Posted at 3:45 PM
Thank you, Terry.
It is wonderful to be here in Los Angeles, a city that is a gateway to the world. And I am very pleased to be here with all of you from the World Affairs Council, an organization with a proud legacy of facilitating meaningful conversation and action around critical global issues.
Many think of me as a Chicago native, but what most don't know is that I actually grew up in California. I came of age here as this state asserted itself, not only domestically but also on the international stage. From trade to financial services to innovation to entertainment and much more, Los Angeles has helped shape how our nation’s culture and our values are perceived abroad.
Today, it seems fitting for me to be back in California – now as Secretary of Commerce – to start a national conversation on the need for greater global fluency in America’s business communities. What that means is helping America’s companies take full advantage of the opportunities to do business all over the world.
At the Department of Commerce, we just launched a new strategic vision – we call it our “Open for Business Agenda.” We are prioritizing trade and investment as the first pillar of this agenda. And that is what I am here to talk about today, because of the critical importance that trade and investment play in the nation and this region in particular.
Los Angeles is one of America’s top three export hubs. And a headline from The LA Times just yesterday reported that California exports have jumped to pre-recession levels due to a strong performance in November.
At the national level, exports have jumped by more than $600 billion since 2009 to $2.2 trillion in 2012. It looks like we will hit yet another record for 2013. Also, the Commerce Department announced this week that our trade deficit hit a 4-year low in November.
The President’s National Export Initiative has raised awareness about the fact that 95 percent of the world’s customers are outside our borders. We have worked to train and empower many businesses to become exporters. But let me be clear – Leaders like you are responsible for this progress.
As a result of all of our efforts, U.S. exports have risen to account for roughly 13.5 percent of our GDP.
Yet vast opportunities remain. While our exports are reaching record-high dollar levels, as a percentage of GDP we are not doing as well as any of our 20 free trade agreement partners. And only 40 percent of U.S. companies in tradable sectors are actually exporting.
Simply put, trade and investment must become an even bigger part of the DNA of our economy.
We need more stories like Louroe Electronics. Their CEO, Richard Brent, is here with us today. Louroe is a small manufacturer with about 25 employees, and they make specialized audio equipment and microphones for hospitals, police stations, and university labs.
A few years ago, they were exporting $80,000 in goods per year to Mexico. But Richard knew they could do MUCH more, and he called the Commerce Department’s Export Assistance Center here in Los Angeles.
Our international trade specialists worked with the Louroe team to research the potential demand for their products in Mexico. Then, we identified potential customers in country and set up appointments for Louroe executives to meet with them. As a result, Louroe’s sales to Mexico quickly grew to more than $1 million. In fact, they recently secured financing to expand their business in Central America. Let’s congratulate Richard and his team.
All over Los Angeles and all over this country, we have the potential to foster more success stories like this.
Let me be clear: if you are an American business, the time is now to consider selling your product or service abroad.
With that in mind, here’s what I want to focus on today: First, I want to talk about one region of the world where we can and should be boosting our exports – right now. Second, I want to highlight how the Commerce Department serves as a partner to businesses all over the country as they look to sell their goods and services abroad.
Today, more than half of America’s free trade agreement partners are in Latin America. These 11 economies are fast growing, with diverse industries, young populations – and each has a burgeoning middle class.
These markets are fertile ground for more U.S. exports: Tariffs are low, if they exist at all. Many of these countries are developing high standards in areas such as intellectual property protection, customs procedures, and openness in government procurement. Most importantly: Businesses, governments, and consumers in these countries want the high-quality goods and services that our companies offer. These considerations are vitally important to U.S. firms looking to do business abroad.
Today, we are announcing a new effort led by our International Trade Administration – We call it the “Look South” Initiative. The Look South Initiative will help businesses across the United States explore Latin America’s markets, learn about emerging opportunities, and tap into federal programs that can help companies sell more products into the region, expanding their bottom line.
With 58 percent of U.S. companies exporting to only one market, usually Canada or Mexico, Look South will help companies understand why exporting to more markets is just good business.
