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Remarks by Ambassador Demetrios J. Marantis
Deputy United States Trade Representative
"The Future of International Trade"
February 18, 2011
University of Georgia
*As Prepared for Delivery*
“It is a great honor to be here today to discuss the future of international trade. But let me offer my apologies up front. While I may have a flair for the dramatic, I am not here to paint sensational pictures of tomorrow. There is no trade apocalypse upon us. No dark clouds and thunder bolts loom on the horizon as nations dig alligator infested moats, create SPS barriers, and shed their trade obligations. Nor is the future all sunshine and light – birds chirping and flowers blooming as everyone holds hands and lowers their tariffs in unison, speaking one common language of free trade.
“The future of trade is neither extreme. In fact, the future of international trade is no great mystery at all. We have been discussing it for years, and we know what awaits us.
“In the future, we have been told that Asia’s economies will drive global economic growth with increasingly competitive export industries and growing domestic consumption. In the future, the United States’ historical ties to the Asia-Pacific will come under strain as regional economies grow more confident and pursue Asia-only trade agreements that exclude the United States.
“In the future, it will not be enough to do more of the same trade policy -- global and domestic developments will force the United States to do better and more creative trade policy. We will need new policies to increase our ambition and flexibility, anticipate future economic challenges, and better reflect our values.
“In the future, people have been saying the United States will no longer be able to rely on the existing consensus on trade, which years of domestic skepticism have left shrunken and frayed. In the future, we will need to rebuild a more robust consensus, including by facing up to beliefs that trade is bad for American jobs, families, and economic growth.
“We have also been told that in the future, the United States will realize trade and exports must play a bigger role in American economy. Trade will become part of a long-term, job-creating, sustainable growth agenda that relies less on domestic consumption and borrowing, and relies more on the 95 percent of consumers outside the United States.
“Sound familiar? It should. Because while we have for years been loudly debating the future of international trade, the future has quietly arrived. The future is now.
“This future is now and we must act to embrace it. As the President said in his State of the Union address, ‘The future is ours to win..but to get there, we can’t just stand still…to compete for the jobs and industries of our time…we need to out-innovate, out-educate, and out-build the rest of the world.’
“This is why I am pleased to be at the University of Georgia today, where I just finished learning about your exciting new science and technologies programs, and where students are surging forward in the fields that will fit our workforce for the future.
“We must seize the future – in education, in innovation, and in trade. Right now, we have a once in a generation opportunity to shape the future of a trade policy that maximizes U.S. exports, American jobs, and our engagement around the world.
“The Obama Administration is implementing a robust and innovative trade agenda to embrace and shape each of the future challenges that are upon us. Let me take these challenges in turn – our engagement with Asia, our new approach to trade policy, our work to rebuild the domestic consensus on trade, and finally how we are putting trade at the center of our national economic agenda.
“The Asia-Pacific has changed the global trade calculus. Accounting for 43 percent of global trade and home to 41 percent of the world’s population and some of the most dynamic economies anywhere, the Asia-Pacific has come into its own. Intent to build on their successes and integrate regionally, Asia Pacific economies now have more than 180 Asia-only preferential trade agreements in force. More are on the way, with over 20 agreements awaiting implementation and nearly 70 others under negotiation. Even as our exports to the region grow, our overall share of the Asia-Pacific import market has fallen from 13 percent to 7 percent over the past decade.
“The future is here, the stakes are high, and the time for action is now. Which is why this Administration has not hesitated to take bold action on trade bilaterally and regionally.
“Last December 3, the United States and Korea announced a package of measures to move forward Congressional approval of the United States-Korea trade agreement, or KORUS. The accompanying agreement we negotiated made KORUS better for America’s auto industry and better for America’s autoworkers. Within weeks, President Obama will submit to Congress legislation to approve and implement KORUS. Entry into force of KORUS will strengthen our ties with the world’s 12th largest economy and has the potential to increase annual American goods exports to Korea by over an estimated $10 billion and support over 70,000 additional American jobs.
“We are also engaging the Asia-Pacific regionally. A little over a year ago, President Obama announced that the United States would join the Trans-Pacific Partnership Agreement (TPP), a key initiative to advance our trade and investment interests in the region. This negotiation involves an initial group of nine like-minded countries, the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, and aims to create a platform for regional economic integration across the Asia-Pacific. In just over a year, TPP has become the biggest game in town, and additional Asia-Pacific economies are eager to join. This week, negotiators are in the fifth round of negotiations in Santiago, Chile and will continue talks at an intensive pace. We will welcome additional countries when they are ready, and seek to bring a swift conclusion to TPP that assures maximum benefits for American workers and exporters.
“The United States is also leading the Asia Pacific region by hosting for the first time since 1993 the 21-economy Asia Pacific Economic Cooperation (APEC) forum. Our host year will give the United States the opportunity to drive APEC’s trade and economic priorities, and we are intent to make the most of it. The President has said that the priority for APEC 2011 will be to build a seamless regional economy. We at USTR are already working hard to move forward specific proposals in each of these areas, including related to innovation and trade in technology; improving supply chain performance in the region; eliminating barriers to trade in environmental goods and services; and tackling regulatory issues that prevent trade in emerging technologies. We will do all of this with the goal of making it cheaper, easier, and faster for American businesses to operate in the Asia-Pacific.
