ACTING U/S HYATT KENTUCKY INTERNATIONAL TRADE SUMMIT 2016

ACTING U/S HYATT

KENTUCKY INTERNATIONAL TRADE SUMMIT 2016—LOUISVILLE, KY

9/13/16—THIRTY MINUTES

[INTRODUCTION]

GOOD MORNING.

IT IS A PRIVILEGE TO BE HERE WITH ALL OF YOU TO PARTICIPATE IN THIS YEAR’S KENTUCKY INTERNATIONAL TRADE SUMMIT.

FIRST AND FOREMOST, TO THE FOREIGN REPRESENTATIVE OFFICERS FROM ROUGHLY 20 COUNTRIES WHO ARE IN ATTENDANCE, LET ME EXTEND TO ALL OF YOU A WARM WELCOME.

LET ME ALSO TAKE A MOMENT TO THANK THE BUSINESS PARTNERS WHO HAVE HELPED PUT TOGETHER THIS FANTASTIC EVENT TODAY.

ADDITIONALLY, I WANT TO THANK EDWIN, BOTH FOR THE INVITATION AND FOR THE INCREDIBLE WORK OF WORLD TRADE CENTER KENTUCKY.

FINALLY, I’D LIKE TO TAKE A MOMENT TO RECOGNIZE THE STRONG TRADE PARTNERSHIP WE ENJOY WITH MAYOR FISHER AND HIS ECONOMIC DEVELOPMENT TEAM,

AS WELL AS THE STATE CABINET FOR ECONOMIC DEVELOPMENT,

AND THE KENTUCKY DISTRICT EXPORT COUNCIL.

WE HAVE SEEN THE STRENGTH OF OUR PARTNERSHIP IN BOTH THE LOUISVILLE-LEXINGTON BEAM PLAN AND IN THE KENTUCKY EXPORT INITIATIVE.

AS THE HEAD OF THE LEADING FEDERAL AGENCY FOR EXPORT AND FOREIGN DIRECT INVESTMENT PROMOTION, I CAN TELL YOU THAT THE INTERNATIONAL TRADE ADMINISTRATION RELIES ON STATE AND LOCAL STAKEHOLDERS TO CARRY OUT THE NATION’S TRADE AND INVESTMENT AGENDA.

SO ON BEHALF OF ITA, LET ME SINCERELY THANK YOU FOR YOUR INCREDIBLE SUPPORT.

[FUTURE SHOCK]

AS I THOUGHT ABOUT THIS MORNING’S TOPIC, “THE CHANGING FACE OF GLOBAL COMMERCE,” I REFLECTED ON THE CHANGES I HAVE EXPERIENCED DURING MY WORKING CAREER.

I ENTERED THE WORKFORCE IN THE EARLY 1980S. NOW, I ASK THAT YOU NOT USE THIS INFORMATION TO DETERMINE MY AGE.

(PAUSE)

SO I THOUGHT IT WOULD BE INTERESTING TO SEE HOW THE GLOBAL MARKETPLACE HAS CHANGED BETWEEN THE TIME I STARTED MY CAREER AS A BUSINESS PROFESSIONAL AND NOW.

CONSIDER THESE POINTS.

IN 1980, NEARLY 63% OF GLOBAL GDP WAS CONCENTRATED IN NORTH AMERICA AND EUROPE.

BY 2015, THAT FIGURE WOULD FALL TO 48%;

ASIA WOULD SEE ITS SHARE OF GLOBAL GDP RISE FROM 20% TO 33% DURING THAT PERIOD.

IN 1980, CHINA WAS THE 12^TH LARGEST ECONOMY IN THE WORLD.

TODAY, AS WE ALL KNOW, IT IS THE 2^ND LARGEST ECONOMY IN THE WORLD.

IN 1980, GLOBAL UPPER MIDDLE INCOME GDP WAS VALUED AT A LITTLE OVER $1.5 TRILLION.

TODAY, IT IS JUST UNDER $20 TRILLION.

BETWEEN 1980 AND 2005, 58 COUNTRIES OPENED STOCK EXCHANGES.

WITHIN THE ENTIRE 180-YEAR PERIOD BETWEEN 1800 AND 1980, THE NUMBER OF COUNTRIES THAT OPENED STOCK EXCHANGES WAS 59.

AND IN 1980 TRADE AS A SHARE OF GLOBAL GDP WAS 39%.

TODAY, IT IS 58%.

(PAUSE)

AND THIS STUNNING AMOUNT OF CHANGE REMINDS ME OF A WELL-KNOWN THEORY ADVANCED BY AN AUTHOR WHO JUST PASSED AWAY TWO MONTHS AGO.

HIS NAME WAS ALVIN TOFFLER AND HIS THEORY WAS KNOWN AS FUTURE SHOCK.

