Business, Asia, and the New American Government: Challenges and Opportunities, Remarks

Address by
THOMAS J. DONOHUE
President and CEO, U.S. Chamber of Commerce

Foreign Correspondents Club of Japan
Tokyo, Japan
January 16, 2009

As Prepared for Delivery

Introduction-Purpose of Trip

Thank you very much, Catherine [Makino, Club president], and good afternoon everyone.

I appreciate the opportunity to speak at one of the world's greatest press clubs.

I have to admit some people have asked me what I am doing in Asia when there is so much happening in the United States.

A new Congress is already at work, a new president will be inaugurated in a matter of days, and the economy is in a recession.

My answer is simple-half of the world's economy has shifted to the Asia-Pacific region.

The United States and the leading countries of Asia therefore have a fundamentally important role to play in jump-starting growth, fighting protectionism, and expanding worldwide trade and investment.

Furthermore, the transition to a new government in the United States understandably leads to many questions about the approach these new leaders will take in our relationships in Asia.

So earlier this week, we were in Beijing meeting with top Chinese leaders, including Chairman of the Standing Committee Wu Bangguo and Vice President Xi Jinping.

Yesterday, we were in Korea meeting with President Lee and Trade Minister Kim.

After this lunch, we'll have a chance to visit with Prime Minister Aso and METI Minister Nikai.

And in all three countries we've had an opportunity to meet with leaders of the business community, as well as our affiliated American Chambers of Commerce and their members.

And we've been talking with the press.

So allow me to share with you some of what I've been saying-as well as what I've been hearing—during this short, busy and very productive trip.

The U.S. Economy and Economic Stimulus

Leaders in all three countries are obviously concerned about the current state of the U.S. economy and the prospects and timing of recovery. So are we all!

Just last week we learned that the United States lost 2.6 million jobs in 2008-the worst record since 1945. The unemployment rate jumped to 7.2%-it hasn't been that high since 1993.

When the reports come in for the fourth quarter of 2008, we think they will show a GDP decline of at least 5%. We're looking at another 3% drop in the first quarter of this year.

We hope to hit the bottom of the recession by the middle of the year, providing there are no more major shocks to the economic system-and, provided that leaders at home and abroad make wise decisions to stimulate economic activity, while avoiding actions that would make today's problems even worse.

In the United States, President-elect Obama is already working with Congress to develop a major economic stimulus package to expand consumption and investment, while also taking the first steps to rebuild America's infrastructure.

These actions could save or create millions of jobs, and the Chamber strongly supports them.

And because our economy is so closely linked with the economies of China, Korea, and Japan, I was very pleased to hear that the Chinese and Korean governments are themselves undertaking unprecedented actions to spur domestic economic growth.

In China, leaders told me very frankly that the global downturn has affected their economy more than they expected.

This impact can be seen in recent reports of declining Chinese exports and imports, the shuttering of factories in Southern China, and the legions of new university graduates who cannot find jobs.

Chinese leaders wake up every day focused on the reality that anything significantly less than 8 percent growth means that their economy will not be able to generate the jobs and incomes needed to keep up with the population.

So leaders there are prepared to take significant steps to come as close to that number as possible. Will they hit the target this year? We heard a variety of views during our discussions in Beijing.

Likewise, Korea also has growth expectations that are higher than those of the United States or Japan. The Korean economy has been hurt by the global slowdown but there is an underlying optimism that the impact can be minimized.

Even so, President Lee has made economic stimulus his highest priority this year as well.

I will be interested to hear more about Japan's $250 billion stimulus package when I meet with the Prime Minister later today.

As the world's two largest economies, Japan and the United States have a special responsibility.

Together we generate over a third of global output. We exchange the equivalent of $760 million in goods and services every day, and drive much of the commerce and investment throughout this region and the world.

The global economy can't fully recover until the United States and Japan do.

Fighting Protectionism and Expanding Trade

Now, at the same time we work to promote growth in our domestic economies, I am also urging leaders in Asia and the United States to fight protectionism and take bold action to strengthen the global trading system.

It's easy for well-meaning stimulus measures to cross the line into unfair barriers to trade and investment.

