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October 13, 2009
Coalition of Service Industries Summit
*As Prepared for Delivery*
Thank you all for having me here today. In particular, thank you Bill for that wonderful introduction. And my thanks as well to your Chair, Mike Ducker, your President, Bob Vastine, and all the member companies who played a role in organizing this event.
I also appreciate the presence here today of my counterpart trade ministers from countries around the world, WTO Director-General Lamy, and the former United States Trade Representatives who are here to share their experience with us. Likewise, we're grateful for the support and participation of the Congressional leaders here today who champion services trade in the Congressional Services Caucus.
As many of you know, the service sector is a relative newcomer to international trade agreements. But the importance of services, and the men and women who provide them, has long been recognized as a critical part of a well-functioning economy.
Let me give you just one example: when Genghis Khan's best general defeated the Chinese capital of Kaifeng, his impulse was to burn the city down. But his advisors informed him that many of the empire's best architects, administrators, artists, and craftsmen had gathered inside its walls. The general knew value when he saw it. The city was spared, and the Mongol empire was enriched by their expertise - they enlisted their services in building new capitals, advising the Mongol court, and developing better administrative techniques.
None of our lives hang in the balance here today, and I'm no Genghis Khan, but I do know that the service sector continues to enrich the global economy. In fact, services are the main driver of U.S. economic and global growth. According to the Research and Education Foundation, between 1993 and 2005, 22.7 million new jobs were created in the American services sector.
Services account for more than 75% of the domestic economy, but represent only 30% of our international trade. It's true that many services will always be local, but it's also true that we are just beginning to unlock the potential of services in the global economy. For every service export we do provide - for example, when an American teacher engages foreign students or an American airline carries a foreign passenger to an international destination - we could export two more. And my goal is to help America take advantage of that potential.
I'm here to talk about what USTR is doing to open up services trade around the world. But first, I want to point out an important insight into a service issue taking place here at home. Right now, American businesses and workers can't take full advantage of job-creating trade opportunities, because our health care system is draining their resources. And they won't be able to take advantage of those opportunities until we get health care reform done. That makes reform a trade priority.
President Obama's health insurance reform plan addresses three simple goals: If you have health insurance, it will give you more security and stability. If you don't have insurance it will give you quality, affordable options. And it will lower the cost of health care for our families, our businesses, and our government. To find out more about President Obama's plan for health care reform, I encourage you to visit healthreform.gov.
Now, as I've said, achieving health care reform is a priority for USTR and a priority for this Administration, but it is only one of the many challenges we face. President Obama has set an ambitious agenda for America's future. He has asked us to work together to create jobs, to support innovative research, and to ensure that all our children have the education to succeed. To achieve those goals, we must grow the United States economy. And to grow the economy we must expand opportunities for trade.
The numbers make the argument for me: Ninety-five percent of the world's consumers live outside of America. For American workers to prosper, America needs to sell our goods, services, and intellectual property to customers around the globe. And when American businesses can make those sales, they can hire more workers here at home. It's that simple.
The good news is, homegrown businesses across the country are taking on the challenge, exploring the global marketplace, and engaging in international commerce. And the rewards of their work cannot be underestimated - service firms that make the leap to the international marketplace are more likely to hire additional workers and they are more likely to pay those workers higher wages than firms that deal exclusively with domestic customers.
The mission of USTR is to help those companies and their workers do even more.
First things first, we are going to do a better job of figuring out where American businesses and entrepreneurs most need our help. When I took on the job of United States Trade Representative, I was surprised to discover that the United States lacks significant information on small and medium sized service-sector enterprises in the global marketplace.
That knowledge might not help us to fix every problem, but it can certainly help us to figure out where problems exist. So I have asked the International Trade Commission to undertake a series of studies on the role of small and medium sized businesses in services trade. We will use the outcome of those studies to target our efforts where they will have the most impact for the most Americans.
While we await those results, we know that there are a few basic prerequisites for a dynamic services trade: open and competitive markets, transparent trade policies, and effective rules that apply equally to American companies and foreign competitors.
In order to create new service sector jobs here at home, we need trade agreements that will enable American companies to meet global demand for both goods and services. Increasingly, those goods and services go hand-in-hand.
