Under Secretary of Commerce For International Trade Francisco SÁnchez
The Zion's Bank Trade Conference
Tuesday, May 18, 2010
Salt Lake City, Utah
As prepared for delivery
Thank you, Scott. You were more than generous in your remarks. I want to congratulate you and Zions’ Bank for hosting this conference again. Thank you for convening this premier gathering of individuals who understand the growing role that exports play in the national economy – something President Obama understands as well.
I am glad that as we meet this morning the economy is now growing at an annualized rate of more than three percent – a heck of an improvement from a year ago, when it was at minus 6.4 percent. We have a lot of ground to make up, still, but we are headed in the right direction.
Some parts of the world’s economy turned the corner before the American economy did – an important factor to consider. The global economy has created a global market for individuals who want to grow their businesses. We have known this for some time but in the wake of the recession, the need to grow exports in this new global environment is critical.
Before the recession that began in 2007, exports made up 12.7 percent of the nation’s GDP. That was the highest since 1916.
Export growth was growing steadily until the bottom fell out of the economy. Now, with the Administration’s economic strategies beginning to pay off, we can concentrate on the building blocks of America’s future, one of which is increasing exports in order to create jobs. About 95 percent of the world’s consumers lie outside the United States, a reality the President understands, which is why he created the National Export Initiative.
The two goals of the NEI are to double exports in the next five years to support two million jobs. The long-term purpose of the NEI is to put America on a track that takes full advantage of the opportunity that the global market place creates.
To move this process forward, the President created an Export Promotion Cabinet reporting to him that will consist of top leaders from the Departments of Commerce, State, Agriculture, the Export-Import Bank, the United States Trade Representative and the Small Business Administration. The Cabinet is to co-ordinate these agencies through the NEI to increase trade promotion – backed up by more funding for export promotion.
We have a budget request before Congress for $78 million for the International Trade Administration, which I oversee, for precisely that purpose.
Implicit in the NEI is the need to advocate more effectively for U.S. products in our interactions with foreign businesses, farmers and foreign officials. And that, too, is one of my key roles. We cannot grow the export market without free and fair trade.
The Cabinet is also responsible for making sure that access to credit is available for exporters, and so increases in funding for the Ex-Im Bank have been proposed.
Zions’ Bank has been instrumental in addressing and mitigating the working capital needs of Utah businesses through partnering with SBA and ITA on trade finance education programs as well as offering financing tools to exporters. Zions’ is a member of SBA’s Preferred Lender Program and has been the highest SBA lender in Utah for the past 15 years.
Through its work with the SBA and Ex-Im Bank loan guarantee programs, Zions’ Bank helps U.S. exporters access the working capital they need to fill export orders and their expand global sales.
Zions’ Bank is a strong strategic partner of ITA and has deepened the export awareness of businesses in the Rocky Mountain region. Recently, Zions’, working with us, sponsored an extremely successful trade mission from the Mountain West to Monterrey and Mexico City. One of the bank’s vice presidents, Mark Garfield, chairs the Utah District Export Council, one of the most active DECs in the country.
Trying to follow the example of Zions’ in order to make the NEI operational as soon as possible, I have implemented a 12-month plan that refocuses ITA’s mission. We are moving somewhat from finding and working with companies that are new to exporting to an approach that works with companies that already export to look for new markets. About 58 percent of the companies that export today do so to only one market. We are also moving to focus more on targeted industries and markets instead of using the broad approach of the past.
We are also making some internal changes that will streamline the way ITA manages its contacts with companies like yours in order to have more centralized, closer and effective relationships. And we are strengthening our communications and marketing effort to further support the President’s initiative.
One great step forward is growing our Office of Strategic Partnerships to maximize the benefits to the economy that can come from real and meaningful public-private partnerships.
With UPS, FED EX and the U.S. Postal Service, we will try to educate their entire client base to the importance of trade to the American economy. Already, 600 FED EX sales staff have been trained on the services ITA’s Commercial Service offers to companies.
To further harness the potential between the public and the private sectors, we have re-engaged our Industry Trade Advisory Committees that help us develop public policies and strategies. And for the first time since 1996, the relationship between the value of exports required to support one job has been ascertained using 2008 data: nearly $165,000.
For the longer term, I am concentrating on export control reforms, continuing to try to break down and penetrate trade barriers and advocating for free trade agreements.
Regarding export control reform, the President’s plan envisions a single export control list, a single licensing agency, a single enforcement coordination agency and single information technology system. Regarding fair trade, unless commercial impediments and market access barriers are addressed, they will negatively affect U.S. export growth.
In that context, our long-term thinking includes developing commercial engagement strategies for important emerging markets, like Brazil, India, China, Vietnam, South Africa and other nations. These engagement strategies envision where we want to be in our commercial and trade relationships in five years. Our objective, of course, is to increase trade.
The United States exported more than $1.6 trillion worth of goods and services in 2009, and today I can report to you that exports have reached the highest level in two years, and, as you know, retail sales rose in April for the seventh straight month. Industrial production posted an 0.8 percent gain and is growing at an annualized rate of 8.2 percent. Inventories rose 0.4 percent. Business sales gained 2.3 percent for six months in a row.
Though we can be optimistic about these new numbers, all of us know how the world is changing. The President’s National Export Initiative is more than a concept for discussion about the global economy.
The NEI is a real-time plan that with the cooperation of institutions like Zions’ Bank can be decisive to growing the American economy.
One of the ten states the bank serves, Idaho, saw its sales of products to other countries jump 65 percent for the first three months of 2010 compared to last year. Utah businesses sold $3.3 billion in exported goods from January to March. The successes here underscore the importance and multiplier value that partnerships with entities like Zions’ Bank bring to the core tenant of the NEI – that is, increasing and strengthening American jobs through the broadening and deepening of the U.S. exporter base.
The story of exports and international trade, however, does not begin with ITA or the federal government. It begins in communities such as this one and throughout this region. The American economy is supported by businesses of all sizes, yet there is no doubt that small and medium-sized businesses hold the key to our economic vitality. Ask any small business owner and they will tell you that access to credit is the single most difficult barrier to launching the next successful company.
This story of trade, then, really begins with entrepreneurs who take their ideas to a bank willing to give them a chance. We need our local and regional banks across the country empowering our entrepreneurs.
This is the math of our economy. This is the equation on which the NEI hopes to build. And once that company is operational and seeking new markets, ITA stands ready to prepare you for any market you target. We have commercial experts in 128 countries standing ready to help. I am hopeful that all of us here reflect upon the opportunity at hand to ensure the success of the American economy.
I believe we have turned the corner on the crisis that a short time ago threatened to engulf us all, and I believe that we have the right partners in you to help America reach the next milestone in the exciting future before us.
Thank you so much for having me here today.
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