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Remarks by Ambassador Michael Froman to the National Council of Textile Organizations

Remarks by Ambassador Michael Froman to the National Council of Textile Organizations

Washington, D.C.
March 26, 2015

*As Prepared for Delivery*

Thank you, Jay. It’s a pleasure to be here, at an important moment for our nation’s economy and for American manufacturing in particular.  I see that the theme of this meeting is “resurgence.”  That could well be the theme for this Administration’s economic policy as well.

Consider the progress we’ve made together in recent years:

•           Six years ago, we were losing 700,000 jobs a month and unemployment touched 10%. Now, for the first time in 37 years, U.S. businesses have added more than 200,000 jobs per month for 12 months, and unemployment has dipped to 5.5%.

•           Between 2000 and 2010, we lost roughly 50,000 jobs a month in manufacturing. In the last five years, we’ve seen a gain of almost 900,000 new manufacturing jobs.

•           After nearly two decades in decline, factories are opening in this country again, and manufacturing jobs are starting to return from overseas.

If you could put a label on this comeback, it would read “Made-in-America.” That’s because U.S. exports have contributed nearly one-third of our overall economic growth since 2009. Last year, 11.7 million American jobs were supported by exports, an increase of 1.8 million since 2009. After remaining stagnant for far too long, average wages are finally starting to rise, and we know that jobs related to exports pay up to 18% more, on average, than jobs not related to exports.

Our record-setting exports include strong performances from across the economy – from agriculture, services and manufacturing, including the textile industry. After a decade of decline in U.S. manufacturing during the 2000s, the American textile industry has seen more jobs and increased shipments over the last 6 years, including a 45% increase in exports. Thanks to all your hard work, the United States remains the world’s third largest textile exporter.

Like the broader manufacturing sector of which it is a critical part, we’re making sure America’s textile industry succeeds because a strong American textile industry means more good jobs and innovation. The textile industry is an important component of our manufacturing base, employing more than 230,000 Americans directly, including many in rural communities, and supporting many more indirectly across the country.

Our textile industry is also at the forefront of some of the very latest in global technology. You’re producing cutting edge products, from carbon fibers to advanced and composite materials.  And this leadership, combined with quality and dependability, has also made our textile industry an important supplier for home, technical, apparel and industrial uses – not to mention the U.S. military.

For all these reasons, this administration has been working closely with textile workers and businesses to build on the solid foundation that has been laid in recent years. Just last week, President Obama launched a competition for a “Revolutionary Fibers and Textiles Manufacturing Innovation Institute.” This effort seeks to keep the United States at the leading edge of fiber science, and it’s backed by $75 million in public investment and at least that much in additional private investment. 

So our commitment to the future of American textiles is stronger than ever. And that’s true in our trade policy as well, which is a key pillar of President Obama’s overall economic strategy and a key part of our investment policy and our manufacturing policy. They work hand-in-hand to create jobs, promote growth, and strengthen the middle class in America.

We’re using our trade tools on all fronts to support America’s textile workers and businesses. The first aspect of that work is aggressive enforcement of our existing trade agreements. By making enforcement a top priority, this administration has vigilantly held our trading partners to live up to and account for their obligations.

The logic behind aggressive enforcement is simple. Our workers and businesses are among the most productive in the world, so we know that when the playing field is level, when everyone plays by the rules, Americans don’t just compete, they win.

That’s why we’ve been standing up for American workers, families, farmers, and businesses across the economy. We’ve filed nearly 20 complaints through the World Trade Organization since 2009, and we’ve won every case that has been decided so far. Over the last year alone, the United States has won four major victories affecting billions of dollars of U.S. exports, including cases against China, India, and Argentina.

We’ve consistently stood up for America’s textile industry, most recently by initiating a new WTO dispute against China. Through close monitoring, we discovered that China appears to be using its “Demonstration Bases” and “Common Service Platforms” to provide domestic producers with free or discounted services contingent on exporting.

These unfair practices are against WTO rules, and they threaten American textile exports and the good jobs those exports support. At an even more fundamental level, illegal trade activity by any country undermines the rules-based global trading system that we’ve led for over seven decades. That system has brought jobs to our shores, allies and partners to our defense, and peace and prosperity to those around the world who have embraced openness and fairness.

It is very much in our interest—in terms of jobs, growth, and the strength of our middle class—to ensure that everyone in that system plays by the rules.

At the same time, we know from experience that we need to do more than rigorously enforce the existing rules. We need to be pressing our trading partners to adopt higher standards that reflect the realities of today’s global economy. We need to be leading on trade so that our workers and businesses will positioned to benefit from tomorrow’s global economy.

That’s why we’re moving forward with the Trans-Pacific Partnership, or TPP, which is a truly ground breaking agreement. TPP will cover nearly 40% of the global economy, and it is estimated to grow our exports by more than $123 billion by 2025, according to one study, and support many more high-paying jobs.

Just as importantly, TPP gives us the opportunity to protect workers, to protect the environment, and to tackle a number of issues that have never been addressed:

•           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 – will put disciplines on state-owned enterprises and ensure a free and open Internet.

•           TPP will ensure that the 40 million Americans whose jobs are directly or indirectly dependent on innovation, invention and creativity enjoy the fruits of their labor – from the inventor in her garage to the pioneers who are producing the next generation of technical textiles.

Across the board, TPP will help restore the connection between hard work and rightful reward by giving Americans a fair shot in these markets, including America’s textile industry.

That’s because USTR and NCTO have worked together, forging a partnership and putting into practice a new model for cooperation. The finish line for TPP would not be in sight today if not for the partnership that we’ve cultivated here at home during the past few years.

