Room 2322
Rayburn House Office Building
Washington, DC

Wednesday,
October 1, 2003
Gilmour
72 pp.

The meeting was convened, pursuant to notice,

at 10:00 a.m., MR. J.W. MARRIOTT, JR., Chairman,

presiding.

APPEARANCES:

PRIVATE SECTOR MEMBERS:

J.W. MARRIOTT, JR.
Marriott International
Chairman

JIM MORGAN
Applied Materials
Vice Chairman

GLEN A. BARTON
Chairman and Chief Executive Officer
Caterpillar

RILEY BECHTEL
Chairman and Chief Executive Officer
Bechtel Corporation

ARNOLD DONALD
Chairman and Chief Executive Officer
Merisant Company

MICHAEL L. ESKEW
Chairman and Chief Executive Officer
UPS

JACK FARIS
President and Chief Executive Officer
National Federation of Independent Business

RAYMOND V. GILMARTIN
Chairman and Chief Executive Officer
Merck & Company, Inc.

DR. PAUL S. HSU
Chairman and Chief Executive Officer
Manufacturing Technology, Inc.

CHRISTOPHER JENNY
Senior Partner
The Parthenon Group

CECILIA OCHOA LEVINE
President
MFI International Manufacturing, LLC

JOHN A. LUKE, JR.
Chairman and Chief Executive Officer
MeadWestvaco Corporation

BETTY MANETTA
President and Chief Executive Officer
Argent Associates, Inc.

HAROLD B. SMITH
Former Chairman/President
Illinois Tool Works, Inc.

SIDNEY TAUREL
Chairman and Chief Executive Officer
Eli Lilly and Company

CHRISTOPHER JENNY
Senior Partner,The Parthenon Group

HAROLD SMITH
Chairman of the Executive Committee, Illinois Tool Works

EXECUTIVE BRANCH MEMBERS:

THE HONORABLE DONALD EVANS
U.S. Secretary of Commerce

THE HONORABLE ELAINE CHAO
U.S. Secretary of Labor

THE HONORABLE HECTOR BARRETO
Small Business Administrator

THE HONORABLE PHILLIP MERRILL
President and Chairman, Export-Import Bank of
the United States

CONGRESSIONAL MEMBERS:

THE HONORABLE MIKE ENZI
A United States Senator
from the State of Wyoming

THE HONORABLE JAMES TALENT
A United States Senator
from the State of Missouri

THE HONORABLE PHIL ENGLISH
A United States Representative
from the State of Pennsylvania

THE HONORABLE ROBIN HAYES
A United States Representative
from the State of North Carolina

THE HONORABLE JAY INSLEE
A United States Representative
from the State of Washington

THE HONORABLE DAVID WU
A United States Representative
from the State of OregonALSO PRESENT:

THE HONORABLE GRANT ALDONAS
Under Secretary for International Trade
U.S. Department of Commerce

THE HONORABLE LINDA CONLIN
Assistant Secretary for Trade Development
U.S. Department of Commerce

THE HONORABLE RANDAL QUARELS
Assistant Secretary for International Affairs
U.S. Department of the Treasury

MR. MARC CHITTUM
Staff Director
President's Export Council

P R O C E E D I N G S

WELCOME/INTRODUCTORY REMARKS
By Honorable Donald L. Evans, Secretary of Commerce
SECRETARY EVANS: Welcome to many of you who I have not seen this morning. I have already had the pleasure of greeting a number of those around the table earlier in the morning.
I just wanted to welcome everybody to the first business meeting of the President's Export Council. I want to thank all of you for your participation. I want you to know how much the President appreciates your service to America on this most important subject matter.
At this time, we all know how important trade and exports are to the American economy, and the President certainly values your counsel, values your advice, and is anxious to hear the reports that you will be presenting to him. So, again, you are all busy, all have companies to run, and America appreciates your service.
I acknowledge once again my good friend on my right, Bill Marriott, for his leadership time and time and time again, once again stepping up, serving his country, serving America, doing what he can to make sure that we are creating the conditions that will mean a better life for our children and our grandchildren. So, Bill, thank you.
I want to thank my friend on my left, Jim Morgan, for agreeing to be the vice chairman of this important council as well. It takes a lot of time, a lot of energy, a lot of effort, a lot of organization.
We come together just a few times a year, but during the course of the year there are many, many, many meetings, many phone calls, and many hours spent discussing these important subjects.
So, I want to tell you how I look forward to hearing the report. I know that Glen Barton is going to deliver a report on technology and competition. I know Mike Eskew is going to deliver a report on services. Ray Gilmartin, I know, is going to deliver a report on corporate stewardship. Jack Faris is going to deliver a report on trade promotion.
I know there has been a special subcommittee of Export Administration that Jim Morgan is going to address. It makes sense that we have a body like this that continues to review the international trade policies of this government.
It makes sense that we have the opportunity to listen to those that are in the private sector and are dealing with trade around the world and exports around the world. You are the ones that are experiencing the opportunities as well as the obstacles.
It is our responsibility here in government to continue to create the conditions where it makes it easier for you to compete domestically and internationally, and not harder. That is what this is all about.
It is all about, what can we do as an administration, as a government to make it easier for our private sector, our businesses, our small businesses, medium- and large-sized business to compete domestically as well as internationally.
There has been a lot of media attention recently on the manufacturing sector and the job loss in the manufacturing sector. The President constantly has jobs on his mind. What can we do in this administration to create conditions for not only economic growth, but what that leads to is job growth in America.
So one of the sectors of our economy where we have seen declining job growth, while the sector itself is growing in size, there has been declining employment in the manufacturing sector.
So, we in the Commerce Department took it upon ourselves to take a hard look at the manufacturing sector. Under Secretary Grant Aldonas is with us today, about six months ago, to deliver a report to me this fall, which he will do, that will review what the issues are in the manufacturing sector across America.
We have heard the issues and concerns of rising health care costs, junk lawsuits, excessive regulations, demanding reporting requirements. All of those kinds of things are issues that we will be addressing, and Grant, I am sure, will talk about in some length later on this morning.
Madam Secretary, nice to see you.
SECRETARY CHAO: Thank you.
SECRETARY EVANS: I appreciate your attendance this morning. Secretary of Labor Elaine Chao. Everybody, I know, knows her. But we are delighted to have you here. Thank you so much.
SECRETARY CHAO: Thank you, Mr. Secretary.
SECRETARY EVANS: So, again, this is a very constructive group. We're anxious to hear your comments, your ideas, your recommendations that we will deliver to the President as to what we can do to not only create better conditions here in America for economic growth and job growth, but, indeed, around the world.
That is what America is about. America is about leading the world. It is about leading the world to a better quality of life. That is going to happen through trade. The road to freedom, the road to peace, the road to prosperity is the road to trade.
The more trade we do with friends around the world, the relationships that we develop, the more experiences we can share as to what it is that has created the success that we have enjoyed here in America for the last 200 years, we need to share that with the rest of the world. So, we are going to continue to endeavor to create those conditions of free trade, but a level playing field for everybody.
In America we love to compete. We think competition is key to our success. Competition is what leads to innovation. That leads to higher productivity. That leads to economic growth. That leads to a higher standard of living. That leads to a better quality of life. That leads to peace and prosperity.
So, yes, competition is key, but it has got to be fair competition. When it comes to opening up the world to more trade, we are going to insist upon fair competition.
We have set up a new task force at the Department of Commerce that is specifically focused on unfair trading practices around the world where we will put not only a spotlight on where we happen to see unfair trading practices, but we will take action.
We will enforce our trade laws vigorously and we will be tough when it comes to enforcing our trade laws because we are going to make sure that our workers here in America have a level playing field to compete on.
Again, I want to thank the Chairman for this great service and his great leadership. We all know about the success of his company all around the world. I particularly know about it, since I sleep in his beds all around the world.
(Laughter)
SECRETARY EVANS: I enjoy doing that as I travel. Thank you for taking on a big job one more time and delivering in such a big way.
Let me turn the meeting over to Bill Marriott.
CHAIRMAN MARRIOTT: Thank you, Mr. Secretary.

