Secretary's Speech

Commerce Secretary Carlos Gutierrez Remarks to 2006 China Business Conference
Cleveland, Ohio

Thank you. I’m delighted to be here today. I was in business for 30 years. And I spent a lot of my time searching world markets for new customers to buy our products. So I think it’s wonderful to see all of you here today looking at how you can tap into China’s markets.

China truly does offer fantastic opportunities. Our exports to China so far this year are up nearly 40 percent. That’s a big increase, and follows a 20 percent increase last year, and 22 percent the year before. And while I can’t promise that this level of growth will continue, clearly the trend is very positive.

China continues to be one of our fastest-growing trading partners, with U.S. companies investing billions of dollars in China. I’ve been to China three times since taking office 16 months ago. And I’ll be there again later this year leading a delegation of business leaders on a trade mission.

And the more I go, the more I realize what a great opportunity this market is becoming, as China emerges from the darker days of its modern history. Few emerging economies will have a larger influence than China over the global economy during the 21st Century. Few markets have captivated the world’s commercial imagination more than the prospect of selling to more than a billion consumers, and China’s rising middle class.

We should aspire to become experts in doing business in China because this is the commercial relationship of the century.

But as I’m sure you know, China can be a tough customer to deal with. Last year we had a $200 billion trade deficit with China. This worries people, and we don’t want it to become so big that what happens is that people who want to isolate the U.S. and who want to be protectionist may find a welcoming ear in the American people.

We’ve been there before with the Smoot-Hawley tariffs that led to the Great Depression of the 1930s. President Bush believes protectionism is absolutely the wrong policy. He’s been working very hard to turn the situation around, to convince China that it is in everybody’s best interest to liberalize China’s markets.

And I believe China’s leaders are aware of the situation as well. They recently sent one of the largest buying missions to the United States, and announced billions of dollars in new contracts with American companies. We hope to see more of this in the future.

Several issues dominate our talks with the Chinese. And the Commerce Department has been deeply involved with two of them: protecting intellectual property rights and improving market access for U.S. companies. Results on both fronts would help bring down our trade deficit.

We made headway on a number of key areas during recent (in April) visits to Washington by China’s leader, President Hu, and China’s Vice Premier Wu Yi. Let me give you a few of the details. And this will also show you how engaged we are and the level of complexity involved.

First, China agreed to reopen its market to U.S. beef subject to completion of a technical protocol. This is an important market for American farmers and American ranchers, so this was very good news. China also agreed to adjustments in capitalization requirements in the telecommunications sector, with discussions to begin this year. This will remove a barrier to U.S. service providers who seek to compete in China.

Another industry is steel. We’ve been working with China and others to eliminate global excess steel capacity and market-distorting practices. In our dialogue with China, we agreed to give the private sector a stronger voice.

We also agreed to set up a series of discussions to solve the problem of uncontrolled manufacturing of active pharmaceutical ingredients in China. This is a major problem because these ingredients are the building blocks for making counterfeit drugs. This kind of counterfeiting has not only a business impact, but also a tragic human impact. And in a related field, China agreed to remove barriers to trade in medical devices.

On the macro level, the Chinese have taken steps to ensure greater transparency in their economy. They announced that they will begin negotiations to join the WTO Government Procurement Agreement. Following technical consultations, China will submit its final offer no later than December 31, 2007. This is an important development that will improve access for U.S. companies to Chinese government contracts.

And for the first time, China is requiring all agencies in the central government to publish their new trade-related measures immediately in the central government's official gazette. Finally, China made commitments to improve enforcement of intellectual property rights. Most important, it agreed to new rules requiring all manufacturers to pre-load legal software on computers sold in China.

The real outcome of all these measures will be known when we see the results. And we will be monitoring the situation very closely in the coming months. As business people, all of you know what counts most are the numbers. And that’s what we’ll be looking for from the Chinese.

President Bush believes that China, as a major player, has a responsibility to strengthen the international trading system. After all, it is that same system that has empowered a strong and growing Chinese economy.

One of this Administration’s goals is to preside over a period of progress and increasing cooperation between the U.S. and China. China’s leaders also talk about achieving greater progress. Maintaining support for trade within a democracy requires cooperation from our trading partners. We expect the progress to date will continue, and that China will honor its commitments.

In closing, I want to make a final comment about our national competitiveness. In America, we look outward with optimism and confidence. We have seen Americans compete and win in markets all around the world. And they have done so for most of our history. So this is not a time for hand-wringing. It is a time for a relentless focus on creating our future.

The President has called for a national focus on competitiveness and innovation. He wants to make improvements in critical areas: education, R&D, Social Security, providing health care, and opening the economy to the global market place.

He knows we can succeed. I know we can succeed. And with your help we will succeed. As entrepreneurs, as world traders -- and as potential world traders -- you have the power to make a major contribution by doing what you do best: by looking forward, taking a risk, and being major leaguers in today’s global economy.

Thank you very much.