Trade and National Security: Renewing U.S. Leadership Through Economic Strength
Secretary of State John Kerry
Deputy National Security Adviser for International Economic Affairs,
Office of the President of the United States
General James L. Jones, Jr.,
Chairman, Brent Scowcroft Center on International Security,
Senior Fellow, Belfer Center for Science and International Affairs,
John F. Kennedy School of Government, Harvard University;
Chair, National Board of Directors,
World Affairs Councils of America
Australian Ambassador to the United States
Welcome and Moderator:
President and CEO,
Location: Atlantic Council, Washington, D.C.
Time: 8:45 a.m. EDT
Date: Thursday, April 23, 2015
Superior Transcriptions LLC
FREDERICK KEMPE: Good morning, everyone. If you’d take your seats, we’re about to get started.
Can you hear me? Is that all right? Do we need a little bit more volume? We’re all right? All right.
So good morning, everyone. I’m Fred Kempe. I’m president and CEO of the Atlantic Council. And you’re all joining us for what I hope will be a historic moment. Secretary of State John Kerry will be joining us at 10 a.m. this morning to provide keynote remarks for the launch of our new Trade and National Security Initiative. We’re also building a Business Coalition for Trade and Security to help highlight the geopolitical implications of the Obama administration’s ambitious global trade agenda to draw attention not just to the benefits of action, but to the costs of inaction and failure. And so any of you who are interested in getting more information on that, please contact me – contact me and my office directly.
The secretary will discuss the vital importance of trade in securing the future of U.S. leadership in the world, making strong partners – stronger partners of our allies and strengthening their economies, which in turn helps us here at home.
American leaders have understood the strategic logic of trade at least since Franklin Delano Roosevelt signed the Reciprocal Trade Agreement Act of 1934, which through its five years ultimately included 19 trade agreements. Don’t forget what a historic moment that was in the history of the 20th century.
Many years and a world war later, President Kennedy called the reciprocal trade program, quote, “An expression of America’s Free World leadership.” President Kennedy made a lot of news around the world in 1963 with his speech “Ich bin ein Berliner,” as he stood up for the defense of a free – of a free West Berlin. Less remembered was his speech the same week a bit earlier at the St. Paul’s church in Frankfurt, where he talked about the equally vital need for an economic alliance. It almost sounded like a call for an economic NATO. Said Kennedy, quote, “Indeed, economic cooperation is needed throughout the entire free world. By opening our markets to the developing countries of Africa, Asia and Latin America, by contributing our capital and our skills, by stabilizing basic prices, we can help assure them a favorable climate for freedom and growth.” And then he ended that quote with: “This is an Atlantic responsibility.”
So today we gather at a moment of new Atlantic responsibility. The idea of trade being geopolitically important isn’t a particularly new one, but we do have an important new inflection point which we here at the Atlantic Council – and I’ve said this quite often – feel is as important as the end of World War I in 1919, the end of World War II in 1945, 1961 in Berlin, the end of the Cold War in 1989. What galvanizes our work at the Atlantic Council is a conviction that each of those moments of history it has been U.S. leadership among our friends and allies – or lack thereof – that has shaped the future. It is certain that if we don’t lead, others will fill the void. As we’ve seen in Ukraine and Syria, they will be less benevolent.
As you all know, President Obama likes basketball, and he has referred to the last two years of his second term as the fourth quarter of his presidency. And as the clock ticks down, he’s making some big bets on (the) foreign policy front, on Iran in particular, and Cuba and elsewhere. Yet, for all the publicity those efforts have gained, their completion would not do as much to shape a new world order and ensure its norms of behavior through this defining moment as the Obama trade agenda, which could bring two-thirds of the world’s economies under a set of strictures that are very friendly to what we have tried to create with our allies after the end of World War II. And that’s what we’re here to discuss today.
