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Remarks at Consumer Electronics Show, Las Vegas, Nevada

Thursday, January 6, 2011

Commerce Secretary Gary Locke
Remarks at Consumer Electronics Show, Las Vegas, Nevada

Good afternoon – thank you for having me today.

As always, the Consumer Electronics Association has put together an unbelievable program for CES. I’m looking forward to spending the afternoon meeting with vendors and buyers, from the U.S. and from abroad.  I can’t wait to spend some time “walking the floor.” 

I’m also pleased to provide a few cap-stone remarks for the Show’s Policy Summit.

Innovation has been a major topic of discussion today – as it should be, because it is the lifeblood of the U.S. economy.

America has always celebrated the idea of entrepreneurial innovators and companies bringing new products and new ways of doing business to market. 

And the Obama administration understands that technology companies like those gathered here this week play a special role in driving innovation throughout the rest of the economy and indeed, around the world.

The TVs, the smart phones, and the videogame consoles on display here drive billions of dollars in sales and support millions of jobs.   But that’s not all.

The hardware and software you many of you develop help make virtually everyone – whether they are a homeowner here in Vegas, an auto parts supplier in Ohio, a farmer in Nebraska, or a retailer in New York – more efficient, more productive and more responsive.

As policymakers, we face two big questions: First, how can we use the levers of government to enable you and those who follow in your footsteps to innovate? And second, how do we get more of what you make into markets around the world?

Let’s start with innovation and a stark look at the reality facing America in today's global marketplace.

As President Obama said last month:

"We are in a fierce competition among nations for the jobs and industries of the future.  And the winners of this competition will be the countries that have the most educated workers, the strongest incentives to innovate, and the fastest most reliable ways to move people, goods and information."

I think many people in this room would agree that for too long, America did not take this competition seriously enough. Too many people in Washington were resting on the laurels of what historians like to call the American Century. Too few were focused on making sure the next 100 years were also an American Century.

We were falling behind.

America remains a world leader in key metrics of economic success like levels of entrepreneurship, R&D investment and IT infrastructure.  But a report from the Information Technology and Innovation Foundation concluded that no advanced economy in the world has done less than the United States to improve its competitive position over the last decade.

No wonder then that this past decade featured the slowest average annual GDP growth in America since World War II.

And that is still true even if you stop measuring before the beginning of the recession in 2008!

Fixing America’s innovation deficit has been a primary focus of the Obama administration since day one.

That’s why the Recovery Act included more than just short-term stimulus measures.  It also included hundreds of billions in investments in emerging industries like clean energy and in critical infrastructure like broadband to help lay the groundwork for sustainable economic growth and innovation.

We have also significantly increased investments in the type of critical basic and applied research at federal labs and universities that in the past, has enabled the private sector to commercialize everything from the Internet to GPS.

In fact, President Obama has set a goal for the public and private sector combined to invest three percent of our GDP in research and development, which would be the highest share since the Kennedy administration.

The administration is also working to improve the policies and practices that govern how America commercializes R&D.

Right now, America simply does not have an efficient system to take new ideas from government, academic and private sector research labs and translate them into commercially-viable products and businesses.

While the pursuit of knowledge for its own sake is and always will be important, we’ve got to do a better job focusing on lines of discovery that have real potential to spawn new industries, new businesses and new jobs.

Another key priority for amping up America’s R&D is ensuring our federal investments spur private sector and other capital to work alongside federal dollars.  For example, the Obama administration is putting $90 billion in government investment and tax incentives toward clean energy – which has spurred $110 billion in additional capital.  A lion's share of this is coming from the Department of Energy, which has led some commentators to say DOE has effectively become the largest clean energy venture capital fund in the world.

To me, that’s the measure of smart economic policymaking.

We’re not looking for government to directly create jobs – we’re trying to empower the private sector to take the lead and to bring capital off the sidelines.

That’s also why you’ve seen the president pushing so hard for expanding and making permanent the R&D tax credit, and allowing companies to deduct in one year 100 percent of their investments in plants and equipment made through the end of 2011.

That philosophy of empowering the private sector underpins almost everything we do at the Commerce Department.

We are the lead agency in the administration's $7.2 billion effort to expand high-speed Internet access to unserved and underserved parts of the country.

And because many of our broadband grants are to build out “middle-mile” connections between the national Internet backbone and local lines that go to homes and businesses, we hope to bring billions of dollars in private capital off the sidelines to build out the last of the nation’s last-mile connections.

Commerce is also pursuing aggressive reforms at the U.S. Patent Office – which, by 2008 had a backlog of almost 800,000 patent applications, and a three year wait for patents to be granted or denied.

So, we’re accelerating patent evaluations with a goal of getting the wait period down to a year for those applicants who want it.

And we’re working to improve patent quality to prevent inventors and other patent holders from being tied up in years of costly and often unnecessary litigation.

