Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
4th Annual European Business Summit
Brussels, Belgium

Good morning. I want to begin by thanking the European Business Summit for organizing this conference. I also want to thank the people of Brussels for being such gracious hosts. My visit here has been truly wonderful, and I greatly appreciate the opportunity to visit this beautiful city.

It is my distinct honor to be here today representing President Bush and the U.S. Department of Commerce. President Bush has a global view. He is committed to actively engaging our international partners to promote the spread of liberty and democracy, the surest ways to a more prosperous and peaceful world.

The United States and the European Union cooperate on a wide range of political, security and economic issues, as you know--from the global war on terrorism and security in Europe and NATO, to trade and investment.

In today's competitive environment, expanding our economic ties is increasingly important. President Bush is committed to working with our friends in Europe on opening new markets, reducing trade barriers, and helping workers and businesses compete in the global economy.

So I look forward to a very stimulating discussion today as we share ideas and experiences.

What brings us here is the common goal of building prosperity and raising standards of living for our citizens. We've been very successful over the last 60 years since the end of World War II in advancing that goal, overcoming great challenges, political and economic alike.

Now we face the challenges of globalization, which is forcing all of us to reassess our economic policies. We're all asking the same questions:

How do we grow and create jobs in this new 21st century reality? What is the appropriate mix for tax and spending policies? How do we deal with higher energy and health care costs? How do we respond to rising economic powers, such as China and India?

As you heard yesterday, reinvigorating Europe's economies remains a major issue. And likely will again dominate the agenda at next week's EU leaders summit.

Clearly, you have many ideas of your own for building on the success of creating a Euro-zone linking the many economies of Europe closer together.

In the United States, our economy remains strong and very diverse. But like Europe, we also have to reinvent ourselves to remain competitive in order to grow, and to create the private sector jobs that our workers need, and to raise living standards. Merely maintaining the status quo is a synonym for stagnation.

To contribute to the debate, I want to share a few thoughts and specifics on the approach we're taking in the United States, and the policies we're using to prepare our people and our economy for the long term.

As President Bush sees it, innovation and competitiveness are what drive our economy. Throughout our history, America has relied on the ingenuity and optimism of our entrepreneurs and workers. It's in our cultural DNA.

The Context for American Competitiveness
Recently, the U.S. has experienced faster growth than any other major industrialized nation--growing by 4.2% in 2004 and 3.5% in 2005--and our unemployment rate, at 4.8 percent, is one of the lowest. Payrolls are growing in almost every single U.S. state (47 out of 50). We've added nearly 5 million new jobs during the last two and one half years. And despite the headlines about our trade deficit, U.S. exports are up over 12% in the past 12 months, running at a record annual rate of $1.4 trillion.

One of the major reasons for our success is the enormous improvement in worker productivity. In fact, U.S. productivity has had one of the fastest five-year periods of growth in almost 40 years (averaging 3.3 percent).

And the underlying reason for our economic strength is that we remain a nation of innovators. We have a reputation for coming up with new technologies and ways of doing things that make us more productive.

Today, more than ever, the United States is a knowledge-based economy. In fact, you might call us knowledge-dependent.

A recent study shows that 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.

The challenge we face is keeping our economic leadership, our competitive advantage, by encouraging innovation in a very dynamic global economy. This is no time for complacency.

American Competitiveness Initiative
We're attacking the problem on a number of fronts. President Bush has a new and very ambitious pro-growth agenda to focus our efforts. He launched the American Competitiveness Initiative in January.

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

As the Austrian Federal Chancellor said last night, governments don't create jobs, only the private sector can do that. The role of government, whether in the US or the EU, is to create the conditions for the private sector to innovate, invest, and create jobs and wealth.

A key part of President Bush's new 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.

The President also proposes doubling innovation research funding government-wide for physical science and engineering over the next ten years. Let me give you a specific example that explains where we're putting our research dollars.

At the Department of Commerce we have a world-renowned research lab, the National Institute of Standards and Technology (NIST). The President's budget calls for a 24 percent increase in funding for NIST--over $104 million--for core laboratory programs. This will allow scientists at NIST--who have won three Nobel Prizes in recent years--to advance research in promising fields. Some $72 million would go for such cutting-edge areas as nanotechnology, hydrogen fuels, and quantum information.

These initiatives might one day lead to new cancer therapies, fuel cells for pollution-free cars, or unbreakable codes to protect electronic transactions.

This is the kind of basic research that we believe government should be supporting.

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

Another critical area is education. We've been graduating 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. The President's plan proposes funding for 70,000 newly trained teachers with advanced math and science skills. And it would create a corps of 30,000 math and science professionals to assist regular teachers.

This will 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 hot-button issue. 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. That's why we are so aggressive about enforcing patent and copyright laws. As we see it, our competitive advantage is only as good as our ability to protect our ideas. Protecting IP is a priority we certainly share, and we are pleased that we have an active dialogue underway to promote closer collaboration between the US and EU on IP enforcement.

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 sometimes messy, but it has created an environment that has provided more opportunity and more prosperity for more people than any other system of government in history. We believe in our innate abilities to innovate, whether it's inventing the Internet or putting a man on Mars, as the President has proposed.

And as an 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. We look forward to working with you to build that competitive advantage, both in America and Europe.

Thank you very much.