President Obama Meets with Export Council

Uploaded by whitehouse on 09.12.2010

Mr. Chairman: Good morning. Good morning, everybody.
I think we have enough of a quorum to start with.
We have the President's schedule to be sensitive about.
And so he's anticipating that we start about now, so my
suggestion is that we start about now.
Speaker: Yep.
Mr. Chairman: I officially call the second meeting
of the President's Export Council to order.
Before we get into our business today, I would just like to
review very quickly progress on the four recommendations
we made last time.
You recall the four letters that we discussed and then submitted
to the President from the PEC.
First, export controls.
And you may have seen already this morning the President has
made an announcement on a valuable step forward there.
And I think he'll make further comment about
that in his remarks.
But the administration, obviously, gets high marks for
both initiating and moving quickly on this one.
It's a big deal.
Major steps have been taken in India.
There's been the creation of a uniform export enforcement
coordination center, ratification of the U.S./UK,
U.S./Australia defense cooperation treaties, which has
a lot of this export control language prototyped in it.
And we would like to keep up the momentum.
But the administration is clearly working very hard to
modernize this archaic system.
Remember, this is the one that doesn't let you export stuff
from Radio Shack to any place around the world because of a
archaic drawing of lines during technological era eons ago.
Two, good progress is also being made on the
veterans retraining initiative.
Bill Height in his leadership has been
absolutely critical there.
And it's my understanding that the First Lady's office has
taken this challenge on, both to help drive it and support,
pulling together multiple agencies to help
our returning vets.
And in late October,the Department of Labor released a
veterans hiring tool kit for employers to make it easier for
employers to put vets on their payrolls.
And we look forward to more initiatives in this area.
On the free trade agreements, which was the third thing we
highlighted at the last meeting, obviously -- and I think
Ambassador Kirk is with us -- just terrific development with
the completion of negotiations on the FTA with Korea, which is
the biggest, most important, has the most immediate and long
lasting impact on exports, has been concluded.
Congressional approval lies in front of us.
And I know Ambassador Kirk is going to depend on all of us to
facilitate, support, and aid that process.
This is a really important term in the right direction, and
hopefully we can get congressional approval
expeditiously and move on to Panama, Columbia.
And also, beyond that one, Ambassador Kirk was talking to
the business roundtable yesterday, the TransPacific
partnership, which is one that looms beyond there which has
more of a Korea size to it in terms of its importance.
And then fourth, promoting tourism.
And I think it's fair to say on this one it's still slow going.
And I think Dick gave us a quick report this morning which
suggested that the thought is right but the action is slow to
come, particularly as it relates to Visas.
Dick, do you have a quick comment there?
Dick Friedman: No.
Mr. Chairman: We've got to get going on this one.
Yeah, I mean you cited this morning the verging travel
trends; out-bound tourism up, in-bound tourism down.
And also business related movements of the same kind of
people also troubling.
It makes us a lot less competitive.
It's simple things like people can't come in and inspect goods
that we want to sell to them.
It takes a long time to get a visa from some of these places.
We've got to keep focusing on that.
So that's just a quick update on the four.
Gary and Ursula -- I would like to call on
Gary and Ursula to make a --
Secretary Gary Locke: If you want, I'll give you a little bit of overview.
Mr. Chairman: That would be terrific.
Secretary Gary Locke: Thanks a lot, Jim and Ursula.
Thanks for chairing and cochairing this council.
And appreciate everyone traveling great distances and
taking time out of your very busy schedules to serve on the
President's Export Council, which is absolutely critical.
And the President and the administration are working
very earnestly, full boar, to achieve his goal of doubling
U.S. exports over the next five years, supporting several
million new jobs in the process.
I want to give you just a very brief snapshot of our progress
since the last meeting.
And Jim, you highlighted some of those.
Exports are a big part of the economic recovery
that is taking hold.
In fact, exports really accounted for half of the GDP
growth in the last year.
And through September, exports are up 18% over the same period
a year ago.
Exports of manufactured goods are up 22% over the
period a year ago.
Agricultural exports are up 15%, second highest in U.S.
history, and perhaps we're expecting that to perhaps exceed
the all-time high next year.
I know that Dick talked a little bit this morning --
Dick Friedman talked about the travel issue.
A lot more work needs to be done there.
But actually foreign travel into the United States is up 11% this
year over comparable -- [inaudible].
Actually, an export that has a positive trade balance.
And so we need to keep working on that.
I'll have more to say about visas in a moment.
Our advocacy center, which involves a whole host of
agencies and reports export content of about 13.4
billion so far this year, that's the export content of
goods and service that are being sold around the world that our
advocacy center has helped our U.S companies secure.
And that has supported some 72,000 jobs.
To build on the success that we're all seeing, as you know,
the President announced progress on the Korea
free trade agreement.
And I think the President will speak a little bit about that,
but also Ambassador Kirk in a few minutes.
At Commerce Department this week, we launched two new export
initiatives I just want to mention briefly.
The first is a partnership with the National Association Of
Manufacturers, which is part of our new
market exporter initiative.
Fifty-eight percent of all U.S.
companies that export export to only one country, typically
Mexico or Canada.
Many of the big companies represented here
have a very sophisticated marketing staff, and you do a
great job of selling.
And we also try to help through all the different federal
agencies supporting your efforts.
But we need to provide the services of the federal
government to those small-medium sized companies that
don't have marketing staffs.
So we're reaching out with the
National Association Of Manufacturers.
They're going to identify 500 of some of their best
small-medium sized firms.
And they're going to partner with us and Fed-Ex to help them
expand into additional markets.
We're actually going this with other private sector companies.
UPS, they're identifying 8,000 of their best customers right
now that only export to one or two countries.
And our goal is to work with them through all the different
federal agencies to inform those identified customers of the
incredible opportunities to sell their goods and
services around the world.
UPS says that for every eight packages that they're able
to ship each day, additional eight packages a day, that
accounts for one new job.
So it's good for American companies, good for
our carriers as well.
We also launched a new renewable energy advisory committee
through the TPC-C and also a renewable energy
efficiency export initiative.
And we're going to be dealing with a full array of issues
facing renewable energy and energy efficiency companies,
including more tailored export financing through xxXM, OPEC,
We're going to be knocking down trade and access barriers,
specific to energy companies, and much more
aggressive trade promotion.
We talked a little bit this morning at the breakfast -- and
Dick Friedman just mentioned some concerns about visas.
Yes, we do have to work hard to knock down those barriers and
expedite the process.
But I do want to say that the State Department, Homeland
Security, and Commerce are in fact trying to
address this issue.
But so far, over the last five years, ESA issuances for
business and tourism travel is actually up 15% in Brazil,
37% in China, and 6% in India.
And these combined visa issuances in these countries are
actually twice what they were five years ago.
But we do have a problem of reducing the wait time
to get those visas.
And we know that that's a major impediment to encouraging that
foreign travel for business or pleasure into the United States.
And that's -- right now we have a positive trade surplus
in that area.
We still have to do a lot more.
So with that, I'll stop and turn it over back to you Jim.
Mr. Chairman: Thank you.
And Mr. Secretary, just again, we just want to thank you for
your sponsorship, support, and leadership.
The whole PEC -- I don't think all the PEC members know the
degree to which your leadership and the support of your staff
really makes a huge difference here.
So thank you.
I just want to mention that.
Just one housekeeping item before I ask
Ursula to make some comments.
Because we're webcast, sort of rustling of paper, cellphones on
desks, just be a little sensitive to that.
Some of the technicians are picking up some
of the sensitive stuff.
So Ursula, I'll turn it over to you for some remarks.
Ursula Burns: Thank you, Mr. Chairman. Thank you Secretary Locke.
To the staff of the PEC members who are carrying a lot of the
weight for us, the pleasant thing about this is that we're
off to a fast start.
And today's discussion regarding exports, I think -- and the
benefits of export and trade is timely.
It's very timely.
We were at breakfast this morning, hosted by the import
and export bank or export and import bank.
Thank you very much for that.
And what we heard was that the economy is picking up a bit,
which is good news.
More outside the United States than in.
And that, I think, the balance, the difference
is important to understand.
And it makes this effort that we're involved with extremely
important and very timely.
What we'll see today, including in the last meeting, is that
we're making a good start and a fast start on recommendations.
And the administration is working hard as well to make
this an easier path for us, notably the Korea free trade
agreement which will help.
I know it still has work to do, but it's a good start and a
good indicator there.
And as I said earlier, I commend all the subcommittees.
And we should just continue working.
Mr. Chairman: Thanks, Ursula.
Thanks for your leadership.
Appreciate it very much.
Just in line with what Ursula just said, the initiatives that
were proposed last time, combined with the ones that
we're going to discuss today, including some of the Jean's
work -- and Jean is here on the small-medium sized businesses.
Just to frame it, we're working on about $350 billion, hard
recommendations on about $350 billion.
That's where we'll be at the end of today, which is not to
suggest that it's all done.
But it does say we've got it in focus, we're moving forward,
we're tied in with the leadership here in Washington to
try to make it happen.
And it's -- so I'll try to keep a running count as we go along.
And eventually I know someone's going to ask me -- some of the
harden bitten CEOs on this group are going to say, Jim, show me
that the dogs are eating the dog food.
I mean, let's count.
And we will count.
I think it's really important to see how we're doing.
But $350 billion of opportunity.
And that's framed against our base level
of $1.5 trillion.
That's the base level to double, okay.
That was last year's export total.
So we're beginning to work on enough to make a difference.
And as Gary said, you know, just some of the underlying strengths
of the economy and the work that's being done at Commerce
and State to support commercial activity, already beginning to
see some export movement.
So with that in mind, if it's all right, I would like to move
on to the four letters of recommendation that
we have for today.
And I think Bob Eiger is going to talk about IPR.
And then I would like to ask member Reichter to make a
comment when he's done.
So Bob, you tee up the salient points, submit the letter, and
then we'll have Congressman Reichter make a comment, and
then we'll vote.
Bob Iger: Thank you, Mr. Chairman.
I want to thank you for your support of this letter.
I think we all know the protection of intellectual
property and patents are important elements
in increasing exports.
And I very much appreciate your willingness to
move this forward.
Additionally, I want to thank Congressman Reichter and Jeff
Kintler of Pfizer and their staff for their work on
drafting this letter.
I would also like to commend the administration for their efforts
to develop an effective means of attacking the high levels of
intellectual property rights infringement.
Under this administration, we now have an intellectual
property enforcement coordinator who work with with other senior
officials in the administration to release a pretty ambitious
intellectual property enforcement plan.
We're grateful for this plan, and look forward
to it being implemented.
A November 2009 study by the organization of economic
corporation and development concluded that in 2007 the
international trade and counterfeit and pirated goods
could have amounted to about $250 billion, more than double
the estimate in 2000.
And that is approaching 2% of world trade.
Nevertheless, despite these numbers, there's been little
progress that's been made to stem the tide
of copyright infringement.
Foreign sales and exports of the companies in the most copyright
intensive sectors of our economy amounted to some
$126 billion in 2007.
And whoever is stated in the letter, the biggest obstacle to
further growth of these exports is due to too many foreign
markets being flooded with too many illicit goods.
Music, television programs, publications, video games,
software, et cetera.
And too many of our trading partners are simply not
responding adequately to this growing problem.
