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U.S. Department of State - Great Seal

U.S. Department of State

Diplomacy in Action

U.S. International Economic Policy

Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs 

New York, NY
September 19, 2011

1:00 P.M., EDT


UNDER SECRETARY HORMATS: Well, thank you very much for coming and joining us here this morning. This morning, prior to this, I’ve been at the meetings we’ve been having on the Deauville Partnership, which was initiated by the G-8 at their summit in Deauville. And now we have the G-8 countries plus a number of partners from the Middle Eastern-North African region. And we’ve been having conversations. There’s going to be a ministerial meeting tomorrow, and we are doing some preparatory work today on a communiqué. And as you know, these negotiations take a little longer than one normally expects, so I apologize for being a bit late, but it’s aimed at a partnership response to developments in the Middle East and North Africa. So I thought I’d just mention that at the outset because that will be very much in focus tomorrow, and the Secretary will be at the meetings that will take place around 3:30 through about 4:30 or 5 tomorrow afternoon.

But the broader issue that I’d like to discuss really is part of a sequence of events that the Secretary has been focusing on for a number of months, and that is how does the United States respond to changes in the global economy, and what are the major focal points for her efforts to address some of these changes, both in the international economy and in what we need to do at home to strengthen our position in the global economy, and what we need to do internationally to strengthen our domestic economy because, more and more, what we do internationally has an impact on what happens in the U.S. economy and vice versa.

So let me just go through a few basic points. One, when we look at the sweep of events over the last couple of decades, what is interesting and important, I think, to recognize is that there is a shift in power in the global system from west to east, from military instruments to economic instruments, and from countries which are highly indebted financially to those with more available funds. If you look at the period of, say, 40 or 50 years ago, a lot of what nations were about was building and strengthening military power and projecting that military power abroad. Increasingly, what more and more nations are addressing is how to build economic power at home and how to project economic power abroad. And these changes are reflecting an emerging global economic system where economic competition is particularly intense and very different from that of recent generations where you have today a wide range of competitors for all countries, many of which are highly innovative. A handful of the emerging economies will account for much of the world’s growth this year and for several years to come, and a few of them are wielding enormous financial power and exerting enormous influence in global economic institutions.

We’re also witnessing the growing role of state-sponsored and state-supported enterprises, and sovereign wealth funds which are producing a new model of state-led capitalism which is beginning to compete with a more open market-driven trading and investment model that has been the primary driver of innovation and global growth for the last few decades. The emergence of this model has the potential to dramatically change the global economic system that has facilitated not only our own prosperity but also the prosperity of countless other countries around the world, including the Asian Pacific region and others. And the challenge for the United States is how we respond to this changing landscape, and it will have enormous implications for our prosperity and security here at home, for our influence around the world, but also for the way the global economy functions. And from an American point of view, in this environment, in order to have a successful foreign international security policy, we have to have a strong economy here at home with robust job creation and sustainable finances. (Inaudible) a well-constructed international economic policy that boosts exports and attracts foreign investment is necessary to strengthen our domestic economy. And it’s also necessary, we believe, to reinforce the global economic order on which U.S. domestic prosperity and opportunity increasingly rests.

So when we looked at this, a strong domestic economy and an effective foreign economic policy are intimately linked. Each one reinforces together one another, and both are critical ingredients in an effective foreign and national security policy. And what we’re trying to do in the State Department and other agencies in the Obama Administration is to address some of the changes we face in the global economy today, and likely will for some time. And one of them is to ensure economic strength at home because this is also the source of our strength abroad, and also very important to the global economy. We’re quite aware of the responsibilities that we have to the global economy. We have a big economy in the United States and we understand that we have a responsibility to our own citizens to strengthen our economy. We also understand that a strong American economy and a strong American financial system are important to the global economy. And second, how do we relate to what is going on and work with other countries, critically the emerging economies, to develop new international rules and norms for a fair and well-functioning global system in the 21st century?

