Deputy Secretary's Speech

U.S. Acting Deputy Secretary of Commerce David A. Sampson
RFID Conference
U.S. Chamber of Commerce
Washington, D.C.

Good morning. It's a great pleasure to be with you today. I want to begin by thanking the Chamber and SAP for partnering to make this event possible. It is my pleasure to address today’s conference on Radio Frequency Identification (RFID).

It is clear that RFID in the United States and around the world is poised for significant growth in business, consumer applications, and in government. Today’s meeting will help build the dialogue on RFID as a technology that promises to keep America more competitive and innovative in the world economy.

Secretary Gutierrez and I share the President’s commitment to pro-growth policies that create a business environment that encourages innovation, supports emerging technologies, and lowers the cost of doing business.

The rapid advancement in technology presents challenges and opportunities to industry. Our success in advancing innovation will depend on the partnership between the Federal Government, industry, and academia through strong support of research and development (R&D).

To improve the infrastructure for innovation, President Bush’s FY 2006 Budget request includes a record $132 billion for federal research and development

• This represents a 45 percent increase from when he took office in 2001 ($91.3 billion).
• The 2006 budget allocates 13.6 percent of total discretionary outlays for R&D—the highest level in 37 years. Not since 1968 and the Apollo space program have we seen as much investment in R&D

Even in an environment of tight budgets, these investments reflect the importance President Bush places on science and technology to enhance U.S. competitiveness and solve challenges in health, defense, energy, and the environment.

According to industry sources, the RFID market for related consulting, implementation, and managed services is expected to reach between $2 billion and $4.2 billion by 2008. In addition, as much as 30% of all capital goods will carry RFID tags by 2008. There are many business reasons to use RFID technology: supply chain visibility, inventory management, ensuring product legitimacy, and shrinkage/loss prevention. It’s therefore not surprising that Wal-Mart and the Department of Defense are market leaders as both rely on extensive supply chains.

RFID applications are also being tested in other parts of government for logistics support and for public safety and security. But the commercial sector will continue to drive innovation in this area.

Dr. Alex Pang at the Institute of the Future spoke at an RFID workshop hosted by the Department of Commerce this past April. He said that RFID is one of a set of emerging and connective type of technologies that has the potential to impact business and daily life as profoundly as the rise of the internet.

Over the past year the Department of Commerce has setup an RFID working group. It involves a number of our offices. The initial goal is to better understand the technology, its deployment in the business sector, and the policy challenges associated with an emerging technology application.

I encourage you to take a look at our recently issued RFID paper, Radio Frequency Identification – Opportunities and Challenges in Implementation” (www.technology.gov).

This issue paper explores RFID technology’s implications for international trade, standards, spectrum, small- to medium-sized enterprises, intellectual property rights, privacy and security, and economic growth.

As implied by the title, the deployment of this emerging and promising technology presents us with both opportunities and challenges.

On the opportunity side, RFID is poised for growth in the U.S. as business and government, led by Wal-Mart and DOD, realize the potential of this evolving technology to enable global commerce and spur innovation and competitiveness.

RFID technology can increase visibility and accountability in the supply chain because it allows users to efficiently collect, manage, distribute, and store information on all kinds of things … inventory, business processes, and security controls, for example.

For the public, this translates to better selection, lower prices, convenience, and improvements in safety and security.

But there are challenges, as is common with any emerging technology. RFID challenges include: harmonization of standards and interoperability issues across various RFID systems, companies and countries; and privacy and security concerns.

As you will hear this afternoon from the panelist from NIST, we are working with industry on the development of practical and market-driven technical standards to allow greater interoperability. We must also implement smart privacy and security policies that can sustain innovation built around RFID technology and provide consumers with the information and tools they need to protect themselves.

All these challenges must be overcome for RFID to achieve its full potential.

As I mentioned earlier, the Department hosted an RFID workshop on April 6th, in conjunction with the release of our issue paper. The workshop was attended by over 300 representatives from industry and stakeholders. Its primary objective was to engage stakeholders and policymakers about the benefits of RFID technology, technology development efforts, current and future applications, and privacy and security considerations. We also want to better understand industry’s experiences in implementing RFID technologies.

The workshop reinforced the wide range of applications for RFID. Panelists discussed benefits that range from applications in the health field for quality assurance and drug anti-counterfeiting and tracking the content of cargo containers … to increasing supply chain efficiencies and improving customer satisfaction.

We also heard that since RFID is an emerging cross-cutting technology, we actually do not yet know all the ways the technology can and will be used.

But we do know that to achieve success in developing this technology we will need strong partnerships among technology companies, standards bodies, regulatory and non-regulatory agencies, and industry and consumer groups.

That’s why forums like our workshop and today’s event are so important. We need them to establish intelligent dialogues on the global potential of RFID, and hopefully avoid some of the misinformation and emotions that discussion of emerging new technologies like RFID can sometimes generate.

Let me say something about standards, which will be discussed at one of the panels later this afternoon.

Common standards provide the basis for international trade. The challenges that I mentioned earlier in terms of interoperability and worldwide harmonization are very significant obstacles that will need to be addressed.

Open standards are key to making possible the wide-spread deployment of technology and all its associated benefits. We believe in market-driven development and adoption of standards, the approach consistently taken by the U.S.

Of course, this goes beyond RFID. Open standards are a global trade issue. As you will hear this afternoon, NIST has a series of “Standards in Trade” workshops focusing on specific sectors and target regions of the world where training in U.S. standards development, conformity assessment, and metrology can facilitate trade.

Next month (on July 11) NIST will hold a standards in trade workshop for China focusing on RFID technologies. The underlying premise for these kind of workshops is that as more economies like China enter the global trading system … often with unique standards of their own … the need for harmonized standards becomes more acute. We need to educate our trading partners that multiple standards create huge costs and great burdens for product and technology development as well as world trade.

Those of you from industry understand the importance of continuing a dialogue on acceptable use guidelines for RFID technology. You also know how important this is to keep consumers and the general public informed about this technology’s benefits, while allaying concerns about misuse.

I think all of us would agree that a market-based solution is preferable over the government establishing a potentially onerous framework of rules that could stifle RFID deployment and ignore markets needs.

Let me end by saying how much I appreciate the leadership that the Chamber and SAP are showing by organizing today’s meetings. We need such efforts if we are to succeed in developing and deploying this promising new technology and its associated applications.

Together we can learn more about this promising new technology and its potential. And along the way, just maybe, even dispel a myth or two about RFID’s capabilities.

Thank you very much.