Where Industry and Security Intersect
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Thank you Ken (Juster) for that kind introduction. I am honored to be here with you today. On behalf of President Bush and Secretary Evans, I welcome all of you. We greatly appreciate your participation in the 17th annual Update Conference.
The two most important priorities for President Bush and this Administration are to provide lasting security for our citizens and sustained growth and economic opportunity for our businesses and workers. President Bush believes, as I do, that to create long-term prosperity, we must embrace the opportunities of global trade by opening markets for our products. But this President also understands that in a post 9-11 world, increased access to global markets demands unprecedented commercial vigilance.
The Department of Commerce’s Bureau of Industry and Security stands at the crossroads of these vital endeavors. Its mission is to provide a line of defense to ensure that sensitive U.S. technologies do not fall into the wrong hands, while working to further the growth of U.S. exports.
President Bush’s vision for our country’s role in the global economy provides an excellent, common-sense approach for the 21st century that creates real security while promoting prosperity at home.
Since his first days in office, the President has consistently pursued policies to encourage economic growth and to create new American jobs. Faced with a recession upon assuming office, he acted decisively to lower the tax burden on Americans, by working with Congress to pass the largest tax relief program in a generation. President Bush continues to fight for affordable energy, tort reform, lower health care costs, and open markets for American exports.
The President’s actions underscore his commitment to the long-term success of America’s economy. That commitment is bearing fruit. Because of our expanding global markets and the President’s pro-growth economic policies, our economy is growing stronger every day.
Signs of growth are everywhere. More Americans are working today than at any other time in our history.
Unemployment is at 5.4 percent – lower than the averages of the 1970s, 1980s and 1990s. 1.7 million new jobs were created in the last year. Take-home pay increased 3.6 percent last year – faster than the averages of the 1980s and 1990s.
Homeownership is at an all-time high. Demand for new homes rose by 9.4% in August as new home sales made their biggest jump in nearly 4 years. More than half of minorities now own a home. And interest rates, mortgage rates and inflation are all down to near historic lows.
Manufacturers have seen gains as well, creating more than 100,000 new jobs since last January. Factory orders in July were at their highest level in four years.
And the United States is the world’s leading exporter of goods and services. At just over a trillion dollars a year, U.S. exports alone would make our nation the world’s sixth largest economy. These exports supported, directly and indirectly, about 12.5 million American jobs last year.
The growth of foreign demand for U.S. products is an important source of growth for the U.S. economy. Over the past three quarters, the U.S. economy grew at an annual rate of 5.6% -- the fastest three quarter growth in nearly 20 years. Exports contributed about 20% of that GDP growth. U.S. economic success depends on exports as never before. And this growth is occurring despite continued high threat levels and concomitant tightening of our border controls.
As America reaches out to the world, not only does America do better, but our trading partners prosper as well. For example, to a significant degree, the developing countries that have been active participants in the global economy have grown more rapidly than higher-wage industrial countries.
It is therefore not surprising that U.S. exports to low-wage countries have grown faster than exports to intermediate-wage or high-wage countries. In fact, trade with lower-wage countries now accounts for 45% of total U.S. exports.
Because expanding trade is so important to expanding economic growth, since Congress passed Trade Promotion Authority (TPA) in 2001, the United States has pressed forward with negotiations of trade agreements globally, regionally and bilaterally.
Prior to TPA, America had been sitting on the sidelines, while our trading partners were negotiating trade agreements among themselves. There were more than 100 free trade agreements (FTAs) in the world in 2001. America was party to just three.
Since the passage of TPA, FTAs with Chile, Morocco, Singapore, Australia, and Jordan were signed by President Bush and have entered into force. In addition, the Bush Administration has successfully completed FTA negotiations with seven other countries, which include Bahrain, the Dominican Republic, and the five countries that will participate in the Central American FTA. And, we are actively negotiating FTAs with ten more countries around the world.
When all these negotiations are completed and the agreements enter into force, the United States will have FTAs covering 26 countries. And that does not include ongoing talks for a broader Free Trade Area of the Americas agreement with the 34 democracies in the Western Hemisphere.
Together, these FTAs, along with what we expect to be the successful completion of the DOHA Round of WTO negotiations, will open huge markets for American goods and services and bring broad-based benefits to American workers and businesses.
While the U.S. economy is booming, dangerous new threats to our national security, particularly in our homeland, challenge us as never before. The President has moved resolutely to address the twin needs of heightening global security and global trade. Increased trade and increased economic security are not mutually exclusive propositions. To the contrary, they should be viewed as mutually reinforcing.