Timing couldn’t be better. While Secretary Kerry makes his arguments here, U.S. Trade Representative Michael Froman is in Japan negotiating to close the remaining gaps on the Trans-Pacific Partnership, and the U.S. and EU are hosting the ninth round of TTIP talks in New York City. Last week, a bipartisan Trade Promotion Authority bill was introduced in the Senate. Republicans Ted Cruz and Paul Ryan endorsed it in The Wall Street Journal yesterday.
So with that scene set, let me turn to four impressive individuals who are uniquely qualified to talk about the connection between American economic strength and the place of these trade and investment agreements and national security. And I’ll also ask them to come to the stage as I – as I introduce them. For our audience and online, we welcome your participation in this dialogue. Our Twitter hashtag today is #ACTrade. So let me repeat that: #ACTrade.
So brief introductions.
Caroline Atkinson is the deputy national security adviser for international economic affairs at the White House. No one better qualified to address these issues and provide insight into the Obama administration’s trade efforts.
General Jim Jones – and you can start making, both of you, to the stage – chairman of our Brent Scowcroft Center on International Security and an Atlantic Council Board director, former national security adviser to Barack Obama and former Supreme Allied Commander, Europe. There is perhaps no one who has been more consistent – a more consistent spokesman about the connection between national competitiveness and national security.
Ambassador Paula Dobriansky, also a Board director at the Atlantic Council. She’ll provide a Republican view on this Democratic president’s legacy moment, and can give us insight into how the trade initiative is being viewed from the other side of the aisle. In many ways, it was a midterm election – the midterm elections – this is the one legacy moment that gets made easier by the last midterm elections rather than harder. She served as undersecretary of State for democracy and global affairs.
And we’re delighted to be joined by Australia’s ambassador to the U.S., Kim Beazley, representing an allied nation with whom we already have a free-trade agreement and a key partner in the Trans-Pacific Partnership. He’s a Rhodes Scholar, former deputy prime minister, minister of defense and finance, so he can bring all those portfolios to bear. And former prominent member of the Australian parliament.
So let me sit down and get this conversation going. The panelists don’t have prepared comments, so what I’ll do is I’ll ask them questions down the line. But just to make it as informal as possible, if you see even in this opening round that one of the speakers has said something you’d like to comment on, feel free to jump in, and we’ll do it in a little less formal of a fashion.
So for Caroline, you know, this – how much of a legacy moment is this for the president? How does this – the president see this in the context of everything else he’s trying to get done in the world? And how are you going to get Democratic members of Congress to give you the backing you need to get it through? Because I think I’m right that that’s more of a question at the moment than it is Republicans.
CAROLINE ATKINSON: Well, thank you very much, Fred. And I want to say, even though these are not formal remarks, thanks for the – your leadership in having this session and with all these terrific panel members.
I believe this is a really important moment, of course for the president and the president’s legacy, but more important for America and American leadership around the world. This notion of – that you expressed of trade that will link our allies and partners, covering two-thirds of global GDP, not just through market access but with setting standards by which trade will be conducted in this enormous area – first in Asia, the fastest-growing region in the world, and then with Europe, with our allies – is really an important moment, both for our economy – because it will be good for American workers and companies and others and consumers – but also for our leadership in the world.
You mentioned about Democrats and you pointed out at the beginning that there was a bipartisan bill introduced last week. Overnight, the Senate Finance Committee reported out a markup of TPA, along with – Trade Promotion Authority – along with some other bills, with a 20-6 majority, which is very strong. So –
MR. KEMPE: Congratulations, by the way. Yeah.
MS. ATKINSON: Thank you.
So there are many people working very hard on this, so – including, of course, the president.
So I think we’ve seen the president’s leadership. He has been very clear, very much out there arguing for why this is a good deal for America. It’s also very important for everybody in America and for our allies and partners.
MR. KEMPE: So talk to me a little bit about – more about that bill and then we’ll get into the geopolitical arguments. If you look at that, the 20-6 vote, obviously that’s not a vote for TPP, it’s a vote for TPA. What will be harder in the TPP argument, the Trans-Pacific Partnership? Who does one have to convince? And what do you think are the most important arguments, both for people – for workers of America?
