Under Secretary of Commerce For International Trade Stefan M. Selig
Trade Americas Expo 2014
JW Marriott Marquis Miami
Thursday, September 4, 2014
As prepared for delivery
Thank you, Richard for those warm introductory remarks.
I would like to thank the city of Miami and the larger South Florida area for the wonderful welcome.
As head of ITA, I am pleased to be in one of the strongest export hubs in the country.
Just this week, we released a study on U.S. metro area exports in 2013. The Miami-Fort Lauderdale-West Palm Beach area was the seventh largest export hub in the country last year.
Nearly $42 billion in merchandise goods were exported last year from this metro area.
It is a privilege to address representatives of business, industry, and financial communities, as well as our respective governments throughout the Western Hemisphere.
It is a particular privilege to address the more than 100 small and medium sized enterprises or SMEs from the U.S. as well as Latin America and the Caribbean that are here today.
On behalf of the Commerce Department, the International Trade Administration, and the entire U.S. Government, I want to thank the Latin Trade Group and the Inter-American Development Bank for putting together this wonderful event.
The Trade Americas Expo has already done a fantastic job of raising awareness of both infrastructure opportunities and the tremendous economic advancement going on in Latin America and the Caribbean.
I’d like to use my time today to discuss three initiatives:
- one that is helping reinvigorate U.S. exports;
- one that is actively connecting U.S. SMEs to Latin American markets,
- and, finally, a potential initiative that could create unprecedented market opportunities for SMEs throughout the Western Hemisphere.
But first, I’d like to touch briefly on the issue of infrastructure.
The program agenda states that Latin American and Caribbean countries would need to invest up to 5% of GDP annually to bring their infrastructure to international standards within a decade.
A separate study found that improving Latin American infrastructure could add as much as 2 percentage points to annual growth rates for the region.
And the Inter-American Development Bank predicts that the region will invest at least $1.5 trillion over the next decade on infrastructure projects.
Given the magnitude of these numbers, it is clear that what is at stake is economic growth, sustainable development and long-term prosperity.
So clearly the stakes are high. But clearly this also means the opportunities are plenty, and we know that the US can take better advantage of the growth happening in Latin America.
As Jose W. Fernandez, the former U.S. Assistant Secretary of State for Economic, Energy, and Business Affairs for President Obama, wrote recently in Foreign Affairs magazine, the U.S. has ceded substantial ground to companies based outside of the hemisphere in the Latin American and Caribbean infrastructure development space.
That is precisely why it is so important that this expo is taking place today. This event has and will provide a wonderful opportunity for U.S. companies, including SMEs, to tap into this lucrative and important market opportunity.
And as the matchmaking sessions scheduled for today begin, I am also proud to say that--when it comes to transportation and logistics, energy efficiency, and public works--U.S. quality, innovation, and service in these sectors are indeed world class.
That is also why I am so pleased with the launch of the ConnectAmericas Infrastructure Business Community. This community will not only connect stakeholders in the infrastructure sector, but it will also provide training for service providers and local partners.
We expect that this will be an enormous boost for Western Hemisphere SMEs in their efforts to do business in the infrastructure sector.
What an event like the Trade Americas Expo proves is that what binds our people, our markets, and our nations are the challenges we face collectively.
President Obama has made it clear that the future of the United States is inextricably bound to the future of the people of the Americas.
In particular, how we collectively confront the shared challenges of economic growth:
- Poverty elimination;
- Improving living standards; and
- Unlocking the maximum gains of a real opportunity economy.
As some of you know, prior to my coming to Commerce to lead the ITA, I spent nearly 30 years in investment banking. My professional life has been largely spent connecting clients to attractive market opportunities.
So I am personally very aware of what it takes to identify and produce real economic gains.
And the reason why I am so excited about leading ITA, at this particular point in time, is that I firmly believe trade is an essential driver for growth in our economy that can take all of us--individuals, businesses, and governments to new levels of prosperity.
From the U.S. vantage point, that means returning to the economic trajectory we had before the 2008 recession.
Now I want to acknowledge that we are indeed far into the economic recovery, a recovery that includes a record 53 straight months of job growth yielding nearly 10 million jobs.
But I think whether you’re a Democrat or a Republican, there is clear agreement that we are not all the way there yet, and that we haven’t recovered as quickly as we have coming out of previous downturns.
Growth in times like these—when market uncertainty lingers and the recession is still fresh—depends on trust and doggedness.
The reason I was able to develop and deepen relationships and maintain loyal clients for nearly 30 years in the private sector was neither because I play golf nor because I am sadly charming.
It was because I made it my daily goal not only to be a trusted advisor to my clients, but also to be their dogged advocate.
