Remarks by Ambassador Ron Kirk
The Consumer Electronics Show
Las Vegas, Nevada
Janury 8, 2011
* As Prepared for Delivery *
“Thank you, Gary. It’s wonderful to be here at CES. I had the opportunity to walk the show floor earlier today, and the future is really on full display.
“My daughters constantly remind me that I’m not an expert on digital technology. Whenever I start getting good at using a digital camera or mobile phone, you all go and create new ones – or a single device that does everything. I know Alan Mulally spoke here yesterday about how cars are the next big technology delivery devices. But I understand they haven’t figured out how to get the car in the palm of your hand yet.
“The trends on display here are very important for America’s economic future. We’re seeing exciting technological innovations. As you well know, there is a growing nexus between goods and services, especially in your industries. And supply chains are stretching across oceans and borders at an astounding pace.
“We as a country need to do what you do best – invent, discover, create and build products and services that are sold all over the world.
“It is my job to ensure that America’s trade policies are flexible enough to accommodate innovation, safeguard your intellectual property, facilitate your global reach, and lead to the creation of more technology-sector jobs here at home.
“Think about the devices on display this week. Most of them are based on intellectual property predominantly developed in one country – let’s call it ‘Country One.’
“Then they are probably produced with metals mined and manufactured in Country Two, contain components manufactured in Country Three, embody inputs from Country Four, and assembled with labor provided in Country Five. All of that happens before the device is even shipped to a retail market.
“Then once a customer buys the device in Country Six, let’s say, he or she utilizes telecommunications services originating in Country Seven to download content created in Country Eight, and possibly stored on a server in Country Nine!
“You get the picture… and it’s easy to see how trade rules have to be comprehensive to support the value chain that links business and trade today in rapidly evolving industries like electronics.
“The United States is leading by example. Low tariffs, industry-driven standards, competitive telecom markets, and an open Internet all provide strong support for the innovation that drives your growth.
“But we have to encourage other countries to adopt similar policies, so you can be equally successful in other markets. And we have to keep thinking beyond traditional rules to make sure our agreements stay relevant.
“Tonight I’m going to share with you four cases in which USTR works to address issues on the cutting edge of technology, and on the front lines of your global business.
“You should be pleased to know that this summer we received affirmation of an agreement that underpins much of the trade and technology policy supporting your products and businesses today – the WTO Information Technology Agreement (ITA). The findings in a ruling that the United States won underscored how ITA is a living agreement that encourages technological developments rather than freezing coverage based on technology at a single point in time.
“The original negotiators of ITA understood that restricting trade in any particular product would create a negative ripple effect throughout the economy because many technology products are inputs into other products or services.
“So they created a trade agreement platform flexible enough for the future by extending duty-free treatment not only to particular products, but also to products ‘wherever classified’ so that technologies that didn’t exist or have significantly evolved are covered. Beneficiaries of this forward-thinking approach have included smart phones, set-top boxes, and tablet computers.
“But we’re not stopping there. USTR is exploring ways to build on this agreement, to further encourage development of the next great set of gadgets and revolutionary products.
“We also recently took a significant step forward in trade and technology policy by finalizing the Anti-Counterfeiting Trade Agreement (ACTA).
“Just as ITA is a living agreement that provides the policy flexibility necessary to promote technological innovation, ACTA is a partnership of countries committed to protecting the intellectual property on which innovation depends.
“The ACTA will be an important new tool to fight the global scourge of counterfeiting and piracy, which threatens American jobs that depend on innovation.
“Building on good agreements like ITA and ACTA, USTR is exploring ways to further remove tariff and non-tariff barriers to electronics trade through the Asia-Pacific Economic Cooperation Forum (APEC). APEC has long served as an ‘incubator’ for new and cutting-edge ideas to address key trade and investment policy challenges.
“This year, the United States is hosting APEC, and we plan to use this opportunity to achieve practical, concrete, and ambitious results that will have a real impact on the ability of your companies to do business in the Asia-Pacific region.
“Because we know that’s the center of the global supply chain for your products, we are focused on improving and simplifying customs and logistics procedures to reduce the time, cost, and uncertainty of moving goods and services through the region.
“We are also looking to expand regulatory cooperation and promote regulatory convergence. Addressing barriers related to technical regulations, standards, and conformity assessment procedures is essential to creating a positive environment for trade in the region.
“We will advance the APEC Privacy Framework – an innovative approach to addressing consumer interests in a borderless world where data must move but personal information needs protection."
“And finally, we will seek open and competitive innovation policies across the region – ones that allow for access to technologies and that promote economic growth.
“Beyond the ‘incubator’ of APEC, we now have another vehicle for bringing these good ideas to fruition: the trade agreement being negotiated in the Trans-Pacific Partnership (TPP). TPP partner countries share the goal of creating a ‘21st century’ agreement that promotes the growth-enhancing strengths of our respective economies, and the electronics sector is at the vanguard of these concerns.
“TPP negotiators for the United States are always thinking about that Country One, Country Two example I mentioned earlier, and we try to get our trading partners to do the same.