MEETING CALLED TO ORDER
By Mr. J.W. Marriott, Jr., Chairman
CHAIRMAN MARRIOTT: I will officially call the meeting to order and welcome you all to our very first business meeting.
Since February, the council has worked hard on what I think is a very aggressive agenda. We are pleased that three subcommittees will be presenting their letters of recommendation this morning.
As you all know, we have a wide diversity of industries. We have members of Congress, we have Cabinet, we have the administration, which makes this council, I think, uniquely qualified to deal with the many issues that the Secretary has talked about.
We are certainly capable of assessing the recommendations from Congress and the administration, as well as some bold initiatives by ourselves. This is certainly a unique period in economic history. We have suffered the effects of 9/11, two wars, a recession, and some very difficult, unfortunate corporate scandals. In our industry, we sort of term this as a "perfect storm."
September 11th has brought us into an age where security has become more vital. Yet, free trade and open borders are the future, certainly, for a prosperous global market.
So I am pleased to report that the Department of Homeland Security is now an official member of the council and their role is to ensure that 9/11 does not ever happen again.
As you know, the event brought international trade to a halt, and transportation by land, sea, and air into and out of the United States stopped. Exports were not allowed to exit. Imported goods used in manufacturing were not permitted entry into our country.
Since the Department of Homeland Security now controls these avenues of trade, it is important for the council to work closely with them.
Today we will receive three letters of recommendation, one on corporate stewardship, one on services, and one on trade promotion and negotiations, which will deal with China.
We will also receive committee reports from the committees on Technology and Competitiveness and Export Administration.
First, I would like to ask the council's Executive Director and the Under Secretary for International Trade, Grant Aldonas, to please give us an overview of Cancun and the President's manufacturing initiative.

