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U.S. Department of State

Diplomacy in Action

Scene Setter for the Upcoming Americas Competitiveness Forum in Santo Doming, Dominican Republic

Francisco Sanchez, Under Secretary for International Trade, U.S. Department of Commerce
Washington, DC
September 29, 2011




11:00 A.M. EDT

NATIONAL PRESS BUILDING, WASHINGTON, DC

MODERATOR: Well, thank you all for coming and it’s our pleasure today to host Francisco Sanchez, who’s the Under Secretary for International Trade at the U.S. Department of Commerce. He’s here to discuss the upcoming Americas Competiveness Forum that will be in Santo Domingo, Dominican Republic as well as his travels to Brazil.

And with that, I’ll turn it over to you.

UNDER SECRETARY SANCHEZ: Great. Well, thank you very much. It’s great to be here. Thank you for coming out.

I am very excited about the Americas Competiveness Forum. This is the third one that I’ll have the privilege of attending. And I’m excited about it because, for the United States, trade and economic integration with the Americas is a very high priority. Forty-two percent of our trade with the world happens in the Western Hemisphere. And increasingly, it’s important that all of the countries in the hemisphere look to work together economically to be competitive vis-à-vis the world.

And I’m excited when I see sectors such as aerospace, textile and apparel, the automobile industry, integrating their supply chain production within Canada, the United States and countries to the south because it makes all of us more competitive vis-à-vis China, for example. Bombardier, a Canadian company, makes an airplane that is sourced in Canada, in the United States, and in Mexico. And I daresay if that plane wasn’t sourced that way, it might not be competitive. Embraer Air, another aerospace company, makes airplanes in Brazil with 50 percent U.S. content. And again, they make quality airplanes that are sourced within the hemisphere in a way that makes them competitive around the world.

The textile and apparel industry, which is one that seemed to be lost, not only for the United States but also for the region, and lost to Asia primarily, is coming back. And in our country, that means over two million jobs that are supported by that industry. And it’s working because American yarn makers and fabric makers and cotton growers produce a quality product that gets sent down to very high quality companies that make the shirts and pants and other things. And what’s happened is the – number one, quality has continued to increase. Speed to market – it takes a container of apparel from China about 32 days to come back to the United States. It takes, on average, about 11 days to bring it back from the U.S. from countries within the hemisphere. Now, that’s a huge advantage.

And then you factor in the costs. We need to verify these numbers. I believe it’s roughly 32 cents a pound, maybe 32 cents a ton – I need to get these numbers verified from the textile apparel folks – to ship a container of textiles to the U.S. It’s one third of that cost, on average, coming from countries within the Western Hemisphere. And then you add to that that because of NAFTA, because of CAFTA-DR, and hopefully very soon Colombia trade agreement, we have no – little or no tariffs on this. So the opportunities in that industry are continuing to grow.

And so I continue to believe that the ACF and other forms – I have the privilege of leading the U.S.-Brazil Commercial Dialogue, where we identify issues of mutual interest, whether it’s in standards in particular sectors, whether it’s in regulatory cooperation, whether it’s in capacity building on how to improve trade facilitation at the border – I we tackle all those issues there – whether it’s the work we do in Mexico on regulatory cooperation, on standards. All of this, I believe, is so important to the economic well-being of all of our countries. And the ACF gives us an opportunity to discuss, among business and government leaders, critical issues that can allow us to take full advantage of all the opportunities we have, both in trade as well as in supply chain production.

And with that, I will be quiet, and answer any questions you might have.

QUESTION: So what is the purpose of the travel of Secretary Clinton? This partnership and this forum has been going for a few years, but we don’t see much about it as compared to maritime initiative or security matters, for instance. So what is – what is she bringing to the forum?

UNDER SECRETARY SANCHEZ: Well, I’m not going to – other than generally, I’m not going to speak for Secretary Clinton. I’ll refer you to the State Department and Secretary Clinton. But I will tell you that the Secretary recognizes the importance of this hemisphere. I have a much narrower lane. I focus on trade and commercial activities, and I know how important that is to the United States well-being and I also believe to all the countries in the hemisphere. I think that Secretary Clinton knows that it’s important commercially, but it’s also important on so many other levels, whether it’s political, whether it’s security. And so I think her presence there is a recognition of the broader importance of our relationship in the hemisphere. But for a more detailed answer, I’m going to defer to the Secretary.

