Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
U.S. Chamber of Commerce of Commerce, Jakarta
Tuesday, December 14, 2011
As prepared for delivery.
Good afternoon and thank you for this opportunity to be with you today.
Before I begin, let me express my appreciation to all of you — the members and supporters of the American Chamber of Commerce in Indonesia. It’s always great to see leaders from business and government come together in the spirit of community and cooperation to advance our shared interests. Let me also take a moment to recognize Ambassador Scot Marciel, who is doing so much to advance President Obama’s vision of a deep and committed relationship between the United States and Indonesia.
We have shared interests in Asia, generally, and more specifically, in Indonesia.
As President Obama said last year:
“The story of Asia over the last few decades is the story of change that is so rapid and transformative that it may be without precedent in human history … Countries where people once lived on a few dollars a day are now some of the fastest-growing economies in the world.”
The numbers reflect this growth: The Asia-Pacific region now represents more than 55% of global GDP, and nearly 45% of world trade. There has been tremendous progress. And, through trade and investment, the United States has benefitted greatly from this growth.
The next thirty years promise to be even more exciting than the last thirty years. But, in the short term, as all of our countries continue to deal with the impact of the global financial crisis, we have an obligation to continue to resist protectionism and grow our economies by embracing even greater economic integration.
This effort is essential if we are to meet the expectations of President Obama’s National Export Initiative, which he announced nearly two years ago during his State of the Union address. The goal is to double U.S. exports by the end of 2014.
In terms of jobs, exports contributed greatly to growing our economy in 2010, and supported over 9 million jobs. U.S. exports of goods and services in 2010 increased nearly 17% over 2009 -- the largest year-to-year percentage change in over 20 years. This puts us on pace to achieve President Obama’s goal of doubling exports by the end of 2014.
Even more recent data confirms we remain on pace to achieve the National Export Initiative goal in 2011. Overall, exports in the first seven months of 2011 have increased 16 percent over the same period in 2010, a pace that continues to exceed NEI goals.
So, this afternoon, let me please say a few words about our trade relations. Let me first cover multilateral or regional arrangements. I will start with APEC. Then, let me say a few words about ASEAN and TPP, our recently concluded free trade agreement with the Republic of Korea, and a few words about China. I’d like to then offer a few comments on individual ASEAN members before closing with some observations on Indonesia, specifically, and our rapidly expanding bilateral relationship.
US ENGAGEMENT IN APEC
As most of you know, the United States hosted APEC in 2011. President Obama hosted the APEC Economic Leaders in Honolulu on November 10 and 11. In my view, this event was a major turning point for U.S. diplomacy, both in the region and on the global stage.
Please allow me to summarize a few of the key APEC deliverables that might be of interest from your perspective. Of course our topline goal remains to deepen regional economic integration and the expansion of trade. This is manifested through our shared vision of an eventual Free Trade Agreement of the Asia Pacific. In addition, we pursued several specific initiatives:
- We agreed to make a collective effort to stream-line and then harmonize regulations among all the APEC economies across our vast region. For example, we will harmonize regulations concerning medical equipment by 2020.
- We agreed on key principles to promote green growth. Specifically, we agreed to remove non-tariff barriers and lower tariffs on Environmental Goods and Services throughout the region.
- Also, we agreed to take concrete efforts to address corruption. This is an issue of particular interest to and resonance with me. Corruption remains the most significant trade barrier faced by U.S. companies, especially SMEs, and we are committed to a robust program through APEC—and beyond—to continue the effort to level the playing field for U.S. industry.
- We also made meaningful progress in a number of specific industrial areas, such as: food processing, energy, medical devices and cross border data flows.
- Finally, we agreed to continue to focus on the needs of Small and Medium Sized exporters so as to promote meaningful integration that will maximize jobs in each member economy.
While I recognize that APEC is a voluntary organization and that members are not required to implement the consensus, this organization is, nonetheless, important for setting the regional agenda and prodding recalcitrant or more protectionist economies to consider global best practices.
So, we think that we have made our APEC host year a productive period for all parties. And as to continue to advance these efforts, we are working closely with the hosts of the 2012 APEC, Russia. And of course we look forward to Indonesia’s chairmanship in 2013. I hope that our Indonesian government colleagues know that they can count on us to be good team players and strong supporters when they take up the burden of hosting APEC only one year from now.
