Remarks by Ambassador Michael Froman at the New England Council Luncheon
April 14, 2014
*As Prepared For Delivery*
“Thank you for that very kind introduction. It is very good to be back in Boston. I did live here for about four years, and even more importantly, my wife’s family is from here. So I have a ready excuse to come up and see my in-laws at any time. And let me just say it is poignant to be here this week when I think the whole nation’s thoughts are on Boston, in commemoration and memories of those who died in the bombing last year and the commemoration of Boston’s resilience. You really demonstrated to all of America and all of the world what “Boston Strong” really means. So, our thoughts are with you and with the families of the victims during this time of remembrance.
“The Obama Administration’s economic agenda is focused really on three things: creating jobs, promoting growth, and strengthening the middle class. And as President Obama said in his State of the Union earlier this year, it is also very much about expanding opportunity for all Americans. ‘Opportunity is who we are. And the defining project of our generation is to restore that promise.’
“We at USTR view our piece of that – making the President’s vision a reality by unlocking opportunity -- by opening markets for American workers, farmers, ranchers, and growers so that they can sell more of their product abroad and expand businesses; by leveling the playing field that they face by raising labor and environmental standards and intellectual property rights standards around the world. We fundamentally believe that American workers, American firms, are the most competitive in the world, and provided that they have a level playing field, they can compete and win. And by transforming our country into a hub for innovation, manufacturing and export.
“Trade has been one of the major drivers of economic growth coming out of the recent financial and economic crises.
“Over the past four years, U.S. exports have skyrocketed growing about four times faster than the economy as a whole – to an all-time record of $2.3 trillion last year. Fully one-third of our economic growth during this period is attributable to the increases of U.S. exports.
“And that is jobs. Because every billion dollars in increased exports supports somewhere between 5,400 and 5,900 additional jobs. More than 11.3 million Americans owe their jobs to exports – and 1.6 million of those Americans, those are new jobs have been created in the last 4 years. And these are good paying jobs, well-paying jobs, because export-related jobs pay on average 13 to 18 percent more than non-export related jobs. So increasing exports helps grow jobs, helps grow wages, and as a result, helps bridge some of the inequality in this country and helps improve the overall economic picture.
“These are a lot of numbers to throw out all at once, but it’s difficult to overstate the positive contribution of trade to America’s economy. And Boston has been very much part of that.
“In Massachusetts, you guys know the numbers better than I do, goods exports alone totaled over $26 billion last year. Nearly 11,000 Massachusetts firms exported and 90 percent of those firms were small and medium sized businesses – businesses that employ fewer than 500 employees.
“Right here in Boston, Boston exported $21 billion in goods in 2012, supporting over one hundred thousand jobs, putting Boston in the top 10 of all American metropolitan areas in terms of their dependence on exports.
“While the numbers speak for themselves, the story of trade goes far beyond facts and figures; they go to real people and real stories. One of the main reasons I came up here today was to meet two people named Nate and Bryan, and see their company, Atlas Devices.
“Atlas makes tools that help governments, soldiers, and firefighters do their jobs. They have a device that can pull you up a rope at 10 feet per second. It’s literally like the Batman grappling hook.
“At their facility here, they have engineers hard at work producing new products. They have a manufacturing facility, the hub of their production. And trade is absolutely vital to their business – 50 percent of their sales come from exports across North America, Europe and Asia.
“Nate and Brian took an idea, made it into a business, and are now growing it through trade. They are hiring additional employees and they are manufacturing right here in Boston.
“There are hundreds of thousands of stories like Nate and Bryan across the country, and the goal of our trade agenda is to unlock the power of exports for them –creating new opportunities that otherwise wouldn’t be available.
“Our trade agreements are really justified and driven by several major factors. The first, and most important one, are the underlying economics. Our trade agreements need to contribute to increased jobs, increased wages, and increased economic growth in this country. And we are doing that by cutting tariffs so that our small businesses can access new markets.