And while there needs to be a long-term sustained effort in
combating this problem, the letter outlines several very
specific short-term opportunities and initiatives:
Continue to empower the intellectual property
enforcement coordinator and work with Congress to ensure she has
adequate resources and authority to effectively coordinate the
government's efforts; ensure the U.S.
Government continues to negotiate and implement
bilateral and multilateral trade agreements with strong IP
provisions that build upon and do not diminish existing U.S.
trade agreements; work to shut down overseas websites that
sell counterfeit goods and facilitate digital theft; and
ensure that IP attache programs within executive agencies,
including the U.S.
Patent and Trademark Office, Department of Justice, and
Department of Homeland Security directors are robust and
coordinated to work with Congress to expand these
programs into additonal countries abroad.
So I want to thank you all for your support.
We would ask that this letter be agreed to by the council and
sent to the President.
Mr. Chairman: Thanks very much, Bob.
Would you like to kick off the discussion,
Congressman Reichert?
Congressman Reichert: Well, I'll be brief.
I'm happy to be a part of putting this together.
And I'll just take a moment to recognize the ambassador and his
achievement this past week, in his efforts with Korea and
working with Columbia and Panama.
I think that's very exciting news.
The trade is, of course, one of the most important things we can
do to double exports.
But I think the second best thing we can do is
to protect intellectual properties.
And most people think that, when you think about intellectual
properties across the world, you're thinking of the larger
corporations, technology, [the two million] Microsoft workers,
that sort of thing.
Gary Locke and I come from Washington state.
We've known each other a long time.
There was a company in Takoma called
Brown and Haley candy company.
They make almond roca.
And most often you see it around during the holiday season.
Well, we had a meeting here not too long ago and
Brown and Haley presented a box of almond rocca candy that was a
knock off box from China.
And so we were a little bit surprised at that.
They're a smaller company, but they're suffering the same thing
that some of the larger companies are.
So we really wanted to make this point, and we really wanted to
emphasize the need that -- I liked your comment, Jim, about
the dogs eating the dog food because I think it boils down to
we're making an effort here.
But do we have some performance measures?
Do we have measurables?
And that's the point I wanted to make, to make sure that we're
measuring our progress as we go along, that the strategies that
we're employing and applying right now, applying to this
effort are actually working.
So I appreciate the time.
I wanted to take a moment to say something.
Thank you.
Mr. Chairman: Thank you very much for your contribution
and support and comments.
I think Bob's letter and his discussion stand on their own.
But are there any questions or any discussions
before we take a vote?
Any additional comments?
Speaker: First of all, thank you all for your comments about Korea.
I think the President is going to speak to that.
But lost in the, I think, the deserved attention we've gotten
over Korea, we've had a -- I think, equally important
achievement in this area in particular.
And I want to highlight that Ambassador Miriam Sapiro from
my office who's sitting behind me.
She lead a team in successfully concluding the anticounterfeit
and trade act negotiations which have been going
on for ten months.
And nothing is probably as relevant to this particular area
as what we've done in that.
And that's going to make a big difference in getting some of
the other important market economies -- to strongly
asemilate your property rights and enforce them.
So I just wanted to highlight that for you.
There have been a number of countries that
began a formal assignment.
But of particular importance, we, after a lot of very
difficult work, were able to bridge our differences in the
European union, to get them into it, between U.S.
-- significantly more than half of the important
intellectual property work products.
And also, to amplify the Congressman's point of the
importance of this to small businesses, at the roundtables
we've done around the country, Jim, the single biggest fear we
get from small business is about exporting, that they cannot
survive the theft of their property the way -- and I'm not
saying, you know, Boeing, or others of you
could survive that.
If you take a hit to EPS, if you're almond roca,
you're out of business.
So that affects their decision on how robustly they're going to
maybe pursue exporting if we can't protect that.
So we're going to continue to do it.
I would encourage you -- I noted the TransPacific partnership.
The beauty of that is, for the first time, we're starting with
a blank sheet of paper.
And at least our intent is to be as aspirational as we can in
this agreement that, we hope, will ultimately become the free
trade agreement of the entire Asia Pacific.
And all of you know the importance of that region.
So I would just urge you to maybe have you or your teams
visit with us so that we can incorporate your thoughts in
terms of what we're doing.
The IPR protections within that will be critically important.
Mr. Chairman: Okay.
We'll make sure we do that, ambassador. Bob?
Speaker: Two quick points.
One, we designated for each embassy an individual who will
serve as the officer in charge.
So every embassy will have someone, people out there.
They can contact this.
and they are soliciting.
And if you do have problems, e-mail me and I'll make sure it
gets to that individual, because it's a priority now for current
jobs but it's also our future, since our future is in
knowledge-intensive industries.
Entertainment industry to the computer industry, the software,
virtually everything has a knowledge base.
And a lot of it is very vulnerable to piracy or forced
transfer of intellectual property.
And that's the second point I wanted to get to.
There are more and more devices around the world -- China being
the country that's sort of most engaged in some of these adverse
practices -- where it's not simply the piracy which is a
problem but it is forcing you to transfer intellectual property
as a precondition for doing business or giving preference to
intellectual property produced in their country as opposed to
from the United States.
And we've been making an enormous effort, particularly
with the Chinese.
The President has made this point,
the secretary and many others.
Gary and Ron and many others have made this point as well.
So we're looking at a wide range of intellectual
property theft cohersion piracy.
And we have to combat the whole planoply of issues.
It's becoming more complicated but also far more urgent in
terms of our own economic future.
Mr. Chairman: Okay.
The opportunity is huge if we can build on those starts.
And we'll make sure that your organizations are fully briefed
on our recommendations.
And we'll solicit also your perspectives on what we're
proposing to do.
Speaker: Can I just make other -- adjunct to that sense, Bob,
I mentioned China.
Secretary Locke and I will be hosting the Chinese during our
joint commission [inaudible] next week.
The issue of intellectual property rights protection, I
just want to assure you, is always one of the top issues of
discussion for us with them.
The Chinese, perhaps, are more sensitive to feedback from those
businesses of you that are invested in China, perhaps more
than any other country.
I will tell you the good news.
They have launched a six-month campaign to really highlight the
importance of intellectual property and enforcement.
The challenge is we need for them to hear from
as many voices as possible.
That's a nice start, but we don't need a campaign.
We need a long, sustainable, you know, embedded system.
Not only that protects you, that's beginning to protect a
very emerging entrepreneurial sector in China.
So for those of you that may have the opportunity to interact
with your colleagues, I think you can applaud
them for what they're doing.
But encourage them that we want this to be
systemic and sustainable.
Mr. Chairman: Okay.
Are there any objections to the letter?
Hearing no objections, I suggest that we adopt it.
Let's move on to the second letter then.
Ivan, I'm always staring at you.
You spent the last three days leading a business roundtable
as its chairman.
And now you're weighing in here, subcommittee.
Thanks for your efforts.
Appreciate it.
And I know you want to talk about the tax policy.
Speaker: Well, taxes are easier than intellectual property.
We all know that.
So madame Vice Chair and Jim, secretary, Ambassador
Kirk, thank you very much.
I'm delighted to be part of the PEC and work with you all.
My role here is to suggest we introduce this letter
on tax reform.
Most of you have the letter in front of you.
There are four key components to them, to the letter.
You know them all pretty well: Reduce the combined corporate
tax rate to reach about the OECD level You know that we're
substantially above that at this point.
Deal with this territorial tax system.
Create an international tax in which U.S.
corporations can compete better with those in the OECD.
An act of permanent R & D credit that is competitive with
benchmarks against the other OECD countries, and actually
create additional temporary tax incentives, or actually try to
make as many of those permanent in terms of dealing with
investors of capital equipment.
The central idea behind all of this is to modernize our system
and incense substantial private sector investment.
I think the facts support -- the benchmarking supports
making some changes.
We appreciate greatly the dialogue and the conversation
around these issues here, and we're happy to discuss any of
these in any detail, Mr. Chairman.
But we submit this for the council's consideration.
Mr. Chairman: Okay.
I think it should be noted that the President's tax proposal of
a couple days ago incorporates a star on a couple of these
things, on the R & D tax credit and the
other investment incentives.
Although, I think the point we would make is that it needs to
be permanent, predictable, long-term for it to really begin
to influence behavior.
Is that a fair comment?
Speaker: Absolutely.
Let me just reinforce your point.
I think, for example on the issue of bonus appreciation and
expensing what a business does, if it has the opportunity to
accelerate a project this year, it will do it.
What's more powerful is to look out over a three to five year
horizon and say, what can you do over that time period,
particularly industries that require three to five year
capital horizons to do that.
So what the President has done is terrific.
I think we have an opportunity to continue this dialogue,
increase the focus on this, and do some things that are
even more powerful.
Mr. Chairman: Further discussion or comments?
Speaker: I just want to say that on behalf of the treasury
department that we appreciate very much the suggestions.
We're always looking, as you know we would like to find ways
to keep a dialogue about fundamental reform.
We're highly aware of the discrepancies between our system
and our competitor's tax systems.
I felt like this week's agreement was a very good
down payment on that.
But of course, we're going to want to continue
dialogue with you.
Mr. Chairman: Any other comments on Ivan's letter?
Hearing no objections, I suggest we adopt the letter.
Thank you.
Thank you very much.
I think Rob Henderson is going to talk about collecting better
data on services exports as a precursor to getting the arrow
behind the arrow head.
Rob Henderson: Yes. Thank you, Mr. Chairman.
Let me briefly contextualize the letter and describe its content.
The letter is a product of the manufacturing services and
and agricultural subcommittee.
First, a contextual point about the service sector which, of
course, my company is obviously a part.
Services account for nearly 80% of our country's economic output
and accounts for 40% of our exports.
This percentage disparity can be partly accounted for by barriers
to services trade.
And the disparity shows the untapped potential
for the sector.
It follows logically that service jobs account for over
80% of the U.S.
private sector employment, and therefore is a sector we
cannot afford to ignore or underestimate in the goal
of doubling exports.
When you consider the span of the sector, it emphasizes the
important role of services in job creation.
In addition, the services economy is an enabler and a
multiplier in the agricultural and manufacturing sectors.
For instance, banking, insurance, accounting, express
delivery, logistics, telecommunications play
essential roles in getting any product to customers.
We actually have a trade surplus when it comes
to service exports.
So this is a true American success story.
As we all know in our business lives, we pay attention to the
areas of our companies that do well.
And we make sure they have the resources they need to succeed.
The same should be true of trade services and data connected to
it, underaccounting somewhere from 20 to 40 billion of
services exports because we were working with one hand tied
behind our back in terms of statistics.
After impressing upon President Obama to reach an importance of
the services sector, this letter makes
two specific recommendations.
First, it suggests the resources be reallocated or increased to
the Bureau of Economic Analysis within commerce.
In this way, BEA would be able to expand and improve its
coverage in its quarterly surveys
and collect additional data.
Second, by permitting data sharing between key statistical
agencies and by allowing additional categories of
companies to be surveyed, we could overcome a chronic
underaccounting in service sector exports.
This requires a statutory change to the law.
It's important to point out that while the agencies involved --
Census, BEA, Bureau of Labor Statistics -- would need
statutory access to the federal tax information, it isn't the
tax information itself they need, but additional categories
of company that are currently not supplied.
These agencies already received the relevant information.
They just aren't allowed to access it for
this particular purpose.
They are simply exporters that aren't being counted because
they aren't able to be surveyed.
