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Remarks by Ambassador Ron Kirk at the Coalition of Service Industries Global Services Summit

Remarks by Ambassador Ron Kirk 
United States Trade Representative

Coalition of Service Industries Global Services Summit
Washington, DC
July 20, 2011

** As Prepared for Delivery **

“Thank you, Bill Toppeta, Bob Vastine, and members of the Global Services Coalition.

“It’s an honor and a pleasure to be back for the third annual Global Services Summit, here in the company of so many leading trade policy makers from around the world, including Minister Bruno Ferrari from Mexico, and senior officials from Canada, Japan, Australia and trading partners around the world.

“And we are fortunate to have my predecessor, former USTR Ambassador Susan Schwab, as well current Deputy USTR Ambassador Demetrios Marantis, here.

“I also want to thank Members of the Congressional Services Caucus for their vision and leadership in support of greater services trade and investment.

“Thank you all for your continued contributions to our important trade policy work.

“President Obama is working to get the nation’s business done. He is focused on doing everything we can to ensure America’s economic recovery and enhance U.S. competitiveness.

“Over the past few weeks, the President has made it clear he is ready to make the tough decisions necessary to get America’s fiscal house in order. He is working with Congressional leaders every day, offering ideas and seeking solutions.

“The Administration is also working with Congressional leaders to pass our pending trade agreements with South Korea, Colombia, and Panama, as well as renewed Trade Adjustment Assistance, because we want to bring home the job-building benefits of these agreements as soon as possible.

“Leaders on both sides of the aisle have consistently affirmed that these trade agreements will support additional jobs, and build a more prosperous future for America.

“It is estimated that together these three agreements will increase U.S. GDP by $12 billion in support of tens of thousands of additional American jobs. And that figure is just based on increased exports of goods, so we think it is a conservative estimate.

“After all, these agreements offer significant opportunities for enhanced services trade and investment, along with additional American jobs. Let me briefly highlight three key benefits for U.S. service providers.

“First, no matter what type of services you provide, these agreements will give you a fair chance to compete and win new customers abroad. Guaranteed access to the services markets of South Korea, Colombia, and Panama adds up to a combined total of $766.6 billion (South Korea – $580 billion, Colombia –$166 billion, Panama –$20.6 billion).

“Once the agreements are passed and fully implemented, each country will be required to maintain a level openness in its services market on par with the United States. And in order to match our level of openness, the market access commitments undertaken by South Korea, Colombia, and Panama far exceed those of the WTO services agreement, extending across substantially all service sectors.

“Furthermore, the market access commitments provide automatic coverage of new and innovative services that may develop as markets evolve.

“Second, the trade agreements’ provisions on cross-border services, telecommunications, and electronic commerce break new ground to ease the flow of services and products delivered over telecommunications networks. This is an area where the United States excels thanks to the creative ingenuity of our many small businesses.

“Third, the agreements also provide strong investor protections to establish a stable framework for investment in accordance with the rule of law. But to be sure, each of these bilateral agreements respects the right of both governments to regulate in the public interest, including prudent measures to protect public health, public safety, financial stability, and the environment.

“Those are just three of the many ways our trade agreements with South Korea, Colombia, and Panama will help support U.S. job creation and American competitiveness in all sectors including services.

“And of course we appreciate the support of CSI and its members. You have been leading the charge to advance these game-changing agreements along with TAA.

“As President Obama has said, we have a historic opportunity to do something big.

“In addition to these critically important trade agreements, the Administration is pursuing a balanced and ambitious trade agenda covering a wide range of issues in markets all around the world.

“Services are central to our efforts. Three out of every four American workers are currently employed in a service-related industry. And connections between people – through electronic devices, over networks, and across borders – are becoming more critical to U.S. job creation every day. In many cases, when U.S. services companies expand into new markets through global supply chains, they can support additional service industry jobs here at home.

“Consequently, the United States continues to be unequivocal and unwavering in support of greater services trade and investment liberalization at the global, regional, and bilateral levels.

“But let me be clear – we’re not interested in big ideas just for the sake of discussion. We’re focused on turning ideas into action – action that fosters competition, action that encourages innovation, and action that supports American jobs today, tomorrow, and well into the future.

“That is certainly our goal in the rapidly growing Asia-Pacific. In this region, producers are seeking increased investment and greater access to more efficient and dynamic services, while at the same time rising incomes are driving consumer demands for more choice and quality in services. Meanwhile, since U.S. service providers are well-positioned to serve these growing markets, in most cases we are simply asking for equal access and a fair chance to compete.

“For instance, if China were to energetically follow up on high level plans to accelerate services sector reform and introduce greater competition, it could benefit Chinese consumers in financial services, telecommunications services, and logistics/express delivery services, just to name a few.

