U.S. Secretary of Commerce Penny Pritzker today laid out the commercial and economic dimension of the Obama Administration's rebalance to the Asia-Pacific region. Home to nearly 60 percent of global GDP, the world's fastest growing economies, half of the world's population, and an emerging middle class that is eager for American products and services, the Asia-Pacific is a region of tremendous opportunity for United States businesses and workers.
Secretary Pritzker emphasized the United States' long-term commitment to strengthening well-established trading partnerships, to supporting emerging Asian economies as they develop infrastructure and enter the global trading system, and to building and strengthening regional mechanisms like the Trans-Pacific Partnership (TPP), the Association of Southeast Asian Nations (ASEAN), and the Association for Asia-Pacific Economic Cooperation (APEC).
Secretary Pritzker also announced that she will make her third trip to the region since taking office nearly 10 months ago. She will travel to Vietnam, the Philippines and Burma in conjunction with a delegation of U.S. CEOs and the U.S.-ASEAN Business Council in early June, underscoring U.S. government support for high-level private sector engagement in the Asia-Pacific region.
AS PREPARED FOR DELIVERY
Thursday, April 17, 2014
CONTACT OFFICE OF PUBLIC AFFAIRS
Thank you, Dean Nasr and thank you to the SAIS community for hosting me this morning. This institution was founded here in Washington in 1943, and for seven decades, your faculty has trained diplomats and government officials, business and civic leaders, and academics. Today, SAIS attracts students from nearly every corner of the planet, and your alumni are world leaders working on our most pressing global challenges across a range of fields. It is an honor to be here.
230 years ago -- four years before the adoption of the U.S. Constitution -- an American ship named the "Empress of China" set sail from New York City to Canton, China. It was the first U.S. ship to trade with China. 15 months later, "the Empress" returned with valuable cargo -- including tea, silk, and porcelain -- and provided its investors with a 25 percent return. That historic voyage ushered in a new era of economic opportunity for our young nation. The United States has been trading with and engaged in the Asia-Pacific region ever since.
The United States is -- and will always be -- a Pacific nation.
But in the first decade of this century--as we fought two costly wars--our diplomatic, economic, and strategic resources were over-invested in certain regions of the world and under-invested in others.
During the early days of his Administration, President Obama made a deliberate and strategic decision to correct this imbalance and to deepen U.S. engagement with the world's fastest growing region -- the Asia-Pacific.
From the Ganges to the Great Barrier Reef to the Great Wall, we remain determined to build and expand partnerships across the region. We want to establish a stable security environment We want to create an open and transparent economic environment And we want to ensure a liberal political environment that respects the universal rights and freedoms of all.
There are people--in the media and elsewhere--who question whether the Administration's "re-balance" to Asia will persist and thrive as we tackle crises and capitalize on opportunities elsewhere around the world. Let me be clear at the outset: The United States has made a long-term commitment to the region. No matter what crisis emerges next, re-balancing toward the region will remain a cornerstone of this Administration's foreign policy.
That does not mean we will turn away from friends and allies in other parts of the world. The United States will uphold all of its commitments. But we absolutely will continue to focus more of our resources on a region that includes: nearly 60 percent of global GDP, the world's fastest-growing economies, half of the world's population, and an emerging middle class hungry for American products and services.
Let me give a few examples of our progress to date. The President, who will travel to Asia later this month, has strengthened and modernized security ties with our five strategic allies in the region: Japan, the Republic of Korea, Australia, Thailand, and the Philippines. Also, we have united with allies to address humanitarian and natural disasters--from Fukushima to Typhoon Haiyan. And we have invested in capacity-building through efforts like the Lower Mekong Initiative and the U.S.--Philippines Partnership for Growth.
Overall, the Administration's rebalance is focused on four areas: enhancing security, expanding prosperity, fostering democratic values, and advancing human dignity. Today, I will focus my remarks on expanding prosperity and the economic dimension of the rebalance.
This dimension involves deepening our trade and investment ties with existing partners. It requires working multilaterally to build both the hard and soft infrastructure that is necessary for growth of our emerging partners in the 21st century. And it entails building new mechanisms--like the Trans Pacific Partnership--to establish a level playing field for commerce across the entire Asia-Pacific region.