A significant achievement of this Administration – and one of special interest to this audience – has been its ability to work effectively with the international community to prevent the spread of weapons of mass destruction – WMD – and other items of national security concern.
From a security perspective, there are no higher stakes. And I think we would all agree that strong security measures provide the foundation for a productive international economic system.
In a world where the items needed for WMD and other advanced weapons are available from numerous sources, and where trade is expanding so rapidly with countries that do not have well-developed proliferation control systems, the United States must cooperate with its partners and allies to prevent the spread of sensitive items. It can take time to find common ground, given the number of supplier and transshipment countries. But this is a task we must undertake to ensure the security of the global trading system. Multilateral cooperation also ensures that U.S. companies are not burdened with compliance responsibilities that are far more stringent than their competitors face.
President Bush has taken the leadership role in building broad international support for rigorous measures against proliferation of sensitive items. At the last three G-8 summits, for example, the leaders committed to new joint efforts to prevent the proliferation of WMD, to increase transport security, and to foster secure international travel. The Administration has worked to put these commitments into concrete actions, including through the Smart Border Initiative, the Container Security Initiative, multilateral export controls, interaction and cooperation with the global community, and the Proliferation Security Initiative.
Shortly after 9-11, the United States and its trading partners to the North and South entered into what are now known as the Smart Border Declaration with Canada, and the Smart Border Accord with Mexico. Mexico and Canada share more than a border with the United States. They are also our largest trading partners. In 2003, U.S.-Canada trade totalled over $390 billion. That is over $1 billion in goods everyday! In 2003, total U.S.-Mexico trade exceeded $235 billion.
By working together to develop a zone of confidence against terrorist activity, the U.S. and both Canada and Mexico have seized a unique opportunity to build a smart border for the 21st century – a border that allows the secure and free flow of people and goods. Although the U.S. has a separate agreement with each country, the means to achieve the goals are the same: expanding partnerships with private sector trade groups and importers and exporters with the help of innovative, smart technologies, to increase security and compliance of commercial shipments.
One promising example of how trade has endured and flourished on both borders is demonstrated by the Free and Secure Trade (FAST) program. The FAST program utilizes transponder technology and pre-arrival shipment information to process participating trucks as they arrive at the border, expediting trade while better securing our borders. Along the Canadian border, FAST is currently available at 12 high-volume border crossings and plans are being developed to have all 22 major commercial crossings FAST-capable by the end of 2004.
Another post 9-11 action of this Administration, the Container Security Initiative (CSI), is based on an idea that makes sense: Extending our zone of security outward so that American borders are the last line of defense, not the first. Through CSI, which was announced in January 2002, U.S. Customs and Border Protection works jointly with host nation counterparts at foreign ports to identify and to examine maritime containers that pose a risk for terrorism before the containers are shipped to the United States.
Containerized shipping is a critical component of global trade because about 90% of the world's trade is transported in cargo containers. In the U.S., almost half of incoming trade (by value) arrives by containers onboard ships. CSI is now implemented at the top 20 foreign ports, which together ship approximately two thirds of the volume of containers to the United States. The Bush Administration hopes to expand the program to additional ports based on volume, location, and strategic concerns.
Last July, I had an opportunity to tour the Port of Rotterdam. I saw first hand how tightened security measures have been integrated smoothly into the operations of one of the world’s busiest ports. The Rotterdam Port officials were very clear in their understanding of the critical importance of these measures to the commercial success of the port and its customers. They also noted incidental benefits, such as an increased interdiction of smuggled goods, drug trafficking, and other common crimes. For them, and for all of us, increased vigilance is a win-win proposition.
Elsewhere, the Bush Administration has worked within the four multilateral export control regimes – the Wassenaar Arrangement, the Australia Group, the Nuclear Suppliers Group, and the Missile Technology Control Regime – to strengthen their guidelines.
President Bush wants and expects our trading partners to administer and enforce export controls in the same rigorous manner as the United States. To this end, the Administration negotiated agreements that tighten the rules of the road for everyone.
We have made America and the world safer by reaching agreements to address terrorism that, first, control items that would be especially useful to terrorists; second, control intangible sensitive technology; and, third, control exports of items to missile, nuclear, biological and chemical weapons programs, as well as to military programs in countries subject to arms embargoes.
In addition, we have modified the international regime control lists to ensure that newly developed commodities are properly controlled by all our partners.
You are all doubtless familiar with the A.Q. Khan case, in which American and British intelligence officers uncovered and shut down a sophisticated black market network headed by the architect of Pakistan’s nuclear weapons program. This case made terribly clear what we already knew - - that it is necessary to strengthen export controls in countries that are not yet members of the multilateral regimes.