This can happen in the form of preferential treatment for domestic producers, export subsidies, investment barriers-anything that tilts the playing field against open and fair competition.

The Chamber is leading the fight against market-closing measures in the United States.

Isolationism always has its greatest public appeal during times of economic distress. We must fight these impulses and instead take positive action to expand commerce across the globe and in our critical bilateral relationships.

I got a very receptive response in China and Korea to the idea that all our countries must make a special effort, right now, to complete the Doha Round. This would provide a tremendous boost to the worldwide economy.

I also urged China not to backtrack on the progress it has made in recent years on currency exchange, the protection of intellectual property, and on efforts to transform the economy to consumption-led growth.

Korea wants very much to attract more domestic and foreign investment, and I advised leaders there that as the global economy recovers, Korea can do very well-if it improves regulatory transparency, opens up its financial sector, and finds a way reform its highly restrictive labor policies.

I also pledged the Chamber's continued support and leadership in the effort to pass the U.S.-Korea free trade agreement. There are political factors in both countries that are making this difficult. We can't say when it will get done, but it will get done!

Let me add that Japan and Korea have a tremendous opportunity to forge greater ties with each other and with China. The recent summit between Prime Minister Aso and President Kim was a positive step.

This year, Korea will host the G-20. Next year Japan will chair APEC and the United States will chair it the year after that. So there are many opportunities for our countries to drive productive regional and multinational agendas.

The Obama Administration and U.S. Japan Relations

Finally, let me turn to a few reflections about the transition to a new American President - one whose election has inspired virtually all of us -regardless of where we live of what our politics may be.

I believe that with many of his appointments, President-elect Obama has signaled that he well understands the importance of the relationship between the United States and Japan.

The members of his economic and national security teams are serious internationalists who support trade. Given all the critical economic and geopolitical challenges they will face, America's leaders will continue to see Japan as an indispensible partner and friend.

We know many of these people very well. In fact, the President-elect hired General Jim Jones away from me to become the new National Security Advisor!

Nevertheless, there is little question that President Obama will face strong protectionist pressures from the larger Democratic majorities in the House and Senate. He will face political pressures from organized labor and other activist groups that strongly supported his election.

At times, statements could be made that trouble our friends here in Japan and Asia. I would only urge them to not over-react.

Pay attention to what our Congress and administration do, not just to what they say. President Obama will be looking for friends and allies to help him deal with many pressing global challenges. Japan were should reach out to join him in concerted efforts whenever possible.

The Business Role in Meeting Challenges

The business communities of Japan and the United States have responsibilities too. The Chamber works very closely with Keidanren and we have a number of outstanding Japanese companies as members.

There are very few domestic challenges anymore. Most of the challenges we face are global in scope because we all live and do business in an interdependent world.

As I mentioned, the United States and Japan are the two largest economies, and our business leaders and organizations must therefore stand at the forefront of economy recovery-and that includes restoring confidence, liquidity, and trust to the global financial system.

We must lead the effort against isolationism and convince our governments and our citizens to move toward greater international commercial engagement.

Business must also apply its creativity and commitment to urgent challenges such as energy, climate change, and the protection of intellectual property.

As the world's largest business federation, the U.S. Chamber of Commerce is devoting an ever expanding level of resources to these critical efforts.

That's why I have traveled to Asia this week, despite everything going on back home. It's why I am in Tokyo today.

In doing so, I hope we have sent a message to governments here and at home that American business is absolutely committed to maintaining and strengthening our critical commercial, friendship, and strategic ties in Asia.

It has been a particular honor to speak to the members of this club, a club so rich in history.

It's always interesting to look back at history because it helps us appreciate how far we have come.

Once bitter enemies, the United States and Japan have forged a political and economic partnership based on shared values and a shared vision that provides substantial benefits to both countries-and to people throughout the Asia-Pacific region.

Our collective leadership is needed now more than ever. The challenges before us are great, but they are not greater than our ability to overcome them, to restore prosperity to our countries and the world, and to make life better for our people.

I hope we have a good exchange during the questions, and I thank you again for the opportunity to share my views with you today.

Thank you very much.

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