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Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
Remarks to the American Chamber of Commerce of Ottawa
Wednesday, March 27, 2013
Ottawa, Canada
As prepared for delivery.
Introduction
Thank you Rick and AmCham for your leadership and for hosting breakfast today. Welcome and thank you all for being here. It is good to be in Ottawa.
As you heard, I’m the Assistant Secretary for Market Access at the U.S. Department of Commerce responsible for helping to manage our bilateral trade relationships. I have a global portfolio, and that means my team tends to focus extensively on emerging markets and those places where we—like you—encounter our biggest challenges. Places like the BRICs and other emerging economies. In my role I’ve circled the globe a few times, including visiting Sub-Saharan Africa—home to 7 of the 10 fastest growing economies in the world—4 times in the last 18 months alone. But as we look to new markets, we know we can’t forget our oldest friends. And the U.S. doesn’t have a better and more reliable friend and economic partner than Canada.
Now, I could cite for you the numerous statistics on our trade relationship, but you already know them well. You know that we are each other’s largest and arguably most important bilateral trading partner, with a staggering $600 billion in annual two way trade. When you include investment, we’re talking about an annual economic relationship in excess of one trillion dollars—one of the world’s largest and most successful partnerships. And beyond just statistics, those numbers represent real economic prosperity, regional competitiveness, and literally millions of jobs for our people.
It’s a relationship that works well and keeps working well. But it’s one that we can’t and shouldn’t take for granted. So I’m here, in part, to make sure we don’t.
We don’t have a lot of time, so I want to focus my remarks on just a few things this morning. And hopefully we’ll have time for a few questions at the end.
First, I want to touch briefly on our government’s international trade policy, and what that means for Canada and our work together. Second, I want to touch upon some of the initiatives we have underway to strengthen our own bilateral trade relationship; and finally, I want to close by talking about why we should work together, including with Mexico, to strengthen North American competitiveness, a topic I feel quite passionately about.
Brief Overview on the President’s Trade Agenda as it relates to Canada
From the earliest days, the Obama Administration has understood that exports and trade are a key component of our economic growth and competitiveness. We took office during an historic and by now well documented recession, with an economy that was losing some 750,000 jobs a month. The President wisely recognized that, with 95% of consumers and an estimated 80% of global income growth taking place outside our borders in the coming years, if we were going to grow our way out of the recession, we were going to have to up our game in global markets. That’s why he launched, in 2010, the National Export Initiative, a whole of government effort being led by the Department of Commerce. Recognizing that fewer than 1% of American companies export, and that most of those export to one country (typically Canada or Mexico), the NEI has endeavored to kick start the U.S. economy by promoting export-led job growth. And so far it’s working. In 2012, U.S. exports hit an all-time record high of $2.2 trillion, supporting close to ten million U.S. jobs. Exports as a share of U.S. GDP are now almost 14%, also a record high. Despite some very strong headwinds that put significant downward pressure on global exports and trade volumes, we will continue to see exports play a strong role in supporting U.S. economic growth and jobs. And this is reflected in our trade with Canada, where bilateral trade has increased 30% since 2010 alone.
But there’s clearly more to do. This is why we’re focused so intently on a range of initiatives across a variety of international fora to promote trade liberalization and regional economic integration. Canada has been, and will remain, an important partner in these efforts. For example, we have worked together to maintain the vitality and centrality of the World Trade Organization and its disciplines in Geneva. From concluding the updated Agreement on Government Procurement to advancing the Information Technology, Services and Trade Facilitation Agreements, the United States and Canada share common values and common strategic interests in making the case for a rules-based system of free trade. This means bringing in new partners, like we did with the Russian Federation in 2012, while holding them and existing members, like China and others, accountable for the rules that they have agreed to. And here again, the U.S. and Canada have been effective partners.
We have also worked closely outside the WTO on a range of issues affecting trade and commerce, from our work together to promote transparency and anticorruption in the OECD, the OSCE, and the G20, to our shared interests in promoting regional integration in Asia through our joint membership in APEC.
In fact, perhaps our biggest area of cooperation—and opportunity—now lies with our shared commitment to advancing the Trans-Pacific Partnership. As our Acting U.S. Trade Representative testified just last week to Congress, we view the TPP as “as a flagship initiative of . . . President [Obama’s] trade policy,” and we were delighted that Canada joined the negotiations last year. Through the TPP, we are seeking, together, to achieve a high standard trade agreement that will link dynamic economies throughout the rapidly growing Asia-Pacific region, and to provide a more robust and responsive trade model for the 21st Century.
