Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
San Antonio Hispanic Chamber of Commerce
Friday, October 5, 2012
San Antonio, Texas
As prepared for delivery.
Thank you very much, Mayor Castro, for that kind introduction, and for your leadership in the San Antonio community. You are an inspiration to Latinos around the country, and it’s a real privilege to be here with you, in your home town of San Antonio—a place rich with history and culture. And thank you to the San Antonio Hispanic Chamber of Commerce for hosting us today. Senator Van de Putte, Mr. Lomeli, Mr. Cavazos, and distinguished guests, thank you for being here; I am honored by your presence. It’s a real pleasure for me to be here this afternoon to talk about the Obama Administration’s trade policy agenda and its implications for San Antonio businesses.
Before joining the Commerce Department, [as you heard], I had the privilege of serving in the White House as both a Special Assistant to the President, where I was responsible for managing the President’s high level appointments to the domestic cabinet, as well as Special Counsel to the President in the Office of the White House Counsel. From my vantage point in the White House, I was keenly aware of the impact that the recession had on the country and on the Latino community specifically, and I can say unequivocally that growing the economy and putting America back to work is—by far—the Obama Administration’s highest priority. After two years in the White House, I was honored to be nominated by the President, an unanimously confirmed by the Senate, as Assistant Secretary of Commerce to help lead the effort to rebuild the economy through trade and international commerce.
In my current role, have the privilege and responsibility of traveling the globe and working with our international trading partners to deepen our strategic trade and commercial relationships worldwide. Through my work, I see extraordinary economic opportunities on the horizon for our country as literally millions of people in emerging economies around the world are moving from poverty into the middle class and becoming global consumers, demanding goods and services, and creating significant economic opportunities for American businesses. But I also see an increasingly competitive global landscape that presents both serious challenges and very real opportunities. So let me take just a couple of minutes to discuss some of those challenges and opportunities and to share with you, if I may, what the Obama Administration has been doing to promote trade and global competitiveness as part of a more comprehensive economic recovery agenda.
The President’s Trade Policy Agenda: Putting America Back to Work
From the moment he took office, President Obama faced one of the worst economies and deepest recessions to confront our nation since the Great Depression. Our economy was shedding about 750,000 jobs a month and had lost some eight million jobs since the start of the recession in 2007. Apart from the well known challenges facing the banking and housing sectors, key segments of the country’s automotive industry, which employs hundreds of thousands of Americans—indeed millions if we look at the full supply chain—were facing imminent collapse. In the face of great criticism, the President took immediate action to shore up the bottom line of America’s cities and states to help teachers, policemen, and firefighters keep their jobs and took other important steps to help save critical industries from the kind of ruin that would have spelled economic disaster for the country.
But from its earliest days this Administration recognized that an essential element of any strategy to reclaim jobs, rebuild the economy, and put America back to work must include a focus on improving America’s competitive posture and ability to compete in foreign markets. The simple reality is that while the United States still has the largest and most diverse economy in the world, we are witnessing tectonic shifts in the realignment of global economic growth and development. The numbers speak for themselves: 95% of the world’s consumers live outside the border of the United States and, according to World Bank and IMF estimates, close to 90% of world income will be earned offshore. The world’s emerging economies are on the rise, and millions of people are moving from poverty into the consuming and middle class. A recent McKinsey Global Institute report predicts that by 2025 the consuming class will swell to 4.2 billion people worldwide. Consumption in emerging markets will account for $30 trillion—nearly half of all global total.
Beyond the rise of the so-called BRICs, which we hear so much about, we are seeing tremendous growth in other key regions through Southeast Asia, South America, Central and Eastern Europe and Sub-Saharan Africa. In fact, six of the ten fastest growing economies in the world are in Africa today. In short, the days when we could rely on our own internal market and domestic demand to fuel economic growth are behind us. So the President correctly recognized that to sustain, and even surpass, the kind of economic growth we’ve seen in the past, we have no choice but to embrace global markets and engage aggressively in trade and international commerce.
The central component of the President’s longer term vision for our economy is for Americans to make, grow, and provide goods and services that the rest of the world buys. Simply put: we want to build it here and sell it everywhere. Our goal has been and continues to be building a 21st century economy that is built to last.. In turn, this will foster sustainable job growth at home and will help U.S. businesses to establish footholds in new markets all over the world.
