[Congressional Record Volume 152, Number 135 (Friday, December 8, 2006)]
[Senate]
[Pages S11689-S11691]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WORLD TRADE MONTH
Mr. SMITH. Mr. President, I rise today to speak about World Trade
Month. I have always been a free trader, and I am very proud of the
many Oregon companies that are active in international trade and are
pioneers in breaking into new markets and tearing down ancient barriers
to commerce and cooperation. As advances in technology and
transportation shrink our world, the international trade of goods and
ideas becomes more and more vital to our economy.
In May 2006, the Commerce Department's Office of Export Assistance
organized a very timely and useful program that focused on Asian
markets
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beyond China. Oregonians who pay attention to trade realize the
importance of China as a market for goods and services from the Pacific
Northwest, but we also have a long and robust history of trade
relations elsewhere in Pacific Rim Asia. As a result of this, I have
led the Senate's effort to normalize our trade relations with Vietnam
and increase trade with the least developed countries in the Asia-
Pacific region.
As a businessman, I have seen how trade can raise standards of living
both in America and around the world. International commerce creates
new growth opportunities for our manufacturers and agricultural
producers, and WTO membership for Vietnam will help ensure that
everyone's playing by the same rules. It will also mean that Oregon
farmers, ranchers, manufacturers, and service providers will enjoy
greater access to a market of more than 83 million new customers.
During the Commerce Department's conference, Deputy Assistant USTR
Jeri Jensen provided a very insightful keynote address, which, without
objection, I would like to have printed in the Record. I believe this
speech is worth examination by my colleagues interested in trade policy
and export markets for U.S. goods and services.
Mr. President, I ask unanimous consent that the speech be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Expanding Trade With the Pacific Rim
(Remarks of Jeri Jensen)
Want to thank the Portland USEAC and Scott Goddin in
particular. Before coming to USTR, I spent about 20 years at
the Commerce Department, working trade promotion and policy
issues. I've known Scott most of that time, and can say
without a doubt how lucky Portland is to have him.
Also want to thank companies that are here today, for their
interest in the region and their support for our trade agenda
more broadly. Companies like Intel, Nike, Tektronix, HP,
Infocus and Colombia Sportswear are the reason why we work as
hard as we do at USTR to increase our footprint in the Asia
Pacific region. We look forward to your support next year
when we seek Congressional approval for our trade agenda.
What I want to accomplish today is for you to come away
with the clear sense that there really is no other region in
the world now where we are more economically engaged than the
Asia Pacific. We have a vision to continue to get you in on
the ground floor of these economies, which you all know are
the fastest growing economies in the world.
This is good news to Oregon, because you all are the
seventh largest state exporter to Asia, (Washington is
third--but Scott assures me that its only forty planes and
some Microsoft software that separates Oregon from Washington
when it comes to trade with the Asia Pacific).
Exports from your state to Asia have averaged about $5 and
a half billion over the last 5 years, and as most of you
know, have been concentrated in the high tech sector and
agriculture. Eight of your top twelve trading partners, or
more than 60 percent of Oregon's trade, is with countries in
the Asia-Pacific region.
This tracks with the overall significance of U.S. trade
with Asia. Asia accounts for one-third of total U.S. trade--
up almost 70 percent over the past 10 years. U.S. investment,
also has more than tripled in the region over same period.
As we can see from the number of companies in the room, few
major U.S. companies do not have an Asia strategy, and many
have chosen some of our FTA partners like Malaysia and
Singapore as hubs for their regional supply chains.
What I want to do today is give you a snapshot of where we
are with our trade policy efforts in the region, but before I
do, let me provide some context and say a word about some of
the recent economic dynamics in the region.
First, it wasn't that long ago when our trade policy was
all about our rising trade deficit with Japan. Now, the
challenge and opportunity is dealing with the commercial and
strategic influence of China.
Second, along with China's new economic might, we've seen
unprecedented economic growth and political reform in the
rest of Asia. And, we are now the largest or second largest
trading partner of most of these fast-growing economies.
Third, most of the countries in the region are developing
unique visions of how they intend to compete and integrate
their economies into the global trading system. Some want to
move quickly, some more slowly.
