Today, U.S. Deputy Secretary of Commerce Bruce Andrews delivered the keynote remarks at a luncheon hosted by the Center for Strategic and International Studies (CSIS) and the Japan External Trade Organization (JETRO). This luncheon builds upon the United States and Japan’s shared commitments for security, democracy and mutual economic benefit with the recent signing of a Memorandum of Intent.
In his remarks, Deputy Secretary Andrews highlighted the commercial relationship between Japan and the United States and underscored commitment to economic engagement in Asian-Pacific region through the ASEAN Economic Community. Japan is a critical ally in the passage and enactment of the Trans-Pacific Partnership (TPP), which emphasizes priorities shared by countries including high standards on labor, the environment and public health.
Remarks as Prepared for Delivery Thank you, Dr. Green, for that kind introduction. I am pleased to be here today with the Center for Strategic and International Studies and JETRO – an organization that we at the Commerce Department have had a long and productive relationship with for many years. I want to thank you, Mike, as well as Ishige-san, for all the work you put into hosting this 11th iteration of the CSIS-JETRO Forum.
Fifty-six years ago this Sunday, Japan recognized the Treaty of Mutual Cooperation and Security. President Eisenhower said the treaty would “establish an indestructible partnership” between the United States and Japan. More than a half-century later, those principles remain the foundation of the modern U.S.-Japan alliance. It is a relationship built on our common commitments to security, democracy, and mutual economic benefit.
Today, the commercial ties between the U.S. and Japan are at the core of our dynamic partnership. Japan is the United States’ fourth largest trading partner. There is no greater evidence of our strong commercial ties than the fact that for most Americans, Japanese brands – like Sony, like Toshiba, like Honda – are household names. Japanese and American firms have together created some of the world’s most iconic technologies.
Japanese companies today employ tens of thousands of workers in the United States and invest billions of dollars in our economy. In fact, Japanese-sourced FDI in the United States rose in value to over $374 billion in 2014. That is why we were pleased to have SelectUSA and JETRO sign a new Memorandum of Intent to bolster our two-way investment cooperation. Next week during our third-annual SelectUSA Summit, thousands of investors from Japan and around the world will meet in Washington to explore new investment opportunities here in the U.S. and take advantage of our great business climate.
Yet I want to spend the majority of my time today discussing what lies ahead. In particular, I want to note the challenges we face and the strong, decisive action we are taking along with our Japanese colleagues to shape the future we hold so dear. We live in a world where new powers are rising, new markets are emerging, and new technologies are changing how we do business. In an interconnected world, where both the United States and Japan have so much at stake, together our partnership allows us to successfully address these challenges. As two of the world’s most advanced and innovative economies, our leadership in the global economy has never been more essential.
But let’s be clear: we have work to do. We must reinforce the economic architecture that has facilitated the success of our two economies and kept the world relatively safe for the last seven decades. Failure to do so risks losing the ability to shape our economic futures. This is not an overstatement – it is just the truth.
Fortunately, we have moved decisively to ensure our nations remain at the forefront of the global economy by further integrating our economies. Late last year, the formation of the ASEAN Economic Community represented a major step in the right direction. President Obama signaled his commitment to greater economic integration by hosting the U.S.-ASEAN Summit in the United States for the first time this past February.
My colleague, Secretary Pritzker, welcomed leaders from all ten member countries to Sunnylands, California for the Summit. Our message was clear: The United States is devoted to economic engagement in Southeast Asia, one of the fastest growing regions and dynamic economies in the world. ASEAN is home to 632 million consumers and a collective economy of more than $2.4 trillion dollars. Two-way trade of goods and services reached $254 billion in 2014. To put that in perspective, that’s a 55 percent increase since 2009.