That’s precisely why the President launched the National Export Initiative (or the “NEI” as we call it) during his State of the Union address in 2010. The NEI has several goals, but chief among them is to double U.S. exports by 2014. To achieve this, we have been asked to redouble efforts to open new markets for U.S. goods and services, substantially expand our trade promotion and trade financing efforts, increase access to financing for those companies doing business overseas, and, importantly, to aggressively enforce our trade laws and hold our trading partners accountable to their commitments at the World Trade Organization and through existing trade agreements in order to ensure that U.S. companies can compete on a level playing field. The President mobilized the entire government to support this effort through the Export Promotion Cabinet, and he also engaged captains of industry and other private sector leaders to help advise and support the effort through the President’s Export Council.
Growing exports and expanding access to new markets for U.S. companies has been a major priority of the National Export Initiative and a major focus of my team’s efforts at the Commerce Department.
- Last year, for example, the Obama Administration concluded negotiations and Congress passed three new trade agreements with Korea, Colombia and Panama. These agreements will contribute significantly to the creation of thousands of new jobs here at home while positioning us well in critical regional economies.
- After more than fifteen years of negotiation, we also successfully concluded negotiations earlier this year that will bring the Russian Federation into the World Trade Organization later this month. Until now, Russia was the largest economy in the world not yet a part of the WTO and was thus not subject to important global norms and rules that create substantial protections for U.S. companies seeking to do business there. Candidly, important work remains to be done here in the U.S. to establish normalized permanent trade relations between the U.S. and Russia, including the repeal of the Cold War era Jackson-Vanick Act, to ensure that U.S. companies can take full advantage of the new market access and WTO disciplines that Russia has committed to, and the Administration will continue to urge Congress to take up this important legislation when it returns from recess in September.
- Finally, the Administration is leading the way in negotiating a new, high standard regional trade agreement known as the Trans-Pacific Partnership that reflects the growing importance of trade between Asia Pacific nations. When completed, the TPP will provide U.S. companies with new opportunities and enhanced protections in what is collectively the fourth largest goods and services export market of the United States. With the addition of Mexico and Canada, the TPP countries will be by far the largest export market for the United States. U.S. goods exports to the broader Asia-Pacific region totaled $895 billion in 2011, representing 60 percent of total U.S. goods exports. So this agreement clearly represents significant opportunities for American industry.
Of course, our work to grow and expand U.S. market share is not limited to these examples alone. We are literally working world wide to knock down barriers, increase trade and investment, and open new markets and sectors to American companies. And these efforts range from initiatives in the most advanced economies, like the European Union, with whom we are assessing the feasibility of a comprehensive free trade agreement, to efforts in advanced developing markets like Turkey, China, India and Brazil, to work we’re doing in the “emerging emerging economies” like those in Sub-Saharan Africa, where, for example, we are negotiating a new Trade and Investment Partnership Agreement with the five member nations of the East African Community. In all of these cases, our overarching goal is the same: create opportunities for U.S. businesses by growing our exports, which in turn drives economic growth at home; put more Americans to work; and create new opportunities in new markets for U.S. companies and their employees.
And I’m pleased to report that our efforts are paying off. In fact, U.S. exports are on track to exceed a record $2 trillion for the second year in a row. Department of Commerce data show that export growth has played a major role in the country’s economic recovery since 2010. For example, exports accounted for more than half of the country’s GDP growth in 2010 alone. In 2011, exports surged to a record $2.1 trillion, a 33 percent increase over 2009, and supported 9.7 million jobs. The jump in exports since 2009 has helped the private sector create 4.5 million new jobs over the past 29 months, and in 2011—the last year for which we have data—jobs supported by exports increase 1.2 million over 2009. Preliminary data for the first half of 2012 shows this pattern continuing, although it’s clear our economy is facing strong headwinds from a slowing global market. Nevertheless, 34 states, including Texas, reached record highs for merchandise exports in the first half of this year. In fact, here in the Lone Star State, which exported $249 billion worth of goods last year, exports are up 7% in the first six months of this year.