And how do the – you know, it’s very interesting. Most often, administrations make economic arguments around trade. We are talking now about national security arguments, geopolitical arguments. Talk about how – you know, who needs to be convinced? What are the questions about TPP that need to be satisfied? And how does the geopolitical argument work inside this?
MS. ATKINSON: I think the first argument is an economic one. So people need to be satisfied that TPP will be good for America and will be good for American workers and American families. We believe and the president believes that it will be. We know that exports support, in our economy, 11 million jobs. We know that export growth has accounted for one-third of the growth that we’ve had since the crisis in 2009. And research shows that jobs supported by exports tend to be better-paid than other jobs, by as much as 18 percent more than other jobs. So all of these elements are ones that are very good for American families.
Beyond that, the TPP itself includes not just market access, but a wide range of so-called disciplines that will spread from our values and our standards on labor, labor rights; on the environment; on protection of intellectual property, which of course helps to promote the innovation that makes American – the American economy so strong; and many other areas that will make it much more than an ordinary free-trade agreement. You know, my colleague Michael Froman always refers to it as a 21st-century agreement, setting global standards and norms for the 21st century. And it’s also been referred to as, you know, a progressive trade agreement in the sense that it supports American values.
So the economic argument, we – Americans need to be convinced that this is good for them. And actually, recent polling suggests that a majority of Americans do believe that exports are good for them and that trade can be good for them.
But of course, there is a lot of concern about globalization, stagnant wages. Those concerns are very real, which is partly why we need to make sure that we are in the lead establishing a level playing field. We believe, once you’ve got that level playing field through these rules, America can do well and can, you know, beat the other countries in terms of being able to sell our goods.
On the geostrategic, which links with the economy, first of all, our economic strength and leadership and attractiveness – the products that we make and sell, the openness of our economy – Kim was speaking earlier about how much American investment there is in Asia – all of these aspects of our economy help to build our partnerships with other countries and help to strengthen those partnerships. At the same time, our leadership in developing and promoting and working with others on this agreement is – helps to strengthen and deepen those ties.
And if you allow me, I will just – we’re going to hear from our nation’s chief diplomat on this, but I would like to remind everybody of what the secretary of Defense, Ash Carter, said just a couple of weeks ago. And he said, if he was asked to choose between TPP and an aircraft carrier, he would choose TPP from his strategic perspective of how to keep America safe and strong.
MR. KEMPE: But he wouldn’t be able to land jets on it. (Laughter, laughs.)
MS. ATKINSON: (Laughs.) He could do much more than land jets. TPP does much more than that.
MR. KEMPE: (Laughs.) There we go.
I think that’s a good segue to General Jones. How does a Marine feel about this choice between aircraft carriers and – (laughter) – between aircraft carriers and TPP? And that’s kind of a frivolous, but underlying serious question. You gave a speech to the National Defense Industry – Industrial Association where you said that the administration should broaden the National Security Council’s role to encompass more energy matters. Are we just not looing comprehensively enough at, first, how we define national security and how we use our national security tools? And so – and this, I think, grabs nicely off of the aircraft carrier/TPP values?
GENERAL JAMES L. JONES, JR.: Well, I mean, I think this – well, this is really an exciting time, and I am – I’m fully enthusiastic about what the administration’s trying to do here. I think we have a great U.S. Trade Rep in Mike Froman. I think Secretary Penny Priztker’s use of global diplomacy or commercial diplomacy is one of the – one of the bright things that’s really going on in our approach to world affairs. And I think it recognizes that we’ve made the transition from 20th-century problem solving to 21st-century problem solving.
And the 20th century was kind of a bipolar century. The 21st century is obviously multipolar. Globalization is a – is a reality. And the relationship, particularly in this country, between the public and the private sector I think is on a course of convergence vice divergence because one of the sectors that is universally admired and recognized for what it does is the American private sector. And when you think about the developing world and the growth of Africa and, you know, what’s going on, even dealing with the problems that Mr. Putin is calling – is causing, a large part of the solution set are economic, when you think about it.