These actions seem minor, but they are the business equivalent
of a public company failing to report fully to its decision
makers and shareholders on the success of
its most important product.
We've talked about addressing the low-hanging fruit in terms
of actions to take to improve exports.
In this case, exports are there, we just don't know about them.
So I strongly encourage the PEC to approve this letter.
I'll be glad to take any comments or questions.
Mr. Chairman: Any comments or questions for Ron?
Secretary Gary Locke: Well, we very much appreciate that support for our agencies
within the Department Of Commerce Bureau of Economic
Analysis, to coordinate with the other federal agencies to
actually get that data and share the data and
make those analyses.
We very much appreciate that.
We talked about services.
Services represent almost 80% of our U. S. economy.
And you're right.
We actually have a trade surplus in that area.
I also want to point out that maybe Fred [inaudible] can talk
a little more about it, but XM does in fact finance the service
industry as well.
Maybe you can talk a little bit about it.
But I'm going to also brag on behalf of Fred.
In my remarks, I didn't cover some of the outstanding work and
accomplishments that the XM bank has been able to achieve this
year at the close of their fiscal year.
And Fred indicated a little bit this morning at the breakfast --
not everyone was there, but XM had a record highest ever
$24.5 billion in financing.
Five billion of that went to small and
medium sized businesses.
And under our calculations, all that financing has supported
some 230,000 jobs in America.
And you know, this is the highest ever that closed
in October, $24.5.
Higher, of course, than 2009.
2009 was the second highest in U. S. history too.
So XM has really done a great job.
But Fred, if you could talk a little bit about the service
sector and what you do to support that.
Speaker: We only do -- and I say only because I think this is
scratching the service -- about $2 billion of service exports.
Usually they're part of a larger project where the engineering
services will be a part of it, a power plant or road project.
We've done -- it was a highway built in the Dominican Republic,
about a $360 million project.
About $30 - $35 million was U. S. services.
And we actually financed all of the services from architecture,
engineer, legal, insurance, as I said.
So usually part of a larger project.
We would love to find ways that we can reach
more service providers.
And a lot of them are small businesses, so as part of our
outreach we keep mentioning them.
But I think a lot of smaller architectural firms, engineering
firms may not really -- just aren't as aware of it.
So whatever that letter can do and the data, we would like to
support much more of it.
I think we are sort of undersupporting that
part of the business.
Speaker: Raoul, did you want to --
Speaker: Yeah, I just want to -- in support of Secretary Locke's
efforts with the roundtables
that are going around the country, I think we
can put together a program where we can integrate some internet
marketing, some trade mission, some education and training
around this idea, that small and medium businesses
would rally around that.
And the service providers like myself would definitely get the
education laws they need to move forward.
W. James McNerney, Jr: I think we should note the connection to XM.
Any other comments?
Hearing no objections, let's adopt the letter with
the one modification.
Speaker: Thank you very much.
Mr. Chairman: Thanks Ron.
Appreciate it.
Fourth letter about benchmarking other economies, industrialized
competitors like Germany for example, that do a great job,
and is there anything we can learn.
The only thing I would add, before turning this over to
Scott and Jim, is the German export machine, as an example, a
lot of that is small to medium sized businesses.
So they're doing something that I think we can learn from, just
as a Colonel.
And it can override two of our very important initiatives.
So Scott, could you take it away?
Speaker: Mr. Chairman, you did my introduction nicely.
Seriously, we're hopeful this benchmarking will
produce the best in class policy enablers that can reimplement
the stakes. [inaudible]
Speaker: Scott, I'll be very brief here.
Scott and I view the substance of this letter as being --
advocating something that's fairly fundamental and that
pretty much, to be blunt about it, is knowing what the
competition is doing.
The letter says it quite a bit more eloquently than I just did.
It talks about analyzing the changing nature, size, and
effectiveness of government export policy, including export
promotion and advocacy programs by foreign countries.
But it means knowing what the competition is doing.
And I don't think the letter is terribly controversial.
It is built on the thought that having better insight to how
other nations are assisting their companies reach global
markets will actually help the administration, help Congress,
help the general public to have a better understanding of the
competitive pressures that U.S.
companies and U.S.
workers are facing.
So if we need to change our policies -- and I suspect we
will in some fashion -- public support is
going to be necessary.
And so without an understanding by the public of the need for a
change, really informed by the knowledge of what other
countries are doing, I think it may be more difficult to get the
buy-in to get the political support for they are legislature
or regulatory changes.
I think we see that in trade agreements right now.
As Ambassador Kirk has said, a lot of the hard work has been
done on Korea, but there's a lot more hard work yet to go in
making sure that both the people and Congress
supports these agreements.
This letter suggests a six-month timeframe for the study, that
the study be publically made available, and that the study
include a cost analysis, along with any recommendations.
Again, I don't think it's terribly controversial.
Perhaps it is somewhat fundamental, but it's something
we're all thinking is very important, very beneficial.
I ask for your consideration and support in sending it
to the President.
Mr. Chairman: Okay.
Like you say, pretty fundamental concept.
All we can do is learn.
Any other discussion?
Hearing no objection, I suggest we adopt the letter.
Thanks very much, Scott and Jim.
Appreciate it.
Our vice-Chairman, Ursula Burns, is now going to talk
about our final letter of recommendation which is
suggesting [inaudible], we should get it done.
Ursula Burns: Mr. Chairman, on behalf of my colleague, Andrew Riveras,
chair of the competitiveness subcommittee and CEO and chair
of Dow, I am pleased to present the PEC letter recommendation,
registering strong support for the Russian WTO asession.
WTO asession is another meaningful way that U.S.
manufacturers can build demend for U.S.
products to help and set the job creation in the United States.
Russia is the world's 10th largest economy, and has been
one of the fastest growing economies over the past decade.
If you want to return to a growth trajectory, it is
essential that the U.S.
welcome Russia into the organization that ensures a
level playing field on trade and provides appropriate recourse
for any grievances that we would have.
Russia's economy is expected to enjoy at least 4% growth
in 2010 and 2011.
With a highly educated population and a growing
middle-class, Russia has already become a valuable and profitable
market for U.S. companies and for U.S. products.
The potential for the sale of high-value U.S.
goods and services into the Russian market is strong.
A case in point is my company, Xerox corporation.
Russia is already one of Xerox's largest export markets, probably
the fourth largest export market.
And the potential for continued growth remains very strong.
But we need additional levers to help accelerate this potential,
particularly, interestingly enough, in the service sector
where a lot of our exports are growing.
The elimination of tariffs on U.S.
goods and products that come into WTO asession will help fuel
further demand in Russia and for U.S. goods.
The liberalization of the Russian economy will occur with
Russia's asession and the certainty of having Russia
operating within global norms of the rules making body of the WTO
represents important opportunities for U.S.
exports in a variety of sectors, including IT and most other
major product categories.
Russia is also making significant progress on
increasing its IPR protection laws, which as we heard earlier
is very important as well.
from WTO headquarters are encouraging.
As Russia and the U.S.
are working on remaining bilateral issues, Russia is
similarly focused on outstanding multilateral issues with its
other trading partners.
Moreover, I understand that the administration is committed to
repealing the restrictions under Jackson Vanup.
The PEC letter before us conveys the U.S.
business community's strong support for commercially
meaningful agreement to be reached as soon as possible and
that the Russia join the WTPO in June 2011.
I urge that we give this letter our whole hearted support.
Finally, I would like to thank Andrew and the Dow team for
taking the lead on this and preparing this letter for us.
Mr. Chairman: Thank you, Ursula.
I think we realize the WTO asession for Russia
is not a simple issue.
But when you frame it from the view of exports, it's something
we really ought to try and get done.
So Ambassador Kirk, would you like to weigh in?
Ambassador Kirk: If I might.
Again, this is another example -- I don't want to sound too
USTR-centric, but we don't often get a chance to brag in public.
We've actually had a lot [inaudible], and we've been
making a lot of great progress.
And again, Mirium Shapiro who covers Eastern Europe spent the
majority of this summer working intensely with Russia to meet a
September sort of marker that President Obama and President
Madhev have set, following their visit last summer.
And I will say, to Russia's credit, we were probably 95%
plus successful in terms of getting them to meet some of the
outstanding bilateral issues.
So at least as it relates to the letter, I want to be careful.
I can't speak to whatever the process might be on
on Jackson Vanik.
But with respect to your concern about our resolving our issues,
I would say we believe that we're in a very good place.
And we have committed to work with Russia on their outstanding
issues with other WTO members, in terms of the multilateral
But in terms of your letter on our issues, we are in a very
good positive place with Russia, setting aside whatever happens
on Jackson Vanik.
Mr. Chairman: Terrific.
Any other comments?
With no objections, I suggest we adopt the letter.
Thank you.
Now, we do have Jean Hale with us.
And I think you started to give us a report today
at the XM breakfast.
Could you elaborate a little bit?
Gene Hale: Certainly.
Good morning, everyone.
First of all, let me thank the SME subcommittee for all the
hard work that it's done.
We have met four roundtables throughout the country, two in
Miami -- one in Miami, one in Orlando, and one in Los Angeles
in Long Beach.
The purpose of a roundtable is very simple.
We're not there to reinvent the wheel.
We're there to validate some of the reports that's
already been done.
And I believe that by doing so we can have face time with
people in order to dispel myth from perception and reality.
So that's what we want to do.
And then bring back some of the concerns to this committee.
The most common theme that runs through
the whole thing is resources.
Of course, small businesses do not have the same resources
as large corporations.
And the reason these resources are very important is because
you need working capital to understand the regulatory
compliance of different countries.
You also need to have knowledge of foreign markets.
It costs money to do that.
And, more importantly, you have to have access to capital.
Following that is the fact that we hear the complaint that the
XM bank process is too long.
And I don't have any emperical data on that,
but that's what we hear.
And so working with these agencies -- across agencies, we
need to have better coordination to make this process work.
Because what you need to do -- if you're looking for money, you
need to get this money fast.
And you have to have speed.
You have to have -- to make a deal, you have to have this
money in hand, to buy inventory, things of that nature.
Otherwise, you're just going to be out there.
One of the other things too, speaking with Secretary
[inaudible] last night he brought up a good point.
He said that one of the things we have to also be concerned
about is once a company gets product in country, you have all
these other problems.
Those problems are corruption, fraud, those kinds of things.
So do we have enough compliance officers in country to help
small businesses deal with those things?
My understanding is that we're a [inaudible], we only have
12 compliance officers.
And whereas I think that's pretty noble to say the least,
whereas we probably need about 1200.
So that's one of the things I think that could be very
important to helping small businesses to, you know, deal
with problems in country.
The other item is regulatory reform.
One of the things that people want to happen is for the
government to not become big brother but to
become a trade facilitator.
So those are the kinds of things that we believe that we can, you
know, crystallize in a report and surround those with
recommendations that we can bring back.
Maybe these things can be done administratively, versus having
to go to the Congress to get them done.
So if that's the case, then we can make some serious progress.
Mr. Chairman: Thank you, Jean.
Derrick, did you want to make a comment?
Speaker: I appreciate Jean's comments.
And I want to let you know that the federal agencies under this
administration are really working much harder to
collaborate and provide more seamless services.
And both XM and Small Business Administration are focusing on
streamlining their and processes applications
and approval processes.
I mean, Fred is very, very proud.
And we're very proud that XM has issued the highest ever in
financing two years in a row.
