The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“WORLD TRADE MONTH” mentioning the U.S. Dept. of Commerce was published in the Senate section on pages S11689-S11691 on Dec. 8, 2006.
The publication is reproduced in full below:
WORLD TRADE MONTH
Mr. SMITH. Mr. President, I rise today to speak about World Trade Month. I have always been a free trader, and I am very proud of the many Oregon companies that are active in international trade and are pioneers in breaking into new markets and tearing down ancient barriers to commerce and cooperation. As advances in technology and transportation shrink our world, the international trade of goods and ideas becomes more and more vital to our economy.
In May 2006, the Commerce Department's Office of Export Assistance organized a very timely and useful program that focused on Asian markets beyond China. Oregonians who pay attention to trade realize the importance of China as a market for goods and services from the Pacific Northwest, but we also have a long and robust history of trade relations elsewhere in Pacific Rim Asia. As a result of this, I have led the Senate's effort to normalize our trade relations with Vietnam and increase trade with the least developed countries in the Asia-
Pacific region.
As a businessman, I have seen how trade can raise standards of living both in America and around the world. International commerce creates new growth opportunities for our manufacturers and agricultural producers, and WTO membership for Vietnam will help ensure that everyone's playing by the same rules. It will also mean that Oregon farmers, ranchers, manufacturers, and service providers will enjoy greater access to a market of more than 83 million new customers.
During the Commerce Department's conference, Deputy Assistant USTR Jeri Jensen provided a very insightful keynote address, which, without objection, I would like to have printed in the Record. I believe this speech is worth examination by my colleagues interested in trade policy and export markets for U.S. goods and services.
Mr. President, I ask unanimous consent that the speech be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
Expanding Trade With the Pacific Rim
(Remarks of Jeri Jensen)
Want to thank the Portland USEAC and Scott Goddin in particular. Before coming to USTR, I spent about 20 years at the Commerce Department, working trade promotion and policy issues. I've known Scott most of that time, and can say without a doubt how lucky Portland is to have him.
Also want to thank companies that are here today, for their interest in the region and their support for our trade agenda more broadly. Companies like Intel, Nike, Tektronix, HP, Infocus and Colombia Sportswear are the reason why we work as hard as we do at USTR to increase our footprint in the Asia Pacific region. We look forward to your support next year when we seek Congressional approval for our trade agenda.
What I want to accomplish today is for you to come away with the clear sense that there really is no other region in the world now where we are more economically engaged than the Asia Pacific. We have a vision to continue to get you in on the ground floor of these economies, which you all know are the fastest growing economies in the world.
This is good news to Oregon, because you all are the seventh largest state exporter to Asia, (Washington is third--but Scott assures me that its only forty planes and some Microsoft software that separates Oregon from Washington when it comes to trade with the Asia Pacific).
Exports from your state to Asia have averaged about $5 and a half billion over the last 5 years, and as most of you know, have been concentrated in the high tech sector and agriculture. Eight of your top twelve trading partners, or more than 60 percent of Oregon's trade, is with countries in the Asia-Pacific region.
This tracks with the overall significance of U.S. trade with Asia. Asia accounts for one-third of total U.S. trade--up almost 70 percent over the past 10 years. U.S. investment, also has more than tripled in the region over same period.
As we can see from the number of companies in the room, few major U.S. companies do not have an Asia strategy, and many have chosen some of our FTA partners like Malaysia and Singapore as hubs for their regional supply chains.
What I want to do today is give you a snapshot of where we are with our trade policy efforts in the region, but before I do, let me provide some context and say a word about some of the recent economic dynamics in the region.
First, it wasn't that long ago when our trade policy was all about our rising trade deficit with Japan. Now, the challenge and opportunity is dealing with the commercial and strategic influence of China.
Second, along with China's new economic might, we've seen unprecedented economic growth and political reform in the rest of Asia. And, we are now the largest or second largest trading partner of most of these fast-growing economies.
Third, most of the countries in the region are developing unique visions of how they intend to compete and integrate their economies into the global trading system. Some want to move quickly, some more slowly.
