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Remarks by Ambassador Froman at the U.S. Conference of Mayors

Remarks by Ambassador Michael Froman at the U.S. Conference of Mayors

Washington, D.C.
January 21, 2015

*As Prepared for Delivery*

“Thank you, Mayor Coleman.  You’ve been a leader in making the linkages between trade, investment and the prosperity of our cities, and I was honored to see firsthand how your Global Connect initiative has been helping local businesses grow by tapping into global markets.

“Let me also thank the U.S. Mayors Conference for their active participation on the President’s Export Council.  We have benefitted enormously from the direct input of your members into trade policy. 

“I don’t need to spend a lot of time convincing this group about the benefits of trade.  You see it firsthand, and you see it from a unique perspective.  While pundits are pontificating about Main Street, you’re paving Main Street.  Where economists see facts, sterile and detached, you see families, communities, and the fabric of everyday life.

“Last night, the President talked about building on the new economic foundation that has been laid over the last six years, what has been, by any measure, a remarkable comeback. 

“Consider this:

  • Six years ago, we were losing 700,000 jobs a month and unemployment touched 10%.  Now we are creating more than 200,000 jobs per month and unemployment has dipped to 5.6%.
  • Between 2000 and 2010, we lost 48,000 jobs a month in manufacturing.  In the last four-plus years, we’ve seen a gain of almost 800,000 new manufacturing jobs.
  • Between 2000 and 2009, manufacturing exports grew less than 3% a year on average.  In the last four years, they’ve grown by 11% a year on average.

“If you could put label on this comeback, it would read ‘Made-in-America.’  That’s because our exports have contributed nearly one-third of our economic growth since the second quarter of 2009.  Think about that for a moment: one-third of our economic growth.

“But what does that mean for opportunity?  First, more exports means more good jobs.

“American exports support a record-breaking 11.3 million jobs.  In the last four years, the increase in U.S. exports has supported 1.6 million more good jobs.  I say good jobs without hesitation here, because, as the President noted last night, exporters tend to pay 13-18% more than jobs not related to exports.

“Second, exports have been strengthening small businesses, the bedrock of America’s economy. Today, more than 300,000 American businesses export, and 98% of them are businesses with fewer than 500 employees.

“Traveling to many of your cities, I’ve had a chance to learn some of the names behind those numbers.

“In Boston, I met Nate Ball, Bryan Schmidt, and Dan Walker, who came together as recent graduates and founded Atlas Devices, a company that produces rappelling tools for soldiers and emergency personnel in rescue operations.  Thanks to trade, those job seekers became job creators, doubling their customer base every year for the past three years and more than doubling their workforce since 2005.

“In Cleveland, Ron Swinko showed me the production floor of Jet Incorporated, a small business that’s creating jobs by designing, manufacturing, and exporting wastewater treatment systems.  When their sales in the U.S. took a hit during the recent financial crisis, Ron quickly turned to exports and that let him hire, rather than fire, throughout the recession.  Now, Jet exports to 33 countries, and those exports account for one quarter of Jet’s total sales.

“In San Antonio, Victor Quinones and his son, Victor, Jr., explained how Concord Supply is making a number of innovative industry materials, including a solution that reduces the environmental damage of oil spills.  Over 90% of Concord’s sales are international, and selling more abroad has helped them hire more at home. 

“Those are just three of the 300,000 stories out there.  These are the makers of our “Made-in-America” comeback.  Their resiliency, ingenuity, and drive is why every single metro area exported in 2013 and why metropolitan goods exports reached a record $1.4 trillion. 

“Today, we’re seeing manufacturing jobs come back from overseas.  Debates about offshoring have been replaced by debates about reshoring.  Companies are looking at their options for locating production and more and more, they’re picking the United States.  As a recent AT Kearney survey noted, the U.S. has reclaimed the Number 1 position as a destination for investment. In fact, no country has ever recorded a higher positive outlook from investors in the history of that survey.

“This year, for the first time in almost 60 years, our children will play with Lincoln Logs that are made in America, not abroad.  The company that’s now making that iconic American product has a name that I can’t help but mention: ‘Pride Manufacturing’ of Maine.

“These aren’t aberrations.  They’re signs that the momentum has shifted and that we’re on the cusp of something big.  We have, within our reach, the chance to restore America’s position as a place that makes real things, and in doing so, unlock opportunity for all Americans.