And I know that Small Business Administration is now really
focusing on helping companies -- small-medium sized companies
that have never exported before.
And we at Commerce are going to be focusing on those
that already export.
And in fact, over the coming year, we're all going to be
going out to about 15 of the top metropolitan exporting markets
to really inform those -- especially small-medium sized
companies -- of the exporting opportunities and the services
that all the different agencies have in terms of financing, in
terms of counseling, in terms of advocacy, our ability to just
find buyers and customers for made in U.S.A.
goods and services.
And then on regulatory reform, I just want to let now know, for
instance, SBA and Department Of Commerce have been teaming up so
that we have a more seamless delivery of services.
And under Commerce Department, I think over the next year, we're
going to be going out to a dozen or more, in the major cities of
the United States, having our commerce offices such that, if
you go into one commerce department office, the people in
that office will be crosstrained in all the services offered by
the federal government to help businesses so that you don't
have to then go across the street or a half mile away to
learn about opportunities at XM
or Small Business Administration.
Our folks will be crosstrained in all the different program
offerings, including defense diversification opportunities,
Labor Department services, job training and retraining programs
so that -- it's a one-stop shop because business owner,
especially small - medium sized companies don't have the time to
go trapsing around to different offices within a city or within
a state to try and find out
what's available for those companies.
I don't know if Karen can talk a little bit more about that.
Speaker: Jean, thank you for heading this up.
As you know, this is a critical element because It's one of the
fastest growing, most difficult to reach pieces
of the export equation.
I want to thank Congress and the President for putting in the
small business act that passed in September, a very powerful
set of tools for small business exporting.
We have export financing, but we're now able to
go up to $5 million.
So a lot the of the exporters couldn't deal with
a $2 million cap.
Now that financing is going to be available to them.
And our special export programs also got enhancements, as did
the on-the-ground coordinated activities that we do
to counsel small businesses.
I might also ask you to promote the website, for any
small businesses that have an interest.
We now have live a portal where a small business interested in
exporting can register.
So we'll be tracking their registrations and then pushing
them toward the local assets.
And we have coordinated, as Gary described, the SBA, the
commerce, and also in most cases, the state local assets
that help in exporting, and the XM assets.
So we have a very robust now tool kit for businesses who are
interested in exporting, including online training,
walking them through, and then connecting them up to the
commercial attaches in the country.
We're focusing, at the SBA, on new-to-export manufacturers.
And the commerce folks on the ground are focusing on some of
the people who export but only to one country.
And in that way I think we're going to
make significant progress.
Mr. Chairman: That's good.
I think -- Fred, did you want to make a comment?
Speaker: Jean, if you didn't find out that our service was too slow,
then you would not have done a good job.
We've reorganized actually in the last four months
and put all the small business under one person.
We eliminated credit committee so senior vice-presidents of a
bank can approve up to $10 million, which will
encourage small businesses.
I think Karen makes a very good point.
Before the limited SB -- I think it was $1.7 million.
And then we would do the top up to get them to 5.
It's a lot easier now.
They can get all of that in one location.
But we also have, you know I think -- while we're trying to
really reduce our service time, cut it at least in half.
Cut it about a third.
Tried to get it cut in half.
We've come up with a couple products that will provide
five-day turnaround time.
Otherwise, I think small businesses particularly lose a
sale if we're not getting them a faster answer.
I mean, the President asked for a 25% increase in our budget,
mostly to help small business.
That's probably going to be -- maybe difficult to achieve in
the environment, but we're going to find -- [inaudible]
Mr. Chairman: It's clear that a lot of people are waiting in
here on this priority.
And we've all got to stay together to turbocharge it.
What I respect about what Jeans' doing -- we have a term at the
Boeing learning center called action learning.
And Jean is going around communities meeting with people,
seeing what's going on, trying to make recommendations as it
all flows by him.
We are going to make you harden up with a letter here soon.
And I know that you're going to want to have all these people
with you when you make that recommendation because their
efforts right now are really really moving forward.
And I think we all want to do better.
So Jean, thanks for your leadership there.
Secretary Solis, did you want to make a comment?
Secretart Solis: Yes.
[Inaudible] -- in the course of two years or so.
In the beginning of this month actually, [inaudible] community
college is specifically for training.
And we're looking at projects involving new technologies, IT,
broadband, healthcare, renewable energy.
And I would hope that we can try to bring a greater connection so
that we work with our workforce investment boards that many of
you here may be familiar with, and to really help bring about a
more robust program that will actually provide for a seamless
opportunity for curriculum to match up with the immediate job
requirements that are needed by employers that want to start up
new businesses but also to expand new -- [inaudible].
So I hope to work with all of you on that
through our Department of Labor.
We're really revamping.
And the results, I think, have been positive.
Mr. Chairman: Great.
Thank you for that.
Thank you very much.
You know, representative Teebury, we've got you here.
And a comment at large on any of these issues
would be very much appreciated.
If there's something going through your mind.
Representative Teebury: Well, I appreciate the leadership around
the table in this group.
I don't want to beat a dead horse, but at the last meeting I
made a comment that I will, I guess,
reinforce in this setting.
I want to again publicly thank the leadership of Ambassador
Kirk and the work that he's done, stepping out and doing
some courageous things.
I will tell you though the reality on the ground, in terms
of the public, in both the issue of trade and the issue of
corporate tax reform needs a lot of work.
There needs to be work around this table, there needs to be
work with leaders within this administration.
There needs to be work with the leaders of associations of
business groups that many of the CEOs and presidents belong to.
Because the public is not there, is not there on trade, is not
there on corporate tax reform.
And if we are going to grow the economy as the President -- I
was pleased to hear him talk about, with respect to the tax
code -- If we are going to grow the economy through exports,
which also means trade, we're going to need a lot of work by
people around this table.
I can tell you that Dave and I, as members of the ways & means
committee, coming into the majority, you will find support
among our members as the subcommittee chairmen
on select revenue.
I can tell you on tax reform, I get it.
We need to be more competitive globally.
And part of that is through more competitive tax code.
But that doesn't make it easy.
And so I hope that the message that I'm sending will be well
received by leaders of the business community, leaders
within the President's administration, together with
republican House members and the majority next year, need to work
together to build trust among the public, that this is good
for America and good for American workers.
Mr. Chairman: One data point.
Because you're dead right from where I understand.
Ivan lead a discussion yesterday on this subject at the
business roundtable meeting.
And what it got down to is it got down to local.
It got down to mayor, and governors.
And engaging governors in some of this discussion I think might
be something we consider along the way, and companies, people
who lead companies.
Mayor, governors, companies, people who
lead companies forming up on
this issue -- and Ivan's team is putting together some
communication material for all of us.
And we've taken on the task of local engagement on this issue,
because I think that's where it gets solved.
I'm not sure it's a broadcast medium kind of solution.
I think it's a talk about the connection between winning
globally and your job.
You got to help there.
I really appreciate your help.
It's important.
So are there any other comments?
Yes? Yes, chief?
Speaker: With regard to the letter of recommendation, our strategy is
to [inaudible] -- submit the letter.
Mr. Chairman: Okay.
Any other comments on that?
So we're not voting today on a letter, notwithstanding the fact
that Gene has done more work than any of us.
And that will be forthcoming.
Ambassador Kirk, did you want to --
Ambassador Kirk: I would just add, one more
time, one of the mandates we got from Congress, that was
critically important to them, likewise, we've created a roster
just to coordinate all of our assistants while Secretary Locke
and Fred in particular are focusing on finance.
We're looking at just the difficulty of small businesses
to try to rationale different regulatory schemes.
We're doing it in NAFTA.
As successful as NAFTA is, there's a lot of money left on
the table for small businesses that just stop when you tell
them, I've got to produce this many Spanish, I've got to
produce this in French.
And we've got to solve that problem for them.
So I just want to assure you, we're beginning to look at that
under the NAFTA commission.
And then again within apec, and the transpacific region, we're
looking at everything we can, trying to bring a bit more
regulatory coherence to what we're doing, knowing that for
small businesses, if they have to try to work through that
maze, for many of them, that just becomes a non-starter.
Mr. Chairman:: Thank you, ambassador.
You know, I just would like to acknowledge three people who
have joined us.
You all know who they are, but I think that they should be
formally recognized.
Valerie Jarrett and Larry summers have joined us.
And the new Chairman of the Council of Economic Advisors,
Austin Goolsbee, in his new role, has also joined us to
participate in the discussion as we go along.
Any of you like to make comments at this point?
Or are you going to hold your fire until we get to that point
in the agenda? Okay.
Gary, any further comments?
I think we have about two more minutes before
the President joins us.
And the last thing I want to do is suggest a break.
Secretary Gary Locke: I think, Jim, you've already touched on it.
And Ambassador Kirk did as well.
The whole notion of conveying to the American people the value of
our exports -- I mean, Ursula talked a little bit about it.
I mean, each of the companies here have to really engage and
inform your workers and your own communities as to the benefits
to your communities and to your workers, and stability of
employment, security of employment from our exports.
And that when you sell goods and services around the world this
generates jobs for the workers back home, whether you're making
the stuff here in America or whether you're supervising your
operations around the world that it's generating jobs.
Perhaps Ursula, you could talk a little bit more about what
you're trying to do.
And I think you talked about a recent plant that you opened in
New York, and how you publicizes that.
Ursula Burns: I'll do this before or wait until after the break and do it.
It's up to you.
Mr. Chairman:, Why don't you -- you know a comment along the lines that you
made at breakfast today I think is very useful.
Because it gets at the language that we might be able
Ursula Burns: One of the things that we found, is obviously with
any problem, any opportunity, communication is the key.
And precise concise, local, easy to understand
communication is key.
And we are actually very sloppy in how we communicate our
initiatives around trade.
Most of the time when we communicate we find that people
are confusing, trade without outsourcing.
If I say the word trade people actually think what we are doing
is outsourcing their work.
It's actually 100% the opposite.
And we just opened a plant, announced the expansion of a
plant on Tuesday.
Where we put $25 million more into this plant.
We'll grow the employment by about 10 people.
We already have 75 people there.
This is in up state New York, is declining population area.
Most of what we make in this plant, all of what we make in
this plant is not used in up state New York at all.
More than 50% of it is not use understand the
United States at all.
So we added ten jobs in upstate New York.
It may not seem like a lot.
But, this is the key thing.
And the way that we pulled the press together, the reason why
we did it was to explain that we are putting this money into this
plants, sending most of the good outside of the United States and
it grows employment inside the United States.
And simple language, real examples, I think making it
local as Jim said will move the ball forward significantly.
It is our responsibility to do and to take the time to educate
our employee base which we do at Xerox Corporation of the
communities that we do business in, and the world.
And the rest of the United States about how important
it is to export. Pretty simple. I think.
Mr. Chairman:: Yes.
Speaker: I just wanted to add to that.
I was talking to Mary on the way over about companies indicating
to their employees that they are exporters.
But I think one of the important things is indicating to their
suppliers that they are exporters and that alot of small
and medium sized businesses don't realize
that they are exporters.
We are actually doing something with Boeing to celebrate a
success with them.
We have talked about not only having Boeing present, but some
of their suppliers present as part of it as as well.
I think that's the other message getting out to people.
Ursula Burns: I need to make one more point.
Mr. Chairman: Sure.