OVERVIEW OF TRADE INITIATIVES
By Honorable Grant Aldonas
Under Secretary for International Trade and
Executive Director of the President's Export Council
UNDER SECRETARY ALDONAS: Thank you. This will be a personal reflection. I know you heard from Josette Shiner already today about Cancun. I think the first thing to say is that, whenever we go off on one of these things, Bob gets us all on an airplane, it's on the Air Force Two model, and there is a seat sign on every one of the seats like you usually see.
Going to Doha, I had the fortunate, or unfortunate, experience of having to negotiate on countervailing duty laws and antidumping, which was somewhat sensitive. So he put a name plate on mind that just said "passing."
(Laughter)
UNDER SECRETARY ALDONAS: Going to Cancun, my job was to negotiate on the Singapore issue. So I wasn't surprised when I got on the plane to see the same name plate sitting on my seat.
My point in saying that is, the Singapore issue really is where it broke down. The point I wanted to make about that, is that it was only because we had made progress on market access and services, the things that count from the point of view of American business, that we're even talking about the same core issues.
The reason I say that, and I hate to report this, but the fact of the matter was, since my general operating rule in life, and certainly in managing my part of the Commerce Department is it's always the incompetence before the conspiracy theory.
(Laughter)
UNDER SECRETARY ALDONAS: What happened was, in the case of -- this was frankly the Europeans. I'm from Minnesota. I spent a lot of time with a Kanut guys. We used to have a phrase, "you can sit too close to your own campfire and inhale your own smoke." They misread the room, fundamentally.
They came in thinking that they could treat a lot of their former colonies--I am going to be very blunt about this--as if they were the member states and dictate a result at the end. They were playing the Singapore issues on investment, competition policy, trade facilitation, and on transparency and government procurement tactics.
They were going to try to back the development world off the demands they were making on agriculture, and it was not going to work. We tried as hard as we could over the course of the week to persuade them, but they had a different frame of mind going into the negotiations.
In all these things, in trade negotiations, when you have these sorts of issues, if you move early and are willing to sacrifice, the more you generally get paid. If you wait until the end, you get rolled.
So, they were about to get rolled, which is, in fact, what happened on the last day of the meeting. Lemee himself was finally willing to back off almost completely and narrow it down to one issue, which probably was the one which was most workable in trade facilitation.
The problem was, on the other side you had Brazil, India, and South Africa who were pursuing a coalition among developing countries that was designed to give them more leverage in the conversation.
Of course, for those of you who have dealt with those countries, you know they have enormously sophisticated negotiators and diplomats and they are capable of doing a good pirouette.
So, they walked right up to the edge, turned around, and said, we are ready to negotiate. Unfortunately, the rest of the developed world went right off the cliff. I forget what the phrase was from Tom Wilson, "mao maoing the flack catchers," I think is what it was. That is all that happened in the room when they came in, was just criticism, but not a real abiding interest in trying to sit down to negotiate.
Frankly, I think that they did not have in their brief the ability to move the way the Brazilians did and actually start their navigation of conversation.
So the real question is, where do we go from here? My own view is that, unfortunately, the WTO talks are delayed a minimum of two years. Politically, what that means is it puts you in a position where we have probably passed the current tenure of trade promotion authority.
What you start to do at that point is look for, what are the alternatives that are going to speak for themselves in terms of what they will do for American business, as items you've got to be negotiating on now, because you know that you're going to be running up to the date where you're going to have to seek renewal of trade promotion authority in 2005, and that means you're going to have to have some big things on the deck that matter to you guys, and also matter to the people who are going to grant us trade promotion authority again.
They have to be able to see that there is something out there that we use this for. We have got a pretty healthy slate of bilaterals that we are working on. But I really think that it is time to rethink that and see if we should not be hunting bigger game.
Here is why I say that. To a certain extent, coming out of Cancun, you tore the cover off of a lot hypocrisy that is built into the trading system. When you see many folks in the developing world line up with Robert Mugabe against transparency in government procurement, you have to ask yourself which side of that line you want to be on.
There were a lot of folks in the developing world--this was not a single bloc--that did want to move forward, that did want to make progress on these issues.
So it really comes down to seeing where you can get the biggest bang for the buck, and I do not think anything should be off the table. There is one thing I could ask the President's Export Council, is to think seriously with us about what the targets ought to be now, knowing that we have this 2005 issue, knowing that we have to make a case for how we are going to use trade promotion authority by that point, and knowing that the WTO is not likely to come around between now and then.
So, as you are thinking about the issue, one of the things to really identify is, what are the biggest places where we will get the biggest bang for the buck?
Where are the places that you think we ought to be taking out the cudgels on behalf of American business? Bring that to us, have a conversation, so we can start moving and we can identify for the Hill where we need to be going.
On manufacturing, just briefly. The first thing I always like to do, the Secretary and I, during Manufacturing Week in Chicago about six months ago, ad visited 23 cities, met with industries really across the board on the manufacturing front, and spent a great deal of time meeting with individual trade associations. We also got a lot of help from a number of people in the room in terms of that effort.
The first thing I always like to do is remind everybody where we started from, because while the press is really focused on following out, and certainly I know with Robin here there are some certain issues in individual industries, like tool and die, like textiles and apparel.
I always want to remind people, which people do not really know, we are still the largest producer of manufactured goods, the largest exporter of manufactured goods in the world. In fact, our manufacturing sector, standing alone, would be the fourth or fifth largest economy in the world, larger, in fact, than China's whole economy.
It is always good to have that in perspective. I think when people want to start to want to hang a target on an individual country, and I know we're going to talk about China later, we also have to bear in mind that we still have real strengths in this sector. It is as much about reinforcing the strengths going forward as it is tackling the underlying unfair trade practices that we know we have to do.
But what did we hear? What was interesting to me was, although there is an awful lot of concern registered about the international environment, people were very sophisticated about what was really going on.
They recognized that a lot of what has become the trade deficit is a fall-off in our exports rather than a dramatic increase in the slope of the line in terms of imports. What that means, is it is slow growth abroad in our export markets, in addition to what we find in the way of export barriers.
So the answer in those instances is
generally--and this will sound a little odd because it is not what you are hearing in the press--is it is really going back to the Europeans and the Japanese and saying, you guys represent 20 percent of the world, you have to get the economies moving.
Those are our export markets, and where we actually have seen the most significant drop in terms of our exports, as well as in Southeast Asia where you still have economies that have not come back to where they were prior to the Asian financial crisis. So, that has to be one focus.
I described that as sort of what I would call preaching what we practice. We want people to be pursuing policies that promote growth, the way the President has done here, in fact. So, that is the first thing.
The second step. Again, I was surprised by the number of people who really focused on what I have come to call keeping our side of the street clean. They understood that, in a global economy, the most important thing that we could do for ourselves, that we had control and the levers over, was making sure that, on the government side, we were keeping costs down just the way businesses have been trying to keep costs down.
And what that meant, interestingly enough, was I would almost call it a crisis of neglect. At every level of government, and in every branch, whether it is the legislature, the administrative agencies, and indeed the courts, you have people making individual decisions without reference to the multiple burdens it imposes on manufacturing in this country. What people do not recognize, is the hidden cost that imposes.
Part of the real value of the court, I think, is going to be bringing those costs to life so that people understand you can't be making those individual judgments without running them through a filter that says, as government takes an action, are we in fact improving the prospects for American manufacturing and American business generally or are we hindering them in terms of the actions we are taking? If we are going to take a step, how do we reduce the cost and its impact on people's business operations?
So one of the things that the Secretary has already announced, and the President announced, is a reorganization within the department to provide greater focus on those issues and more of an advocacy role for manufacturing so those cost issues are front and center in people's minds.
The last thing on the international side was, of course, the level playing field issue. Here, again, I was very surprised. There was not any dramatic call for protection, outright protection.
Again, I am not sure this is exactly what people see in the press. I would say, interestingly enough, Robin, that is even true of our friends in the textile and apparel industry.
I had a wonderful example where one manufacturer of fabric for luggage came in to a conversation with me. He showed me five suitcases that are all made out of the rip-stop nylon that you see on all those bags that they throw onto airplanes these days.
They are like Russian nesting dolls, one inside the other, all five selling for $29, which was lower than the cost of materials. Now, these are internationally traded raw materials valued in dollar terms, so it is not as if the Chinese manufacturer of these products could be purchasing them.
What that tells you is, here is a product that does not have a high wage content, but nonetheless is being sold at a price that is below any reasonable rate of return, or that would not generate a rate of return.
What it tells you, is the fundamental subsidy in a system like China's, the degree to which their companies do not face pressures from a capital market the way ours do to turn a profit. That goes after many of the issues that are on the deck with the Chinese. The currency issue is a label that we put on there, and it is one to keep a hard focus on.
I know Randy is here from the Treasury Department. But beneath that it is also the function of the capital markets in China and whether or not their companies will face the same sorts of competitive pressures we experience.
I do think we want to keep that goal in mind even as we are talking about currency, because that, at the end of the day, is what is going to be important in terms of our ability to access that market and to ensure that we have fair competition.
Beyond that, there are individual unfair trade practices that we have to go after. Certainly what the Secretary said about adding a Unfair Investigations Office -- from my perspective, it was a view that it was an effort to say we do not have to wait for somebody to file a dumping petition or countervailing duty petition to recognize that an industry is being subsidized. That is a legitimate issue we should investigate, surface, and raise with our trading partners.
My experience, I would say, with the Chinese in particular, is they are very pragmatic when we sit down to have a conversation. They will do the minimum possible. But it is our job to make sure we confront them with what we have to have on behalf of our business. Their goal is very clear. They want to get another 900 million people out of poverty. That means they have got to give them employment.
We just need to be able to be clear about our goals, which is one of the reasons I welcome the letter I know that is being circulated, because we just have to be very clear and articulate on that, and there has to be a consistent message from the business community, from Congress, and from the administration to make sure that our friends in China understand, here is where we have to be. You guys have made clear where you are going, here is where we are going. Now let us sit down and have a conversation about how we make that work together.
Thank you very much, Mr. Chairman.
CHAIRMAN MARRIOTT: Thanks, Grant. Appreciate it.
Are there any questions for Grant, anyone?
(No response)
CHAIRMAN MARRIOTT: Okay. We are about to hear from our subcommittees.
Before we do, let me thank Jim Morgan for being the vice chairman and for his heavy involvement. He is an ex officio member of all of the subcommittees. He has not been a passive member, but rather an active member on these committees. Jim, your service is a great testament to your commitment to the council and we appreciate it very much.
Before we go into the reports, I would like to establish the rule of order. Once the subcommittee reports have been presented, I will open the floor for comments from members of the council. Following their comments, we will ask for anyone from the public to make any comments or remarks, hopefully keep their comments to one or two minutes.
The first report is from Ray Gilmartin, chairman of the Subcommittee on Corporate Stewardship.
Ray?

