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Remarks by Ambassador Michael Froman at the HSBC ‘Made for Trade’ Event

Remarks by Ambassador Michael Froman at the HSBC ‘Made for Trade’ Event

Washington, D.C.
October 2, 2014 

*As Prepared for Delivery*

“You know, before America was ‘Made for Trade,’ it was made from trade. As John Adams told Congress in his first annual message, ‘The genius, character, and habits of the people are highly commercial. Their cities have been formed and exist upon commerce. Our agriculture, fisheries, arts, and manufactures are connected with and depend upon it. In short, commerce has made this country what it is...’

“And during the more than 200 years that have passed since then, trade has been a constant force for progress. It has brought new technologies and knowledge to our shores, giving American workers and businesses the tools and the methods they need to transform their dreams into a reality.

“It has encouraged our industries and businesses to compete on the global stage, improving their efficiency and helping them become the most productive in the world. Trade has carried American products and culture and values around the world, while decreasing the costs of our producers’ inputs and increasing the choices for our consumers.

“It spurred economic growth during the very toughest of times, including the most recent Great Recession.

“And given the many channels through which trade is unlocking opportunity for our country, it can be challenging to try and capture all those benefits with simple figures.

“But the report that Professor Slaughter wrote and released today is an important contribution to the national conversation about this issue.  It examines the facts and draws some straightforward conclusions that won’t surprise anybody familiar with trade’s promise

“This is a really good report.  I actually recommend that you read it.  But let me mention just one number that jumps out of the data.  That’s the Number 10.

“10%. That’s Professor Slaughter’s estimate for how much international trade has increased U.S. GDP beyond where it would have been without the kind of active global engagement we’ve been pursuing.  That equates to a $13,600 bump-up in the income of every American family every year -- thanks to trade.  That’s a lot bigger than any tax cut or any investment program in recent history.

“And 10 million.  That’s potentially the number of new jobs that could be supported by an aggressive pro-trade policy over the next decade, according to this report.  We’ve created almost 10 million jobs over the last 5 years under this administration, including 700,000 new jobs in manufacturing, but we have more work to do.  And this report suggests that by unlocking opportunities for American workers and farmers and firms to expand trade, that can be a key part of doubling that job growth.

“Now I’m sure economists will debate the finer points of this report, and this report will spur on I’m sure some substantial debate, but the main message is undeniable: trade is critical to the future of the U.S. economy.

“And recognizing this reality is exactly why President Obama has put trade at the center of his economic strategy for supporting jobs, spurring growth, and strengthening the middle class.

“Already, the results have been impressive. During the last four years, U.S. exports have hit record highs, $2.3 trillion actually. And over the last five years, the increase in exports has been responsible for one-third of our economic growth.               

“Last year as I said, U.S. exports hit $2.3 trillion. That’s a record-breaking level and that supports 11.3 million jobs in the US, including in agriculture, in manufacturing, and in services.

“And as this report points out, American companies that export tend to hire more workers, pay those workers higher salaries, and be more productive.

“And even though more than 300,000 American businesses are exporting, 98% of which are small- and medium-sized businesses, only 1% of all American businesses export. That means 99% of American businesses are missing out on 95% of consumers that live outside of the United States.

“That leads to an incredible amount of opportunity—for jobs, for growth, for our middle class. Even more so, given that America has all the attributes of an attractive place to invest and do business around the world.

“Just think about all the ways that America is ‘Made for Trade.’

“We’ve got the world’s most attractive consumer market, one that is governed by a strong rule of law.

“We’ve got a talented, innovative workforce, which ranks first in productivity among the world’s leading exporting economies.

“We now have abundant sources of affordable energy.

“When you layer on top of that President Obama’s trade agenda, it puts the U.S at the center of a web of trade agreements that will provide premium access to two-thirds of the global economy.

“In recent years, there have been some fundamental changes in the global trading system, particularly the growing importance of global value chains. Looking forward, the benefits of trade will accrue to those countries who are best-positioned to be part of those value chains.

“And that’s why we’re aiming to make America the world’s production platform of choice, the most attractive place to make things, grow things, and send all over the world.

“We’ve begun to see manufacturing jobs return to the U.S., but that is just the beginning.  We’re not standing still. We’re moving forward with the most ambitious trade agenda in history.

“This is especially apparent in the Trans-Pacific Partnership, or TPP. An agreement that the United States is negotiating with 11 other countries in the Asia-Pacific, that will give American workers and businesses better access to the world’s fast-growing region, countries representing 40% of global GDP.

“A key part of this agreement is to achieve a high level of ambition, to use the agreement to drive structural reforms, to improve levels of growth. And nowhere is that more important than in Japan; Prime Minister Abe has laid out a bold vision for his country in terms of pulling his country out of two decades of stagnation, modernizing the economy, and setting it on a new path forward. And as he has laid out over the last couple of years, TPP is a key part of what he calls his ‘Third Arrow,’ or his structural reform agenda. I think we are very fortunate on our part to have Minister Amari as our counterpart, as the TPP negotiator, because he is also responsible for the overall economic reform effort in Japan. And we know how hard it is to achieve structural reform; we have done it in this country, we have done it in financial services, we’ve done it in healthcare, we have done it in the auto sector. It’s challenging, it’s difficult, but achieving it is absolutely critical to getting back on the path towards sustainable growth, and we are looking forward to the bold vision that Prime Minister Abe has laid out being translated into similarly bold visions at the negotiating table, as well.

“Through TPP, we’re taking on emerging issues that our companies and our workers face, like unfair competition with state-owned enterprises and restrictions on the free flow of information.      

“TPP will include the strongest labor and environmental standards of any trade agreement in history. Because promoting sustainable, inclusive growth isn’t just in our interest, it’s part of our values

“So let’s face it, these are not issues that will be addressed by others who do not share our values and focus on high standards. We have a unique opportunity through TPP to raise the bar and set the standards, both for the Asia Pacific region, and more globally.

“At the same time we’re knocking down barriers to U.S. exports to our partners in the European Union. By negotiating the Transatlantic Trade and Investment Partnership, or T-TIP, we’ll bolster what’s already the world’s largest relationship by reducing non-tariffs barriers to trade and tariffs with our European Union partners.

“T-TIP will make it easier and less costly for U.S. workers and businesses and farmers to export to our largest market by increasing the compatibility and transparency of our regulatory regimes while maintaining high levels of health, safety, and environmental protection. By opening doors on both sides of the Atlantic, we will create high paying, high quality jobs for years to come.

“The U.S. and the European Union have one of the strongest relationships in the world. We have a shared history and set of beliefs and values which pre-date T-TIP. And T-TIP will build on this closeness, and put our economic relationship on par with our political and security relationship.  

“In closing, allow me to return to the comparison that Professor Slaughter’s report makes so clearly– the United States without trade and related global engagement versus the country we’re standing in today.

“Without some retrospective analysis along those lines, it’s easy to overlook the benefits from trade and openness that we now enjoy.

“Looking forward, that same comparison becomes even starker. In a world without continued American leadership on trade, we will not simply pass on this country as it is now to our children.

“If we do not lead on trade while others move ahead, we’ll find ourselves with less market access, less competitiveness.  And very importantly, rather than shooting a starting gun for a race to the top, we’ll find ourselves in a race to the bottom that we cannot win and should not run.  That cannot be in the interest of American workers and American firms.

“So, looking forward, the real question isn’t what America is made for. It’s what we decide to make of it.  Today’s discussion is an important contribution to that debate. I thank HSBC for organizing this initiative and this event, Professor Slaughter for issuing this report, and I look forward to working with all of you to achieve the great potential that trade holds out for America.”