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

Address by Thomas J. Donohue
President and CEO, U.S. Chamber of Commerce

American Chamber of Commerce in Korea and the FTA Industry Alliance
Seoul, Korea
January 15, 2009

Text as Prepared for Delivery

Introduction

The relationship between the U.S. Chamber, and AmCham Korea is strong and getting stronger. A close working relationship between our organizations is essential given the range of complex policy challenges here and in Washington.

As many of you know, the Chamber is home to the U.S.-Korea Business Council, which includes over fifty U.S. companies that are major investors in Korea. It is committed to expanding trade and investment between our two countries.

The Council works closely with AmCham Korea—and with its Korean partners in the Korea-U.S. Business Council here in Seoul—to promote a strong economic and trade relationship between our two countries.

I'm pleased that members of the FTA Industry Alliance are joining us today. This Alliance brings together Korea's largest business organizations.

Leaders of five of these groups are with us today and I would like to recognize them:

• Chairman Lee of the Korea International Trade Association, which is secretariat of the FTA Industry Alliance
• Chairman Cho of the Federation of Korean Industries, and also chairman of the Korea-U.S. Business Council
• Chairman Sohn of the Korean Chamber of Commerce and Industry
• Vice Chairman Jang of the Korea Federation of Small and Medium Businesses, and
• Vice Chairman Kim of the Korea Federation of Banks.

I would also like to recognize AmCham Korea Chairman David Ruch. Thank you all for giving me this opportunity.

Purpose of Trip

Some folks have asked me what I'm doing here when there is so much going on back home. A new Congress convened last week. A new president will take office next week. So why am I here?

The reason is simple. Nearly half of the global economy has shifted to the Asia-Pacific region.

A strong and vital partnership on all levels between the United States and the most significant countries in Asia is absolutely critical to global growth, prosperity, and security.

In addition, we recognize that there are many questions about what lies ahead given the economic turmoil we are all facing and the transition to a new and different government in the United States.

So we're here to meet with government and business leaders to update them on the economic and political developments back home.

We're here to discuss common steps our countries should take to stabilize and reform global markets, stimulate economic growth, expand global commerce, and fight isolationism.

Earlier this week I was in Beijing to underscore the U.S. Chamber's absolute commitment for continued, strong commercial and strategic engagement between the United States and China.

From here, we will go to Japan, also a key U.S. strategic and commercial ally.

But we wanted to come to Korea because there are few other countries in Asia—or around the world—who share such a growing list of converging interests with the United States.

Korea is a strategic partner and a longtime friend of America.

The Korean people share our commitment to democracy and to ensuring a peaceful and prosperous Asia.

The U.S.-Korea security alliance has helped keep the peace in Northeast Asia for over fifty years, and Korea is today one of our strongest allies in advancing regional and global security.

On the commercial front, Korea shares with the United States an interest in maintaining and expanding open markets, protecting intellectual property, and dealing with climate change in a sensible way.

We traded $82 billion in goods and services in 2007. Korea is the United States' seventh-largest trading partner.

Major American firms have long been big investors here. The United States has welcomed investment from Korea, which has created tens of thousands of jobs across our country.

Korean products, including a number of world-famous brands, have become highly respected in the Untied States

So there is no question that the United States and Korea are good friends and allies. However, today's global economic and strategic challenges require an even stronger and more active partnership between our two countries.

I'll come back to that subject in a minute, but first let me make a few comments about how our Chamber plans to deal with the new Congress and administration back home as well as the prospects for economic recovery in the United States.

U.S. Domestic Update

It's not exactly a breaking news flash to say that the state of American business right now is not very good. In fact, for millions of workers, families, companies, and investors, these are very difficult times.

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%-plus drop in the first quarter of this year.

We should hit the bottom of the recession in the United States by the middle of the year, providing there are no more major shocks to the economic system.

What we're doing at the Chamber is trying to focus our leaders' attention on taking immediate steps to jumpstart the American economy.

Last week, the president-elect outlined his priorities for a major economic recovery package. We applaud many of the things he said—particularly his emphasis on tax cuts to stimulate consumption and business investment. We are also very positive about his emphasis on infrastructure.

We'll work hard to help pass a recovery program that accomplishes these goals— without permanently expanding the payroll and powers of our federal government.

At the same time, we are taking the strongest possible stand against the rise of protectionist policies—in the United States or anywhere around the world.

Now, I never go anywhere overseas and start talking about other countries' problems until I talk about our own—and we've got plenty of them.

So our Chamber is also going to work hard this year to convince our leaders to enact broad and deep reforms that address the most critical problems facing the United States.

We must stop the epidemic of frivolous lawsuits, and modernize the regulations governing our capital markets without choking off the innovation and responsible risk-taking that are so important to capital formation.

We need to produce more domestic energy in the United States from all sources—and find a way to address climate change through new technology, and not by shutting down economic activity.

We see good opportunities to work constructively with the new administration on these and other important issues.

We know and respect many of the President-elect's key appointees—and we believe they understand the critical importance of our relationships in Asia.

We are especially proud of General Jim Jones who later this week will leave his post at the U.S. Chamber to become President Obama's National Security Advisor.

Strengthening the U.S.-Korea Relationship

That brings me back to the U.S.-Korea relationship.

Many wonder what the new Congress and administration plan to do on trade and economic policy, and whether the U.S. might shift towards protectionism.

Will our country remain open to foreign investment, goods, capital, and people?

There is little question that President-elect 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 the same time, I believe that President-elect Obama and his administration will be deeply committed to stability and security in Northeast Asia.

