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Remarks by Ambassador Michael Froman to the 67th Virginia Conference on World Trade
November 5, 2015
*As Prepared for Delivery*
Thank you, Secretary Jones.
It’s a pleasure to be here to talk about what we’re doing to tear down barriers and level the playing field for Virginia exporters.
As many of you are aware, we recently concluded five and a half years of negotiations for the Trans-Pacific Partnership. 12 countries. 40 percent of the global economy. Some of the largest and fastest growing markets for Made-in-America exports in the world.
I am pleased to announce that this morning, we released the full text of that agreement for everyone to read.
TPP is a major victory for our workers and businesses, and we’re excited to share every word of it with the American people. Continuing our commitment to transparency, the full text—every comma, every semicolon, the finest of the fine print —is available at: www.medium.com/the-trans-pacific-partnership.
Take a look. What you’ll see is nothing less than the highest-standard agreement in history, one that will support more high-paying jobs here at home, one that will strengthen our middle class, and one that will advance both our interests and our values abroad.
Now, if you’ve been following the TPP talks, you’ll see this is an agreement that delivers on the promise of trade. And if you haven’t been following, this is an important time to start. Whether America leads on trade will have real consequences for workers and businesses here in Virginia.
In fact, there’s probably no better place to put those stakes into context than here in Virginia.
For over four hundred years, going back to the founding of Jamestown, Virginia has been at the forefront of American commerce, and for much of that time, Norfolk has been one of our leading gateways to the world.
Roughly a century after Norfolk was established, Thomas Jefferson boldly predicted that this town of 6,000 citizens would become “the emporium for all the trade of the Chesapeake [sic] bay and its waters.” When those words were published, in 1782, the entire state of Virginia exported $2.8 million in goods, nearly all of which were agricultural goods.
Today, the scale of Virginia’s commercial success would surprise even the Sage of Monticello. Last year, the state exported $19.3 billion of goods, a record-breaking accomplishment that supported over 90,000 jobs. During the same period, the Norfolk-Virginia Beach metro area alone exported $3.6 billion in goods.
There’s no question that Virginia’s agricultural community continues to thrive, with Virginian farmers and ranchers exporting $1.2 billion of agricultural goods last year. And the Port of Norfolk has emerged as one of the East Coast’s leading commercial hubs, second only to New York in terms of total cargo traffic.
In short, the attributes that made Virginia a leading hub for commerce in our nation’s earliest days have only grown stronger. Between Norfolk’s presence in maritime commerce, Dulles’s success in airborne commerce, Ashburn’s leadership in digital commerce, Virginia is well placed to take advantage of emerging trade trends.
In many aspects, Virginia is America at its best. It’s hardworking, innovative, and talented. It has a world-class education system and is home to some of nation’s brightest minds, from its more than 20,000 doctoral scientists and engineers to the 15,000 veterans who exit the U.S. military each year in Virginia. According to state statistics, Virginia has the highest concentration of private sector high-tech workers in America.
The list of strengths runs long, and I could keep on going. The point is, this state has what it takes to compete in the global economy. And there are plenty of you who are doing just that. At last count, Virginia had over 7600 business exporting, 86 percent of which were small businesses. That’s good news because we know that exporters hire more, pay more, and grow faster than their non-exporting counterparts.
And we know that behind all these big numbers are some compelling stories. Real companies who are competing, and winning, in global markets. Take SUNRNR [Sun-Runner] of Virginia, Inc. Based in the Shenandoah Valley, SUNRNR [Sun-Runner] manufactures and sells high-quality, portable generator power systems to customers around the world, from North America, to Asia, to Africa.
This success is all the more remarkable because in too many cases, the playing field is still tilted against our workers and businesses when they go abroad. As it stands, the U.S. economy is already among the most open in the world. Our average applied tariff is only 1.4 percent, and we don’t use regulations as a barrier to trade.
But the situation looks very different overseas, where Americans face tariffs twice as high, along with a litany of foreign regulations designed to prevent them from getting a fair shot. For example, SUNRNR [Sun-Runner] faces tariffs of up to 20 percent in TPP markets. Meanwhile, competing products made in China and elsewhere are being sold in those same markets without this additional tax.