Apart from our shared interest, as Pacific nations, in Asia, our countries stand to significantly improve our own bilateral relationship, and the broader trilateral relationship with Mexico, through the TPP. It will allow us to advance new disciplines and modernize and update our NAFTA partnership for the 21st Century. From addressing new sectoral challenges like e-commerce that did not even exist when NAFTA was negotiated, to advancing new disciplines on regulatory cooperation, state owned enterprises, and other topics, I believe the TPP will create exciting opportunities for business in both countries, deepen our regional supply chains, and further increase and accelerate regional economic integration.
I understand that, during the 16th round of TPP negotiations that concluded two weeks ago in Singapore, the negotiators were able to put the talks on an accelerated track. And while substance will ultimately drive the timetable, we remain hopeful we can together achieve our goal of completing the negotiations this year. I want to say that the United States appreciates the constructive partnership between our nations on the negotiations. And while no two countries ever see eye to eye on every single issue in a complex negotiation of this nature, Canada has quickly become a valued partner with the U.S. and is an important voice in pressing for ambitious, market-opening outcomes. We are looking forward to Canada’s continued support and cooperation as we head to Lima for the 17th Round of negotiations in May.
Strengthening Our Bilateral Relationship
As we work to advance new trade policy disciplines globally through the WTO and regionally through the TPP, it’s important to remember that there is also important work to be done affecting our own bilateral relationship. Let me say just a brief word about some of what we’re up to together.
In a commercial partnership as vast and complex as the one our nation’s share, the opportunities, and challenges, are always significant. I think it’s important to recognize that it’s been the private sector, including all of you here today, and not the government, that has ultimately driven the investment, the production, and the economic activity that has made our relationship the success that it is. But government does have a role to play. Consequently, what we’ve tried to do is to focus our efforts on those areas where we think government can and should help facilitate, enable and promote even stronger commercial activity and cooperation.
A natural starting point is in the area of regulatory cooperation. Recognizing that enhanced regulatory cooperation and, where possible, alignment can dramatically reduce both non-tariff barriers and significant transactions costs and inefficiencies, President Obama and Prime Minister Harper launched, as you know, the U.S.-Canada Regulatory Cooperation Council (“RCC”) in 2011. The RCC has a two-year mandate to promote economic growth and job creation through increased regulatory transparency and coordination. Our governments have worked hard to solicit industry input to identify those areas where enhanced regulatory cooperation can facilitate greater trade and commerce. As a result, we’ve developed a Joint Action Plan that identifies key sectors characterized by high levels of integration, significant growth potential and rapidly evolving technologies. From Agriculture and Food Safety to Transportation to Health and Consumer Goods, there are some 29 distinct initiatives now underway that are demonstrating how technical collaboration, mutual recognition and other efforts to share best practices and common approaches to regulation and standard setting can yield significant promise for both Canadian and American businesses.
The RCC is also exploring important “cross-sectoral” initiatives, including shared approaches to the development and regulation of nanomaterials and better addressing the needs of small business that are especially burdened by regulatory divergences. It’s a work in progress for sure, but real progress is in fact being made. I hope you have all had the chance to review the December 2012 Progress Report to Leaders. It’s quite a substantive report that makes clear very real and significant initiatives are underway—initiatives that, we believe, will make a very real, bottom-line difference to our companies.
Most of the work of course happens between our regulators. Our role at the Commerce Department is to ensure, in part, that industry’s priorities are reflected in our work plan, and that we do a more effective job communicating with and engaging stakeholders in the process. I think there has been recognition on both sides that we can perhaps do more than we’ve done to date in this space, and I would certainly welcome the Chamber’s ideas on this front.
A second area where government can and must play a role in facilitating trade and commerce concerns the management of our shared border. As this audience knows well, our countries are connected by more than 120 land ports of entry, more than 115,000 annual flights, and literally thousands of commercial and recreational maritime vessel crossings. Every day, approximately 300,000 people cross the U.S.-Canada border for business, tourism, school and family visits. Apart from just shared border crossings, we are bound in many places by common critical infrastructure, including bridges, tunnels, energy pipelines and electrical grids that connect us as one of the most integrated markets on the planet. And while this extensive connectivity represents a source of significant opportunity, it also poses real challenges as both nations grapple with the realities of protecting our people and securing our homeland in a post-9/11 world, where we face very real and ongoing security concerns. The challenge, of course, is to strike the right balance to ensure that we can jointly address our legitimate shared security interests without unduly damaging or inhibiting the dynamic commercial relationship that defines us.
Recognizing that how we manage and approach our “connectivity” has a dramatic bearing on our mutual security and prosperity, in February 2011 President Obama and Prime Minister Harper jointly established the “Beyond the Border” initiative, which establishes a shared vision for perimeter security and economic competitiveness.