While the typical business that sells to just one market generates roughly $375,000 in export sales, companies with 2-4 export markets have average export sales of $1 million dollars: And those who export to 5-9 markets average $3 million in export sales.
The first major event of this initiative will take place next month when Louroe and 17 other businesses will join me and the Department of Commerce team on my very first trade mission – which will take us to Mexico. As you know, the NAFTA agreement is now 20 years old. Over that period, trade with both Mexico and Canada has increased dramatically. And our supply chains along the border have become inextricably linked. Put simply, we make things together – with goods and components crossing our borders often three or four times before a product is finished.
I am very involved in developing the next phase in our relationship with Mexico through efforts like our new High-Level Economic Dialogue, which was launched last fall by Vice President Biden during a trip we took together to Mexico City. The Vice President continues to lead the Administration’s efforts today in this critical work. Clearly, business opportunities are growing in Mexico due to a number of factors: the leadership of their new Administration, liberalization of key sectors such as telecommunications and energy, and Mexico’s relatively young and fast-growing middle class.
Mexico is a great place for any American company to consider as their first international market. And if you are already active in Mexico, we want to help you look even further south.
That is why, in May, Commerce will help lead a delegation of hundreds of U.S. businesses to Trade Winds, a massive trade promotion event. This event will be hosted in Colombia, a country where we have already seen double-digit growth in exports since our new trade agreement went into effect in mid-2012. In Colombia, we will connect our delegation to potential partners and buyers from all of the Look South countries. This endeavor will also make stops in Peru, Chile, and Panama. You can find more information on this initiative at www.export.gov/looksouth.
I encourage you to bookmark that website for another reason: Our experts are taking a fresh look at emerging trends and opportunities for U.S. businesses in Latin America. And they are posting country-specific and sector-specific research on that site.
For example, many of you already know about the vast opportunities available in oil, mining, and infrastructure. But we are also seeing a new set of opportunities in industries such as medical equipment, information technology, safety and security equipment, environmental technologies, franchising, and more. Notably, these are industries where many of our small and medium-sized businesses are very competitive.
One last crucial point on Look South -- We need business leaders like you to partner with us.
We need you to take a second look at your position in these markets – to ensure that you are taking full advantage of free trade. If you are already well established in the region, we need you to look at your partners and business-customers who could follow in your footsteps. In addition, we need your help to reach out to other local groups and chambers whose members might just need a little bit of training in order to break into these markets. I am pleased to say that the U.S. Hispanic Chamber of Commerce and the Association of American Chambers of Commerce in Latin America are stepping up. We would also like to see companies organizing events, conducting outreach, and contributing in their own unique ways. For example, both UPS and FedEx are supporting Look South. Finally, we must work together to cultivate even more advocates to spread the “Look South” message – particularly local and state government officials in border cities and states. If you have additional ideas for how to make this effort a success, please don't hesitate to reach out to Mike Masserman, who’s here with us today and leads our trade promotion efforts.
There are many more steps that we must take to create the conditions for you to compete and succeed on the global stage.
Let me give three examples.
First, we need to push forward with two major trade agreements that will open up vast new opportunities for American businesses.
Right now, we are working to conclude negotiations with 11 other countries, including key Look South markets, on the Trans Pacific Partnership. Here in California, the benefits of TPP will be significant. Nearly half of California’s goods exports – more than $60 billion worth – go to TPP countries. And this agreement should help us sell even more California-made goods and services, and to move them across the Pacific.
At the same time, we are moving forward with talks on a free trade agreement with the European Union – the Transatlantic Trade and Investment Partnership. T-TIP is crucial for lowering both tariff and nontariff barriers to trade.
Together, the TPP and T-TIP will cover more than 60 percent of global GDP. Our businesses need to start preparing – right now – for the unprecedented opportunities that will flow from these two agreements. I am sure that some of you are doing just that. Not only do businesses need to start preparing for these agreements, we also have to provide sufficient training for our workers to succeed in an increasingly global economy.