“We are seeking strong intellectual property rights protections, so that innovative technology and manufacturing companies can protect their creations. We are dismantling discriminatory barriers that prevent American farmers and ranchers from exporting their products. We do all of this because, as I said, we know that if you can compete on a level playing field, you can succeed.
“Yet, as important as these economic benefits are, these trade agreements are also important for another reason. It is what we call geo-economics. The question is, who’s going to define the rules of the international trading system going forward? Is it going to be us, or is it going to be other countries? Our goal, through TPP and TTIP, these two major trade negotiations, is to help contribute to the development of high standards for the international trading system – standards that reflect both our interests, and our values.
“And that’s why we are focusing on both lowering barriers, but increasing labor and environmental protections, strengthening intellectual property rights protections, introducing new disciplines on state-owned enterprises – State-owned enterprises that play an increasing role in the global economy. Making sure that when they compete against our private firms, they are competing on a level playing field. And also taking on new issues, like the digital economy. Making sure that some of the rules that apply to the fiscal economy can spill over into the digital economy.
“TPP, or the Trans-Pacific Partnership, is an agreement currently being negotiated among 12 countries. Those 12 countries represent 40 percent of global GDP. That includes Japan, Malaysia, Vietnam, and others - some of the largest and fastest growing economies in the world, and this will create free and fair trade among them.
“We are seeking a comprehensive agreement – an agreement that will enable our workers and entrepreneurs to compete on a fair basis. TPP will cut tariffs for Made-in-America products, it will create stronger intellectual property rights protections, promote innovation, and take on new issues of the 21st century like the digital economy and the role of state-owned enterprises.
“And it’s an once-in-a-lifetime opportunity to craft the rules of the road governing trade in the Asia-Pacific, and create a platform for integration in what’s the most dynamic region in the world.
“On the other side of the world, we are negotiating the Transatlantic Trade and Investment Partnership with the EU. The U.S. and EU already have a deep and broad trade and investment relationship, but there remains a great deal to be done to get to the untapped potential, to eliminate unnecessary barriers to our trade.
“Through T-TIP, we will eliminate billions of dollars in tariffs, but the greatest benefit of T-TIP will be reducing the non-tariff barriers, the behind-the-border barriers. Here we have two great markets that are each well-regulated. The question is whether we can bring two well-regulated markets closer together and bridge their divergences so as to expand trade as it takes away unnecessary obstacles. That’s the greatest opportunity for T-TIP, but also, the greatest challenge.
“And at the World Trade Organization, the WTO, we’re working to invigorate negotiations there. In December, we reached an agreement on trade facilitation, so our logistics firms and our small businesses can better integrate into the global economy. It will make it easier and cheaper for U.S. exporters to trade by reducing costs at the borders and harmonizing customs procedures and documentation. This is particularly important for small and medium-sized businesses, because they find that one of the great obstacles for exporting and to engage in the global economy are simply the costs of navigating their way through customs.
“Also at the WTO, we are seeking to eliminate tariffs on a list of environmental goods – about 90 percent of the market represented around the table and it is about a one trillion dollar market. We’re negotiating an agreement on services trade that includes 70 percent of global services market. And we are negotiating an agreement to eliminate tariffs on a whole series of information technology products that Boston and Massachusetts particularly benefits from, and that involves 90 percent of the global IT market.
“This is the most robust trade policy agenda perhaps in history. It’s important that we succeed in this, because as you all know in your own businesses, we very much live in an interconnected world. Globalization is here, and it is here to stay. The only question is whether we are going to shape it, or be shaped by it.
“The world is not static – we are not the only party out there. There’s a real global competition going on, and that competition is fierce. The countries that succeed will be the ones that sit down at the table and set the rules for the foreseeable future.
“Today, there are an estimated 500 million middle class consumers in Asia. But by 2030, that number is expected to grow to up to 2.7 billion. 2.7 billion middle class consumers in Asia. That’s more people than the entire planet’s population just 65 years ago. And the question is, who will meet their needs? Will they be buying Made-in-America products or products made by other countries?
