Assistant Secretary of Commerce and Director General Suresh Kumar
U.S. and Foreign Commercial Service
Chicago Council on Global Affairs - U.S.-China Business Forum
Friday, January 21, 2011
As prepared for delivery
Thank you very much for your introduction, Jerry. I am pleased to be here today with you the representatives from the Chicago Council on Global Affairs and China’s Ministry of Commerce. Thank you for hosting this forum today during a memorable week for our bilateral trade relationship, with the visit of President Hu Jintao.
On Wednesday, I spoke in Washington to another large audience of U.S. and Chinese company representatives and encouraged our Chinese visitors to invest in this country.
As the world recovers from one of the sharpest economic declines, we must work together to create opportunities to connect exporters and buyers, while recognizing that growing U.S. exports is not only good for the U.S. economy but also for our trading partners in China. When the United States exports, jobs are created here in the U.S. and abroad.
As the last speaker between you and lunch today I would like to provide some food for thought about the Obama Administration’s short and long term economic recovery strategy in relation to small and medium-sized enterprises, which serve as a catalyst for significant change across our economy; and where exporting fits into this strategy. This approach enhances our competitiveness, creates sustainable jobs and builds a stronger America while providing superior technologies, products and services to consumers across the world.
This Administration’s overarching policy aims to transform the U.S. economy and lay the foundation for sustainable long term success. By investing in emerging technologies and encouraging innovation, we help create new market sectors like renewable energy. Through education programs we are developing skills that will help sustain innovation and build a competitive advantage. And through commercialization initiatives such as the National Export Initiative or NEI, we help connect innovative products and services to global markets. Innovation, education and commercialization are the foundation for creating jobs today; investing in innovation, education and commercialization platforms helps to enhance our competitiveness; it creates sustainable employment in the future and helps companies expand their global footprint to reach more customers worldwide.
As Assistant Secretary and Director General of the U.S. & Foreign Commercial Service, I lead a team of 1,500 trade professionals in 109 offices across the U.S. and 127 cities in 79 countries. The Commercial Service has some 100 employees in China who assist U.S. exporters, especially SMEs. The Commercial Service has a presence at five U.S. diplomatic missions in China—Beijing, Shanghai, Guangzhou, Chengdu and Shenyang--as well as in Hong Kong. Day in and day out we connect U.S. businesses with qualified global buyers; we advocate for business in public procurement projects worldwide; and we level the playing field for U.S. businesses by removing non-tariff barriers through various commercial diplomacy initiatives. In 14 cities across China where we do not have a physical presence as yet, we collaborate with CCPIT to assist and connect U.S. exporters with qualified potential Chinese partners. The Commercial Service is a key implementing agency of the President’s National Export Initiative and is committed to enhancing U.S. competitiveness. Last year, ITA helped nearly 5,600 companies increase their exports and 85 percent of those were small and medium-sized businesses.
Competing in international markets makes us more innovative and cost-effective. The U.S. has always offered solutions that have been well received in the international marketplace for their quality; the NEI helps commercialize and scale exporting into a larger strategy of economic transformation.
U.S. enterprise has always been amongst the most inventive in the world: the motorcar, the computer, the internet and GPS were all invented in the USA. When we have innovated we have prevailed. That is why this Administration places so much emphasis on innovation on building and owning the markets of tomorrow even as we vigorously compete for market share in today’s markets. American products improve lives and livelihoods globally and because of our inventiveness, consumers around the world value a cache of “Made in the USA” more than one made elsewhere.
As President Obama states this week, the United States welcomes friendly competition from our trading partners such as China. But we must also look for opportunities to simplify regulation, reduce barriers to trade, encourage private sector investment in mutually rewarding enterprise and strike more collaborations like the one CCPIT and U.S. Department of Commerce announced last month. And so it is critical that we make the investments necessary to stay competitive in the 21st century by rebuilding our economy on a new, stronger foundation for growth while assisting America’s SMEs to export what they produce to the 95% of consumers who live outside our borders.
The Administration’s two-pronged recovery strategy – with focus on short-term relief and simultaneously encouraging longer-term, lasting transformation – has been consistent from the very beginning, with the passage of the Recovery Act.
