U.S. Commerce Secretary Carlos M. Gutierrez
REMARKS TO DETROIT ECONOMIC CLUB
March 20, 2006
Detroit, Michigan

(Remarks As Prepared for Delivery)

 

Thank you John (Sanderson), for that kind introduction. It's a pleasure to speak to the Detroit Economic Club. It's great to be back in Michigan. This was home for many years. It took a call from the President to get me to leave. I'm here to talk about a critical issue for the future of our economy.

Any discussion of our economy should begin with an acknowledgment that we're starting from a position of strength. Ours is the greatest economy on earth. The benefits of our growing economy are not consistent across the country, as you well know. But our national numbers are strong.

The global environment is more competitive than anything we've seen before. This means billions of new customers for American products. It also means billions of new competitors. This creates uncertainty and allows protectionists on Capitol Hill to sound a retreat. There seems to be a theory that we can keep our high standard of living while walling off our economy.

Policy choices should not be dictated by fear. Policy choices must be driven by steps that build and sustain our strengths. History shows that retreating from competition will hurt our economy and weaken our position in the world.

In 1930 Congress passed the Smoot-Hawley tariff to reduce imports and protect American businesses and jobs. That law succeeded and cut imports in half by 1933. But it also backfired. Over that same three-year period, exports were cut in half and unemployment skyrocketed up to 25 percent.

The Smoot-Hawley trade barriers deepened and extended the Great Depression. A hard lesson was learned. We should never forget it. With the benefits of economic engagement clear, the U.S. began pushing for an international trading system in 1947. At the time, tariffs averaged 40 percent around the world.

Today, the average tariff in developed countries is less than 4 percent. There is 20 times more international trade. In 1947 our real exports were $74 billion. Today our real exports are over $1 trillion. From Franklin Roosevelt to George W. Bush, an unbroken line of American presidents have invested their hopes and energy in a free-trading global economy.

Free trade is our best hope to raise living standards around the world. Studies have shown that removing world trade barriers would create economic growth equal to adding another Canada and Switzerland to the global economy every year.

The World Bank found that trade barriers are trapping up to half a billion people in poverty. Countries that trade grow faster than those that don't. They build greater opportunity for their citizens.

Our economy is a testament to the power of trade. Look at the numbers:

•  Our GDP growth last year was 3.5 percent. Higher than the combined growth of Italy (0.3%), Germany (0.9%) and France (1.5%). Euro-Zone (1.4%), Canada (2.9%), Japan (2.8%)

•  Our unemployment rate is 4.8 percent. Below Canada (6.4%), Italy (7.5%), Germany (9.1%) and France (9.2%)

•  Since August 2003, nearly 5 million jobs have been created

•  And it's important to note that this job growth is enjoyed by all Americans-with minority unemployment near historic lows

•  Homeownership is at all-time highs

•  And inflation remains in check


Our economy is the envy of the world. To keep that going we need to again reject protectionist policies. We cannot buckle to the protectionist sentiment. About 12 million Americans depend on exports for their jobs. One out of every five factory jobs in America is related to global trade. A great many innovative American companies depend on trade. We can't take our ball and go home. Greater competition requires renewed focus and engagement-not retreat and withdrawal.

I know things haven't always been easy in Michigan. I lived in Battle Creek for a number of years. My children were educated here. I know the values of this great state. I wish I could tell you that with a stroke of a pen, or with a piece of legislation, all your troubles will go away. It doesn't work that way. If someone tells you that, I hope you'll be a little suspicious.

President Bush believes that Michigan workers and all Americans can compete with anyone in the world, on fair terms. Michigan is our nation's fifth largest exporter. Michigan 's manufactured exports were more than $37 billion in 2005, an increase of more than 14 percent over the previous two years.

That's why more than 1,000 companies, from more than 20 countries, have operations in this state. This investment supports nearly a quarter of a million jobs. The role of government is to create the environment for business to succeed. An important part of that environment is ensuring that our trading partners are playing by the rules.

We will continue to speak candidly about the lack of transparency in the Chinese regulatory system; weak law enforcement; and the Chinese government's subsidies to state-owned enterprises. All of this conspires against U.S. companies trying to do business in China . We will continue to push Japan and Korea to open their markets.