CORPORATE STEWARDSHIP SUBCOMMITTEE REPORT
By Mr. Ray Gilmartin, Chairman
* DESCRIPTION OF SUBCOMMITTEE ACTIVITIES
MR. GILMARTIN: Thank you, Mr. Chairman. Good morning.
On behalf of the members of the Subcommittee on Corporate Stewardship, I am pleased to describe to you the work that our subcommittee has initiated over the past few months.
We are very proud to have the opportunity to advise the President on a very important matter, the role that corporate stewardship, as practiced by U.S. companies, has both on the success of companies, but also on the well-being and growth of the countries in which we operate.
Mr. Secretary, as you have said, businesses are at the strategic center of any civil society. I know that, like Merck, many of the private sector representatives around here have begun making good use of the central position that we hold in civil society.
I recently joined with leaders from a variety of businesses at a forum that was chaired by Majority Leader Senator Bill Frist talking about the role that corporations are playing in dealing with HIV AIDS in Africa and where companies have stepped up where health systems are totally inadequate to deal with the HIV AIDS, or governments have failed to act.
For Merck, we have taken corporate involvement and global health to quite an ambitious level in terms of the program that we have in Botswana with the Bill and Melinda Gates Foundation attacking HIV AIDS in a comprehensive way.
We see these activities as just one example of a new role for corporate America and what we can do to help aid developing countries to put in place the enabling conditions that would create a foundation of political and economic stability that can only come about by dealing with challenges that are faced in those countries, such as health.
I think increasingly we are all viewing these issues from the perspective of long-term investors in these countries and are working to shape an environment that will lead to greater economic growth of the host countries that we are in.
As a result, it will shape a role that supports and defends a global trading partnership that promotes prosperity in poor nations, and also prosperity in rich nations like our own.
So to highlight this fact, our subcommittee plans to document, in a report to President Bush, successful corporate stewardship initiatives, policies, and philosophies from around the globe, and, consistent with global trade goals, our report will place a specific emphasis on U.S. corporate stewardship activities involving developing countries.
In preparing this report, we hope to assist the President in inspiring additional corporate stewardship activities by American companies. In addition, we hope that this report will assist developing nations and others in understanding the important role that American business can play in promoting economic development and alleviating poverty.
With this goal in mind, the first half of our report will focus on specific examples of corporate stewardship activities. The second half of our report will feature a handful of developing countries to depict the ways in which the corporate stewardship activities of U.S. businesses have positively impacted these developing nations.
This half of the report will be written from the viewpoint of the host country, and as such will differentiate itself from much of the scholarship currently available on the topic of corporate responsibility, or all that falls under that.
We are counting on the Commerce Department and State Department to play a very large role in helping to provide information on this portion of the report.
So, as council members, we hope that you will support our compilation of the data necessary to craft this report, providing us from your own experiences examples of the corporate stewardships of your companies so that we may spotlight them in our report.
* PRESENTATION OF PROPOSED LETTER
MR. GILMARTIN: To advise the President on our forthcoming report, we have drafted this letter, which can be found in your briefing packets.
Mr. Chairman, I hereby submit it to the council for formal review and approval. At this point, I am happy to answer any questions you may have about our work or about our letter.
* COUNCIL DISCUSSION
CHAIRMAN MARRIOTT: All right. You have a copy of the report and the letter under Tab 5. It has been submitted for the council to consider. For members of the public, copies have been posted online. Do any members of the subcommittee have anything they would like to add to what has been said?
Congressman Wu. Yes. Mr. Chairman, I have always been strongly of the view that sound American values, business practices, and corporate governance practices can be a very important tool in increasing transparency economically, socially, and politically around the world.
This not only promotes good business and sound economic development, but it also has a role to play in political liberalization and the development of democracy and human rights and the rule of law.
As a member of the subcommittee, I would like to add one short phrase to the second paragraph of the letter. At the end of that paragraph, strike the word "and" immediately preceding the word "communities." And I'm not wedded to this language, but as briefly as I could, the words I added were, "as well as peaceful international relations."
I believe that, as we promote democracy around the world, democracy, human rights, and the rule of law, that democracies do not make war upon each other, whereas, democracies and totalitarian countries have problems with each other, and totalitarian countries certainly have problems with each other.
The role that corporate America has to play is much more than business. It is the survival of this world in a peaceful way so that we can prosper together. I would just like to get that thought in the letter if we can, if it is acceptable to this body.
CHAIRMAN MARRIOTT: Are you okay with that?
MR. GILMARTIN: That would be fine.
I think that is an excellent addition. I would turn to other members of the subcommittee, if they have any reactions to do that.
(No response)
CHAIRMAN MARRIOTT: Good.
MR. GILMARTIN: We would be pleased to adopt it.
CHAIRMAN MARRIOTT: Anybody from the council have any questions or comments on this letter?
(No response)
* LIMITED PUBLIC COMMENTS
CHAIRMAN MARRIOTT: Any of the public members? Any comments or questions?
(No response)
CHAIRMAN MARRIOTT: Okay. There seems to be general agreement on the letter. Unless there is an objection, I would like to propose the letter be submitted to Secretary Evans for submission to the President.
Any objections?
(No response)
CHAIRMAN MARRIOTT: Okay. Thank you very much.
MR. GILMARTIN: Thank you, Mr. Chairman.
CHAIRMAN MARRIOTT: The letter is approved.
Well, I would like to call upon Mike Eskew, chairman of the Subcommittee on Services, to give his report.