As with the RCC, our governments actively solicited industry and stakeholder feedback to develop and advance a two-year work plan to address threats within, at, and away from our borders, while expediting lawful trade and travel. The work plan identifies four key areas of cooperation: addressing threats early; facilitating trade, travel and economic competitiveness; taking an integrated approach to cross-border law enforcement; and finally cooperating on cybersecurity and the protection of critical infrastructure.
Given the audience, I suspect you are all quite familiar with the BTB program, so I won’t say too much here. But I do want to again acknowledge that, as with the RCC, there has been excellent bilateral cooperation between our governments and significant progress is being made. Much of this progress is detailed in the December 2012 progress report, which I encourage you to review if you haven’t already. For example, last year we developed the U.S.-Canada Integrated Cargo Security Strategy with the intent of resolving security concerns as early as possible in the supply chain, and we implemented the first of three pilots intended to facilitate the movement of cross-border cargo under the principle of “cleared once, accepted twice.” We achieved mutual recognition of our respective air cargo security programs for passenger aircraft, which eliminates the need for re-screening, increases the number of cross-border flights, and allows airports to shorten time between flights. And we enhanced and expanded the trusted traveler program known as NEXUS, providing additional benefits to trusted travelers.
We have a number of initiatives online for 2013, including piloting certain pre-inspection and pre-clearance initiatives for cross-border trucking, releasing the first ever Joint Border Infrastructure Investment Plan, and continuing to deploy smart technology to study, track and improve border wait times. We’re also seeking to implement “single windows” in both countries to allow traders to electronically transmit documentation necessary to clear other government agency and department requirements.
I want to single out and thank our colleagues in our respective customs and border protection agencies for their outstanding leadership and collaboration. Most of this work falls squarely on their shoulders, and they are doing truly important work to facilitate the free flow of trade and commerce, enhance our shared supply chain security, and ultimately promote jobs and economic growth in both nations.
Once again, our role in the Department of Commerce is to work with all of you in industry to make sure that your views, your priorities and your concerns are addressed in these efforts. We want to help raise awareness of the good work being accomplished and identify new priorities that are central to your economic competitiveness. So we welcome your feedback and input into these ongoing processes as well.
Promoting Innovation Through Robust Protection of IPR
Getting it right on regulatory cooperation and border trade facilitation will go a long way toward strengthening an already strong and dynamic partnership. But there is clearly more that we can and should do to promote and enhance bilateral trade and investment. I believe our governments must continue to evaluate and undertake measures to promote innovation and competitiveness in our respective markets, and to promote the kind of investment in R&D and, where appropriate, joint ventures that will keep us competitive in the 21st Century. The capacity to innovate is what will ultimately differentiate truly competitive and dynamic economies, and here again our governments have an important role to play in creating the ecosystem that fosters and promotes innovation. One of the most important things we can do in that respect is ensure there is appropriate and robust protection for intellectual property rights, which are the bedrock and foundation of an entrepreneurial society.
Last year the Commerce Department concluded an important study that found that IP-intensive industries support some 40 million jobs and contribute more than $5 trillion to U.S. GDP. That amounts to a whopping 35% share of our national wealth. The report helped us put numbers to what experience has intuitively taught us: IP drives economic growth and creates jobs. But IP intensive industries cannot and will not develop, much less thrive, without a deliberate focus on the protection of intellectual property rights.
I want to commend the Canadian government for some important steps it has recently taken in this respect. The passage of the Copyright Modernization Act last year was a significant and long-awaited achievement. The legislation makes important advances that will help to combat and reduce the incidence of online piracy, and it will take Canada a step closer to finally implementing the WIPO Internet Treaties. Canada is, as you know, one of only two nations in the OECD not to have yet ratified the treaties, and we hope it will soon take that important step. While the Copyright legislation makes important strides, it does create some new uncertainty through its broadening of certain fair use exceptions, especially in the area of education, which as you know the legislation leaves undefined. We hope and encourage Canada to address these concerns, where possible, through the rule making process, which is an issue I plan to raise with my counterparts in meetings later today.
We’re also encouraged by the Harper Administration’s recent introduction of Bill C-56, the “Combating Counterfeit Products Act.” This bill, if and when passed, will enhance the enforcement authority of border officers, and encourage cooperation between law enforcement and rights holders, among other improvements. We welcome this development and believe that granting ex-officio authority to Canadian customs officials is a necessary step to stem the flow of counterfeit and pirated goods.