“We can’t afford to sit on the sidelines.
“So, my message to you today is that we can’t step back from our global leadership role. We have far too much at stake.
“I look at a company like Atlas Devices, and we see the promise the future holds. Through hard work, dedication, and creativity, an idea was made a reality. New technology was created. And now, that company has an opportunity to expand, see growth, and create jobs by exporting that new technology all over the world.
“And there are more stories about that all over the state and all over the country.
“There’s Trexel, which is headquartered in Wilmington, Mass, whose advanced plastic molding technology can be found in auto parts and medical devices across the world.
“There’s Randolph Engineering – a family-owned and operated company that manufactures sunglasses, frames, and eyewear right here in Randolph, Massachusetts, and exports to over 50 countries worldwide.
“The people of Boston and Massachusetts understand tied in they are to the global economy and how opening markets can help expand jobs and growth here as well.
“It’s not just here in the United States where that’s true.
“I’ve seen students in Vietnam wearing Red Sox caps, and not just knock-offs. I’ve seen Harvard sweatshirts while walking down the streets in Beijing. And I’ve seen New Balance shoes on feet in Brussels and Berlin. Across the globe, people are hungry for American products, hungry for American ideas, and hungry for American innovation.
“I think about the conditions here in the United States that allow companies like Atlas, or Trexel, or Randolph to grow. We’ve got a tradition and culture here of innovation, entrepreneurship, a strong rule of law, strong protection of intellectual property. We have a highly skilled workforce. And now we have abundant sources of affordable cleaner energy, sometimes at one-quarter the cost of our competitors abroad.
“When you add all these things up, and then include the trade agreements we are negotiating, the United States begins to look like the ideal place to invest. To set up a factory. To hire workers. To innovate, design, create, and build things. When we're done with TPP and T-TIP, we'll have free trade with about two-thirds of the global economy. And as a European CEO who just made a major investment in the United States told me the other day, the United States is now the production platform of choice. It’s the place where companies from all over the world want to make things and send all over the world. By opening markets abroad, we drive investment here at home. And that investment means jobs and growth.
“Let me make one last point, and it is an important one. None of the benefits of these trade agreements – the jobs, the growth, the competitiveness – can be realized without Congress passing Trade Promotion Authority, something called TPA.
“There’s been a great deal of debate, and frankly misinformation, about TPA and how it works.
“The fact is, TPA is how Congress has worked with every president since 1974 to give the Executive branch its marching orders about what to negotiate, to tell the Executive branch how to work with Congress before and during the negotiations, and to indicate how Congress will approve or disapprove a trade agreement once completed.
“There is no other area of policy where Congress and the Executive work so closely together than trade policy. Ultimately, it is Congress that decides whether or not the agreement is good enough to merit its approval.
“Other countries aren’t slowing down the pace of their engagement with the world. They are negotiating bilateral, trilateral, regional deals. And I can assure you, they are not putting at the center of their work the goal of raising labor and environmental standards, the goal of protecting intellectual property rights and a free internet, the goal of ensuring a level playing field between state-owned enterprises and private firms.
“Without Trade Promotion Authority, our businesses and workers are put at a disadvantage while other countries are actively negotiating their own agreements, securing preferential market access at our expense, and setting standards that reflect neither our interests nor our values.
“But if we are to pass TPA, we need to spread the message in every city and every state about the benefits of trade.
“I’m delighted to hear about your upcoming events, where it sounds like you will have multiple opportunities to share your views with members of Congress. I think it is important that the American people, and their elected representatives, understand why this is so important to our communities, our businesses, and our citizens. To hear stories about Atlas, Trexel, and Randolph, and of thousands of others like them – stories of companies that have grown through trade, who have added shifts, who have hired additional employees, who have expanded production, thanks to the new export opportunities that are being created.
“I know you all are firmly committed to seeing your community and New England thrive. You want to put people back to work. Our trade agreements can help do that. So it’s highly important that we work together to get this message out there.
“I look forward to working with you on that. I’m happy to take questions, if you so desire.