THE IDEA WAS THAT LARGE SOCIETAL CHANGES OCCUR WITH SUCH REMARKABLE SPEED AND WITH SUCH REMARKABLE FORCE THAT IT CAN COMPLETELY OVERWHELM PEOPLE, TO THE POINT OF SHOCK.

TO QUOTE TOFFLER, “CHANGE IS AVALANCHING DOWN UPON OUR HEADS AND MOST PEOPLE ARE UTTERLY UNPREPARED TO COPE WITH IT.”

FOR A FAIR AMOUNT OF PEOPLE, TRADE AND CROSS-BORDER INVESTMENT REPRESENTS THIS EXACT TYPE OF OVERWHELMING CHANGE;

SPECIFICALLY AMONG CRITICS WHO CLAIM THAT TRADE AND CROSS-BORDER INVESTMENT HAS CHANGED OUR COUNTRY’S STANDING IN THE GLOBAL ECONOMY TO THE ABSOLUTE DETRIMENT OF OUR WORKERS AND OUR BUSINESSES.

(PAUSE)

NOW I UNDERSTAND THAT MANY AMERICANS FEEL LEFT BEHIND IN TODAY’S RAPIDLY CHANGING GLOBAL ECONOMY.

AND THOSE FEELING S ARE BASED ON THE VERY REAL EXPERIENCES AND THE VERY REAL CHALLENGES THAT WE ARE SEEING THROUGHOUT THE COUNTRY.

BUT THE REALITY IS THAT TRADE HAS NOT BEEN THE DRIVING FORCE THAT IS CREATING THESE ANIXIETIES.

AND TO THINK THAT TRADE HAS BEEN THE DRIVING FORCE OVERLOOKS A MUCH MORE COMPLEX, ACCURATE STORY.

THE FORCES CAUSING THIS ANXIETY ARE THE DRAMATIC SHIFTS IN GLOBAL COMMERCE:

SHIFTS IN GLOBAL DEMAND;

SHIFTS IN HOW GOODS ARE PRODUCED;

AND THE SHIFT TOWARDS A GLOBAL DIGITAL ECONOMY THAT IS INCREASINGLY DEFINED CONNECTIVITY.

AND THESE FORCES OF CHANGE WILL CONTINUE TO RESHAPE OUR WORLD WHETHER WE EMBRACE THEM OR RESIST THEM.

SO I WOULD ARGUE THAT TRADE HAS NOT DRIVEN THE DRAMATIC CHANGES IN GLOBAL COMMERCE.

IN FACT, TRADE WHEN DONE PROPERLY IS THE TOOL THAT ALLOWS OUR WORKERS AND BUSINESSES TO NAVIGATE, ADAPT, AND SHAPE THESE VERY FORCES OF CHANGE.

SO I WOULD LIKE TO USE MY REMARKS TO DISCUSS THESE THREE FORCES IN GLOBAL COMMERCE,

AND PROVIDE MY VIEW ON HOW TRADE AND CROSS-BORDER INVESTMENT ALLOWS THE UNITED STATES TO COMPETE, BENEFIT, AND LEAD IN THE WORLD.

[SHIFT IN GLOBAL DEMAND]

THE FIRST FORCE OF CHANGE I REFERENCED WAS THE DRAMATIC SHIFT IN GLOBAL DEMAND.

FROM 2009 TO 2030,

THE SHARE OF GLOBAL MIDDLE CLASS CONSUMERS BETWEEN NORTH AMERICA AND EUROPE WILL FALL FROM 54% TO 21%;

THE NUMBER OF MIDDLE CLASS CONSUMERS WILL MORE THAN DOUBLE IN THE MIDDLE EAST AND NORTH AFRICA; AND MORE THAN TRIPLE IN SUB-SAHARAN AFRICA;

AND PERHAPS MOST IMPORTANTLY, BETWEEN 2009 AND 2030, THE SHARE OF GLOBAL MIDDLE CLASS CONSUMERS IN THE ASIA-PACIFIC WILL RISE FROM 28% TO 66%.

MORE THAN 3 BILLION MIDDLE CLASS CONSUMERS WILL RESIDE IN THIS PART OF THE WORLD.

THAT IS 10-TIMES THE SIZE OF THE CURRENT U.S. POPULATION.

(PAUSE)

AS FOR TODAY, MORE THAN 95% OF GLOBAL CONSUMERS RESIDE OUTSIDE OF THE UNITED STATES.

ROUGHLY 80% OF GLOBAL PURCHASING POWER IS OUTSIDE OF THE UNITED STATES.

AND IN THE COMING YEARS, 70% OF FUTURE GLOBAL GROWTH WILL OCCUR OUTSIDE OF THE UNITED STATES.

(PAUSE)

SO CLEARLY, THE SUCCESSFUL COMPANIES OF TODAY AND TOMORROW ARE THE ONES THAT ARE AND WILL ACCESS THIS INCREASING GLOBAL DEMAND.

