FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman, members of this Committee, I appreciate the opportunity to speak with you this morning about the Administration's trade policy and our strategy to open markets and expand trade. While Secretary Daley and Ambassador Barshefsky will speak in greater detail about our trade agenda, I want to make a few broader points about the importance of trade to our economy because the decisions we make on trade over the next few years will be some of the most important we will make as a nation with respect to our future prosperity.

We meet at a time of tremendous strength in the U.S. economy. Today, unemployment is 4.4 percent and it has been under 6 percent for the last four years. The economy has generated nearly 18 million new jobs over the last six years, and inflation has remained low. And wages are rising B across all income levels.

A number of factors have contributed to this strong economy including, very centrally, the private sector regaining its competitive edge over the last decade, and the President's broad based economic strategy of fiscal discipline, investing in people, and opening markets. And that last point B expanding trade, to which this Administration has been firmly committed and for which this Committee has been the keeper of the flame B has clearly played a major role.

Jobs related to exports pay on average higher wages than other jobs. Opening markets and expanding exports are therefore of great importance to our nation's prosperity and our ability to create high wage jobs. Less widely recognized is that imports, too, contribute greatly to our economic well being. Americans, as consumers, benefit from the lower prices and wider choice which imports provide; American producers similarly benefit from lower costs and wider choice for inputs, making them more competitive, which results in more jobs and higher wages; productivity is enhanced through greater competition; and for all these reasons, inflation and thus market interest rates are therefore lower.

It is interesting to compare our economic performance of the last six years with the economic performance of other industrialized nations that are less open. Study after study has shown that more open economies enjoy stronger growth, and that is certainly evident here. We have low unemployment, rising wages across the board B and we have the most open markets among the major economies. Europe and Japan are far less open than the United States, and the major economies of continental Europe have had persistent unemployment of 10 to 12 percent or greater, and Japan, now in recession for over a year, has been virtually stagnant for roughly eight years.

Moreover, trade is not a zero sum game: All nations benefit from a vibrant trading system.

Mr. Chairman, as you well know, for the last year and a half the global economy has experienced a financial crisis severely affecting countries around the world. While our economy has performed very well despite the crisis, there are certain sectors that have been substantially affected B most notably, steel, because of increased imports, and agriculture and aircraft, because of decreased world demand. The risks of that crisis continue, despite some positive developments in recent months, as do the risks to us from that crisis. To protect the economic prosperity of our country, and to restore the well being of affected sectors, we have been and continue to be enormously focused on the effort to restore stability and growth to troubled parts of the world. In this regard, we have been working bilaterally as well as with the IMF, the World Bank, the MDBs, and others to meet these important objectives.

Let me emphasize two points integrally related to all of these comments. First, trade should be not only open but fair, and this Administration is committed to fully enforcing our trade laws to deal with unlawful practices. Second, the President has worked to equip Americans with the tools they need to succeed in the global economy, with a strong emphasis on education, training, health care, and technological research and development. A strong international policy has to go hand in hand with a strong domestic policy. And we must be particularly focused on helping those who are adversely affected by the dynamic change B due principally to technology but also to trade B that so benefits the American people overall and is critical to American success in the global economy.

What we must not do is pull away from the global economy, which is so important to our economic well-being. The rest of the world look to the United States for leadership. For the United States to reduce access to our markets, even on what might appear to be a limited basis, could well be very damaging to us. It would hurt our economy directly through higher costs to consumers and producers and higher inflation and quite possibly higher interest rates; and under today's conditions there would in addition be two special risks to our economic well-being.

First, reduced access here could undermine the prospects of recovery and growth abroad in a world that is still working itself through the global crisis that began a year and a half ago, a recovery so important to our economic well being. Japan and Europe must also increase the world's access to their markets, for their sake, and for the sake of the rest of the world.

Second, and most troubling, if the United States, with its very healthy economy, is seen as moving toward restricting markets, that could well reinforce the newly vibrant voices of protectionism in many countries around the world whose economies are struggling or less vibrant then ours, and that is enormously against our economic interest.

Mr. Chairman, the U.S. economy is the strongest it has been in a generation. To sustain that strength we must continue to maintain open markets at home, and press for open markets abroad. This Committee has long been a major force in pursuing those objectives, and I and all of us in the Administration look forward to working with you to meet these great challenges, including building a consensus for trade negotiating authority that also reflects appropriate provisions with respect to labor and the environment, issues to which the WTO and the ILO have a great deal to contribute. Our success in meeting these challenges is critical to the prosperity and standard of living of our nation, as well as the global economy, for the years and decades ahead. Thank you very much.