As we work hard to grow exports and support jobs at home, we’re also focused intently on enforcing our trade laws and holding our trading partners accountable to ensure that American companies can compete fairly on a level playing field in overseas markets. After all, we work very hard to negotiate trade opening agreements, from free trade agreements to WTO accession packages and other agreements, but all of that effort will not amount to much if we don’t enforce our rights and our partners’ obligations. That’s why earlier this year the President signed a new Executive Order establishing the first ever Interagency Trade Enforcement Center (“ITEC”), which is co-led by the United States Trade Representative and the Secretary of Commerce. The ITEC will bring a “whole of government” approach to addressing unfair trade practices and significantly enhance our trade enforcement efforts globally. The ITEC will build on our already robust trade enforcement agenda, which has included our initiation of 10 WTO dispute settlement cases against China, India, the Philippines and others. The Department of Commerce is also enforcing our trade remedies laws, taking decisive action when our trading partners unfairly dump products in the stream of U.S. commerce or otherwise unfairly subsidize foreign industry. In short, our trade policy includes a balanced and measured approach that ensures we aggressively enforce our rights even as we work to grow U.S. market share abroad.
A Focus on U.S.-Mexico Trade: A Dynamic Economic Partnership
As you can see we have a full agenda. We are moving on many fronts to advance and deepen our trade ties globally. But I must tell you that for all the attention the BRICs and emerging markets receive, I have always believed that if we are going to achieve our goal of doubling exports and driving economic growth, we must play to our strengths and leverage the power of our proximity to Mexico, one of the fastest growing G20 economies just a few miles south of here. Our economic partnership with Mexico exemplifies one of the most productive and fruitful trade relationships in the world. And the Southwest border region, including dynamic communities like San Antonio, is key to that success.
I must confess, I have a special place in my heart for this part of the country and, perhaps, appreciate more than most in Washington just what an economically dynamic place it is. I was born in Las Cruces, New Mexico just a few miles north of Ciudad Juarez. I lived in the Mesilla Valley, where my family has lived for generations, until I was a teenager, and I have many fond memories of growing up there. Members of my family still live along the zona fronteriza, which is a place that I continue to care about very deeply. Fortunately for me, promoting the well-being of the border and the U.S.-Mexican trade relationship also happens to be a national priority.
As everyone in this room well knows well, the border region is the staging point for the vast majority of U.S.-Mexico commercial activity. Approximately 80 percent of U.S. exports pass through or originate in this region.
Nevertheless, the impact of this bilateral relationship extends well beyond the border and into the heartland—into communities and businesses—in both countries. As President Obama has repeatedly observed, there is a uniquely strong bond between our two societies. This is reflected in the millions of Americans of Mexican ancestry who live in the U.S., as well as the tens of thousands of students, teachers, and researchers participating in exchanges between our schools and universities, and the one million people who cross our shared border every day. We are friends and partners who share more than a border—we share deep bonds and fundamental values.
Let me try to briefly put the scope and depth of the economic aspect of our relationship in perspective.
Last year, U.S. exports to Mexico, the country’s second largest export market, exceeded our exports to Brazil, Russia, India and China combined. In 2011, U.S. exports to Mexico totaled approximately $200 billion, which is roughly 13% of all U.S. exports. Two-way trade in goods alone exceeded $460 billion—that’s roughly $1.3 billion each day. And that doesn’t even include trade in services, which would bring our dynamic partnership well in excess of a staggering half trillion dollars annually.
The trend in U.S.-Mexico trade is positive and keeps growing. Following a world-wide slowdown as a result of the global recession in 2009, bilateral trade increased 29% between 2009 and 2010. In 2011, U.S.-Mexico bilateral goods trade increased 17 percent over the prior year, and by all accounts we expect to see these positive trends continue. In fact, since the inception of NAFTA in 1994, U.S.-Mexico trade has more than quintupled. In Texas alone, exports to Mexico have increased at an annual average rate of 8.4% over those two decades, and total exports have expanded by more than 325%.
To bring this even a little closer to home, consider that in 2011 the San Antonio metropolitan area exported an impressive $10.5 billion goods. About a third of that went to Mexico alone--approaching $3.3 billion. And of course I can’t mention NAFTA without acknowledging that we are approaching the 20th anniversary of that important agreement, whose principal terms were signed here in San Antonio. I know the Chamber will be celebrating the occasion next month.
But as impressive as these numbers are, they actually fail to capture the totality of Mexico’s contribution to the U.S. economy. Take for example the fact that apart from our exports, we imported about $263 billion in goods from Mexico last year. When you dig into the data, a remarkable fact emerges: our imports from Mexico actually drive our exports to Mexico. In fact, some 64% of all those Mexican goods sold in the U.S. contain U.S. inputs. It’s a synergistic relationship that benefits both countries. After all Mexico’s exports to the U.S. make up 22% of its GDP.