I am going to lay out a strategic framework for our economic engagement with the Asia-Pacific region. But I would like to start by contextualizing the scale of the economic and commercial opportunity in Asia -- it is substantial and growing.
Since the voyage of the "Empress of China,' the U.S. has been trading goods and services across the Pacific Ocean. Today, the Asia-Pacific has become an enormous permanent market for American products and a source of good jobs here at home.
In 2013, exports to the region, spanning a broad array of sectors, supported more than 3 million U.S. jobs.
Just this past December, General Electric signed a $94 million contract with a Vietnamese construction firm to sell 52 wind turbines for a wind farm project in Bac Lieu in the Mekong Delta. The deal includes $50 million in U.S. export content and supports an estimated 245 U.S. jobs. The Commerce Department's Advocacy Center supported this deal.
Small exporters are succeeding too. Over the past few years, Nikolas Weinstein Studios in San Francisco has created large-scale glass art sculptures that have been installed in homes, hotels, and commercial buildings in Hong Kong, Japan, Singapore, Malaysia, Indonesia, and China. The share of their income from international projects has jumped from 70 percent to about 90 percent since they started working with the Commerce Department's Commercial Service -- with nearly all of those sales coming from Asia.
Another example is American farmers who export about $30 billion worth of agricultural goods every year-- to China alone. This supports prosperity in countless rural communities across our country.
But exports to and investments in Asia do not tell the whole story. New and important trends are emerging. For example, inbound investment from Asia to the United States is growing -- it now supports more than 970,000 U.S. jobs.
Last year, 180 unique companies from across the Asia-Pacific region came to the Commerce Department's SelectUSA Summit. The purpose of the Summit was to promote foreign direct investment INTO the United States.
One of those companies was Singapore-based Keppel Offshore and Marine, which employs about 1,500 people in the oil and gas industry in Brownsville, Texas. The Export-Import Bank recently approved a loan of $172 million to help Keppel export to Mexico -- a win for the business, for American workers, and for U.S. exports.
I have provided a glimpse of our economic integration today. But there is enormous--and untapped--potential for us to do much more tomorrow.
Consider this: By 2022, the Asia-Pacific will be home to 54 percent of the world's middle class, and the region will account for 42 percent of global middle-class spending.
In 2012, Asia-Pacific countries imported roughly $4 trillion of goods and services. By 2022, that number is expected to increase to nearly $10 trillion.
Put simply, outside of the U.S., the Asia-Pacific region will be the engine of global growth during the next decade. This will have a profound impact on the way American companies engage in these markets.
For example, one forecast shows that nearly half of all world travel will be to, from, or within the Asia-Pacific region by 2032 -- up from 37 percent today. This growth will provide many opportunities for America's aviation, infrastructure, and travel and tourism industries.
As Secretary of Commerce, I lead the department responsible for making these opportunities more accessible to our business community, especially for small and medium-sized enterprises. I see the Commerce Department as having a critical role in realizing these opportunities. Therefore, I have sought to reenergize our high-level commercial diplomacy.
For our businesses and workers to thrive in the 21st century global economy, we must create an environment that makes it easier to capitalize on these opportunities. One of my core missions as Secretary is to help American businesses navigate new markets, reach new customers, and develop new opportunities in existing markets, which is why I have been spending so much time in Asia.
In June, by the time I reach my first anniversary in this position, I will have made three trips to the region as Secretary. In October, I joined Secretary Kerry and Ambassador Froman for the APEC Leaders' Meeting in Bali and traveled on to the Global Entrepreneurship Summit in Malaysia. Shortly thereafter, I traveled to China for the Joint Commission on Commerce and Trade. And I am pleased to announce today that I will be traveling to Southeast Asia in June with a delegation of CEOs and the U.S.-ASEAN Business Council. We will travel to Hanoi and Manila and I will also go on to Burma. I want to thank the U.S.-ASEAN Business Council for all of the work they are doing to deepen U.S.-ASEAN ties and to ensure the success of our upcoming trip.