So let me just talk briefly about some of the things we’re doing internationally and then some of the things we’re doing at home. In her speech in San Francisco just a few days ago, Secretary Clinton talked about one of her most important subjects, which is the role of women in the global economy, particularly, in that context, the role of women in East Asia and in the Pacific region in general. And the point she made was that for countries to truly realize their economic potential, they needed to ensure that women in their societies reached their potential, particularly by having more economic opportunity and removal of constraints on their ability to start companies, move up the ranks and have upward mobility within companies, to obtain jobs, and generally to participate in economic growth.

In other areas – for instance, in Hong Kong a few weeks ago – she made the point about the importance of working together to strengthen the global economy by developing modernized rules for competition in the 21st century. Those would include stronger protection for intellectual property for all countries, not just for American intellectual property, which obviously is very important from our point of view. In fact, it is really a core economic interest for the United States to protect our intellectual property. But more and more intellectual property is being developed by companies in other parts of the world, East Asia and many other parts of the world. So we would like to see cooperation among countries to strengthen intellectual property protection and enforcement of strong rules around the world.

Second, how do we deal with the issue of growing – the growing role of state enterprises? Our goal is not to question whether countries can or should establish state enterprises. We think that is the right of individual countries who want to do that to do it. Our basic point is essentially that we want to make sure that there’s a level playing field between private sector companies and state-owned enterprises which we call – or other countries call as well – competitive neutrality. These, I think, are very important, from our point of view, to ensure a level playing field.

And again, our goal is not to do this in a confrontational way. This is to work to develop and to emphasize common interests between the United States and other countries. We see a multi-polar world now with a lot of powers, economic powers, around the world as also being a multi-partner world. So we think that there are more and more opportunities for partners in other countries on a variety of things. We’re working very closely with China, for instance, on new sources of energy, green energy, and electronic cars or e-mobility. We’ve been working with India, for instance, on helping other countries with respect to improving agricultural production. These are just a few examples, but we see cooperation within the Group of Twenty bilaterally through the Strategic and Economic Dialogue we have with China, through another very substantial dialogue with India which we just have – had recently, with Indonesia, where we had another dialogue when the Secretary was out in Bali on her recent trip, which I went on with her. And we have similar cooperation with Russia and many other countries, and a lot of cooperation with South Korea in technological areas and many other areas.

And of course, we have – which I’ll get to in a moment – the very important U.S.-Korean Free Trade Agreement, KORUS, which we think is essential from the point of view of both countries, and we are aiming at passage of this as soon as possible, along with Colombia and Panama, and along with the Trade Adjustment Assistance legislation. We think it’s critical, from our point of view, as credible trading partners in East Asia and in the rest of the world, to have this legislation passed and passed as promptly as is possible.

With respect to what we’re trying to do at home, the Secretary has made a very strong point in support of the President’s National Export Initiative. We believe that in the current environment, the very worst thing we could do is to turn inward, turn away from the global economy. I mean, there are those who argue that if you’re – have high unemployment and you have difficulties at home, you should turn inward. Our view is exactly the opposite. Our view is that we should – we need to work more with other countries around the world, to strengthen cooperation. And we want to enable American companies to take advantage of opportunities in the global economy, which the three trade agreements that I mentioned are really a part of, but we have strong export advocacy around the world as well.

We also are very interested in working with other countries who want to invest more in the United States. We have a very open investment environment here. Over the next several weeks and months, we’re going to be stressing, in a more direct way, the opportunities for other countries, and companies in other countries, to invest in the United States. We’re developing dialogues between American governors and Chinese provincial leaders. American governors are very good at trade promotion and at attracting investment, and Chinese provincial leaders are doing more and more of the same thing. So we thought having this sub-national dialogue would be very helpful. We’re going to do the same kind of things with India between chief ministers of Indian states and American governors, and we’ve already started on that, and we discussed this when the Secretary was in India, in Tamil Nadu. We would like to do this with other countries as well.