AND MORE TO THE POINT, COMPANIES THAT ARE SUCCESSFUL IN ACCESSING THAT DEMAND WILL ALSO BE SUCCESSFUL IN CREATING GOOD JOBS.

THAT IS WHY 11.5 MILLION AMERICAN JOBS TODAY ARE SUPPORTED BY OUR GOODS AND SERVICES EXPORTS.

AND THAT DOES NOT INCLUDE THE NEARLY 1.5 MILLION ADDITIONAL AMERICAN JOBS THAT ARE TIED TO OUR AGRICULTURAL EXPORTS.

AND EXPORT-INTENSIVE INDUSTRIES PAY MORE ON AVERAGE THAN NON-EXPORT INTENSIVE INDUSTRIES;

UP TO 16% MORE IN HIGHER EARNINGS TO BE EXACT.

AND IF WE ARE TALKING SPECIFICALLY ABOUT WORKERS IN MANUFACTURING INDUSTRIES,

THEY ARE PAID UP TO 19% MORE IN EARNINGS THAN THEIR COUNTERPARTS IN NON-EXPORT INTENSIVE SECTORS.

WE ARE ALSO WITNESSING FOREIGN COMPANIES LOOKING TO THE UNITED STATES.

THOSE COMPANIES WANT TO ACCESS THE ROBUST DEMAND THAT IS DRIVEN BY AMERICAN CONSUMERS.

AND JUST AS IMPORTANTLY, THEY ARE LOOKING TO OUR COUNTRY TO SERVE AS A PLATFORM TO REACH GLOBAL CONSUMERS AS DEMAND OUTSIDE OUR BORDERS CONTINUES TO GROW.

THAT IS WHY 12 MILLION AMERICAN JOBS ARE ATTRIBUTED TO FOREIGN DIRECT INVESTMENT INTO THE UNITED STATES,

WHICH HAPPENS TO BE THE HOME TO MORE FDI THAN ANYWHERE ELSE IN THE WORLD AT JUST OVER $3 TRILLION IN STOCK.

BUT PERHAPS THE BEST EXAMPLE OF HOW EXPORTS ALLOWED OUR COUNTRY TO BENEFIT FROM THIS DRAMATIC SHIFT IN GLOBAL DEMAND IS THE ROLE IT PLAYED IN HELPING OUR COUNTRY RECOVER FROM THE GREAT RECESSION.

BECAUSE WE PRODUCE THE BEST GOODS AND SERVICES IN THE WORLD, WE WERE ABLE TO LEVERAGE GLOBAL DEMAND IN ORDER TO NAVIGATE THE WORST ECONOMIC CRISIS SINCE THE DEPRESSION.

THAT IS PROVEN BY THE FACT THAT SINCE THE CRATER OF THE CRISIS IN 2009, WE ACHIEVED RECORD EXPORTS IN FIVE OF THE LAST SIX YEARS.

THAT INCLUDES 2014 WHEN WE SAW EXPORTS TOTALING $2.34 TRILLION.

AND WE ALSO ADDED NEARLY 2 MILLION NEW EXPORT-SUPPORTED JOBS DURING THAT SAME PERIOD.

[CONSUMERS]

THE SECOND CHANGE RELATES TO SHIFTS IN HOW WE PRODUCE GOODS.

ONE CORE SHIFT INVOLVES THE RISE OF GLOBAL SUPPLY CHAINS AND HOW THEY HAVE FUNDAMENTALLY CHANGED THE NATURE OF TRADE.

TODAY, THE VAST MAJORITY OF GLOBAL TRADE DOES NOT INVOLVE FINISHED CONSUMER PRODUCTS.

OVER 70% OF GLOBAL TRADE IS MADE UP OF INTERMEDIATE GOODS AND SERVICES, AS WELL AS CAPITAL GOODS.

(PAUSE)

ANOTHER CORE SHIFT IS THE RISE OF AUTOMATION IN THOSE GLOBAL SUPPLY CHAINS.

NOW I AM MORE THAN AWARE THAT TRADE IS OFTEN CONFLATED WITH AUTOMATION WHEN DISCUSSING LOST MANUFACTURING JOBS IN OUR COUNTRY.

BUT THE REALITY IS THAT TRADE IS OFTEN SCAPEGOATED FOR THE LOSS OF THOSE MANUFACTURING JOBS, WHICH ARE ACTUALLY LOST IN OVERWHELMING PART BECAUSE OF AUTOMATION.

LET ME POINT OUT HERE THAT IN 1970, MANUFACTURING COMPRISED MORE THAN 26% OF EMPLOYMENT IN THE U.S.

BY 1985, BEFORE WE ENTERED INTO OUR FIRST TRADE AGREEMENT WITH ISRAEL, THAT FIGURE WOULD ALREADY DROP TO 18.1%

BY 1994, BEFORE WE ENTERED INTO NAFTA, THAT FIGURE WOULD DROP TO 15.4%.