Fourth, we are well aware of the fact that we are not the
only country that is thinking strategically about this
region. Virtually every country in Southeast Asia has or is
negotiating an FTA or regional agreement. There are now about
14 trade agreements in SE Asia. China has 3 now and is
negotiating 17 more. ASEAN has an FTA with China and is
negotiating FTAs with Korea and now the EU.
None of them are as comprehensive and deep as those the
U.S. negotiates. But they clearly affect the competitive
landscape, and China's influence in the region.
So the question we try to answer every day is how to deepen
our economic ties with each of these countries in a way that
supports their unique efforts toward economic and political
reform, and yet recognizes the commercial and strategic
significance of the region, and the fact that our competitors
are not standing still?
We are answering that question, as Ambassador Portman has
said, by walking and chewing gum at the same time.
We are working to build relationships regionally in APEC
and ASEAN. Indeed, we are all going to the APEC Trade
Ministerial next week, and we are in the midst of negotiating
a Trade and Investment Framework Agreement with ASEAN.
But most of our efforts are focused on an aggressive
bilateral agenda. We believe this approach will accomplish
the most, in light of our Congressional requirements, the
different levels of development in the region, and the needs
of U.S. companies for genuine market access that goes beyond
just tariff reductions to include non-tariff measures like
IPR, remedies for investment disputes, trade facilitation,
transparency, and other barriers that plague many of the
markets in SE Asia.
This approach is working for U.S. companies. We are
increasing our exports and are opening the markets that
matter most to our exporters.
If you were to take all of our current FTA partners, while
they may represent only 14 percent of the world economy, they
buy about 50 percent of U.S. goods exports and are about the
size of our third largest market.
And if you look at the exports of our FTA partners, they
are growing at a clip of about twice as fast as our exports
to the rest of the world.
We have five FTAs in the Asia-Pacific region which we have
recently negotiated or are about to negotiate. When all five
are complete, Oregon companies will have better access to a
$2 trillion market, and the sixth largest market worldwide.
Our agreement with Singapore in 2003 was one of the first
FTAs President Bush announced under Trade Promotion Authority
and the first FTA between the U.S. and an Asian country.
Since we implemented the agreement, U.S. exports have
increased almost 25 percent and our trade surplus with
Singapore has tripled. Most of those increases have come in
sectors where Oregon companies are globally competitive, like
info technology equipment and chemicals.
Singapore, by the way, at our urging, has developed one of
the strongest intellectual property rights regimes in Asia.
Over the last 2 years they have even gone beyond their FTA
commitments, amending their laws in all IPR areas.
Based on those amendments, just last month Singapore's
courts imposed its first fine (of about $20,000) on a
copyright-infringing design firm after police discovered
illegal installations of Microsoft, Adobe, and Autodesk
software.
Our FTA with Australia was completed 1 year after
Singapore's. We have referred to it as ``the manufacturing
FTA'' because 99 percent of our manufactured goods exports
gained immediate duty free access. All U.S. agricultural
exports received immediate duty-free treatment as well.
One year later we can already see the benefits. U.S.
exports are already up 10 percent; U.S. agriculture exports
are at record levels, and when the data comes in we expect to
see gains in services as well.
Let me turn to our ongoing FTA negotiations in the region.
First, regarding Thailand, we have had six rounds of FTA
negotiations, and have made progress in a number of areas.
However as many of you know, this February the Thais called
for snap elections in April. Since then, the Thai government
has had no mandate to negotiate and our negotiations have
been on hold.
Two weeks ago, the Thai courts invalidated the results of
the April elections and new elections will now be held,
probably this Fall. Once a new government is in place, we
will determine, in consultation with the Thai government,
where we go from there.
But our negotiations with Malaysia are poised to begin in
three weeks in Penang. This agreement holds particular
promise for Oregon companies because you are the third
largest exporter to Malaysia, beating out Washington who
comes in at a mere 12th.
Few people realize we export more to Malaysia than we do to
India, Russia, Chile, Singapore, Brazil or Thailand. Malaysia
is our tenth largest trading partner, with $44 billion in
two-way trade, and a consistently strong growth rate
averaging about 5 percent for the last decade.
