Remarks at the 2016 International Bar Association Annual Conference
Assistant Secretary, Bureau of Economic and Business Affairs
Thank you for that introduction, Laura Christa. My thanks also to Luis Gonzalez, co-chair of the IBA North American Forum, for coordinating this event, and to Hansel Pham who will be monitoring the Q&A and who will provide closing remarks.
Last but certainly not least, I want to thank David Rivkin, for inviting me here today. As some of you may know, the Rivkin family is spread pretty wide. And David in effect is the family elder, if only by a few years. So when David asks you to speak, the answer is always going to be yes.
But in all seriousness, David is widely recognized as one of the top international dispute resolution practitioners in the world. He has a deep passion for so many matters that are truly important, including promoting the rule of law and human rights, addressing climate change, and tackling judicial corruption, to name a few. He has elevated the IBA in so many ways during his time as President, and I am honored to call him my cousin.
I am equally honored to speak to all of you today because the Department of State, including my bureau – the Bureau of Economic and Business Affairs, or EB – and the IBA share the same vision for our economic global trading system.
We want to see rules of the road that work openly, fairly and transparently for everyone.
This vision is hardly new or revolutionary. More than 2,500 years ago, Confucius said: “To rule a country of a thousand chariots, there must be reverent attention to business, and sincerity; economy in expenditure, and love for men; and the employment of the people at the proper seasons.”
If we cut through the centuries, the quaint wording, and the fact that Confucius was talking about a kingdom more than a democracy, we can see that, from the earliest days, we have always recognized the importance of sound business practices, smart economic policies, and rules and regulations that make life better and fairer for everyone.
The IBA and EB are working deeply and extensively to achieve those outcomes – just from different angles.
The IBA is in the business of representing those who believe they are not being treated equitably, and my Bureau works with governments, the private sector and multilateral agencies to create the most open, fair and transparent investment climates we can.
Now, EB is a very big tent and I won’t take up our time outlining everything we do. But some of the things we focus on include coordinating the annual Investment Climate Statement reports so U.S. businesses can identify legal, regulatory, and other factors affecting investment environments in foreign markets.
We take the lead on corporate social responsibility, promoting our American brand as one that brings sustainable and ethical business practices to the foreign communities where we operate.
EB also is the national Point of Contact for implementation of the OECD Guidelines for Multinational Enterprises, which contain provisions on human and labor rights, transparency, due diligence, and supply chain management.
I’m pleased to share that my lead person on these issues – Melike Yetken – will be addressing this group on Wednesday morning to talk about non-judicial remedies.
One of the more visible tools in EB’s arsenal is economic sanctions. We work closely with Treasury to impose sanctions on threats to peace and national security. And when called upon, we work vigorously to contribute to the easing of sanctions in support of foreign policy objectives.
I mention this in light of two recent developments: One in Burma and the other in Cuba.
As you know, the U.S. government launched long term economic and financial sanctions against both countries to encourage democratic transition.
Last Wednesday, President Obama stood with State Counsellor Aung San Suu Kyi to announce significant changes in our bilateral engagement.
With Burma’s democratically-elected civilian leadership for the first time in over half a century, as well as its progress on peace and national reconciliation, economic prosperity, and respect for human rights, President Obama announced that he is rescinding economic sanctions by the end of the year.
The Administration is also reinstating Generalized System of Preferences (or GSP) benefits for Burma.
We are establishing a U.S.-Myanmar Partnership, expanding people-to-people ties, initiating a USAID loan portfolio guarantee, and exploring the possibility of a bilateral investment treaty.
These and other measures are designed to give American businesses and nonprofit institutions stronger incentive to invest in Burma, so that we can build an increasingly democratic and prosperous partnership in a critical region of the world.
In Cuba, the Obama Administration has made a series of regulatory changes, all aimed to increase the flow of resources, information, and ideas between the United States and Cuba, and between Cuba and the rest of the world.
We are already seeing doors beginning to open. For example, U.S. telecommunications firms can now more easily engage with Cuba.
We have begun scheduled commercial flights between our countries. And I’m proud to say much of the hard work behind that progress came from colleagues in my Bureau.
And last week, I was honored to have the chance to lead the first U.S.-Cuba Economic Dialogue in more than 50 years.
In the case of both countries, we have made significant progress, but there is much more to be done – and said.
Today, however, I would like to steer my comments to another area of intersection for the IBA and EB: The Trans-Pacific Partnership, or TPP. I would like to talk about this trade deal not only from the business point of view but the geostrategic perspective.
Ultimately, I believe supporting TPP is the smartest and most forward thinking way we can build our own economic security, through the business we make, the jobs we bring, the barriers we break down, the standards we raise, and the strategic strength we build in the region.
When we discuss TPP, we are in a larger sense talking about the global trading system. So let me start with what I believe to be this Administration’s basic premise on the subject.
It is in our interest that this system be open and rules-based; that it reflect our interests and our values; and that we lead, rather than sit on the sidelines and leave that role to others.
While globalization has given many of our citizens, workers and political leaders a great deal of understandable concern, it has become the stock and trade of our time. Ignoring globalization won’t make it go away, any more than closing the doors of a house will stop a rising tide.