QUESTION: Thank you. Sonia Schott with RCN Colombia. Some people say, or some experts say that Latin America was better prepared to face the current economic crisis, and – better than the U.S., actually. Is this something that you are going to learn in this meeting from Latin America? What do you expect from the Latin American countries they are going to be in this meeting with the U.S.? And if you can, make a comment specifically on Colombia. Thank you.

UNDER SECRETARY SANCHEZ: If I can make comments specifically on Colombia?

QUESTION: Yes.

UNDER SECRETARY SANCHEZ: Sure.

QUESTION: What do you expect? What is on the agenda with Colombia?

UNDER SECRETARY SANCHEZ: I do expect that we – the United States can learn from our neighbors to the south. Certainly, many of the countries have managed their macroeconomic policies in a way that allowed them to weather the storm, if you will, pretty well. And so I think there are lessons to learn. I was just in Mexico Monday and Tuesday, and macro-economically, Mexico’s done pretty well. And I was there leading a policy mission with 19 renewable energy and energy efficiency companies. And on the energy front, Mexico has a very detailed plan for their future. So I took away a lot from that experience. So yes, the answer is yes. I think we can earn a lot.

And the ACF is really a forum for everybody to learn from. I think President Obama said it best when he laid out what is our relationship, what is the U.S. relationship, to the countries in the hemisphere? It’s one based on mutual respect and partnership. And so this is not about the U.S. telling our neighbors how to do it; this is our neighbors and the U.S. working together, whether it’s economics, whether it’s climate change, whether it’s security. We have to do it on the basis of a partnership. And in a partnership, you learn from each other. So I’m very much looking forward to hearing presentations from government leaders as well as business leaders at the forum.

With regard to Colombia, Colombia economically, continues to be one of the markets that the U.S. is focused on in terms of strengthening our commercial relationship, and I hope that very soon we can add to NAFTA and to CAFTA-DR a free trade agreement with Colombia and with Panama.

QUESTION: Is the White House ready to send the agreement soon? I mean --

UNDER SECRETARY SANCHEZ: The White House has been ready. The White House is more than ready. The White House wants to see these three agreements passed. The White House also wants to see TAA passed. We believe very strongly that trade agreements have been good for the U.S. economy, it’s been good for creating jobs. But there’s no question that some sectors get hurt by trade, and it’s important that we not forget or neglect those small businesses, those workers. So TAA is a vital part of our overall trade strategy. And the ironic thing is I believe the votes are there for TAA and I believe the votes are there for the three trade agreements. So we just need to get past the procedural challenges that we’ve had and get on with this.

QUESTION: The Republicans say that the last message they heard from them, been going on for a few – last – about two weeks ago, they said White House has to – some of them said literally they have to trust us. We are ready on the edge of approving TAA and GSP, so now you should send the texts. So the question is, are the texts are already there, are going to be there, I don’t know physically – at some point in the next date?

UNDER SECRETARY SANCHEZ: Well, look, I have given up trying to predict how Congress will act, when it will act. I just know that, I believe that the Obama Administration as well as the private sector have made a very strong case for these three trade agreements, and for TAA, by the way. TAA enjoys broad support within the private sector. And I think both the Administration and the private sector have made a very strong case for these. And I think that there’s just probably a need for trust all the way around, and I hope we can get there soon and get about moving forward because these agreements are critical to our economic recovery.

QUESTION: So TAA has to be approved before? Has to be voted?

UNDER SECRETARY SANCHEZ: Well, I’m not setting the strategy in the Congress or in the White House. So I’m not going to say what has to go first. What I will say is that TAA is important. While we believe very strongly that these agreements will be good for American workers and for American business, we have to recognize that some sectors do get hurt by this. And so the two should be together. And the thing is that TAA has enjoyed bipartisan support for more than 30 years. So it shouldn’t be that complicated.