And of course we shouldn’t forget that Mexico is second only to Canada as a source of tourism in the United States. And those nearly 13.5 million annual Mexican visitors to the U.S. spend millions of dollars on U.S. goods and services every single day.
Now, for those of us who are from this region, some of these numbers may not come as a surprise. In this part of the country, it is difficult to not notice the symbiotic nature of cross-border trade.
In fact, the 10 U.S. and Mexican border states, with a combined population of nearly 100 million people, have been jointly described as the world’s fourth largest economy. On the U.S. side, border metropolitan statistical areas (“MSAs”) exported $55.3 billion in goods in 2010—that was up 27 percent over 2009. As I noted earlier, San Antonio accounted for the $10.5 billion of this in 2011.
All this data adds up to one reality that matters most: it is our shared border that drives this dynamic economic partnership; that puts millions of our people to work; that provides for expanded opportunities for families and the kind of upward mobility that is the promise both nations seek for its citizens.
What is more, the border region is vital to our shared competitiveness. And that’s because, increasingly, the United States, Mexico and Canada are competing together as a regional economic platform in global markets. In fact, with its open markets, low tariffs, strong protections for intellectual property, low energy costs, skilled work force, and, importantly, integrated supply chains, the North American platform is one of the most globally competitive regions in the world. Just last week, I’m sure many of you saw the Financial Times article highlighting the competitiveness of Mexico vis-à-vis China. In the United States, we too, are seeing a renaissance in manufacturing—in fact, for the first time in a decade U.S. manufacturing job growth is again on the rise. My point, ladies and gentlemen, is that the border is a key determinant to our global competitiveness.
Leveraging the Power of Our Proximity
Despite our success to date, there is even more we can do together. And the border is the key to achieving it. And San Antonio has an important role to play.
Our countries share not just a border but a highly integrated economy with linked supply chains and high levels of industrial co-production, which means that large volumes of goods cross the border each day by truck—most of it down in Laredo, the nation’s largest inland port and, as of this year, the nation’s fourth largest port overall. In fact, there is so much coproduction and such a great degree of economic integration that many products and components often cross the border several times en route to final production. In this respect, our shared border represents not a line that divides us, but a critical asset that contributes to our shared prosperity. Our challenge, then, is to leverage—in the words of Secretary Clinton—“the power and advantage of our proximity”.
Unfortunately, current infrastructure capacity is generally ill-suited to dealing with the economic reality that we face. It has failed to keep up with the dramatic increase in our trade as well as related security requirements.
Many ports of entry (POEs) were built decades ago and have not been updated or maintained to keep up with the dramatic growth in trade that has resulted from NAFTA’s success. For example, the Mariposa POE in Nogales, Arizona was built to handle 300 trucks daily—today it handles 1,200 trucks each day. I know the same is true for Laredo.
Likewise, border delays hinder manufacturers’ dependence on reliable logistics for freight distribution. With today’s just-in-time supply chains, unpredictable wait times can act as a barrier to trade and a deterrent to cross-border investment. Border delays impact productivity, industrial competitiveness, and result in lost business income and reduction in gross output in both countries.
Most importantly, these issues matter not just to border cities and border states, but to the nation at large. In fact, some 22 U.S. States count Mexico as their first or second largest export market. Companies around the country depend on and utilize border infrastructure and, as a result, have a vested interest in what happens here.
President Obama understands all of this; that is why he has made addressing U.S.-Mexico border issues in a comprehensive manner a national priority. Together with Mexican President Calderon, the President launched a new 21st Century Border Management Initiative, committing our nations to full and renewed cooperation based on the principles of joint border management, co-responsibility for cross-border security, and a shared commitment to the increasing the secure flow of legal commerce and travel.
A bi-national Executive Steering Committee (ESC), of which my office in the Department of Commerce is a part, oversees the initiative. Through the ESC we are working to enhance economic competitiveness by supporting a bilateral border master plan process for infrastructure projects in order to increase capacity; expand trusted traveler and shipper programs; and explore opportunities for pre-clearance, pre-inspection, and pre-screening processes for commercial goods and travelers.
I’m pleased to report that we are already seeing positive results in each of these areas. We’ve seen new commercial crossings open across the border, including here in Texas. In Laredo, the World Trade Bridge, which is one of the busiest commercial crossings in the nation, was enlarged to include seven new northbound commercial lanes. Also here in Texas, great progress continues to be made on the Matamoras – Brownsville West Rail Bridge. When the crossing opens, it will be the first new rail crossing between the U.S. and Mexico in over a century. Think of that: until now, a new transborder rail crossing has not been built since the time of the Mexican Revolution! I think we can all agree that things have changed dramatically since then.