Once negotiations are complete, all trade agreements must be approved by Congress. The first step in that process is passing Trade Promotion Authority. The fact is every President has had this authority going back several decades. Once Trade Promotion Authority is approved, we are one step closer to opening new markets, ensuring a more level playing field, raising global standards, and supporting more American jobs. I encourage you to make your voice heard on Trade Promotion Authority and these two crucial trade agreements.
Second, we need to support and welcome more foreign direct investment into the United States. This is one of the President’s top priorities, and it is another key way we are working to compete in a global economy.
Los Angeles County is now home to about 4,500 foreign-owned and affiliated businesses. Directly and indirectly, these firms employ about one in ten private sector workers in this region. These businesses are a crucial part of the fabric of the economy here in the Southland.
Today, the United States has never been better positioned to attract foreign investment. More than ever before, global firms are looking to expand in the United States for a number of reasons: our rule of law, our intellectual property protections, our stable financial markets, our universities, our enormous consumer market, low-cost and abundant energy and most importantly, the ingenuity of our people.
The Administration is seizing this opportunity. Through SelectUSA, we are connecting foreign businesses with economic development officials across the country. Our SelectUSA staff are serving as ombudsmen to foreign companies as they navigate the U.S. market so they can make their investments here.
We need your help to foster a broader understanding of the benefits of foreign direct investment. U.S. subsidiaries of multinational firms employ more than 5.6 million U.S. workers, pay an average compensation of $77,600, and account for 20.5 percent of the value of U.S. goods exported in 2011. We are seeing the benefits of foreign direct investment in communities across America. In Spartanburg, South Carolina, BMW has invested roughly billions, and employs 7,000 people in the area. This is a success story worth replicating in every state in our union.
Finally, a third way we can strengthen our competitive edge is by passing comprehensive immigration reform.
We are a nation of immigrants. My own great-grandfather came to the United States from Czarist Russia, dirt poor, at the age of 10. He taught himself English, worked several jobs, earned his law degree at night, and opened his own law practice at age 30. I am sure many of you in this room have similar family stories.
Today, the facts are clear: About 40 percent of the Fortune 500 were started by immigrants or their children. Immigrants start about 28 percent of new businesses in the United States, even though they only account for 13 percent of the population. Here in LA, immigrants account for over one-third of the metro area’s total economic output.
The problem is this: Our current immigration laws do not support a dynamic and competitive, 21st century economy.
The Senate-passed bill will help change that. It will expand the temporary and high-skilled worker programs that our businesses need to grow. It allows us to staple a green card to the degrees of graduate students, instead of forcing potential innovators and job creators to leave after being trained at our universities. In addition, the bill takes common-sense steps to increase the number of international visitors – such as business travelers – by improving the visa waiver program and the entry process.
Overall, estimates show that this bill will grow our economy by $1.4 trillion dollars over the next two decades while reducing our deficit. Here in California, immigration reform could create 77,000 new jobs and boost the state economy by $7 billion in the near term. Put simply, this must be at the top of our to-do list. I encourage you to continue to make your voices heard.
In closing, let me emphasize that this is just the beginning of a national conversation on the topic of global business fluency.
As business leaders, we must include global markets – including those in Latin America – in more of our activities. Perhaps more than anywhere else in the country, business leaders here in Los Angeles – each of you – are poised to help us lead in growing our economy through trade and investment.
I saw first-hand – at a very young age – how people from every corner of the world came to California to build ties of prosperity and friendship with the United States.
America needs your leadership as we build a globally fluent, more competitive nation in the 21st century.
My commitment to you is this. The Department of Commerce – and this Administration – will serve as your partner. We will be responsive and outcomes-driven, and we will demand a strong return on our investment – because we know that you demand nothing less of your own businesses.
Let’s work together to create the conditions for firms like yours to grow and hire in the months and years ahead. And let’s send a clear message to the world that America is Open for Business. Thank you.