Ursula Burns: On this plan where I talk about the ten jobs for Xerox
Corporation, more importantly, we use the local manufacturing,
we are using a local manufacturing plant operation to
build this plant, obviously.
So they are employing more people.
And they are using six suppliers from upstate New York.
So they are employing more people.
Exporting most of the stuff that's done we have actually
created a supply chain of jobs in upstate New York.
And this simple story, I mean we all have it, if we can actually
make these little simple stories local and add them up to a good
global story, it would be I think very useful
in moving us forward.
Mr. Chairman: Two great points.
Every time a triple 7 lands in Beijing, that's 22,000 suppliers
that have access to the Chinese market that they wouldn't
otherwise have. That's point one.
And we have to articulate that better.
And I think Ursula's point, you know, when you ask somebody,
white collar, workers often working for people like us, how
do you feel about the impact of globalization.
That can mean outsourcing or it can mean connecting job
security, to successful exporting
and that gets confused.
I think we have got -- Glen, did you have a point --
Speaker: Yeah I would like to speak to the work
that we are doing within the
industry, Jim, [inaudible] Secretary Lahood [inaudible].
Competitiveness of the industry, the globalization of the
industry and our participation in it is a message that cascades
down across our industry, yours, Scott's, and if you can get that
message into the constituent base of the entire industry,
including as Ursula says, it's supply chain, then you
understand you have to be competitive at the essence to
each be part of that conversation.
The President: Hello, everybody
Mr. Chairman: Welcome. Good to have you here.
The President: Everybody have a seat, have a seat.
Well, good morning, everybody.
And thank you for once again coming together to help us
figure out how we're going to sell a lot of stuff
all around the world.
I want to thank Secretary Locke and members of my
Cabinet and administration.
I want to thank the members of Congress who are here.
And I want to thank Jim and Ursula, the chair and vice
chairs of the President's Export Council, and all the other
members here today for your extraordinary work.
Now, everyone in this room is committed to promoting a strong
and growing economy -- one that's creating jobs, fostering
a thriving middle class, and extending opportunity for all
who are willing to work for it.
And as we meet here, there is an important debate I think most of
you are aware of on Capitol Hill that will determine, in part,
whether our economy moves forward or backward.
The bipartisan framework that we've forged on taxes will not
only protect working Americans from seeing a major tax increase
on January 1st; it will provide businesses incentives to invest,
grow and hire.
And every economist that I've talked to or that I've read over
the last couple of days acknowledges that this agreement
would boost economic growth in the coming years and has the
potential to create millions of jobs.
The average American family will start 2011 knowing that there
will be more money to pay the bills each month, more money to
pay for tuition, more money to raise their children.
But if this framework fails, the reverse is true.
Americans would see it in smaller paychecks that would
have the effect of fewer jobs.
So as we meet here today to talk about one important facet of our
economic strategy for the future, I urge members of
Congress to move forward on this essential priority.
Now, the top priority of my administration since I took
office has been to get the American people back on their
feet and back on the job in the aftermath of the most
devastating recession in our lifetime.
That's job one.
But as I said in greater detail on Monday, we've also got to ask
ourselves how do we position our economy to be strong, growing
and competitive in the long run.
One strategy that will help us do both -- to create good jobs
that pay well today and create new markets for jobs tomorrow --
is to increase our exports to the rest of the world.
That's why, in my State of the Union address, I set a goal for
America: We will double our exports for goods and services
over five years.
And I re-launched this council because, as business leaders and
labor leaders, as members of Congress and as members of my
administration, I value your advice in terms of how we best
achieve that goal.
What we all agree on is that we've got to rebuild our economy
on a new and stronger foundation for growth.
And part of that means getting back to doing what America has
always been known for doing -- what our workers and our
businesses have always done best -- and that's making great
products and selling them around the world.
The world wants products made in America.
We've got workers ready to make them.
And the fact is, exporting is good for our economy.
The more our companies export, the more they produce.
The more they produce, the more workers they hire.
Every $1 billion that we increase in exports supports
more than 5,000 jobs, and companies that export
often pay better wages.
So at a time when jobs are in short supply, growing our export
markets is an imperative.
And growing our exports today will create
the jobs of tomorrow.
Ninety-five percent of the world's customers and the
fastest-growing markets are beyond our borders.
If we want to find new growth streams for our economy, we've
got to compete aggressively for those customers -- because other
nations are competing aggressively.
And as long as I'm President of the United States, we are going
to fight for every job, every industry, every market,
everywhere -- and we intend to win.
That's why I set this goal.
We're on track to meet it.
Exports are up nearly 18 percent so far over last year.
Today, I'd like to offer an update on some of the steps
we've taken to get there and steps we're taking based on this
council's recommendations, to keep making progress.
Earlier this year, I launched the National Export Initiative
-- an effort to marshal the full resources of the federal
government behind America's businesses, large and small, in
order to best help them sell their goods, services and ideas
to the rest of the world.
One of the things I pledged to do as part of this initiative
was to move forward on new trade agreements with
some of our key partners.
And I promised to do it in a way that secures a level playing
field for our companies and a fair shake for our workers,
without compromising our most cherished values.
That's why I am so pleased that the United States and South
Korea reached agreement on a landmark trade deal last week.
We expect this deal's tariff reductions alone to boost annual
exports of American goods by up to $11 billion.
And all told, this agreement -- including the opening of the
Korean services market -- will support more
than 70,000 American jobs.
I hoped to finalize this agreement -- I had hoped to
finalize this agreement when I traveled to Korea last month,
but I didn't agree to it at that time for one simple reason:
It wasn't yet good enough for our workers or our economy.
As much as I believe that looking out for American workers
requires competing in the global marketplace, I also believe that
as we compete in the global marketplace, we've got to look
out for American workers.
So I said let's take the time to get this right.
And we did.
It is now a deal that is good for our workers, good for our
businesses, good for our farmers, good for our ranchers,
good for aerospace, good for electronics manufacturers.
In particular, American car and truck manufacturers will have
more access to Korea's markets.
And here at home, we'll encourage the development of
electric cars and green technologies and continue to
ensure a level playing field for our automakers.
It's also good for our friend and ally South Korea.
They will grow their economy, gain greater access to our
markets, and will also get American products that will be
more affordable for Korean households and businesses.
And that means more choices for them and more jobs for us.
And it's good for American leadership.
As I've insisted all along, it -- the deal that we've struck
includes strong protections for workers' rights and
environmental standards -- and as a consequence, I believe it's
a model for future trade agreements that I will pursue.
It's an agreement supported by members of Congress on both side
of the aisle, and Americans on all sides of the political
spectrum -- from the UAW to the Chamber of Commerce.
And I look forward to working with Congress and leaders in
both parties to approve it -- because if there's one thing we
should all agree on, it's creating jobs and opportunity
for the American people.
Another thing that we said we'd do is to go to bat as a stronger
advocate for our businesses abroad.
This is an effort that I pledged to lead personally.
And that's why, on the same trip where we were working to get the
Korea deal done, I visited India to highlight the role American
business played there and took the opportunity to sell our
exports to one of the fastest-growing
markets in the world.
While I was there, we reached several landmark deals -- from
Boeing jets and GE engines to medical and mining equipment --
deals that are worth nearly $10 billion in exports and will
support more than 50,000 American jobs.
I also believe that strong economic partnerships can create
prosperity at home and advance it around the world.
And that's why we focused on deepening our economic
cooperation with Russia on a range of fronts -- from
aerospace to agriculture, including restarting American
poultry exports earlier this year, which was an important
victory for many American farmers.
I believe that Russia belongs in the WTO and that we should
support all efforts to make that happen.
I think President Medvedev is doing important work trying to
reform and move Russia forward on a whole host of issues, and I
told him that the United States would be a partner
with him in that effort.
Welcoming Russia to the WTO would be good for them; it would
also be good for us and good for the global economy.
Finally, we've also been working to reform our export control
system with high-tech companies like some of yours in mind, so
that American firms that make products with national security
implications can stay competitive even as we better
protect our national security interests.
When this council met in September, some of you asked
that we make it easier for businesses to participate in
these reform efforts.
So today, I'm pleased to announce that we're publishing a
first set of guidelines for what products should be controlled
going forward, and the licensing policies that
will apply to them.
As an example, we've applied those policies to
one category of products.
In that one category, about three-quarters of products
previously subjected to stricter controls will be shifted to a
more flexible list, and many are expected to fall
off the list altogether.
And we want input from businesses, from Congress and
from our allies as we complete this reform.
Today, we're also unveiling a new export control reform web
page as part of the revamped
This is something that Secretary Locke mentioned
in our last meeting.
Typically, all businesses that export have to go through a maze
of different lists, different formats, from different
departments, to make sure they're not selling their
products somewhere or to someone that they shouldn't be.
As important as that is, the process is repetitive, it's
redundant, and particularly onerous for small businesses
without the means to navigate it all.
So we're changing that.
Effective today, businesses can, for the very first time, go to and download one consolidated list of entities
that have special export requirements.
So that's a lot of work that we've been doing to double our
exports, to open up new markets and level the playing field for
American workers and businesses -- all with the overarching
purpose of growing and strengthening
the American economy.
I'm very much looking forward to the discussion we're going to be
having as you guys continue your work.
I'm grateful for all of you for being here, because while those
of us around this table may not always agree on every issue,
what does bind us together is that we want to
see our businesses grow.
We want to see our workers get hired.
We want our people to succeed.
We want America to compete.
We want to stay on top in the 21st century.
And I'm confident we can do that with your help.
So thank you very much, everybody.
And I think you guys are going to strike this podium so I can
sit down and listen a little bit.
Thank you.
(Cross talk with the president)
Mr. Chairman:: Okay.
Just, if I could, Mr. President, first of all,
thanks again for coming. We are honored to have you here.
We were delighted to see it reflected in your comments about
progress over the last few months that some of the
recommendations that we made found its way.
I don't know whether --
The President: We are paying attention to it.
Mr. Chairman:: We are either getting out ahead of your parade or you
know, one or the other.
But nonetheless -- I just wanted to spend one minute before we
get into more interchange with everybody, just bring you up to
what we have done today.
Five letters of recommendation are headed your way.
One is sponsored by Bob Iger Disney intellectual property
rights, huge opportunity, very specific thoughts.
We discussed it, everybody's linked it.
Second, tax policy, including investment tax credit and our
detax credit where you got out ahead of us.
Although, we would like to see that obviously extended, so more
visibility for a longer period of time.
If you'll see -- the theme that [inaudible] presented was about
globably competitive other tax regimes around the word.
That's the theme.
You'll see that second letter, third letter.
We got into the services arena.
A huge percentage of our economy, 75, 80% of our economy,
as it relates to exports.
We need to build a database, we need to link into people that
put together numbers in your administration to give us the
base to move forward.
The fourth letter of recommendation,
a very simple one.
This is a group of business people.
So you would expect something like this.
We want to benchmark some other nations
that have export machines.
Exports are a great percentage of their economy.
Germany is the obvious example, industrialized nation, to the
same degree we are.
And the interesting thing about Germany is a lot of their export
machine are small in medium sized companies.
There's going to be some learning in there for us.
And that was, that was presented today by Scott and Jim.
And then finally, in support of the WTO, Russia, Ursula, Ursula
presented and will forward to you a letter basically
supporting it, and suggesting reasons why it's very important
to the overall effort to double exports.
So that's what we have been working on.
It's headed your way.
So we would be delighted to sort of weigh in.
