for
Service Industries, Tourism and Finance
Douglas
B. Baker
Before
the House Committee on Energy and Commerce
Subcommittee
on Commerce, Trade and Consumer Protection
Chairman Stearns, Ranking Member Schakowsky, I would
like to thank you for your leadership and the leadership of Chairman
Barton. I also thank you for asking me
to testify before you today on a very important topic. Your hearing "Travel, Tourism, and Homeland
Security: Improving Both Without Sacrificing Either,@ was called just a few weeks after the Department of
Commerce hosted its own conference.
On June 10, the Department hosted a conference entitled
“International Travel to the
We organized this conference because we saw that many
industries were struggling to understand new security measures and were also
impacted by a perception that they will be unable to get foreign visitors into
the
The need for border security is a huge geographic
challenge to our country. We share a
5200 mile border with
Last year, more than 40 million international travelers
visited the Unites States. They
generated over $80 billion in revenue for this country through their
expenditures. International travel
represents the
Overall, based on Department of Commerce data, travel
and tourism represented $741 billion in direct and indirect sales, the
international portion totaling over 80 billion in 2003.
The attacks of September 11, 2001, brought the economic
contribution of this industry and border security into sharp focus. Our goals since then have been to ensure the security
of U.S. citizens and international visitors and to facilitate legitimate travel
and trade B all while safeguarding the privacy
of visitors to the United States and of U.S. citizens and residents.
Everyone agrees that border security is key to this
effort to save lives, protect property, and utilize limited government
resources wisely. We have made great
strides in developing the technologies and processes to enable this security,
to identify those who would do harm by employing the best technologies to
ensure we are secure, yet still able to enter and leave the country easily and
safely.
The Student and Exchange Visitor Information System
(SEVIS) program, US VISIT, and the development and implementation of biometric
technologies for visas and passports have all become key steps in heightening
our security.
These security measures have made our nation safer, but
that is only part of the equation. We must also work to facilitate legitimate
travel. Facilitating legitimate travel
to our country is an important goal.
Foreign travel to the
Commerce Role in Ensuring Economic
Security with Border Security
The Department of Commerce served on the Data Management
Improvement Task Force formed prior to 9/11, which was predicated upon industry
and government coordination and made recommendations for the improvement of
entry and exit systems for this country.
Since 9/11, the Department of Commerce has been
proactive and engaged in industry outreach.
Secretary Donald L. Evans convened a meeting of the leaders of the
travel and tourism industry sectors within a week of the attacks. Since that time, he has engaged in roundtable
discussions across the country with a variety of service and manufacturing
sectors and brought the concerns and issues home to interagency efforts.
The Department of Commerce chairs the Tourism Policy
Council (TPC), an interagency group composed of 15 government offices and
agencies dedicated to coordinating policy considerations affecting travel and
tourism. This Council, and its Working
Group, has served as a platform for mutual deliberations, industry input and
the dispersing of information concerning efforts for visa and entry/exit policy
changes. TPC News Alerts have been
issued to Commercial Service officers in American embassies to communicate
changes and rulings related to traveler requirements and documentation to the
local population for visiting the
The Department of Commerce=s
The Department of Commerce works with the Homeland
Security Council to ensure that commerce and economic security concerns are
duly considered during policy deliberations.
In this capacity, the Department of Commerce also serves on the Welcome
to the USA International Travel Perceptions Interagency Working Group to
effectively develop a unified, interagency, strategic communications plan that
addresses and attracts international visitors to the
One of the most important accomplishments of the
interagency process was the G-8’s accepting and subsequently adopting a
28-point action plan for enhancing and coordinating security measures that
facilitate travel. The Secure and
Facilitated International Travel Initiative was adopted by the G-8 at the
recent meeting at Sea Island,
What we need to do is consider the
best ways to ensure that we keep out the dangerous few, while those with
legitimate interests are allowed to enter on reasonable terms. The failure to strike this balance could
result in a situation where the borders are physically secure, but at a cost of
closing off many critical contacts with the rest of the world. Alternatively, no one wishes for our borders
to so open as to allow those who would do us harm into the country.
This broader conception of security, includes the
critical matter of
Our attracting the finest minds from around the world
fuels the dynamism of the
If the best minds can no longer practice science in the
United States or study in the top universities, or people find it hard to
practice or receive the best medical treatment, over the longer term we lose
something important B our position as leaders in our
respective fields, as the standard for higher education, as pioneers in the
sciences and technology on which the next economic breakthroughs will depend.
If people cannot visit
In today’s global economy, even those who do not engage
in international trade are subject to what happens in the international
markets. Our commercial strength lies in
leading and adapting to the great changes in business that have produced the
global market place.
