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Remarks at American Chamber of Commerce Singapore

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Friday, November 13, 2009

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Secretary of Commerce Gary Locke
Remarks at American Chamber of Commerce Singapore
Singapore

Thank you. It’s great to be here.

AmCham Singapore is not only one of the largest American chambers outside of the United States, it is also one of the most influential.

I had the pleasure of meeting some of your members last June when they participated in the Washington Doorknock.

We talked about expanding trade liberalization in Asia and increasing market access for U.S. companies—which I said was a top priority for the Commerce Department and the Obama administration.

I am happy to be here today to relay a similar message.

This is actually my third trip to Asia since becoming Secretary of Commerce in March.

I was in China in July with Energy Secretary Chu, and again last month for a productive meeting of the Joint Commission on Commerce and Trade.

I am in Singapore this week to support President Obama’s first trip to the Asia-Pacific Economic Cooperation meetings. His trip has been delayed by 24 hours. Therefore he will not be addressing the APEC CEO Summit tomorrow, but United States Trade Representative Ron Kirk will replace him.

APEC is home to 2.7 billion people. And APEC economies contribute 53 percent of world GDP and 46 percent of global trade.

This represents enormous market potential. And it’s an opportunity American companies have to capitalize on if we’re going to help the U.S. economy get back on its feet.

Exports are already a growing and substantial part of the U.S. economy.

They account for almost 13 percent of our GDP, nearly three times as high as in the 1950s. Importantly, they support millions of American jobs.

But with 95 percent of the world’s consumers outside U.S. borders, the Obama administration understands these numbers must grow.

At the Commerce Department, I have identified five key strategies to help achieve that goal in the months and years ahead.

The first element of my agenda is to ramp up the Department of Commerce’s trade promotion activities across the globe.

Today, less than one percent of America’s 30 million companies export—a percentage that is significantly lower than all other developed countries.

And of U.S. companies that do export, 58 percent export to only one country.

We can do a lot better.

And Commerce has a lot of resources to help. We have trade promotion offices staffed with some 1,500 people in 77 countries around the world.

We have a talented corps of commercial services officers based out of our embassies who go out into foreign communities to line up new business meetings for U.S. companies.

But in previous years, we have not put the resources and focus necessary to support these talented professionals. That's going to change under my leadership. I believe strongly we can get more U.S. companies engaged with our commercial service corps.

As we seek to open up markets for U.S. companies abroad, we must also acknowledge that we have room to improve when it comes to increasing the secure flow of goods, services and people across our own borders.

And a big part of that effort is reforming our export control system—which governs trade in defense and military items, as well as dual-use products that are designed for civilian purposes but often have military applications.

America’s current export control system was designed in the 1950s to prevent sensitive technologies from falling into the hands of adversarial nations that were relatively easy to identify.

But our export control system has not kept up in a world where economies are far larger and more integrated, and nations’ economic and security interests are more nuanced.

Our current system often prevents U.S. companies from selling products abroad that are readily available from companies in allied nations.

And our control rules are so onerous that some foreign businesses are now engineering U.S. components out of their products altogether.

Let me read you a troubling quote from Charles Edelstenne, the president of the Aerospace and Defense Industries Association of Europe, which serves as a trade group for companies ranging from Airbus to BAE Systems. He said:

The only way to resolve technology access and U.S. Government export restrictions is by "not including any U.S.-sourced technology in our products."

It has reached a point where the undeniable appeal of U.S. technology is often outweighed by the time and effort foreign companies must endure to obtain it.

And these troubling conclusions are shared by many.

Earlier this year Brent Scowcroft, former National Security Adviser to President George H.W. Bush, co-chaired a distinguished panel at the National Academy of Sciences to look into this issue, and they flatly declared:

“The national security controls on science and technology are broken.”

And with most military production in the United States now based in the private sector, the need for reform takes on an added urgency.

Here’s why: When we needlessly restrict U.S. companies from selling items abroad that are readily available from companies in allied nations, we make them less profitable. That leaves fewer resources to develop the new technologies our military depends on for battlefield success.

Another inescapable conclusion to be drawn from the Scowcroft report is that as the sphere of innovation expands to countries in Asia and Europe, there will be new opportunities for commercial cooperation. Cutting American companies off from that cooperation will discourage innovation and job creation here at home.