“For example, even though a country may not be strong in software development or device design, it may still want to see a wireless network prosper because consumers and businesses demand it. And if you have a network, you need devices. In turn, those devices need access to software – like all of the ‘apps’ we buy for a dollar at a time. Those apps need to be able to link to content – like songs and text and video. Sometimes, that content can promote local culture – for instance, a local novel can be sold as an e-book.
“And so interests can come a full circle: a country which may not consider itself at the forefront of the electronics revolution can see the wisdom and the economic benefit of rules that help them harness this new digital ecosystem.
“So while we develop these rules, we need your input to build on some common themes. And as with ITA, we want to ‘future-proof’ rules so that they respond to the dynamism of your sector in both goods and services.
“Consider just five years ago, outside of those of you in this room not many people read e-books; not many people did their social networking with digital tools; and very few people besides you were thinking about ‘cloud computing.’ So one of our challenges in crafting the TPP agreement is to make sure it is not only relevant to current innovations, but that it also supports and protects the emergence of the next big ideas.
“We also have to be vigilant against the temptation for governments to try to capture the next good thing for themselves or their industries. They can do this either by prescribing standards that foreign firms have difficulty meeting, or by excluding foreign service suppliers.
These kinds of approaches typically only hurt a country in the global market, but special interests will often try to convince regulators otherwise. APEC pioneered adoption of ‘technology choice,’ which we are seeking to incorporate into TPP as well.
“In the same way, we are working to ensure that governments and private actors do not block or otherwise discriminate against devices, services, applications and content to create competitive or national advantages. This is definitely a principle of trade policy that CEA members should support.
“We also intend to make the protection and enforcement of intellectual property rights a cornerstone of TPP. Creative output can be quickly spread far and wide, and every country now has the potential to ‘move up the value chain’ and become an IP producer."
“That means all TPP partners can see the value of protecting intellectual property and promoting innovation as well. TPP partners’ openness to new, legitimate distribution platforms can also complement a strong intellectual property framework and counter the lure of piracy.
“Just as supermarkets cannot compete against a bazaar of stolen goods, so too E-commerce will not prosper, unless a market for legitimate content is in place. And trade agreements can help foster such legitimate markets, by ensuring market access for service suppliers and enabling responses to the strong demand for creative content we excel at producing.
“We are also looking to build on APEC’s good work in figuring out how information can flow while privacy thrives. There are no easy answers in these areas but we are certainly seeking solutions in TPP.
“Many of the issues we hope to build upon in TPP are addressed in our most recent and comprehensive trade agreement: the U.S.–Korea pact. Bringing this agreement into force will enhance our vibrant trade with Korea. But it can also build momentum for an enduring commitment to the region, with a particular focus on innovation and job growth in your dynamic sector.
“Korea is a natural partner for U.S. firms in consumer electronics and information and communications technology (ICT). It is the fifth largest ICT goods and services market in the world, and one of the most connected nations. Increased access to this market has enormous value to our leading firms and the jobs they support – not only services jobs, but complementary manufacturing jobs right here at home.
“The key to your business is, of course, your ability to freely develop, adopt, and market your technologies around the world. The Korea agreement has focused on this issue to a degree unprecedented in our other trade agreements. It has strong provisions to promote the flexible use of technology in this sector, benefitting service suppliers and equipment vendors alike. These are strong rules that will counter the temptation of a government to provide an advantage to local suppliers at the expense of American innovations.
“The agreement also contains the most cutting-edge provisions ever struck by two countries on intellectual property protection and enforcement. These will safeguard the patents, trademarks, and copyrights that are critically important for your industry’s knowledge-based products and services.
“Furthermore, the agreement helps to address current problems in the Korean market. Strong new rules will ensure that American companies and others can fully participate in the development of Korean standards, technical regulations, and conformity assessment procedures. This will be important for all U.S. exporters, but will especially benefit smaller enterprises that lack the resources to overcome the challenges of foreign regulations.
“My goal in crafting and enforcing American trade policy is to help all of America’s technology innovators, big and small, benefit more fully from the global trading system.
“I want you to do well in ways that help America’s working families do well. I don’t mean this just in terms of the great gadgets they can buy – although I am fairly certain my daughters have an industry list. I mean it in terms of the great jobs that the American people can have making and designing and repairing and moving those gadgets and goods and services right here at home.
“And our trade policy is one key component of the President’s comprehensive strategy to help the private sector compete and create more jobs here at home. That’s why he signed a health care law that lowers costs, cuts the deficit, and supports job growth. That’s why he insisted that business tax incentives be included in the package he signed last month.
“Among these is a 100% deduction for large capital investments made this year. That accelerated depreciation should help you move plans from the drawing board onto factory floors and store shelves, putting more people to work.
“The same is true of a two-year extension of the research and development credit, which helps cover the cost of wages for employees involved in research. Your businesses thrive on R&D and this Administration is committed to your continued success.
“As I said at the beginning, America already gets a lot right with regard to technology and trade. With your help, I want to raise the bar. I want to work with you for the next big idea in technology trade policy. Thank you.”