To this end, President Bush called on the United Nations to adopt a binding global non-proliferation norm. In April 2004, the Security Council adopted Resolution 1540. This resolution calls on member states to develop and to enforce credible export, re-export and transshipment controls designed to prevent the proliferation of weapons of mass destruction.
Resolution 1540 also calls upon members to refrain from supporting non-state actors that attempt to acquire weapons of mass destruction or their means of delivery. Additionally, it calls on all UN members to support the fundamental precepts of all the major arms control agreements and the non-proliferation objectives of the export control regimes.
Now that we have secured this commitment, we are working to make sure it is implemented. We have enhanced our interaction with key countries. In January of this year, for example, the Administration and India agreed to the “Next Steps in Strategic Partnership.”
This partnership establishes a series of reciprocal steps for expanding engagement on nuclear regulatory and safety issues, enhancing cooperation in peaceful uses of space technology, and creating an environment for successful high technology commerce between the United States and India.
Under Ken Juster’s leadership, BIS has played a critical role in the Next Steps process. On September 21, President Bush and Prime Minister Singh announced completion of the first phase of this partnership. This phase included implementation of measures to address proliferation concerns and ensure compliance with U.S. export controls. India’s actions enabled the United States to revise its licensing policies for exports to the Indian civil space program.
Separately, we have increased our cooperation with China. At last April’s meeting of the Joint Commission on Commerce and Trade, the United States and China agreed on measures to strengthen end-use visit cooperation. This should facilitate increased U.S.-China high-technology trade. Additionally, through the Export Related Border Security Program, the Administration has provided technical exchanges to 22 countries that are source countries for strategic items, transshipment hubs, or potential smuggling routes.
The Administration has also supported expanding the membership of the multilateral export control regimes -- when supplier countries demonstrate that they are prepared to adhere to the established guidelines and to work constructively with the membership on the common security issues that need to be addressed.
I am pleased to note that this year, China joined the Nuclear Suppliers Group (NSG), reflecting China’s and the United States’ shared interests in stemming the proliferation of nuclear weapons. International cooperation among all the major supplier countries is essential, given the truly apocalyptic capabilities of such devices in the hands of irresponsible national leaders or terrorist groups.
We therefore supported China’s admission to the NSG, and we look forward to working with China to advance our common security objectives.
Finally, to build on all of these initiatives, President Bush led the creation of the Proliferation Strategy Initiative (PSI). Under this initiative, the Administration has achieved wide international support to interdict WMD trafficking in the air, land, and sea.
As a result, American and British intelligence discovered advanced components useful in a nuclear weapons program that were being shipped to Libya. German and Italian authorities helped seize the materials. This interception was a major factor in Libya’s decision to end its WMD programs.
PSI is counter-proliferation in action. It is a coordinated international effort to use intelligence and enforcement resources to stop WMD shipments from reaching their intended destinations. It
brings together like-minded countries to use existing national and international legal authorities to shut down WMD trafficking networks, and has become an important tool in our fight against WMD.
The PSI is just one example of how this Administration has increased our enforcement efforts to better target and to take down violators of our laws and regulations.
You will hear a great deal in the course of this conference about the role of enforcement in the functioning of our dual-use export control system. I’d like to emphasize one critical aspect of enforcement – our cooperation with you in the private sector.
The exporting community has been – and increasingly continues to be – on the front lines of preventing and detecting serious export violations. The system only works if you help make it work.
For example, just this past year, a U.S. manufacturer worked with BIS Export Enforcement on a significant investigation that prevented the export of dual-use items that can be used to detonate nuclear devices. Our national security is enhanced significantly because of this type of cooperation from U.S. companies. We are extremely grateful. This is where all of you can be of assistance.
I ask you to watch for opportunities to partner with us to prevent violations. Wherever you are in the export control chain, you can make a difference. You can make America, the American people, and the world as a whole, safer.
The Bush Administration will continue to work with other nations to build a world of values and principles based upon a shared vision of mutual economic gain, and a shared hope that succeeding generations will grow up in a world that is secure and prosperous.
We will continue to work to strengthen multilateral arrangements and trading relationships to expand the global horizon of opportunities for U.S. business and industry. And of course, we will always remain vigilant to make the United States of America, and the world, a safer place without unduly burdening America’s greatest resource— the innovation and energy of her people.
As President Bush said “the way ahead is not easy, but it is clear. We will proceed as if the lives of our citizens depend on our vigilance, because they do.”
Thank you.