This is why in August, President Obama called for a broad-based interagency review of the U.S. export controls system.

In the meantime, I have asked the Commerce Department's Bureau of Industry and Security—which has jurisdiction over dual use export controls—to immediately explore pursuing two reforms:

  • One: Eliminating dual-use export license requirements for allies and partner nations; and
  • Two: Implementing a fast-track procedure for the review of dual-use export licenses for other countries that do not pose a significant proliferation concern.

These two reforms could affect more than half of the 20,000 licenses Commerce issues each year. But our reform efforts should not stop there.

In short, we need to reallocate resources to focus more targeted controls on highly sensitive item—and to reduce controls elsewhere where they serve no useful security purpose and make no sense.

These reforms could have an immediate and positive impact for American economic competitiveness while strengthening U.S. national security.

Yet another area where red tape is challenging American businesses is our business visa system.

The United States often makes it too difficult for foreign company executives to enter the U.S. to do business—a shortcoming that has had a tangible cost for American businesses by shutting out some of their best customers.

Just last year, for example, Boeing had to significantly delay the delivery of a $250 million freighter because an inspector from the Chinese aviation authority didn't receive his visa on time.

That’s not an isolated incident. Our business visa system just isn’t agile enough for today's economy.

Historically, processing for these types of visas could be done in a matter of weeks but recently the time has stretched to as much as four months in some cases.

The U.S. government has already made some tentative progress on improving the situation, but I have also created a departmental task force that will keep national security paramount while working to further improve the business visa process.

Of course, Commerce is not just concerned with helping American companies get their products into foreign markets.

Once they get there, we want to ensure they receive the same rigorous intellectual property protections that they would at home.

Despite America's remarkable dependence on innovation for future growth, the current system for protecting U.S. intellectual property—both domestically and internationally—is fraying at the seams.

Every year, American companies in fields as diverse as energy, technology, entertainment and pharmaceuticals lose between $200-$250 billion to counterfeiting and piracy.

That is simply unacceptable.

There are a series of steps the Commerce Department can and will take to improve America’s IP regime, from reforming the U.S. patent office to helping shape upcoming congressional intellectual property legislation.

But fundamentally, our efforts need to begin with better enforcement.

We must ensure that U.S. stakeholders reap the full benefits of trade agreements, and that our exporters know that we will protect their interests.

Commerce’s Trade Agreements Compliance Program plays an important role in this monitoring and enforcement work.

There is one final step that must be taken in order to increase the amount of goods and services that America sends to foreign markets: We need to use every lever of the U.S. government to promote our exports.

A few weeks ago, I chaired the first Trade Promotion Coordinating Committee (TPCC) meeting of the Obama administration—which brought together 20 federal agencies and departments to develop a government-wide strategy for expanding trade and promoting American exports.

It was a very productive meeting, and we established working groups on several critical issues including:

  • Increasing exports for small and medium-size businesses;
  • Expanding access to emerging markets;
  • Capitalizing on promising new industries like clean energy; and,
  • Improving our advocacy abroad to make sure our companies aren't subjected to unfair competitive practices.

We will be meeting frequently in the months ahead to make sure we are making concrete progress in all of these areas.

The trade priorities I’ve discussed today—business visa and export controls reform, intellectual property protection, intergovernmental cooperation and trade promotion—will help U.S. companies increase exports to APEC economies, while setting the country on a path to long-term, sustainable growth that creates jobs at home.

And these priorities will help rebuild the consensus in America that trade can promote widespread prosperity for our people.

That is important.

In these difficult economic times, there are voices at home and abroad joining a chorus of protectionism.

History has already rendered its verdict on the utility of turning inward and closing off markets.

It doesn’t work, and it reduces living standards for us all.

This administration is committed to pursuing an open and transparent global trade system that promotes balanced and inclusive global growth.

With the federal government fully engaged in promoting American exports and trade—and working side by side with AmChams worldwide—I am confident that our businesses will be able to capitalize on emerging opportunities across the globe.

Thank you for having me, and again congratulations on your great work to spread prosperity throughout the APEC economies.