Secretary's Speech

U.S. Secretary of Commerce Carlos M. Gutierrez
Remarks to the National League of Cities
Washington, D.C.

Thank you. Good afternoon everyone. It’s a pleasure to be here. As Cynthia (McCollum, NLC President) mentioned, the Commerce Department has a broad portfolio. One of my predecessors called it the “Noah’s Ark” of agencies. I prefer to think of it as a conglomerate.

Importantly, the over-arching goal of each Commerce unit is one we share with groups like the National League of Cities: promoting growth, opportunities and new American jobs, including increasing knowledge and rational use of the natural environment.

Much of what we do is developing and putting timely information in the hands of decision makers.

Those decisions can be as routine …

• As deciding whether you will need a raincoat, based on our Weather Service forecasts.
• As important as when to adopt new technologies developed by our National Institute of Standards and Technology.
• Or as market moving as the report on the Gross Domestic Product that’s produced by our Bureau of Economic Analysis.

Today, I’d like to highlight three issues of importance to your constituencies.

First, travel and tourism: Among the data we track is the number of international visitors to the United States.

As mayors and council members, you’re well aware that travel and tourism is one of America’s important industries and employers. It supports millions of U.S. jobs. And it generates billions in local, state and federal taxes.

International visitors contribute to these numbers. Travel and tourism is America’s leading services export. It’s also a positive contributor to our balance of trade.

I’m pleased to announce that a record-breaking high 56.7 million international visitors were welcomed to the United States in 2007. Ten of the top 25 markets broke international visitor records set in previous years.

This is yet another record-breaking year for the U.S. travel and tourism industry and another year in which it produced a healthy trade surplus.

In addition to the social and cultural benefits that these personal exchanges bring, these international visitors spent a record $122.7 billion in cities and communities across the country.

This spending was an increase of nearly 14 percent over the previous record set in 2006. It’s also a 53 percent increase from the low numbers following September 11, 2001.

The second issue is DTV: The Commerce Department wants everybody in every city to be ready for the digital television transition.

People with older analog TV sets, that get free programming through rabbit ears and outside antennas, have some decisions to make. And they need to act before full power stations end analog service on February 17, 2009, as required by Congress.

Among their choices is purchasing a television with a digital tuner; subscribing to a cable, satellite or pay-tv service; or purchasing a digital converter box for their analog set.

Coupons worth $40 toward the purchase of up to two converter boxes are being made available though our telecommunications agency at dtv2009.gov.

We’re working with partners in the public and private sector to get out the word. We don’t want anyone to lose their TV service.

We especially don’t want any of you to be awakened by an angry constituent on February 18, 2009, because there’s no picture on the TV screen.

Third is the economy and trade: The nation is facing economic challenges and growing at a slower rate than in previous years and at a slower rate than we would like. The President’s economic stimulus plan will provide a needed boost with incentives for both consumers and businesses.

And while trade is the subject of some debate in Washington and throughout the country, net exports remain a key driver of U.S. economic growth, contributing 26 percent to our growth in 2007.

One of our big responsibilities at the Commerce Department is helping U.S. entrepreneurs and exporters find new opportunities in global markets. Our trade administration has specialists in over 100 cities and more than 80 countries.

In 2006, seven metropolitan areas recorded product export sales of $25 billion or more. Thirty more posted export sales of between $5 billion and $24 billion. And 116 posted export sales of $1 billion or more.

In 2007, American businesses sold a record-breaking $1.6 trillion in goods and services exports. And 2007 was the fourth consecutive year in which U.S. export growth exceeded 10 percent.

If we include the three pending free trade agreements with Colombia, Panama, and South Korea, our FTA partner countries accounted for nearly 30 percent of export growth in 2007.

Exports support millions of U.S. jobs, which on average pay a higher wage than non-export related jobs.

Is this really, as some of have suggested, the time for a trade “time out,” when other countries are negotiating free trade agreements to get an edge?

• The EU has at least 15 FTAs and is negotiating many more;
• China has least six trade agreements and is negotiating with a dozen other countries and regions;
• India is negotiating with Korea;
• Japan is negotiating with Korea and India.
• Chile has trade agreements that cover 58 countries and is negotiating more.

Our nation tried the protectionist play decades ago with disastrous results? In 1930, Congress passed the Smoot-Hawley tariff to reduce imports and protect American businesses and jobs.

Imports were cut in half by 1933. But over that same three-year period, exports also fell by half, and unemployment skyrocketed to 25 percent. These trade barriers deepened and extended the Great Depression.

A hard lesson was learned. We should never forget it. Protectionism doesn’t protect.

Now we’re hearing talk about quitting a free trade agreement with Canada and Mexico, our neighbors, our friends and our allies. The North American Free Trade Agreement links over 440 million people in an area that produces more than $16 trillion worth of goods and services.

Canada and Mexico are our first and second largest export markets. U.S. goods exports to the two countries last year totaled $385 billion.

• During NAFTA’s first 14 years, U.S. GDP growth was 54 percent.
• In the 14 years before NAFTA, U.S. real disposable income per capita increased just over $5,300. In the 14 years after, it increased more than $8,400.
• In the 14 years before NAFTA, unemployment was 7.1 percent. In the 14 years after, it’s a low 5.1 percent.
• Manufacturing output grew just two percent before NAFTA. After NAFTA, it grew 3.7 percent.
• Importantly, more than 25 million net new U.S. jobs were created in the 14 years since NAFTA.

Quitting NAFTA would destroy economies in U.S. border communities, hurt U.S. farmers, rip apart North American supply chains and information systems, devastate large and small exporters and cause incredible damage to the overall American economy.

The economic headwinds we now face are real. Yet the housing downturn, which has impacted our economy in the short-term, is unrelated to trade.

Clearly, many Americans are anxious over their jobs, their families and their futures. But our responses to economic anxieties must be thoughtful, responsible and smart.

Pretending we’re not part of North America is not a prescription for growth.

Trade is vital to the nation’s economic health. It drives growth, innovation, jobs, and higher standards of living.

We’ve already had the debate about closing vs. opening markets. American presidents from Franklin Roosevelt to George W. Bush have put their faith in free and fair trade.

America is not about retreating to the failed trade policies of the early 1930s. America is about competing and winning in the 21st century global marketplace.

I’ll close with this: It was Walt Whitman who wrote that “A great city is that which has the greatest men and women.” Clearly, America is blessed with the greatest cities in the world.

We look forward to working with the League and all of the cities in America to keep our nation informed, growing, prosperous, safe, and secure and our natural legacies protected for the next generation. Thank you.