Thomas J. Donohue Remarks at the Indo-Pacific Business Forum

Monday, July 30, 2018 - 9:45am

 

Indo-Pacific Business Forum
Remarks as prepared for delivery by
THOMAS J. DONOHUE
President and CEO
U.S. Chamber of Commerce

Good morning everyone.

It’s my pleasure to welcome you to the U.S. Chamber of Commerce for today’s Indo-Pacific Business Forum.

We’ve brought together leaders from business and government to discuss an issue important to all of us—America’s engagement in one of the most significant regions in the world.

We’re looking forward to hearing directly from top administration officials about their vision for the region. And there will also be opportunities to ask questions and network.

Today’s forum symbolizes the increasingly important role that India and the sub-continent plays in our economic relationship with Asia.

It’s also a sign of the good will between the administration and the business community, and our shared desire to seize historic opportunities in the Indo-Pacific.

I don’t need to tell anyone here why this region is so important. We’ve all read the reports and heard the statistics …

The Indo-Pacific is the fastest growing and most dynamic region on earth.

By the end of the next decade, it will represent 66% of the world’s middle class. 59% of all goods and services sold to middle class consumers will be sold in the Indo-Pacific.

That means that trade with this region is not just a historic opportunity—it is a requirement for any nation that hopes to compete and lead in the world economy.

The same can be said of investment. Developing nations in the region will need about $1.5 trillion in investment every year for the next twelve years to develop the infrastructure needed to sustain their growth.

Their governments cannot fund it alone. It will require private capital. This presents another opportunity—and also an urgent calling—for American firms.

Funding for these projects will come from all around the globe. But America needs to be at the table, with the financial resources to match our ambitions.

The bottom line is, our nation’s economic future depends in no small part on the ability of our companies to compete in the Indo-Pacific.

But here’s the problem … U.S. businesses have been steadily losing market share in the region for years.

One reason—as the administration points out—are protectionist policies from local governments. A typical Southeast Asian country imposes tariffs five times higher than what we impose, and also has a web of regulations that block market access.

We are also seeing an increase in non-tariff measures such as local content requirements that hurt the many American service providers trying to operate in Asia.

Another challenge is economic nationalism. We’ve seen the state capitalist model become more prominent in the region over the past decade—and not just in China.

Despite all of this, there are more reasons for optimism than pessimism. There are many bright spots in the region.

India, for example, has become an increasingly close commercial partner to the U.S.  In fact, I’m headed there in just a few weeks for a series of meetings with industry and government leaders.

Hard work still lies ahead—in India, and throughout the region.

Everyone here can agree that we have enormous opportunities to seize …

And everyone here can agree that there are challenges standing in the way.

What we don’t always agree on is how to solve those challenges. But the most important thing is that we remain determined to work together.

This event today is evidence that the Trump administration and the business community are determined to keep the discussions going between us, and to work toward common solutions to our shared challenges.

Before we welcome our first speaker, let me take a moment to share the business community’s perspective on how to solve the challenges we face.

There are three priorities that we believe should govern our approach.

Openness

First, we must recommit to openness.

We need to strengthen our existing partnerships in the Indo-Pacific region by lowering, not raising, barriers to trade.

And when we run into barriers in other countries, we must overcome them through tough, fair, and enforceable trade deals.

When we stop pursuing these deals—when we stand still on trade—we inevitably fall behind.

Consider the fact that the Trans-Pacific Partnership is moving forward without us…

The EU has signed a deal with Japan, and is pursuing talks with others in the region such as Vietnam …

The Belt and Road Initiative is promising to connect China to dozens of nations throughout Asia, Europe, and Africa …

Indo-Pacific countries have signed more than 150 bilateral or regional trade agreements …

Meanwhile, the United States has just 3 free trade deals in the Indo-Pacific—with Australia, Singapore, and South Korea.

If we don’t get busy inking more deals and opening back up to the region, we’ll be left on the outside looking in.

The business community is eager to work with the administration to negotiate new trade agreements with high standards. These should include intellectual property protection, and should be crafted with all industries in mind—from the digital economy, to financial services, to energy.

In addition to trade deals, we have a range of tools that can allow the U.S. to establish a posture of openness in the region—and some of them will be discussed today.