Fourth, we are well aware of the fact that we are not the only country that is thinking strategically about this region. Virtually every country in Southeast Asia has or is negotiating an FTA or regional agreement. There are now about 14 trade agreements in SE Asia. China has 3 now and is negotiating 17 more. ASEAN has an FTA with China and is negotiating FTAs with Korea and now the EU.
None of them are as comprehensive and deep as those the U.S. negotiates. But they clearly affect the competitive landscape, and China's influence in the region.
So the question we try to answer every day is how to deepen our economic ties with each of these countries in a way that supports their unique efforts toward economic and political reform, and yet recognizes the commercial and strategic significance of the region, and the fact that our competitors are not standing still?
We are answering that question, as Ambassador Portman has said, by walking and chewing gum at the same time.
We are working to build relationships regionally in APEC and ASEAN. Indeed, we are all going to the APEC Trade Ministerial next week, and we are in the midst of negotiating a Trade and Investment Framework Agreement with ASEAN.
But most of our efforts are focused on an aggressive bilateral agenda. We believe this approach will accomplish the most, in light of our Congressional requirements, the different levels of development in the region, and the needs of U.S. companies for genuine market access that goes beyond just tariff reductions to include non-tariff measures like IPR, remedies for investment disputes, trade facilitation, transparency, and other barriers that plague many of the markets in SE Asia.
This approach is working for U.S. companies. We are increasing our exports and are opening the markets that matter most to our exporters.
If you were to take all of our current FTA partners, while they may represent only 14 percent of the world economy, they buy about 50 percent of U.S. goods exports and are about the size of our third largest market.
And if you look at the exports of our FTA partners, they are growing at a clip of about twice as fast as our exports to the rest of the world.
We have five FTAs in the Asia-Pacific region which we have recently negotiated or are about to negotiate. When all five are complete, Oregon companies will have better access to a
$2 trillion market, and the sixth largest market worldwide.
Our agreement with Singapore in 2003 was one of the first FTAs President Bush announced under Trade Promotion Authority and the first FTA between the U.S. and an Asian country.
Since we implemented the agreement, U.S. exports have increased almost 25 percent and our trade surplus with Singapore has tripled. Most of those increases have come in sectors where Oregon companies are globally competitive, like info technology equipment and chemicals.
Singapore, by the way, at our urging, has developed one of the strongest intellectual property rights regimes in Asia. Over the last 2 years they have even gone beyond their FTA commitments, amending their laws in all IPR areas.
Based on those amendments, just last month Singapore's courts imposed its first fine (of about $20,000) on a copyright-infringing design firm after police discovered illegal installations of Microsoft, Adobe, and Autodesk software.
Our FTA with Australia was completed 1 year after Singapore's. We have referred to it as ``the manufacturing FTA'' because 99 percent of our manufactured goods exports gained immediate duty free access. All U.S. agricultural exports received immediate duty-free treatment as well.
One year later we can already see the benefits. U.S. exports are already up 10 percent; U.S. agriculture exports are at record levels, and when the data comes in we expect to see gains in services as well.
Let me turn to our ongoing FTA negotiations in the region. First, regarding Thailand, we have had six rounds of FTA negotiations, and have made progress in a number of areas.
However as many of you know, this February the Thais called for snap elections in April. Since then, the Thai government has had no mandate to negotiate and our negotiations have been on hold.
Two weeks ago, the Thai courts invalidated the results of the April elections and new elections will now be held, probably this Fall. Once a new government is in place, we will determine, in consultation with the Thai government, where we go from there.
But our negotiations with Malaysia are poised to begin in three weeks in Penang. This agreement holds particular promise for Oregon companies because you are the third largest exporter to Malaysia, beating out Washington who comes in at a mere 12th.
Few people realize we export more to Malaysia than we do to India, Russia, Chile, Singapore, Brazil or Thailand. Malaysia is our tenth largest trading partner, with $44 billion in two-way trade, and a consistently strong growth rate averaging about 5 percent for the last decade.