We would like to use, as some other countries do, our chambers of commerce abroad to be supportive of the interests we have in more trade with other countries and more investment in the United States from other countries.

One other area that I think is very important for the United States is to work with other countries on entrepreneurialism and innovation. Virtually everywhere around the world, there is a greater degree of emphasis on innovation and entrepreneurialism. And we have had discussions on this. Very recently, there was a conference on entrepreneurialism in Indonesia, focusing in part on women, but even more broadly, I was in Jordan for an innovation entrepreneurialism dialogue a few months ago. So increasingly, what we’re trying to do is to use American experience in producing innovation and producing the sort of ecosystem for entrepreneurs and encourage other countries to do this.

And the reason for this is because what’s interesting about the way the world is today is it’s – there’s – globalization doesn’t occur not only – it doesn’t occur only in trade or finance or the internet, but it also includes the diffusion of innovation and the diffusion of centers of excellence all around the world. I mean, all of the countries represented around this table have increased emphasis – placed increased emphasis on innovation, on centers of excellence, and developing their university systems and developing science centers around the world. I mean, Korea’s probably the most wired country in the world today – maybe Singapore or South Korea, the two are probably competing to be the most wired with 4G networking. And a lot of things, we can learn from other countries on. And China is developing a number of university centers of excellence all around China. So we see opportunities more and more. And more importantly, the private sector sees more and more opportunities for collaborative innovation. These days, very little innovation is by one company or one country alone. More and more, it’s networked across companies and across borders.

So – but to make this happen, to make this successful, it requires protection of intellectual property, which is why I go back to the point of that being a core economic interest of the United States. More and more American companies are now moving up into knowledge-intensive industries. And therefore, people who invest their time and their talent and their money and their entrepreneurial skills in innovation, in the United States and elsewhere, want to make sure that they get proper returns on those investments of time and talent and innovation and entrepreneurialism. So that means that strong intellectual property protection is important for American companies, but it’s also important for rising companies in East Asia and many other parts of the world who are engaged in innovation to have their intellectual property protected as well. So the notion of more and more cooperation on innovation and entrepreneurialism should continue, but it goes hand-in-hand with proper intellectual property protection.

So these are just a few thoughts that reflect what the Secretary has said and what I’ve said and others have said around the world on some of our global economic issues. And just let me – since I mentioned the Middle East, one of the things we’re aiming at, as I say, is this Deauville Declaration among foreign ministers tomorrow. And one of the things we’re hoping for – and I close on this on a very, I think, optimistic note, is that increasingly younger people around the world are playing a greater and greater role in their societies. We’re seeing this sort of democratization of information and a democratization of participation, more participatory societies all around the world. And this is largely led by young people. So one of the things we’re trying to do – and the Secretary has been a real leader in this – is trying to connect with innovative young people around the world and help them to achieve their aspirations and their hopes and their desire for good jobs and upward mobility. And one of the elements of our conversations with the countries of the Middle East, and elsewhere, is to focus on younger people, and use what we consider to be one of America’s great strengths in innovation and entrepreneurialism to help them to see opportunities in their countries for the same kind of innovative opportunity and entrepreneurial opportunity because these – we think that will strengthen their societies, but we also think it will strengthen connections with the United States.

I was just out in Silicon Valley last week with the minister of commerce of Indonesia, Mari Pangestu, and we went to Google and we went to Intel just to see where cooperation could take place between Indonesia and the U.S. But more and more, we think this is a win-win situation for countries to work with American innovative companies and help their economies to be innovative, which in turn helps to improve opportunities in their company – in their countries, and greater opportunities for cooperation with the United States.

So the Middle East is certainly one of those areas. Having said that, I’m very open to questions.

Yes, please.

QUESTION: Chen Weihua, China Daily. Yeah.