It goes without saying, of course, that we are not focused exclusively on APEC.
US ENGAGEMENT IN ASEAN
Days after the Honolulu APEC meeting, we were also very excited to participate in the East Asia Summit and the U.S.-ASEAN Summit in Bali, Indonesia. For the past three decades, the United States and ASEAN member countries have strived to develop sustainable, bilateral and multilateral relationships.
The ASEAN region as a whole is our 6th largest trading partner, and holds over $120 billion in U.S. Foreign Direct Investment. We are deeply impressed by how well the region has weathered the financial crisis and has recorded many consecutive quarters of strong growth.
As part of this Administration’s commitment to further engage in South East Asia and consistent with our goals for APEC 2011, we have also been working closely with ASEAN on many projects – including the convergence of industrial standards and conformity assessment procedures to meet their economic goals by 2015. ASEAN has, as you know, set some ambitious goals to promote the greater “connectivity” of the region, and the United States is eager to help achieve that ambitious vision. We are lucky to have great leadership representing us through our recently appointed U.S. Ambassador to ASEAN, David Carden. The Ambassador and I met just yesterday to explore how the U.S. Commerce Department can further deepen our engagement here.
PROMOTING DEEPER REGIONAL TRADE THROUGH NEW TRADE AGREEMENTS
I mentioned earlier that a major commitment of the Obama Administration is our effort to further strengthen and deepen trade throughout the Asia-Pacific Region, and one of the primary vehicles through which we are pursuing that agenda is the Trans-Pacific Partnership (TPP). TPP negotiators are seeking to conclude an ambitious, 21st century Asia-Pacific trade agreement that reflects U.S. priorities and values.
The United States, along with Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, intend to craft a high-standard agreement that addresses new and emerging trade issues and challenges. Our hope is that the TPP will take on critical trade issues like disciplines for state owned and state controlled enterprises, greater commitments to regulatory coherence and cooperation, and a renewed commitment to combatting corruption.
TPP will be a very high quality Free Trade Agreement and it is important that we maintain the highest standards. We are very pleased that other countries, including Philippines, Canada, Mexico and Japan have suggested that they may wish to join the discussions. It is also important, however, that we complete TPP quickly.
We have already completed nine rounds of negotiations to date. With all the TPP partners committed to concluding the negotiations as expeditiously as possible, we are optimistic we will be able to make continued progress and finalize the discussions next year.
We see the TPP as the most credible pathway to Asia-Pacific regional economic integration. We are pleased with the progress in the TPP negotiations to date. Our ultimate goal would be to move toward a Free Trade Agreement of the Asia Pacific, or FTAP, fully consistent with APEC’s Bogor Goals and other regional commitments.
As we have pursued a regional agreement, we’ve also recently completed, as you know, a very important bilateral agreement with the Republic of Korea, referred to as “KORUS.” We were delighted when the U.S. Congress overwhelmingly voted to approve the KORUS agreement, along with agreements with Panama and Columbia. We were yet more pleased with the Korean Parliament cleared the same agreement on November 22.
Make no mistake about it … KORUS is important. Outside of NAFTA, KORUS covers more trade than the rest of our trade agreements put together. Further, KORUS’ passage indicates to the world that the U.S. Congress and the U.S. Administration are both deeply committed to free trade and that we welcome the opportunity to expand our strategic partnerships around the world.
Korea is the United States’ 7th largest trading partner, and U.S. exports to Korea are growing fast this year: through the first five months of 2011, U.S. goods exports jumped nearly 14% compared to the same period in 2010.
By expanding access to Korea, the 12th largest economy in the world, the agreement will support tens of thousands of American jobs, open Korea’s $560 billion services market to American companies, eliminate Korean tariffs on 95% of U.S. exports of industrial and consumer goods within five years, and immediately eliminate Korean tariffs on over two-thirds of U.S. agricultural exports. This represents an unprecedented opportunity to increase exports, support job creation, bolster the American economy, and strengthen a vital strategic alliance in the Asia-Pacific region.
We expect the KORUS agreement to come into force early in 2012, and our government is working hard to make that a reality.
REFLECTIONS ON U.S. BILATERAL TRADE RELATIONS IN THE ASIA-PACIFIC REGION
I thought it might be of interest for this audience for me to make just a few high level comments on some of our key bilateral trade relationships, starting with one of the fastest growing and most exciting markets in the world: China.