In addition to making significant infrastructure improvements, we are working hard on important trade facilitation initiatives to improve the efficiency of border crossings through trusted traveler and shipper programs and pre-clearance and pre-inspection pilot projects. For example, CBP and Aduanas recently signed a Declaration of Principles to explore the establishment of a pre-screening and pre-inspection pilot program at the Laredo airport that is designed to facilitate trade and alleviate congestion at land points of entry. Similar pilots are under consideration at the Santa Teresa, New Mexico and Otay Mesa, California crossings.
I believe all of these efforts will dramatically benefit San Antonio and the entire border region.
Clearly more still needs to be done, and we’re determined to continue to push for the resources and support to make that happen. Our primary objective at the Department of Commerce is to ensure that our efforts do not overly concentrate on just the security dimension of cross border management, but also include a robust focus on commerce and trade, and this means ensuring that the private sector, civil society and key border leaders have opportunities to give input into our joint border management efforts. That’s why being here with you today is such a great opportunity, and I look forward to hearing your views on these issues.
“Changing the Narrative” through the Border Export Strategy
Now a lot of important work is being done along the border to enhance and improve infrastructure, improve trade facilitation, and to increase the secure flow of goods and people. But in my view, that’s not enough. We’ve also got to change the narrative about what the border means for both countries and how it is a critical asset and driver of economic growth and prosperity. That’s why the Department of Commerce has launched a Border Export Strategy as one important element of President Obama’s National Export Initiative. As all of your experience daily, to the extent the national media and, as a result, our national discourse focus attention on Mexico and the border, they tend to focus on the worst and most sensational stereotypes and stories about gun running, cartel violence and illegal immigration.
No doubt, security along the border is critically important, but lost in translation is the reality of the powerful economic engine that the border region represents. We speak of building walls and keeping people out, rather than focusing on what a truly extraordinary asset our economic partnership represents. A recent report issued by the Center for Trans-border Studies at Arizona State University characterized the border region as a critical national asset that is “hidden in plain sight,” and I couldn’t agree more.
That’s one of the reasons why I have made the promotion of cross-border trade a top priority during my tenure in office. I’ve taken numerous trips to Mexico and the border region, carrying this message and focusing a positive spotlight on this important asset. Through our Border Export Strategy, we are promoting trade, deepening our commercial ties, and working hard to call attention to the significant contributions the border region, border economies, and border communities make.
We’ve led trade missions to Mexico; I’ve led numerous trips to the border region, including an innovative border policy mission with the U.S. Chamber of Commerce that started in San Diego and criss-crossed the border, winding our way through El Paso, Juarez, Laredo and ending up in Monterrey. And I’ve taken this message beyond the border to the heartland of America, to states like Indiana that rely heavily on U.S.-Mexico trade and crossings like the Bridge of the Americas for their success.
One of the key goals of the Border Export Strategy is help build a new national consensus on the importance of strengthening our bilateral economic relationship with Mexico and to remind the nation that, notwithstanding the very real challenges Mexico is facing, we have a robust and vibrant partnership that requires our sustained commitment. To that end, just two weeks ago I convened a two-day conference in Arizona that we co-hosted with the North American Center for Trans-border Studies at Arizona State University. The conference, entitled “Realizing the Economic Strength of Our 21st Century Border: Trade, Education, and Jobs,” brought together academia, private and public sector leaders, and members of civil society to discuss strategies for strengthening cross-border trade and to share best practices for economic development. An editorial in the Arizona Republic praised the conference and signaled to me that our efforts are finally paying off.
San Antonio has always played a leadership role on these issues, not just in Texas but nationally. The birthplace of NAFTA, and the home of important organizations like the Chamber’s own Free Trade Alliance, y’all—can I say that in Texas?—instinctively get how important this agenda is. And you know how much it matters to our nation’s prosperity and continued success. So I want to invite the Hispanic Chamber, the City of San Antonio, and the greater business community here to join us in these efforts to build a more prosperous nation that embraces global trade and understands the vital role it plays in job growth and economic development. And I want to encourage you, Mr. Mayor, to keep leading on these issues, and to keep putting San Antonio at the forefront of these issues.
Please know that the International Trade Administration and the Department of Commerce stand ready to work with you to create new business opportunities here in Texas and to strengthen the U.S.-Mexico commercial relationship.
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