QUESTION: You –

QUESTION: Secretary – go ahead, you first.

QUESTION: You are going to Brazil to open an oil and gas partnership.

UNDER SECRETARY SANCHEZ: I am.

QUESTION: President Obama has been – has (inaudible) something really important in his agenda. But all I hear is about (inaudible) in Canada, oil in Brazil – why not bio-diesel? What is the place for bio-fuel.

UNDER SECRETARY SANCHEZ: Well, first of all, what President Obama talked about is a comprehensive energy strategy. And a comprehensive energy strategy does not exclude traditional oil and gas. It has to be part of the mix. But renewable resources are very much a part of it. Biofuels have to be a part of it. My trade policy mission to Mexico was exclusively on renewable energy and energy efficiency. So it’s not just about FARSAMS (ph). But that needs to be looked at as well. And I think biofuels have an important place in Brazil’s economy, our economy, and in the world.

Obviously there are some issues there that we’ll continue to look at. Some of them go beyond just actions that the Administration can take, but that the Congress plays a role in it. And so I think that this is an issue that we’ll probably – we’ll need to continue to study and focus on and work with the Congress at looking at setting the right balance.

QUESTION: (Inaudible.)

UNDER SECRETARY SANCHEZ: Again, Congress plays a big role in this, so this is not something that the Obama Administration can act alone on. So I think that we will have to continue to work very closely with the Congress and with Brazil in striking that balance.

QUESTION: And – but I think that your focus in Brazil would be the business around the (inaudible) and how the American companies could participate in this – all this business. But I think also that Americans are a bit late in this business because, I don’t know, because of the crisis the last years, and, I don’t know, the situation of the companies. But they didn’t have this priority. They didn’t give this priority to the big news around the (inaudible), and we have some more Europeans, Japanese, the Chinese, Korean companies well placed in this business. How to – how can you manage this to be great partner of Brazil, Brazilian companies, in this business?

UNDER SECRETARY SANCHEZ: Well, first let me say that part of my trip down there is to participate in a trade show, an oil/gas trade show that traditionally has been held in Texas, and I think it speaks volumes that this trade show has been relocated for this year to Brazil. I think it also speaks volumes that I’ll be joined between the trade show and other activities that are going on there by about 176 U.S. companies. So --

QUESTION: One hundred?

UNDER SECRETARY SANCHEZ: A hundred seventy-six, between the trade show and some other activities that will be going on related to oil and gas. That’s a pretty strong commitment that we would have that – that that show would take place in Brazil. It’s a recognition of Brazil’s growing importance in this sector. And 176 companies is a lot of companies. So we – our private sector has a commitment to support Brazil and the development of its oil and gas sector, and we think we have a lot to offer. We welcome the competition. It’s not surprising to me that companies from Europe and from Japan and others are there. It makes a lot of sense. I believe very firmly, though, that we can compete, and we have a lot to offer Brazil in helping them achieve their full potential in this area.

QUESTION: In the sector specifically – technology for example and –

UNDER SECRETARY SANCHEZ: I’m thinking oil and gas more generally because we offer – we can offer expertise and technology in a number of different ways. So I wouldn’t limit it. Oil and gas business in many ways, the U.S. has been a leader in this. So we have a lot to offer in knowhow and skills and products and an array of services.


Let me go here, and then I’ll go here, and then I’ll come here.

QUESTION: Thank you. In what (inaudible) country who are (inaudible) to the ACF (inaudible) at the end of the forum?

UNDER SECRETARY SANCHEZ: Well, a couple of things. First, we expect to have somewhere between 800 and 1,000 government and business leaders. So it is a wonderful opportunity to interact with leaders to get ideas, to learn best practices, but also very practical. You can – if you’re a government official and you’re trying to attract investment to your country, you’re going to have important business leaders from throughout the sectors, and quite frankly, from throughout the world. There will be a European contingent at ACF this year. So I think you – it is a venue for rigorous ideas, exchanging of ideas, number one. Number two, it’s an opportunity to network with businesses that you may want to encourage to look at your country. And number three, it’s an opportunity for the hemisphere to think of itself as a region that can work together for mutual benefit.