“Here’s one example: the Chinese government currently prevents foreign companies from selling mandatory third party liability auto insurance in China. But mandatory third-party liability is critical to any comprehensive auto insurance package. And allowing foreign insurance companies to participate in this market would improve insurance quality to the benefit of China’s huge – and increasing – driving population. So we are working vigorously with our Chinese partners to find a path forward on improved services liberalization in these and other key services sectors.

“But to be sure, when our trading partners fail to fulfill their WTO commitments, and negotiations do not yield timely solutions, we do not hesitate to enforce U.S. trade rights. That’s why we have gone to the WTO to challenge Chinese measures that appear to block foreign suppliers from China’s large and growing market for electronic payment services for credit and debit card transactions. Our ultimate goal of course is to secure open market access that allows U.S. service providers to compete on a level playing field.

“Moreover, we are pursuing similar goals with each of our Asia-Pacific trading partners at the bilateral, plurilateral, and regional levels. I spoke earlier about the substantial benefits for U.S. service providers in the U.S.-South Korea trade agreement, so let’s now turn to the Trans-Pacific Partnership and APEC.

“In the Trans-Pacific Partnership, the United States is working with eight like-minded trading partners to develop state-of-the-art trade policy that reflects and supports the needs of service providers in the digital age. Specifically, with our TPP partners, we are developing proposals for free flow of information across borders, non-discriminatory treatment of digital products, and elimination of local infrastructure requirements. We are also seeking to reduce and eliminate constraints or policies that hinder ‘technology choice,’ or that effectively provide preferences to indigenous technology.

“To complement these efforts, we intend to make protection and enforcement of intellectual property rights a cornerstone of TPP, because we think it goes hand in hand with increased market access for service suppliers. Creating legitimate platforms for content distribution will protect innovation and enable robust responses to consumer demand. TPP negotiations are proceeding and we look forward to hosting the next round this September.

“On the regional level, the United States is hosting the Asia-Pacific Economic Cooperation (APEC) forum this year. Working with APEC partners, we are building toward a seamless regional economy through practical, concrete, and significant outcomes in a number of key policy areas.

“At the recent APEC Trade Ministers meeting I hosted in Big Sky, Montana, we agreed to address next generation trade and investment issues like facilitating global supply chains, integrating small and medium-exporters into production networks, and promoting non-discriminatory and market-driven innovation policy. In addition, we are seeking agreement on concrete steps to promote trade in environmental goods and services, including eliminating local content requirements that distort trade.

“Another APEC priority is improving the quality of regulations in the region. For example, we are seeking to prevent and eliminate technical barriers to trade that presently make it difficult for U.S. companies, including service suppliers, to do business in Asia-Pacific markets. We are working with APEC partners on these issues as we build momentum toward the APEC Economic Leaders’ meeting, to be hosted by President Obama in Honolulu this November.

“And at the multilateral level, we will continue to play a key role in strengthening the rules-based global trading system. Because as leaders in all countries seek to enhance economic growth and job creation, maintaining barriers to trade and investment is like trying to hit the gas pedal while slamming on the brakes at the same time – it just doesn’t make sense.

“Today, cutting-edge American companies are well-positioned to win in international markets as long as they have the opportunity to compete on a level playing field. Furthermore, services liberalization can benefit any country that leverages the latest technology to link products and customers more easily.

“Consider the boom in mobile information and communications (ICT) technology. An estimated half a billion customers worldwide already use broadband services. From big cities to tiny villages, people are downloading data to mobile devices that are designed, developed, and delivered through complex global supply chains.

“In fact, the international market for mobile applications, or ‘apps’, is expected to surpass $10 billion in the next several years. This growing market is up for grabs, in part because the internet has dramatically leveled the playing field.

“Online, the gap is narrow between small and large businesses: surveys show that over 85 percent of the top 500 apps were written by small businesses. For example, a small firm in Finland developed the ‘Angry Birds’ game app, which now grosses $40 million annually.

“Furthermore, ‘Angry Birds’ barely scratches the surface of mobile apps’ full potential. Right now there are more than 17,000 mobile health applications and it is estimated that by 2015 more than 500 million people will be using them. In fact, speaking at a recent health policy conference, Bill Gates said: “Diagnosis of malaria and TB will likely be the first ones you can assign a number to and say without this mobile phone app these people would have died.”

“In the digital age, there is unlimited potential for creative and efficient cross-border collaboration. Consequently, increased access to top-notch services can offer a game-changing boost for emerging economies seeking to become more competitive. On the other hand, any country that delays addressing barriers to services trade and investment does so at great peril.

“So in our discussions and negotiations, let’s remember that the pace of tomorrow’s growth depends on the choices we make today. Let’s continue to enhance the flow of services and investment across borders. And together, let’s bring home the job-building benefits of trade for businesses, workers, and families in the United States and around the world. Thank you.”