It’s important to stress that the proposed legislation is important for both of our countries. It will help our joint efforts to protect the health and safety of citizens on both sides of the border, because it will stop harmful goods—like fake pharmaceuticals and defective auto parts—from entering the Canadian and U.S. markets, putting our people at risk. I understand from my colleagues at U.S. Customs and Border Protection that they made 150 seizures of suspected counterfeit goods transiting the U.S. en route to Canada in FY2012, and they have already made 95 additional seizures this calendar year alone. Regrettably, if the current legislation passed as is, Canadian authorities would not be authorized to seize counterfeit goods in transit the other way, headed to the U.S., because the legislation does not extend ex-officio authority for in-transit shipments. We hope that this significant omission can be addressed through the committee process, and that industry will speak forcefully to the importance of the issue. Our supply chains are too integrated, and our economies are too linked, for this type of imbalance to persist.
Now while Canada has taken some very important strides to enhance the protection and enforcement of intellectual property rights, we do remain concerned in a few key areas, and we hope we can continue to work to address these issues together. In particular, we continue to hear substantial concerns from the innovative pharmaceutical sector about what is widely perceived to be weak and deteriorating patent enforcement in Canada. This is especially true with respect to the apparent heightened utility standard that Canadian courts are applying, ex post, in patent challenges. This is coupled with the fact that Canada is the only G7 nation not to offer patent term restoration for delays associated with the regulatory approval process. The bottom line is that the Canadian market is becoming an ever uncertain and unpredictable place for U.S. innovative companies in the emerging and otherwise booming biotech and life sciences industry. This is a strange place, I think, for Canada to be, given that in virtually every other respect it is a natural and obvious locale for innovative industries to invest. With its excellent educational system, favorable tax rates, strong institutions and rule of law, Canada can and should be partnering with the United States to develop these new innovative sectors that hold the promise for global competitiveness. We certainly stand ready to partner with and support Canada as we together take steps to ensure our industries’ leadership role in this emerging sector of the economy.
Thinking Anew About North American Competitiveness
Recognizing that our time is short, I’d like to conclude with just a brief word about North American competitiveness. I’ve focused most of my remarks today, for obvious reasons, on our bilateral relationship, but I do think it’s important to acknowledge that all that I’ve said about the promise of the U.S.-Canada relationship is equally true of Mexico. Mexico, which is now one of the fastest growing and best performing economies in the OECD, is well on pace to be the next great economic success story. Notwithstanding some real security concerns, which the Mexican government recognizes and is tackling aggressively, the Mexican economy is thriving, and Mexico is quickly transforming into a middle-income nation. Mexico is quickly emerging as a manufacturing powerhouse, well on track by many studies to displace China as a major global manufacturing hub. Given the extensive levels of co-production and integration that exist between our economies, I have spent, in fact, considerable time these last two years making the case that increasingly U.S. competitiveness is linked intrinsically with Mexico. And this is equally true of Canada. Together, the U.S., Mexico and Canada comprise one of the most dynamic regional economic platforms on the planet, and I believe we need to be much more strategic in our thinking about how we leverage this powerful relationship.
I believe we need both government and industry leaders together to be thinking critically about how to position North America as a competitive destination of choice for investment and high end manufacturing, and as the hub of innovation. We can do much more to understand how to strengthen the integration of our economies, especially in key emerging growth sectors. And we can be much more strategic in our cooperation and shared interests in third markets—especially in the arena of advancing international standards to keep foreign markets open to goods produced in North America. The TPP will certainly play an important role in this respect, but there is clearly more that we can and should do together. This is why the Commerce Department is committed to once again supporting a North American Competitiveness Conference to explore these important topics in the fall of 2013. We are just beginning to explore what a robust agenda for this conference might look like, and we’d certainly welcome the Chamber’s and all of your input and advice in this respect.
I want to close by leaving you with an image that I think embodies the spirit of what I’ve tried to convey this morning.
In August of 2009, we launched the Space Shuttle Discovery on an important mission to the International Space Station (“ISS”). On board the shuttle—an icon in its day of American leadership in science and engineering—was astronaut Jose Hernandez, the California-born son of Mexican immigrants, who Mexico quickly embraced as its first astronaut in space. Also on board that shuttle was a robotic arm, used to deploy critical satellites and vital components of the ISS. That arm of course was known as the Canada Arm, reflecting the unique technology and contribution that Canada made to our joint space exploration efforts. To me, the image perfectly captures the spirit of North America and its people: working together, seamlessly, in one of the most innovative and technologically advanced endeavors in human history. That collaboration represents the promise of our nations—a promise that is rooted in the talent of our people, our shared commitment to technological innovation and global leadership, and to our mutual prosperity. The shuttle program is behind us now, but new challenges and opportunities beckon, not just in space but here on the ground, and not just in science but across a wide range of industries and sectors. The challenge before us now, in my view, is harness the talent and innovation of our people, our ideas and our industry to lead the way in in the global markets of 21st Century. The promise is before us, and we welcome the chance to explore these new opportunities with our Canadian, and Mexican, partners.
Thank you very much.
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