Acting Under Secretary for International Trade Joseph Semsar Remarks - February 28, 2020
Remarks at South Carolina Auto Summit
Friday, February 28, 2020
As Prepared For Delivery
Thank you, Amy, for your leadership in promoting the continued growth of the automotive industry here in the Palmetto state.
To all the members, companies, and organizations here today, it’s a pleasure to be with you.
As a Charlestonian, a Clemson Alumnus, and a Proud South Carolinian, it’s also great to be in Greenville.
As the Acting Under Secretary of Commerce for International Trade, I lead the International Trade Administration, housed at the Department of Commerce under the leadership of Secretary Wilbur Ross.
Within the U.S. Government, ITA leads on strengthening the international competitiveness of U.S. industry, promoting trade and investment, and ensuring fair trade and compliance with trade laws and agreements.
Our footprint consists of 100 United States Export Assistance Centers across the country, three of which are located here in South Carolina, Foreign Commercial Service Officers in 76 countries, covering 95 percent of world GDP, and industry and country-specific experts at headquarters in Washington, D.C. With the strong support for international trade by Governor McMaster, Secretary Hitt, the South Carolina legislature and congressional delegation, and the economic development community throughout the state, South Carolina has reported 10 consecutive years of record export growth, With exports last year going to 198 countries and increasing 19.7 percent over 2018’s total.
As a South Carolinian, I thought I had a good understanding of the strength of the state’s automotive sector.
But as I was preparing for this visit, I learned a great deal more about just HOW strong the automotive ecosystem is, here in South Carolina.
South Carolina has built a global reputation with its ability to attract an impressive roster of automotive manufacturing companies.
This state is a national leader in the export of completed passenger cars, which reached $10.3 billion dollars in 2019.
72,000 South Carolinians work in the automotive industry…which is nearly enough to fill Death Valley on a Fall Saturday.
There’s an annual economic impact from the automotive sector of more than $27 billion dollars, which makes up more than one-tenth of the state’s annual GDP.
And South Carolina has become the #1 state in the nation for export sales of both tires and completed passenger vehicles.
So, how in the world did little ole South Carolina as Dabo likes to say, transform its economy in the past 25 years?
I’ve heard from leaders in the industry that it really comes down to three things.
One, SC has an incredible workforce and an unparalleled workforce development ecosystem. Just this morning, I visited Clemson University’s-ICAR facility and was floored by what that institution is doing on the innovation front.
Two, the state’s infrastructure value proposition is second to none in the region with its large highway system, Port of Charleston, and inland Ports in Greer and Dillon. And as Governor McMaster taught me a few years ago, PORT is not spelled P-O-R-T, its M-O-N-E-Y.
And three, South Carolina’s state and local governmental leaders work tirelessly to foster a business environment conducive to growth.
Just think about it, in the early 90s there may have been 10 or so automotive companies. And today, there are well over 400 automotive companies in this state.
Lastly, I would add one additional observation to these in-state differentiators, and that is the proclivity of South Carolina companies to engage in international markets. With President Trump’s leadership, pro-growth policies, like tax reform, and the recent trade achievements that I’ll reflect on today — it’s remarkable to think that, in the past 3 years, more than 7 million new jobs have been created across this country, including more than 30,000 opportunities right here in South Carolina. In South Carolina’s manufacturing sector alone, employment has grown 8.0 percent since 2017, representing the addition of 18,900 new manufacturing jobs.
And the unemployment rate in South Carolina has fallen to 2.3 percent as of December 2019.
The lowest unemployment rate on record.
As you know, President Trump has ALSO prioritized free, fair, and reciprocal trade.
In just the last two months, we have seen incredible progress on the trade front with the signing of two major trade deals.
First, the United States-Mexico-Canada-Agreement, or USCMA, which will replace NAFTA; and second, the China Phase One Agreement.
Let’s start with a trade deal that has the potential to create at least 176,000 jobs and generate up to $68.2 billion dollars in economic activity, the U-S-M-C-A.
The Trump Administration set out to renegotiate NAFTA with two specific objectives: One, modernize the agreement, and two, rebalance the agreement.
Keep in mind that when NAFTA was implemented over 25 years ago, we were still using floppy disks, and the phones we carry today were considered supercomputers.
To put the importance of our trading relationship with Canada and Mexico into perspective, consider that the United States conducts more than $1.3 trillion dollars in annual trade with the two countries.
U.S. exports to both markets are estimated to support close to 3 million U.S. jobs. And the vast majority of U.S. auto parts exports with 73 percent in 2019 going to Mexico and Canada.
USMCA not only keeps most tariffs among the three countries at zero, it also does more than any other prior trade agreement to eliminate NON-tariff barriers.
There are important updates and new chapters on Digital Trade; Intellectual Property Protection; Customs and Trade Facilitation; Labor and the Environment; Good Regulatory Practices; and, Small and Medium-Sized Enterprises.
Not to mention chapters addressing unfair trade practices, such as Currency Manipulation; State-Owned Enterprises; Non-Market Economies; and, Anticorruption.