I spent my career in the client service business as a trusted advisor to CEOs. Now as Under Secretary, I am Secretary Pritzker’s primary advisor on trade and investment, which is a cornerstone of her mission at Commerce.
And my newest clients are U.S. businesses looking to grow.
My mission here is to serve as your advisor and to advocate for you. I will work tirelessly—in partnership with the 2,100-plus staff of ITA—to connect our clients to promising global opportunities and help them tap into new export markets.
The goals here are strong gains for American businesses and enduring, long-term growth for the U.S. economy, and I truly believe that the resources and expertise we offer at ITA will enable us to achieve both of those goals.
When we succeed in our mission, we will have created jobs in the US and helped American businesses prosper at home and abroad.
Now I will concede that my tenure leading ITA has not been a particularly lengthy one.
By my count, and please be charitable if my math is off, but tomorrow will represent my 80th day on the job.
Not that I’m counting.
But it doesn’t take long to realize that the United States’ commitment to trade-based growth is inseparable from its time-deepened relationship with the Western Hemisphere.
Overall, more than 45% of U.S. exports today go to the Americas. Our exports to the Americas are growing at a faster rate than our trade with the rest of the world.
And since 2009, U.S. exports to South and Central America have shown the most rapid growth of any region—a spike of nearly 70%.
A key example of that is our trade relationship with Brazil.
Brazil is one of our largest trading partners, despite not being a free trade partner economy with the United States and the challenges that brings.
And yet, Brazil was our 9th largest trade partner in 2013 and total bilateral trade in goods reached nearly $72 billion. This proves that our commercial ties are deep, historic, growing, and mutually beneficial.
But probably the clearest example of our intertwined economic paths is in the way that the Americas has almost single-handedly defined the United States’ experience with free trade.
Before the mid-90s, the U.S. had only one free trade agreement or FTA, with Israel.
That number would rise from one FTA with one country to 14 FTAs with 20 countries between 1994 and 2012.
And of those 20 FTA partner-countries, 11 of them are in Latin America. So the history of the U.S. commitment to free trade is driven more by this region than any other in the world.
One fifth of our exports were purchased by Latin American FTA partner markets last year.
I want to emphasize that.
The goods we sold to our 11 Latin American FTA markets in 2013 represented 20% of our total export wallet.
During the same time, the goal of ITA has been to offer the services that enables deals in the region.
Part of that includes making U.S. businesses aware of the tremendous growth potential in the region.
And sometimes that means rebutting unfair or unwarranted skepticism about doing business in our Latin America FTA partner markets.
For example, many companies may look at Mexico and question whether it represents a market that they should look to for future business.
But when you factor the economic growth of the Mexican economy and our existing business ties, it becomes quite clear that the answer is a resounding yes.
Last year, U.S. exports to Mexico reached $226 billion—that exceeded the value of U.S. exports to all BRIC nations combined.
Mexico is our second-largest trading partner in the Western Hemisphere and the second most important destination for American small business exports.
And nearly 50,000 U.S. SMEs ship their exports to Mexico today.
But Mexico’s growth potential isn’t just about numbers, because in today’s global economy, good governance also makes for an attractive market.
We applaud the revolutionary energy reform policy that will end the more than 70-year state-controlled monopoly on the country’s petroleum sector and open up private investment throughout the entire Mexican energy market.
As a second example, other businesses—whose views may be clouded by a violent past—may have concerns about whether Colombia is a safe market for American business.
But in fact, because of the country’s increasing political stability, growing middle class, and vast improvement in their security, Colombia today is on pace to become the third largest economy in all of Latin America.
As for the CAFTA-DR economies—Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic—they are all slated to grow by a solid average of 3%.
Growth in the remaining FTA countries ranges from 4% for Chile and Peru to 7% for Panama, all of which would outpace the rate of global growth for 2014.
It is also a source of deep regional pride that every nation represented here today—including Paraguay, Uruguay, Ecuador, Jamaica, Belize, and Trinidad & Tobago—is a member of the World Trade Organization.
And by 2016, all of us will have reached the twenty-year threshold of WTO membership.
I’d also like to point out that, while the vast majority of the global economy suffered heavily from the economic slowdown of 2008, many countries in Latin America and the Caribbean were spared much of that pain.
This was in large part because they developed strong, independent economies.
So if I may steal a line from my boss, Secretary Pritzker, the Western Hemisphere generally and our FTA partner markets in particular are clearly open for business.
Now, I’d like to discuss the three initiatives I referenced earlier, and walk you through ways ITA has succeeded in expanding U.S. exports generally.
But let me start by saying that over the past four years, U.S. gains in the area of exports have not only been promising, they’ve actually been historic.
- The number of jobs supported by exports has increased by 1.6 million,
- Bringing us to a total of over 11.3 million export supported jobs.
- That’s the highest figure in 20 years.