QUESTION: Ah. Two questions about – one regarding what you said about a national export initiative. Reports from U.S.-China Business Council show that U.S. exports with China grow four times faster to the rest of the world. So would you say a few words – does that make you happy, or what is the (inaudible) – is that going to help reach Obama’s doubling the export target? Maybe I just say that all together.

The other is regarding what you said – you want the U.S. (inaudible) exports to the – into the United States. That’s sort of --


QUESTION: Yeah, investments. So one of the sort of concern in China is being sort of the people feel you’re not so Chinese investments --


QUESTION: -- are not so welcome. It differs – sort of the rigorous process regarding the Chinese investments, of course, (inaudible) the highlight. It’s not even a state-owned enterprises. But also the SOE state-owned enterprises are major players. So you said you’re sort of against that (inaudible) being – have a fair play. So for that, it’s going to be the fact of Chinese economy. They are going to continue to be the major player. So how you can --

UNDER SECRETARY HORMATS: No, it’s a very good question. They’re both very good questions. Let me just start out on the trade side. We’re very pleased that exports to China are increasing. We welcome that. We know that China internally, in the 13th five-year plan which is underway now, is in the process of – it is the 13th, isn’t it?

QUESTION: Twelfth.

UNDER SECRETARY HORMATS: Twelfth. One off – 12th five-year plan is in the process of doing a rebalancing within China and depending less on exports and more on imports and more on improving consumption within China, particularly – and purchasing power in central and western China, all of those things. So we welcome that plan and we think that what China is doing internally is consistent with what we want to do, which is to have a better balance in trade between the United States and China.

We also – but we – so the more exports, the more helpful it is. We also know that we have a responsibility, and the Chinese Government reminds us of that periodically, which is to improve our savings-investment balance, which is to say to increase our domestic savings in this country, borrow less, consume less, or consume at a slower – at a sustainable pace, not so much based on borrowing, and to invest more in future productivity. So we’re – we understand that both countries have a responsibility to improve the balance, and we’re trying to do our part. The President has announced a very important jobs program in the American Jobs Act. He’s just last night indicated ways in which he wants to improve our budgetary and our debt outlook through a number of recommendations he’s made to the super-commission. So we understand – the President certainly understands very clearly that we have a number of things we need to do to strengthen our economy and improve the balance in our economy so we don’t try to build our recovery based on unsustainable borrowing and unsustainable consumption, and we also need to put our fiscal house in order in a more sustainable way. And the Chinese Government has correctly underscored that this is something that would be a constructive thing for the United States to do. We watch very carefully the statements that are made in Beijing.

On the question of investment, let me just make the point – I think you’ve made a point that a number of very serious Chinese such as yourself have made and that is a very small – only a very small portion of the Chinese investment in the U.S. raises national security issues and is – and goes to CIFIUS. The vast majority of Chinese investment does not raise national security implications or go to CIFIUS. So what we need to do is find a way of working together with the Chinese in a more effective fashion to design and establish a dialogue that provides a welcoming attitude toward foreign – Chinese foreign investment in the United States. And one of the ways we do this is to discuss this in S&ED. The other – and other dialogues that we have. That’s not the only one; that’s just – it’s sort of the highest-level one.

But the other is to have a much more – a much richer dialogue between the American governors and the Chinese provincial leaders. For instance, the party chairman of Hunan province was here very recently. A number of Chinese provincial leaders came to the governors association in – the National Governors Association in Salt Lake City, Utah very recently. In October, there’s going to be another one of these meetings in Beijing, that I’m going to go to with several American governors, meeting with several Chinese provincial leaders. So our hope is that the governors and the provincial leaders can sit down and talk about investment and identify ways of improving the political environment so that there is a more receptive environment here toward Chinese investment in this country, and the Chinese investors in various parts of China understand the American investment environment better than they do, to avoid issues that raise this sort of – that causes a pushback of the kind that you’ve mentioned.

