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Remarks at Transatlantic Business Dialogue Conference

Thursday, October 8, 2010

Commerce Secretary Gary Locke
Remarks at Transatlantic Business Dialogue Conference

Thank you for the kind introduction.  Good morning everyone.

Let me begin by thanking the Transatlantic Business Dialogue – TABD – for providing the venue for this important discussion, and also for its tremendous contribution to building trans-Atlantic economic ties over the years.

The relationship between the European Union and the United States has been, remains and always will be critical.  We share a common set of values and a vision for the future. 

Our economies are deeply intertwined.  Two-way trade and investment ties currently stand at a staggering $4.4 trillion per year. 

And trans-Atlantic foreign direct investment has generated a whopping 14 million jobs on both sides of the Atlantic. 

Of course, in these economic times, I believe we can–and must–do even more business together. 

As many of you know, President Obama launched a National Export Initiative or NEI, earlier this year. It aims to double U.S. exports by 2015, in support of several million new jobs.

As part of the NEI, the Commerce Department is increasing trade promotion activities and ramping up efforts to take on trade barriers

But central to our efforts is discovering new avenues of cooperation with longstanding trading partners like those in the EU.

Expanding exports is particularly important for new businesses and small- and medium-size companies.  Today, less than one percent of America’s 30 million businesses export–a percentage that is significantly lower than much of the rest of the developed world.

We have our Commercial Service offices throughout Europe and the world operating on all cylinders to find new global opportunities.

As you know, this is not a zero-sum game.  The NEI is not a one-way street that will only benefit U.S. companies. 

Mutually beneficial trade creates growth and jobs for both trading partners.

That truth is well understood in the U.S. and EU. Our economies are central drivers of the global economy, accounting for over 30 percent of global trade and 50 percent of global GDP. 

Some observers, especially a press on the lookout for next new trend, have suggested that U.S. interest in the trans-Atlantic economic relationship has diminished with the rise of new economic powers, such as China and India. 

I can assure you that President Obama and this administration remain fully aware of the significance and importance of the U.S.–EU economic relationship. 

There are many forums that bridge our continents.  Today, I want to give special thanks to TABD for its support for the Transatlantic Economic Council (or TEC).

The Obama administration sees the TEC as another good vehicle for Cabinet-level officials to steer this rich, complex and dynamic relationship. And Deputy National Security Advisor Michael Froman will be discussing the Economic Council at greater length later this afternoon. 

Since last year’s TEC meeting, we have been working with our European Commission counterparts to reshape the TEC to be more results-oriented, transparent and focused on priorities identified by stakeholders. 

We appreciate the leadership that the TABD has displayed in its role as a key advisor.

I also want to applaud TABD for its announcement today of its Ten Innovation Policy Principles and Recommendations for Action.

Both the United States and Europe are facing daunting challenges, ranging from boosting economic growth and job creation to increasing competitiveness and finding alternative energy solutions. 

Now, we can talk about all the structural factors that caused this:  be it global competition, productivity gains, or the recent folly of building an economy on the flimsy surface of a real estate bubble.

But the deeper problem we’re facing in America is a system that simply isn’t innovating to create enough new advanced products and services.

In the past, America has depended, above all, on one thing to keep growing: a continuous flow of new technologies and new ideas entering the marketplace, one that sweeps away old ways of doing business and replaces them with new ones.

But today, America’s innovation ecosystem is struggling.  It does not efficiently:

  • Create the right incentives or allocate enough resources to research and development;
  • Nor is it rapidly turning those ideas into businesses that can create good jobs.

The evidence is everywhere you look.

Most strikingly, you see it in the job numbers.

America has created no net new jobs over the past decade, and median wages have remained flat.

Fortunately, President Obama grasped the urgency of the problem.

Overall, the president’s Recovery Act included $100 billion to support groundbreaking innovations in diverse fields, from healthcare IT and health research, to smart grids and high-speed rail.

In 2009, the president went before the National Academy of Sciences and committed to devote more than three percent of America’s GDP to research and development, which would represent the biggest such investment since John F. Kennedy’s administration.

And just last month, the president unveiled a proposal to expand, simplify and permanently extend the R&D tax credit.