SERVICES SUBCOMMITTEE REPORT
By Mr. Michael Eskew, Chairman
* DESCRIPTION OF SUBCOMMITTEE ACTIVITIES
MR. ESKEW: Thank you, Mr. Chairman. Good morning, everyone.
Our subcommittee is working to advance the priorities of the service industries. Just allow me to underscore some of the important services.
The U.S. is the world leader in services: financial, insurance, entertainment, travel, e-commerce, and certainly package delivery and logistics, and a host of others.
Services represent about 64 percent of the U.S. GDP and about 80 percent of all jobs. Nonetheless, total world services trade is a fraction of what has happened in the service industry. It is estimated that if we could lift all the barriers of services, world trade would increase by $1.1 trillion.
Services provide the infrastructure for goods exports. A University of Michigan study finds that a 50 percent reduction in barriers to service trade would gain five times greater than those comparable in good industries.
* PRESENTATION OF PROPOSED LETTER
MR. ESKEW: Our challenge as a subcommittee is to explain why services are so important in our efforts to serve a common voice to export and energize global commerce. We have drafted a letter, that you all have a copy of, that addressed the importance of the service sector to the U.S. economy. We encourage the President to continue to place a high priority on services in bilateral, regional, and multilateral negotiations.
The letter addresses two major concerns. Number one, from the failure of the Cancun talks and WTO, we want to encourage the administration to go forward with service negotiations.
As you know, services was a so-called built-in agenda in the Uruguay Round, meaning that governments have the mandate to continue to negotiate with services in WTO.
Number two, some of the countries, particularly in the Free Trade Area of the Americas, FTAA negotiations, have suggested taking services off the agenda may help us get something passed by the 2005 deadline. We think that would be missing a terrific opportunity if we would take services off the agenda. So, we think we need to continue to focus on services.
* COUNCIL DISCUSSION
MR. ESKEW: So I would like to open up the floor for discussion of the letter and see if there is any consensus for moving this letter forward, Mr. Chairman.
CHAIRMAN MARRIOTT: Thank you.
Any questions or comments on this letter? The letter is under, I believe, Tab 6.
CONGRESSMAN INSLEE: Mr. Chairman?
CHAIRMAN MARRIOTT: Yes?
CONGRESSMAN INSLEE: I would just like to throw out an idea for us to talk a little bit about. I represent a Congressional district just north of Seattle, a very high-tech district, a very service-oriented district. We understand export of services; that is how we make our living up in Microsoft country in the biotech corridor up in Seattle.
But there is the same emerging type of concern among a lot of my constituents in the service sector that has existed through the last decade in the manufacturing sector.
I think it is very important for us in the trade community to get ahead of the curve of that concern in order that you do not see it pushed back on liberalization of trade rules regarding the service sector.
I think it is very important for us to recognize that sort of reality on Main Street, USA. I throw that out because I am just sort of a -- do not shoot the messenger here.
I am trying to report to you about what I am hearing from my constituents who are very trade dependent in exporting services, but nonetheless have a concern about some of the things that are going on in the service sector in engineering jobs, service jobs that are now being done in Russia, back office jobs being done in India, and the like.
I think it is very important for us in the trade community to address those concerns when we talk about trying to promote exports in services, which I do believe we still have great potential in this country to do.
I would suggest us giving some consideration in this letter to address the need to, as we move forward in removing trade barriers, if you will, for services, that we still address the basic core values that have to be harmonized with other countries in doing that.
For instance--and I am just pursuing this stream of consciousness for a moment, so I do not have any agenda here--it seems to me that we ought to, in this letter, address the need to make sure that we harmonize our privacy rules, for instance, when we have services both across borders, both import and export related, so we can assure constituents that we are protecting privacy rights, as we are melding our service sector and financial services, for instance.
It seems to me perhaps we should make some reference to preserving our security interests in export of high technology defense information, for instance, which is an emerging concern, getting the multinational component, like the aeronautics industry, for instance.
I just think it is important for us in this community to make a conscious statement that we are aware of a need to protect those sort of value that people believe are important as we go forward. I think that message is important to our constituents that we recognize that.
I do not have any magic language to propose. I assume I could probably draft some. But I just think it is an important message for us to send to the national constituency so that we do not end up with the same type of push-back that we see in manufacturing related issues.
So, that is an idea. I do not know if it will have a second, but I would suggest we think about that.
CHAIRMAN MARRIOTT: All right. Do you have any comments?
MR. ESKEW: No, I think those are good points. I think that if we need to strengthen this letter, that is fine. We should take their points and see what we can do.
CONGRESSMAN INSLEE: With the Chair's permission, perhaps I could suggest some language in the immediate future?
CHAIRMAN MARRIOTT: Yes, that's fine.
MR. GILMARTIN: Yes. That is fine. We'll work with him and see if we cannot firm this up.
CHAIRMAN MARRIOTT: Yes. I do not think there should be any objection here on anything you have said. I do not see any. Sounds like motherhood and apple pie to me.
(Laughter)
CONGRESSMAN INSLEE: Well, that can be controversial.
(Laughter)
CONGRESSMAN INSLEE: I am sure.
UNDER SECRETARY ALDONAS: Mr. Chairman, could I just raise a point about that? I wonder, actually, Congressman, whether -- the issues you are raising are very important. They apply, really, across the board. They are not limited just to services.
Although I appreciate the recent outsourcing of services--John raised the issue--in a number of communities. But it almost makes me wonder whether we should not be asking the PEC to reflect on that as a more general matter.
I do not object to adding something to the services letter, but it strikes me that what you are raising are important issues for the business community to make a statement on that.
Maybe putting that into a separate letter will really reflect that that sort of thing will be helpful, whether it is in addition to getting something on the services letter or whether it is really putting it to the PEC and allowing them to deliberate further on that and come up with a statement that would be really going in the next year, so it does lay the groundwork for where we ought to be headed.
What I was saying earlier, I think, before you came in, was where we are headed on trade means we are going to have to be rethinking our approach, generally, after Cancun. There is a reason to have those statements out there by the business community about where they want to go. So, I am not sure if that will get a second from you.
But the one thing I would be thinking about is whether the services letter itself is the right context or whether it is not an issue that we really have to put in front of the PEC as a whole.
CONGRESSMAN INSLEE: I would just suggest we do both. I think this will be a long-term issue for us all, but I think it is important for us now to make this statement to the country that this is what the community is thinking. That is what I would suggest.
CHAIRMAN MARRIOTT: Glen, did you have something?
MR. BARTON: Yes. I would just like to add my thoughts in that regard, too. I think this is probably the next biggest area that most companies are looking to to realize significant cost reduction, and it is going to be a big sucking sound unless we really get on top of it and get some guidance.
So, everybody sees this as a huge bonanza. Unless we step in and do something at this point in time, we will be looking at a huge number of white collar jobs lost in the future as well.
CHAIRMAN MARRIOTT: Why do we not set this up as a separate item for the Services Committee to consider? Then we will just go ahead with this letter, if that is okay with you. Then we will just set up and see if we can't come up with another policy statement and letter to the President on this specific issue.
MR. GILMARTIN: Are you suggesting, Mr. Chairman, that we submit this letter, but we also submit a separate letter?
CHAIRMAN MARRIOTT: Submit this letter and have another, separate letter come out.
MR. ESKEW: Based on what the Congressman suggested, which is fine.
CHAIRMAN MARRIOTT: Then in your next subcommittee meetings, you could give us your input and we'll get it into a separate letter. Is that okay?
CONGRESSMAN INSLEE: Yes.
CHAIRMAN MARRIOTT: Is that okay with you?
MR. ESKEW: It's fine with me. Thank you.
CHAIRMAN MARRIOTT: Any other questions on this issue?
(No response)
CHAIRMAN MARRIOTT: If not, we will just go ahead and present this letter to the Secretary and he can send it to the President.
* LIMITED PUBLIC COMMENTS (None)
CHAIRMAN MARRIOTT: I understand, Secretary Chao, you have to leave.
SECRETARY CHAO: Yes, unfortunately.
CHAIRMAN MARRIOTT: We would like to hear from you.

