Acting Under Secretary Joseph Semsar Remarks - January 27, 2020

Metro Atlanta Chamber of Commerce

Atlanta, Georgia

Monday, January 27, 2020

AS PREPARED FOR DELIVERY

Thank you, John, for that kind introduction. And thank you all for hosting me this morning. 

As a South Carolinian, it’s good to start my week outside of D.C. in a southeastern state. And as a former resident of Atlanta, its good to be back. 

As a quick aside, I called my wife last night and said you’ll never guess which street I’m staying on. She guessed Peachtree of course, and then we collectively determined that there are 71 streets in Atlanta with a Peachtree variant in their name. Just a little-known fact to kick off your week. 

With that, I would like to thank all of today’s attendees, especially the organizers here at the Chamber, the members of the Georgia District Export Council, and our trade promotion partners.

The Department of Commerce plays a critical role in facilitating international trade and promoting exports, both of which are key components of this Administration’s economic and national security agenda.

As the Acting Under Secretary of Commerce for International Trade, I lead the International Trade Administration, or ITA, an agency charged with creating prosperity by strengthening the international competitiveness of U.S. industry, promoting trade and investment, and ensuring fair trade and compliance with trade laws and agreements.

ITA’s global footprint consists of 100 domestically-based U.S. Export Assistance Centers, including one here in Atlanta and another in Savannah, U.S. Commercial Service officers in more than 70 countries worldwide, and headquarters staff in Washington, D.C. consisting of country and industry experts. 

ITA accomplishes our mission in three ways. First, we assist U.S. companies in gaining access to markets around the world. Second, we facilitate discussions with government decision makers and policy influencers. Third, we help U.S. businesses succeed in trade through customized solutions. Last year alone, ITA assisted more than 30,000 U.S. companies in accessing new opportunities in international markets, and overcoming a wide range of trade barriers. 

With the strong support for international trade shown by Governor Kemp, Mayor Bottoms, and leadership throughout the state, Georgia has an excellent track record of engaging in foreign markets.

In 2018, the State’s total trade exceeded $139.3 billion dollars, spanning 223 countries and territories, with an 8.4 percent increase over the previous year. Exports sustain thousands of businesses across the state and employ nearly 182,000 Georgians, with nearly 90 percent of Georgia exporters being small and medium-sized firms. 

Georgia’s success in exporting are seen in some of the state’s staggering trade statistics: In 2018, “Made-in-Georgia” goods and services were exported to the world, reaching their highest value on record at $40.6 billion dollars. There are more than 800 aerospace companies in state, generating $9.1 billion dollars in exports; agricultural products account for nearly $7.4 billion dollars of exports; medical devices and pharmaceuticals are exported to the tune of $1.7 billion dollars; and more than 300 facilities generate $3.4 billion dollars in automotive-related exports.

Equally as impressive is Georgia’s leadership in establishing franchises abroad and exporting FinTech, transportation equipment and diverse machinery, just to mention a few. We at ITA say with great conviction that Georgians truly value the importance of global markets. 

However, like in many other states, Georgia businesses face challenges with international trade. Be it with tariff or non-tariff barriers, customs and trade facilitation, regulatory environments, or standards and conformity issues. With our long history of working together, the International Trade Administration is one of your greatest allies in finding solutions to these challenges, and supporting your businesses economic competitiveness abroad. 

ITA’s solution comes through three of our trade and investment programs. The first being the U.S. Commercial Service, which assists U.S. businesses in international markets to address: foreign trade barriers and compliances issues. Domestically our Commercial Service is also available to you in two Georgia locations, one being here in Atlanta and another in Savannah, and we are happy to note that many of your companies have or are currently working with our team. 

The Atlanta U.S. Export Assistance Center (or USEAC) serves 85 counties in North & Central Georgia and the Savannah USEAC covers 74 counties in South & Central Georgia. 

We also have close working relationships with various trade promotion partners including the Metro Atlanta Chamber, Georgia Department of Economic Development, Small Business Development Center, Small Business Administration, and Export-Import Bank. Our partnerships allow for an all-encompassing approach to assisting companies and communities across the state that are interested in global markets or attracting foreign direct investment.