- And we’ve also had four straight record breaking years of exports, leading to last year’s record of $2.3 trillion in exports sales.
So what was ITA’s contribution to this reinvigoration of U.S. trade?
First, the President’s National Export Initiative, or NEI, which launched in 2010. This program is just as ambitious as it is unprecedented.
NEI is the first ever whole-of-government initiative dedicated to boosting exports.
The idea is simple: marshal the combined resources of the administration to help U.S. companies enter into, expand, and compete in the global marketplace.
Under NEI, we’ve:
- Offered business counseling to more than 16,000 U.S. companies;
- Coordinated 135 trade missions to 55 countries;
- And recruited 38,000 foreign buyers to visit U.S. trade shows.
Secretary Pritzker wanted to build on those gains, so she launched NEI/NEXT.
This is a dedicated program to help U.S. firms directly tap into global markets, specifically by helping companies and entrepreneurs understand the importance of trade and investment, and by making it easier for them to get involved, whether it’s:
- Providing valuable market information;
- Boosting efficiency of government export-related services; or
- Expanding access to financing.
So already, NEI and NEI/NEXT are enabling U.S. businesses to tap into markets in the Western Hemisphere.
And you can be sure that part of the next iteration will involve creating even more awareness of the tremendous demand for U.S. goods and services in Latin America and the Caribbean.
That leads me to the second key initiative I’d like to discuss today. And that is the Look South Initiative.
Look South, which launched this past January, is a coordinated federal government effort to boost exports to our 11 Latin American FTA partner markets.
Look South is essential to ITA’s efforts to helping the U.S. achieve and exceed its exporting potential. While we have reinvigorated exports, there is still plenty of room for improvement.
The entire trade burden of our country is carried by only 1% of U.S. companies; the majority of which are small and medium sized enterprises.
Of that one percent, the majority of those companies--58%--send their goods to only one market, usually Canada or Mexico.
So Look South’s value is in the unique resources ITA provides to U.S. businesses in general and U.S. SMEs in particular.
All of us here today understand the challenges SMEs face relative to larger firms when it comes to investing in global markets.
SMEs are typically not as well capitalized as larger businesses, so they are less willing and less able to withstand early losses to achieve long-term gains.
They’re not as equipped to access market intelligence or to advocate for themselves in resolving disputes.
As a result, the knowledge needed and indeed the trust threshold for SMEs to invest in global markets generally is higher than for larger firms.
So I’d like to highlight a few of the unique resources that directly aid our SMEs and connect those businesses with our Latin American free trade partners.
One is our global network of experts. Located in more than 100 cities in the U.S. and more than 70 countries throughout the world—including 13 countries in the region—our team enables U.S.
SMEs to invest in the way larger firms can.
This sets us apart from any other agency in the federal government—and I am specifically referring to our domestic based U.S. Export Assistance Centers and our globally based U.S. Commercial Service Offices.
So what exactly are the resources ITA offers?
First, access. Our officers help provide U.S. SMEs with access into new markets. Now that can range from providing counseling and information, to developing a business strategy, to increasing brand awareness in a foreign market.
Second, connections. Our client service also works to connect American businesses with their next manufacturer, distributor, and ideally their next customers.
Thirdly, compliance. When and if American businesses need guidance to enforce their rights in foreign markets, we’ll be there to help them and we will do it quickly and aggressively.
And let me repeat that no other agency in the federal government does what we do.
In fact, the global market reach that we are talking about—not just in the Americas but throughout the globe—is comparable only to the global diplomatic reach of the U.S. State Department.
Serious global reach…World class client services…ready to support U.S. businesses.
In fact, we have representatives from our Miami and South Florida U.S. Export Assistance Centers here today.
So starting today, we can help you follow up with this afternoon’s matchmaking sessions.
One company that can attest to the power of our client services is based about 10 miles from here in Doral—Fire Technologies Corporation.
Fire Tech is a small distributor of fire protection systems: pumps, valves, sprinklers, and hoses.
Before Fire Tech started its work with ITA, Robledo Aybar managed a two-person business.
Fire Tech has been a client with our Miami office since 2011. The trade leads, contacts, and other services provided by our Miami office produced immediate gains for Fire Tech, and laid the foundation for future growth.
Within just a few months of working with ITA, Fire Tech was able to make initial export sales to Colombia totaling $240,000. Since then, Fire Tech’s sales to Colombia have grown as high as $600,000.
Those initial export sales to Colombia evolved into deepened business with other free trade partner markets: Honduras, Peru, Costa Rica, and Guatemala. Fire Tech’s export reach has also expanded into Jamaica, Trinidad and Tobago, and Brazil.
$3 million of Fire Tech’s export sales have been to new markets opened by our trade missions, sales, and in-country visits.