AND BY 2012, IT WOULD BE JUST OVER 10%.

SO THIS IS A TREND THAT CLEARLY PRE-DATED OUR FREE-TRADE AGREEMENT ERA.

AND I WOULD BE REMISS IF I DID NOT POINT OUT THAT MANUFACTURING OUTPUT HAS NOT SUFFERED.

IN FACT, WE PRODUCED FOUR OF THE FIVE LARGEST QUARTERS FOR REAL MANUFACTURING OUTPUT ON RECORD OVER JUST THE PAST TWO YEARS.

A FINAL CORE SHIFT IN PRODUCTION OF GOODS IS THE DIGITIZATION OF MANUFACTURING;

THE INDUSTRIAL INTERNET IS PUSHING MANUFACTURING BEYOND ITS TRADITIONAL LIMITS THROUGH PREDICTIVE MAINTENANCE AND BY PROVIDING UNPRECEDENTED CONNECTIVITY BETWEEN MACHINES.

THE CONVERGENCE OF TERABYTES AND PETABYTES OF DATA AS A RESULT “BIG DATA” ANALYTICS HAS BECOME THE DRIVING FORCE BEHIND ADVANCED MANUFACTURING.

THE RISE OF 3D PRINTING HAS MADE IT EASIER FOR SME MANUFACTURERS TO BRING PRODUCTS TO MARKET WITHOUT THE NEED FOR LARGE FACTORIES OR ASSEMBLY LINES.

AND WITH THE SEAMLESS, REAL-TIME SHARING OF APPLICATIONS AND DATA THAT CLOUD COMPUTING OFFERS, WE ARE SEEING REMARKABLE SPEED BETWEEN THE BEGINNING AND END OF THE MANUFACTURING CYCLE.

SO WHEN YOU COMBINE THE RISE OF GLOBAL SUPPLY CHAINS, THE ADVANCES OF AUTOMATION, AND THE DIGITIZATION REVOLUTION, WHAT WE END UP WITH IS AN EXPLOSION IN GLOBAL MERCHANDISE EXPORTS.

LET ME POINT OUT THAT IN 1995, GLOBAL MERCHANDISE TRADE WAS JUST UNDER $2 TRILLION.

IN 2015, IT WAS JUST UNDER $17 TRILLION.

(PAUSE)
AND MORE IMPORTANTLY, WE ALSO END UP SEEING TREMENDOUS EFFICIENCIES THAT TRANSLATE INTO LOWER PRICES FOR TRADED GOODS;

AND IT NEEEDS TO BE SAID THAT THIS DISPROPORTIONATELY BENEFITS WORKING AND LOWER-INCOME CONSUMERS OVER WEALTHIER ONES.

A STUDY RELEASED LATE LAST YEAR BY UCLA AND THE NATIONAL BUREAU OF ECONOMIC RESEARCH REVEALED THAT CLOSING OFF TRADE WOULD RESULT IN A REAL-INCOME LOSS OF NEARLY 37% FOR THE 50^TH INCOME PERCENTILE OF AMERICANS;

AND AN ASTOUNDING 69% IN REAL INCOME LOSS FOR THE LOWEST 10^TH PERCENTILE OF AMERICANS.

BY COMPARISON, CLOSING OFF TRADE WOULD RESULT IN A REAL INCOME LOSS OF JUST 4%TO THE TOP 90^TH

THE STUDY ACKNOWLEDGES THAT THIS IS DUE TO CONSUMERS AT THE LOWER INCOME LEVELS SPENDING MORE IN HIGHLY-TRADED SECTORS, NOTABLY GOODS LIKE FOOD AND CLOTHING.

BY CONTRAST, WEALTHIER CONSUMERS SPEND MORE ON SECTORS THAT ARE LESS TRADED, NAMELY SERVICES.

(PAUSE)

AND LET ME MAKE A SEPARATE POINT HERE. THE IMPORTANCE OF GETTING IT RIGHT ON SUPPLY CHAINS IS PRECISELY WHY WE ARE WORKING SO HARD TO MAKE THE WTO TRADE FACILITATION AGREEMENT A REALITY.

TFA IS AN AMBITIOUS MULTILATERAL AGREEMENT THAT LOOKS TO ELEVATE BEST PRACTICES IN GLOBAL TRADE TO ENSURE THE EXPEDITIOUS MOVEMENT OF GOODS.

THAT IS WHY TFA IS SO CRITICAL.

BECAUSE A FULLY IMPLEMENTED TFA IS PROJECTED TO REDUCE TRADE COSTS BY AS MUCH AS 14%.

SO I AM VERY PLEASED THAT WE HAVE 85% OF THE RATIFICATIONS NEEDED TO BRING TFA INTO FORCE.

