Transcript of Under Secretary Marisa Lago’s Interview at the Center for Strategic and International Studies (CSIS) - January 26

TRANSCRIPT: The State of Trade Technology Policy Entering 2024, A Conversation with Under Secretary Marisa Lago at the Center for Strategic and International Studies

Under Secretary Lago’s armchair discussion titled “The State of Trade Technology Policy Entering 2024” hosted by the Center for Strategic and International Studies (CSIS) and moderated by Emily Benson, CSIS Director of the Project on Trade and Technology.

Marisa Lago, Under Secretary of Commerce for International Trade
Washington, D.C.
Friday, January 26, 2024, at 11:15 a.m. EST

Emily Benson: Good morning, everyone. Thank you for tuning in virtually for a preview of the Biden Administration’s 2024 trade and technology agenda. It is an absolute honor to be joined here today by the Under Secretary of Commerce for the International Trade Administration, Marisa Lago. If you’re interested in reading her full bio, it’s available at commerce.gov. I will just say very quickly that you represent so many dreams that women have — you have a bachelor’s degree in physics, and then eventually a law degree. So, an inspiration to women everywhere. It’s really a pleasure to have you here today.  

It is a particularly dynamic time in the world economy. And a lot of authority has shifted to the Commerce Department, which is increasingly carrying out not only the economic agenda, but in some ways, the geopolitical agenda. Hopefully today, we can talk through what’s on the agenda, what we have seen transpire from the administration so far on trade and technology, and then look at some of the risks that are rising and additional opportunities for international cooperation going forward.  

So, I would like to begin by asking a very simple question, which is, what do you hope to achieve in 2024? We were just talking about this before the session, but there are over 50 elections worldwide. And so that will inevitably reshuffle some of our economic relationships. We have a big election here in the United States. There’s also a major European Union election, also this year. And so, what can reasonably be achieved on economic cooperation? And how do you see ITA facilitating that change?  

Under Secretary Lago: Well, thank you for the question. But even more for the opportunity. I am so struck by how CSIS has its finger on the pulse of what’s happening today. And thank you also for noting that Commerce is the place to be. We are fortunate to have a phenomenal Secretary in Gina Raimondo. And if you want to talk about a role model for women of this generation, and coming generations, look to Secretary Raimondo.  

So, for those who might not be familiar with the International Trade Administration, ITA, our fundamental mission is to create opportunities for sustainable and growing opportunities for U.S. businesses and their workers. We do this, of course, through promoting exports. But we also work very closely with our allies and partners for this kind of equitable growth globally.  

At the Department of Commerce, we love statistics. After all, the Bureau of Economic Analysis is part of Commerce. And so let me just give a few to put things in context. In [2023], we facilitated over $170 billion in US exports and foreign direct investment into the U.S. And we always translate that into U.S. jobs. That is 600,000 U.S. jobs due to the activities that we’re involved in. We have a team of around 2,000 folks who are located in over 80 locations around the globe, and also in over 100 cities and towns in the U.S. And that is how we are able to match exporters — potential exporters across the U.S. with opportunities around the globe.  

Last year, we supported 93,000 businesses, the overwhelming majority of which were small- and medium-sized enterprises. When Boeing makes a mega sale, it gets headlines, but our day-in and day-out work is focusing on the SMEs. The other thing that we’ve done is make sure that people live up to their trade agreements. Last year, we had 670 anti-dumping and countervailing duty cases. And that is the way that we defend U.S. businesses and workers from unfair trade practices around the globe. The final statistic that I’ll note is travel and tourism because it’s one of the most visible sectors of our economy. And we are on track to have 90 million visitors to the U.S. by 2027, which given how far it had fallen during the pandemic, is significant.  

So, in 2024, our key focus is going to be on economic security as an integral element of national security. And that is where ITA, with our focus on the business community and exports, sits right at the fulcrum. I’m just going to give you a couple of examples of initiatives.  

The first is to deepen our engagement around the globe, but especially in the Indo-Pacific. We know that, in the Indo-Pacific, there are such opportunities to focus on supply chain resilience, on protecting critical technology — U.S. leadership in innovation has been our hallmark in our business community for decades, if not centuries. We want to lay the groundwork for the clean energy transition that our partner and allied countries are engaging in. And we are always focused on enhancing the business enabling environment. And that includes focusing on strengthening anti-corruption, strengthening tax administration policies. It’s wonky, but it is essential for the U.S. business community to be able to compete on a level playing field.  

If we look at the signature accomplishment of ITA in 2023, it was IPEF: the Indo-Pacific Economic Framework for Prosperity. We were able to finalize the supply chain pillar of IPEF and on the other two pillars that the Department of Commerce was responsible for — the clean energy pillar and the fair economy pillar. We have substantially completed negotiations.