So we are very welcoming of Chinese investment, but we have to figure out the right way of doing it and creating the right environment for this, which we think this is one way of doing it at the federal level and there’s another way of doing it at the state and local levels.

In fact, for instance, I’ll give you an example. When I was in – I was in L.A. last week and I gave a talk, which we can send you if you give me your card, that was organized by the mayor of Los Angeles, Villaraigosa, and he had a number of press people and civic leaders and things. And it was very directly related to how we and countries of East Asia – obviously, China included – can work together on the question of trade and investment and many other things. We’ll be happy to send it to you.


QUESTION: Two questions. One is (inaudible) a meeting concerning the future the media. On Friday, the China company DNI* signed an agreement with (inaudible) to sell them 50 percent of their oil field in (inaudible). (Inaudible) wondered if you have any objections?

UNDER SECRETARY HORMATS: Well, let me just say, I – at this point, since we have the meeting tomorrow, I really can’t comment on Libya in specific terms. Let me just make a couple of general points, though, and that is that I do think that our goal – and we actually have invited Libya, and Libya has joined this Deauville Partnership. So we clearly want to work with Libya. We have collectively, us and others, have unfrozen a large amount of Libyan assets. We want to make sure that Libya is a full partner in this Deauville Partnership. We also want to make sure that – and do as much as we can to help Libya get its oil back on track and start pumping oil, in part because the revenues are very important to Libya, and in part because that oil is very important to the world economy. And we also want to make sure that the money that Libya gets from the oil and from the unfrozen assets is utilized in a transparent way that is – where there is full accountability, so that we know that the money is being utilized for the benefit of the people of Libya. So these are the kind of things we’re working closely with the Libyans on. There’ll be, as you say, a meeting tomorrow on this. The President’s going to go to this. Secretary Clinton will go – but I probably shouldn’t get into any more details because they’ll be discussing this substantially tomorrow and so I think I’ll just leave it (inaudible).

QUESTION: (Inaudible) open the door for the Russians (inaudible).

UNDER SECRETARY HORMATS: Yes, we have been working – let me just say – we have been working very closely with Italy throughout this whole process. Italy knows Libya very well and E&I (ph) certainly knows the Libyan oil situation very well and we’ve – we have been working with Libya on – Italy very closely on this but I don’t think I’ll get in any more detail, but we’ve had a lot of conversations about this very issue.

QUESTION: In your presentation you mentioned the evolving – the economy is changing and also said that the world economy (inaudible) and norms. So could you elaborate more?

UNDER SECRETARY HORMATS: Not so much new, but modernized. Some new and some modernized.


UNDER SECRETARY HORMATS: Sure, sure, sure. Absolutely.

QUESTION: (inaudible) norms (inaudible).

UNDER SECRETARY HORMATS: Absolutely. Good point.

QUESTION: And just another question, the economy is in bad shape and the aftermath will be the G-20 and the APEC Summit

MODERATOR: Yeah, G-20 at Cannes and APEC in Honolulu, right?

QUESTION: So what are the priorities for the U.S. Government in those two?

UNDER SECRETARY HORMATS: Okay. First the norms and rules. I mean, it in a way – we’re like where we were after World War II but not to the same degree. And that is, after World War II all the institutions had broken down prior to the war. There were no global institutions, zero at that point, to speak of – or a few like international weather and things like that, national post, but nothing major. So what was done was to create new institutions which were the UN, the gas, the World Bank, and the IMF, the OECD, and then for security issues there was NATO. And what happened after World War II – after World War II was that those helped to rebuild the global economy and establish rules for the global economy. And then, when – at the fall of the Iron Curtain, and then the Bamboo Curtain, then more and more countries joined these institutions. And I think these institutions have been very effective in addressing problems of the global economy and creating cooperation and stability and free flow of trade and finances that had been very beneficial to the global economy but also very important to helping emerging economies to grow.