We live in an age when consumers worldwide are gaining the resources and the opportunity to buy the best products made anywhere. And that will be good for American workers. We're already the world's largest exporter. We're the world's most competitive marketplace. I know American workers can compete with anyone in the world. The President knows American workers can compete with anyone in the world. We need to continue providing economic leadership to the rest of the world, so we can shape our future.

That's why President Bush proposed his American Competitiveness Initiative. By improving math and science skills in our schools; by tripling the number of workers getting job training; by attracting and retaining the worlds best and brightest through immigration reform; and by focusing on Research & Development-we will ensure America stays on top.

We're building on a rich history of innovation. Think about the great inventions that have changed our lives: the telephone, the light bulb, the car, and the airplane. Innovation is in the American DNA. That's why the President wants to double funding for basic research and development. And make the private sector R&D tax credit permanent. Two-thirds of all R&D spending is done in the private sector. By making the tax credit permanent, we can provide companies certainty in the future.

The federal government does some of the basic research that the private sector turns into products, and that consumers buy. For example, government scientists have been studying the applications of nanotechnology-the economic potential of which is expected exceed $1 trillion by 2015. And as a result of the President's initiative, I am announcing today the opening of a National Center for Nanoscale Science and Technology. This is where we will help the private sector develop advanced measurement and manufacturing techniques.

We will strengthen American competitiveness with things like more efficient batteries, lighter-weight and higher performing materials for autos and aircraft, and smaller computer chips. When the private sector creates products from this research, we need to protect them. That's why IPR enforcement is a top priority for this Administration.

Today, I am announcing two additional initiatives from our Patent and Trademark Office. We are creating an outreach program that increases the interaction between our patent examiners and industry leaders. And we are initiating a training academy that will make our team of patent examiners faster and stronger. These efforts will further enable the pace of private sector innovation. Last week we announced a new patent filing system-giving America the simplest and most secure system in the world.

The President knows that we need to encourage the inventors and entrepreneurs tomorrow. Foreign countries are outpacing us in math and science graduates. Last year, China graduated over 600,000 engineers, India 350,000 and America, 70,000.

Education is the greatest indicator of future success and prosperity. The No Child Left Behind Act is working. National test scores are on the rise and minority students are closing the achievement gap. On this year's test, fourth grade reading score were six points higher than in 2000. Fourth grade math score were the highest in the test's history.

We can build on this success with the President's plan to recruit 30,000 math and science professionals into classrooms. This is where we need your help. We need to get you and your employees into the classroom as volunteers. We need to show our kids that math and science can lead to exciting careers. That math and science are cool. This is a major calling-and I hope everyone in this audience will volunteer.

And we need to retain the talent that we help educate. Foreign students come to America to get the best education money can buy. Then they are forced to go home and compete against us. We need to increase the number of H-1B visas for temporary workers and raise the number of employment-based green cards.

Our focus on competitiveness goes hand in hand with the President's agenda for continued economic growth. We need to keep America as the best place in the world to do business:

• We need to pursue advanced energy technologies to develop an affordable and reliable energy supply
  
• We need to reform our tort system so that we don't spend more money suing ourselves than we do innovating. (The current tort system costs America $240 billion each year)
  
• We need to reform our health care system by empowering consumers and making the marketplace more competitive
  
• We need to make sure the proper safeguards are in place to protect the retirement savings of workers
  
• And we need to make the tax relief permanent

The President's tax cuts ignited the economy. Nearly 4 million Michigan taxpayers are paying lower taxes. And over 720,000 small businesses had extra savings to invest in new equipment, expand facilities and hire additional workers. Individuals and businesses allocate capital more effectively than the federal government does. Yet, some in Congress resist making the tax cuts permanent. The problem is not that taxes are too low. The problem is that we need spending restraint. Congress needs to pass the President's budget-and give him the line-item veto.

I want to thank the leaders who are in difficult industries, who are striving to compete and to revive great corporations. I want to reiterate the President's call for focus on our competitiveness. He knows we can succeed. This is not a time to withdraw; it is time for a relentless focus on creating our future. And we need you to get everyone involved!

Membership in the Detroit Economic Club is for those with an interest in the great issues of our times. You're here today because you're interested. I call on you to get active. I call on you to embrace free trade; to volunteer in the schools; to continue believing in free enterprise; to compete with confidence-and win in the marketplace!

This is the greatest economy in the greatest country on earth. It's companies and leaders like you that make it that way.

Thank you very much.