The United States welcomes a strong, prosperous and successful China that plays a greater role in world affairs.
Indeed, ensuring that U.S. companies operate on a level playing field in China is a top priority of the Obama Administration. Through dialogues such as the Joint Commission on Commerce and Trade (JCCT) and the Strategic & Economic Dialogue (S&ED) we continue to raise concerns in areas such as IPR protection and enforcement, innovation policies, standards, investment, and government procurement.
We made some progress at the last JCCT high-level meeting, which was held in Chengdu last month. Specifically:
- China announced that it has created a high-level leadership structure to institutionalize systemic improvements to its IPR enforcement regime and will continue to put more efforts into software legalization;
- Regarding new energy vehicles, China stated it will not mandate technology transfer nor require the establishment of domestic brands in China, and will allow foreign-invested enterprises to be eligible on an equal basis for subsidies and other preferential policies for NEVs with Chinese enterprises;
- China announced that it has issued a measure requiring that all levels of government delink indigenous innovation policies from government procurement preferences.
- Finally, China has also agreed to treat foreign companies equally in the implementation of their USD $1.5 trillion program to stimulate 7 strategic emerging industries.
While these steps can be seen as progress, we fully realize that have much more work to do. Indeed, there is a very robust discussion underway in Washington as to how we might work toward a more healthy economic balance with our Chinese friends.
We are also very excited about our relationships with Australia, New Zealand and the Pacific Islands. U.S. companies have already had success in Australia with the signing of an FTA in January 2005. Since that time, U.S. exports have gone up more than 30%. The FTA has encouraged U.S. companies to see that Australia is a stable and transparent economy in which to do business.
U.S. goods exports to New Zealand continue to rise yearly, with an increase of 30% last year. Although we currently don’t have an FTA with New Zealand, we are pleased to be negotiating with New Zealand, along with seven other countries, in the TPP. We expect to see our already robust trade relationship with New Zealand grow even stronger after the TPP is signed.
We also look forward to expanding our trading relationships with the members of the Pacific Island Forum in the years ahead. Indonesia has also been a strong supporter of the Pacific Islands.
Japan is also a critical pillar economy of the Asia Pacific – and always will be. As our fourth largest trading partner and the third largest economy in the world, Japan remains one of our most important markets. We are terribly impressed by Japanese resilience and we look forward to ever closer economic integration with this important ally.
Hong Kong and Chinese Taipei also play critical roles in the regional market and the global supply chain. Both are highly valued trading partners.
Before moving on to Indonesia, I would like to make a couple of comments about three other countries, the Philippines, Vietnam and Burma, which are of course important ASEAN members.
With regard to the Philippines, you may have noted Secretary Clinton’s recent visit to Manila and the signing of a Partnership for Growth (PFG) agreement. The Partnership for Growth is, as you may know, a White House-based program that has identified four countries (Ghana, El Salvador, Tanzania and Philippines) that have made great strides toward democracy and good government for special consideration.
Under the PFG with the Philippines, we have worked out a comprehensive protocol under which we will work with them to: (a) enhance government revenue management and (b) improve their economic regulation for the purpose of expanding investment. These programs have just started. So, I would welcome you to watch this space and keep an eye on the Philippines, which, under the leadership of President Aquino, has a better chance than ever to address the core issues associated with poor growth and economic stagnation.
We are also excited about the economic opportunities in Vietnam. We are of course working closely with the government of Vietnam in the context of the TPP negotiations. But, we are also anxious to introduce more American companies to Vietnam as quickly as possible so as to take advantage of the relatively strong growth prospects in that dynamic country. As the only truly developing country within the TPP arrangement, Vietnam is well worth watching closely.
I will only mention Burma (aka Myanmar) briefly. Secretary Clinton’s recent visit was very important and indicates that we are interested in improving relations with that country – contingent on continued reforms and improvements in human rights. We will be monitoring developments in Burma closely.
ADVANCING THE GOALS OF THE US-INDONESIA “COMPREHENSIVE PARTNERSHIP”
Let me conclude by saying a few words about Indonesia – realizing, humbly, that this is my first visit here and that I am in a room with some of world’s finest experts on trade and investment with this country.
We are excited and truly committed to expanding our dialogue with this great nation. It is in the interests of the American government, the American economy and the American people to expand our ties with Indonesia – across a wide spectrum of activities or interactions.