If business people cannot visit for training, to close
deals, to participate in new ventures enabled by trade liberalization, or visit
to take delivery of major purchases – this hurts the U.S. economy and slows the
international trends that have contributed to our economic growth.
If our entry policies make it more difficult for
suppliers to operate, our private sector entities suffer. On the demand side, if our policies prevent
customers from reaching us, it=s the same result.
Services exports exceed $270 billion
each year, and our perennial trade surplus in services was approximately $65
billion last year. Many of those
services depend on temporary contacts and visits from foreign nationals; these
visits contribute to human development, culture, and mutual understanding. If this inbound channel of contacts becomes
too difficult, we may lose out to services firms located abroad and find
ourselves facing something of a brain drain.
If the top technical people cannot come here, they will go
elsewhere. And we=ll be the worse for it.
Consider education: International students attending universities and training entities were largely responsible for $13.7 billion in exports in 2003. A March 2004 Council of Graduate Schools survey indicated that the total number of international applications to the 113 responding graduate schools dropped 32 percent for fall 2004 from fall 2003, across all major countries of origin and for all major fields. Survey respondents included 60 percent of the top 50 universities. These 113 schools enroll nearly half of all international graduate students in the United States. Among other factors, potential student visitors frequently point to new, more stringent visa standards as an obstacle to studying in the U.S.
Losing foreign students means a lost opportunity to expose more people to American democracy and culture, which can serve as soft diplomacy for peaceful progress.
In medicine, American hospitals and clinics have long been the chosen destination for foreign patients= needing advanced treatment and surgery. Hospital revenue from such patients is typically double that of foreigners' share of patient volume. So, if 5 percent of a hospital's patients are foreign nationals, they typically account for 10 percent of that hospital's total revenue. This substantial revenue stream often finances vital hospital or clinical functions, such as care of inner-city patients and medical personnel training.
Travel and tourism industries contribute an average of 3.5 percent to our GDP annually. International travel is the largest services export category. In 2003, travel and tourism contributed approximately $80 billion in exports, which resulted in a travel trade surplus of approximately $4 billion.
Visa limitations impact a range of services industries, from training corporate staff of U.S. firms operating abroad to hosting visitors. Temporary entry rules affect how efficiently those activities happen, and in turn affect services and manufacturing industries across the national economy.
The tide is turning. In the first quarter of 2004, the U.S. welcomed 8 million international visitors. This was an increase of 12 percent over the same period of 2003. Nineteen of the top 20 visitor markets registered gains for the quarter. This follows the 3 percent increase from fourth quarter 2003. We must continue to fine-tune our entry/exit policies.
Visa
policies are directly linked to trade liberalization and our belief that free
trade is beneficial, spreading economic prosperity and peaceful governance. Trade negotiations are inseparably
linked to these issues as well. Great
progress has been made in liberalizing trade in goods over the years. Today, we aim to increase trade in services,
the next great threshold for trade liberalization.
Services represent close to 75 percent of U.S. GDP, but
only about 25 percent of U.S. international trade. Clearly there is room to grow this sector,
especially in light of the great competitiveness of U.S. services providers. Much of the most interesting work in trade
policy today concerns the development of new trade disciplines that deal with
services, investment, and the associated intellectual property rights. These disciplines are inherently more complex
than those related to manufactured goods, yet all are taking place against a
backdrop of falling telecommunications costs and the availability of computers
and advanced IT equipment and software worldwide.
All of these developments support openness in
international travel to match the new openness of international markets. If we develop a border security regime that
does not permit the necessary contacts and visits to deal with trade in complex
services, we lose something valuable. As
Under Secretary Aldonas stated at the Department of Commerce conference on June
10th, security must be understood comprehensively, so as to preserve
our national interests, and specifically, our objectives in trade and trade
policy.
Our security needs today are greater
than ever before, and they must be developed in a comprehensive manner. It is
not enough to simply secure the borders B we need a comprehensive system that
will provide unrivaled border security with full provision to allow foreign
visitors to come to the United States for the many legitimate purposes they
have.
The economic stakes are great for many leading edge
sectors of the American economy, in both services and manufacturing.
We have all accepted a bit of inconvenience to ensure
our safety. That is an acceptable trade
off. However, we must also work to
ensure that additional security precautions have a minimal effect on trade and
economic growth.
Perhaps even more important over the long term, our
position at the leading edge of science, technology, education, and the global
economy as a whole, could be at risk if we close our doors to the many
legitimate visitors who are exposed to some of the finest characteristics of
American life and values. This is why we
work hard to ensure legitimate travelers are welcomed to the United States.
My office at the Department of Commerce will continue to
work collaboratively with our colleagues at the Homeland Security Council and
the Departments of Homeland Security, State, Justice, and Transportation. We will continue to be vigilant and ensure
that we keep our nation safe while welcoming visitors to our country who are
such an asset to our nation and our economy.