is closed or open because they might be out for lunch or today is Sunday and I don't work on Sundays or we need to change the tractor that actually is moving the container because now it has to be a Costa Rican operator in that one rather than a Panamanian one you know that is nonsense okay if you do the same thing in Europe and I make this study for the for the IDB Bank okay you can have you're going to load a container in Hamburg in Germany and take it all the way to Sevilla in in Spain in something like 28 hours the same distance in Central America will take you weeks okay and that is because that actually doesn't have any sense I have people in we are doing a work in in in in in Kainau the private sector within Cai trying to analyze this this issue and there was a person from Nicaragua and this guy sports beef through Panama well the problem that he has is that because of this paperwork and these customs that you know that are close and you know he said I could actually be able to export beef that is not frozen okay to markets getting a much bigger value on my exports but I cannot do it because of this problem that I I'm facing and this is from Nicaragua to Panama okay so we don't see that and I think that that's where we need to focus and I think that all of these ports I am glad that you know Chile is doing energy facilities that Peru is now having better ports in Callao that hopefully Costa Rica will have better ports in in in the area that El Salvador built a poor facility and they don't have trains things like that you know and and I hope that they can actually be able to export better because you open markets you open more volume and then we all benefit I think that at the end that is about you know investing properly in infrastructure allow me just to sort of conclude with one one just to build upon on those common Alberto's comments because you know I actually abbreviated sort of my stump speech which is you know you have man-made trade barriers which are quotas and tariffs and that's what you know we try to address with free trade agreements and multilateral agreements you have man-made barriers and that's what the Panamanians are doing as far as infrastructure in the United States hopefully we're going to be doing but the third type are sort of the trade barriers you put on yourself and you can do that by embracing protectionism but in some ways you can even be more sinister if you see your customs department as a way to employ people rather than a way to facilitate trade that's a trade barrier and in some countries it's marginal but in a lot of countries in Latin America and Africa and Asia it's far more than marginal and it really is more pernicious than a lack of infrastructure or a lack of of of of and what have you and maybe that'd be a good topic for a for another CSIS program just the importance of capacity building and what that type of payoff could be from from efficiencies and expanded trade opportunities but this I mean this really is a big deal and it really is a it's a self created trade barrier which really puts a an enormous penalty on that for instance when when you talk about this idea of putting rail in the into the Pacific side of of Colombia well you know you have a huge area of Colombia that doesn't have access okay by pouring either roads or rail or things you are actually promoting more exports out of that region you will make that region even more with more production capacity and therefore at the end of the day it better our possibility of having flow from the Pacific to the Atlantic is is actually benefiting all the way around and I think that that really one issue that Latin America do have and that we're actually lacking is proper infrastructure to actually be able to compete because otherwise we're going to be condemned that the only way we can compete is going to be on having low wages and I don't think that that is the way to do it otherwise you know I always put put the question how can we compete with a and what are the ways here in the U.S. are we really do we really believe that only the the people are putting factories in China because low wages you know let's try to do factories in China when they don't have ports so they don't have trains so they don't have highways ready to to because it will be so expensive there's no way you can do it so that is why you need to look at the whole picture and that's why you need to invest in infrastructure to really be competitive about you know and actually create more markets ladies and gentlemen round of applause for Alberto Aliman Phil Lane and Meredith Broadbent