At the Commerce Department, we have launched the Office of Innovation and Entrepreneurship.  Its mandate is to drive policies that help entrepreneurs translate new ideas, products and services to into economic growth, and to accelerate technology commercialization of federal R&D.

Researchers–especially those relying on taxpayer dollars–have to do a better job of focusing on lines of discovery that have real potential to spawn new industries, new businesses and new jobs.

You might not know it, but the Commerce Department’s functions also include operating the U.S. Patent and Trademark Office.  And at the PTO, we are working hard to reduce the enormous backlog of pending patent applications.  We are committed to processing applications dramatically faster, while maintaining quality.

Across the rest of the Commerce Department, we are putting our shoulder behind any number of initiatives aimed at accelerating innovation.  We just finished the grant process for underwriting new broadband infrastructure to under-served parts of the nation.  And at the National Institute of Standards and Technology, we continue to speed along the development of standards for smart grid technology, so that those new products can come to market faster.

As the United States moves forward in implementing this innovation agenda, engaging with other nations, particularly the EU, is critical. 

The EU is our most important partner when it comes to research and development. 

In 2007, U.S. foreign affiliates invested 66 percent of their global R&D in Europe, while affiliates of European companies invested 78 percent of their overseas R&D budgets in the United States. 

Given how similar and integrated our economies are, it makes sense for the United States and the European Union to collaborate on innovation. 

For this reason, the TEC created the Transatlantic Innovation Action Partnership and asked my Department to lead the effort on the U.S. side.

Initially, the United States and EU have identified three areas of focus for the Partnership:

  1. Engaging on policies that foster commercialization and innovation ecosystems;
  2. Ensuring adequate access to critical raw materials; and
  3. Encouraging the development and sale of eco-efficient, bio-based products. 

These topics were developed in collaboration with the private sector, and we intend to further define the work stream with your help in the coming months.

Working cooperatively, we can innovate in ways that will make our companies more competitive, improve our quality of life and create jobs and wealth.

Even beyond the Innovation Action Partnership, there is always more we can do.  The United States and the EU are working together, for instance, to fight against the theft of intellectual property – which costs businesses billions of dollars and threatens the health and safety of consumers.

We’ve made some progress in coordinating our objectives and approaches on protecting IP rights in third-country markets, including joint seizure operations at U.S. and EU ports. 

Another area of cooperation is the U.S.-EU Energy Council, which is focused on energy policies and research collaboration on sustainable and clean energy technologies.

Worldwide, energy is a $6 trillion market, and the fastest-growing sector is the cleaner, greener kind.

As we implement these and other initiatives on innovation, we want to ensure maximum public-private cooperation, transparency, and accountability – a key objective in the President’s innovation strategy.

I want to emphasize here the importance of U.S.-EU collaboration on world standards to come up with compatible systems and keep markets open – whether for health IT, cybersecurity or smart grids.

If we in the West do not collaborate on standards other countries will adopt their own standards to protect not just their markets but to gain competitive advantage around the world. 

I am referring specifically here to countries such as China and India.

And speaking of China in particular, we’ve heard a lot, for example, from the international business community about the effect of China’s “indigenous innovation” policies, which threaten access to the Chinese market.

It’s a misguided strategy that serves no one well. It stands to hurt foreign businesses, including those in the U.S. and Europe. But it would also hurt Chinese consumers, who would be denied access to products that could improve their quality of life.

World leaders, governments and businesses must be unified and insistent in opposing such policies.

I look forward to continuing the dialogue on these and other matters with TABD and with your companies. 

I also look forward to reviewing more closely TABD’s  Ten Innovation Policy Principles and Recommendations for Action.   The Commerce Department will be leading a U.S. interagency analysis of this report. 

As everyone here knows, innovation is a long-term economic competitiveness issue, and one we will continue to work on with those of you in this room and our European partners. It takes sustained focus and a willingness to think of the next generation–not just the next election.

Emerging from the worst financial crisis in generations, we must work every day to strengthen U.S.-EU collaboration on innovation, clean energy, and other critical areas that will promote sustainable growth on both sides of the Atlantic and around the globe.

Thank you for everything you do to realize that future.