[DIGITAL ECONOMY]

THE THIRD CHANGE AS I MENTIONED AT THE TOP IS THE EVOLUTION OF THE DIGITAL ECONOMY;

THE DIGITAL ECONOMY HAS YIELDED NEW WAYS TO REACH CUSTOMERS,

NEW PRODUCTS TO OFFER CUSTOMERS,

AND NEW WAYS FOR CUSTOMERS TO FIND SUPPLIERS.

WE ARE EXPERIENCING AN EXPLOSION IN GLOBAL B2C E-COMMERCE, WHICH WILL CONTINUE OVER THE NEXT FIVE YEARS.

CROSS-BORDER TRANSACTIONS WILL MAKE UP NEARLY 30% OF GLOBAL B2C E-COMMERCE BY 2020.

THAT IS DOUBLE FROM 2014 LEVELS.

AND CROSS-BORDER CONSUMERS WILL ALSO DOUBLE DURING THIS SAME PERIOD, REACHING 45% OF GLOBAL B2C E-COMMERCE SHOPPERS.

ANOTHER EXAMPLE IS IN HOW E-COMMERCE PLATFORMS ARE ENABLING SMEs TO REACH CUSTOMERS DIRECTLY, ALLOWING THEM TO MAINTAIN COMPETITIVENESS WITH LARGER FIRMS.

THAT IS PRECISELY WHY THERE ARE 2 MILLION U.S. AND GLOBAL SMEs UTILIZING AMAZON;

10 MILLION UTILIZING ALIBABA;

AND 50 MILLION UTILIZING FACEBOOK.

AND WE SEE THIS REMARKABLE CAPABILITY IN THE FACT THAT 59% OF U.S. SMEs ENABLED BY E-BAY ARE SELLING INTO 10 OR MORE MARKETS.

FINALLY, THERE ARE U.S. EXPORTS OF DIGITALLY-DELIVERABLE SERVICES.

IN 2014, THE UNITED STATES EXPORTED JUST SHY OF $400 BILLION IN DIGITALLY-DELIVERABLE SERVICES.

AND MORE IMPORTANTLY, WE HAD A TRADE SURPLUS IN DIGITALLY-DELIVERABLE SERVICES OF JUST UNDER $159 BILLION.

SO TRADE HAS ENABLED US TO TAKE OUR REMARKABLE COMPETITIVE ADVANTAGE IN THE DIGITAL SPACE AND TURN IT INTO A ROBUST TRADE SURPLUS FOR OUR ECONOMY.

(PAUSE)

AND THIS LEADS TO A FUNDAMENTAL POINT. WE ARE ALL AWARE OF THE SAYING THAT COMPANIES TODAY ARE BORN GLOBAL.

BUT THE FACT IS THAT THE PATH TO ECONOMIC GROWTH, PROSPERITY, AND SECURITY IS NOT ONLY GLOBAL IN NATURE.

IT IS ABSOLUTELY DIGITAL IN NATURE AS WELL.

[GEO-STRATEGIC]

BUT WHILE WE HAVE SEEN THESE THREE PROFOUND CHANGES IN GLOBAL COMMERCE, WHAT WE HAVE ALSO SEEN IS A SHIFT IN THE IMPORTANCE OF OUR PARTICIPATION IN GLOBAL COMMERCE.

AND I AM REFERRING TO WHAT WE WOULD CALL COMMERCIAL DIPLOMACY.

THE DOCTRINE OF COMMERCIAL DIPLOMACY RELIES ON FOSTERING THE CONVERGENCE BETWEEN OUR PUBLIC AND PRIVATE SECTOR, TO LEVERAGE OUR COMMERCIAL POWER IN ORDER TO ADVANCE OUR NATIONAL SECURITY GOALS.

NOW, THIS IS NOT ENTIRELY A NEW PHENOMENON.

EVER SINCE THE END OF WORLD WAR II, COMMERCE AND TRADE HAVE BEEN AT THE CORE OF A MODERN RULES-BASED ORDER,

WHICH GENERATED PEACE BETWEEN GREAT POWERS,

SPURRED THE GREATEST EXPANSION OF ECONOMIC GROWTH IN WORLD HISTORY,

AND LIFTED A BILLION PEOPLE FROM POVERTY.

AND AS PRESIDENT KENNEDY SAID ROUGHLY 50 YEARS AGO “ECONOMIC ISOLATION AND POLITICAL LEADERSHIP ARE WHOLLY INCOMPATIBLE…IF WE ARE TO LEAD, WE MUST ACT.”

BUT WHAT WE HAVE SEEN IS A SHIFT IN THE IMPORTANCE OF COMMERCIAL DIPLOMACY.