Energy security is something that I’ve been convinced is not only going to be one of the United States’ strongest hold cards in the future, but it’s a way of showing leadership in a – in a more globalized world that recognizes the important changes between the two centuries. This century’s problems are going to be solved not just by aircraft carriers and troops alone. I think the formula is – obviously you have to have security before you can have economic development, but security plus economic development plus governance and rule of law applied proportionately to each individual problem can bring about and prevent future conflicts – future Afghanistans, future Iraqs. It’s a lot cheaper, and it’s also a way in which you can answer the radical – the radical threats that face us by showing families around the world, particularly through the use of the Internet and the social media, that there are better ways and there are – there are brighter opportunities for their families and their children. And the economic/trade issues that we’re bringing to the fore now are exactly, I think, indicative of the kind of potential that the United States can unleash with its tremendous private sector.
So the coming together of organizations like the – like the National Security Council to encompass a much broader response to what are the traditional threats, the secretary of Commerce’s aggressive program, the U.S. Trade Rep’s work, I think this is really the wave – the wave of the future. And I’m very excited by the potential.
MR. KEMPE: Drill down on that a little bit, particularly in the energy sector, which you talk a lot about and are quite passionate about. The Transatlantic Trade and Investment Partnership, TPP, what could that mean for expanded access to suddenly plentiful American energy for our partners? Part of that is: How do we use energy in – as a national security tool?
This may come back to you as well, Caroline, because I think many of our allies would like an energy charter in TTIP, which at the moment I think is not on – also, they would like to have finance in TTIP, but that’s another issue. Should an energy charter be in this? Is the U.S. open to that? For Caroline.
So first, to you. Should it be in there?
GEN. JONES: Sure. Well, I mean, I think that, you know, the way we use energy and the way we see energy in the future has to be a global approach. I mean, it can’t just – I cringe a little bit when I – when I hear the term, you know, that energy is – we’ve got ours and everybody else is kind of, you know, on their own.
I think that the difference between the Russian president’s position, which tends to use energy as a weapon, and ours is completely – is completely different, should be completely different. We can use energy and our good fortune in energy and our technology to help developing countries skip the pollution stage of energy, for example, sharing technology, providing American leadership, and the leadership of our friends and allies holistically to help jumpstart economies from – struggling economies all over the world. You need energy. Those who have it are blessed. Those who don’t, need it. And to me, an enlightened American foreign policy should include the ways in which we’re going to try to make energy and climate an issue that is – that typifies all of the best qualities of American leadership.
And so I think it’s a very positive opportunity. And as I mentioned, I do believe that part of the response to Mr. Putin, particularly where Europe is concerned, is to help the Europeans become less dependent and give them choices. And there’s exciting projects being discussed right now. The Atlantic Council has been at the forefront of this North-South Corridor from the – from the Baltics to the Adriatic involving at least 13 different countries, which, if it comes to pass, will have the – a U.S.-European transatlantic partnership on using energy for a much, much – to greater influence on a geostrategic problem that Mr. Putin deserves to pay a price for strategically. And we’ll see what happens, but it’s very exciting.
MR. KEMPE: Yeah. And for anyone who wants to look at that report, it’s on our website, AtlanticCouncil.org. General Jones it the co-chair of this North-South Energy Corridor idea, so it’s really getting traction at the moment, both in Brussels and here.
Question of the energy charter, Caroline.
MS. ATKINSON: I would pick up on what General Jones said, which is that we need to, and indeed are, working on – with energy and climate, seeing that as part of our general national security and international economic work. In fact, in my position, energy and climate is one of the three areas, including trade and investment and the global economy. So we already are seeing it in that integrated fashion.
We are working intensively – it was – got most attention with China last year – on climate and clean energy and the link there, sharing technology. We’re working also with India and with other countries intensively on how to work towards – leapfrog the dirty stage, as the general was pointing out.
