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Remarks by U.S. Trade Representative Ron Kirk at the Coalition of Service Industries 2012 Global Services Summit

Remarks by United States Trade Representative Ron Kirk at the Coalition of Service Industries 2012 Global Services Summit

CSI 2012 Global Services Summit
Washington, D.C.
September 19, 2012

*As Prepared for Delivery*

“Good morning. Thank you, Bob Vastine, for your strong and steady leadership of CSI over the years. Your vision for the Global Services Summit helped establish this event as a premier forum for promoting serious efforts to open services markets around the world –which is a vitally important part of the Obama Administration’s jobs and growth agenda. As we wish you well in your future endeavors, we welcome your successor, Ambassador Peter Allgeier. Ambassador Allgeier is well-known to most of us, having previously served as Deputy USTR in both Geneva and Washington, including two stints as Acting USTR. I am personally thankful for the expertise and professionalism Peter displayed in helping me and my team hit the ground running here at USTR. CSI certainly made a wise choice.

“Welcome also to my fellow trade ministers and attendees from around the world. We all recognize the growing significance of services in global trade. And of course, we appreciate the input and insights provided by Members of the U.S. Congressional Services Caucus, and stakeholders from every service industry represented here today.

“Today’s topics are critically important, because services support jobs and economic growth in every country and every industry worldwide. From smart phones in the palm of your hand to supply chains stretching around the globe, goods and services are increasingly hard to separate. Consequently, barriers to the smooth flow of services across borders can negatively impact producers in the agriculture and manufacturing sectors as well. Missed emails, calls, connections, shipments, or payments can lead to angry customers, lost sales, less growth, and ultimately, fewer jobs in any industry these days. To avoid these potential pitfalls and maximize the job-building benefits of trade, we need policies that will enable and amplify economic growth, not limit it.

“That is why the United States is partnering with like-minded countries to explore a new International Services Agreement (ISA). We are enthusiastic about this exciting initiative. Frankly, a fresh look at services is long overdue. The WTO General Agreement on Trade in Services (GATS) was concluded 18 years ago. Since then, more than 100 bilateral or regional trade agreements have followed. To be sure, many of these agreements have improved upon the GATS by going deeper into certain areas, or covering additional ground in response to new issues. But as a result, the policy backdrop surrounding global services trade looks somewhat like a patchwork quilt right now.

“The ISA presents significant new opportunities to examine the achievements of services agreements so far; consolidate the most important and effective elements into a single framework; and extend that framework to a broader group of countries. The ISA also offers a means of building international consensus on new trade rules that someday could be introduced into the WTO. This is a significant feature, because the WTO’s central role as a cornerstone of the multilateral trading system depends on its capacity to advance creative and ambitious approaches to trade liberalization.

“We should also work to advance policies that respond to the growing nexus between trade in goods and services. This applies to services that enable the free flow of goods across borders, as well as information and communications technology (ICT) products that seamlessly combine the two. Commercial trends are heading toward increasingly global services offered anytime, anywhere over digital platforms. But in too many global markets, persistent trade barriers are putting an artificial ceiling on the economic growth and jobs that digital products can create.

“Current negotiating efforts in the Trans-Pacific Partnership (TPP) are aimed at crafting an ambitious agreement and tackling these 21st century trade challenges. Our current TPP partners include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, and we are excited that Canada and Mexico will be joining the negotiations in the coming weeks. We expect their participation to further enhance the strength of this agreement, which will cover all services and include robust commitments to address new barriers our service suppliers are facing in foreign markets.

“TPP partners are advancing a series of enhanced disciplines that will provide a level playing field for cross-border competition in digital services throughout the dynamic Asia-Pacific region. For example, three of the most significant and troubling impediments to cross-border trade in ICT services are local establishment requirements, local data storage requirements, and restrictions on the flow of data across borders. Even large companies currently have enormous difficulties complying with data requirements in multiple jurisdictions. And these barriers are especially burdensome for small- and medium-sized businesses that don’t have the resources to establish local offices in every market they could otherwise reach online.

“To be sure, proposals under consideration recognize that a limited set of data restrictions stem from legitimate regulatory objectives, like the protection of privacy and enforcement of laws and regulations. Our challenge in the TPP, and more broadly, is to shape balanced policies that enable trade to flow as widely as possible, while preserving the ability of regulatory authorities to take necessary and appropriate actions.