But far more important than my own travel is the day-to-day work of the Commerce Department's Foreign Commercial Service. When I took this position, it was wonderful to learn that such a dynamic team exists in our government. Each day, this team helps American companies break into overseas markets, expand, and find new customers abroad.
The largest footprint of the foreign commercial service is in Asia, with 75 officers and nearly 300 locally engaged staff. And, as part of the Department's emphasis on the Asia-Pacific region, I am thrilled to make another announcement: Our Foreign Commercial Service will open new offices in Wuhan, China and Rangoon, Burma. In addition, we are putting more resources at ten other posts across the region. This expanded team will now be able to do even more to promote U.S. exports -- while also helping attract inbound investment through SelectUSA.
But the economic goal of the rebalance -- achieving long-term, shared prosperity across the Asia-Pacific region and at home -- demands much more than simply selling American products to new customers, which brings me to the strategic framework I want to lay out for you today.
A successful economic strategy requires building a strong regional economic architecture that provides opportunity for all.
Broadly speaking, our economic strategy has three pillars--all of which are predicated on consistent, multilateral engagement:
First -- we must use creative and energetic commercial diplomacy to strengthen our partnerships with long-established trading partners.
Second -- We must help dynamic, fast-growing, and emerging Asian economies to enter into the global, rules-based trade and investment system by developing the necessary infrastructure, both "hard" and "soft." By "hard" I mean the physical infrastructure that helps move goods and people from point A to point B smoothly. And by "soft," I mean the legal and regulatory systems that provide clarity and predictability to transactions.
And finally, we must build and strengthen regional mechanisms like TPP, APEC, and ASEAN to establish and maintain rules of the road across the region--rules that promote a level playing field for U.S. businesses.
The Department of Commerce plays an important role in all three pillars, but given the intense interest in the Trans Pacific Partnership, I would like to take a moment to focus on the third pillar: building regional mechanisms to develop rules and principles of commercial behavior.
The successful conclusion of the TPP is a top economic priority of the Obama Administration. Opening markets across the Asia-Pacific region to U.S. exports and investment will help promote growth and jobs here in the United States in many ways.
TPP will provide American businesses with preferential access to this vast and growing marketplace. TPP will enhance regulatory coherence to make trade more seamless for our exporters. TPP will promote American innovation through strong and balanced intellectual property obligations and protections. TPP will establish rules that better link our companies to emerging production and distribution networks across the Asia-Pacific region, which will give companies more incentives to keep production in the United States.
In addition: The Trans-Pacific-Partnership will address important 21st-century issues, like digital commerce, by ensuring that trade barriers are not introduced in sectors that thrive on openness and innovation.
The TPP will include strong commitments in areas ranging from transparency and anti-corruption, to the environment, to enforceable protections for workers abroad--which will also help workers here at home.
And finally, we are looking to include rules that provide a more level playing field when U.S. companies are competing against state-owned enterprises.
When it comes to the TPP, I believe we are at a critical inflection point and face a crucial choice. We can act now to advance American values and interests in setting the rules for trade in a region representing 40 percent of the world's economy or we can let others with different values and interests take the lead.
After four years of negotiations, we are at the endgame. We are working to resolve the remaining challenges as soon as possible to conclude an ambitious agreement that reflects the President's vision of how we make trade work better for Americans. Recognizing that inaction will have real consequences, we must work closely with Congress to pass Trade Promotion Authority and get this deal done.
While the TPP is the cornerstone of our economic engagement in the region, it is not the only regional mechanism in which we are focused. Let me say a few words about ASEAN and APEC.
As our economic ties to Southeast Asia grow, the Association of Southeast Asian Nations--ASEAN--has blossomed into an important partner to the United States. Today, our country is one of the top global investors in ASEAN economies. In fact, the United States invests more in ASEAN collectively than in any other market in Asia. In addition, ASEAN is collectively the United States' fourth largest export market in the world.