I think -- the only thing I would just kick off of the
discussion, just you know the theme of international
engagement that is reflected in your comments, terrific.
I mean you see the progress on Korea, you see Russia
WTO. You see your personal advocacy state
department commerce, what they are doing.
We feel a C change, international engagement in many
different forms which I think is going to make a big difference.
And I think just the on the ground perspective of companies
around the table is the places like India, places like Korea.
Places like China, Japan, et cetera.
They all feel it, they all feel the difference in the way
we are approaching them.
So I think, anybody want to weigh in on that or anything or
would you just like to lead the discussion?
The President: Well, I don't need to lead it, I think you
guys are doing a great job.
I want to listen.
But I'll just make a couple of comments.
First, in response to the list that you just laid out.
IPR has obviously been our radar screen for a long time.
I think this is very timely, particularly because I've got a
state visit coming up with China in January.
I'll be honest with you.
One of the challenges we have had on this sometimes is that
something everybody is concerned about, but when we say, well,
will you help us surface these issues?
Will you essentially be a witness?
W. James McNerney Jr.: Witness protection program.
The President: Everybody gets a little nervous.
The President: But this is obviously a top priority and I
mentioned China, not because it's unique, but because
obviously the size of its market makes it a important partner in
trying to get better enforcement.
And we have actually seen them make gestures
towards improved enforcement.
But I'm looking forward to saying
the specific recommendations.
On tax policy, I have indicated my interest in dealing
with the current structure.
Is there a way for us to lower corporate tax rates?
Go to a territorial system?
Broaden the base.
The challenge on this.
And I just want to preview for you what I think is going to be
a tough discussion, is how do we do it in a
relatively revenue neutral way.
It doesn't have to be dollar for dollar, but it can be a two
trillion dollar proposition, which is couple
recommendations that we have seen when we have priced it out,
have just blown a hole through the budget.
In these difficult fiscal times, we have got to do it in a
way that means somebody is giving up somebody.
And so I just want to plant that thought in your head.
The services stuff is great.
WTO Russia, I already indicated we are pushing and we are going
to need help from this council and I think the business
community on one element of that and that's going to
to be Jackson Vanik.
Those of you who are aren't familiar, this is is carryover
from the Soviet union days.
It was designed to make sure that refused nics (phonetic),
Soviet jury were able to get out of the former Soviet union.
It's know lingered on for a very long time as basically used as a
cudule [phonetic]for whatever Russia policy
we are concerned about.
And the intentions are always good.
The question is this the best tool we have for dealing with
some of these issues and I'll be interested in hearing business'
views on that.
And then the last point I would just make, two last points and
then I'll shut up and I'll just listen.
On -- I very much like the idea of us examining what is Germany
doing because it's comparable.
They have got comparable economy.
And they don't have -- they are not competing
based on low wages.
So, you know I know Billy is shaking his head or nodding his
head because you know here you've got not only a high wage
workforce, a very unionized workforce.
Very collaborative workforce and yet they seem so be able to sell
the heck out of stuff.
And, you know the question is what are they doing, right that
we are got doing?
The size of the economy makes a difference.
We have such a huge domestic market that it's not realistic
that we are going to be you know 30 or 40% of our economy is
going to be export.
Nobody is expecting that.
But there are some lessons to be learned there.
And I've already asked my team to start looking
at some of these models.
I think this group can do a great job helping
us to learn some lessons.
Last point is on the Korea free trade agreement I think we are
going to get this thing passed.
But I tell you, even as hard as we worked on this, as good as it
is for American businesses, American workers, there's still
just a lot of suspicion about the trade deals.
And so, thinking about how we are better talk about trade,
market trade, that's goings to be a major challenge that I
think this group needs to engage in over the next
two to three months.
Not just in the lead up to this particular agreement, but other
agreements that may be coming down the pike. So...
Mr. Chairman: Terrific, I think there's a couple of people that
would like to weigh in on --
The President: Good.
Mr. Chairman: Bob, do you have some comments on Bob Iger, Disney.
Bob Iger: Well, the extent of the in terms of theft is tremendous.
There's a study done in 2009 that, that in 2007, about $250
billion of intellectual property product was stolen
around the world.
And it's a growing issue.
It's clearly getting in the way of growth.
But your point was a valid one Mr. President that unless we are
willing to be a witness we are really not going
to get much done.
We tried to hide under the umbrella protection of industry
organizations like the MPAA, but I found over the last few years
it can be less effective than the CO of a company whose
project has actually been stolen, sitting face-to-face
with someone on the other side and giving you the facts.
However that has been retribution, and there probably
will continue to be.
So it's a fine line that we walk.
There's no question about it.
I think your point is a good one though, we probably need to get
a little less conservative about our willingness to complain.
The President: Well, this is also -- obviously if we are -- I think
the first step is to give us the information.
And then the second step is are we you know as chaperones,
taking you in to have the conversation
with the other country.
I understand why companies wouldn't do it just on their
own, because there's a vulnerability there.
But if we are there to shine the spotlight on them along side
you, I think retribution is maybe more difficult, not -- it
doesn't eliminate the fear but it's more difficult.
That would be very helpful.
Mr. Chairman: We'll work hard on that one.
You know, Ursula, we spent about 20 minutes on this discussion on
how do you sell trade.
And Ursula had sort of did a nice job of summarizing that
discussion, just to bring you up to speed Mr. President, maybe
you can talk a little about some of the thought you had earlier.
Ursula Burns: One of the thing we found that Xerox Corporation is that
we do business in markets everywhere around the world and
about 60% of our revenues come from outside
of the United States.
Interestingly enough, about 40% of what we sell is produced
inside of the United States.
So obviously we are producing to sell externally
which is a good thing.
We have the largest footprint of employees in up state New York.
Not a low wage vibrant economy.
We made a decision a couple of years ago to site a plant much
against the advice of everybody, to seat this plant in Upstate
New York because we had a lot of a large employee base there and
thought we had a need to give them some hope and a future.
By the way the plant is doing extremely well, so well that we
are about ready to expand it and we announced this one Tuesday,
expand the plant and almost double its volume.
None of this volume, very little of this volume -- none of it is
in upstate New York.
Obviously nobody in upstate New York is buying the products that
we are selling.
More than half of it is of this output will be sold outside of
the United States.
So 100% of the reason for doing this plant is not local.
It is exported.
It grows jobs, about ten jobs inside of our company.
It may not sound like a big amount,
but in Rochester, New York ten jobs is a big deal.
We use local manufacturing resources, a local company to
build, to expand the plant.
They have used local suppliers to them to expand the plant.
So with this small growth in exports, all exports, we have
been able to increase employment in upstate New York.
So why this bad news?
If I said export in upstate New York or anywhere, the first
reaction is that we are exporting jobs,
that we are outsourcing jobs.
What we did with this plan we actually held a fairly large
news conference for a relatively small event.
The reason for the news conference was to educate not
only my employees but the local community, the local governance
structure -- the mayor, the governor.
We had everybody, congressmen, senators, anybody we could get
to this event in the cold of winter, snow on the ground.
To explain to them that this little export based expansion is
about job creation.
And, Jim was talking about it before you came in.
Communication is so important here.
We are not very precise or concise or simple
in our language.
When we were explaining to people why exports are a good
thing, we said it earlier, 95% of the population is, you said
it in your words, outside of the United States.
It's -- the math is really simple.
I think if we can get down to the points where we use fact in
local communities and expand those and communicate out with
real data and real facts, I think that we will be able to
break it down little by little in be really precise in your
words and clear about the fact that export equals jobs, exports
don't necessarily equal outsourcing, actually almost
surely don't necessarily equal outsourcing.
So I think it's an example of what -- the kind of work,
missionary work that companies have to do to explain the
goodness of exports and how it can help our economy.
The President: Good.
Mr. Chairman: Mary you had a comment about your facility in Iowa.
Speaker: Thank you.
Mr. Chairman: More on the same point.
Speaker: Yes, and a great example from Xerox, fantastic.
Mr. President, I just want to say thank you for taking time to
listen to us.
We know your schedule is unbelievably hectic.
The President: No. No.
Speaker: Thank you very much.
The President: I was thinking about taking the afternoon off.
Speaker: I'll take it too.
There are just so many misconceptions,
you said it right.
So many suspicions about what is happening with trade, export,
what does that mean, does it mean we are losing jobs?
And I think the most important thing to Ursula's point is to
really give the facts.
And for instance, the Congress department has been tracking
with our free trade partners.
Where were we in 2000?
We were at a deficit.
Where were we in 2009 with those free trade partners?
We are surplus.
And in our company we do about 30% export.
That's doubled in the last ten years.
And our employees know that 500 of our U.S.
workers have jobs because we have the opportunity
to export goods.
In fact, we take raw steel and do the whole process and have
finished goods at the end.
And our folks know where those products are going.
They know if they are going to Australia or they are going to
China or they are going to the Congo or to Brazil.
And they are very interesting.
They want to make sure they have a quality product that ends up
in the hands of a customer in western Australia [inaudible]
And so for us we have just really tried to communicate
a lot to our employees.
Again, we are privately held where most of our employees are
in one location in the U.S.
So it's relatively easy.
But, I think the comment about also making sure we are talking
the same talk to all stakeholders including our
vendors is very important.
And we have been on the lean journey for over 12 years with
continuous improvement, always looking for ways to take out
waste out of every process.
By the way, I'm delighted what I hear from various entities in
your administration about doing that same thing, whether it's XM
or commerce, wherever it is going on is fantastic.
You have a little mantra that says in God we trust,
all others bring data.
And it's really, how do you get to the reality.
Ursula Burns: We have the same thing hanging on our door.
Speaker: How do you get to the reality of what the reality is?
And then make improvements.
And so we need to share the right data and the right facts.
And I guess I urge all of us around this table from
administration, business, labor that we make sure we are sort of
talking off the same fact book.
And then tell the story, and to Xerox points, the local
stories of how it makes a difference to our people.
I know we just had a employer year-end meeting and a piece of
it was we did a myth the buster take-off from a Discovery
Channel and took some myths and one of them was meaning global
means off shore and jobs.
And we busted that myth.
Because we had facts. And--
Mr. Chairman: This a all about --
Speaker: We are responsible for this.
Mr. Chairman: This is about mayors, governors and people who -- so I
think one of the things this council is looking is the and
may recommend is how do we link into the community of governors
and mayors in some efficient way that be
doesn't slow things down.
But, the most articulate voices on exports are often mayors and
governors, because they get it.
They are close enough to the action to understand
this and that.
And so, we are going to think about is there some way to get a
linkage there and so that the perspectives that we are
developing here can find a voice, not only in our
companies, but in the local communities.
The President: What is also important, I completely agree
with you, but Ursula's point about using events where there's
an expansion, there's a ribbon cutting, there's you know 50
workers are being hired.
Because what happens is is that when the plant closes, everybody
knows about it.
And when the plant opens, not so much.
Or if there's just incremental additions to a plant that's
already operating, not so much.
And making those linkages so that at least people are seeing
both sides of the equation.
That's going to be important.
Mr. Chairman: Austan, did you want to make a comment.
Austan Goolsbee: Sure, my comment would be more directed
at the group that the president hears too much from us already.
I was just going to [laughter] it's on this subject -- I think
it's not really selling it.
It's explaining it, because I think that in this case the
facts are most of time on your side.
And I guess would just say three things.