TPP helps level the playing field by cutting over 18,000 taxes on U.S. exports, including those faced by SUNRNR [Sun-Runner]. To give a just few more examples, right now, tariffs on auto parts made in Virginia are 30 percent in TPP markets. Tariffs on poultry raised in Virginia go as high as 40 percent in TPP markets. And tariffs on peanuts grown in Virginia can be above 700 percent in TPP markets. TPP will cut all of those tariffs, helping Virginia farmers, workers, and businesses sell their goods and services in the world’s fastest-growing region.
The Asia Pacific is expected to grow dramatically in the coming years, and by 2030, it is projected be home to two-thirds of the world’s middle class consumers. They’ll want more of everything that America is great at making, from cars and cosmetics, to streaming movies, to fresh fruit and vegetables. And their governments and businesses will be among the fastest-growing investors in everything from infrastructure, to aircraft, to satellites.
TPP will help American workers and businesses of sizes play a leading role in that growth story. Thanks to the first chapter in any trade agreement expressly dedicated to the needs of small businesses, TPP will help more Americans tap the possibilities beyond our borders, where 95 percent of the world’s customers live. Thanks to strong and balanced IP standards, TPP will protect the 40 million Americans whose jobs depend on innovation while also ensuring the benefits of innovation are widely shared. And thanks to the first disciplines on state-owned enterprises of any trade agreement, TPP will help ensure that all businesses compete on a fair and commercial basis.
But the stakes extend even further, from the physical economy of today to the digital economy of tomorrow. The world’s population of Internet users has grown from 1.5 billion when President Obama took office to 3.2 billion this year – a ‘virtual nation’ more populous than China and India combined. Advances in connectivity creates new exporters in the telemedicine, research and development, and distance education fields, among other services.
As the world’s leader in services exports, the United States is primed to excel in these areas. We already export $400 billion a year worth of digitally deliverable services. If the Internet – bolstered by fair and open rules that keep markets open, protect privacy, and ensure security – remains free and continues to grow, there is no reason to think we can’t greatly scale this success.
As one of America’s top sites for data center location and Internet traffic, Virginia in particular has a huge stake in ensuring that digital freedom triumphs over digital protectionism. According to the Virginia Economic Development Partnership, Virginia’s 650 data centers employ more than 10,000 people and handle 70 percent of the world’s internet traffic.
But whether we’re able to take advantage of these opportunities is an open question. There are those who have a very different vision for the future. A future with barriers to cross-border data flows and data localization requirements that make costs prohibitively high for many small businesses, curtailing access to global services, and stifling innovation. A future where countries force companies to hand over source code, favor one type of content over another, and rule with unpublished regulations. A future where websites are blocked widely, keywords are filtered frequently, and results disappear without explanation. In all these areas, at stake is not simply the digital economy’s future growth, but also its current benefit.
TPP includes a number of new tools for addressing these challenges and shaping a better future. To ensure the free flow of data or information across borders, TPP contains first-ever commitments that ban forced localization. It keeps the Internet open and free, while ensuring that consumer protections can be enforced. And it encourages cooperation between TPP countries on those consumer protections, including privacy and cybersecurity
There are many first-evers in TPP, and not one of them came easily. This is the first agreement to impose disciplines on state-owned enterprises so that they have to compete on a level playing field against our private firms. This agreement also levels the playing field for our workers and firms by raising standards in other countries, including labor, environmental and intellectual property rights standards.
During a time of global economic uncertainty, TPP sends a clear signal, from 12 diverse economies, about the importance of raising, not lowering, global standards. During a time when alternative, more mercantilist models are challenging the open, rules-based system we’ve led since World War II, TPP is a victory for openness, fairness and freedom. During a time when many American workers are just finally beginning to see their paychecks rise, TPP will support more higher-paying jobs here at home. And during a time of partisanship and gridlock, TPP may well be one area for bipartisan cooperation.
There will be those who criticize this agreement as being less than perfect or who try to move the goalposts by which this agreement should be judged. Is it perfect? No. Did we get 100 percent of our demands? No. It is, after all, the product of a negotiation with 11 other countries and, in some areas, we had divided interests even here in the United States. But there is no doubt that this agreement positions the United States better than we are today and better than where we would be if we ceded global economic leadership to others. There is no doubt that TPP is – as President Obama has said -- trade done right.
And as good as the words are in this agreement, it’s your voices that will make the difference in the coming months. So please, take a look at the agreement at www.medium.com/the-trans-pacific-partnership, consider the facts, and speak up. As a nation, we now face a critical choice on trade: whether to lead and level the playing field with TPP, or sit on the sidelines and be left behind. The choice is clear.