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Remarks by Ambassador Michael Froman at the White House Rural Opportunity Investment Conference

Remarks by Ambassador Michael Froman at the
White House Rural Opportunity Investment Conference

Washington, D.C.
July 24, 2014 

*As Delivered*

“I’m pleased to be here today with Secretary Vilsack. We were talking earlier today at another agriculture event about all the things we do, between USTR and USDA, but also personally between the two of us. I have learned a lot from him, in fact, everything I that have learned that has to do with agriculture, farms, and rural America came from Tom Vilsack, so it’s a great pleasure to be here.

“There was a time in our nation’s history when every product that left our shores could have been marked “Made in Rural America,” and back in 1790 or so, 90 percent of Americans were farmers.

“Obviously a lot has changed since then, primarily because of technology. We have seen from the steel plow, to commercial fertilizer, to satellite technology, innovations have ramped up agricultural production, allowed it to be done with fewer hands, and making America the most productive agricultural producer in the world.

“That, in turn, has helped transform the United States into a major agricultural exporter. Since 2009, U.S. agricultural exports have gone up roughly 40%, and last year, we exported a record of almost $150 billion in food and agricultural exports.

“One out of three acres of corn are grown for export, one out of ten pounds of beef are sent to export. These exports support directly one million U.S. jobs last year alone, and export-related jobs are good jobs. They’re jobs that pay 13-18% more on average than non-export related jobs. And we’re on track for another record-setting year this year.

“Now, these figures tell only a part of the story, because we should think about the whole team effort that goes into moving products from farms to forks. There are input suppliers, transporters, processors, packagers, advertisers, sellers and the list goes on and on. In 2012, each dollar of agricultural exports stimulated another $1.27 in business activity, meaning that $150 billion in exports last year sparked a total of $320 billion in economic activity in the United States.

“As potential investors, you’re interested in knowing where rural America is heading more than where it has been in the past.

“When I think about what investors are looking for, I think of growing the top line, strengthening the bottom line and ensuring that there is a stable regulatory regime in which to conduct business. 

“That’s where we view our role at USTR as coming into play.  We’re growing the potential top line by opening markets for U.S. exports.  We’re strengthening the bottom line by taking costs out of the system, for example by facilitating trade by reducing the cost of shipping, customs clearance, and border measures that create unnecessary frictions and transaction costs.

“And we’re working to create a transparent regulatory regime by insisting that sanitary and phytosanitary standards be based on science, not protectionism, and using all of the tools at our disposal to enforce those obligations.

“95% of the world’s consumers live outside the United States and, very importantly, we are seeing tremendous growth in the middle class around the world.  It’s a well-established fact that as people hit certain levels of income per capita, they seek changes in their diet. 

“They want more protein; they want a more diverse diet.  They want to make sure their food is safe and nutritious.  All of that points to greater demand for U.S. agricultural products – not just commodities, but also specialty foods, organic foods and processed products. 

“As a result, we have seen our farm exports to developing countries outpace our exports to developed countries.  In less than thirty years, the share of imports in developing countries’ consumption of oilseeds, of grains, cottons, and meats was 10 percent. And now it has doubled to 20 percent.

“When it comes to food, the “Made in Rural America” brand is the strongest brand there is.  We’ve seen tremendous growth in demand for U.S. agricultural products around the world, and as we at USTR with USDA work to eliminate tariffs and non-tariff barriers, such as the non-scientific use of SPS standards, we’ll drive that growth even further.

“We’re doing that by negotiating the Trans-Pacific Partnership. This is a trade negotiation with eleven other countries in Latin America and Asia. With 40% of global GDP, it’s one of the fastest growing regions in the world, including for agricultural goods.

“We have equally high ambitions for the Transatlantic Trade and Investment Partnership, a high-standard agreement we are negotiating with the European Union. We should be exporting more agricultural products to Europe. By eliminating tariffs and bridging our regulatory differences without compromising health and safety, the T-TIP agreement will help upgrade the world’s biggest and deepest economic relationship and bring even more opportunities to rural America.

