Building on NAFTA Luncheon - Remarks by Tom Donohue
AS PREPARED FOR DELIVERY
Welcoming Remarks at Luncheon
President & CEO, U.S. Chamber of Commerce
June 16, 2006
Washington, D.C.
Good afternoon. I'm Tom Donohue, President and Chief Executive Officer of the U.S. Chamber of Commerce.
Welcome to the closing luncheon for today's conference — "The United States and Mexico: Building on the Foundation of NAFTA to Compete in a Changing World."
I am especially pleased to welcome back to the Chamber our guest of honor – Mexico's Economy Secretary Sergio García de Alba.
Mexico is increasingly seen as a leader in the Americas and on the global stage, and so the world will be watching with great interest to see what direction Mexican voters decide to take on July 2.
The business community, for one, will be following the political debate in Mexico very closely.
That's because for CEOs, North America is already a single market, and business decisions are no longer made with a Mexico strategy … or a Canada strategy … but, rather, with a North American strategy.
And so, I'd like to say a few words about North American competitiveness and the growing competition that Mexico and the United States both face from Asia and Europe.
Of course, we are in a position of strength, with great opportunities for the future, because of NAFTA and the integration of our economies that followed that landmark agreement. Income gains and tax cuts from NAFTA are putting an extra $900 into the pockets of the average American family of four every year. And millions of workers on both sides of the border owe their jobs to increased trade flows between the two countries.
More than a decade after NAFTA was enacted, let the record show that critics who warned about a "giant sucking sound" of jobs moving south were way off the mark. The past decade has been marked by progress, growth, and opportunity in North America.
But also during that time period, Asia emerged as an economic force, competing with us for jobs and investment.
China, India, and smaller Asian nations are opening their economies, embracing free markets, encouraging entrepreneurs, competing for energy and natural resources, challenging us in third country markets, and developing and educating their workforce…
In other words, they're doing all of the things that we have encouraged them to do for the past fifty years.
The fact that they're actually doing it — and doing it well — makes us all a little uncomfortable.
In some respects, the United States is failing to maintain its global economic leadership, and Mexico is not doing enough to keep up with the competition, whether in energy development, labor market reform, or educational reform.
The point is, the United States and Mexico need to adjust to the changing competitive environment across the world as well as to a changing society here in North America.
We both need to create more flexible, more open, and less bureaucratic economies.
We both must work to improve, modernize, compete, and move up the ladder of innovation.
Both of our countries have challenges they must sort out on their own. In this country, we have to continue our progress on legal reform, improve access to affordable health care, and figure out a way to shore up our retirement and entitlement programs as our population gets older.
In Mexico, the next president must continue the economic reforms pushed by President Fox, including smarter regulation of key industries, opening closed sectors to investment, streamlining complicated labor laws, and investing in education.
But there are three areas in particular where our paths cross and where we can collaborate to create a more competitive North America.
Globalization/Trade
The first of these is a willingness and ability to engage and lead in global trade and investment.
This is one area where Mexico can show the United States how it's done.
Mexico is a leader in trade, with dozens of free trade agreements and an ambitious stance in the global Doha Round of trade talks.
Mexico's leaders have moved boldly to integrate their country into global markets.
The same cannot be said about the United States. Protectionism rears its ugly head with every tight trade vote and with every effort to restrict global sourcing or make it harder for foreign companies to invest in the United States.
The business communities in Mexico and the United States need to work together to change attitudes. We all need to become better ambassadors, telling the story of how trade can change countries and communities for the better.
Five years ago, the Chamber launched a program called TradeRoots to build support for international trade at the grassroots level.
Later this year, TradeRoots will launch a NAFTA education program in communities all over this country.
We're succeeding in building a tremendous network of small companies and chambers of commerce throughout the United States that is telling the Congress, the press, and their neighbors about the importance of trade.
We're also responding to critics of trade and globalization by collecting and distributing fact-based research that shows its benefits.
You all recall the uproar over outsourcing during the 2004 presidential campaign. Well, we published a booklet on the facts about outsourcing, and it helped stop dozens of state and federal bills designed to ban or restrict that practice.
In a few weeks, we'll be issuing a publication on globalization. Like the outsourcing publication, we're convinced this one will also change a few attitudes.
We have much more work to do on this score, but we have a roadmap, and we know where we are going
Immigration Reform
Second, ladies and gentlemen, the United States and Mexico must work together to take on the enormous challenges surrounding the availability of jobs and workers in North America.