Two-thirds of our trade with Malaysia is in electronics and high-tech products, and is tied to a number of U.S. company supply chains, which may explain Oregon's interest. Financial services and autos, where entry barriers are high, will also likely benefit from an FTA.
We will also begin our negotiations with Korea next month. This will be a huge opportunity for U.S. companies, as the most commercially significant bilateral free trade agreement launched by the U.S. since NAFTA 15 years ago.
Korea is the third largest market in Asia, after China and Japan, and the world's tenth largest economy. Like Malaysia, it has consistently high growth of about 5 percent a year over the last 10 years. It is a high-income economy with per capita income about
$20,000/year.
And it is a major world trader--the world's seventh largest goods and services exporter. We are already Korea's second largest trading partner.
But we are under no illusions about the challenge ahead. As with Malaysia, we have about a year to complete the agreement, which will be no small feat in light of the size of the Korean economy and the number of non-tariff measures unique to Korea. But because of the extensive preparatory work that was done and the political commitment on both sides, we believe it is achievable.
We also have an active bilateral agenda that's distinct from our FTA negotiations.
At about the same time we were concluding the Singapore FTA, President Bush announced the Enterprise for ASEAN Initiative in 2002. This is really the strategic framework for our trade relationship with the ASEAN countries.
It's a vision for a network of FTAs with those ASEAN economies that have demonstrated an ability to resolve bilateral trade issues, build strong support in the U.S. business community and in the Congress, and are ready to meet our comprehensive FTA commitments.
TIFAs--Trade and Investment Framework Agreements--are really just a fancy acronym for an ongoing trade dialogue. TIFAs are one of many possible bilateral vehicles that can work to take a trade relationship to the next level.
The point is that we are broadening and deepening our trade relationships throughout the region, and the shape that takes for each country depends on each country. Indeed, precisely because the region is so dynamic, there is no ``one size fits all'' for trade agreements here.
We have TIFAs with 7 countries in Asia.
Our TIFA discussions with the Philippines and Indonesia are great examples of the breadth of issues that can be covered.
The Philippines have lifted its ban on U.S. beef, opened its market to U.S. poultry and modified their decision to increase auto tariffs. There have also been major accomplishments on IPR, including stronger legislation and increased coordination among IP agencies.
Indonesia's Trade Minister Pangestu was just in town in March for TIFA discussions. She and Ambassador Portman announced a customs cooperation agreement and an MOU on textiles. They also announced their intention to negotiate a bilateral investment treaty and the first agreement ever on illegal logging and illegal trade in endangered species.
As a major exporter of forest products that compete with illegal logs, this should be of interest to Oregon. We hope the agreement will be a model for other countries who have an interest in protecting their land and sensitive habitats from illegal logging, while making sure they have access to legally produced timber.
We are particularly excited about the agreement in principal we reached with Vietnam May 14 on bilateral market access that will pave the way for Vietnam to enter the WTO.
This is a major accomplishment, considering that it wasn't that long ago--just a little more than a decade--that France was Vietnam's major trading partner and Vietnam was a state-controlled economy.
Now the U.S. is Vietnam's major partner and it's clear Vietnam recognizes its future is tied to the global economy, through broad-based economic reform.
You can see this in the stats: its growth rate last year alone was 8.4 percent, the fastest in Southeast Asia. Its imports have grown dramatically. Last year our exports to Vietnam were up 24 percent. Two-way trade with the U.S. has grown to more than $8 billion, which is an increase of more than 400 percent since 2001.
Our bilateral agreement will result in real market access for U.S. companies when Vietnam accedes to the WTO.
About 94% of Vietnam's imports from the United States will face duties of less than 15%. Major U.S. exports like construction equipment, pharmaceuticals and aircraft will face duties of less than 5%.
Vietnam will join the Information Technology Agreement, implement low duties on nearly all medical equipment and to harmonize its chemicals tariffs.