To ensure that this relationship continues to grow, the Administration launched the U.S.-ASEAN Expanded Economic Engagement initiative--known as E3. E3 is a framework for cooperation designed to expand our trade and investment ties. It will create new business opportunities and jobs in all eleven countries and help their governments set the stage for eventual participation in high-standard trade agreements like TPP.
Through E3: We are helping to train officials from ASEAN member nations in areas such as trade facilitation We are supporting efforts to help these countries create conditions to attract more private-sector infrastructure investment And, just last year, my Department welcomed economic ministers from ASEAN to see first-hand how America's infrastructure and customs--as well as innovative companies like Google--are the building blocks of a strong economy.
The United States -- and our companies -- have a long-term stake in ASEAN's economic growth and prosperity, and our businesses want to be part of the solution.
That is why I am returning to the region in a few weeks with a number of America's leading CEOs. We want to help bring the investments that ASEAN wants and needs -- information technology, clean energy, healthcare, education, and more.
And, of course, both our government and our businesses look forward to seeing the ASEAN nations establish a common market in 2015.
While the United States is not a member of ASEAN, we are -- of course -- an active member of APEC, the association for Asia-Pacific Economic Cooperation. We continue to work with the twenty other APEC economies to build a highly competitive, vibrant, open, and transparent regional economy that is an engine of global growth.
Specifically, this year we are working with the Chinese to pursue an ambitious APEC agenda focused on: achieving regulatory transparency, setting renewable energy targets for the region, enhancing the role of women in the economy, and strengthening cooperation on business resilience following natural disasters.
We are also keen on advancing China's APEC priorities, including: strengthening regional connectivity, focusing on the sustainable development of cities, promoting transparent and rules-based infrastructure development, and doing more to understand the policy implications of global value chains.
Let me spend a few minutes discussing the Administration's economic engagement with China more broadly -- because it ranges far beyond 2014 and China's leadership of APEC. As others have noted, integrating China into the rules-based global economy will be one of the most significant economic developments of our lifetime.
China's GDP growth rates have averaged approximately 10 percent per year for the last 30 years. And, as approximately 200 million Chinese migrate from rural to urban settings over the next decade, the importance of the Chinese market to U.S. businesses will only grow.
Just last year, U.S. exports of goods to China rose 10.5 percent to $122 billion, and services exports grew to $40 billion.
We look forward to China's leaders implementing the Third Plenum reforms, including allowing market forces to play a quote -- "decisive role" -- in their economy. And we will continue to work with China to identify areas of cooperation and mutual benefit.
Specifically, the Commerce Department will continue to focus on: opening China's market to greater U.S. investment, including in the services sector; ensuring a level playing field for American companies competing in the Chinese market, including improving the protection of their intellectual property; promoting inbound investment from China across a broad range of industries and sectors, which creates good American jobs; and engaging with China on areas of mutual interest and concern, including in third countries.
In some of these areas, we have already seen progress.
For example, in the area of intellectual property rights, China committed at last year's Joint Commission on Commerce and Trade to adopt and publish an "action program" on trade secrets protection and enforcement. And, just this Monday, China's State Council identified "strengthening the protection of trade secrets" as one of its three priority areas for combating Intellectual Property Rights infringement.
We will continue to work with our Chinese counterparts on these and other trade policy issues through the JCCT. And I look forward to working with Vice Premier Wang Yang to achieve robust outcomes when the United States hosts the JCCT later this year.
In the five years following that first successful voyage of the Empress of China, nearly thirty more American ships took the same journey. At that moment of challenge and opportunity, these intrepid pioneers established America's first real ties across the Pacific.
Today, we are at another moment of opportunity. The U.S. economy has become inextricably linked to the Asia-Pacific region. More than ever before, governments, companies, and people throughout the region want to do business with American firms, which offer: the world's best technology and innovation, a powerful ability to mobilize capital, a commitment to good working conditions and training, a business culture that values transparency and ethics, and, of course, a spirit of entrepreneurship that remains the envy of the world.
I pledge that this Administration will continue to help American businesses and workers thrive within our own Pacific nation. And I pledge that we will work with our friends across the region to bring greater prosperity throughout the Asia-Pacific.