As you know, LNG exports the Department of Energy licenses, gives license for export, and they have now licensed a very large quantity. It depends on the private sector to build the facilities. When you look – and we also have a link that these licenses are freely granted to countries or to projects going to countries that have a free-trade agreement. So if these agreements get done, both TPP and TTIP, that will expand the almost automatic granting of licenses for projects in those regions.
We do – we’ve worked a lot with Europe, particularly in the last 15 months, and there is a G-7 energy track now with ministers. And we’ve also worked about the fact that, in Europe, especially in some parts of Europe, there’s room for more energy efficiency. There is also room for breaking down the European energy market. At the moment, we export – Spain has an LNG terminal, but they do not send the gas into Europe because there is no way to transmit it, so they sell it on to Asia. You have wind power in the North Sea that can’t get to where it’s needed further south because there aren’t transmission lines because nobody wants – so there are many issues within Europe, which they are working on and which we can work with them. We certainly believe in promoting a strong global market for oil, gas and other energy, and of course the clean energy.
MR. KEMPE: But at this point there’s not a particular need for it to be in TTIP.
MS. ATKINSON: At this point we’re not – yes, exactly.
MR. KEMPE: Yeah, OK. In your view.
Ambassador Dobriansky – Paula – draw upon your career in U.S. government. Talk both about the national security objectives that are locked in trade agreements, but perhaps you can also talk about how hard it is to get these deals done. Because I talked to someone from the Clinton administration who was crucial to this, to NAFTA, yesterday, and she said to me – she said to me they have no idea what they’re getting into – (laughter) – that it takes a huge amount of effort and it has – takes a huge amount of concentration of an administration to push one of these quite ambitious two deals through, and not to mention TPA to start with, yeah.
PAULA DOBRIANSKY: Well, let me first, though, congratulate you and the Atlantic Council for bringing us together because the focus this morning, it’s not just on the economics, which I think is really quite important; it’s pointing out how these trade agreements really are absolutely crucial for our national security. So let me start with that one –
MR. KEMPE: Yeah, please.
MS. DOBRIANSKY: – because obviously there are the political elements, because trade, economic – one’s economic standing is so integral and interwoven with one’s military standing and ability to show strength and to be able to achieve one’s national security objectives.
You know, I remember when Admiral Mullen not too long ago, as chairman of the Joint Chiefs, had said, you know, we have to really worry greatly about our economy. And you know, the integration here, it isn’t just about the aircraft carrier. And that matters, but it is also about your economic standing and what impact that also has. So in that sense, that’s a key one.
But let me mention two others that are sometimes often forgotten, and Caroline referred to it, and that is she mentioned the importance of values and standards. And here there’s also a paradigm that’s been established, and again it is interwoven with other paradigms: our military alliances and what they mean. But not just only that, also the kind of humanitarian alliances we have, the rule of law, the values that we have. At this time, with many global challenges that we have around the world – you know, in this case, this adds great value because it does contribute to that international global order, to that paradigm.
And then there’s a third I’d put forth – and that’s one that we look at, but it’s also audiences in Asia and also in Europe – and that is how you build consensus at home. If you are able to bolster your economy – and these agreements will do that – that leads to greater consensus in the foreign policy arena.
MR. KEMPE: That’s interesting.
MS. DOBRIANSKY: And that’s been a real challenge for us here in the United States in terms of trying to galvanize that support and point out that stake that we have in events abroad.
I believe strongly that these elements are all interwoven if these – you know, you go forward, you have the agreements, it bolsters the economy, your economic standing, and in turn it helps in building a consensus – a domestic consensus – at home for dealing with national security challenges abroad.
MR. KEMPE: So in short, you see a direct connection, for example – maybe I’m taking this a step too far – between the conclusion of TTIP and the strengthening of NATO.