About three-fourths of U.S. agricultural exports to Vietnam will face duties of less than 15%. And, Vietnam will open up telecom, distribution, financial, insurance and energy services to foreign participation.
The next step is for Congress to grant Vietnam Permanent Normal Trade Relations (PNTR), so that U.S. companies can take advantage of all of the benefits I've just described. We believe there is bipartisan support for PNTR, and are consulting with the Hill to highlight the benefits of the agreement.
Last but certainly not least, let me say a few words about Japan and China.
Japan of course is our 4th largest trading partner. And the question that is always posed is why aren't we negotiating an FTA with Japan? And the answer is, as with all of our FTAs, we always seek a fully comprehensive agreement that covers all industry sectors, including agriculture. And the reality is that Japan is not yet interested in negotiating this kind of fully comprehensive agreement.
That said, Japan certainly is one of our most important trade relationships. We already have an advanced approach to working with Japan, under our Joint Economic Partnership for Growth, which includes work across a number of important areas--including regulatory reform, financial services, express delivery and investment.
And we are looking at new ways to integrate our markets more, particularly in the area of IPR, both through APEC and bilaterally.
And then there is China. Thirty years ago China accounted for less than one percent of the world's economy. Today, it is four percent of global economic activity, with almost $1 trillion in foreign trade annually, one third of which is with the U.S.
It is one of the world's fastest growing economies, with almost 10 percent growth in 2005, the third largest economy in the world in terms of purchasing power, and our second largest trading partner.
What is often overlooked in our relationship with China is the opportunity--the fact that it is our fastest growing export market and that U.S. companies are doing quite well there.
Exports to China have increased at a clip of about 20 percent a year for the past five years. What's even more impressive is that in the first 3 months of this year we almost doubled that rate, with our exports increasing 39%, 2 times faster than our exports to Japan and more than double the growth rate of U.S. imports from China during the same period.
And, China is not a market just for large, sophisticated companies. The number of small and medium-sized enterprises
(SMEs) exporting to China rose faster than to any other major market in the last ten years, with the total number of firms exporting to China quadrupling.
But as with any complex relationship, there are challenges. In February, USTR unveiled a top-to-bottom review which concluded that, while the U.S. has clearly derived substantial benefits from U.S.-China trade, the relationship has not been sufficiently balanced.
We are entering a new phase in our relationship with China. We are treating it as a mature trading partner and drawing upon the full set of tools available to us to make sure China complies with its commitments.
You may have noticed that we were just joined by Canada and the EU in bringing a case to the WTO over China's unfair barriers to imported auto parts. Of particular concern has been its WTO commitment to enforce intellectual property rights.
We've had two recent opportunities to strengthen this relationship. The Joint Commission on Commerce and Trade, or JCCT, chaired by the Secretary of Commerce and the USTR, met in April as it does each year to discuss our bilateral trade agenda. And then there was President Hu's visit to see President Bush ten days later.
At the JCCT, the Chinese made a number of commitments to strengthen their enforcement of intellectual property, resume trade in U.S. beef, improve access to China's telecom market, sign the WTO government procurement code and take steps on transparency and export controls.
During his remarks on the South lawn, (just before the Falun Gong protester made her remarks, President Hu reiterated the key commitments China made during the JCCT, such as boosting domestic demand and increasing imports, improving market access and strengthening intellectual property protection.
And President Bush impressed upon Vice Premier Wu Yi that the value of these commitments was in the follow-through. We are currently working with our Chinese counterparts to turn these commitments into reality.
So we believe our relationship with China is on track.
To sum up, there are really just three points.
First, the transformation of the Asia-Pacific region from a center of low-cost manufacturing to what has become the growth engine for the world economy has been truly remarkable;
Second, we ``get'' at USTR that for Oregon's companies--and all U.S. companies--to stay innovative and globally competitive, they have to be integrated into the fabric of the Asia-Pacific;
And third, we have a strategy to do just that, one that contemplates the economic diversity of the region and employs a variety of tools matched to the potential, capacity and willingness of our trading partners.
Thank you.
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