One, we got to do a better job in the government in the making
of the policy that will make your job easier.
So the vice-president joke with Ambassador Kirk that if he
could sign a trade agreement with south Korea that the
union's like, the industry likes, around get through
Congress, going to nominate him for the Nobel prize.
[laughter] [inaudible]
Well, the deadline passed.
But, we, in South Korea agreement, to address issues of
non-tarriff barriers is a major accomplishment for that
agreement, because there are things that have contributed in
my view to the general public distrust of the system.
Some of them have to do with okay will you sign these
agreements, but you know it feels like we sign agreements
and we open up our markets, but really they found some other way
other than tarriff to keep our stuff out.
If we do a better job on that, of enforcing the rules of what
you guys raised in intellectual property and these things, I
think those make your job in the private sector
of the explaining easier.
My second point is there's not a silver lining to being -- to
have the job market in the dumps, but if there were a
silver lining on this is that expansion is news worthy.
Now to the locals, to the mayors and the governors, whatever.
If you're opening a plant, if you're expanding ten people,
this is a thing which in a boom nobody pay attention.
In a moment like this, if you say we are adding 50 workers,
people are listening and you have the opportunity
to make a point.
And then my third point would be, what are the points
that one could make?
Well, things that I'm struck with when we hear from you both
in these letters or we talk to business people.
Not just what significant share of growth is now getting tied to
exports, you know as Mary said.
But also that big companies are tied with small companies
in their exports.
And that the you know whether it's -- if United Airlines is
getting roots overseas or somebody is opening hotels
somewhere else is feeding back to back off his headquarter's
functions jobs in the U.S.
If you're expanding here in a way that you could make just a
simple point, look, why are we adding ten jobs, because there's
tons of demands in Asia and so we need more people here to back
that up, you know, UPS.
Really in most major businesses, they have, that's helpful for
you, but that's helpful for us too.
Getting out of the zero sum, this is a war.
And the only way to win the war is to make the other guys
surrender is important for us on the policy side.
Mr. Chairman: Good. Yeah Gene.
Gene Hale: Mr. President, good morning.
One of the things that we have done in these roundtable
sections done around country for [inaudible] we have invited the
mayors [inaudible] to participate.
The reason why we want them involved is so they can help
tell the story.
What we are trying to do is they are engaged in policing the
efforts to have a regional plan.
And I think that's what needed here.
Regional plans [inaudible] to me, listening to the]
[inaudible] story.
When you think about manufacturessers and the world
customer, outside of the United States apparently someone is not
telling small businesses this is the way you could go.
The information is there somewhere, I believe.
But, how do we get that information?
So I think we could -- the emphasis has to be more on the
outreach to those companies that might want to export, and also
those companies that are exporting to one country to
understands the nuances about the mark new trade agreement
that you just signed.
But more importantly, you need a regional transportation plan --
you need a regional plan that would
also include infrastructure.
Because as an example, trying to get services to the Port of Long
Beach, for example, the Desmond Bridge is 99 years old.
Well, the truckers, small SME's who drive the trucks across the
bridge, they aren't concerned that the bridge might collapse
and they might lose their lives.
So it's a bigger story that we have to tell other
than just the export side.
The infrastructure has to be included in this.
So the local officials along with the SME's
has to tell the story.
Mr. Chairman: Jim?
Speaker: I was thinking about what is often said -- this is a war the
only way to win is to ask the other person to
surrender or something.
It's not a war but it is very competitive.
And I think that's something that you know, the letter coming
to Mr. president on really studying what the other
countries, Germany as a perfect example are doing is really
important, so that we actually think about the competition of
thats taking place.
We do so in a very quick timeframe.
We do so in a very transparent way, so that the people, not
just the government, not just the business leaders, but
actually people understand that it's competitive building on
the fact that 95% of the customer are outside of the
United States, and everybody has you know their educational level
raised on this.
Because if changes are needed, they need to be supported by the
population, not just by you, not just by us.
So we think that this would be very helpful to the
implementation of things.
Mr. President: Well, I just want to interject here, I mean
Jim is making an important point.
For the last 30 years, what you've had is a debate that's
framed in black and white.
And that is either trade is the this unadultered good, and any
trade deal was good and open markets are always good, and
anybody who engages in protectionism, they are going to
be heard in the longrun, so that's one school of thought.
And then there's the other school of thought which is
trade is always bad.
Why manufacturing is declining, why we have lost all of our jobs
and why we are no longer, no longer at the top
of the world export market.
And I think that everybody around this table understands
that there are elements of truth in both stories.
We just talked about how important exports
are to our businesses.
Jim always makes the points that when Boeing sells a plane there
are a lot of small businesses and medium size businesses that
are going into that plane that's being sold.
That's supporting a lot of jobs.
Our service industries, like UPS, our logistics, our
financial sector, et cetera, we are, that's supporting a whole
bunch of back office stuff.
So we know that story.
But we also have to acknowledge that we opened up our markets to
a lot of countries that at the time we opened them were way
behind us and we were pretty confident.
Well, if they are just selling toys or selling T shirts.
That's note going to be a big deal because we are still folks
making cars, steel, et cetera, et cetera.
And over the course of 20 to 30 years, that asymmetry between
what we are were selling there versus what they were selling
here exploded because of technology, globalization.
They upped their game.
They moved up the value stream.
And so now the reason this kind of sort of assessment,
benchmarking, is so important is, I think it gives us an
accurate story that says trade can be good, should be good,
there's no reason why we can't compete and we don't have a
choice but to compete.
On the other hand, we've got to be tough bargainers.
We've got to make sure that we're prying open other markets.
The time has ended when we're treating China like Mali when it
comes to trade arrangements.
There's got to be a smart marketing plan.
We've got to put resources behind it.
What are countries like Germany, that are doing high-end stuff,
what are they doing.
So what it will do -- I guess the point I'm making is the
American people won't buy it if you embrace
one or the other story.
And this is where data comes in because then we can tell an
honest story about, yep, there have been some times where jobs
have been lost because our markets were open and the other
side wasn't. You can start reversing that.
And in some sectors we run a surplus and we do real well.
We sell a lot of planes and nobody else does.
And our intellectual property, if it's protected, nobody does a
better job than Disney or some of our other companies in terms
of products that people around the world want.
And then, but we've got to be able to make them that stuff and
present it to the American people accurately as opposed to
trying to spin them on ignoring the facts of a plant in their
community that closed and may have moved somewhere else.
Speaker: One piece of asymmetry is I think on balance
qualitatively, the people in the many other countries know more
about the United States and our market than our people know
about their markets.
The President: Hum-hum, right.
Speaker: It comes from encouraging education and we
have the best universities here and so big numbers of students
come here, they learn about it.
So I just think that --
The President: I think that's a real good point.
Chairman: Bill, before giving rabishad on services, Bill, did
you have a comment on this?
Bill: Yes, I did.
Mr. President, you talked about your own experience, a couple of
years ago I went over to Germany and met with the head of the
union there that represents most of the
manufacturing industry over there.
And, yeah, they do do things differently.
One thing that they pointed out that they identified people,
young kids, 7th, 8th grade, who's going to go into that
manufacturing industry and they're started training at that
point, 7th, 8th grade, four years of high school.
So, when they come out to go to work in the manufacturing
industry, they have six years of schooling behind them so they
are productive from day one.
We've gotten away from that in this country.
I remember 40 years ago when I went to high school,
maybe 30 some --
The President: It was 40, Bill
Bill: -- but we had a lot of vocational high schools around
the south side of Chicago.
There were seven, eight, ten vocational high schools, and you
don't see them around any more.
People aren't trying to go into manufacturing.
And over there in Europe manufacturing, people that do
the manufacturing, they're high tier, they're a good job.
And we should get that here.
We have good jobs in manufacturing with the big
companies represented here at this table, but the small
business, too many people think if they're going to go to work
in a small business in manufacturing they're going to
make the minimum wage.
And it's not necessarily true.
But we've got to promote the manufacturing industry as
somewhere where you can go out and live that American dream.
You can raise your family and send your kids to school, you
can own a house.
And we've got to get more people trained, certified and want to
take these manufacturing jobs.
Chairman: I think all of us have learned over the last
decade Mr. President, that labor cost is a function
both of wage and productivity.
That's the German lesson.
You multiply the wage rate times productivity to get,
to get unit labor cost.
And I think we've -- a lot of us have outsourced a lot.
And I think we've learned some lessons, and I think we all are
drawing the lines a somewhat different place.
We're all going to still be global as hell, but I think,
this is what I think, Jim, your initiatives is going to, one of
the things it's going to tell us.
Rob, did you want to weigh in on services?
Do you have a response to that --
Rob: I did. Mr. President, this morning I had an example that
was similar to the first list about the excitement of U.S.
workers that aren't comfortable relative to our
expansion outside of the United States, it's palpable.
And it's -- I just had a different thought: When you came
in, I actually wrote it down because I was paying attention
to what you said, even before you -- as you were transitioning
in you said what we're going to talk about selling a lot of
stuff around the world, and that's -- that resonates.
And it made me think that, you know, in the past, probably well
meaning and at a different time, we all talked
about "buy America".
" And that was very much a national sort of a campaign.
As time went on, I think "buy America" may be unwittingly
became a narrow concept in terms of our economic opportunities so
it is about not only buy but sell America.
And I wonder if we couldn't view this -- of course, we've all
talked about the lack of understanding in the general
public, if we couldn't talk about something around the lines
of like a public service announcement through the Ad
Council to talk about it is about buying and selling
American and it's about growth.
And that we can tie that to our own experiences
with our companies.
It's been done well in the past.
I mean, maybe it's different kinds of examples, but whether
it's, you know, Smokey the Bear, you know, talking about things
or littering or using seat belts that people didn't want to use
or whatever, whatever, with a little bit of understanding all
of a sudden now we just take that for granted.
So we're part of the global economy and I think, you know,
maybe thinking about that there is some good work that's been
done there in the past, maybe we can lever it again.
The President: All right, I very much appreciate that.
I just got the hook [laughter] so,
but these are all terrific ideas.
Look, I will have a, probably my best bully pulpit, at the State
of the Union in about a month, month and a half.
And my main focus -- and I previewed this in a speech in
North Carolina this week that some of you may have seen -- is
going to be exactly this topic: What does it take
to make us competitive?
We're not going to draw a wall around America.
We're out there leading, that's what we've always done.
We don't shy away from competition;
we beat the competition.
But we don't do it just by beatin' our chests.
We do it by hard work and a good strategy.
And so this is going to be a critical body for me to be able
to work with to develop that strategy and the data that comes
out of this body, the recommendations that come out of
this body are going to be very important.
As you have seen we take them seriously.
We've already started implementing some of the
recommendations you've made and you haven't even been around
that long we're already taking all your good ideas.
So because he finally earned his paycheck, I'm going
to let Ron Kirk say one thing before I leave.
He's been sitting around loafing for two years.
Finally got something done.
Ambassador Kirk: First of all, I enjoyed every minute of it.
I just wanted to say the comments of the group, your
choice of a mayor as USTR obviously was inspired.
So that's one thing.
The second thing, look, one thing I want to say we
are reaching out to mayors and governors and the league of
cities, teeing them up because we're going to need them.
Mayors are the ones that work with the chambers and the
business on job creation.
But, I mean, you've heard the report of the group, there is a
lot of synergy between what the business leaders have asked us
to do and what we have been.