STATEMENT OF ELAINE CHAO, SECRETARY
U.S. DEPARTMENT OF LABOR
SECRETARY CHAO: Thank you, Mr. Chairman, for a few moments of your time, and also the council.
I want to say how pleased I am to be a member of this council. Secretary Evans and I have worked on a number of issues together, and I look forward to working with you, Secretary Evans, as well.
As I look around the room, I see a very impressive array of leaders in the product sector who are focused on promoting exports, and also creating more jobs.
As the Secretary of Labor, I am obviously very concerned about creation of jobs, and the President's trade agenda can result in creating good, well-paying jobs.
I want to say that the competitiveness of the American workforce is absolutely critical to our economic well-being. Part of the mission of the U.S. Department of Labor is to engage in partnerships within in the private and nonprofit sectors to help increase the competitiveness of the American workforce.
So, I look forward to continuing the dialogue, along with the council, and look forward to continuing to grow U.S. jobs so we can increase trade.
Thank you.
CHAIRMAN MARRIOTT: Thank you very much. Thank you for being here today. Okay.
I now call on Jack Faris--he is vice chairman of the Subcommittee on Trade Promotion and Negotiations--to give his report. The chairman, Mr. Raymond, could not be here today.
Mr. Faris, the ball is yours.

TRADE PROMOTION AND NEGOTIATIONS SUBCOMMITTEE REPORT
By Mr. Jack Faris, Vice Chairman
* DESCRIPTION OF SUBCOMMITTEE ACTIVITIES
MR. FARIS: Mr. Chairman, thank you on behalf of our chair, Lee Raymond, who could not be here today.
We have had several meetings on the subject matter that is dear to our hearts. I want to thank the staffs of those on the committee who I know have spent a lot of time and effort in meetings on this.
* PRESENTATION OF PROPOSED LETTER
MR. FARIS: We have had a conference call to discuss the letter. We have had various inputs from different ones and made some fairly moderate changes to the letter. The letter is under Tab 7 in your book.
CHAIRMAN MARRIOTT: The new letter is, I think, being passed out as we speak.
MR. FARIS: This is the newest revised version.
(Laughter)
MR. FARIS: It is recommended that you not smudge the ink as it is being passed around.
We have had a number of changes, but they have all been very minor. The key points of this letter is, although China's membership in the WTO has brought some immediate benefits, including increased market access, the U.S. growth and job security for millions of Americans of all size and types of businesses are dependent upon an open, fair global system.
We found that the word "fair" is defined different ways by different people at different times, even in the halls of Congress, not just in world trade.
China maintains barriers to free trade. We are focusing on:
1) Under-valued currency, which gets into
the whole competitive marketplace, but
the currency undervaluation is a major
problem.
2) Non-tariff barriers.
3) Licensing
4) Inconsistent regulatory practices
5) Failure to protect intellectual property
rules
6) Discriminatory tax policy
7) A number of technical barriers to trade
8) Subsidies, which gets into the whole
free competition market, that is not
there, by many State-owned businesses
and industrial policies that distort
allocation of resources
9) Areas of investment in services.
Besides commitment they have made for
foreign investment, it has not been very
open.
We will be meeting in the future to consider other work plans. I think it is important, as we look at this letter, that as we said at breakfast, this is not creating a negotiating strategy document for the administration.
What we are doing as a committee of business people is saying, from the business community of all sizes and types, including the 41,600 manufacturing companies that are members of the NFIB, that we indeed are concerned about these areas all. This is a letter from the business community on this committee to the President. We suggest, Mr. Chairman, obviously adoption of this letter to be presented by the Secretary.
CHAIRMAN MARRIOTT: Thank you.
* COUNCIL DISCUSSION
CHAIRMAN MARRIOTT: I'll open it up to questions and concerns. Any comments from anyone?
(No response)
* LIMITED PUBLIC COMMENTS
CHAIRMAN MARRIOTT: Public comments?
(No response)
CHAIRMAN MARRIOTT: Yes?
* COUNCIL DISCUSSION
MS. LEVINE: I have just one comment. This is not something that needs to be added to the letter. On the issue of competitiveness, I would like to suggest that the council invite someone from the Education Department.
I cannot bring more economic development into our region or raise the level of our workforce if the Education Department is not helping us or participating. Economic development will come if we raise the level of education of our workers who are ready for the challenges of competitiveness.
The Education Department needs to assist us, and I would like to encourage, I do not know, an invitation to the Education Department to our committee.
CHAIRMAN MARRIOTT: Any other comments? Yes.
CONGRESSMAN HAYES: Thank you, Mr. Chairman. I think this is a very important and very helpful step to tell our folks back home. No matter where home is, if we are serious about making sure that fairness and equitability is a part of what we are doing, it can help increase consumer confidence and help grow the economy.
CHAIRMAN MARRIOTT: Thank you. I think it is a good letter and it states the case very, very well.
Any other comments, suggestions?
(No response)
CHAIRMAN MARRIOTT: If not, we have a consensus. I would be happy to forward this letter on to you, Mr. Secretary, to send on to the President. Consider it approved.
I would now like to call upon Glen Barton, chairman of the Subcommittee on Technology and Competitiveness, to give his report.

TECHNOLOGY AND COMPETITIVENESS SUBCOMMITTEE REPORT
By Mr. Glen Barton, Chairman
* DESCRIPTION OF SUBCOMMITTEE ACTIVITIES
MR. BARTON: Okay. I would like to first thank the Trade Promotion Association Subcommittee for its excellent recommendations regarding the need to ensure that China complies with its WTO obligations.
In that same light, the Subcommittee on Technology and Competitiveness also focused on the issue of WTO compliance, but instead of focusing on those countries and other countries, we focused on the United States.
Currently, there are five WTO decisions where the United States is out of compliance. They include:
1) Foreign Sales Corporation
2) Extra territorial income, better known
to most of us as FSC or ETI
3) Byrd Amendment
4) Antidumping Act of 1916
5) The Hot-Rolled Steel Case
6) Section 211 of the Omnibus
Appropriations Act, also called the
Cuban Trademark Provision
And during the next two months, there could be an additional entry to this list when the WTO makes its final rulings on the Section 201 Steel Safeguard Action.
The Technology and Competitive Subcommittee strongly believes the United States needs to comply with its own WTO obligations. The subcommittee is pleased that there are three serious proposals that are before Congress that would resolve the FSC/ETI dispute.
While the subcommittee could not reach a consensus as to which FSC/ETI remedy is best, the subcommittee is nevertheless united in its belief that the United States needs to comply with its WTO obligations.
Allow me to take a moment to explain why WTO compliance for the United States is so important. As the world's largest economy and most competitive nation, it is critical that the U.S. lead by example.
Increasingly, we in the United States would be asking other countries to stand up to political influential interests in order to make reforms that will open their markets to U.S. products. If the world's most competitive country is not willing to play by the rules, how can we expect other countries to do the same?
Secondly, the World Trade Organization is a promising, but young, institution. It is important during this period of development that countries, particularly the most advanced countries, not try to game the system by ignoring WTO decisions.
Finally, with the global economy starting to grow again, this is no time to dampen trade by allowing countries to impose retaliatory tariffs on American products. The last thing we need now is a trade war.
As for the subcommittee's work on standards, Harold Smith of Illinois Tool Works has asked me to report that PEC staff has been briefed twice by the Commerce Department, including a special briefing of the National Institute of Standards and Technology with regard to the Secretary's Standard Initiative.
The Secretary has identified the use of standards and other nontariff barriers used by our trading partners as a critical obstacle to free trade.
The Standards Initiative is comprised of eight elements, including an extensive outreach to the PEC, trade and business associations, and U.S.-based private consensus bodies. The subcommittee will next meet via conference call to discuss recommendations that support the Secretary's goals.
That concludes my remarks. I would be glad to take any comments from other subcommittee members, or also questions.
* COUNCIL DISCUSSION
CHAIRMAN MARRIOTT: Any questions or comments?
(No response)
* LIMITED PUBLIC COMMENT (NONE)
CHAIRMAN MARRIOTT: Okay. Thanks very much.
The President's Export Council has a separately chartered committee, a subcommittee on Export Administration. Brian Ferguson is the chair, and unfortunately could not be here, but has sent the following report on activities of the committee.
Grant, are you going to read that?
VICE CHAIRMAN MORGAN: No, I think I am. I think I am.