BECAUSE NATIONAL SECURITY TODAY IS DRIVEN BY SO MANY DIFFERENT AREAS OF POLICY AND INTERESTS,

TRADE AND COMMERCE TODAY IS AN EVEN MORE IMPORTANT TOOL TO ADVANCE OUR NATIONAL SECURITY INTERESTS AS WELL AS THE INTERESTS OF THE INTERNATIONAL COMMUNITY.

AND THAT MEANS THAT THE INCREDIBLE BENEFITS THAT AMERICAN COMPANIES ARE BRINGING TO OTHER COUNTRIES IS MEASURED IN MORE THAN JUST COMMERCIAL GAINS.

COMMERCE AND TRADE HAS NEVER PLAYED A MORE IMPORTANT ROLE IN ADVANCING AND SECURING GLOBAL ECONOMIC INCLUSION THAN RIGHT NOW.

WE ARE SEEING THAT TAKING PLACE ALL OVER THE WORLD.

AND A CLEAR EXAMPLE IS OUR COMMERCIAL ENGAGEMENT WITH SUB-SAHARAN AFRICA.

IN PREVIOUS YEARS, U.S. ENGAGEMENT WITH THE REGION WAS DEFINED ENTIRELY BY THE AMOUNT OF DIRECT ASSISTANCE WE OFFERED EVERY YEAR.

TODAY, IT IS OUR COMMERCIAL TIES THAT ARE DEFINING OUR EFFORTS TO HELP THE REGION ACHIEVE ITS TREMENDOUS COMMERCIAL AND ECONOMIC POTENTIAL.

THOSE TIES WILL BE ON FULL DISPLAY NEXT WEEK WHEN THE DEPARTMENT OF COMMERCE WILL PARTNER WITH BLOOMBERG PHILANTHROPIES TO HOST THE SECOND U.S.-AFRICA BUSINESS FORUM.

THE FIRST FORUM IN 2014 WAS NOT ONLY A HISTORIC OPPORTUNITY TO DEEPEN TIES BETWEEN THE U.S. AND AFRICA.

WE ALSO SECURED $33 BILLION IN INVESTMENT COMMITMENTS TO AFRICA WHILE STANDING UP THE LARGEST GATHERING OF AFRICAN HEADS OF STATE IN AMERICAN HISTORY.

THIS YEAR’S SUMMIT WILL ONCE AGAIN BRING TOGETHER AFRICAN HEADS OF STATE AND GOVERNMENT AS WELL AS U.S. AND AFRICAN CEOS.

AND IT WILL BE AN OPPORTUNITY TO FORGE NEW PARTNERSHIPS TO ADDRESS THE CONTINENT’S MOST PRESSING CHALLENGES, AS WELL AS SECURE GROWTH OPPORTUNITIES FOR BUSINESSES AND INVESTORS ON BOTH SIDES OF THE ATLANTIC.

ANOTHER EXAMPLE IS ENERGY SECURITY AND SUSTAINABILITY.

AND I WOULD NOTE THAT MY AGENCY IS LEADING THE U.S. GOVERNMENT EFFORT TO PROMOTE EXPORTS OF RENEWABLE ENERGY AND ENERGY EFFICIENT TECHNOLOGIES.

AND ONE OF THE CORNERSTONES OF THIS EFFORT IS OUR LEADERSHIP TO DEEPEN TRADE PARTNERSHIPS IN THE AREA OF “SMART CITIES” TECHNOLOGIES,

WHICH WILL PLAY A SINGULAR ROLE IN ENSURING THAT THE CITIES OF THE FUTURE ARE ENERGY AND CLIMATE SUSTAINABLE.

BUT MOST IMPORTANTLY, COMMERCE AND TRADE IS PLAYING A DIRECT ROLE IN OUR EFFORTS TO COUNTER VIOLENT EXTREMISM.

WHEN MY AGENCY WORKS ON DEEPENING OUR TRADE PARTNERSHIPS WITH COUNTRIES IN THIS MIDDLE EAST, THESE EFFORTS ARE MOTIVATED BY MORE THAN MERELY CREATING BUSINESS OUTCOMES.

THEY ARE ALSO INTENDED TO HELP THESE COUNTRIES DIVERSIFY THEIR ECONOMIES TO CREATE THE ENVIRONMENT WHERE VIOLENT EXTREMISM IS LESS LIKELY TO EMERGE:

AN ENVIRONMENT WHERE LONG-TERM COMPETITIVENESS IS ENHANCED;

AN ENVIRONMENT THAT IS MORE ATTRACTIVE TO PRIVATE INVESTMENT;

AND AN ENVIRONMENT WHERE ECONOMIC OPPORTUNITIES ARE CULTIVATED FOR THE LARGEST POSSIBLE GROUP OF PEOPLE, YOUNG PEOPLE SPECIFICALLY.

(PAUSE)

SO CLEARLY THE INTERESTS OF OUR COMPANIES AND OF THE GLOBAL COMMUNITY HAVE NEVER BEEN MORE INTERTWINED THAN RIGHT NOW.