One thing we haven't, and we haven't been applauded for so
much is that we were able to gain the space and the
credibility to get labor to listen to us because of what
we've been doing the last 18 months, working with Hilda,
addressing reinviting labor to the table, and a lot of people
beat us up and said we gave labor a beat-on, and I told them
no, but labor has to have a voice.
But what we've done on that, what we did with enforcement,
what we've gone taking on China, we're going to continue to do
because the American public, when we talk about simplifying,
the American public isn't at all attuned to global trade, but the
American public's not crazy.
They understand basic fairness and feel like we're buying from
everybody else, they're closing their markets, they want to see
all of these things.
They want to hear about the jobs but they also want to know we'll
stand up and take on China whether it's on tires or we take
them on on IPR.
And so, I think, one, we've got a good story to tell because of
your leadership and because of the fact you about reject that
false premise between the old way we used to look at trade,
and we'll continue to do that.
The President: Good. All right.
Jim, Ursula, thanks for your leadership.
Mr. Chairman: Thank you.
The President: Thank you, everybody.
If I don't see you, Happy Holidays!
Mr. Chairman: Okay. What's that?
Do you want to make a comment?
Ivan: Let me just talk about the tax.
Mr. Chairman: Sure.
Do you want to do something else?
Mr. Chairman: No, no.
Yeah, got that.
A quick comment before we --
Ivan: Yeah, if you don't mind, I
wanted to make sure I had a chance to --
Speaker: Ivan, can you speak up a little?
Ivan: Yeah, I will.
I wanted to make sure we had a chance to address the tax issues
while Larry and Austen are here.
So if you could keep a secret, which I assume you can, what
you'll see over the next several weeks is the business community
indicating that the economy seems to have
a little life to it.
This is one of those indications where almost many companies are
saying they're beginning to see orders, they're beginning to see
a little bit of activity.
And so the question becomes how do you sustain it.
The stuff that has been done, free trade, the tax deal, all
the other initiatives that you put forward, are very solid.
So just let me offer from the BRT's perspective
just a comment on this.
Take something like bonus depreciation or any of these
kinds of strategies, they're helping to stimulate
a little activity.
What's most important is to set these rules in place for three
to five years.
Because what you'll find is all these small businesses will
react to what the large companies do in one year, but if
we say we're going to have a program that spends capital over
three or four years it will have a ripple effect across the
economy that's really extraordinary.
So to me, the elements of what the President has
proposed is terrific.
Where you can create the certainty over time you're going
to get an even more powerful, I think, multiplier then.
The other thing I would say about, the question I was going
to ask the President is his comment
about revenue neutrality.
So this is where you create, not intentionally, this is where you
have a discussion about uncertainty, because on one hand
we do these things to create and the next thing we do is we talk
about what the neutrality is.
So just a thought.
For every incremental dollar of capital, incremental above what
people would have spent, jobs get created.
So if we could get comfortable at the business community, the
Administration, the Congress, is showing the American people that
we're taking a risk on the future of the country and we're
putting capital to work, jobs will get created
without any question.
Just an example on the ones you were just talking about, we're
opening up a data center in a location in upstate New York
creating 300 jobs, right?
Not a single transaction in that data center serves the U.S.
They serve transactions in Latin America and in Asia.
So we have people walking around that plant who think they're
serving the Chinese or the Taiwanese or the Argentineans.
And so I know everybody worries about the public doesn't
understand, they get it.
If you put a plant, if you put work in their community, their
globalists in about two seconds, I guarantee it.
So the issue, it's not hard, we just do the work.
So my only comment on this as we go forward I think you guys have
done great recently.
I think we're moving in the right direction.
Let's keep taking the uncertainty out of this
discussion so these planning cycles have three, five year
horizons to them.
Now we have to figure out how to pay for it, I got it.
But incremental capital absolutely will
create jobs, no question.
Ask any business guy that and he'll tell you that.
Mr. Chairman: Larry, maybe in your final comments you could
respond to that if you'd like.
But I think that does reflect with respect to the letter.
Larry: Yep, thank you.
Mr. Chairman: A couple of Administrative comments here.
Next meeting, Friday, March 11th, here.
I think most everybody knows it.
We're planning a coffee the afternoon before with Chairman
Bernanke and we're hopeful of a breakfast with Secretary Clinton
in the morning.
I think we have to get a little closer to lock that in.
Second official meeting in 2011, November 16th.
And depending on the schedule, we may try to fit in a short
meeting on Capitol Hill with leadership during the summer.
That's getting out there; it's a little vague.
In the meantime, on December 21st, a great iconic American
exporter, Harley Davidson, Bobby -- where's Bobby -- Bobby,
you're going to be hosting a, hosting a tour to try
to highlight them.
They're a real export machine.
And it's a chance to see.
And I think everybody will get a communication.
If you can show up, great.
Gene's next, SMU Roundtable in Iowa beginning in February, I
think you just mentioned that.
Marianne Andringa is going to be leading that
one in her home state.
Nothing happens in Iowa, I get it, nothing happens in Iowa
without -- you know, your football team faded.
But the rest of you --
Audience: OHHHHH!
Marianne Adringa: That's personal.
Mr. Chairman: You can tell the difference between Chicago and
Iowa right there.
Hey, we typically take, during our cycle, a trade
mission trip that you're invited to be on.
We're thinking it through.
We're thinking about Brazil.
Haven't got -- haven't firmed it up yet.
But if there's any comments either on Brazil or on some
other place that is not as supported by members of the
staff, let me know.
But I think we're forming up behind a Brazil trip.
Speaker: Here-here on Brazil.
Mr. Chairman: What's that?
Speaker: Here-here on Brazil.
Mr. Chairman: I think I've gotten a lot of encouragement on Brazil
so I think that's what we're going to do.
And that, we haven't decided on a date, but it could be late
next year or early 2012 so is what we're working on.
So, hey, listen, before adjourning, I think Larry --
right -- you know, this is Larry's last meeting.
And I think, I, for one, I think I represent everybody, would
like to acknowledge his contribution not only to the
Administration but to the country during an
extraordinarily difficult time.
Your steady hand, Larry, made a huge difference.
We all get it.
We all know it.
And we're going to miss 'ya.
I know we can find you at the Verst House up
in Cambridge holding forth --
Larry: It doesn't exist any more.
Speaker: It went broke!
Mr. Chairman: It went broke?
Speaker: Since Larry was not here.
Mr. Chairman: In any case, Larry, I just want to on
behalf of the faculty, I would just like to thank you for your
leadership and your contribution.
And we realize it is at least your third turn in D. C.
with this kind of selfless service and, you know, we all
wish we could be as good.
But thank you.
Any comments, Larry?
Larry: Let me just make three comments, if I could, of just
sort of things I'm struck by in the discussion
and to answer Ivan's question.
First, I think we always need to remember that trade is not just
the export of widgets and other manufacturing goods and that
will increasingly be the case.
As you know, about 30% of Harvard's sales of higher
education services to students go to foreigners.
I look around and I see others here and, you know, it's going
to take longer to outsource Harvard than it is to outsource
most other things.
I'm wondering, listening to the conversation, whether we should
start talking about the internationalizing of the
American economy because it has got the word "American economy"
in it and it smakes less of outsourcing.
There is a huge set of opportunities, as best I can
tell you're infinitely more organized to promote the sale of
manufactured goods abroad, infinitely more organized to
stand up for investment rights here than we are to attract
patients to our hospitals, students to our universities,
tourists to our resorts.
It's something I know Dick Friedman has pushed on, it's
something that I've tried to push on.
But we have not, as important a legislation as Senator Reid
legislated in the travel area, but I think it is the single
largest opportunity in export promotion and that commercial
diplomacy for people to come here and do things
is a vast opportunity.
It implicates a lot of opportunities.
It implicates the visa system, for example.
But if you ask me, as I leave, what the biggest gap in our
potential competitiveness agenda is, it is in that area.
So I would just hope, and I know this group has been totally on
board, but I would just hope that people both in and out of
government would put their pedal and sort of get on it.
Second observation: Taxes.
Nothing I say is going to usually surprise you.
I usually think of myself as young but I was kind of active
as an academic expert pushing things during the 1986 tax
reform so I guess I have a pretty long memory
on this stuff.
The case for investments incentives is compelling.
Equipment investments in particular is heightened
correlated with economic growth.
That's why the thing I worked, personally worked hardest on in
the latest tax deal was the expensing provisions which, by
the way, have the virtue that while they put money into the
economy in 2011, they reduce the deficit in 2015.
But -- and there is obviously issues with competitiveness as
we think about, as we think about the tax system.
But hear me, hear me if you want to succeed: Corporate profit,
S and P corporate profits are 60% higher this year than they
were two years ago, 60%.
The country has a major deficit problem over
the next five years.
You will find massive enthusiasm in Washington and you will find
yourselves pushing on an open door if the business community
as a collective is able to formulate a revenue neutral
theory of how the tax system's competitiveness can be improved.
If the business community formulates a wish list plus a
bunch of claims about how economic growth will generate
the extra revenue but do not score, that is not a strategy
that, in my judgment, is very likely to get
to the end successfully.
And so the revenue neutrality here really is the coin, really
is the coin of the realm and I would just urge that those of
you who I think rightly feel that there are enormous
potential benefits from competitiveness, pay close
attention to the question of the revenue impact, of the proposal
and, you know, mobilize the necessary kind of advocacy
that's fully analytic around that.
And I think with that, there is a real chance of succeeding.
Without that, I would be very surprised if at the end of the
day the effort to bring about reform was successful unless
there was real attention to the revenue question.
Third, last comment I'll make is, what is going to define -- a
lot of you have heard me say this before -- what is going to
define this quarter century in economic history, in all
likelihood, is going to be the major change in the balance and
economic weight from the rich world, to traditionally rich
world, to the emerging world.
And we just need to orient all of our strategies.
I had a chance to speak to the new congressmen who are in our
orientation program at our -- and I was asked to talk about
trade, and I said to them, if you can remember only one thing
of what I say, remember this: The United States
has a largely open market.
Most other emerging markets don't and substantially don't.
When we enter into a trade agreement, you cannot fall very
far from the basement which is where we are.
And, therefore, the benefits are highly asymmetric because even
if you judge these things on purely mercantilist grounds,
their trade barriers are falling much, much more
than our trade barriers.
If we could get that point out, that these agreements are as
asymmetric as they are and that would be much more true as we
start doing business with the emerging markets, I think we can
make a substantial contribution to the progress we're making.
To put it differently, there is not a law right now that says
you're not allowed to move to India, or you're not allowed to
move to China or you're not allowed to move to Korea,
there's not a law like that right now.
A trade agreement isn't making it easier to do that.
What a trade agreement is doing is making it easier to stay here
and produce for there.
So we need to find a way to change the debate about trade to
whether agreements are good deals for America, not a broad
referendum on whether globalization is a happy thing
or not because it's not going to stop whether we do or do not
have trade agreements.
What is going to be decided is whether we're going to be a
serious participant or whether we're going to seed the ground
to other countries.
Those are my final three thoughts.
Mr. Chairman: Weighty comments and we will take them seriously.
Appreciate that very much.
Larry: Thank you for your generous words.
Mr. Chairman: Yeah, thank you.
Secretary Locke, any final comments?
Secretary Gary Locke: No, sir.
I'm looking forward to the next meeting.
Mr. Chairman: Declare the meeting adjourned!