Now – we now face a changed world from the world of the ‘50s and ‘60s and ‘70s and the ‘80s, and even some of the ‘90s, and that is you have this new emergence of very strong commercial and financial participants in the global system – China, India, Brazil, South Korea, and a number of other countries. These are not the only ones – South Africa is becoming more and more important, Russia’s becoming a more important player in the global – raw materials and energy sphere.

So there are these – there’s a multitude of new economic powers and what we need to do is make sure that the global system can integrate these economic powers into the system in a way in which they are seen as responsible stakeholders in that they draw benefits from the system and they contribute to the stability and the strong performance of the system in ways that are consistent with the benefits they derive from it. I mean they have – they want openness, they want respect for their intellectual property, they want respect for and openness toward their investment, so they have to adhere to the global rules of the system to strengthen the system in their own interest, because the system is important to them. And so what we’re trying to do is find ways of working with them. And so here’s – so the kind of changes that you’re suggesting are, one, increasingly, for instance, the OECD has an outreach to these countries and is – even though many of them are not members of the OECD – there’s more and more – they participate in many of the working groups, including on investment issues and anti-corruption, anti-bribery issues, a whole range of things. So it’s not that we’re insisting that every country adhere to every rule right away, but it’s to develop new norms of cooperation and consultation. We have now the G-20, which we didn’t have four years ago, where countries work together on global economic issues and global financial issues. So we’re working on that.

We’re now in the process of working more closely, which gets me to the second part of your question, on APEC, where we have a number of the Asia Pacific economies working together very closely on – how do you standardize and improve regulations? How do you increase trade? How do you deal with environmental issues? How do you deal with issues of providing more opportunities for women? How do you improve investment rules in the APEC region? Now APEC’s interesting because it’s not a group where everyone has to read everything, in other words it’s voluntary, so you can do things in APEC without being as concerned that you have to – that you if you’re – Korea has to implement the rules the same way and at the same time as the United States or China has to implement rules in the same way as Korea. But the general rule – the general idea is that we subscribe to the same norms in APEC and we introduce them at a pace that is consistent with domestic circumstances in our various countries. So it’s not a mandatory thing, it’s voluntary, but it sort of creates good global – good norms that can be used in the region in a voluntary way. So it sort of the new more proactive APEC is another response to the changes in the global system.

So these are just examples of what the system – also as I mentioned the idea of – and I forgot to mention this point in response to your question – competitive neutrality. I mean we understand that a lot of China’s economy is based on state enterprises or state-supported enterprises. As I say, we have no objection to the way China establishes its economic model. It can do – it can focus on state enterprises or build more state enterprises or modify state enterprises – it’s an internal Chinese decision that the United States does not have a view on one way or another. It’s a Chinese decision. The decision, however, as to whether the support for state enterprises distorts trade or gives those state enterprises an artificial advantage over private sector enterprises in the United States or elsewhere is however an issue that is of concern to the United States and therefore our view is that we should try to find some norms which enable there to be a level playing field so that there are not these distortions of the kind that we’ve – that I’ve mentioned.

MODERATOR: Maybe, one more question.


QUESTION: Yes, sir. Yeah, (inaudible) presentation, my question will also be on the U.S. trade policy, I don’t know if you have read it but this morning the Council on Foreign Relations compiled a task force report –

UNDER SECRETARY HORMATS: I know of its release, I was at the council this morning but I unfortunately did not read it. I have not read it. Yeah.

QUESTION: I haven’t read it either --

UNDER SECRETARY HORMATS: Good, then we’re in the same boat.

QUESTION: So, (inaudible) made many points. They say that U.S. (inaudible) basically lacks a real trade policy. They have made trade agreements with small countries but not big countries with an exception of South Korea for example –

UNDER SECRETARY HORMATS: Korea’s a big country. Columbia’s a big country. I mean it’s not as big as China but it’s big.

