Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Opening Remarks at the Americas Competitiveness Forum 2008
Atlanta, Georgia

Thank you Chris (Padilla, Under Secretary for International Trade). Mayor Franklin, your vision and dedication both this year and last has been critical to the success of the Americas Competitiveness Forum. Thank you for your partnership and for all you’ve done.

Nearly 1,000 leaders in business, academia and government have gathered from nearly every country in the hemisphere, and we have an exciting program lined up. We are honored to have three presidents who have done so much for hemispheric growth and cooperation:

• Alvaro Uribe, President of Colombia;
• Elias Antonio Saca, President of El Salvador; and
• Alvaro Colom, President of Guatemala.

They’ll be speaking to us about leadership, building democracy, and what they’re doing to increase their countries’ competitiveness later this morning. Thank you for joining us.

Our goal last year, as it is today, was to listen and learn from one another about the best ways to improve competitiveness in our hemisphere. No one has all of the answers. But we hope that at the end of this meeting that each of you will have at least three or four new ideas that you can take back to your country and say, “I want to try this. I learned something about what another country is doing and I want to try it in my country.” That is the purpose of this conference.

So here are some positive developments since our last meeting:

• In Mexico, the number of days to start a business has been cut nearly in half.
• In the Dominican Republic, the time required to register property has been reduced from 107 days to 60 days, making it easier to get financing and start a business. Those are tangible results that will make a difference.
• Uruguay and Nicaragua have hosted successful competitiveness forums and conferences in their countries, also focused on small businesses.

And we know one thing from all of our economies: small businesses drive the majority of all jobs. In the U.S. it is about 70 percent of all new jobs are created by small businesses. And this is an interesting number that I repeat often, because I find it incredibly dramatic: 50 percent of all new jobs are created by businesses that are less than five years old.

So, while we often think that the economy is about big, multinational companies, it isn’t. The lifeblood of the economies in our Hemisphere—the energy, the vitality—is small businesses, entrepreneurs, people that dreamed, people with a willingness to take a risk, to start a new business and to grow.

Trade is also, of course, a powerful source of growth. In our country, the U.S., 12 percent of our GDP is now driven by exports. And we have had this year double-digit increases in trade to countries in our hemisphere, and I’ll mention five where trade is growing the fastest: Brazil, Mexico, Colombia, Peru and Chile. Very strong, double-digit growth rates of two-way trade.

Yet the progress that has been made is still sensitive. It is still fragile. Because we know there are people who would like to go back to an era where there wasn’t much trade to an era of economic isolationism, which we believe would be a big mistake. And it is our leadership that will keep the hemisphere on the right track—trading, attracting investment, creating jobs, creating prosperity.

And at the same time, we know there’s no shortage of competition. And as we mentioned yesterday, we believe and the numbers show that in the hemisphere we compete less with each other then we do with countries that are far away. So, very often we think that a reduction of jobs is due to trade inside the hemisphere. And people will blame it on NAFTA or CAFTA or some other trade agreement. The reality is that we complement each other. There are a lot of integrated supply chains in our hemisphere and very often the competition is coming from countries that are far away, not from countries inside of the hemisphere.

We’re interested in being more competitive for very simple reasons. Because through competition and through being more competitive we can create more jobs, we encourage growth and we help our people have better lives. That’s what competitiveness is all about. We can give people in remote areas and the poorest within our cities the chance to live better lives. They need the opportunity to move out of poverty and the ability to share in the benefits that being part of the global community can bring. So this is about helping everyone, about lifting people, about creating jobs, about giving people a better hope for the future.

One of the great examples that I use about hope and growth and progress is, of course, Colombia. Colombia is a great example of what can be achieved by increasing security, stability, democracy and a commitment to markets. Colombia’s turnaround has been nothing short of spectacular.

Colombia has significantly reduced poverty and unemployment. Ninety-two percent of Colombian children are enrolled in school. At the same time, Colombia’s economy has continued to grow quickly with GDP nearly doubling since 2002. This kind of positive change is good for Colombia and it is good for our hemisphere.

As President Bush said, “We need to work with our neighbors to build a Western Hemisphere of freedom and prosperity—a hemisphere bound together by shared ideals and free trade…Our future cannot be separated from the future of our neighbors.”

Today we have a very ambitious agenda and will carry on into tomorrow, about ways that we can improve our growth rates. Ways that we can learn from each other. We have 30 sessions today and tomorrow and we’ll be covering primarily four topics. Although, as you can imagine, there will be subtopics that flow out of these big four themes: one is travel and tourism; two is trade logistics; three is renewable energy; and four alliances in business and education.