His appointees are serious internationalists who believe in engagement and who, in my view, will not turn their backs on the critical importance of a strong partnership between the United States and Korea on all levels.

Even so, transitions to new governments always bring uncertainty. So let's discuss what our countries and business communities should do to ensure that the U.S.-Korea relationship continues to move in the right direction.

Fighting Protectionism

First and foremost, we must fight protectionism in all of its forms—trade, investment, regulatory barriers, standards, or industrial policy.

No country ever succeeded over the long run by closing itself off from the rest of the world.

Anyone who is unconvinced of the power of free trade, open markets, and international engagement need look no further than Korea. Trade has helped this country build one of the biggest and best economies in the world.

Even in a time of economic retrenchment, the United States and Korea must convince the global community to abide by international principles of open trade and investment.

We can begin by joining with others to complete the Doha Round. This would provide a tremendous boost of confidence to the global economic and trading systems.

Similarly, ratification of the U.S.-Korea free trade agreement would be an historic leap forward in commercial relations between our countries.

Both nations must overcome political hurdles to get this deal done. It is the business community's responsibility here and in Washington to lead the way forward—and lead we must!

For our part, the Chamber will be conducting an effort of education, dialogue, persuasion, and grassroots lobbying in the United States to fight protectionism and explain the benefits of trade—including the benefits of the U.S-Korea free trade agreement.

The U.S.-Korea Business Council was the first business group in the United States to call for the FTA.

The Council created and launched a business coalition to support the agreement the day our two governments announced these negotiations.

Since then, that coalition has worked tirelessly to inform Congress and the American people of how this agreement will create new economic growth, jobs, and opportunities.

We will continue to press for Congressional consideration of this agreement at the earliest possible time.

Let me also suggest that there are things Korea can do to further demonstrate its commitment to free trade and open markets, and to engage with the new American administration.

We applaud President Lee for his leadership—both at the G-20 Summit last November and since then—in urging world leaders to renew their commitment to free markets and their opposition to protectionism.

Korea will have many further opportunities to do this as part of the G-20 'troika" in 2009 and as that organization's chair in 2010.

The Chamber also commends President Lee's politically difficult decision to reopen Korea's market to U.S. beef. I hope you all enjoyed your lunch!

But more can be done. We are encouraged that the National Assembly is planning to take up deliberation of the FTA soon. Prompt ratification is in the interests of both countries.

Reforming the Korean Economy

But Korea should not wait for approval of the agreement to address barriers to its competitiveness and prosperity.

For example, Korea should move forward with deregulation and economic reforms that will strengthen the Korean economy.

During a time of global economic turmoil, it is important that the Korean government maintain positive reform momentum.

It should make every effort to match its positive message on foreign direct investment with real actions.

These actions should reaffirm to investors that Korean laws and regulations are developed in a transparent manner—with opportunities for foreign investors to provide input—and that they are driven by the rule of law.

The government should ensure that foreign investors can compete on a level playing field with domestic companies once they are established in the Korean market.

It should also continue to align Korean standards and regulatory systems with internationally recognized models.

Differences in standards and regulations make Korea appear to be a closed market and are highly inefficient.

As you know, the government recently announced that it would remove a technical standard for telecommunications handsets that has kept the BlackBerry and i-Phone out of the Korean market.

This is a very positive step.

The trade agreement we have negotiated addresses many such matters. But if it's good for Korean consumers and the country's ability to attract investment and business engagement, why wait?

Innovation and IP

Innovation, and the protection of the intellectual property that drives it, are also fundamental to Korea's future success.

This country has been quite supportive of IP rights—including significant steps to increase enforcement.
Korea has a tremendous opportunity to play a leadership role in advocating the importance of intellectual property and innovation—regionally and in global forums. The U.S. Chamber stands ready to help.

Energy and the Environment

Energy and environmental challenges also demand our attention.

Both of our countries face the twin challenges of securing affordable and abundant energy while preserving the environment.

Both President-elect Obama and President Lee support plans to boost clean energy technologies, energy efficiency, and global solutions to climate change.

Clearly there is great potential for cooperation between the United States and Korea to advance these shared goals.

Our private sectors have raced ahead of our governments—as they always do—by working together on lithium ion batteries, fuel cell technology, and hydrogen power.

Combining the ingenuity of the American and Korean people could go a long way towards helping the world achieve energy security while addressing climate change.

Fostering a Strong Dialogue

Finally, both countries should remain committed to an open, honest, active dialogue across all levels of our relations.

Our Chamber will strongly urge the Obama administration and the Congress to further strengthen this partnership through more frequent, senior-level engagement with the Korean government and National Assembly.

We encourage the Korean government to reach out actively to our new government and business leaders as well.

The more the Korean government can do to help our new president tackle the extraordinary challenges he faces, the better. This approach would go a long way to achieving the continuity and strengthening of our relations that we all want to see.

Conclusion

Let me conclude by saying that Korea has achieved remarkable things under very challenging conditions over the last half century.

Americans have been proud to count themselves as good friends and committed partners of the Korean people.

There will be difficult challenges ahead—in our economies, in this region, and around the world.

But if there is one thing that Koreans and Americans have proved again and again, it is that we are resilient and we are tough.

We have tenacity and the capacity to overcome big challenges. And we never let problems or setbacks stand in the way of building a better, more secure, more peaceful, and more prosperous world, for ourselves and for the generations who will follow us.

Thank you again for being so warm in your welcome and for giving me this opportunity to share my views with you. I deeply appreciate it.

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