For example, later this morning, we’ll hear from Ambassador Jeffrey Gerrish, acting president of the Ex-Im Bank, on the administration’s goals for its future.

A fully functional Ex-Im Bank is critical to empowering U.S. businesses of all sizes to benefit from trade.

We’ll also have a discussion with members of Congress about how legislation can open the floodgates of investment and trade.

Case in point: The Build Act, which the Chamber supports. It helps put private-sector dollars to work in developing countries—building infrastructure, creating first-time access to electricity, and even starting local businesses.

We’ll also hear from Administrator Mark Green of USAID about how economic assistance not only improves life for the citizens of developing countries, but also levels the playing field for U.S. businesses.

If we use these tools—in addition to trade, investment, and more—to signal our openness, it will inevitably encourage Indo-Pacific nations to open themselves to us. 

That is why openness is the first priority for American business in the region.

Principles

Second, we believe bedrock American principles should govern our engagement—starting with free enterprise, innovation, and the rule of law.

The U.S. was founded on free enterprise and free markets—and we started a global trend toward liberty that has led hundreds of millions out of poverty worldwide.

But today we face a challenge in China’s model of state capitalism. Beijing’s subsidies, industrial policies, and unfair trade practices favor domestic firms and put foreign enterprises at a disadvantage—not only in China, but in global markets.

As the administration has rightly pointed out, this model has given China economic advantages at the expense of other countries.

We should not hesitate to challenge China’s model, but we must do so in a way that adheres to our own free market principles and avoids self-harm.

Unilateral actions, without the support of our allies, will only weaken our own negotiating hand by squandering international good will.

That doesn’t mean we shouldn’t be tougher and smarter than we’ve been in the past—and it doesn’t mean we can’t try new things.

It simply means we need to stay true to who we are—and who we were founded to be.

History

That leads me to our third priority: We must remember the lessons of history.

In the aftermath of the Second World War, the U.S. took the lead in creating a global, rules-based trading system based on mutual openness. Successive rounds of tariff cuts over half a century helped increase world trade 40-fold.

America’s Greatest Generation established this post-war trading order because they knew the costs of protectionism.

The disastrous Smoot-Hawley Tariff Act of 1930 triggered a 66% decline in world trade, contributing to the Great Depression, which set the stage for war.

They vowed not to let history repeat itself, and trade has played a huge role in this massively successful undertaking.

The strong trade ties between the United States and the other nations of the Indo-Pacific have been at the fore of these efforts. 

Our commerce has fostered economic growth and good jobs, but it has also strengthened ties of peace, cooperation, and friendship between nations.

Peace and prosperity have often gone hand in hand throughout history. But now, they are more closely related than ever.

Today, American businesses are not just in competition with their rivals across town, or across the state, or even across the country.

They are in competition with foreign businesses they have never heard of.

If our companies lose access to foreign markets, they will struggle to remain competitive in this global economy—especially if other nations are increasing their own access at the same time.

Today, foreign policy is domestic policy.

That is why we are so glad to be engaged in this discussion today with the administration. And it’s why I’m honored to introduce to you our next speaker.

Secretary of State Mike Pompeo is a true leader—guided by vision, intellect, and also faith and trust in his team.

This is why he excelled as an Army officer, leading his men during dangerous deployments at the height of the Cold War.

It’s why he became a successful businessman, founding a thriving airplane parts company in Wichita.

It’s why he quickly set himself apart on Capitol Hill after being elected to the U.S. Congress—and earned President Trump’s nomination to be Director of the CIA.

He led that agency like a true businessman: Streamlining unnecessary bureaucracy, boosting workforce morale, and setting a clear northern star—what he termed a “Commander’s Intent.”

Now, as we all know, he’s been tasked with doing the same at the State Department. And so far, he’s knocking it out of the park.

He’s revitalizing our diplomatic corps, and tightening our relationships around the world—and he’s doing it in person with a travel schedule like nothing I’ve ever seen. It’s too bad there’s no frequent flyer miles for military travel!

Ladies and gentlemen, we’re honored to have him here, and we’re excited to hear his vision for America’s future in the Indo-Pacific—including what all of us in the business community can do to help.

Please welcome Secretary of State Mike Pompeo.

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