As Secretary Kerry recently said – and I quote: “No politician, no government, no one can put the genie of globalization back into the bottle.”
But what we can do, he continued, is “mitigate the harm that may be done to some, maximize the benefits to all, and lift the standards that govern global trade so that it levels the playing field for American workers and businesses.”
From the business point of view, the case for TPP is compelling.
About 95 percent of the world’s consumers, representing 80 percent of the world’s purchasing power, live outside our borders. TPP, together with the Transatlantic Trade and Investment Partnership, the trade deal we are negotiating with the European Union, would give us unfettered access to almost two-thirds of the global economy.
Exports have greatly contributed to the economic recovery that President Obama’s Administration has seen in the last eight years. American businesses have set new records for consecutive job growth. And exports have supported one in four new jobs in the manufacturing sector.
Not only that, export-related jobs are paying 13 to 18 per cent more on average than non-export related jobs.
Those higher wages are critical if, as the President has said, we want our middle class to remain an engine of prosperity.
Data from the U.S. Census Bureau released just last week tell us median household income increased 5.2% in 2015 – so this is exactly what is happening.
TPP will not only boost our exports to a greater degree. It sets ground-breaking commitments on e-commerce, and treatment of state-owned enterprises, that will foster a more open, competitive business environment for North American businesses.
One of TPP’s greatest exports, however, isn’t even monetary. It’s good governance.
There is binding language on labor and environmental standards which, for countries such as Vietnam in particular, go far beyond their previous commitments.
TPP also sets high standards on transparency, corruption, and government accountability.
It defends the rights of men and women to collective bargaining. It requires every country to refrain from using underage workers and unsafe workplaces. And it sets a high bar for environmental protection, for clean air, clean water, and wildlife preservation.
Of course, I don’t have to tell this audience that things only work well when we strongly enforce the rules. That is exactly what this Administration has set out to do.
It has brought more enforcement actions at the World Trade Organization, which is the chief world forum for trade enforcement, than any other country. That’s 21 cases since 2009. In every single one of them that has been decided, the United States has prevailed. Those victories include wins against China on various products, from poultry to autos to high-quality steel.
We know that, when American manufacturers have a level playing field, they win. So, we keep pushing.
But we also recognize that we must stand for a fair, rules-based order of trade that reflects our values, not those of our competitors. By doing so, we don’t just set the standards for the region, we build our strategic presence.
Sixty years ago, during a press conference at the White House, President Eisenhower observed that “trade is the greatest weapon in the hands of the diplomat.”
At a time when a nation’s power is measured in economic clout as much as its military capabilities, Eisenhower’s statement could not be timelier. The trade deals we forge today must be as strategic as they are economic.
That’s especially true in the Asia Pacific where so much of the world’s business will be conducted, and so many geopolitical issues hang in the balance.
The case is clear cut. If we don’t write the rules of the road, we will leave it to countries like China to shape the region’s destiny.
The magnetic impact of this deal is equally palpable. I have spoken to countries in the East Asian Pacific who are already lining up in the hopes of one day joining this historic pact.
As a treaty, TPP incorporates all of these concerns. It brings business benefits to our U.S. companies by setting higher standards for workers, and creating competitive environments that are protected by the rule of law.
It also deepens our diplomatic relationships, strengthens our national security, and reinforces our leadership across the globe.
That’s why Secretary Kerry has said TPP is “the highest-standard trade deal ever reached, period.”
That’s also why Secretary of Defense Ash Carter has stated that TPP is worth more to him than another aircraft carrier.
No matter how formidable a ship might be, it must eventually pull up anchor and go home. But the impact of a trade deal like TPP could last for centuries in a region that represents 50 percent of the projected economic growth on the planet.
In the coming years, there are at least two things we can be sure of. The first is uncertainty. For example, while the global recovery continues, it does so at a sluggish pace.
According to the latest economic outlook from the International Monetary Fund, global GDP growth is expected to expand at a modest 3.2 percent this year, picking up to 3.5 percent in 2017.
In the United States, expected growth this year is flat at 2.4 percent, with a modest uptick in 2017.
But we can only estimate these figures. We cannot anticipate the political or economic developments that may occur.
The second thing that we can be sure about is our interconnected global economy. It’s here for the foreseeable future, and we are in this together.
Even though some economies might be doing well, others are facing slowdowns or even deep recessions. How we work together will determine how well we all recover.
Peter Drucker, a thought leader of the 1950s, who predicted many of the major developments of the late 20th century, from the rise of Japan to the emergence of the information society, had this to say about the future. He said, “The best way to predict the future is to create it.”
With TPP, we are doing precisely that. We are setting standards to which we can all agree.
We are respecting the dignity of our workers.
We are creating fair and open competition for our entrepreneurs and investors.
And we are working to build prosperity – not at the expense of others, but to everyone’s mutual benefit.
That strategy made sense to Confucius. It makes sense today. It will make sense tomorrow.
I am confident that, when the facts come out, our legislators will make the right decisions about trade. And they will move TPP across the finish line, so that we can move towards the future securely, fairly, and prosperously.
Thank you all for the chance to address you today, and I welcome your questions.