“When we’re done with these two agreements, TPP and T-TIP, we’ll have free trade with more than two-thirds of the global economy. And when you put that together with all the other things that make the United States a good place to invest—rule of law, the entrepreneurial culture, and very importantly, abundance sources of affordable energy of renewable, it makes the United States the production platform of choice. People want to make things here, grow things here, and they want to send them all around the world. That’s what we are trying to do at USTR.

“As we open markets, businesses of all sizes benefit.  98% of our exporters are small- and medium-sized businesses, yet only 1% of small- and medium-sized businesses export. Now that  means we have tremendous opportunity for growth.

“Take the Auburn Leather Company, from Auburn, Kentucky, a rural town with 1,300 people.

“Auburn Leather had 12 employees and $900,000 in sales in 1986. But thanks to opening markets, as well as assistance from the Export-Import Bank, Auburn Leather now has more than $20 million in sales, 45% of which are exports. The company has added 20 people in the last two years and plans to add another 20 people in the near future.

“So this is just one of the 300,000 stories from exporters across the United States, people who benefit from seeing markets get open, leveling the playing field through our regulatory efforts, benefit from our enforcement efforts, and as a result, create jobs, create growth, and support their communities here in the United States.

“There’s no doubt that when the playing field is level, and global competition is fair, American businesses can compete and win. And that is why we’re continuing to focus on knocking down tariff and non-tariff barriers and vigorously enforcing our trade rights around the world.

“For example, last year our efforts to resolve some unwarranted sanitary and phytosanitary barriers helped expand a range of American exports, including U.S. beef exports by 12%. And other SPS resolutions include opening the door for $4.3 million in U.S. peach and nectarine exports to Australia and increased U.S. pork exports by 63% to Colombia. 

“We’ve also worked hard for the adoption of the Trade Facilitation Agreement. This is the first multilateral agreement in the WTO’s history, and this agreement aims to standardize customs procedures and border practices around the world. It’s making it easier to get a product in and out of the country, and take out some of the transaction costs.

“Right now we are applying to make sure that that agreement gets fully implemented. It would reduce the cost of trade by 10% for developed countries and almost 15% for developing countries, and that’s especially important for small businesses who find the effort of navigating different border issues and customs issues particularly daunting. So the Trade Facilitation Agreement is really one of the best ways to get costs out of the system and helping get a good return on investment for exports.

“As we take these steps, we need to make sure that we are taking the steps at home necessary for our businesses to compete and innovate as well. I know you saw Secretary Foxx earlier in the conference, but certainly investing in infrastructure that connects rural America with global markets is absolutely critical.

“So is the continuing effort to innovate and adapt, and we see in rural American rural entrepreneurs doing everything from engineering more effective probiotics and biopesticides to bio-based fuels that cost less and burn cleaner.

“There’s a critical role for the public-private partnerships in enabling rural exports to continue this growth, and that’s why I plan to travel to Iowa next month to participate in one of the "Made in Rural America" export forums that our Administration is hosting across the country in partnership with the National Association of Counties. During that forum, we’ll connect rural businesses with public officials, community leaders, and experienced exporters to help them take advantage of new investment opportunities and access new markets abroad. 

“So in conclusion, let me just say, rural America, and increasing productivity in rural America, and investing in rural America has been central to America’s success and the development of our country. And it is as important now as it is then, as investing in rural America as investing in America. We see great opportunities- we were in a session earlier today, Secretary Vilsack and I, and one of the participants spoke up and said his children are coming back to the farm, they graduated from college and they’re looking forward to coming back to the farm. And they’re excited because they see so many more opportunities in rural America for their economic future to thrive, than he saw when he did the same thing back in the 1980s. There is a lot of energy out there, there’s a lot of excitement out there, and we are pleased to play our small role in helping to support that endeavor, we’re excited about your efforts to invest in rural America and help continue to make America stronger.

“Thanks very much.”