AND FOR THAT MATTER, THE BENEFITS OF OUR COMPANIES AND OF THE GLOBAL COMMUNITY HAVE NEVER BEEN MORE INTERTWINED EITHER.

WHEN AMERICAN COMPANIES OFFER OUR SECOND-TO-NONE GOODS AND SERVICES, WE ARE NOT ONLY REAPING THE COMMERCIAL BENEFITS.

WE ARE IMPROVING OUR ENVIRONMENT.

WE ARE SUPPORTING GLOBAL ECONOMIC INCLUSION.

AND WE ARE ADVANCING THE RULES-BASED ORDER THAT ENSURES GLOBAL STABILITY AND NATIONAL SECURITY.

[TRANS-PACIFIC PARTNERSHIP]

SO IT SHOULD BE QUITE CLEAR THAT IF YOU WANT OUR WORKERS, OUR BUSINESSES, OUR ECONOMY, AND OUR COUNTRY TO TRULY EXPERIENCE FUTURE SHOCK,

THE EASIEST WAY TO ACHIEVE THAT IS TO WALL OURSELVES OFF FROM GLOBAL COMMERCE.

THAT IS WHY THE PRESIDENT AND HIS ENTIRE ADMINISTRATION, INCLUDING SECRETARY PRITZKER, MYSELF AND ALL OF ITA ARE WORKING TO GET THE TRANS-PACIFIC PARTNERSHIP ACROSS THE FINISH LINE BEFORE THE END OF THIS ADMINISTRATION.

AND AS WITH TRADE GENERALLY, TPP WILL ALLOW US TO SHAPE THE CHANGES IN GLOBAL COMMERCE TO THE BENEFIT OF THE AMERICAN BUSINESS COMMUNITY AND OUR TPP PARTNERS.

AS I MENTIONED EARLIER, THE NEXT MAJOR WAVE OF CHANGE REGARDING GLOBAL DEMAND WILL COME AS TWO-THIRDS OF MIDDLE CLASS CONSUMERS WILL BE IN THE ASIA-PACIFIC.

SO TPP WILL POSITION OUR EXPORTERS TO BENEFIT FROM THIS DRAMATIC CHANGE BY REDUCING AND ELIMINATING TRADE BARRIERS TO ENSURE LONG-TERM ACCESS TO THIS MIDDLE CLASS CONSUMER BASE.

THAT ACCESS WILL BE CRUCIAL FOR KENTUCKY SINCE 46% OF THE STATE’S GOODS EXPORTS ALREADY GO TO TPP MARKETS.

AND TPP WILL ADDRESS MANY OF THE CHALLENGES THAT PREVENT AMERICAN SMES FROM GOING GLOBAL, INCLUDING THE 79% OF KENTUCKY EXPORTERS THAT ARE SMALL-AND-MEDIUM SIZED ENTERPRISES:

REDUCING BURDENS LIKE UNNECESSARY DELAYS AND PAPERWORK,

MAKING REGULATIONS MORE ACCESSIBLE AND RESPONSIVE TO PUBLIC INPUT,

AND ELIMINATING TARIFFS ON SHIPMENTS BELOW A CERTAIN VALUE.

I MENTIONED THE DRAMATIC SHIFTS WE HAVE SEEN IN SUPPLY CHAINS DRIVING GLOBAL TRADE.

TPP WILL, IN FACT, STRENGTHEN EXISTING SUPPLY CHAINS AND INCENTIVIZE INVESTMENTS BY GIVING PRODUCERS TARIFF-FREE ACCESS TO INPUTS FROM ALL 12 PARTNER MARKETS.

AND WHEN IT COMES TO THE DIGITAL ECONOMY, TPP REPRESENTS A GENERATIONAL OPPORTUNITY BECAUSE IT IS THE FIRST MAJOR AGREEMENT OF THE DIGITAL ECONOMY.

TPP WILL SECURE THE DIGITAL CAPITAL THAT SERVES AS THE CORE OF THE DIGITAL ECONOMY,

BY PROTECTING CROSS-BORDER DATA FLOWS,

PREVENTING THE IMPOSITION OF CUSTOMS DUTIES ON ELECTRONIC TRANSMISSIONS,

AND PROTECTING OUR INNOVATORS BY ENSURING THAT THEY DO NOT HAVE TO TRANSFER THEIR TECHNOLOGY OR SOURCE CODES IN ORDER TO GAIN MARKET ACCESS.

TPP ALSO CRIMINALIZES THE THEFT OF TRADE SECRETS IN CYBER SPACE FOR THE FIRST TIME EVER.

AND AS THE ECONOMIC LEG OF THE PRESIDENT’S HISTORIC FOERIGN-POLICY SHIFT TO THE ASIA,

TPP WILL ALLOW US TO SECURE OUR PRESENCE AND DEEPEN OUR PARTNERSHIP IN THE REGION THAT IS BECOMING THE POLITICAL AND ECONOMIC CENTER OF GRAVITY IN THE WORLD.

