January 28, 2010
Center for Strategic and International Studies
U.S. Trade Priorities in the Asia-Pacific: TPP and Beyond
*As Prepared for Delivery*
Thank you, John for the kind introduction. And thanks to all of you for being here today.
Barely nine months into my work as Deputy United States Trade Representative, I am amazed how quickly I have forgotten the first moments of this job. But this weekend I reunited with old law school friends, and they reminded me what the beginning was like. We joked about the moment when my Senate Finance Committee colleagues caught me refreshing the White House webpage every ten seconds, waiting for news of my nomination. Or the moment sitting in my confirmation hearing, barely able to hear the Senators' questions over my mother's sobbing in the seat behind me. Whether those were tears of pride for me or my Republican mother's tears of sadness over her wayward son's political affinities, I am still not certain. And I remember the moment of terror when I first set foot in my new office, realizing the big shoes left to fill by predecessors like Ambassadors Karan Bhatia, John Veroneau, Susan Schwab, Richard Fisher, Rufus Yerxa, and Charlene Barshefsky.
But the second I stepped into that office, these first moments of excitement and nervousness about my new position vanished. They were replaced by an immediate and clear realization that we face a watershed moment in U.S. trade policy, one unseen in decades, and perhaps generations. And it is a watershed moment that we have a limited time to get right.
Why is this a watershed moment? Why is this moment in trade policy so exceptional and significant? Because we are witnessing a unique alignment of domestic and international economic events that demand unprecedented action. The domestic economic events we know too well. The United States is recovering from an historic economic recession. National unemployment remains at 10 percent and tops 12 percent in some states. This Administration is committed to reforms that will drive the U.S. economy from this recession, and emerge with affordable health care, a more stable financial system, and balanced and greener growth. Every reform and every policy measure is focused on creating and retaining good, sustainable, and high-paying American jobs.
As the President said last night, trade is part of this Administration's jobs plan, and trade must be part of America's economic recovery. We know that Americans who work in export-sector jobs are paid up to 18 percent above the average. We know that six million Americans owe their jobs to manufacturing exports, and that agricultural and service export jobs mean paychecks for many more. And we know that as a number of key markets around the world recover more quickly than ours, exports will create good American jobs here at home even as our economy rebuilds and reforms. That is why the President last night set the goal to double exports over the next five years.
But that is only half of the domestic picture, because we also know that these economic facts align with a public opinion that has soured on trade. We cannot deny that polls find only a quarter of Americans think a global economy benefits the United States. We cannot deny polls that show only thirteen percent of Americans think trade agreements create jobs, while over half think these agreements lead to job losses. We need to face the fact that over one third of Americans polled think trade agreements are bad for America, and more than 40 percent think free trade agreements have hurt their personal financial situation.
These domestic facts align with an international picture that also has two dimensions. Look at the Asia-Pacific region. On the one hand, it is a picture of huge markets that already are key destinations for U.S. manufactured goods, agriculture products, and services. Even given the deteriorating global economy, in 2008 U.S. goods exports to the Asia-Pacific region totaled $747 billion, up over 8 percent over the previous year. Agriculture exports were $76 billion, a 30 percent increase over the previous year. U.S. services exports to the region grew to $187 billion, and U.S. small and medium-sized enterprises alone exported $173 billion to the Asia-Pacific in 2008.
On the other hand, despite these export successes, America faces the daunting prospect of getting locked out of the Asia-Pacific. Just four weeks ago, China and the 10 Southeast Asian ASEAN nations ushered in the world's third-largest free-trade area. In addition to the ASEAN-China trade deal, there are now 175 preferential trade agreements in force that include Asia-Pacific countries. More are on the way, with an additional 20 agreements awaiting implementation and more than 50 others under negotiation. Already, the United States' share of trade with the Asia-Pacific has fallen, and a recent study forecasts that America could lose as much as $25 billion in annual exports just from the discriminatory effects of an East Asia Free Trade Area that excludes the United States. Exclusion from economic opportunities already is becoming evident. Such exclusion will cost American jobs.
To me, the alignment of these domestic, international, and other economic developments frame our watershed moment. We must seize it. We must get it right. And we must follow through in a way that benefits the U.S. economy and American farmers, ranchers, workers, manufacturers and service providers - today, tomorrow, and in the long term.
At the Office of the U.S. Trade Representative, we are doing exactly that. As many of you know, on December 14, USTR formally notified Congress of the Obama Administration's intent to enter into negotiations of the Trans-Pacific Partnership, or TPP. Beginning with an initial group of seven partner countries - Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, Vietnam - the United States hopes to shape the TPP into a high-standard, broad-based regional trade agreement. We will consider and welcome new negotiating partners based on their readiness and ability to bring commercial value, balance, and ambition to the negotiations. It is our aim for the TPP to create a platform for economic integration across the Asia-Pacific region. And it is our aim to advance U.S. economic interests with the fastest-growing economies in the world, expanding U.S. exports and creating new American jobs.
The diversity and dynamism of our TPP partner countries - not to mention the Asia-Pacific more broadly - promise to make these negotiations among our most complex and challenging. But this watershed moment in trade policy demands our focus and ambition. If we are to set an enduring anchor to the world's future drivers of economic growth, we must raise the stakes and push the envelope. We must do this by not just facing the challenges of specific issues posed by our negotiating partners. But also by challenging ourselves to rethink the substance of our trade objectives. We must challenge ourselves to rethink how USTR works with Congress, stakeholders, and all of you.