And so one of the things that we’ll be seeing at the ACF is ways that we can put forward a set of competitive principles. What – for example, what do we really mean by competitiveness? And there will be discussions around coming up with a set of principles that make sense for the hemisphere around competitiveness. So, I think, in terms of working together, in terms of meeting business people that you might be able to attract to your area, and in terms of just sharing best practices, it’s a wonderful forum, and it’s very efficient. You get to meet a lot of the people you might otherwise have to go country by country to meet. So it’s efficient and quite dense in terms of information exchange.

QUESTION: So you could say that it could empower the countries in the region for being more competitive in (inaudible) of China, for example?

UNDER SECRETARY SANCHEZ: I absolutely believe that it is in all of our interest to work together, whether it be through two-way trade, whether it be through supply chain integration, as I mentioned earlier. It absolutely can be empowering to us. We can no longer think of ourselves as just countries that try to sell each other things. We have to really (inaudible) the Western Hemisphere as a set of countries that, working together, can be far more competitive than working individually.

QUESTION: This trade union between Mexico is in front of this (inaudible)?

UNDER SECRETARY SANCHEZ: I’m sorry?

QUESTION: Because – it is related to the reunion that you have in Mexico with energy industry –

UNDER SECRETARY SANCHEZ: Yes. Is it related to the ACF?

QUESTION: Mm-hmm.

UNDER SECRETARY SANCHEZ: Well, only that I promoted the ACF during my visit and encouraged representatives of the Mexican Government to be very much engaged in it. But no, it really was a mission focused on Mexico’s future and renewable energy and energy efficiency and an opportunity for these 19 companies to learn what Mexico was doing and for Mexico to learn from these 19 companies some of the concerns and challenges that they see.

Yes.

QUESTION: Yes. BCIU is currently hosting a tour of Latin American ambassadors, which are going around the country promoting like opportunity in Latin America. I was wondering if you could comment on – it seems strange that they’re doing this at this particular time when the FTAs haven’t been approved. How much is this tour a political opportunity to push forward with the FTAs, and how much is it really a trade strategy when you’re not sure if you’re going to have the FTAs?

UNDER SECRETARY SANCHEZ: I won’t speak for BCIU. You should probably direct that question to them. What I can imagine is, as I’ve been talking here, that our relationship is – with the – the countries within the Western Hemisphere, our relationship is much more comprehensive, if you will, than just simply buying goods from each other. We are increasingly integrating our supply chain production, which is giving benefit to countries that engage in that. I gave examples earlier – I don’t think you were here – Bombardier and Embraer, for example, or the textile and apparel business. So I suspect part of the reason to come would be to showcase various countries for investment, number one. Number two, I would say we have two pending FTAs, but we do have free trade agreements in place with Canada and Mexico, with Central America and the Dominican Republic. So there’s already a lot of activity present there, and there’s a lot of reason to interact and look for ways to encourage more commercial engagement with our country, whether we have the FTAs in place or not.

QUESTION: So – but there is a sense that trade must go beyond the discussion of the FTAs and there’s sort of some provision that they may not be there in --

UNDER SECRETARY SANCHEZ: Well, the FTAs – I believe the FTAs are very important. I also believe they will be passed by the Congress. Now, if you ask me when, I won’t go that far. But I’m convinced that they will be passed. They’re too important. And I believe that the Administration has made the case for them, and I believe the business community has made the case for them.

But let me say that every day I know my team, the Office of U.S. Trade Representative, works on what I would call the not sexy activities of standards, of – when there’s a problem at the border of getting goods moved forward – regulatory cooperation. Nothing terribly exciting about discussions on regulatory cooperation, but very, very vital. And so all that kind of work continues every day, and that’s, I would say, of equal importance. In American football parlance, it’s blocking and tackling. Cut the quarterback throwing the long pass in the world of football, it’s not the guy who’s kicking it from midfield and making a goal, but it’s that hard work that you do every day that helps move this, and all of that continues in the hemisphere. And some of that work will happen at the ACF as well.

