Thank you for that kind introduction. It’s great to be here in the Silicon Valley, the nerve center for so much of what’s new, innovative and entrepreneurial in our economy. Tonight I’d like to talk to you about our economy—what’s driving it and how we can ensure America’s continued leadership in the 21st century.
As financial executives I know numbers are your bread and butter. As a former CEO and now at the Commerce Department, I too like to look at the numbers.
Recent Gross Domestic Product (GDP) reports show that, as predicted, first quarter growth was slow—0.6 percent to be precise. And, while our unemployment rate fell to 5.0 percent in April, 20,000 American jobs were lost.
Any monthly downtick in jobs is disappointing, but we are expecting a challenging first half and the losses were better than forecast. The numbers underscore that while our economic fundamentals are sound, we must continue to strengthen our economy.
With quick action by the President and bipartisan economic stimulus legislation earlier this year, we are addressing the immediate and long term needs of our economy. Americans have started to receive their tax rebates and businesses are already taking advantage of the incentives.
The stimulus plan will inject more than $150 billion, or one percent of GDP, into the economy by putting money back in the hands of workers. It is expected to help create over a half million jobs by the end of this year.
We must continue to address the challenges in the short-term, but in the long term we must implement policies to ensure sound economic fundamentals.
One of the most significant policies we can and must immediately pursue is open markets. Open markets create opportunities to grow U.S. exports and contribute to our economy. Again, the numbers tell the story. The Bush Administration has implemented free trade agreements with 11 countries since 2001, and as a result, U.S. exports have hit record numbers.
We are the world’s No. 1 exporter, with more than $1.6 trillion in goods and services exported in 2007. Trade is playing an increasingly significant role in our economy, with exports accounting for 12 percent of GDP last year. And exports this year have kept our economy in the black.
To continue our record export growth, America must maintain its posture as a leader in the global economy, committed to breaking down economic barriers and engaging with countries around the world.
We must pass pending free trade agreements (FTAs) with countries in our own hemisphere, such as Colombia and Panama—and with South Korea, a country in an increasingly competitive Asia.
These three Pacific Rim countries are vital to California. Last year alone, Californians exported $320 million to Colombia, $259 million to Panama, and $7.4 billion to Korea. With trade supporting an estimated one million jobs in this state—Californians should understand the importance of these FTAs.
Colombia—is critical, and unfortunately this agreement is being held up in Congress—this agreement deserves a vote by Congress now.
It’s no secret America’s continued preeminence in the global economy is not guaranteed—in fact our position is being challenged. That’s why it is more important than ever that we further engage with the world—not retreat from it.
And we must encourage an environment for innovation. President Bush is committed to helping keep America on the cutting edge.
His American Competitiveness Initiative (ACI) includes a 10-year effort to double funding for innovation-enabling federal research—an area in which we have been lagging behind.
Nanotechnology is just one example of a field where basic field research is essential. Advances in manipulating matter on the tiniest of scales is spurring business creation around the world, showing tremendous potential for new health benefits, economic growth and productivity.
Unfortunately, Congress has not met the President’s requests for funding the basic research that supports these advances. I cannot emphasize enough the importance of the ACI. Maintaining America’s technology leadership requires a commitment to basic science. The President has made this commitment, and it’s essential that Congress fulfill it.
One of our nation’s greatest economic advantages is our encouragement and defense of intellectual property.
In virtually every bilateral meeting I have with nations around the world ranging from China, Japan and Mexico, we emphasize the importance of protecting intellectual property. Tomorrow I will be heading to Beijing, and as always, intellectual property as at the top of our agenda.
Yet, while we work with our neighbors around the globe, we must also ensure that our intellectual property system at home remains the envy of the world.
As you well know, the development of intellectual property primarily takes place in the private sector. Promoting an environment where innovative ideas can grow and inventors’ rights are protected is a critical function of government and of the Department of Commerce’s Patent and Trademark Office in particular.
Innovation is a proven driver of growth for the U.S. economy, and it is critical to our leadership at home and abroad. Technological advances have given us an edge in business and have made a difference in our everyday lives, making us safer, healthier and more productive.
IP is a key element in our nation’s economic expansion and has helped make American workers the most productive in the world. IP industries represent 40 percent of U.S. economic growth and employ 18 million Americans in good, high-paying jobs, not just in places like Silicon Valley, but around the country.
We must do all we can to encourage great ideas wherever they are found. One way the government can do that is through providing a systematic way for intellectual property to be recognized and registered—a critical function of the Patent and Trademark Office (PTO) for more than 200 years.
We now have the opportunity to bring these laws into the 21st century through meaningful patent reform.
Talks recently broke down in the U.S. Senate on the first serious effort in 50 years to systematically improve our innovation pipeline, in large part because of an inability to reach agreement on how patent holders should be compensated in cases of infringement.
We can do better than this. I believe there is a way forward to pass legislation that improves our patent system—already the envy of the world—and addresses many of the concerns raised by patent holders and industries.
How can we do this? By crafting a bill that focuses on the areas where there is broad agreement on the need for reform. I believe we can achieve legislation that isn’t perfect, but represents a significant step forward for our patent system.
I think we can agree that it is a significant improvement to give judges the authority to direct juries to consider certain factors in awarding damages for infringement.
I think we can agree that we need a cost effective alternative to litigation that provides an opportunity for patent holders and patent challengers to address legitimate issues in front of experts at the PTO.
Such a “post grant” review should also protect the rights of patent holders from frivolous harassment, but I believe the Senate can devise accomplishes these goals.
The Senate bill also requires higher quality patent applications at the front end of the process—a key reform that will help us process applications faster and reduce the backlog in our innovation pipeline. Add to this reforms that establish appropriate penalties for misrepresenting information before the patent office and I believe we would have the makings of a good bill.
Of course, this doesn’t meet the definition of a perfect patent bill. But I believe such an agreement would represent a significant improvement—and we all know the importance of not letting the perfect be the enemy of the good.
So my question is: can we let go of the perfect and accept a bill that’s good? If we can answer “yes” to that question, then I think we can pass a good bill that improves our patent system. The challenge will be mustering the will to forge a compromise and get it to the President’s desk. The Administration stands ready to help move a good piece of legislation forward, and I urge the Senate to get this done.
Let me close with this: No discussion of America’s future economic competitiveness is complete without discussing immigration. I know that many of you, like me, weren’t born in this country. But our families came here for liberty, for freedom and for opportunity. And we have contributed this country.
The debate our nation has been waging over immigration is vitally important. But only a comprehensive system that addresses security and prosperity will be effective. Our country has a long history of making immigration work—we must not let that advantage fade in the 21st century.
It is worth noting that companies like Google, Dell, Cisco and eBay didn’t exist 30 years ago. But they were founded in America—a place where creativity and initiative are encouraged and rewarded.
It is a sign of progress that many of the countries competing against us today were not even participants in the global economy 20 years ago. To keep pace in the rapidly changing world we helped create, we must continue to break down barriers to trade, encourage and protect innovation and be open to new people and new ideas.
In the end, I believe we will succeed in the future because of our fundamental strengths, which are our freedom and our openness.
So thank you for the invitation to be with you this evening. Thank you for your efforts to keep America’s economic engine humming. The Silicon Valley is an important region for our country and our economy—your hard work will ensure America’s global leadership position.
Source: U.S. Department of Commerce
