Secretary's Speech

U.S. Commerce Secretary Carlos M. Gutierrez Remarks Before Bahrain Business Conference
Bahrain

I'm proud to be visiting Bahrain for the first time and at a moment when the Kingdom is offering such strong economic and political leadership in the Gulf region.

The Free Trade Agreement is a testament to the vision, determination, and wisdom shown by the Government of Bahrain.

On behalf of the United States, let me express our strong appreciation and gratitude for your friendship and statesmanship.

Free Trade Agreements promote balanced, stable trade relationships. Countries with which the U.S. currently has FTAs only account for seven percent of global GDP, however we do at least forty percent of U.S. trade with these countries.

As one example, following our FTA with Singapore, we saw significantly increased trade. Singapore's exports to the U.S. also grew strongly. Greater cooperation has been good for both of our countries.

The bonds between our countries extend back over 100 years, and I see that relationship continuing far into the future.

The government of Bahrain has taken the right steps to enhance its economy. And the benefits of those decisions will continue flowing to the people through expanding opportunities for many years to come.

That may be why this country posted one of the fastest rates of growth in the Arab world at 7 percent last year.

That status is enhanced by Bahrain's 25th place standing in the Index of Economic Freedom's ranking of the world's freest economies.

Bahrain has been recognized as having the freest economy in the entire Middle East. Your leadership deserves great credit for boldly taking Bahrain down the path of reform to expanding prosperity.

The FTA formalizes the growing economic partnership between Bahrain and the United States. We trade with each other because we believe in open markets. More important, we are close and valued partners because we support basic democratic principles.

We applaud the steps Bahrain has taken to introduce democracy. We are united by the spirit of mutual respect and shared determination. Our bonds transcend any differences of culture, race, and religion.

Once the trade agreement is implemented, Bahraini businesses will have duty-free access to virtually every aspect of the whole U.S. market.

There will also be no entry barriers for service providers in either country. Service businesses won't be required to have a local presence or representation.

The practical effects of the agreement are important.

The symbolic value may be an even more important source of progress. The implicit "seal of approval" carried by the FTA will make Bahrain a more attractive destination for global commerce.

American and other companies will correctly assume that Bahrain has a positive investment climate.

The government of Bahrain is wise to diversify its economy by focusing on enhanced education and upgraded national infrastructure.

We know that Bahrain seeks to establish this jewel of the Gulf as the economic "Gateway to the Gulf." The FTA will support that effort.

The Kingdom also has other strengths:

• A strong financial system
• A strong regulatory regime
• Proximity to large regional markets
• A new port in the near future
• A soon-to-be renovated airport
• A modernizing telecommunications system
• And a high quality of life

Bahrain has the potential to be a regional business and investment hub. I will encourage American businesses to explore the regional potential they can access by basing their operations in the Kingdom.

The FTA will be implemented once Bahrain makes a few modifications to its laws covering intellectual property rights protection. Those necessary procedural steps shouldn't obscure Bahrain's excellent record of protecting IPR.

Bahrain is a leader in the Middle East in protecting intellectual property, and IPR protection is growing in Bahrain.

In 1999, Bahrain was removed from the Special 301 Watch List, because it demonstrated a complete commitment to protect intellectual property and create a free market economy. Bahrain has always been a secure climate for patent and trademark protection. And by 2001, the government had made dramatic progress in reducing copyright piracy. The goal of creating secure markets for IPR around the world is one of my highest priorities as Secretary of Commerce.

This area is an Administration priority because we see both developed and developing economies increasingly competing on the basis of knowledge and innovation.

For example, the Business Software Alliance estimates that if software piracy were lowered to 48 percent in Africa and the Middle East:

• Regional economies would grow by $5.4 billion
• IT companies would create 13,000 jobs
• And, local industry revenues would grow by $3.7 billion

A third of the U.S. GDP is based on products that need IPR protection.

A recent study shows that 75 percent of the value of publicly traded U.S. companies--some $5 trillion--comes from "intangible" assets such as brands, copyrights, and patents.

As growing economies like Bahrain also develop innovative products and brands, IPR piracy will threaten its national prosperity. We can't allow the creation of a world environment where patents and trademarks and copyrights don't mean anything.

Providing a secure environment for innovation is a key focus for the Administration. IPR protection for global brands and innovative technologies has never been more important--going forward, it will only be more so. Our countries need to continue creating the environment in which innovation flourishes.

For example, the U.S.-Jordan Free Trade Agreement, signed in 2000, contained an intellectual property chapter that covered data protection.

Since 2000, 32 new innovative pharmaceutical product launches have happened in Jordan--a substantial increase in the approval rate of innovative drugs. This gave Jordanian consumers access to many new medicines.

And since the enactment of our free trade agreement, Jordan's drug industry has started developing its own innovative medicines.

Jordan's experience demonstrates how strong intellectual property protection can substantially benefit developing countries. We are continuing to work with the Jordanian government on its IPR-related FTA obligations.

In short, IPR enforcement improves a country's economy, and the lives of its citizens.

Bahrain has now joined all of the major international intellectual property agreements. I applaud the regional leadership Bahrain is showing on this critical issue.

Microsoft, a company that has flourished in Bahrain, requires strong IPR protections to ensure the integrity of their products.

Microsoft has launched a number of ambitious projects in Bahrain:

• Delivering basic IT training to hundreds of Bahrainis
• Giving 1,000 teachers basic IT training
• Sponsoring a gateway to the knowledge economy for women throughout the Middle East

Microsoft is preparing people throughout Bahrain to take part in the global knowledge economy.

We congratulate the Kingdom on making great economic strides.

Every country faces a defining choice about the way it interacts with the world. They can turn inward and pursue protectionist policies or they can participate actively in the global economy.

We choose openness. We are open to trade with any responsible partner. We know that competing in markets around the world makes America stronger and more flexible at home.

The momentum for openness and reform is building across the Middle East. President Bush announced the goal of a Middle East Free Trade Area by 2013 and we have already reached FTAs with Morocco and Oman, in addition to Bahrain, and Jordan.

We are proud to welcome Saudi Arabia as a member of the World Trade Organization.

These individual steps build support for President Bush's vision of a free-trading region.

We in Bahrain and the U.S. know that everyone benefits when more consumers in more countries have access to the best products from around the world.

As President Bush has said, "Across the globe, free markets and trade have helped defeat poverty, and taught men and women the habits of liberty."

Here in Bahrain, your citizens are already experiencing the benefits of widespread reforms and a liberalizing economy.

Bahrain is on the path to discovering its full economic potential.

The U.S. believes the Gulf region will only realize its full potential when individual countries grow closer through greater intra-regional trade and greater economic ties to the global economy.

Expanded trade also helps countries strengthen in other ways.

Building democracy, expanding education, strengthening the rule of law, establishing commercial law, and instituting greater transparency are the path to greater growth and stability. As someone said recently, "Trade is a gateway to peace."

America recognizes that a future of shared opportunity and expanding prosperity is the best strategy for peace, stability and the triumph of hope in the Middle East. We stand ready to assist countries in the region as they pursue their own reform programs.

Thank you very much.