Yes, ma’am.

QUESTION: Yeah, please, aside of the countries that would seems to be the most urgent now with the trade agreement with Colombia and Panama and so on. I would like to (inaudible) identify six countries in the Western Hemisphere, which you are strong working to increase the trade between the United States and those countries. I would like to know if I can – if they’re going – if they’re meeting any country in this meeting that (inaudible). And I would like to know if Argentina is one of those places in which you maybe have to increase the work or – because there seems to be any some kind of noise in the trade agreement (inaudible).

UNDER SECRETARY SANCHEZ: Boy, this is a lot here. (Laughter.) You may have to repeat some of these questions. So identifying countries where we’re especially --

QUESTION: We know that you are working hard with Colombia right now and --

UNDER SECRETARY SANCHEZ: Yeah. So, I mean, I can give you --

QUESTION: For example --

UNDER SECRETARY SANCHEZ: -- three, but this isn’t to the exclusion of others. Brazil – we have the U.S.-Brazil Commercial Dialogue that I mentioned earlier, where we actively identify issues that could be of mutual benefit. So we’ve worked on things to facilitate the expansion of small and medium-sized companies. Specifically, we’ve looked at how express delivery can help small and medium-sized companies. We’ve looked at how to harmonize standards in the green technology space, particularly in construction materials and other green technologies. We’re looking at standards in the alternative energy space. So that’s Brazil in the commercial dialogue. In addition to that, we have the U.S.-Brazil CEO forum, which brings together CEOs of both countries to really give advice on what should be the priority issues to promote trade. So there’s a lot of engagement in Brazil.

Colombia, as you pointed out, the President is working very hard to get the trade agreement passed through Congress, and we think that will be very, very helpful to expanding trade. In Mexico, we are working very closely with the Mexican Government on regulatory cooperation and specific regulations that are not – in some cases, at odds or in some cases just make it more difficult to encourage trade because you have to comply with two different sets of regulation. So we’re looking at ways to work with Mexico on regulatory cooperation and --

QUESTION: Can you give us an example of this – something more tangible.

UNDER SECRETARY SANCHEZ: On regulatory --

QUESTION: Yeah.

UNDER SECRETARY SANCHEZ: I haven’t been involved in these discussions specifically. I can give you one that is – it kind of hovers both regulations and standards, and that’s been in the energy efficiency space. So in electrical appliances, where energy standards take place, there’s been a lot of work on making sure that we have – that we’re simplifying our standards and our regulations so that it isn’t so difficult to comply with both U.S. regulations and standards and Mexican regulations and standards. So in Mexico, we’re engaged very much. And then I would say as a region, Central America and CAFTA – there’s been a lot of cooperation in the textile and apparel industry.

QUESTION: Now, how’s the situation with Argentina? There seems to be (inaudible) and some not (inaudible).

UNDER SECRETARY SANCHEZ: Well, I think that – I think we’re – it’s easier where countries are seeking to reduce trade barriers and open trade. And that isn’t to say that we don’t engage where there are differences because countries that had been good trading partners will always have differences. But clearly where they are – where there seems to be an increase in barriers rather than a decrease, it makes it more challenging. And so I think Argentina is a country with great resources. It’s a country that the U.S. can and should have a robust trading relationship with. And I would hope that we could see more of an effort toward open markets and free trade that benefits both countries.

QUESTION: Thank you.

QUESTION: Just one question: I think that --

MODERATOR: I’m sorry, this is going to have to be the next-to-last question.

UNDER SECRETARY SANCHEZ: So we got two more?

MODERATOR: Yes.

UNDER SECRETARY SANCHEZ: Okay.

QUESTION: Yes. Well, I think that you were going this forum in Santo Domingo in a very delicate position. You don’t have the free trade agreement approved by the Congress, you don’t have the general system of preferences approved to the – especially for the Western Hemisphere countries, and – well, I think that United States has so few things to offer to the Latin Americans at this moment. How can you deal with the situation?