USTR has embraced this challenge, and our work is underway. Beginning last month, USTR began a transparent and ambitious consultation process, briefing and listening to the views of Congressional leadership, and Congress's trade, agriculture, and foreign relations committees. We have spent hours listening to many of USTR's 28 statutory advisory committees, including our advisors on labor, environment, agriculture, and industry. This week, we will begin reading the submissions to our Federal Register notice seeking comments on the TPP, and we are beginning an unprecedented fifty-state domestic outreach strategy. We look forward to reviewing the International Trade Commission's study on the economic benefits of TPP. We will do all of this while aiming to use new technologies and a new approach to fulfill President Obama's vision of a government more transparent and accountable.
This innovative TPP domestic process has two goals. First, it acknowledges and seeks to remedy the deep skepticism on trade and to rebuild solid bipartisan support for trade. We may not succeed in changing all minds and erasing all doubts. But we will listen with open minds and try to view our work and develop our goals recognizing different perspectives.
Second, our domestic consultations will drive the substance of our negotiations. Together with Congress, we intend to work hard to shape the negotiating objectives for what President Obama and Ambassador Kirk have termed the first 21st century trade agreement. What does that mean? For the Obama Administration, a 21st century trade agreement is one that creates and retains U.S. jobs, integrates U.S. companies in Asia-Pacific production and supply chains, and promotes new technologies and emerging economic sectors. A 21st century trade agreement creates more opportunities for small- and medium-sized companies, prioritizes labor and environmental protections, and fosters development. These are some of our 21st century trade priorities. But we expect our domestic outreach process to shape, guide, and develop these ideas and give them life. And then USTR will bring these proposals to the negotiating table.
Another exciting pillar of the United States' Asia-Pacific trade strategy is our work in APEC - the premier forum for economic engagement in the region. APEC already accounts for nearly half of global trade and just over 40 percent of the world's population. APEC has a diverse and important membership, including both large economies like China, Korea, and Japan, as well as most of the Southeast Asian ASEAN countries. APEC is also a flexible organization that provides an environment where economies are willing to take on pressing and new barriers.
In 2011, the United States will host APEC, providing us an incredible opportunity to put forward a bolder vision for APEC and allow us to eliminate barriers to trade and investment impeding greater economic integration in the region.
Last year, we worked closely with Singapore and Japan as the APEC hosts in 2009 and 2010 to set forward the outlines of an ambitious agenda that we can build on as we move into 2011. We concluded work to facilitate services trade in the region, and we hope that this services initiative will also provide a model for narrowing gaps to other key trade and investment issues.
We also took steps to make it cheaper, easier, and faster for businesses to conduct trade in the region. We simplified rules of origin and documentation to make it easier to take advantage of preferential trade deals in the region. We improved logistics and transportation networks, and increased transparency and accessibility of APEC economies' customs information and regulations. And we agreed on an ambitious plan to address barriers to trade and investment in environmental goods and services in APEC.
With 2011 approaching, discussions on our substantive priorities and deliverables for our APEC host year are of course already underway. But as with TPP, we will rely on your input and that of other stakeholders to help shape our views and priorities for an ambitious outcome. We will also rely on you to help us take advantage of another great opportunity that hosting APEC will provide the United States - the chance to educate stakeholders in the U.S. about the benefits of exports and trade to our country.
I have focused on our key regional initiatives. But we also have other important bilateral priorities in the Asia-Pacific region. For example, as we proceed with our TPP and APEC work, we will continue to address concerns with Korea, and in consultation with Congress, present the U.S.-Korea Free Trade Agreement for Congressional consideration. KORUS is a high-quality agreement in many respects, with groundbreaking provisions on IPR, transparency, and non-tariff measures. That said, there are still outstanding issues, particularly related to autos and beef, that we need to work through in close consultation with Congress and stakeholders. Once we address those concerns, we can realize KORUS's significant economic and strategic benefits and send a strong signal of America's commitment the region.
We are also seeking to deepen and broaden our already extensive economic engagement with Japan - which is still our fourth largest bilateral trading partner and key market for many U.S. exporters. I will be travelling to Tokyo next week to accelerate this engagement, and to raise some long-standing bilateral irritants related to insurance, autos, and beef. And after Japan, I will be stopping in Malaysia and Indonesia to discuss regional developments and bilateral issues. We also will continue to work to build our economic relationship with ASEAN countries and to support ASEAN integration. You may have heard that President Obama will be visiting Indonesia later this year, and trade will figure prominently on the agenda, so we have our work with the region cut out for us.
Finally, our significant and difficult work with China in our existing bilateral dialogues and enforcement actions merit their own speech, and will be the focus of much of our work this year.
This is how I believe we must seize this watershed moment in trade policy - through TPP, APEC, and beyond. But while I began with the amusing first moments of my job, this watershed in trade policy is neither mine to remember nor mine to pursue. It is our moment, our obligation, and our common challenge. I ask that none of us forget that. And I look forward to working with all of you.