MS. DOBRIANSKY: There are direct connections. And we know that, with regard to NATO, one of the mandates, we want to see greater burden-sharing. And toward that end, if you bolster economies, you’re going to have resources to be devoted – (chuckles) – in the national security area. Secondly, a deepening of ties, as Caroline mentioned: a kind of esprit de corps. There’s a challenge here to the alliance. And in that sense, this can only undergird our strength and our foundation of strength, not just in the military area but economically. Even some basic questions of transport. I mean, when you think down to that detail, these trade agreements can have a great impact.
You already discussed energy. I think the important element here is the fact that Europe is looking at a diversified approach. And in that sense, I think that only adds value. And again, it’s interconnected, clearly, with these agreements. So it’s a win-win situation.
On the other part of your question, it’s very, very difficult. I had it from the other side of the ledger. Caroline mentioned labor and environment, and I spent my time when I was in government in dealing with environmental issues, which were interwoven into these questions. But let me just say this: It’s doable. It requires patience. It requires also being able to listen – not only to put forth your own objectives, but also to listen, and you have to have give and take.
I firmly believe that these agreements in the end, even with the kind of give and take and some of the challenges that exist, like in the agricultural area, some other areas, that the bottom line is everyone realizes, who will be around the table and who are around the table, they realize, look, in the end you give a little here but you get these benefits there. So patience, leadership, a broader perspective, a multilateral perspective, but of course looking at your own interest.
And also I certainly would not forget in this, I think, also two other important aspects. I think the executive-legislative relationships matter, and I also think the NGO community and the business community matter. So also, in that sense, in terms of this business forum and a launch of a business forum, it matters greatly because you have to have the voice of the business community and also the nongovernmental community. Patience and openness really matters.
MR. KEMPE: Yeah, let me turn to Ambassador Beazley.
I’m just going to be a panelist for 30 seconds to agree violently with Paula, but to add one other thing. And that is, 15 years of Europe having half the rate of growth of the U.S. is actually not good for us, and it’s not – and it’s not good for our security, it’s not good for geopolitics. And so we are seeing actually potentially more resistance to the TTIP in Europe right now than in the U.S. We have to see how that unfolds. But Andrea Montanino, the director of our Global Business and Economics Program, is really pushing forward a Europe Growth Initiative as not just an economic story, but also a geopolitical story and a national security story. So just those couple of comments.
Ambassador Beazley, since you’ve been appointed here as ambassador, you’ve been a strong supporter of free trade – concluded agreements recently with Japan, Korea, and perhaps most interestingly with China, and that’s where I want to go with this question. With the Asia-Pacific economy growing faster than any part of the world, how have these trade agreements benefitted Australia? But you already have this bilateral agreement with the U.S. Why do you need TPP? And then what do you do about China within this?
AMBASSADOR KIM BEAZLEY: Look, I think the –
MR. KEMPE: Which is not part of TPP, yeah.
AMB. BEAZLEY: Look, the TPP is on a totally different plane. I think the first thing you need to point out is there is a plethora of trade agreements in Asia and there will be many more negotiated after the TPP is put in place. The Asian nations love organizing the trade agreements between them. They’re not particularly exciting. I think the three that we have negotiated with the – with Korea, Japan and China are a bit more exciting, but partly that’s driven by the education that is being delivered to countries in the region following what’s been happening with the TPP and getting an understanding of how much more, perhaps, they ought to be including in their trade agreements that they might not have done in the past. So that’s the first point I’d want to make.
The second is the trade between this country and the Asian region is intense, and the character of that trade has driven Asian prosperity. It’s now self-generating to a considerable degree, but not in the – in its origins. The U.S. was the great importer of last resort, as has been the – obvious in the debates that have been taking place in the U.S.
And one of the things that I point out to my friends in the trade union movement is this: currently, your effective rate of protection from manufactured goods is 1 ½ percent; after the TPP, it’ll be 1 ½ percent. If the TPP is not done, it’ll be 1 ½ percent. And what does that tell you? Well, what that tells you is that you have been open to the manufactured product and the supply chains that operate out of the Asian region into the United States for years, and you have driven the prosperity of those countries, and now you actually have an opportunity to get some back yourself. So that’s part of what’s bound up in the argument for the TPP, but it is not the argument for the TPP.