For the U.S. auto-industry, USMCA delivers 5 key benefits, as it incentivizes new U.S. automotive-related investments, promotes additional purchases of U.S.-produced auto parts, advances U.S. leadership in automotive research and development, supports additional high-paying U.S. automotive jobs, and encourages automakers and suppliers to locate future production of new energy and autonomous vehicles in the United States.
As a hub for automotive production, South Carolina can expect to reap the benefits of all these provisions.
Updated automotive rules of origin in USMCA will strengthen the U.S. manufacturing base by increasing the regional content levels from the current 62.5 percent to 75 percent for cars, and to 70 percent for heavy trucks, establishing a new list of critical parts that must be sourced from North America, supporting regional production of these highest value-added parts, and creating a new requirement to increase the use of North American steel and aluminum.
There is also a first of its kind labor provision requiring that at least 40 percent of auto content for passenger vehicles and 45 percent for light and heavy trucks be made by workers earning at least $16 per hour on average.
This will incentivize billions of dollars in additional U.S. vehicle and auto parts production, and ensure that we level the playing field for U.S. manufacturers and workers.
Now, we know that NAFTA rules have governed much of automotive trade for the last quarter century.
And we also know that many of you in the industry are awaiting the final implementing rules and regulations.
Know that my agency is working closely with our counterparts at USTR and with industry to ensure that your views are considered during the process, and that your industry is not unduly burdened in seeking full compliance.
We will also continue to conduct outreach, to ensure businesses in communities across the country are fully aware of the benefits associated with USMCA. Another U.S. trade agreement setting higher, stronger benchmarks for the future is the China Phase One Agreement, which the President signed last month.
We believe this agreement begins to rebalance and expand our vital trade partnership with China in a significant way.
With this agreement, China has agreed to make significant structural reforms, particularly on Intellectual Property Protection and Tech Transfer; and to open its markets and improve its trade regime.
As we see increased consumer demand for high-quality goods and services from China’s growing middle class, U.S. industry will have a unique opportunity to meet these market demands with exported U.S. products.
Notably, China has committed that, over the next two years, it will import an additional $200 billion dollars worth of U.S. goods and services, on top of 2017 levels, in four broad categories: Manufactured products; Agricultural products; Energy products; and Services.
With the commitment to purchase manufactured goods, automotive exports will be a critical segment.
China is the largest automotive market in the world and their commitment to increase purchases of U.S. vehicles creates a significant opportunity for growth.
Ultimately, we see the China Phase One Deal as a very important first step, as the two countries make up 35 to 40 percent of the entire world’s economy.
With increased exports of U.S. goods and services in 2020, 2021 and beyond, we should see a significant rebalancing of the U.S.-China trade relationship.
In addition to the landmark USMCA and China Phase One deals, the President has achieved additional wins on the trade front.
In 2018, the Administration renegotiated our trade deal with Korea. Korea has historically been one of the most difficult markets for US built vehicles to gain access to due to non-tariff barriers.
To address this issue, the revisions to the Korea U.S. Free Trade Agreement, will double the number of U.S. automobile exports, to 50,000 cars per manufacturer, per year, that can meet U.S. safety standards in lieu of Korean standards and enter the Korean market without further modification.
And this is just one win of many in that deal.
There are other potential trade agreements in the works. The U.S. is committed to engaging with Japan, the United Kingdom and the European Union to reach trade agreements that focus on identifying and reducing tariff and non-tariff barriers to trade.
Acting Chief of Staff Mulvaney and I personally visited with the new European Union Commissioner for Trade, Phil Hogan, when he was in Washington a few weeks ago, where we discussed the myriad possibilities, and the desire to reach an agreement.
We hope to see further developments in the coming months on these fronts.
With an open investment policy, large consumer market, highly skilled workforce, available infrastructure, and local and state government engagement, the United States is the premier market for the 21st-century automotive industry.
In 2019, U.S. vehicle sales surpassed 17 million units for the fifth straight year, and total foreign direct investment in the U.S. automotive industry reached $114.6 billion dollars.
With foreign direct investment being a high priority in South Carolina, I’d be remiss not to mention the International Trade Administration’s SelectUSA Investment Summit.
SelectUSA is the premier conference for facilitating FDI into the U.S.
At the 2017 Investment Summit, Secretary Ross and Governor McMaster signed a certificate of recognition for the South Carolina Technical College System’s ReadySC program.
This program is a strong example of the how South Carolina is leading on workforce development.
Governor McMaster and the entire South Carolina team have always been enthusiastic partners in the effort to attract FDI.
In fact, Governor McMaster even shared his cell phone number on the SelectUSA Investment Summit stage so potential investors could call him directly.
Since its inception, SelectUSA has facilitated more than $64 billion dollars in investment, and created and/or retained over 87,000 U.S. jobs.
We hope to see you at this year’s Summit in Washington, DC, June 1st – 3rd. In closing, thank you for your dedication to the important work being done in South Carolina on the international trade and investment front, and thank you for your involvement in reinvigorating the American auto-industry.
I look forward to future collaboration between the International Trade Administration, the state, and the South Carolina automotive industry.
Thank you, go Tigers, and go team South Carolina!