Two-thirds of our trade with Malaysia is in electronics and
high-tech products, and is tied to a number of U.S. company
supply chains, which may explain Oregon's interest. Financial
services and autos, where entry barriers are high, will also
likely benefit from an FTA.
We will also begin our negotiations with Korea next month.
This will be a huge opportunity for U.S. companies, as the
most commercially significant bilateral free trade agreement
launched by the U.S. since NAFTA 15 years ago.
Korea is the third largest market in Asia, after China and
Japan, and the world's tenth
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largest economy. Like Malaysia, it has consistently high
growth of about 5 percent a year over the last 10 years. It
is a high-income economy with per capita income about
$20,000/year.
And it is a major world trader--the world's seventh largest
goods and services exporter. We are already Korea's second
largest trading partner.
But we are under no illusions about the challenge ahead. As
with Malaysia, we have about a year to complete the
agreement, which will be no small feat in light of the size
of the Korean economy and the number of non-tariff measures
unique to Korea. But because of the extensive preparatory
work that was done and the political commitment on both
sides, we believe it is achievable.
We also have an active bilateral agenda that's distinct
from our FTA negotiations.
At about the same time we were concluding the Singapore
FTA, President Bush announced the Enterprise for ASEAN
Initiative in 2002. This is really the strategic framework
for our trade relationship with the ASEAN countries.
It's a vision for a network of FTAs with those ASEAN
economies that have demonstrated an ability to resolve
bilateral trade issues, build strong support in the U.S.
business community and in the Congress, and are ready to meet
our comprehensive FTA commitments.
TIFAs--Trade and Investment Framework Agreements--are
really just a fancy acronym for an ongoing trade dialogue.
TIFAs are one of many possible bilateral vehicles that can
work to take a trade relationship to the next level.
The point is that we are broadening and deepening our trade
relationships throughout the region, and the shape that takes
for each country depends on each country. Indeed, precisely
because the region is so dynamic, there is no ``one size fits
all'' for trade agreements here.
We have TIFAs with 7 countries in Asia.
Our TIFA discussions with the Philippines and Indonesia are
great examples of the breadth of issues that can be covered.
The Philippines have lifted its ban on U.S. beef, opened
its market to U.S. poultry and modified their decision to
increase auto tariffs. There have also been major
accomplishments on IPR, including stronger legislation and
increased coordination among IP agencies.
Indonesia's Trade Minister Pangestu was just in town in
March for TIFA discussions. She and Ambassador Portman
announced a customs cooperation agreement and an MOU on
textiles. They also announced their intention to negotiate a
bilateral investment treaty and the first agreement ever on
illegal logging and illegal trade in endangered species.
As a major exporter of forest products that compete with
illegal logs, this should be of interest to Oregon. We hope
the agreement will be a model for other countries who have an
interest in protecting their land and sensitive habitats from
illegal logging, while making sure they have access to
legally produced timber.
We are particularly excited about the agreement in
principal we reached with Vietnam May 14 on bilateral market
access that will pave the way for Vietnam to enter the WTO.
This is a major accomplishment, considering that it wasn't
that long ago--just a little more than a decade--that France
was Vietnam's major trading partner and Vietnam was a state-
controlled economy.
Now the U.S. is Vietnam's major partner and it's clear
Vietnam recognizes its future is tied to the global economy,
through broad-based economic reform.
You can see this in the stats: its growth rate last year
alone was 8.4 percent, the fastest in Southeast Asia. Its
imports have grown dramatically. Last year our exports to
Vietnam were up 24 percent. Two-way trade with the U.S. has
grown to more than $8 billion, which is an increase of more
than 400 percent since 2001.
Our bilateral agreement will result in real market access
for U.S. companies when Vietnam accedes to the WTO.
About 94% of Vietnam's imports from the United States will
face duties of less than 15%. Major U.S. exports like
construction equipment, pharmaceuticals and aircraft will
face duties of less than 5%.
Vietnam will join the Information Technology Agreement,
implement low duties on nearly all medical equipment and to
harmonize its chemicals tariffs.