“And our trade policy is a key part of that.  I have people coming through my office saying how the United States is becoming the preeminent place to be in order to do business with the world:

  • We’ve got the world’s most attractive consumer market, one that is governed by a strong rule of law.
  • We’ve got a talented, innovative workforce, which is among the most productive in the world.
  • We now have abundant sources of affordable energy.

“When you layer on top of that President Obama’s trade agenda, it puts the United States at the center of a web of trade agreements that will provide premier access to two-thirds of the global economy.  That’s the extra push we need to clinch this comeback, to level the playing field for our workers and businesses, to strengthen our middle class, to make America the world’s production platform of choice – the place businesses want to make things to sell in our country and to export all over the world.

“There’s a lot of good news out there.  As the President said last night, the foundation has been laid.  But I’m not here today to declare victory, because this comeback, America’s comeback, remains incomplete.

“We’re creating more jobs, but the average worker hasn’t seen a bump in his paycheck in far too long.  We have the most productive workers in the world, and their productivity is increasing at a steady pace, but their wages are not keeping pace.  And that’s not fair.

“Today, many Americans feel as if the cards are stacked against them, especially where the global economy is concerned.

“Our small businesses are forced to navigate a maze of foreign regulations in order to reach foreign customers.  That’s why even though more small businesses are exporting than ever before, the vast, vast majority of them, ninety-plus percent, aren’t exporting at all.  And it’s not just one maze, it’s a maze for every foreign market, which is one reason why of the small businesses that do export, less than half do so to more than one country.

“Our workers are competing against counterparts in countries that lack even the most basic labor rights—like the right to associate, have protections against forced labor and child labor, and be free from employment discrimination.  That human toll is one that is measured on both sides, in jobs and livelihoods here in the United States, and in a deficit of dignity for workers overseas. 

“Our businesses are competing against companies that get subsidies from their governments or that don’t have to maintain any environmental standards.  The result is a competitive disadvantage for our workers here at home, it’s a fundamental threat to the environment we all share.

“That’s the world that we live in. Not everyone is playing by the same rules.  Not everyone is getting a fair shot.

“The question is what to do about it.  Some would have Americans continue the status quo – or worse, compete in a world where the rules of the road are defined by China, not the United States.  They would have us sit on the sidelines, rather than take the field, and they would have us do so without the tools we need to win.

“But as the President said last night, we should be the ones who engage and lead.  Done right, trade agreements are the keys for unlocking opportunity, for leveling the playing field for American workers and businesses, for making sure we’re the ones who write the rules of the road, for making sure those rules reflect our interests and our values.

“And the fact is, we’re in a great position to gain through future agreements.  That’s because the United States is already an open economy.  Our average applied tariff is only 1.4%, among the lowest in the world, and we don’t use regulations as a barrier to trade.  America is open for business, but other countries still have real barriers to our exports.  As a result of that imbalance, our trade agreements disproportionately reduce other countries’ barriers, allowing us to disproportionately increase exports and the good-paying jobs they support.

“Take the Trans-Pacific Partnership, or TPP, which is an agreement we’re negotiating with 11 other countries in the Asia-Pacific and includes 40% of the global economy.  It will grow our exports by more than $123 billion every year, according to one study, and support hundreds of thousands of additional well-paying jobs.  But most importantly, it gives us the opportunity to protect workers, protect the environment and level the playing field, because we know that when competition is fair, our businesses and workers can and will win.

“To understand how TPP will unlock opportunity here at home, you need to appreciate the challenges that our workers and businesses face today in the Asia-Pacific, the world’s fastest growing region:

  • In Malaysia, American motor vehicles face tariffs of 30%, while motor vehicles from Japan, Turkey, and elsewhere face no tariffs.
  • In Vietnam, American poultry faces tariffs as high as 40%, while poultry from Australia and New Zealand face tariffs of only 20%.
  • In Japan, American aluminum bars face tariffs as high as 7.5% while aluminum bars from Mexico, Chile and elsewhere face no tariffs.

“These are just three areas where TPP would eliminate or significantly reduce barriers to American exports, leveling the playing field for American workers and businesses of all sizes.

