Acting Under Secretary of Commerce For International Trade Ken Hyatt
U.S. Chamber of Commerce Global Supply Chain Summit
Wednesday, May 7, 2014
As prepared for delivery
Thank you for the opportunity to talk with you today.
And I want to thank the Chamber for its many efforts to advance free trade and the competitiveness of our supply chains.
You’ve heard from some great speakers today about so many of the issues that determine the success of today’s global supply chains and their stakeholders:
modernizing our borders,
facilitating trade while securing it,
opening new markets through trade agreements, and
addressing all of these issues from an international, and specifically an inter-American, perspective.
At Commerce and the International Trade Administration, we are focused on increasing U.S. exports and attracting investment in the U.S. economy, and we are building a supply chain perspective into all of our work, just as you do in your businesses.
We recognize that export competitiveness is linked to supply chain competitiveness.
We recognize that attracting investment is linked to supply chain competitiveness.
We can’t just have a port policy… a border policy… a policy for our trade negotiations. We need to look at these questions the way companies do, by considering the whole supply chain. We need to continue to work to make our supply chains more globally competitive.
For the first time at the Department of Commerce, we have highlighted explicitly in our strategic plan the goal of reducing the transaction costs and complexities of exporting, improving supply chain competitiveness to drive exports and attract investment.
Today I will talk about three areas:
Our work with other countries in trade negotiations and their implementation;
Our work at our borders with Canada and Mexico; and
Our work domestically.
To you, we want to continue to work with our private sector partner so that you are as competitive as possible.
Trade Negotiations and Partnerships in North America
First, in our trade negotiations, market access issues touching supply chain services are on our trade agenda.
We recognize the real world supply chain implications of trade agreements on company decision making around where to source an input.
My Department is working with our U.S. trade negotiators to include provisions in our trade negotiations, such as the Trade in Services Agreement (TISA), the Trans-Pacific Partnership (TPP), and the U.S.-EU Transatlantic Trade and Investment Partnership (TTIP), that explicitly consider supply chain issues and reduce or eliminate barriers to trade.
We are actively pursuing market liberalization and policies that facilitate the movement of goods, in a wide variety of sectors, including competitive delivery services, air transport and other transport services, distribution, and information and communication technology.
But one of the most critical developments right now is securing the ratification and implementation of the WTO Trade Facilitation Agreement that came out of the Bali WTO meetings last December.
This path-breaking agreement promises to take us toward the economic gains from improved customs processing and border management.
The World Economic Forum estimates that the gains from better customs processing could reach nearly 5% of global GDP and increase global trade by nearly 15%.
We are also working with key trading partners to strengthen their capacity in the customs area and are working hard to persuade nations around the world to be ambitious in their plans to implement the Trade Facilitation Agreement.
Second, we are working to create value in the work we are doing with partners in Canada and Mexico. I know Walter Bastian has already touched upon this work, but let me add some additional thoughts.
In North America, supply chains are already closely integrated.
The US, Canada, and Mexico traded about $1.2 trillion dollars in goods with each other in 2013, and the US content of an import from Mexico is 40%.
The share of US content in an import from Canada is also high at 25%.
Given this level of integration, efficiency gains we realize in North American supply chains have significant and immediate economic benefits here in the United States.
And we are working hard to realize these gains through the U.S.-Mexico High-Level Economic Dialogue and its new focus on a 21st Century border and improvements in cross-border transportation – confirmed in the North American Leaders Summit in February.
These efforts have the potential to reduce costs and delays for U.S. exporters, by providing uniform, predictable avenues for goods moving to markets around the world, through better compliance and increased efficiency.
In North America, …
We are working to streamline procedures and harmonize customs data requirements for traders and for visitors, including through alignment of our respective "single window" initiatives.
We are increasing information sharing and best practices among our three nations by ensuring that observers from all three nations can participate in the Canada-U.S. Beyond the Border and the U.S.-Mexico 21st Century Border Management initiative meetings.
We are convening meetings of border officials from the three countries to discuss sharing of best practices.
We are promoting and expanding enrollment in trusted trader programs, such as the Customs-Trade Partnership Against Terrorism (C-TPAT), Partners in Protection (PIP), and the New Scheme for Certified Businesses (NEEC).