About three-fourths of U.S. agricultural exports to Vietnam
will face duties of less than 15%. And, Vietnam will open up
telecom, distribution, financial, insurance and energy
services to foreign participation.
The next step is for Congress to grant Vietnam Permanent
Normal Trade Relations (PNTR), so that U.S. companies can
take advantage of all of the benefits I've just described. We
believe there is bipartisan support for PNTR, and are
consulting with the Hill to highlight the benefits of the
agreement.
Last but certainly not least, let me say a few words about
Japan and China.
Japan of course is our 4th largest trading partner. And the
question that is always posed is why aren't we negotiating an
FTA with Japan? And the answer is, as with all of our FTAs,
we always seek a fully comprehensive agreement that covers
all industry sectors, including agriculture. And the reality
is that Japan is not yet interested in negotiating this kind
of fully comprehensive agreement.
That said, Japan certainly is one of our most important
trade relationships. We already have an advanced approach to
working with Japan, under our Joint Economic Partnership for
Growth, which includes work across a number of important
areas--including regulatory reform, financial services,
express delivery and investment.
And we are looking at new ways to integrate our markets
more, particularly in the area of IPR, both through APEC and
bilaterally.
And then there is China. Thirty years ago China accounted
for less than one percent of the world's economy. Today, it
is four percent of global economic activity, with almost $1
trillion in foreign trade annually, one third of which is
with the U.S.
It is one of the world's fastest growing economies, with
almost 10 percent growth in 2005, the third largest economy
in the world in terms of purchasing power, and our second
largest trading partner.
What is often overlooked in our relationship with China is
the opportunity--the fact that it is our fastest growing
export market and that U.S. companies are doing quite well
there.
Exports to China have increased at a clip of about 20
percent a year for the past five years. What's even more
impressive is that in the first 3 months of this year we
almost doubled that rate, with our exports increasing 39%, 2
times faster than our exports to Japan and more than double
the growth rate of U.S. imports from China during the same
period.
And, China is not a market just for large, sophisticated
companies. The number of small and medium-sized enterprises
(SMEs) exporting to China rose faster than to any other major
market in the last ten years, with the total number of firms
exporting to China quadrupling.
But as with any complex relationship, there are challenges.
In February, USTR unveiled a top-to-bottom review which
concluded that, while the U.S. has clearly derived
substantial benefits from U.S.-China trade, the relationship
has not been sufficiently balanced.
We are entering a new phase in our relationship with China.
We are treating it as a mature trading partner and drawing
upon the full set of tools available to us to make sure China
complies with its commitments.
You may have noticed that we were just joined by Canada and
the EU in bringing a case to the WTO over China's unfair
barriers to imported auto parts. Of particular concern has
been its WTO commitment to enforce intellectual property
rights.
We've had two recent opportunities to strengthen this
relationship. The Joint Commission on Commerce and Trade, or
JCCT, chaired by the Secretary of Commerce and the USTR, met
in April as it does each year to discuss our bilateral trade
agenda. And then there was President Hu's visit to see
President Bush ten days later.
At the JCCT, the Chinese made a number of commitments to
strengthen their enforcement of intellectual property, resume
trade in U.S. beef, improve access to China's telecom market,
sign the WTO government procurement code and take steps on
transparency and export controls.
During his remarks on the South lawn, (just before the
Falun Gong protester made her remarks, President Hu
reiterated the key commitments China made during the JCCT,
such as boosting domestic demand and increasing imports,
improving market access and strengthening intellectual
property protection.
And President Bush impressed upon Vice Premier Wu Yi that
the value of these commitments was in the follow-through. We
are currently working with our Chinese counterparts to turn
these commitments into reality.
So we believe our relationship with China is on track.
To sum up, there are really just three points.
First, the transformation of the Asia-Pacific region from a
center of low-cost manufacturing to what has become the
growth engine for the world economy has been truly
remarkable;
Second, we ``get'' at USTR that for Oregon's companies--and
all U.S. companies--to stay innovative and globally
competitive, they have to be integrated into the fabric of
the Asia-Pacific;
And third, we have a strategy to do just that, one that
contemplates the economic diversity of the region and employs
a variety of tools matched to the potential, capacity and
willingness of our trading partners.
Thank you.
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