“Of course, many of the cutting edge concepts we are addressing in the TPP negotiations have been incubated through the Asia-Pacific Economic Cooperation (APEC) forum. Earlier this month, APEC Ministers meeting in Russia agreed to a comprehensive approach to improve supply chain performance in the region, so that businesses can move goods faster, easier, and cheaper. APEC Ministers also committed to promote innovation policy that is market-driven and non-discriminatory.

“Moving forward, the United States is eager to seize the full potential of our trade and investment relationship with Russia at the bilateral and multilateral levels as well. Last month, the United States welcomed Russia as the 156th Member of the WTO. Now, WTO rules could – and should – offer important transparency and predictability for U.S. service suppliers doing business in Russia. But because the WTO Agreement does not apply between the United States and Russia at this time, Russia does not have to apply the WTO rules, or its market-opening commitments, to U.S. service suppliers. That’s why the Obama Administration is strongly encouraging Congress to pass legislation as soon as possible that will terminate Jackson-Vanik and authorize permanent normal trade relations with Russia.

“Giving U.S. service suppliers a level playing field in large and growing international markets is critical to creating jobs here in America. That’s why the Obama Administration is also working to bolster the unparalleled transatlantic trade and investment relationship between the United States and European Union (EU). U.S. foreign direct investment (FDI) in the EU was worth more than two trillion dollars last year, and similarly, the EU holds more than one and a half trillion dollars of investment in the United States. Through the Transatlantic Economic Council, the United States and the EU reached agreement on common principles for trade in ICT services and investment, respectively. These principles are a testament to our shared commitment to open, transparent, and non-discriminatory trade and investment policies. And this commitment will provide a strong foundation for our joint work in the U.S.-EU High Level Working Group on Jobs and Growth, which will be developing final recommendations for our Leaders later this year on potential U.S.-EU negotiations.

“The robust and dynamic U.S.-EU economic relationship clearly illustrates how open trade and open investment go hand-in-hand. And to be sure, the Administration is working with all of our trading partners to promote investment policies that enhance trade. Earlier this year, the Administration concluded a thorough review of the United States’ model bilateral investment treaty (BIT). We enhanced transparency and public participation; sharpened the disciplines that address preferential treatment to state-owned enterprises; and strengthened protections relating to labor and the environment.

“With these new policy tools, U.S. negotiators are now advancing efforts to secure high-standard BITs with trading partners such as China and India, as well as Mauritius. We have also resumed exploratory BIT discussions with a number of countries including Ghana, Cambodia, Russia, and the East African Community (EAC).

“The United States is also focused on enhancing services trade through our existing agreements. For example, the U.S.-Korea trade agreement now in force is providing new opportunities in Korea’s $580 billion services market for U.S. service suppliers. Similarly, U.S. investors and service suppliers are starting to take advantage of new opportunities under our recently implemented trade agreement with Colombia.

“As we explore all of these new opportunities through negotiations and agreements, it is also important to remember that direct dialogue is essential to enhancing services trade and investment. For example, China is the fastest growing auto market in the world. Through bilateral engagement, the United States persuaded China to open its market for certain mandatory auto insurance.

“Of course, when negotiations and dialogue are not able to remove discriminatory barriers to trade sufficiently, it may be necessary to utilize appropriate trade enforcement tools. In July a WTO Panel agreed with U.S. claims that China’s pervasive and discriminatory measures in the electronic payment services (EPS) sector deny a level playing field to financial services suppliers from the United States and other countries. China has now accepted the Panel’s ruling and the United States is working with China to ensure that these practices end.

“All of the efforts I’ve outlined here demonstrate that the Obama Administration is moving full speed ahead on multiple fronts to advance ambitious trade objectives with respect to services. We are promoting policies that will truly open markets and level the playing field for service providers of every size. We’re pressing forward because businesses across America and around the world aren’t waiting to innovate; they are constantly seeking new customers and more markets for their latest products.

“This year, the Office of the U.S. Trade Representative (USTR) is celebrating our 50th anniversary, marking five decades since Congress asked President Kennedy to appoint a Special Representative for Trade Negotiations in 1962. We’ve come a long way, but there’s still more to do. I look forward to working with all of you to ensure that our businesses, workers, and families continue to benefit from global trade that expands economic opportunity, supports jobs, and spreads prosperity widely. And I can’t wait to join my colleagues on the panel. Thank you.”