In practice, our partnership has entailed a step-by-step, very deliberative process to identify the most important domestic sensitive interests, decide how to treat them in this agreement, and construct a framework for progressively less sensitive items. 

The level of engagement and collaboration between USTR and NCTO has been unprecedented.  We began the TPP process with different ideas about what an acceptable market access package would entail, but rather than parting ways there, we listened to each other’s concerns, we charted a common course forward, and corrected that course as necessary. 

You completed a comprehensive analysis that simulated impacts from certain market openings, and we’ve adjusted our negotiating approach to carefully incorporate that analysis. We’ve also cooperated very closely in developing a short supply list that balances the offensive and defensive interests of the United States, encourages regional integration of TPP textile and apparel markets, enhances supply chains in the region, and creates new business opportunities for U.S. exporters.

The result is that we’re close to delivering a balanced package that we can all be proud of, one that will support supply chains in the Western Hemisphere and put America’s textile industry on a path to becoming even stronger. Like any compromise, this one will require that everyone gives a bit in the short term in order to secure some even larger gains in the medium term. At the same time, this package takes into account special concerns related to your core products, and it will establish a pace that will provide time for investment decisions to enhance your competitive position.

As with any negotiation, there will be odds and ends that won’t be closed until the very end. But let me assure you that there won’t be any surprises. We do not expect significant changes to the existing parameters and structure of the deal being considered, and any further modifications to the package will be based on consultations with NCTO leadership, just as we have been doing throughout this negotiation. I want to thank Auggie and the NCTO leadership for investing the time and energy to working with us over the last couple of years to find the right approach on these challenging issues. We appreciate their commitment and their creativity.

Now, let me say just a few words about the Transatlantic Trade and Investment Partnership, or T-TIP, because TPP and T-TIP are two parts of the same overall strategy for attracting more jobs and investment to the United States.

As you’re aware, our textile and apparel relationship with the European Union is considerable in its size and scope. Through T-TIP, we’re seeking to obtain fully reciprocal access to the EU market for U.S. textile and apparel products, supported by effective and efficient customs cooperation and other rules to facilitate U.S.-EU trade in textiles and apparel. More specifically, we believe that agreement on trade rules, market access, and cooperation and coordination on non-tariff barriers are principal components of successful free trade agreements, and these commitments are closely linked to each other. 

A number of specific issues have been raised about opportunities in T-TIP to address non-tariff barriers.  In the textile and apparel sector, these include labelling requirements, product safety and consumer protection requirements, and test methods. And we’re open to exploring whether T-TIP presents opportunities to explore future cooperation in these areas.  

Now, when TPP and T-TIP are concluded, the U.S. will be at the center of a web of agreements that will give us unfettered access to nearly two-thirds of the global economy. And that will help us position America to become the world’s production platform of choice – the premier place for making things and selling them around the world. More businesses will want to move their operations to the U.S. to take advantage of our talented workforce, our abundant and affordable energy, our dependable legal system, and all the other things that make the U.S. market great.

As I mentioned at the outset, we’re at an important moment of “resurgence” for our nation’s economy and for American manufacturing in particular. We’ve come back from the Great Recession, and we’ve got some momentum. Jobs are coming back from overseas to communities around the country.

Communities like Hildebran, North Carolina, where plans were recently announced for a state-of-the-art facility that will make legwear for sale all over the world. That facility will create more than 200 new jobs, and those jobs will pay $4,000 a year more than the North Carolina average, according to the North Carolina Department of Commerce.

Stories like these are evident across the country. But to fully deliver on the promise of resurgence, we’ll need to continue leading on trade – not just by aggressively enforcing our existing agreements but also by negotiating tough new ones like TPP.

Because even though more American businesses are exporting than ever before, more than 95 percent of all American businesses still don’t export at all. That means 95 percent of our businesses are missing out on 95 percent of the world’s customers.

The first step toward unlocking that incredible opportunity is passing trade promotion authority, or TPA. Trade promotion legislation is the way Congress gives direction to the President about what to negotiate, how to consult with Congress before and during the negotiations and how Congress will decide at the end of the day – after an extensive public debate – whether to support or reject a trade agreement.  It’s how Congress has worked with American Presidents since FDR, including every President—Republican and Democrat—for the last four decades, to ensure that the United States takes the lead in shaping the global trading system.

And yet TPA hasn’t been updated since 2002. Think about how much the global economy, and the textile industry, has changed since then. Consider the rise of emerging markets and state owned enterprises. Or consider the growing importance of e-commerce in making suppliers more responsive to consumer trends.

Updating TPA should be a natural choice for the textile industry, which has been at the forefront of adjusting to an increasingly competitive global economy. Going back to the 1980’s, your industry started looking ahead to design our trade agreements and trade programs in ways that were mutually supportive to the United States and our partner countries, including developing countries.

We have a similar opportunity within reach today. By updating TPA and closing an ambitious TPP agreement, we can support more jobs here in the United States and maintain our textile industry’s competitive edge for years to come.

I can promise you that we’ll continue fighting for your interests in our negotiations, and that we’ll continue seeking your input at every stage of the process. But we can’t do this alone. We’ll need your strong support to close the deal that’s best for you.

As industry leaders, you’re among the most influential and respected voices in your local communities, states, and here in Washington. People will be looking to you for guidance in the coming weeks and months, and we need you to speak out, loudly and clearly, in favor of TPA.

The partnership that we’ve forged depends on it. That partnership represents a new paradigm for cooperation between USTR and industry, and it’s one that will become increasingly important in as we continue our work together and prove to others that it’s a model worth replicating elsewhere.

With that common goal in mind, let me thank you again for having me here today. I’m happy to take your questions.