Now, lots of people think, “Oh, the negotiations are over. It’s done.” No, [2024] is going to be about the really hard work, which is implementation. In March, Secretary Raimondo is going to be headed to the Philippines, leading a Presidential Trade and Investment Mission. And the goal is to be able to strengthen our commercial ties, but also business-to-business ties. And again, she will proudly — with the businesses that are accompanying her — be showcasing how U.S. businesses with their cutting-edge technologies can contribute to the Philippines’ growth, and also the Philippines’ very particular challenges or the challenges that are posed to the Philippines by climate change. We’ll also be looking at [the] critical minerals sector as well. It is not just the Indo-Pacific — I’ll note that the Secretary herself has had very high-level — with her counterparts, with heads of state — engagement with Brazil, with Mexico, and with the European Union through the [U.S.-E.U. Trade and Technology Council].  

The second major area that we’re going to be focused on in 2024 — and again, related to economic security — is climate, always championing the fact that industry with its innovation, and also U.S. financing solutions are absolutely essential to allow other countries to meet their Paris Agreement goals. Just this past December, I was so pleased to be able to lead the Department of Commerce ITA’s largest-ever delegation to COP28, and it was very much focused on the opportunities that U.S. industry presented to partners around the globe. And we’re already planning for COP29 in Baku. In March, we are going to be leading a trade mission from ITA to India, and that is going to be focusing on deploying clean energy solutions and broader environmental solutions.  

The third area that I’ll highlight is Trade Winds. Trade Winds is ITA’s signature annual business forum and trade mission. And this year, it is going to be — the investment forum is going to be headquartered in Istanbul. And there, there will be very tailored business-to-business matchmaking and business-to-government meetings that will be set up. And additional countries that participants can go to either before or after the Istanbul portion of the trip are Kazakhstan, Romania, Poland, Italy, and Denmark. Given Istanbul’s central location, you can see we are covering a broad swath of widely varying countries.

People think of ITA and they think of export promotion. We are also charged with attracting foreign direct investment into the U.S. We do this throughout the year through this network of trade specialists located in these 80 locations globally, but our signature event is the SelectUSA Investment Summit. And to give you a sense of what occurs: we, last year, had the economic development organization from every state in the union. We had delegations from over 80 countries, and they ranged from the world’s largest sovereign wealth funds to tech startups, that said, “You know what, I’ve got a great idea. I see the U.S. market, I’m going to participate,” We had almost 5,000 participants. And this is important to us, because for 11 years running, the U.S. has been the number one destination for foreign investment globally. But it’s not something that we take for granted. We know that we have to own it absolutely. Every single year.  

Emily Benson: Well, thank you very much. That certainly speaks to the diversity of the authorities under ITA and the Commerce Department more broadly. If I could pick up just on something that came out of your SelectUSA comments, I’m curious if there are priority areas for investment in the United States. This has come up quite a bit, of course, in the semiconductors space, where I think there’s room for additional cooperation with foreign partners, whether it’s the European Union or other partners. And so, I’m wondering if there are priority areas for investment — clean tech being another key category — or if the goal is more investment across the entire economy.

Under Secretary Lago: I think part of the reason that the United States remains in this number one slot for foreign direct investment is obviously our investment climate or the stability of our rule of law. But the fact that we have such a diverse economy, we’re a multipolar economy.  

Now, we’re very focused on the fact that we have in the U.S. three key pieces of legislation that had been adopted: the Bipartisan Infrastructure Law, the CHIPS and Science Act — especially near and dear to the Commerce Department’s heart — and also the [Inflation Reduction Act]. With those dollars that are available, we’ve seen that the government has sent a demand signal, and industry and investors are responding. And so yes, we are very keen to see foreign investment in our semiconductor industry. But I would not say that it is to the exclusion of others.

The one other thing that I would note is we do have within SelectUSA a very special focus on SelectUSA Tech. We have a pitching competition that starts out around the world regionally, and the winners from around the world have the opportunity to come to SelectUSA without having to pay the fee for the conference. And there, they engage in a pitching competition in front of some of the world’s leading U.S. investors. It is, for me personally, one of the highlights of SelectUSA to see the creativity that is bubbling up around the world and that wants to make it here.

Emily Benson: Tech startups, you heard it here first: potential free ticket.  

If we could go back to one of your comments on economic security, I’d like to drill down on that a little bit more. It’s obviously dominated the headlines, not only in the domestic legislative context, but also the international context. We saw historic progress on economic security convergence under Japan’s leadership of the G7. The European Union and also Germany released economic security strategies over the summer. Japan has re-tooled theirs in the fall. And then, in early December, the Select Committee on Competition with the CCP on the Hill — this bipartisan committee — put out a comprehensive report with 150 recommendations that essentially calls to reset the economic relationship with China.