When Fire Tech came to us, they were a two-person business. Today, they are a six-person business with exports totaling nearly $14 million to Latin American markets.
As Robledo said, “We still have much work to do, but the results are here and will continue to come in.”
I can assure Robledo today that ITA will do everything we can so you can continue to build your company.
The second resource is our targeted trade events.
We are constantly developing focused trade events to introduce companies to Latin American FTA markets as well as other foreign decision-makers and buyers.
In fact, I am happy to announce that I will be leading a Renewable Energy and Energy Efficiency Trade Policy Mission to Peru—a potential Trans Pacific Partnership market and a current member of the Pacific Alliance.
I’m excited because this will be the first trade mission that I will lead as the head of ITA.
The mission will focus on creating a strong clean energy environment in Peru and introducing U.S. exporters to key Peruvian government officials and regulators.
We will be promoting the entire suite of U.S. renewable and clean, efficient energy sources: wind, solar, geothermal, biomass, and other technologies.
Anyone who has worked in the energy field, or any business, knows that a key to profitability is getting to scale. So an essential part of my trip will be focused on discussing how to scale up investment in these sectors.
The third resource is market intelligence.
Maybe the greatest resource of Look South is that it makes it significantly easier for companies to access industry-specific market intel.
We believe this is especially helpful to U.S. SMEs who may not have either the in-house resources or the capital to outsource the acquisition of such information.
If you go to the Look South website and utilize the Best Prospects service, this allows you to quickly access all eleven market snapshots.
And you can access that intelligence along 28 individual industry sectors.
That includes reports on a wide variety of infrastructure sectors, from renewable energy to construction to transportation to mining, and other related areas.
The last initiative I’d like to discuss doesn’t exist yet but we believe has the potential to catalyze enormous economic growth for SMEs in the Western Hemisphere. I am referring to the Trans-Pacific Partnership.
I think the economic potential has been well discussed and well established.
12 potential member states. 800 million potential customers. A potential market that is comprised of nearly 40% of global GDP.
We believe that the TPP will also serve as a means of deepening our existing relationships with potential partners Chile, Peru, and Mexico, who also make up the Pacific Alliance.
Detractors of the TPP negotiations argue there isn’t even a need for it because free trade is largely already a reality. Others claim that TPP would serve as a windfall for the biggest companies at the expense of smaller firms.
But both of these points overlook the benefits of TPP and free trade agreements generally, and to small and medium sized enterprises in particular.
FTAs facilitate transparent rule making, which allows companies to engage in sound business planning.
FTAs establish strong intellectual property protections, which incentivize businesses to innovate and to deposit their innovation into new markets.
FTAs also produce certainty by ensuring that new regulations won’t discriminate against you just because you are a foreign company.
So without FTAs, you have no ability to predict new regulations, no assurances your intellectual property rights will be protected, and no confidence new regulations won’t discriminate against you.
It is precisely those ambiguities, among others, that present enormous hurdles to becoming global for SMEs throughout the Western Hemisphere.
As for FTAs or TPP being a windfall solely for larger firms, it’s simply not true.
Free trade agreements offer enormous benefits to SMEs that allow them to tap into markets in ways that they wouldn’t have been able to otherwise.
That’s because they provide the transparency, predictability, and enforcement that all businesses—small, medium, and large—rely on to invest and succeed.
So let’s be clear. Free trade agreements are not instruments used by major multi-national corporations to consolidate their global power.
They are a fundamental tool that will help ensure and expand access to international markets for all companies—including all of the SMEs represented here today.
And that’s why we will continue to push for more FTAs and why we will continue to push for a finalized TPP.
I’d like to conclude by reflecting on a point made by Jeffrey Immelt, the CEO of GE, during the U.S-Africa Business Forum we co-hosted last month with Bloomberg Philanthropies.
He spoke about how businesspeople his age didn’t have to travel very far in the past in order to find business because the U.S. market was so good.
Well, we all know that today, good commerce requires all of us step out beyond our borders. But the good news is that none of us here today have to travel all that far.
This is a great time for businesses to Look South.
And we at the Commerce Department are committed not only to helping U.S. businesses identify opportunities in these incredible markets, but also to providing the service they need to succeed.
So whether it is contacting your local U.S. Export Assistance Center, signing up for a trade event, or reviewing best prospects in your industry, every company here today can take steps right now to grow your business globally.
There are untapped opportunities to capitalize on. There are on untapped markets to invest in.
And there is untapped growth to unlock.
The key to all of it is what binds us. The shared challenges we face. The shared solutions to address them. And the shared prosperity that awaits.
As far as ITA is concerned, we will continue to do our part to rev up this dynamic economic engine that we see in our hemisphere.
I thank you all and look forward to your questions.
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