“But you really can’t put a price tag on a level playing field.  That’s because the Asia-Pacific region is expected to grow dramatically.  In 2009, there were 525 million middle class consumers in Asia.  By 2030, that number will swell to 3.2 billion.  Two thirds of the world’s middle class will call Asia home.  The question is, who will serve that market?  Will the world’s middle class buy Made-in-America goods and services, or products made elsewhere?

“Every comeback has a moment of truth – a tipping point, a momentum shift, a defining move. We are living in that moment today.  The choice before us today is clear:

  • We can knock down barriers to American exports and create more good paying jobs, or we can allow other countries to capture the growth from global markets.
  • We can help our small businesses reach the world’s customers, 95% of whom live outside our borders, or we can leave them lost in a maze of regulations.
  • We can set clear, consistent rules about how to sell goods in markets abroad, or we can allow corrupt bureaucrats in foreign capitals to continue picking winners and losers.
  • We can level the playing field for our workers, or we can condemn them to fighting the same uphill battle with one hand tied behind their back.

“And the choice becomes even clearer when you consider the alternative models that exist for trade and investment, models that fall far short of America’s ambitions.  Consider the Asia Pacific, where China is moving ahead with its own network of agreements:

  • TPP will include the highest and most enforceable labor and environmental standards of any trade agreement.
  • TPP – for the first time in any trade agreement – puts disciplines on state-owned enterprises and ensures a free and open Internet. 
  • TPP ensures that the 40 million Americans whose jobs are dependent on innovation, invention and creativity enjoy the fruits of their labor – from the inventor in his garage to the union carpenters I met making Hollywood sets. 
  • The same can’t be said for China’s alternative. 

“Ultimately, this is a choice that we’ll make together, as one nation.

“We’re at a critical time in this process.  The contours of a TPP agreement are coming into focus, and we look forward to continuing our efforts to engage the public and Members of Congress in a robust discussion about it.

“That’s important, because it’s critical for the public and Members to understand how we’re opening markets and creating opportunities for American exports; how we’re raising labor and environmental standards to level the playing field for American workers; how we’re promoting innovation and creativity, as well as access to its products; how we’re ensuring that governments will be able to regulate in the public interest while giving Americans abroad the same kind of protections we guarantee domestic and foreign investors here at home.  These are important issues, and we welcome substantive engagement by the public and Congress.

“In parallel, as the President made clear last night, we look to Congress to pass a bipartisan Trade Promotion Authority bill.  America has always been strongest when it speaks with one voice, and that’s exactly what Trade Promotion Authority, or TPA, helps us do.

“TPA puts Congress in the driver’s seat to define U.S. negotiating objectives and priorities for trade agreements. It clarifies and strengthens public and Congressional oversight by requiring consultation and transparency throughout the negotiating process. It makes clear to our trading partners that the Administration and Congress are on the same page in negotiating high standards in our trade agreements – standards that will protect our workers and environment.

“The one thing about so-called ‘Fast Track’ is that there is nothing fast about it. Trade agreements take years to negotiate during which time there is an enormous amount of consultation with the public, stakeholders, and Members of Congress. For example, TPP has been under negotiation for almost five years, during which we’ve had more than 1600 briefings in Congress.

“Under previous TPA bills, the President was required to provide three months’ notice before signing an agreement.  Even when Congress begins its work, the process is designed to take up 90 legislative days, which is typically five calendar months or more. That is hardly “rushing to ram something through in the dead of night.”

“So in many ways, TPA is Congress’s best tool to ensure that Congress and the public have ample time to give our trade agreements the public scrutiny and debate they deserve.

“That’s why it’s the way that Congress and the President have legislated their cooperative relationship on trade time and again – 20 times in fact – stretching back to FDR and the New Deal Congress.

“Now, I can promise you that we’ll continue working hard to strike balanced agreements that benefit our workers, our small businesses, and the economy at large.  But as we turn the page to the next chapter of this national conversation, we need your voice.  As America’s mayors, you’re uniquely qualified to put this in context that people can understand, digest, and support.  We can’t do this without you.

“So I’d like to ask you to consider highlighting the importance of trade to your own economic strategies, underscoring how exports support good jobs in your communities, and explaining how our trade agenda can help connect your constituents to global opportunity.  If we work together, I know we’ll make the right choice.  One that we’ll measure in jobs gained and incomes raised, but also in dreams achieved and communities strengthened, in opportunity unlocked.”