Likewise, the Advocacy Center is another great resource we offer. The Advocacy team takes the lead in the federal government’s interagency advocacy efforts for U.S. companies competing on foreign government procurement projects. Our Advocacy Center works very closely with the Commercial Service to help level the playing field on behalf of U.S. businesses and workers and to promote the growth of exports of U.S. goods and services around the world.

With 102 international procurement contracts signed in FY 2019, at a total project value of over $53 billion, we are furthering companies’ success in the global marketplace, while supporting nearly 280,000 American jobs. 

Furthermore, our SelectUSA program is the premier instrument for facilitating job-creating foreign direct investment into the U.S. Since its inception, SelectUSA has facilitated more than $64 billion dollars in investment, and created and/or retained over 86,000 U.S. jobs. The Department of Commerce organizes the annual SelectUSA Investment Summit in Washington, DC. With FDI being a high priority for Georgia, I encourage you to consider attending this year’s summit from June 1st- June 3rd. 

Tom Strauss and George Tracy lead ITA’s operations here in-state and would be happy to connect with you afterwards regarding SelectUSA or any of our other programs. 

Along with the great resources ITA provides at the local level, we have various trade milestones coming out of Washington. Just this month, President Trump signed the Phase One Agreement with China; AND later this week, the President will sign the United States-Mexico-Canada Agreement (or USMCA) with our North American neighbors.

I’d like to take some time this morning to discuss ITA’s part in implementing the United States-Mexico-Canada Agreement, or USMCA. The Trump Administration set out to renegotiate the North American Free Trade Agreement, or NAFTA, with two specific objectives: number one, modernize the agreement, and number two, rebalance the agreement. 

The negotiations were grounded in an understanding of the power of and interdependence of the North American economies. But also, in a belief that a 25-year-old unbalanced agreement was ripe for refreshing. 

To level set on the importance of our trading relationship with Canada and Mexico, 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 for 46 of 50 states, the top two export markets include Canada or Mexico. This includes Georgia, who in 2018 exported $10.1 billion dollars’ worth of exports to Canada and Mexico, accounting for 25 percent of Georgia’s total exports to the world. 

Given the importance of these relationships, the Trump Administration worked hard to assemble the broadest coalition ever, to solve the 21st century challenges we face.

Ultimately, the past two years of hard work and collaboration between the Executive and Legislative branches and Republicans and Democrats, culminated on January 16th in the U.S. Senate ratifying USMCA by an 89 to 10 vote… 

We expect the President to sign the agreement on Wednesday, giving American workers, small businesses, big businesses, innovators, farmers, and ranchers, expanded market access and a more level playing field to compete. 

Mexico has already ratified the agreement. And we expect the Canadian Parliament to ratify it short order after it reconvenes today. Implementation will take place no more than 90 days after all three countries have notified that they have ratified the agreement, and the Department of Commerce will lead outreach with the Office of the United States Trade Representative to ensure that businesses in your communities are fully aware of the benefits associated with USMCA. 

So what are the benefits? USMCA not only keeps most tariffs among the three countries at zero, it also does more than NAFTA—or any other prior trade agreement—to eliminate non-tariff barriers. 

There are important updated and new chapters on Digital Trade; Intellectual Property Protection; Customs and Trade Facilitation; Labor and the Environment; Good Regulator 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. 

When we negotiated NAFTA, we were still using floppy disks and type writers, and the phones that we carry today were considered super computers. Therefore, NAFTA was silent on digital trade. 

USMCA addresses this deficiency with a brand-new and world class digital trade chapter, which includes provisions to ensure that there are no data localization mandates around where data can be stored and processed. And that prohibits customs duties or other discriminatory measures being applied to digital products distributed electronically, such as e-books, music, and software. 

On intellectual property, USMCA includes the most comprehensive enforcement provisions of any U.S. trade agreement, including not just patents, copyright, and trademarks, but also, broad protection of trade secret theft.

On customs and trade facilitation, USMCA goes beyond any past agreement to help reduce costs and bring greater predictability to cross-border transactions, while ensuring customs officials have the tools necessary to enforce the law and stem the flow of counterfeit goods and fakes. 

Updated automotive rules of origin will improve the U.S. manufacturing base, by requiring that up to 75 percent of auto content be produced in North America, up from 62.5 percent under NAFTA; with a new provision that 40 to 45 percent of auto content must 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 assure that the U.S. will get a fair share of the jobs brought back from Asia. 