Our trade and investment relationship with ASEAN supports more than 500,000 jobs right here in the United States. Following the summit, we were pleased to launch U.S.-ASEAN Connect, a new strategy to increase business to business collaboration between our countries. Three “Connect Centers” in Jakarta, Singapore, and Bangkok will expand access to U.S. business information and insights. We also recommitted to better aligning our product standards. Incompatible standards raise the cost of doing business and add complications that make it difficult to sell in different markets.
At the Department of Commerce, we are leading efforts to improve compatibility between U.S. and ASEAN products – from medical technology to chemicals to electronics – by bringing our standards into greater alignment. Our efforts to create compatible standards will allow for greater collaboration between businesses and entrepreneurs across Southeast Asia and the United States.
Of course, at the top of our Administration’s trade agenda remains the passage and enactment of the Trans-Pacific Partnership – of which Japan remains a critical ally. President Obama has made greater engagement with the Asia Pacific a cornerstone of his foreign policy. TPP is at the center of that effort. Both the United States and Japan played leading roles in negotiating TPP. And Prime Minister Abe’s bold leadership was vital to securing the high-standards present in the agreement. Put simply: TPP will be a game-changer not only for the U.S.-Japan trade partnership, but for the entire region. Through TPP, we will combat corruption and strengthen the rule of law, improve enforcement of intellectual property rights, and improve working conditions in TPP countries through binding and enforceable obligations.
Both the United States and Japan will benefit from this agreement. For the United States, the agreement eliminates 18,000 tariffs – many on day one. And for the first time, it establishes the rules of the road for our rapidly-developing digital economy by supporting cross-border data flows and preventing harmful data localization policies. TPP facilitates the export of our goods and services; and it spreads our common values. The agreement is a huge leap forward for high standards on labor, the environment, public health, and many other priorities shared by the American and Japanese people. This is especially important at a time when not everyone in the region shares our commitment to high standards trade agreements.
TPP is especially critical for small and medium enterprises (SMEs) looking to compete in today’s global economy. In both the United States and Japan, SMEs are a powerful force behind U.S. exports and a powerful engine for job growth. From 2009 to 2013, SME exports grew by over 52 percent – a rate more than five percent higher than large company exports. But far too often, high tariffs hold back businesses from exporting our goods and services to customers who want them.
Take our agriculture industry, for instance. In 2014, Japan imported over $13 billion in U.S. agricultural products. With a population nearly 128 million and an affinity for U.S. products, Japan is an ideal market for U.S. agricultural exporters. But Japan’s average agricultural tariff is 14% -- nearly three times higher than tariffs on the same products coming into the United States.
It’s clear that we can do better. TPP will eliminate most agricultural tariffs in Japan, opening the market to new trade and investment opportunities. This is good for our two economies and for our consumers, who clamor for new products at more affordable prices.
Still, we hear the voices of skepticism about trade. I want to address that clearly, which is something we all must do if we are to change the perceptions around trade. Much of what they say is based what has happened with trade agreements in the past. We must focus on the future. Yes, globalization is creating more competition for our companies. Yes, digitization is changing how we work. Yet these forces will continue to transform the world whether we embrace new trade agreements or reject them. The reality is that high standards trade agreements are not responsible for these forces.
Strong trade agreements like TPP are how we shape these forces to match our mutual economic strengths. TPP will advance our commercial interests, support greater trade and investment, and ultimately, promote shared prosperity for the people of the United States and Japan.
The middle class in the Asia Pacific region is set to reach 3.2 billion people over the next 20 years. That’s nearly nine times larger than the entire U.S. population. The region is looking to us for leadership. The passage of TPP will demonstrate the strength of our partnership and the commitment of the United States to greater engagement in the Asia Pacific and the world. So let’s pass the Trans-Pacific Partnership and set the gold standard for trade in the Asia Pacific and around the world. Let’s strengthen the legacy of U.S.-Japan economic cooperation and stay true to our shared values. Together, let’s usher in the 21st century phase of our “indestructible partnership.” Thank you.
Source: U.S. Department of Commerce