The argument for the TPP is that Asia was excluded, in effect, from the setting of the arrangements that have governed world trade since World War II, when the United States finally cracked open the restrictive effects of the European empires and started to introduce a level of principle into the way in which international trade and arrangements were done. Complexity, honesty, integrity and certainty: that’s what came through with the – with the WTO, not applied in Asia. The Chinese and the Japanese were prostrate at the end of the war. All the rest were under European empires. Now there is a chance for the Asian people to participate in rule-setting. And when the TPP goes through – and I believe it will – with the – with the extraordinarily superior character of the rules that are being put in place for IP protection, e-commerce protection, for behind-the-border removal of restrictions on activities associated with the tertiary sector – not just manufacturing and agriculture – there’s a range of those sorts of things that are coming in through the TPP. That will be, in potential, the WTO, the GATT for the Asia-Pacific region.
And the strategic significance of that is that it will be a standard to which all will repair. There’s a small number of nations, albeit with some very substantial economies, negotiating it now. But after it is put in place, many of the countries in the region will have as a first-order priority – and I include China in this – working out ways in which they may place themselves within it. So in terms of the strategic position here, that’s the American interest, if you like.
This is not ganging up on the Chinese. This is putting in place something that makes a real difference to the way in which the burgeoning trade of Asia is conducted, to introduce to it sensible rules, integrity and the rest of it.
Now, there’s one other thing I want to say on the security issue, because we look at security issues differently from you. The starting point of the way in which we look at global security issues is not who contains whom, but how strong is our principal ally. How powerful is the United States? How happy is the United States? (Laughter.)
When I first – I first gave public evidence here to your foreign trade commission, when I – a couple of weeks after I arrived, and I said, you know, the happiness, the prosperity, the health of the United States, and in particular the American middle class, is an Australian national interest. So the American middle class has been smashed, and American – the American economy for years has been driven by domestic consumption by the American middle class. A combination of technology, a combination of the effects of other trade agreements, a – with the changes in labor laws, a whole range of things have contributed to that. Basically, though, I would identify changes in technology, because the American middle-class experience is not unique. What is going to give them a chance to drive prosperity and income growth in the future?
Well, there’s only one thing that will, and that is acquisition of access for the product you produce to another middle class. Asia, now that stands at 580 million; 10 years’ time that’ll stand at 3 billion. It’ll be 60 percent of the world’s middle class. You’ll prosper in this country if you can access that fairly for your product. You will not prosper if you can’t.
MR. KEMPE: That was just wonderful, Ambassador. I mean, this is – it’s rare that you have someone who’s been both defense minister and finance minister, so –
AMB. BEAZLEY: (Laughs.)
MR. KEMPE: And you heard him speaking as both. And for those of you who are tweeting “happiness of America is in Australia’s national interest,” I want you to – (laughter) – I want you to – (laughs) – I would broaden that to the global interest. (Laughs, laughter.)
But could you just drill down just a little deeper? As defense minister, does TPP reassure Asian allies? And do they need that sort of reassurance right now?
AMB. BEAZLEY: There’s no doubt at all that, in Asia, we like to see the Americans around. You know, the – I often do point out to folk in this – in this country, you have great courage in going where you are hated and you stick around where you are hated, and I admire you for it. (Laughter.) Why don’t you go where you’re loved? (Laughter.) I mean, it’s a – in the – sort of the worst that you experience is from – well, let’s leave the North Koreans out of this – but the worst that you experience really in the region is sort of a quizzical, cautious skepticism by the Chinese, and that ranges through to outright love in Australia, and everybody’s in between those two markers. So the area is very accepting of U.S. leadership.