USMCA also contains fully enforceable labor and environmental obligations – unlike NAFTA. On Labor, this will help prevent low-wage, low-standard, unfair competition. On the environment, there are new provisions to combat trafficking in wildlife, timber and fish; and to address issues like air quality and marine litter. 

With the new good regulatory practices chapter, USMCA helps to reduce and prevent non-tariff barriers by requiring increased regulatory transparency and evidence-based decision-making. Lastly, on small and medium-sized enterprises, USMCA establishes information-sharing tools that will help SMEs better understand and access the benefits of the agreement.

If I had more time, I would talk to the market access wins on agricultural goods, like dairy, eggs, poultry, and wheat. All of which will be additional catalysts for the U.S. economy. USMCA’s 34 chapters, delivers more balanced, reciprocal trade with Canada and Mexico, more high-paying jobs for hardworking Americans, more economic growth right here in our own backyard, and more long-term economic security. 

The U.S. International Trade Commission projects USMCA to add 176,000 jobs and $68.2 billion dollars to the U.S. economy. We believe USMCA will have ramifications far beyond North America. It sets a new, higher, stronger benchmark for future U.S. trade agreements. And will serve as the starting point for new deals with countries in Europe, Africa, Asia, and elsewhere. It also includes a very important ‘sunset’ provision that will give future administrations leverage to ensure that, unlike NAFTA, USMCA will never become outdated or out of balance. 

On China, as you know earlier this month, the President also signed the China Phase One Agreement.

We believe this landmark agreement will begin to rebalance and expand our vital trade partnership with China and benefit both of our countries.

Your home state Senators agree: 

Sen. Perdue (R-GA) was quoted after the deal signing as saying: “President Trump is the first president in decades to actually stand up and fight for a level playing field with our trading partners around the world.” 

And your new Senator, Kelly Loeffler, said: “Today, President Trump signed a historic trade deal with China that will secure a bright future for our nation. Through this agreement, we will back Georgia farmers, bolster American manufacturing & keep our country safe. I applaud President Trump and this Administration for their resilience on this landmark deal.”

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.

With regard to intellectual property concerns, China will address numerous longstanding concerns in the areas of trade secrets, trademarks, enforcement against pirated and counterfeit goods, and more.

On tech transfer, China has agreed in earnest to end its practice of forcing foreign companies to transfer their technology to Chinese companies in order to gain access to their market. As China faces increased consumer demand from its growing middle class for high-quality imports of goods and services, the United States will have a great opportunity to take advantage of the new market opening opportunities to produce, supply, and export our goods at competitive prices. 

Consistent with the two sides’ projections, China is committing that over the next two years, it will import no less than $200 billion of U.S. goods and services; on top of the amounts that it imported in 2017 in four broad categories.

First, U.S. exports of manufactured goods, such as industrial machinery, aircraft and vehicles, and chemical products, among other goods. Second, U.S. exports of agricultural products, such as soybeans, cotton, meats, and a full range of other agricultural products. Farmers will undoubtedly benefit from the purchase agreements in this deal, pushing 40 billion dollars above 2017 levels, which is a significant net increase. 

In addition to the agricultural market opening commitments, the agreement also includes agreements by the Chinese to eliminate specific agricultural regulations and adopt international standards with timeframes and deadlines. 

In the long term, this is a major market opening concession. And the acceptance of USDA Foreign Agriculture Service Standards woven into the agreement is a long-term win we should all be celebrating. The third market opening category is that of U.S. exports of energy products, such as LNG, crude oil, and coal. And lastly, the agreement includes new market access opportunities for U.S. services exports, such as financial services and insurance, cloud services, and business travel and tourism. 

In closing, we see the China Phase One Deal as a very important first step. These two countries comprise 35 to 40 percent of the entire world’s economy, so it was very important to get this done. 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.

Like no other time in America’s history, our trading partners are working with us to adopt freer, fairer, and more reciprocal trade agreements that put America’s businesses, farmers, manufacturers, and innovators first.

In closing, I would like to thank you all for your dedication to the important work being done within international trade. I look forward to our future collaboration as we continue to strengthen ties between the federal government, U.S. industry, and the state of Georgia.

Thank you, and I look forward to hearing from you about the issues that are front and center for you and your businesses.