From your perspective at ITA, is a reset necessary or targeted re-tooling of existing policies potentially a better approach? And how is it navigating more broadly this new chapter of economic security that, in some ways, is supplanting our more traditional approach to trade?

Under Secretary Lago: Thank you for the question because the relationship with China occupies a very significant amount of our time. It is one of the largest and most consequential economic relationships that we have globally. And it’s big: in 2023, over 690 billion, so it is consequential.  

How do we approach it at the Department of Commerce? You’ve heard this from numerous Biden administration officials, which is protect what we must, but also to promote where we can.  

I think that many would be surprised to know that last year, we had a personal care products trade mission, combination in-person and virtual, in China because our beauty products are viewed as being very attractive in the Chinese market. Here’s a perfect example of a trade relationship in a sector that does not bear on national security.  

We are looking for and we welcome healthy competition, but on a level playing field. And to state the obvious: national security is not on the negotiating table. It’s not up for negotiation. We also are very aware of the importance of aligning with countries that share our approach to rule of law, to human rights, to labor protections, to environmental protections.  

Secretary Raimondo’s trip to China — one of the series of Cabinet officials’ trips — was absolutely seminal. And during that trip, she made it clear that national security, again, was not something she would negotiate on, but that her focus was on de-risking and diversifying supply chains, not decoupling. Two weeks ago, the Secretary had a follow-up call with her counterpart, Minister Wang Wentao, and that was part of their commitment to have ongoing dialogue throughout the year in between the more formal visits.  

I’m very excited that in the upcoming months, we are going to be hosting the first meeting of the Commercial Issues Working Group. This is what the Secretary and Minister agreed to, and this is expected to be in person here in Washington. And it was very consciously set at the vice-ministerial level. And I am so honored to have been asked on the U.S. side to be leading this initiative.  

The focus is very much on addressing concrete issues that affect our business communities. It’s not a negotiation forum, but a channel where the issues that we have each heard from our business communities can be discussed. And we’re looking for really specific, actionable outcomes where the government can help address. There will be a very significant role for the business community as part of this first CIWG — a new acronym, Commercial Issues Working Group. Our goal is to have a lot more predictability in our commercial relationship, so that our companies operating in China, looking to operate in China, can operate without having to be concerned about IP theft, about unsustainable subsidies, about unfair so-called security raids.

It is so important to keep the line of communication with China open because that reduces the risk of misunderstanding. And it also allows us to explore areas of cooperation. We had mentioned COP28 earlier, and I think that it was very evident that Secretary Kerry and his counterpart were very engaged in addressing this global challenge.  

A couple of statistics that might surprise your listeners: one is that, at the International Trade Administration, we have more Foreign Commercial Service Officers present in China — in five locations — than any other country. The other statistic is another part of the Department of Commerce — BIS, the Bureau of Industry and Security, which is responsible for export controls. Under one percent of our total trade is affected by export controls. I think that this is evidence of what our National Security Advisor Jake Sullivan has spoken of as a small yard, high fence. And so the BIS within the Department of Commerce — their goal is to restrict access to sensitive technology that could be used to harm us in the U.S. It is not — decidedly not about constraining China’s economic development. It’s narrowly targeted at technology that has a clear national security nexus.  

Another facet of our relationship with China that might be of interest is outbound investment. Now, you know, at the U.S. we have our ethos to have open capital flows because we know that they create and they expand economic opportunity globally. But again, we have this interest in preventing the transfer of U.S. capital and expertise in a way that can fuel military intelligence or cyber capabilities in ways that could come back to threaten our national security. ITA played a very large role in the development of the outbound investment Executive Order that President Biden issued, along with many, many other government agencies. But our role was to define, to assess which sectors should be covered. We had — in the lead-up to the EO — intense and multiple engagements with the business community and other stakeholders, so that we could be sure that we were focusing on these highest-impact, highest-threat areas. But we, within ITA, we’re particularly focused on having clarity in the Executive Order so that the business community would know what’s in and what’s out.  

The final facet of our relationship with China, I think, is competition with Chinese businesses in third countries. And this is, we know that it’s a challenge for U.S. companies, because frequently they’re competing on an unlevel playing field. Where ITA gets involved is — one, with advocacy on behalf of U.S. companies that are bidding on foreign procurement. In addition to the advocacy, though, we engage in a lot of capacity-building with countries so that they are better able to represent their interests and have a level playing field when they go out with government tenders — good for U.S. businesses, but also good for the other foreign country that’s issuing the tender. We also are very focused on the fact that many times, U.S. companies are bidding against companies from countries that might not share our anti-corruption ethos of U.S. companies, that don’t have the same protections for labor rights, for environmental rights. So, I hope that this gives a sense of the breadth and the centrality of our commercial relationship with China.  