The iPhone, MP3 players and GPS devices, for example, became phenomenal successes because they combined great hardware with a seamless set of services. And we can help more American companies to capitalize on the synergy of goods and services by pursuing a global consensus on the growing importance of services trade and the accompanying need for fair, effective regulation.
If given the opportunity, American entrepreneurs are ready to reach any market, anywhere in the world. But unfortunately, at too many borders, the door of opportunity is still closed. That's not to say we haven't made progress - the world's leading economies have made solid commitments to services liberalization through the WTO system - but there is still plenty of room for improvement. Some of the largest emerging markets are still walled off to services trade by regulations that restrict foreign competition and tilt the playing field in favor of domestic champions. Often, these policies are unwritten and unspoken, making it all the more difficult for American companies, particularly smaller enterprises, to overcome the challenges to doing business.
We are taking concrete steps to address those barriers because a robust services trade is not only good for America. It is also good for the world. Access to efficient infrastructure services is a key ingredient in economic development for the some of the world's poorest nations, and a critical component of continued growth in the world's most developed states. And it can also be a boon to the world's poorest residents. For example, the ability of millions of small farmers to access market and weather information through new mobile networks, or to access new capital through enhanced financial services, is bringing new efficiency and productivity to the agriculture sector and transforming millions of lives.
To that end, we are working to create opportunities in the services trade through a number of fora.
First and foremost, we are engaging our partners at the WTO through the Doha Round talks. We know that the biggest gains to the global economy are likely to derive from multilateral services liberalization, but the offers on the table right now fail to deliver on that promise. We have said flat-out that there will be no deal without a solid result on services which would result in new market opportunities, but we believe that a positive outcome is still achievable. So we will continue to put forth new ideas that may help us to build a better outcome.
We have also opened a dialogue with APEC nations with the goal of invigorating the services trade throughout Asia. Those conversations have become all the more important in the wake of the global economic crisis. Competition in services can help Asian nations to improve the efficiency of their domestic markets, stimulating domestic demand and reducing their dependency on export-driven growth. We are asking our Asian trading partners to adopt new policies that will facilitate cross-border services trade. And if we are successful, that work will amplify our efforts at the WTO.
In addition, our free trade agreements have gone a long way toward achieving open markets for services. And we are pursuing further market-opening opportunities through our bilateral relationships, trade investment framework agreements, and bilateral investment treaties. Through our negotiations and agreements we are not only opening new avenues for trade, but also clearing the path for trade-sustaining investment. Because we understand that foreign direct investment can be an engine for growth, bringing in technology and know-how as well as capital.
This work is helping American businesses and workers to achieve greater success in the large and complex markets that define the services sector.
For example, the information and communications market is estimated at nearly $4 trillion dollars globally; we are charting a course that will maximize America's ability to innovate, compete, and succeed in that market. Internet-based services, such as cloud computing, delivered globally, have been remarkable in bringing innovation and growth, particularly for U.S. companies, before entrenched interests could mobilize to erect barriers. In this arena, we need to keep pressing on the traditional goal of ensuring greater market access and non-discriminatory treatment, but may also need to look at new challenges that impede such services.
We know that the technology driving this market is transforming rapidly. And that is hardly unique: markets across the service sector are rapidly evolving. Big changes are in the works, and we are asking you to help us think imaginatively about how trade policy can nurture the opportunities made possible by technological advances. We are best able to take advantage of those opportunities when we are able to find a way to cooperate globally when they first emerge.
Here's what I mean: You know that when kids on a soccer team converge on the ball, the result is pure chaos. If they want to move the ball down the field, they have to work together. And so do we. The United States and our trading partners successfully adapted our trade policies when the internet opened opportunities in the 1990s. And we can do it again.
We need to think collaboratively. And that's why events like this one are so important. Because they help us to see the whole picture. The service sector is so large and so omnipresent that it can be difficult to focus on common objectives.
If we hope to achieve progress, everyone in this room has to learn to speak with one voice on the importance of services trade. The goal of this summit should be to develop a clear, shared message. We can help you to convey that message around the world. And we will listen to what you have to say - your ideas can help make American trade
What you know about your families' finances, your businesses, and your local economies can help us make the right choices to bring home the benefits of trade. You can make our policies stronger and our work more reflective of America's needs by sharing that knowledge with us.
I look forward to working with you.