Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Remarks to the Manufacturing Council
Washington, D.C.

Thank you. Thank you very much, Mister Chairman. We have a full agenda, but I would like to make a few comments about the economy and very specifically about trade and manufacturing. We all know that recent job reports have been disappointing. Our economy is still growing, although it is growing slower than we would like.

The bipartisan stimulus package that was supported by Congress earlier this year is beginning to have an impact, I think we’ll see that reflected in the second quarter, and we believe that it came just at the right time. We expect the stimulus to help the economy as the year progresses, and we should be seeing, again, some impact when we report second quarter results. Over time, as we look ahead to the future, we believe there are three things we need to do to keep the fundamentals moving. We’re going to get through the current situation as we have gotten through similar circumstances in the past, but long term it’s important we make the tax cuts permanent, that we give businesses visibility and predictability into the future.

It’s important that Congress allow for more environmentally- responsible oil exploration to expand production. It doesn’t make any sense that we ask countries around the world to do something that we are not willing to do. We have a lot more oil than we can produce for ourselves and not be relying on foreign countries. And finally, we need to pass pending free trade agreements with Colombia, Panama and South Korea. Just a reminder, it’s been over 600 days since the Colombia Free Trade Agreement and since that time our exporters have paid over $1.1 billion dollars of tariffs that they would not have to pay had the agreement been approved. So Congress needs to act on that as soon as possible. Those free trade agreements are also stimulus for our economy, and Congress should approach that with the same sense of urgency that they did the stimulus package.

Like the National Association of Manufacturers, we’ve been taking a close look at the export numbers, and I know Governor Engler will talk a little more about this. The story for manufacturing is good. Today, we’re releasing the following information: The U.S. trade balance with our 14 FTA partners has generated a surplus in manufactured goods. In the first five months of 2008, the trade balance in manufactured goods rose to a $2.7 billion dollar surplus with our FTA partners. That’s up from a $12.3 billion dollar deficit during the same period last year. In the first five months of 2008, the U.S. manufactured goods trade balance with our FTA partners improved by 122 percent over the first five months of 2007. The balance with non-FTA partners also improved, but by only six percent. So the improvement in those countries where we have an FTA is so much great than with those countries where we don’t have an FTA.

This improvement in the trade balance is due to the increasing competitiveness of U.S. manufactured goods. Some interesting facts: In 2007, manufactured goods exports were the highest in history, accounting for 62 percent of total U.S. goods and services exports. Manufacturing productivity has increased every year over the past decade—and, it was up 3.6 percent in the first quarter of 2008 from the fourth quarter of last year. With less than five percent of the global population, the U.S. produces more than 20 percent of world manufactured goods—the largest output in the world. Free trade agreements continue to work for our manufacturers.

Free trade agreements are critical for economic competitiveness beyond manufacturing. And just to give you an idea these are facts that we don’t often discuss and perhaps are too often overlooked. President Bush has implemented free trade agreements with 11 countries. Our trade surplus with those countries has grown from $3.8 billion in 2000, to $21.0 billion in 2007. So I’ll just repeat; countries with which we have implemented Free Trade Agreements since the President took office, 11 countries, we’ve have a trade surplus of $21 billion dollars.

So this is no time for a “time out” on trade. We are actually moving too slowly on trade. There are, it is an estimate, about 100 agreements being either signed, negotiated, or completed around the world; we have three of those. We have a total of agreements with 14 countries. Countries like the European Union have over 40. Chile has over 45. China is negotiating and will soon have well over 20. So as the rest of the world is moving forward very quickly, we are standing still. And we are going to pay a very heavy price for that. We need to move forward. We need to approve our agreements, and this is not a time to adopt economic isolationist policies. The countries with which we have trade challenges, are countries with which we do not have free trade agreements. So, the lesson is we need more free trade agreements, and we need to be moving as quickly as possible to add to our current list of free trade agreements.

FTAs help clarify rules and provide a level playing field for Americans to compete fairly. Passage of the pending FTAs would give U.S. companies and workers greater access to 100 million consumers.

We look forward to working with you to pass these agreements, to continue to create jobs, to continue to drive growth. And we appreciate the Council’s support, and right now the focus is on Colombia. We need to get Colombia through, then Panama and then Korea, and then we can get back negotiating as many free trade agreements as possible. Again, the challenges we have and the enforcement issues we have with countries around the world are with those countries with which we don’t have free trade agreements. Free Trade Agreements have been very helpful to our economy, to our worker, to our businesses, and we need to get on with it. So thank your Mr. Chairman, and I’ll turn it back to you.