[Congressional Record (Bound Edition), Volume 152 (2006), Part 18]
[Senate]
[Pages 23590-23592]
[From the U.S. 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 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.

[[Page 23591]]

       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 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

[[Page 23592]]

     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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