Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
U.N. Public Diplomacy Panel Boosting Trade & Development: Innovation, Property Rights and Governance
New York, New York

Thank you, Rhonda (Schaffler, Bloomberg TV). I'm delighted to be here this morning to talk about these vital issues. As I'm certain my colleagues on the panel would agree, the U.S. has many years of experience building our economy and our democracy.

And it wasn't easy. We didn't start out as a great power; in fact, we were a backwater to the great powers of Europe who saw us mainly as a place for cheap natural resources and a market for their factories.

But our forebears who built our mighty economic engine had a vision of ever-expanding opportunity and prosperity, and above all else, freedom. And they did this on the basis of innovation, open markets, education, and the rule of law.

I believe this is increasingly important to keep in mind as we face the challenges of globalization. This is a powerful development, and it's forcing all of us to reassess our economic policies and priorities. And I do mean all of us, whether you come from a big industrial power or a small emerging nation, a big city or a tiny rural village.

Many members of the European Union are re-evaluating their economic policies to cope with globalization. I was in Southeast Asia a few weeks ago, and nations there are doing the same.

We have to ask ourselves: How do we grow and create jobs in this new 21st century reality? What is the appropriate fiscal policy mix? How do we deal with higher energy costs? How do we respond to rising economic powers, such as China and India? And how do we avoid the temptation to go protectionist?

On this last question--avoiding protectionism--the World Bank estimates that full market liberalization would raise the incomes of developing nations by up to $259 billion over 10 years.

Let me share a few thoughts on the approach President Bush is taking to prepare our people and our economy for the 21st century.

American Competitiveness Initiative
President Bush has a very ambitious pro-growth agenda to focus our efforts.

The core principles of his American Competitiveness Agenda are: lower taxes and a more predictable tax structure, less regulation of our businesses, and a more open, rules-based world trading system.

A key part of President Bush's plan calls for increased federal R&D spending from the current $132 billion per year to $137 billion. That would be a huge increase, especially compared to the $91 billion we were spending in (fiscal year) 2001.

We also want to double funding for basic research in physical sciences and engineering over the next ten years. This would go to such cutting-edge areas as nanotechnology, hydrogen fuels and quantum information.

As for the private sector, which accounts for two-thirds of our R&D spending, we want to make our R&D tax credit permanent. This would be worth $86 billion over the next ten years, and would give companies the confidence they need to invest.

Private innovation is absolutely critical in a knowledge-based economy. A recent study shows that as much as 75 percent of the value of publicly-traded U.S. companies is derived from "intangible" assets, namely ideas and innovation. That's up from just 40 percent in the 1980s.

Another critical area is education. We've been graduating fewer and fewer engineers and scientists in recent years. To reverse the trend, we need to enhance math and science skills in Kindergarten through the 12th grade.

President Bush wants to hire 70,000 new teachers with advanced math and science skills, and to create a corps of 30,000 math and science professionals to assist regular teachers. Just this week, President Bush named Larry Faulkner, former President of the University of Texas, to chair the national Math Panel.

This will help give us the highly skilled people we need to keep creating and developing the newest and the best technologies.

A final area I want to highlight is protecting intellectual property. This is a critical matter worthy of the attention of this conference. Many of our industries depend, as I said, on their technologies, trademarks, software and brands to stay in business. It's their lifeblood.

And pirates know what a gold mine this is. Intellectual property theft is costing U.S. companies some $250 billion a year in lost sales and hundreds of thousands of lost jobs.

As we see it, our competitive advantage is only as good as our ability to protect our ideas. And we believe this is also the case for our trading partners. As economies move up the value chain--producing more and more sophisticated products and services--the ideas and technologies behind them become increasingly more valuable.

We have an active dialogue underway with the Europeans on protecting IP. We recently won agreement with China for tougher enforcement of its laws against IP theft. And we're working with many other trading partners to crack down on this piracy.

In closing, let me say I can think of no better way of summing up the American experience as the pursuit of finding a better way of doing things. We are a nation of optimists and risk-takers.

We believe in individual freedom and democracy for all. Granted, it's not always easy, but we've created an environment that has provided more opportunity and more prosperity for more people than any other economic or political system in history.

As for economic policy, we believe that innovation that leads to higher productivity and rising living standards is the best, if not the only, sustainable competitive advantage for the 21st century.

Thank you very much.