Let me just talk a little bit about travel and tourism. We know that this is one of the most important industries in our hemisphere. It’s a service industry that’s constantly changing to meet the demands of customers throughout the world.

Travel and tourism account for billions of dollars in spending, employing thousands in businesses both large and small. In the State of Georgia, tourism generates approximately $28 billion of revenues annually, and it supports about 200,000 jobs. From the rain forests of the Amazon, to the ancient ruins in Peru to the beaches of the Bahamas, throughout the hemisphere, every single country, there are destinations that tourists want to visit. Our challenge, of course, is to maximize the positive impact of travel and tourism.

In the U.S. economy, travel and tourism and industries related to travel and tourism represent about eight million jobs. So this is big, big business and it creates a lot of jobs and allows people to understand different countries and to open up to the rest of the world.

We know that logistics is absolutely critical in our hemisphere and to trade and to growth. Especially because we have geographic proximity and the way we can take advantage of geographic proximity is through better logistics. A significant portion of productivity gains come from efficient movement of goods and information.

Consider one of the biggest initiatives that we will have in the hemisphere over the next 10 years, which is the Panama Canal. In nearly 100 years almost a million vessels have passed through the canal, slashing thousands of miles off trips with each crossing. And now we’re headed toward a new expansion of the Panama Canal. What we call the “Panamax” ships will soon be larger. The Canal is doubling its capacity. What we are seeing is that every single port in the hemisphere will be impacted by this new capacity of the Panama Canal. So it will require new investments in ports and logistics infrastructure throughout the hemisphere.

One example, Chile, will be investing up to $1 billion between now and 2020 in its port terminals in part due to larger ships. I was just speaking recently with President Vasquez of Uruguay, they have a major project in the Port of Montevideo. Every time I speak to someone from a different country they have something going on with ports.

In the U.S., we need to double port capacity over the next 10 years. And we know that ports that don’t increase their ability to take bigger ships will be at a competitive disadvantage. But the opportunity is great, the opportunity for the whole hemisphere to be a lot more efficient.

Four years ago—another example—the Colombian flower industry was faced with delays at Colombian airports of up to 13 hours. Improved logistics coordination has cut delays to less than three hours, and refrigerated transportation capacity and technology has improved. As a result, today consumers in Europe, Asia and the U.S. receive millions of Colombian flowers each day that are fresher than ever. And that is a tremendous logistics challenge and a logistics feat.

With energy prices increasing, getting goods to market quickly and efficiently, as we know, is more and more critical. And you’ve seen studies recently that suggest that because of the price of energy and because of what it does to freight costs that it becomes more efficient to trade in our own hemisphere instead of going far away to bring in goods. That’s also an advantage for the Western Hemisphere.

One example of the things we’re doing close to home: crossings between San Diego County and Baja California, Mexico—crossings in terms of delays—cost the U.S. and Mexican economies an estimated 19,000 jobs; the delays in our border—19,000 jobs and about $3.3 billion in annual output. So you can imagine there’s a lot of work going on to improve our ability to get trucks flowing quickly, to decrease the amount of time that trucks are sitting idle.

Here’s another interesting statistic: the amount of goods that move from Canada to the U.S. through the Ambassador Bridge is greater than all of our exports to Japan, and Japan is our third or fourth largest trading partner. So, again, today, teams on both sides are looking at the best ways to expand capacity, bridge capacity, from crossing from the U.S. to Canada and Canada to the U.S. That is a big deal. If we can’t get that right, it’s going to impact our ability to grow. The flip side is that if we get it right we’ll have a tremendous advantage in the terms of cost and capacity.

Just as logistics can be either a bottleneck or an opportunity so can access to central resources such as water and power. In Mexico the Monterrey Landfill Methane Gas Power Plant provides electricity for lighting in the evening and powering the metro system during the day. They’ve turned the problem of landfill emissions into a valuable resource.

Probably the best example that I can think of in the world in terms of having a vision and a long term strategy for energy is Brazil. As you know Brazil is a leader in the development of bio-fuels and the progress that they’ve made has been dramatic. In fact they’ve gone from a net energy importer to an exporter in large part due to bio-fuels, especially ethanol, producing more that 25 billion liters a year. What impresses me the most about Brazil is that not only do they produce a lot of oil but back some years ago they had the foresight to diversify into bio-fuels and today they are seeing the benefits of that diversification.

