September 14, 2007
hp-556

Remarks by Secretary Henry M. Paulson, Jr.
at Atlas Material Testing Technology

Chicago, Ill. – Thank you, Russell, for the opportunity to learn more about Atlas and your operations.

For those who don't know, Atlas is an innovative company, founded in 1918, that manufactures equipment that simulates weather conditions --- sun, rain, heat and humidity --- for their clients who manufacture products, providing them the data needed to test their products' durability.

Atlas continues to pioneer new methods of durability testing, and from its headquarters here in America's heartland, Atlas sells across the globe. Companies like Atlas, and your employees, form the basis and promise of the American economy.

And we have a healthy U.S. economy today, and the strongest global economy I've seen in my business lifetime. Our unemployment rate remains low and real wages are rising. The United States' businesses and workers are the envy of the world. In industry after industry, we innovate, create and define what's possible.

In order to keep our economy healthy and extend this sixth year of economic expansion, we need to focus on areas that are vital to maintain our economic leadership.

First, international trade and investment, opening markets around the world to U.S. goods and services and keeping our markets open to competition. I see rising protectionist sentiment in the U.S. and around the world. It is ironic that protectionism is rising at a time when the global economy is so strong.

Trade is vital to continued growth in Illinois and throughout the U.S. And the U.S. has long been a leading advocate and beneficiary of global trade and investment and we must keep it that way. Globalization is here to stay and it is important that we continue to benefit from it rather than retreat into isolationism.

Illinois is the fifth largest exporter of the fifty states, selling over $42 billion of goods overseas last year. $12 billion of those goods were machinery manufacturing.

Over the past five years, Atlas has grown its exports by 12% on average each year and this year will export $30 million worth of goods.

About 14,000 Illinois companies, almost 90% of them companies that employ fewer than 500 people, exported goods in 2005. That is clear proof that it's not just multinational and Fortune 500 companies that benefit from trade --- the benefits of free trade spread across the economic landscape, and create jobs in companies of every size.

Congress has the opportunity to act quickly to generate even more opportunities for Illinois and U.S. workers --- by approving four Free Trade Agreements. The Peru Agreement will be the first Congress considers – but it shouldn't be the last. Colombia should follow quickly. And then we need to press for Panama and South Korea, too.

Colombian President Uribe has taken tough steps to improve conditions in his country, and he deserves our support. And, as the 8th largest economy in the world, South Korea is a very significant market for U.S. exports.

Far from creating obstacles for economic growth, these trade agreements will level the playing field and provide greater opportunity for Illinois' companies to sell goods to these countries.

I agree with Russell that lowering trade barriers in Latin America would mean growth for his company and his employees -- it would provide access to large and growing markets in our American neighborhood. Atlas sells products around the world and in each of the four countries where agreements await --- Peru, Colombia, Panama and Korea --- and Russell knows what he's talking about.

Trade with China is also critical to our continued economic growth. Our exports to China are rising rapidly, and there is great potential for more. I recognize that China has become a big political issue --- due, in part, to their own actions and also because China has become a symbol for globalization fears.

Our relationship with China is complex, and that makes the issues more difficult. But keeping our economic relationship on an even keel is critical - maintaining and building trade, and also working to persuade the Chinese to reform their own economy more quickly, because the health of their economy affects the health of the global economy.

I am impatient with the pace of change in China, and I know Congress is impatient. But legislation that would impose unilateral, punitive trade sanctions isn't the answer. I don't want to start a trade war. Punitive trade legislation could have enormous repercussions, especially when we are working to extend our economic expansion and get through a turbulent time in our markets.

Proven economic principles show that nations that open themselves up to competition - in trade, finance, and investment – benefit, while those that don't are left behind. Openness to trade and competition fuels innovation and creates good-paying jobs that raise productivity and standards of living in both rural and urban economies.

In our rapidly changing economy, we see job losses and dislocations in particular companies, industries, and even regions – just as there are new opportunities in others. But making trade a scapegoat and enacting protectionist policies would make us worse off. We should recognize the hardships and work to alleviate them, while keeping in sight the higher living standards Americans enjoy as a result of economic dynamism.

That dynamism will be best served by Congress acting quickly to enact these free trade agreements. The global economy is here to stay. To keep growing and leading the world in innovation and opportunity, the U.S. must trade freely, openly, and according to the principles of the global marketplace.

Thank you for the opportunity to meet with you this afternoon.