That is why the U.S. government has prioritized our relationship with Indonesia through the Comprehensive Partnership; it’s also why we have identified Indonesia as just one of six priority emerging markets through the National Export Initiative. In support of these efforts, the Department of Commerce and Indonesia’s Coordinating Ministry for Economic Affairs have joined hands to establish the new Commercial Dialogue, which I chair on behalf of the U.S. government, and which formally met for the first time just this morning here in Jakarta. This is a cooperative and collaborative effort that supports our shared commitment under the US-Indonesia Comprehensive Partnership to expand trade and investment. The vision of the Dialogue is provide a vehicle to pursue capacity building, the sharing of best practices, and a forum for dialogue to advance policies to improve US-Indonesia commercial ties, to help make Indonesia an easier place to invest and do business, and to help support the ongoing efforts of existing bilateral efforts like the Trade and Investment Framework Agreement (or “TIFA”) discussions.
While the Commercial Dialogue has a structure that is government-to-government, we have an explicit agreement with our Indonesian colleagues that the content and the activities within the Commercial Dialogue must be driven by, and for, the private sector in both nations. If our discussions are not useful to you over the longer term, then, we are not doing our job.
Accordingly, as we have developed the structure and the evolving agenda, we have tried to coordinate closely with the US-ASEAN Business Council and the U.S. Chambers of Commerce and we are committed to engaging the private sectors in both countries in our meetings. We are grateful for their input and support. But, this was only to get the ball rolling – to start the process. Now that we have a functioning framework with a few mutually-agreed, broadly defined goals, it is now time to reach out to you and solicit your views and cooperation as we move forward.
How do we make the Commercial Dialogue useful to current members of the American Chamber of Commerce? More importantly, how do we use the Commercial Dialogue to create an environment that will grow the Chamber and the U.S.-ASEAN Business Council’s membership with new American companies that have not yet succeeded in this market? How do we attract more American trade and investment to this country?
That’s why I’m so pleased to be here today. Progress often starts with conversations like this, where we can exchange ideas and experiences. Please know that I, and the U.S. Department of Commerce, are firmly committed to addressing the range of commercial concerns and challenges.
Apart from my role as the U.S. chair of the Commercial Dialogue, my “day job” of course is tending to the broader set of market access issues U.S. companies face here in Indonesia and around the globe. In this regard, let me just reflect that while Indonesia holds much promise, I am keenly aware that it also presents many challenges, which are known all too well to this audience. One of my highest priorities as the Assistant Secretary for Market Access and Compliance is to engage with our counterparts in the Indonesian government on the wide range of policies and issues that present significant barriers to U.S. companies doing business here. Although one can never fully trust what one reads in the press, I must say I am concerned by recent press accounts suggesting that Indonesia is purportedly contemplating pursuing an explicitly protectionist set of policies as a means of protecting domestic industries from recent trade imbalances. Indonesia’s future growth and competitiveness depends on its ability to continue to attract foreign investment and its willingness and ability to open its markets to trade. The Indonesian government clearly recognizes this and has, I’m glad to say, been an important ally of the U.S. in advancing these commitments and principles in a wide range of multilateral institutions like the G-20 and APEC. We will continue to engage with our Indonesian counterparts on these issues bilaterally, and we expect that Indonesia will lead by example and honor both its international commitments and its responsibilities as a leader in this region and the world at large.
And we will continue to press for further reforms that will promote greater transparency, predictability, and stakeholder engagement across a wide range of policy areas affecting trade and investment.
To this end, we continue to rely upon the valuable input of the private sector in all of these efforts. You have an important role to play, and I encourage this group, in particular, to embrace its distinctive role. I look forward to working with you to ensure that our shared destiny is guided by the values of community, fairness and opportunity for all.
Once again, thank you to the American Chamber of Commerce in Indonesia for inviting me today, and for all your contributions to the international community.
The International Trade Administration, U.S. Department of Commerce, manages this global trade site to provide access to ITA information on promoting trade and investment, strengthening the competitiveness of U.S. industry, and ensuring fair trade and compliance with trade laws and agreements. External links to other Internet sites should not be construed as an endorsement of the views or privacy policies contained therein. This site contains PDF documents. A PDF reader is available from Adobe Systems Incorporated.