EXPORT ADMINISTRATION SUBCOMMITTEE REPORT
By Vice Chairman Morgan
* DESCRIPTION OF SUBCOMMITTEE ACTIVITIES
VICE CHAIRMAN MORGAN: Brian was not able to be here, as he said, so he asked me to comment on the subcommittee's report.
This committee has been rechartered. It's chartered separately from the other group. It is being set up. They met in Washington on July 31, then they have added a couple of additional members and have begun to develop an action agenda and establishing subgroups to address specific topics.
Export control issues affect both U.S. trade and national security, so it is important to promote -- a couple of objectives, of course, is facilitating trade and strengthening national security. That is going to be key to a successful and coherent export policy.
Many of us who do export--this is a little ad lib here--get impacted by this regularly, so it is important this gets worked out right. It can really be a very valuable contributor, I think, to meet these two objectives and provide some real-world experiences to develop some real-world solutions, because otherwise we are going to bog trade down.
The next meeting is scheduled for November 5 and they plan to talk about three aspects:
1) Impact of recent technology developments
on existing export controls
2) Extent to which foreign availability of
similar products affects U.S. licensing
3) How to balance the needs of U.S.
industry with national security concerns
If any members of the committee have any other suggestions, I will pass that on to Brian, if you want any other subjects considered.
Finally, they want to build on the previous successes that this organization has had, and they will keep us informed as we go along. That is really the extent, Mr. Chairman.
* COUNCIL DISCUSSION
CHAIRMAN MARRIOTT: Okay. Are there any questions? Any comments?
(No response)
CHAIRMAN MARRIOTT: Okay. Thank you, Jim.
I want to thank all of the subcommittee chairs for their good work, and the committees themselves for the terrific work that they have done.
At the conclusion of the meeting I will sign the letters and present them to Secretary Evans to convey to the President.

