Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
The Manufacturing Council
Gaithersburg, Maryland

I'm delighted to be with all of you again. The Council is a hard-working group, and Secretary Gutierrez and I truly appreciate your efforts and commitment.

I also want to thank all of the manufacturers and manufacturing associations for being here today. Your input is extremely valuable.

The economy continues to prosper since the last time the Council met in March, as I'm sure most of you know. GDP grew 5.3% in the first quarter, unemployment is down to 4.6% and 5.3 million new jobs have been created since August 2003.

But as the President has said many times, our job won't be done until opportunity reaches every American neighborhood and every American family.

At the Commerce Department, we have a full policy agenda. One of the highest priorities right now is comprehensive immigration reform, which Secretary Gutierrez spoke about with you last night.

But there are several other key priorities I want to mention and update you on.

First, is China and protecting intellectual property rights. China is always on the radar screen. President Bush and just about every federal economic agency continue to work on opening this rapidly growing market. It truly is the commercial relationship of the century.

In April, we had a very successfully meeting with the Chinese. The Joint Commission on Commerce and Trade agreed to number of measures that we expect will result in a more equitable and balanced commercial relationship.

This was a very senior level meeting that included China's vice premier and three U.S. Cabinet officers, Secretaries Gutierrez and Mike Johanns at USDA, as well as our top trade negotiator, Rob Portman (who is now the head of the President's budget office, OMB).

These kind of high level talks produce tangible results.

One area that we've been very insistent about is protecting our intellectual property. Chinese manufacturers have been pirating our brands, CDs, pharmaceutical, and computer software for many years. At the meetings in April, China finally agreed to strengthen intellectual property right enforcement and require companies to only use legal software.

This is positive step forward since China is the second largest PC market in the world, but the 13th largest software market.

Our job now is making sure that China honors the agreements it has made. And we will be very aggressive about it.

A second priority is opening other foreign markets.

There is a rising protectionist mindset when it comes to trade both here and around the world. It's a natural reaction to the changes that globalization brings. But it must be overcome.

I couldn't agree more with what Jim Owens (Council member & Chairman of Caterpillar, Inc.) said at the last Council meeting:

"We must look at globalization and international competition as an opportunity to make ourselves stronger and more efficient-and not, as some are proposing, as a reason to turn inward and put up barriers to trade and investment."

So we will continue to push forward on new trade agreements

At the top of the list is the Doha Round of trade talks, which we hope will be completed by the end of the year. As noted in the Council's letter we will discuss later, it is of tremendous importance to manufacturers.

We've also been successful in negotiating a number of free trade agreements, including with Australia, Bahrain, Central America (CAFTA), Morocco, Singapore, Colombia, Peru, and Oman.

And talks are underway with many others--Korea, Malaysia, Panama, the United Arab Emirates and Thailand.

These agreements are opening markets for American goods around the globe. Yet, there is concern that American manufacturers aren't taking full advantage of these opportunities.

U.S. business participation in the global economy has remained relatively flat with only a 7 percent increase in the number of U.S. companies exporting between 1997 and 2004.

So I urge you to do more to encourage businesses to take the plunge, and embrace international trade. I think we should heed the President's words in his State of the Union:

"The road of isolationism and protectionism may seem broad and inviting--yet it ends in danger and decline."

The third and final priority I want to quickly mention is innovation and competitiveness.

I know you discussed the President's initiatives when you met in March, and Al Frink will be speaking about them again later today.

But I absolutely believe that encouraging innovation is one of the greatest economic issues of our time.

If properly nurtured, research and technology will respond to the biomedical, energy and environmental imperatives that we face in the 21st century. Not only will this solve problems and improve quality of life, but it will also bring about economic opportunities that we can barely imagine today.

The goal of President Bush's American Competitiveness Initiative is to create the right conditions, the right nurturing environment, in which a new golden era of innovation can flourish. If innovation continues to flourish in the U.S., the manufacturing sector will grow and strengthen.

I encourage you to work with us on this initiative. And as always, I look forward to your comments and suggestions.

Thank you very much.