Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Remarks at 2008 National Potato Council Public Policy Conference
Washington, D.C.

Thank you, I appreciate the opportunity to talk with you about the importance of free trade to America’s future. I look forward to working with our new Agriculture Secretary Ed Schafer to open new markets for American exports.

Potato and potato products play an important role in the American economy. Your industry keeps growers, shippers, processors and retailers working, and the American economy healthy.

Despite a recent slowing of growth, the American economy remains strong and resilient, with GDP increasing 2.2 percent last year. The President and Congress passed a stimulus package that gives our economy a needed “booster shot.” It puts money back in the hands of consumers and spurs business investment.

The stimulus package is an important example of the kind of bipartisanship we hope to see in other areas, such as the Administration’s trade agenda.

Trade is an increasingly important segment of our nation’s economy. Listen to these recent statistics:

• 2007 was another record-breaking year with $1.6 trillion in exports, increasing 12.2 percent over 2006.
• In 2006, exports increased 12.7 percent.
• Fourth consecutive year of export growth over 10 percent.
• For the first time since 2001, our annual trade deficit declined.
• Trade was the source of 25 percent of GDP growth in 2007.
• At 12 percent of GDP, exports are a greater proportion of our economy than anytime in U.S. history.
• Services export surplus was up 30 percent last year, and has doubled in the last four years to a record $104 billion.
• 20 percent of manufactured goods were exported.
• We also have a surplus in agriculture exports—31 percent of agricultural products were exported—over $90 billion last year.

For many industries, including potato growers, exports are a critical source of growth. Potato consumption in the U.S. has actually decreased since 2003, from 138 pounds per person to 126 pounds last year. However, in the same time exports of potato and potato products are up 62 percent in value.

Free trade agreements are the best way to help our exporters break into new markets. That’s why pending FTAs with Colombia, Panama and South Korea are so critical. These three countries combined represent more than $1 trillion in GDP and 100 million potential consumers for American products.

We already have FTAs with 14 countries. With the 11 signed during the Bush Administration we have a surplus.

Through these agreements we’ve had significant results; however we must continue to push for the access our farmers deserve.

The pending FTAs now pending will open up more markets for American potatoes.

For example, we’re already the largest supplier of agricultural products to South Korea. Under the FTA there will be even more opportunities:

• Frozen potatoes, which currently have an 18 percent tariff, will enter duty free immediately.
• Fresh and dehydrated potatoes which have duties up to 300 percent going into South Korea will see quotas and duties reduced to zero with full implementation.

Colombia is another important market. Potato tariffs range as high as 20 percent. With an FTA, however, all fresh and nearly all processed potatoes will immediately enter duty-free.

This agreement is a “no-brainer.” For 17 years Congress has given Colombia virtually duty-free access to our market, including almost all vegetable imports. At the same time the 8,000 American companies that export to Colombia are stuck paying duties that average 15 percent. This reduces our export competitiveness.

While Congress has again temporarily extended one-way free trade preferences to Colombia, the FTA still waits for a vote.

Some of you have been to Colombia as I have. If you’ve been you also know how much progress they have made.

• Colombia was on the verge of being a failed state is now thriving. In the last five years:
• Violent crime has dropped nearly in half—75 percent reduction in union leader homicides;
• Tens of thousands of paramilitaries are demobilized;
• Cocaine production and seizures bound for the U.S. have dropped significantly.

At the same time:

• The economy has grown by an average of 5.2 percent since 2002;
• Unemployment has decreased by more than half;
• Enrollment in public schools is up to 92 percent;
• There has been a steep decline in poverty.

It’s no coincidence this is happening at the same time we’ve made a significant investment in Colombia’s future. Plan Colombia has worked. It is a $5.5 billion bipartisan program started by President Clinton and continued under President Bush designed to promote peace, combat the narcotics industry, revive the economy, and strengthen democracy.

The FTA will secure the gains already made. If we are concerned about the welfare of the Colombian people; about stability and security in our hemisphere; and helping our workers and exporters, then this is the direction in which we must go.

Yet there is even more at stake today for those that care about American competitiveness, regional security and strengthening key alliances. These agreements are a “tipping point” in the development of American trade policy.

We cannot take for granted the traditional bipartisan consensus on trade. We cannot assume gains made can’t be reversed. They can, and some want to do just that. This is ironic, considering that exports are stronger and the benefits more widely dispersed than ever.

A shift away from free trade would be devastating for our businesses, families and economy. Many countries would have duty-free access in countries where we would pay a duty.

Being cut off from new global opportunities is certainly possible with regressive, backward trade policies.

Other countries won’t stop trying to gain a competitive advantage even if we do. For example:

• The EU has at least 15 FTAs, and is negotiating many more, including with Korea, India and Mercosur.
• Canada has five FTAs, and eight under negotiation, including Colombia and Korea.
• China has at least six FTAs, and is negotiating with dozens more countries and regions.
• India is negotiating with Korea.
• Japan is negotiating with Korea and India.
• Already, our share of the Colombian market has declined from 33 percent in 2000 to 25 percent last year.

Our retreat would send a message—that the world’s biggest economy is no longer the world’s leading economy. Make no mistake—taking a “timeout” on trade is a retreat. With the world moving forward, standing still would make us fall behind.

It’s our responsibility to lead. These agreements are a bellwether for future agreements and trade liberalization—and that impacts our national competitiveness.

Importantly, if those who oppose the FTAs prevail, they won’t stop. They’ll go after investment, they’ll disrupt supply chains, and they’ll erect protectionist barriers wherever they can.

Thank you for your support of these free trade agreements—

I can’t emphasize enough how important it is that you speak loudly at this critical moment. There is no time to lose. You who are our nation’s strength, who keep Americans working, and who keep the world well fed need to be part of the debate and need to be heard.