In December the President signed into law a tax bill that allows American business to write off their 2011 R&D investment; President Obama is pushing for a permanent tax credit for companies for all the research and innovation they do here in America; and the Obama Administration has made a substantial commitment to innovation by setting the goal of investing a full three percent of our GDP into research and development. Nowhere is this more important than with small and medium-sized enterprises, which make up 97% of all firms in the United States. President Obama has described SMEs as the “anchors of our Main Street.” That is why the President has cut taxes eight times for small businesses.
With the Recovery Act, the Administration made the largest investment in research and development in our nation’s history. It helped craft a larger change: to reinvent what we make, consume, market and sell; and to reinvent government support, focusing on self-sufficiency, sustainability and innovation.
As part of the Bill, the Department of Energy began the Advanced Research Projects Agency-Energy (ARPA-E), a fund created to finance breakthrough energy technologies, and to accelerate transformational technological advances in areas that industry is not likely to undertake independently because of high risk. Through this and other programs, the federal government is acting as a partner in innovation, and encouraging competition among ideas for grant monies. SMEs are the source of much innovation and several SMEs are participating in the ARPA-E program.
We are also investing in our infrastructure. In October President Obama announced this Administration’s commitment to build the best airports, rail systems and roads, and expand our Smartgrid capabilities and broadband services. While countries such as China spend about nine percent of their GDP on investment in infrastructure, the U.S. only spends two percent.
Hand-in-hand with innovation through R&D and investment in infrastructure the Administration has a targeted focus on creating and funding sustainable solutions for the future.
To continue to lead in the global marketplace, we must produce and market the most innovative and technologically advanced products in the world. And that global leadership is dependent on how we educate our students today – especially in science, technology, engineering, and math. In an era where most new jobs will require some kind of higher education, we have to keep investing in the skills and education of our workers. That’s why the President has called for America to once again have the highest proportion of college graduates in the world by 2020.
We already have one of the most educated labor force in the world and the Administration’s investments in education will ensure that we are even more competitive going forward. The Administration’s focus on innovation, education and commercialization, along with an emphasis on infrastructure, and sustainability reflects market-driven, competitive approaches, allowing the best ideas to rise to the top and development of an economic policy that makes sure that the United States is the best place to do business and to innovate.
Leveraging this strategy requires creating deep market linkages and connecting innovation to the marketplace. This is the core of the NEI — connecting American Innovation and our innovative products and services with consumers worldwide. The Administration recognizes that increasing global trade is imperative to provide new opportunities for growing America’s SMEs. Exporting must play a larger role in the U.S.’s economic prosperity. The pre-crisis drivers of U.S. economic growth - domestic consumer and business spending - can no longer be the only levers of emerging and even more globally connected marketplace. Fast developing economies like Brazil, India, and China must stimulate and encourage domestic consumption, open their markets to global trade. This will create domestic prosperity, make products and services that improve lives and livelihoods available to their people and help stimulate sustainable global trade.
To move forward, U.S. small and medium-sized businesses must expand their global reach to new markets. The NEI will help connect small and medium-sized businesses with global consumers and market opportunities. Less than 1 percent of America’s 30 million companies export, and of those companies that do export, 58 percent export to only one country. Clearly we can, and must, do more to ensure that U.S. businesses capture the full potential of economic opportunities that exist internationally. The NEI is off to a great start. Exports are up about 18 percent compared to where they were a year ago – and manufacturing exports are up 20 percent.
Our SME strategy will have a strong focus on education and financing. We are aiming to increase, by 50 percent, the number of small and medium-sized businesses exporting to more than one market.
At the May 2010 Strategic & Economic Dialogue our two countries jointly affirmed the importance of SMEs for sustainable economic growth and job creation and pledged cooperation. In September 2010, the Minority Business Development Agency, which has a nationwide network of partnerships with national Asian Chambers of Commerce and Trade Associations, hosted a delegation of 12 SMEs from Liaoning Province.
And events such as these, the ones earlier in the week in Washington and field visits of the two Chinese delegation over the next week must result in business and investment partnerships that will be mutually and globally beneficial.
The Obama Administration’s vision to rebuild our economy differently – to “change the game” by focusing on innovation and competition; sustainability; education; and international engagement – is laying the foundation for a strong sustainable economy in the United States and beyond. Innovation and exporting are inextricably linked; they ARE the drivers for sustainable American economic growth. I look forward to our continued collaboration with our Chinese counterparts to help U.S. SMEs connect with global markets and to substantially scaling up our engagement in our mutual goal of creating jobs and improving lives and livelihoods worldwide.
Thank you for having me here today.
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