QUESTION: Right. (Inaudible) perhaps they were talking about EU, Japan, for example, these larger economic places – what’s your take on this? And secondly, I know that President Obama lacks the TPA – he lacks the power to really put forth the trade initiative. What are – what would be like the specific measures –

UNDER SECRETARY HORMATS: It’s interesting, I haven’t read the report but I – let me just make a couple of observations, because I think it’s – what you say is useful. Our goal is to get these three agreements through. We think that is very important because I think it’s very important to our credibility in the region both in the Pacific region and the Latin America region with respect to Panama and Columbia. So, that is our priority at the moment. But we also are doing other things. The TPP, which includes a number of countries that are – some are small, some are – Brunei is small but – we have big countries in there like Australia’s in there and Vietnam is a big country – and it’s a middle sized country, but it’s certainly a lot of people, and Malaysia, and Australia is – Chile. So we see this as sort of a modern 21st century agreement that is very ambitious; it deals with labor issues, and environmental issues, and state enterprise issues, and a wide range of issues. So we see this as an important part of our trade policy.

We also have with Europe, although we don’t – I’m sure they put that we – they probably wonder (inaudible) free trade agreement with Europe in their report, yes.

Well, I mean that – it – that could be something that maybe down the road would be considered by, some future group of leaders on both sides. But for the moment our focus is on trying to do a few things that we think will really improve trade dramatically and that is, in Europe, most of the barriers to trade are not tariffs – there are agricultural issues, which you know very well. But they – a lot of the barriers are standards and regulatory barriers. So one of the things we’re trying to do and will be in the transit, the TEC – which is the group that needs to discuss U.S.-European trade issues – Trans-Atlantic Economic Council meets. And what we’re trying to do is find ways of our having – having our regulators work together as we develop new regulations in new areas like for instance, e-transportation, electric cars, or other things where we can have a seamless trade relationship by having standards or regulations that are consistent with one another – we recognize their regulations, they recognize ours – our standard setters work together to establish common standards. They’re the kinds of things that we think are very important from our point of view. And so we think that while – that we are doing a lot in the civic, which is TPP, and in Europe which is the TAC, now could we do more? I hope we can do more. I would like to see us do more, but we have a structure in place. It’s a matter of making more headway in those structures.

The last point I’ll make is that in North America we have the NAFTA – but there again, in North America, the barrier’s not so much tariffs. It’s different standards, different regulations which impede trade. So what we’re trying to do with both Mexico and Canada is to reduce the differences in standards and in regulations so that those do not present major barriers. And increasingly in North America, one way to look at it is, we don’t just trade, we build things together. In other words, if you look -- and you could say this more broadly but let’s just use the Americas for the moment – a lot of the products that we make in the U.S. have a lot of Canadian and Mexican components. And a lot of the products that are made in Canada have American and Mexican components in them and a lot of products made in Mexico have American and Canadian components. So we have – there’s a – we sort of build things together. It’s an increasingly integrated market, where components in one country go to make final products in another.

So if we can make the supply chains more efficient and reduce barriers such as regulatory and standards barriers, we can have a more seamless and a more competitive North America. I mean this is -- we’ve already seen this in Asia where there’s a lot of market integration, supply chain integration, so if we can do this in North America, we can make all of our economies more competitive, and a stronger Mexican economy helps us because the Mexicans buy a large portion of what they buy from the U.S. And in turn the same is true Canada, when they grow they buy a lot more from the U.S. than from any other country. So if we can look at a more competitive North America through improving standards and regulations, we can benefit all three of our economies. So I think we do have a policy, maybe it’s not as grand as the council has suggested, but we do have very constructive policies in each of the areas that we think are pragmatic, and we think if they work we’ll actually considerably strengthen trade in these regions.

MODERATOR:  Thank you so much.  

UNDER SECRETARY HORMATS:  Thank you very much for having me. Thank you.