Emily Benson: It also speaks to the need to thread that fine line between the protect side, the promote side. I’d also like to address the third P, which is the partner side. In some ways, it seems like China or the U.S. approach towards China can really dominate a lot of our foreign partnerships. This has come up very prominently in the Trade and Technology Council, which as you mentioned, is convening here in Washington next week. There are targeted working groups on semiconductor cooperation, some discussions on outbound export controls, broader investment screening, also ways to combat non-market practices. And wondering if, ahead of next week’s TTC, you can preview some of the more affirmative sides of the agenda that are not all eyes on China, but all eyes on the transatlantic partnership?

Under Secretary Lago: It is perfect timing because January 30 is going to be the TTC here. And what is interesting about the TTC is — we have in the European Union an economy that is a great partner for the U.S. because of its heft. But also, because we share so many fundamental principles, even as our approach to regulation and different issues can diverge. What the TTC is about is addressing global challenges, be they climate, be they geopolitical shocks — shocks that disrupt supply chains — be they emerging technologies, such as AI. In your laydown, you addressed many of the work streams that the Department of Commerce is principally responsible for. And for those who are not as conversant in TTC, it is co-led by three U.S. government agencies: State, Commerce, U.S. Trade Representative.  

Let’s talk about AI. We are working to develop a joint roadmap that will address AI risk and AI trustworthiness. This is such a new area that we think we have the opportunity from the outset to be working hand in glove with the E.U. We have a shared interest in having a more consistent business environment, as we think about how AI is to grow and to be regulated. And we have a shared interest on protecting user rights and the safety of AI.

On semiconductors, again, another area of shared interest. We are focused on having a joint early warning system for the potential to have disruptions in the semiconductor supply chain.  

And while you might pose this as not being the proactive, I would posit that it is, and that is the work that we’ve done together on export controls. I think the rollout globally of the export controls and sanctions after Russia unlawfully invaded Ukraine is a high watermark of global cooperation. But we know that having the E.U. so quickly join with the U.S. sent an extraordinarily positive message to the rest of the world because they saw our coordinated action across the Atlantic.  

Sticking with TTC, there is a — we expect that there will be an in-person meeting in Europe in the spring to continue the momentum.

Emily Benson: Wonderful. Well, we just have a couple of minutes left. And so, I’m wondering if you’d like to make any concluding comments, in particular on any policies that we may be overlooking at ITA. I think it’s easy for the blob in Washington to identify shortcomings or what we haven’t achieved. But if you maybe could take us through a couple of key achievements of 2023 and what keeps you optimistic about the momentum for continued progress heading into the election year.

Under Secretary Lago: What keeps me optimistic is the reception that we have around the globe. In under two years of traveling in this job, I’ve been to 23 different countries. And I am received — I believe in large measure because we represent U.S. businesses and their workers. And foreign countries are looking for the investment from the U.S., knowing that it brings with it high-quality goods, respect for human rights, labor, environmental groups, value for money over the long term.  

But one thing that we haven’t touched upon that absolutely underpins everything that we do at the Department of Commerce at ITA is equity, inclusive economic opportunity. As I mentioned, the vast majority of our clients are small and medium enterprises. As I measure success, yes, it is the volume of export, but it’s also who exports. We have increased our focus on rural communities. At this time last year, we had one Rural Export Center. We now have eight, with huge thanks to Congress for providing the funding because there are very specific needs. We’re also focused on increasing exporters from historically underserved communities and from minority, veteran, LGBTQ+, disabled, and women-owned businesses. In 2022, ITA led its first ever minority-focused trade mission. In 2023, I was so privileged — and it was just plain fun — leading a women in tech trade mission that went to Portugal for the huge tech conference that they host there each year, but also to the Netherlands and to France with a group of female tech entrepreneurs and CEOs. In each of those three countries, we were greeted and hosted by the U.S. ambassador, and all three of them were woman, which was way cool. In 2023, I also led a minority-focused trade mission to South Africa, Ghana, and Nigeria. And the companies that accompanied us, many of them were of the African diaspora in the U.S.  

Sticking with Africa, another theme that did not come up before as part of the commitment to building stronger commercial relationships in Africa — the only continent that I visited four times in 2023 was Africa — our Deputy Secretary Don Graves was in South Africa for the [African Growth and Opportunity Act] Forum. And this presence is very, very conscious — we see the economic opportunities that are there.  

I’ll end on this note, which is that in addressing equity, it’s a lot like climate change. It’s the right thing to do, but it also makes economic business sense.  

Emily Benson: Well, thank you very much. You’ve been generous with your time. We appreciate the opportunity to sit down with you. And that concludes today’s program. Thank you.