NATIONAL ASSOCIATION OF FOREIGN-TRADE ZONES
LEGISLATIVE SEMINAR
WASHINGTON, DC

Thank you to Brandi, the rest of the NAFTZ Board, and Will Berry for inviting me today. This legislative seminar is an important event, a valuable event.

In the short time we have, I’d like to do 2 things:

First, a few comments on our FTZ program – all the wonderful things that our Executive Secretary, Andrew MacGillavray, and his team have been doing, and

Second, provide a little context. How the FTZ program fits into the Administration’s larger trade agenda and where that agenda is going….

As Assistant Secretary, I, of course, serve on the Foreign-Trade Zones Board. From this perspective, I’ve come to recognize the value of FTZs in carrying out broader policy objectives, particularly promoting exports and economic growth.

In the course of acting on some 100 FTZ cases over the past two years, I’ve been extremely impressed by the impact that zones have on economic development in local communities.

Indeed, I’ve totally drunk the Kool Aid. FTZ’s are an underappreciated and underutilized resource that can enhance our global competitiveness. And, for that reason, I’ve asked Andrew and his team to travel around the country visiting with zone users as a means of outreach and a way to learn how we can improve things. I’ve given them carte blanche to do so (or almost…), and the endeavor seems to have been useful – for both us and FTZ users. Although our resources are inherently limited, we will continue to do everything we can to ensure that the program is effective and efficient in carrying out its public interest mandate and meeting the needs of communities and companies across the country.

I, myself, have seen first-hand the impact of zones, traveling with Andrew to visit subzone facilities like Nissan Forklift in Illinois and Pfizer in Michigan. It is clear: savings from zone procedures help encourage activity in the United States that might otherwise be done abroad.

One way a zone can contribute to the international competitiveness of U.S. firms, and I saw this with both Pfizer and Nissan, is to remedy disadvantageous Customs situations so that U.S. industries can operate on a level playing field. Often, plants are part of a multi-national corporate structure, with competing plants in a number of countries. U.S. plant managers have explained that their parent companies are looking to rationalize production at the most efficient factories and zone procedures are important as U.S. plants strive to remain competitive.

The NAFTZ deserves great credit for a couple things. First, the association recognizes the balance that Commerce staff is required, by law, strike in our process of evaluating applications. As you know, we must ensure that our actions are consistent with government policy, with the broad public interest, and that our authorizations result in net positive economic effects. The NAFTZ has long worked cordially with us to preserve this balance, something which wouldn’t necessarily occur under less mature leadership.

Second, the association deserves great credit for undertaking an effort to strengthen and revitalize the FTA program. I understand one of the morning sessions included a presentation of the preliminary economic impact projections for the Trade Agreement Parity proposal. It’s a very interesting proposal – I have a copy of the study! – and I look forward to working with you all and hearing more from my interagency colleagues and Congressional committees as they evaluate its impact.

Before closing, I’d like to quickly provide a little context: FTZs fit well into the Administration’s broader trade policy. Although the Administration is committed to vigorous enforcement of our unfair trade laws, we firmly believe that we should reduce the trade deficit – not by erecting trade barriers, not by building walls around the United States – but by promoting exports. After all, a job tied to exports, on average, pays 17% more than an average manufacturing job. And as you know from experience, trade can have a significant positive impact on local communities. In addition, the benefits of trade accrue to all Americans through a higher standard of living as the economic pie expands.

My old boss at USTR, Bob Zoellick, coined the term “competitive liberalization.” While Europe refrained from smaller negotiations, putting all its eggs in a global WTO agreement, Zoellick believed that we should liberalize bilaterally, multilaterally, and globally. We can walk and chew gum at the same time. This policy has continued through the two successive USTRs, Rob Portman and Susan Schwab.

Currently, the United States has FTAs with 14 countries, 11 of which were implemented under the Bush Administration. As you know, we have pending free trade agreements with Peru, Colombia, Panama and Korea. We need a Colombia FTA – for both trade policy reasons and geopolitical reasons. Colombia is a great example of the connection between prosperity and security—you simply can’t have one without the other. An FTA with Colombia would complement our FTZ program by promoting exports in the Western Hemisphere.

The Department of Commerce is dedicated to encouraging economic development and innovation through trade. Breaking down barriers to trade and making U.S. exports more profitable is our goal. Foreign Trade Zones are helping us to accomplish our goals and I am proud to be a part of this NAFTZ event today. Thank you for spreading the word about the value of FTZs and thank you for your time.