Domestic Policy and Work at Our Border
But, as I’ve mentioned, once we take a broader look at supply and competitiveness, these international efforts are only part of the story.
A key challenge is improving our own domestic policies and our freight infrastructure.
For many years, supply chain operators have been concerned about the effects of our domestic infrastructure impediments.
As far back as 2006, the Department of Transportation estimated that congestion factors cost American firms an estimated $200 billion a year in transportation costs.
Congestion just in America’s cities cost $121 billion in 2011, according to the Texas Transportation Institute.
And the volume of U.S. freight movement is forecast to nearly double by 2020, so congestion is likely to become an even more expensive problem unless steps are taken now to alleviate it.
We recognize that the quality and interconnectedness of our freight transportation system and its infrastructure are crucial to our supply chains’ ability to compete in the global economy.
We need to target our limited federal investment capital to infrastructure that speeds the flow of goods, makes it more predictable, and lowers shipping costs.
We have been working very closely with the Department of Transportation and our freight system stakeholders, as well as other agencies, on the development of national freight system plans and policies that strategically improve our nation’s transportation infrastructure.
Listening to the Private Sector to Improve Supply Chain Competitiveness
To help us think this through, we formed an Advisory Committee on Supply Chain Competitiveness at Commerce.
This advisory committee, which began operation in late 2012, is composed of up to 45 senior-level private-sector supply chain industry representatives and experts. It offers detailed policy and technical advice, information, and recommendations to the Secretary of Commerce.
The committee’s members span the range of U.S. supply chain stakeholders from end to end, including representatives from manufacturers, producers, retail and distribution firms, logistics companies and advisers, IT and tech companies, all transport modes, ports, associations, and academic experts, among others.
The Committee recently sent detailed recommendations to the Secretary of Commerce on how the Administration can develop better processes to achieve and accelerate implementation of the ITDS.
For example, the committee called for a targeted pilot phase to test the system for a number of specific products. This recommendation is currently being implemented.
The committee also made valuable technical recommendations that are helping to inform our work as we ensure private sector participation and work to meet the project deadlines for implementing the system.
Next, the Committee will be looking into ways to develop a North American “single window” system that can make this data filing system compatible for users in all three countries.
As you heard this morning from Commissioner Kerlikowske, following the President’s executive order in Feb, implementing the single window is a major government-wide focus.
We are working closely with our CBP colleagues through the Border Interagency Executive Council to ensure that industry’s voice is heard in this process and to implement the order in our own agency.
On freight infrastructure, the Committee is preparing recommendations from a commercial perspective, using techniques widely applied in commercial supply chain and logistics management.
The Commerce Department and the Advisory Committee are providing the Department of Transportation with this input to help shape the national freight policies required by the MAP-21 surface transportation authorization act.
The Committee is also considering how these improvements, together with infrastructure improvements in Canada and Mexico can further benefit our collective growth as a North American export platform.
Let me sum up by saying that we at the Department of Commerce – and across the Administration – are working as hard as we can to address the various issues and concerns that have been raised here today. Supply chain is a strategic priority for the Department today. We are focused on reducing costs and simplifying processing for our companies.
If we can’t deliver the goods to and from our borders, and within our borders, quickly and at the lowest possible cost, we can’t expect to meet our national goals for increasing our exports, or attracting foreign investment – or for boosting our economy and job growth.
We cannot do this work alone. We know we need to listen to what you - our supply chain stakeholders - are telling us about the issues that affect you both at home and abroad. We need – and we welcome – your support, your ideas, and your input.
Specifically, we are asking for your help in the following areas:
We need additional information from all of you as supply chain stakeholders to ensure that we can help the Administration to get the “single window” system implemented efficiently and effectively. We need to hear industry views and will be coming to you frequently with information requests and seeking your ideas.
We also need information from you on the impacts on your companies of the border impediments that now inhibit the flow of trade in North America.
We need your input on how best to coordinate our freight infrastructure policies with Canada and Mexico in a way that helps freight to move seamlessly and competitively.
And we need your input to trade negotiations.
We look forward to working closely with all of you to help our companies and supply chains to be as competitive as possible in the global marketplace.
Thank you very much.
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