In the United States, there is a tremendous imbalance between the two.
Because of demographics, the United States is producing more jobs than it has workers to fill them – a trend that will intensify as 77 million Baby Boomers begin to retire in the next few years.
That is why the U.S. business community continues to push for comprehensive immigration reform.
The Senate's bipartisan comprehensive proposal, though not perfect, is a huge step forward.
It provides enhanced border security. Like any other country, the United States must protect its borders, and business supports those efforts.
The bill also creates a temporary worker program in recognition of our demographic realities.
And it opens new avenues for certain undocumented workers to achieve legal status and ultimately lawful permanent residency, provided strict criteria are met.
It shouldn't be a felony to be in this country without your papers. And those who assist or provide humanitarian support for the undocumented shouldn't be thrown in jail.
To shut the door on people who want to come here to work would be not only contrary to our values and our national heritage—it would also severely restrain this nation's economic potential and the potential of immigrants to create a better life for themselves.
We pledge that the U.S. Chamber will continue to work to keep the American Dream alive for every single person who believes in it and who is willing to work for it.
Energy/Environment
Let me move to a third and final issue — the lack of plentiful and affordable supplies of energy.
It's a much different global energy market today then when NAFTA took effect. China, India, and the rest of the developing world are thirsting for energy to power their fast-growing economies.
And guess what? They are going out and getting it. Several countries, including China and India, are planning to drill for oil in Cuban waters just 50 miles off the U.S. coast. Meanwhile, our government prohibits exploration on 85% of the Outer Continental Shelf, from three miles offshore to 200 miles out.
When it comes to energy, the United States is a nation of contradictions. Some of our political leaders fault oil companies for high gas prices but restrict them from increasing production.
They encourage more use of natural gas because it's better for the environment but don't allow more drilling for it.
They say we lack oil refinery capacity, but they impose regulations that have prevented the construction of a new refinery for the past 30 years.
In Mexico, the same contradictions are on display. Mexicans decry the high price of gasoline but prohibit the private sector from bringing capital and technology to the task of developing energy resources.
Mexico has oil and gas reserves that will last for decades but today is importing refined products from the United States. The United States is a net exporter of natural gas to Mexico.
This is an incredible lost opportunity for Mexico. It's being hammered by high prices when it could be benefiting.
If businesses can't get reliable and affordable energy in North America, they will go where they can find it. And if you don't think that's true, look at the number of chemical companies in the United States that have moved operations overseas because there is more affordable energy elsewhere.
So what's the bottom line? The United States and Mexico need to boost domestic energy production, and Mexico must aggressively open its energy markets to private investment — both Mexican private investment and international private investment. Failure to do so will only guarantee a loss of energy independence.
Ladies and gentlemen, I think it's pretty clear by now that it no longer makes sense to talk about U.S. competitiveness and Mexican competitiveness … or, for that matter, about the competitiveness of Canada.
We are all in this together — we, as North Americans. That's why we are particularly pleased with the outcome of the last meeting between our leaders in Cancun at the end of March.
President Bush, President Fox, and Prime Minister Harper outlined a vision for a North American Competitiveness Council.
This new group consists of business representatives from each country who will provide direct recommendations on things that our governments can do to make our businesses more globally competitive.
The U.S. Chamber is very pleased to support the North American Competitiveness Council.
It will allow us to build on the foundation of NAFTA and our competitive strengths.
I know we're up to the challenge. North America's capacity to change, its talent, its brainpower, and its risk-taking, entrepreneurial spirit are second to none.
North America has an opportunity to lead the world to prosperity in this century and beyond. Let's not waste it.
The U.S. Chamber will continue to work closely with Mexico's top leaders, including the person I now have the privilege of introducing.
Mexico Secretary of the Economy Sergio Garcia de Alba understands the challenges and opportunities facing North American businesses because he himself is an accomplished businessman.
The secretary was co-founder and director general of a design and manufacturing firm and also served as a regional vice president of Axtel, a telecommunications firm.
He's also had a long and distinguished career in the association world, where he served in leadership positions with the Regional Chamber of the Manufacturing Industry of Jalisco [HA-LEE-SCO] and the Confederation of Industrial Chambers of Mexico.
He was appointed to his current role as Secretary of the Economy last September and served in government leadership positions on the state and federal levels during the previous decade.
Ladies and gentlemen, join me in welcoming Secretary Garcia de Alba.