In the past few months, Commerce has also been helping to move America closer to President Obama’s goal of doubling the amount of commercial wireless spectrum by the end of the decade.  Our National Telecommunications and Information Administration is working to make the government use its existing spectrum more efficiently so we can auction off more of it off to the private sector.  With Congress’s and other agencies’ help, we also hope to craft incentives for the private sector to transfer spectrum from legacy uses to higher value ones

In fact, we've already announced a plan to free up 115 megahertz spectrum used by federal agencies as part of our fast-track review to identify reallocation opportunities that can be implemented within the next five years.

Then there’s Commerce’s Economic Development Administration, which is awarding tens of millions of dollars in planning grants to help local communities identify their unique strengths to develop regional economic clusters. 

And because we understand the urgency of spurring innovation right now, this year we’ll be reducing decisions on EDA grant applications from about 280 days to 45.

Of course, work on innovation at home is only half of the battle of economic recovery. Helping U.S. companies sell those innovations to the 95 percent of the world's consumers living outside our borders is the other half.   

Almost a year ago, President Obama announced his National Export Initiative or NEI, which aims to double U.S. exports and support two million American jobs by 2015.

The reasoning behind the President’s plan is simple:

  • The more products and services we sell abroad, the more jobs we create and support right here in America.

This work is critical because right now, a lot of American companies aren't exporting nearly as much as they could or should.

Consider the fact that only one percent of American companies export. And of those that do export, 58 percent only sell to one country.

To expand global opportunities for American companies, the National Export Initiative is focused on three areas in particular.

Number one is expanding the U.S. government's export promotion efforts in all its forms.

This can mean a lot of different things.

It can be:

  • Commerce Department officials doing the tough shoe leather work to find a company new customers in Brazil; or
  • State Department officials making sure a U.S. company gets a fair shake for a government procurement contract in China.

To put it another way, prior to the NEI, export promotion may have been a “some of the time” focus for many U.S. cabinet agencies and departments.

The NEI makes it an “all-the-time focus.”

The NEI is also going to help improve access to credit, especially for small- and medium-sized businesses that want to export.

Finally, under the National Export Initiative, we’re going to increase the government's focus on knocking down barriers that prevent U.S. companies from getting free and fair access to foreign markets.

The American people can feel confident that when we’re party to an agreement that gives foreign countries the privilege of free and fair access to our domestic market, we are treated the same over there.

And I think you are seeing a great example of this with the imminent free-trade agreement between South Korea and the United States.  Our team over at the U.S. Trade Representative drove a tough bargain, and this deal is going to open the way for billions of dollars worth of American made goods and services – ranging from cars and industrial equipment to telecommunications and delivery services -- to enter the Korean marketplace.  Those added sales can create tens of thousands of new jobs here in America.

I know that here at “the Show,” we see many products that are being imported into the U.S., but there are also a huge number of products built by U.S. companies that appeal to the global market.

The Obama administration’s efforts under the National Export Initiative are helping make sales abroad a key driver of our economic growth.  In fact, exports have contributed about as much to U.S. GDP over the last year as consumer spending.

And U.S. exports of goods and services through the first ten months of 2010 are up 17 percent compared to the same period last year.

That’s a lot of good progress to build on.  And we’re going to keep working to help your companies grow their share in existing markets and break into new ones.  We’re also ramping up our efforts to bring foreign buyers here to the United States.

In fact, that’s one of the reasons I’m here today.

The Commerce Department and industry groups have joined forces to create the International Buyer Program, which promotes international attendance at U.S. exhibitions – like CES – and provides hands-on assistance to those interested in exporting and making contacts with prospective overseas trade partners.

In 2010, the International Buyer Program brought over 12,000 international attendees from more than 100 countries to U.S. trade shows. This matchmaking directly led to nearly $800 million in new business for U.S. companies, supporting over 4,000 American jobs.

Last year at the Consumer Electronics Show alone, the program reported more than $350 million in export sales to international buyer delegations. The 2011 CES includes 34 delegations from key markets like China, Brazil and Indonesia – totaling nearly 700 delegates, over 30 percent more than last year.

This year, we’ve got teams of Commerce Department trade specialists here to provide any assistance you might need.  They’ll be seeking you out to offer their assistance but I encourage you to track them down as well. 

Our trade specialists advocate for U.S. businesses in 109 U.S. cities and 77 countries worldwide.  And they have great products to sell – your American made goods and services that are the best in the entire world. 

The fundamental strength of the United States economy and our businesses has always been our ability to design and build things that help people around the world lead healthier, wealthier and more productive lives.  When we’ve got the incentives right, when there are sensible public policies in place, there is absolutely no one in the world that innovates and creates like U.S. businesses and their workers.

That is especially true for the technology sector in the United States.

It has been a tough couple of years but we have moved back from the abyss.  The economy is starting to pick up speed and consumers are starting to get their confidence back.

And all of you, with the work you do every day, are helping us rediscover that American spirit of innovation that has always been and always will be in our DNA.

Thank you.