Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Remarks at the Bureau of Industry and Security Update 2007 Conference on Export Controls and Policy
Washington, D.C.

Good morning. Thank you for attending the 20th annual BIS Update 2007 Conference. As exports play an increasingly important role in our prosperity, your feedback is vital to ensure our controls are precisely targeted and efficient.

In the 20 years since the first Update conference we’ve seen a lot of changes in the world.

In 1987 the Cold War was still very much with us. That year President Reagan implored Mikhail Gorbachev to tear down the Berlin Wall.

On that trip, President Reagan observed graffiti written on the wall that predicted, “This wall will fall. Beliefs become reality.” Beliefs did become reality two years later when that wall did, at last, fall.

Now we are living that post-Cold War reality of a world moving toward democracy and free markets and of increasingly integrated economies where trade and investment have surged.

Last year exports accounted for 11.1 percent of U.S. GDP—20 years earlier it was 7.2 percent.

In addition to new opportunities, new threats and challenges have emerged with the end of the Cold War. We’ve gone from a bi-polar to a multi-polar world, with state and non-state actors willing to disrupt our way of life.

The threats posed by international terrorism and the proliferation of weapons of mass destruction have increased dramatically.

These trends are accelerating. According to the national counter-intelligence strategy, more than 90 countries actively target sensitive U.S. technologies. And as supply chains are extended, there are increasing concerns about import safety and the export of sensitive materials that may harm American interests.

Indeed, the value of goods going across our borders is projected to triple between now and 2015. Exports last year were a record $1.4 trillion—and we’re on track to beat that this year. We must be prepared to effectively manage and expand our trade while keeping our country secure.

One tool that enhances our competitiveness and openness is Free Trade Agreements. This Administration has put into force FTAs with 14 countries and negotiated four more. In each and every case we’ve seen our exports increase.

Indeed, we had a deficit with CAFTA-DR countries prior to its implementation. Now we have a surplus. And while countries with which we have an FTA only make up about seven percent of global GDP, they account for more than 42 percent of our exports.

The four FTAs now pending before Congress—Peru, Colombia, Panama and South Korea—will drive economic growth and promote security, democracy and the rule of law with our trading partners.

Combined, these FTAs will increase market access for our exporters in fast growing economies with more than 126 million consumers with a total GDP of $1.1 trillion.

In our own hemisphere, there is no more immediate, tangible step we can take to increase our competitiveness than passage of FTAs with our partners here.

Peru will be coming up for a vote in the House very soon. In fact, it passed the Ways and Means Committee unanimously yesterday. We are looking forward to it receiving full and fair consideration as the first of four agreements that deserve the support of Congress.

We’re already Peru’s largest trading partner. Panama, with the expansion of the Canal, is poised to be one of the fastest growing economies in the world.

Colombia is particularly important.

BusinessWeek recently called Colombia “an extreme emerging market.” I’ve been to Colombia twice in the last two months and I have to tell you it’s the most impressive turnaround of a country I’ve ever seen.

Since 2000, we have contributed $5.5 billion to Plan Colombia, an initiative to promote the peace process, combat the narcotics industry, revive the economy and strengthen democracy. And it has worked.

• Colombians and their democratically-elected president are one of our staunchest allies in the region.
• Colombia is a partner in the global war on terror and they’ve courageously stood up to guerillas and narcotics traffickers.
• Since 2000, kidnappings are down 76 percent, terror attacks by 61 percent and homicides by 40 percent.
• At the same time, poverty has declined 25 percent while the economy has grown every year.
• And they’ve accomplished this turnaround while staying true to democratic principles.

Hemispheric stability and prosperity are tied to Colombia’s success. To deny Colombia’s FTA would be one of the biggest foreign policy mistakes of our time in our region.

If we have free trade agreements with Central America, the Dominican Republic, Chile, Peru and Panama, but not Colombia, our hemisphere will be less secure.

Colombia’s experience illustrates that prosperity without security isn’t meaningful. We must have both.

FTAs increase security because they promote and help sustain the values of good governance, transparency and respect for the rule of law—all hallmarks of stable societies.

They increase cooperation with our allies on issues of mutual interest, including strengthening supply chains and securing export control systems that facilitate trade.

For example, we’re working with Israel—our first FTA partner—to establish the U.S.-Israel High Tech Forum, which will find ways to increase secure trade and investment that reflects today’s economic and security needs.

And as many of you know, we are in the process of reviewing our export control architecture, much of which was based on assumptions of the Cold War era that no longer hold true.

As a result, we are engaging in a wide variety of activities that anticipate the future dual-use export control needs of our country. Let me mention two.

Last year, we formed the Deemed Export Advisory Committee to consider the policies that oversee the release of controlled dual-use technologies to foreign nationals.

While foreign nationals play an indispensable role in ensuring America’s technical and commercial leadership, we must also be concerned about the potential risks from those willing to compromise our national security and do us harm.

We must ensure our deemed export regulations remain relevant and effective.

I look forward to receiving the Committee’s recommendations later this year so that we can find solutions to this complex issue.

With the end of the Cold War we’ve also been seeking ways to accelerate engagement with key players in global markets. We have increased high-technology trade with rapidly developing economies like China and India, while maintaining the security of the U.S. export control system.

An innovative mechanism we’ve put in place to do that is the Validated End User Program, or VEU. Through this program, American companies will find it easier to export certain U.S. products to customers that meet the security standards of a U.S. government interagency review.

To be approved, companies will need to have a strong export compliance program and a track record of using U.S. high technology responsibly.

The VEU Program will serve as a market-based incentive for companies that import U.S. items to use those items in a responsible fashion.

The Program was created earlier this year, and eligibility has been extended to India and China. Earlier this month, we announced the approval of an initial group of five companies in China who have met the security requirements for this program.

This important step advances our strong desire to compete in these fast-growing markets and the need to maintain our national security interests.

As you seek to expand your exports, we want to help, not hinder, your efforts. You’re a source of our strength as you seek customers for some of the most innovative and advanced products ever created.

When you do business, we all can benefit. Economies abroad become more efficient and productive, while here at home businesses are developed, innovation is encouraged and jobs are created.

Our competitiveness is fundamental to national security and to the maintenance of our economic strength and global leadership.

When our export controls are responsive, effective and transparent, we all win. We can only do that with your cooperation and partnership.

Together, we can enhance U.S. economic competitiveness while preserving our national security interests. And with common sense programs like VEU and forums like this, I am sure we will succeed.

Thank you for your partnership and for making our country more competitive and secure.