UNDER SECRETARY SANCHEZ: Well, actually, I don’t agree with that assessment. We’re still the most open market in the world without the trade agreement. And if – you don’t have to take my word for it; you can look in the trade numbers. Two-way trade within the hemisphere has increased, and it’s high-value trade. The U.S. buys high-value goods. We don’t – we’re not just a buyer of natural resources. We buy value-added products from the region. We sell value-added projects to the region. So it’s a very robust trade relationship, number one.

And number two, again, to refer back to a comment that got a smile out of you, we do a lot of work every day that’s not sexy. It isn’t headline-grabbing. But we’re paying attention every day to our relationship in the region, whether it’s in harmonizing standards or regulatory cooperation, whether it’s encouraging supply chain production in the textile and apparel industry, whether it’s inviting Embraer Air to open up a factory in Florida that will be sourced from Brazil and the U.S. and will sell to the whole world. All of those activities are still going on, and the things you reference are important, but they’re only a part of the story.

So there’s a lot of activity going on. Our commercial relationship in the region is robust. And if I have anything to do with it, we’ll make it even more robust in the year to come.

QUESTION: Thank you.

UNDER SECRETARY SANCHEZ: I’ll do two more and then we’ll quit. Here and there.

QUESTION: Without the approval of the fast-track mechanism, if they are eventually approved, do you think this will be the last FTAs in a long time, that --

UNDER SECRETARY SANCHEZ: No.

QUESTION: -- (inaudible) time?

UNDER SECRETARY SANCHEZ: I do not believe that. Opening – lowering trade barriers, opening markets are absolutely critical to our country. And so no, I don’t believe that this will be the last that we see in a long time.

QUESTION: Do you (inaudible) need the approval of the fast-track mechanisms in Congress?

UNDER SECRETARY SANCHEZ: Well, I suspect beyond Korea, Panama, and Colombia, there probably will be some additional authority needed. But again, it’s – I think the case has been made. If you look at the United States, 17 – we have 17 – free trade agreements with 17 nations. We have a trade surplus on merchandise. If you take oil out of the equation, we have a trade surplus with those 17 nations. We do a tremendous amount of trade with those countries. I think – if I have the number right, I think it’s about 40 percent of our trade goes to these 17 nations, even though those 17 nations only represent 10 percent of global trade.

So I think the case has been made that lowering trade barriers and using trade agreements as a tool for that are vital. So I can’t predict when or how, but I don’t believe that this will be the last of the trade agreements.

And you get the last question here.

QUESTION: Well, (inaudible) strong, but the fact is that the U.S. has lots wrong in trade in the region for China, and all the ideas that (inaudible) told us about all are really good, but they are as good as they were before the Chinese competition started.

So what kind of action – the kinds that – the integration of the supply chain that you were very clear about, what are expecting to change regards trade with Latin America? Is anything possible (inaudible)?

UNDER SECRETARY SANCHEZ: Let’s dig beneath the trade numbers with China, because I don’t think that tells the whole story. If you look at what China is buying from the Americas, it tends to be natural resources, not a lot of value-added goods. So it makes the numbers look good, but it doesn’t necessarily create jobs in your country. If you look at the two-way trade between the United States and Brazil, it has more to do with value-added products, far more, than China. And so I think we are on the right track. We’re trying to form a relationship, a trade relationship, that has benefits for both countries, and I believe we’re doing that.

So I think that this whole China surpassing the U.S. narrative misses the mark, because you also have to look at the richness of the trade, and in that case, the relationship between Brazil and the United States, and quite frankly, the United States and other countries in the region is about beneficial two-way trade.

QUESTION: So the best thing to do is give (inaudible) --

UNDER SECRETARY SANCHEZ: Well, I think it’s important to keep – I do believe that it’s important to keep lowering trade barriers and to pursue a relationship that has benefits for both countries. If it’s a bilateral or if it’s a multilateral relationship, it has to have benefits for all countries. And that’s the relationship that – that’s the commercial relationship we want to have with our neighbors.

Thank you all very, very much.

QUESTION: Thank you.

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