In the U.S. President Bush is encouraging Congress to fund bio-fuels and fuel cell technology programs but also to allow the development of oil shales, oil sands and to produce more oil in our own country. We have more oil that we can produce if we are willing to drill in our Outer Continental Shelf in an environmentally sound way.

Much more research, education, and investment will be needed globally to meet the worlds growing energy needs. And as we know, alliances between business, government and academia today are more important than ever. And we are seeing, what we see a lot of, is companies investing in the university along with the government to develop new products. And this is happening in the university throughout, throughout the hemisphere.

We are also seeing local officials such as Mayor Franklin, such as governors. We had one great example of the governor of Cordoba, Argentina. That governor has taken on the task of attracting investment. So it’s no longer a federal task, it’s no longer a federal preoccupation. It’s down to the mayors, to governors doing partnerships with universities, partnerships with business to be able to have a better environment for capital to come in and to create jobs.

I saw an example just recently of progress in education. I actually heard of the example and many of you, I think, have heard the same thing. In Uruguay, they have now achieved the point where every single child in school had a computer. When you talk about progress and talk about investment that will pay off over the long haul—that is progress. And in the U.S. and in every single country, North, Central, South America, the Caribbean, the challenge, as we know, is education.

We have, in some countries, 50 percent of the people, 20 percent of the people that aren’t participating, that aren’t contributing even though we know they can contribute even though that we know that they can add a lot to our growth to our economy. They need one thing: access to education. And whoever can figure that out faster than others will have a tremendous competitive advantage. There’s a lot going on in this country. There is a lot going on in every single country.

President Uribe was talking yesterday about a program in Colombia where parents are being given a fund to ensure that their kids go to school as long as they have the grades and that way they don’t have to send their kids to work instead they send them to go to school.

There are programs like that throughout the hemisphere and that is the difference between our growth in five, ten, 20, 30 years. Education, education is the big equalizer. And I hope we learn today and tomorrow about ideas, partnerships and ways we can use education and partnerships.

There’s one university called Earth University in Costa Rica which I had the opportunity to be associated with about 10 years ago. That is a great example, a great example of changing the agricultural industry through an entrepreneurial approach to environmental preservation and development by bringing in business, government and academia together. That is just one example. I’m sure there are many examples in every single country.

Let me just close out with two ideas that I believe unite us. And the reason we’re here is because we believe passionately in these two very simple ideas.

As we’ve all learned big strategic moves usually start out through very simple ideas. In my time in business I learned if you needed a long time to explain a strategy, you probably didn’t have a strategy. But if it’s very simple, you probably had something very powerful.

One is that the market is not static. The market is not something that has grown to a certain level and it will not grow any more. It is not a “zero sum game.” So some people believe that what we need to do is take the value of the market and redistribute it because that’s the only way that we will actually, truly gain equality. And we know that that is a myth.

As we say in Spanish: (inaudible) So, making everyone equal by making everyone poor is not a big, worthy, challenge. The challenge is to give everyone opportunities so everyone can improve their life. Everyone can improve their future. Everyone can improve their family. Everyone can have hope for having a more prosperous future.

So the pie is not static. We can grow the market, and by growing we can give everyone more opportunity. But the moment we think that growth is no longer in our future, then we’re going to be in trouble.

The second idea that I will submit to you is what we’re noticing throughout the hemisphere is that it doesn’t matter what your ideology is, whether its right of center or left of center: the economies, the societies that are growing are the areas that are attracting investment; trading with the rest of the world; believing in the power of free enterprise: helping people start new businesses; encouraging entrepreneurship; lowering taxes so people come in and invest more…those are the countries that are growing.

Over the long haul I’ve never known a country that grows by isolating itself. By having dreams of self-sufficiency instead of engaging with the world. So perhaps the idea is that the new ideology is pragmatism because in the end the only thing that matters is: are you creating jobs? Are you attracting investment? Are you trading more? Are you making life better for people?

One example I’ve used very often of a country in our hemisphere which I believe has the world record in free trade agreements is Chile. I think Chile has 52 free trade agreements. And we can talk about what is the ideology of Chile—I don’t know—it doesn’t matter. What matters is that they are creating jobs. They’re growing the economy. Per capita income is growing. Money is coming in. Businesses are getting started. That’s what counts. And that is what I believe brings us all together.

So, I look forward to learning from all of you and I hope you will learn from this session. And in the end we’ll be able to go back to our homes and do what we all want to do, which is create jobs, attract investment, trade more and give people a better future. And I thank you for your example and thank you for your leadership and let’s have a wonderful time.