GENERAL DISCUSSION
CHAIRMAN MARRIOTT: Are there any other items for discussion that anybody would like to bring up?
CONGRESSMAN INSLEE: Mr. Chairman?
CHAIRMAN MARRIOTT: Yes?
CONGRESSMAN INSLEE: Thank you. Maybe this is late and should have come up in the context of China more, but I would just like to ask our administration officials -- we appreciate the work that has been done to raise the heat on China, particularly regarding currency issues.
The more I think about this, the more I look at this as just the largest dumping case situation in galactic history, looking at the currency situation in China, which is maybe one of those things I am not sure I understood until recently.
I just wondered, from the Secretary and Under Secretary's perspective, are there any tools that we have to at least think about using to try to address having balance, including actions in Congress to try to get the attention of our partners across the Pacific in this regard?
Because the enormity of this, it obviously touches every single sector. We are experiencing a job loss that is pretty incredible right now, and I think it is important to be doing this.
I just wondered if there's anything that Congress should be thinking to try to raise the temperature level or the tools that we should be urging the administration to think about? I just wondered. I am looking for ideas here to try to move that effort.
CHAIRMAN MARRIOTT: Sure. Thank you, Congressman. What you speak of is on everyone's mind. I guess I would respond this kind of way. I think the most important thing that we can do with respect to leading the world to an international economy that is fair, and a level playing field, and all playing by the same rules is encouraging other countries to adopt the kind of fiscal policies, monetary policies that have worked so well here in America in creating the conditions for economic growth. That means China, that means India, that means France, that means Germany, it means countries all around the world.
Your focus goes specifically on a specific currency issue at this moment in our global economy. It happens that most of the currencies in Europe are allowed to be determined by free market forces. It happens right now that many of the currencies in Asia are pegged.
I think the Secretary of Treasury made it very clear when he was in China here recently. We do not think that that -- pegging currency is not allowing the free market forces to work and creates the kind of conditions for long-term economic growth in a country, or the world, for that matter.
So I feel like our fundamental role, our basic role, is what we should be doing is encouraging other countries to establish the kind of fiscal policies, monetary policies that worked here so well, and at the same time enforce our trade laws and be very aggressive in enforcing our trade laws.
I think that I am not going to go into encouraging other kinds of action at this moment. The currency issue is an issue that is spoken to in this administration by the Treasury Department, and we are going to leave it there.
But I think, broadly speaking, this global economy is becoming more integrated, more interlinked faster than anybody thought imaginable even five years ago, and we need to make sure that other countries are adopting the kind of fiscal policies and monetary policies that are going to sustain long-term economic growth. That means allowing free market forces to work, not just on currency, but on capital flows, on prices.
When you see countries that are controlling their prices through subsidizing industries, that is not the kind of environment that creates long-term economic growth for American jobs to continue.
It is important to American jobs and our American economy that we encourage global growth so we can export to other countries around the world. I always like reminding people that we are a third of the global economy, yet just 5 percent of the people live here.
So, we need to keep other countries focusing on adopting the kinds of policies that do not give them this kind of perceived short-term gain that they may want to try and capture, but adopt policies that create the conditions for long-term economic growth. It is in the best interests of your own country's economy.
So, anyway, I am going to China myself here in a couple of weeks. It would be helpful to have a letter like this in my briefcase that will show the concerns that the business community is expressing to the administration.
We will have our own concerns as an administration as to where we think they are falling a bit short on issues like intellectual property protection and enforcement, and those kinds of matters. Great idea.
UNDER SECRETARY ALDONAS: Mr. Secretary? I just wanted to add, maybe in direct response to the question on tools, in terms of when you see these imbalances in the world economy, you tend to see the, how shall I put it, the disease metastasizing to trade problems. That is what we are facing right now.
We actually have the tools to grapple with a lot of that. But going after the fundamental problem--I know Randy Quarles is here from the Treasury Department--it strikes me that, in addition to the advocacy that the Secretary was talking about and Secretary Snow has undertaken also, and you might want to speak to, Randy, which is to get to the fundamental underlying problems and the Chinese reluctance to move on the currency issue is based on their own concerns about the fragility of the financial markets, which would suggest to you, let us get together with the Chinese and work on those issues because we do want to get to a state, and I think they've assured us they want to get to a state, where they do have a free flowing currency.
So in addition to the trade tools where we have individual problems for individual industries, which is what we should be doing at the Commerce Department and why the Secretary has asked me to form an investigatory unit that will go at these things on a proactive basis, and Randy, it would be helpful if you actually talked about some of the discussions in China because that's where I think the real hard work has to go on, is not something as dramatic as slapping a countervailing duty on somebody, but it's actually because of the issue and how we need to tackle it.
CHAIRMAN MARRIOTT: Go ahead.
MR. QUARLES: There are a few things going on there. I have been impressed with the degree to which the discussion in general, sort of beginning with Grant's description of his tour around the country, talking with people who are concerned about China, has not focused solely on the currency issue, because that is certainly not the only issue, perhaps not even the major issue that at least we think we ought to have with China.
I was with Secretary Snow when we were in China in August, and then again when the currency issues were being discussed in Dubayh just last week at the G-7 and the IMG World Bank meetings.
I do not think there is any question but that we have the attention of the China and of the Asian economies in general on this issue, particularly on the currency issue, but on the issue of an open economy and open financial markets, generally.
When we were in China, the Chinese were very serious about engaging on the issue. I think part of that was their recognition that we were approaching them with economically serious arguments as well, and that we were not attempting to play this truly politically, but we were approaching them with very serious concerns and with economically sound arguments.
They responded, I think, in kind. Their principal concern, as Grant indicated, is with the weakness of their banking system. If they move very quickly to open up to float their currency and to remove capital controls before they have a stronger financial system, in fact you can have a flow of funds very quickly out of that financial system, precipitating problems in China.
I don't want to say that there's an immediate risk of a financial crisis, but you want to move very carefully. It's like when you put a tourniquet on a limb. You have to be very careful as you take the tourniquet off. The tourniquet needs to come off, and everyone would acknowledge that. The Chinese acknowledge that.
But I was, and I know Secretary Snow was as well, heartened by the response of the Chinese while we were there. I was heartened by the general attitude of the Asian economies when we were discussing this issue in Dubayh.
It certainly would seem to me premature for us to be retaliating before we have given them a little more chance to work some of these issues through. As I say, as Grant said, we have the tools that we need to do so, if it is appropriate.
But I actually think that there is -- as I say, we have been encouraged by, so far, during the course of this last five, six weeks, that we have been really pushing this issue on every available international forum with the degree of consensus that we are beginning to be able to achieve.
CHAIRMAN MARRIOTT: Thank you.
Any other comments, questions? Yes?
CONGRESSMAN ENGLISH: Mr. Chairman, I would like to, first of all, say that I think it is important that we acknowledge once more here that the administration really has laid the ground work for engaging the Chinese on the currency issue, and also some other component of what I consider their system of state-sponsored mercantilism.
I think it is very important at this stage of our relationship with China that we move them, and encourage them, and coax them in the right direction toward a more open economy, toward participating in the global economy based on the rules.
I really believe, although the Treasury representative made the point that the currency manipulation is not the only issue we have with them, I firmly believe, talking to people in the private sector who are engaging in China and are also trying to compete with Chinese producers, that this is perhaps the most important issue. I believe Secretary Snow has done a superb job of laying the groundwork.
What is critical here, and going back to my colleague's question, I think the administration needs to know that Congress is prepared to support its efforts and we recognize this is going to take a sustained effort in order to get the Chinese to undertake what is going to be for them some very difficult reforms, but reforms that are absolutely essential to our trading relationship long term.
So, again, I feel the need to have the record reflect our support of the administration's effort, which I think has been on point so far, but also that we recognize this is an issue that we have to get right, and we are going to have to provide very strong and aggressive support for the administration's engagement on this point if it is to be successful, in my view.
Thank you.
CHAIRMAN MARRIOTT: Thank you very much.
Are there any other comments or questions?
VOICE: Mr. Chairman, Mr. Secretary, a number of members of the council have indicated a strong interest in the manufacturing issue and would like to remain engaged as the final report and recommendations are developed.
So, if I may make a recommendation that some kind of mechanism be found to insure that, because we have got a wonderful source of collective talent and experience in major manufacturing firms here represented on the council.
CHAIRMAN MARRIOTT: That's fine with me. I'm sure the rest of the council would agree.
Any other questions, comments?
DR. HSU: Bill?
CHAIRMAN MARRIOTT: Yes?
DR. HSU: As vice chair for the Corporate Stewardship Subcommittee, again, we have a big task ahead of us in submitting a report next year to review policies and philosophy around the globe.
As Secretary Evans stated, we are honest people. We do business honestly and we just want people to treat us just like the way we treat them.
It is a big task, but this report, I honestly believe, is a giant, positive first step. So, I just wanted to thank the staff in advance for the big task ahead of us. So, thank you.
CHAIRMAN MARRIOTT: Thank you. Okay.
Any other comments, questions? Yes?
MS. MANETTA: Mr. Chairman, I have something. One of the things that was brought up when we began was for medium and small business, the Internet becomes a very powerful tool for many companies to compete globally. It is a way to level the playing field without having to have the bandwidth or the infrastructure to go overseas.
One of the comments that was brought up by one of the members that attended the conference about cyber security, kind of along the lines of homeland security, what are we doing to instill that, the Internet is protected, and I know we spoke once -- or maybe it was the Business Round Table that talked about cyber security and what we're doing about that.
So, that's just something I'd like to throw out. I don't know whether it falls in any of these subcommittees, but it something that is important to many of us.
CHAIRMAN MARRIOTT: Okay. We will put that on the agenda.
Anybody else have any comments, questions?
(No response)
CHAIRMAN MARRIOTT: If not, I will hear a motion to adjourn.
MR. SMITH: So moved.
CHAIRMAN MARRIOTT: Thank you. The meeting is adjourned.
(Whereupon, at 11:11 a.m. the meeting was concluded.)

C E R T I F I C A T E
This is to certify that the foregoing proceedings of a meeting of the President's Export Council, held on October 1, 2003, were transcribed as herein appears, and this is the original of transcript thereof.

WILLIAM J. MOFFITT
Official Court Reporter

My Commission expires: 5-14-04