“China is another pillar of our strengthening engagement with the Asia-Pacific. Last year through our intense dialogues with China – including the Joint Commission on Commerce and Trade and the Strategic and Economic Dialogue –we achieved the best results we have seen in years, including commitments by China to increase purchases and use of legal software, crack down on internet piracy, and refrain from discriminating in government procurement based on where the intellectual property component of goods and services was developed. More recently, China committed to delink its innovation policy from the provision of government procurement preferences – a key concern for America’s innovators and creative industries. We still have significant challenges with China, including ensuring that China implements the commitments it made this year.
“But the future we live in today demands not just more trade policy, but that we do trade policy better and more creatively. The Obama Administration is doing exactly this across the board. TPP is a great example. For the first time in any trade negotiation, TPP is focusing on small- and medium-sized enterprises (SMEs). SMEs are major job-creators domestically, but minimally engaged in international trade. We are looking at trade and investment barriers that hit SMEs hardest – such as lack of transparency, complex legal frameworks – and finding ways to eliminate or minimize those barriers.
“Other new areas of negotiation in TPP reflect recent international economic developments or aim to anticipate concerns beyond the horizon. We are looking at treatment of cross-border data flows, the increasingly common problem of “indigenous innovation” measures that disadvantage U.S. technology by forcing U.S. investors to favor another country’s domestic technology, and unfair advantages given to state-owned enterprises. We are also working on new and more creative ways to strengthen American innovation and creativity, while working with our trading partners to crack down on counterfeiting and piracy and fostering respect for the intellectual property rights.
“We are also working to make sure TPP reflects our values, including worker rights and protection of the environment. We are engaging Congressional Democrats and Republicans to find a common way forward to incorporate strong labor and environmental provisions, including new obligations in TPP that address illegal trade in fisheries, wildlife, and logging.
“All of these creative trade policies will be of little use unless a broad coalition of supporters backs them. That is why we must continue our work to we rebuild our domestic trade consensus. To do so, we need to face the fact that more than half of Americans think trade agreements have harmed the United States, up from one third a decade ago. Just 9 percent of Americans believe that trade creates jobs, only 8 percent think trade raises wages, and fully half believe trade actually slows national economic growth. Not only is trade skepticism real, it is increasingly bipartisan and prevalent among middle- and upper-income earners.
“The Obama Administration has confronted this skepticism head-on. Unions, NGOs, and small businesses that have felt shut out of the trade policy process now have a seat at the table. Ambassador Kirk and I have also taken the time to travel to Ohio, Michigan, Pennsylvania, Missouri, Maine, and other states to speak directly with American workers and business owners, hear what is on their minds, and find a better way of working together on trade. Just yesterday I was in Atlanta meeting with local small businesses and state government officials to hear their priorities and concerns.
“We have also revamped our communications strategy and rethought how we talk about trade, to make sure the facts are being heard.
“We are making progress. The broad support for the KORUS trade agreement is unprecedented and historic. Thanks to the accompanying agreement we negotiated last year that improves our bargain with Korea, tireless outreach, and a transparent process, major labor unions, agriculture groups, businesses, Democratic and Republican leadership in Congress now stand shoulder-to-shoulder in support of KORUS. This coalition will be stronger and more diverse by the time Congress considers KORUS this spring.
“We hope to make this kind of redoubled and reenergized coalition in support of trade the model for our initiatives that follow. Two such initiatives we are working to advance are the trade agreements with Colombia and Panama. The President has instructed Ambassador Ron Kirk to immediately intensify engagement with Colombia and Panama, with the objective of addressing as soon as possible this year the outstanding issues related to these pending trade agreements. If we are successful, we will bring those agreements to Congress for consideration immediately thereafter.
“Finally, success for the future demands we finally place trade at the center of our domestic economic growth agenda. The recent recession underscored how for too long, U.S. economic growth was imbalanced and too dependent on consumer borrowing and spending. Today, and in the future, the United States and the global economy need more sustainable growth, driven by increased U.S. exports and increased consumer spending in markets abroad. Putting trade at the center of our domestic economic growth agenda will not only help ensure more sustainable economic growth, it will create good jobs that pay better than the national average.
“To animate this goal, last spring President Obama created the National Export Initiative (NEI). The NEI is an across-the-government effort to double U.S. exports by the end of 2014 and support millions of additional American jobs. To reach this goal, the President’s Export Promotion Cabinet developed and has begun to implement 70 recommendations on export assistance, increased trade finance, and assertive policies to expand trade opportunities.
“The NEI is succeeding and we are moving toward the President’s export target. Over the past five quarters of steady economic recovery, exports have contributed significantly to America’s total economic output. Exports were up nearly 17 percent last year, supporting hundreds of thousands of additional American jobs. We have work left to do, but we are well on our way.
“I began my remarks dismissing dark visions of the future of trade. But let me end on a note of caution. We know our challenges. I think we have the right policies at hand to embrace and help shape them. But we must follow through. In today’s global economy, there are not many second chances. The stakes are high and the competition is real. If we do not get this right, future generations may look back at us today and say, “You had the chance to shape a better future. Why did you hesitate?”
“We cannot hesitate, and we will not. The future is now and the future is ours to win. We must seize it. If we do it well, we will have a once in a generation opportunity to shape the future of a trade policy that maximizes U.S. exports, American jobs, and our engagement around the world.”