IN THE PROCESS, WE WILL SUSTAIN AND STRENGTHEN THE RULES BASED ORDER THAT HAS DELIVERED THE GREATEST PERIOD OF SECURITY AND PROSPERITY IN WORLD HISTORY.

[KENTUCKY]

BUT IF YOU ASKED ME WHY I REMAIN CONFIDENT THAT OUR COUNTRY WILL AVOID ITS OWN VERY REAL VERSION OF FUTURE SHOCK,

IT WILL BE BECAUSE OF THE POWERFUL EXAMPLES OF HOW TRADE AND INVESTMENT HAVE BENEFITED THE UNITED STATES.

THAT INCLUDES THE EXAMPLES EMERGING FROM THIS VERY COMMONWEALTH.

A KEY REASON FOR WHY OUR COUNTRY RECOVERED FROM THE GREAT RECESSION WAS BECAUSE THE STATE OF KENTUCKY DELIVERED RECORD EXPORTS IN SIX OF THE LAST SEVEN YEARS.

AND OF THE 140,000 KENTUCKY JOBS SUPPORTED BY EXPORTS, 30,000 OF THOSE WERE CREATED DURING THIS SAME PERIOD.

KENTUCKY ALSO OFFERS AN INCREDIBLE EXAMPLE OF THE POWER OF FOREIGN DIRECT INVESTMENT.

THIS STATE IS 8^TH IN THE COUNTRY IN JOBS PER CAPITA AT FOREIGN-OWNED SUBSIDIARIES.

FOREIGN FIRMS ARE AMONG THE HIGHEST MANUFACTURING EMPLOYERS IN THE STATE.

THAT INCLUDES HITACHI, ITOCHU, AND TOYOTA, WHICH IS THE 3^RD LARGEST EMPLOYER IN KENTUCKY.

AND SINCE WE ARE IN LOUISVILLE,

I WOULD POINT OUT THAT THE LOUISVILLE METRO AREA WAS RANKED 40^TH OUT OF 388 METRO AREAS IN THE COUNTRY IN GOODS EXPORTS, AT $8 BILLION IN 2015.

LOUISVILLE EXPORTED MORE GOODS THAN THE METRO AREAS OF CHARLESTON, BALTIMORE, AND TAMPA.

AND NEARLY 80% OF LOUISVILLE EXPORTERS HAPPEN TO BE SMALL-AND-MEDIUM SIZED ENTERPRISES, MORE THAN 1,200 COMPANIES.

SO JUST AS I THANKED WORLD TRADE CENTER-KENTUCKY, THE KENTUCKY DISTRICT EXPORT COUNCIL, AND MAYOR FISHER FOR ADVANCING OUR TRADE AGENDA,

I SINCERELY THANK KENTUCKY EXPORTERS AS WELL.

THEY ARE NOT ONLY ADVANCING POLICIES.

THEY ARE ADVANCING THE GROWTH OF THE STATE’S ECONOMY,

AND THE LIVELIHOOD OF THE STATE’S WORKERS.

[CONCLUSION]

LET ME CLOSE BY SAYING THAT THIS AVALANCHE OF CHANGE IN GLOBAL MARKETS ARE ALSO GOING TO BE THE TOPICS OF THE ROUNDTABLES THAT WILL FEATURE THE BUSINESS, GOVERNMENT, AND THOUGHT-LEADERS HERE TODAY:

FROM CONSIDERATIONS FOR SMALL EXPORTERS TO GLOBAL E-COMMERCE;

FROM SELLING TO INTERNATIONAL CUSTOMERS TO COPING WITH INTERNATIONAL STANDARDS;

FROM THE IMPACTS OF FREE TRADE AGREEMENTS TO TRENDS IN GLOBAL SUPPLY CHAINS;

YOU ARE NOT HELPING OUR EXPORTERS CONFRONT THE CHANGES IN GLOBAL MARKETS.

YOU ARE ALSO HELPING OUR EXPORTERS ACHIEVE THE MAXIMUM BENEFITS IN GLOBAL MARKETS.

SO LET ME CONGRATULATE WORLD TRADE CENTER-KENTUCKY ONE MORE TIME ON TODAY’S SUMMIT.

AND LET ME REITERATE THE COMMITMENT OF MY AGENCY TO SUPPORT THE BUSINESS GOALS OF OUR EXPORTERS IN ORDER TO DRIVE PROFITS, INCREASE WAGES, CREATE JOBS, AND ULTIMATELY SUPPORT OUR COUNTRY.

THANK YOU.

ACTING U/S HYATT KENTUCKY INTERNATIONAL TRADE SUMMIT 2016—LOUISVILLE, KY

BUILDING THE TRADE DNA INITIATIVE