It is also very understanding of the value that the United States has been to the region in terms of the product being exported to the United States. Their experience in the region of American companies is OK. There’s an enormous amount of American investment in the area. I mean, you’ve got 650 billion (dollars) invested in Australia, directly and indirectly, which I think is about twice what you’ve got invested in China. We’ve got 470 billion (dollars) invested in you, rising at the rate of 30 billion (dollars) a year, and that’s 20 times what we’ve got invested in China. And it’s – those sorts of stories – not with that extremity – are all over the region. So the – this notion that somehow you’re disconnected from this is a nonsense, of course.
What you haven’t done is put the intellectual effort (into you ?). You put enormous intellectual effort into Europe when you say that – you’ve actually put quite a lot of intellectual effort into Japan, and I think we’re going to see over the next couple of years a very different sort of Japan from what we’ve been used to, but also based on what you’ve been prepared to do with them. But you’ve nowhere near put that intellectual effort into Southeast Asia and South Asia. This gives you the chance to do that, but more important than that, make the rules right, or make the rules. There are no rules. (Laughter.) There are agreements. And give a set of rules that the local – the region can connect to that have got a bit of principle behind them.
MR. KEMPE: Thank you for that.
Let me go back to Caroline, and also whether General Jones and Paula have any comments on what they’ve heard, and then we’ll go to the audience. Caroline.
MS. ATKINSON: Thanks. Well, I want to jump in after Kim’s, of course, terrific explanation of – about happiness of America, and that’s of course what drives me. (Laughter.)
Two points. The first is that he’s absolutely right about how welcoming and how important it is to establish rules, norms, standards. That is what Paula also referred to. I would argue that there has been intellectual effort put into that, but it will come to fruition when we are able to close TPP on the basis of a strong bipartisan-supported TPA, which goes to Paula’s point about a functioning and strong U.S.
The other thing is that, if we do not do this – and I agree with you that I believe this will happen – but if one imagines not going forward, the world wouldn’t stay the same. Kim referred to the 500 million consumers in the Asia-Pacific that are going to turn into 3 billion in 10 years’ time. Ninety-five percent of the world’s consumers are outside America. They’re going to go on doing that consuming and this trade without the rules and standards and norms that we have, based on our values, whatever we do, but – I mean, if we do nothing. But if we’re there helping to set the rules with them, working with them to set these norms and standards and values, to set the level playing field, then we’re showing leadership. If we’re not there, that would be a big absence, which I agree with Tim (sic; Kim) would be – make not just us less happy, but those in Asia also.
MR. KEMPE: And in terms of windows of opportunity, it’s not entirely clear to me that if this fails now that you have another shot at this four or five years from now, I mean, but –
MS. ATKINSON: This is the time to move. This is a tremendous window of opportunity we’ve been working on, especially Mike Froman, also with the president’s strong backing. This is the time to move. You know, as somebody referred – you referred to the fourth quarter. This is – a lot of things happen in the fourth quarter. We certainly believe that this is the moment for this one.
MR. KEMPE: Thank you.
General Jones, Paula, do you want to jump in on any of the issues?
MS. DOBRIANSKY: I’d just say I want to agree wholeheartedly that this is the window of opportunity.
And I wanted to inject two words that I haven’t quite heard in the conversation, peace and stability, because we’re talking about security. And here, as I was hearing you speak, I mean, that’s also what undergirds all of – all of this, because when you do have a paradigm, you do have rules and you have an order here, it is only going to contribute to that. And it will counter conflicts, conflicts that can arise when you don’t have that.
MR. KEMPE: General Jones, when I spoke to you, actually at the Atlantic Council, when you were national security adviser, I was actually surprised by your answer to one question I asked, which was, what keeps you up at night in terms of threats to the U.S. And you didn’t say terrorists with weapons of mass destruction; you said national competitiveness. Is this part of that piece? Is it –
GEN. JONES: Well, yeah, I think it’s – that answer vocalizes my belief that, as you transition into this century, you know, I think a legitimate question, strategic question that we should be asking ourselves is where do you want to be in 2050. You know, 1945, we charted a course that got us to the year 2000 with some success, and I think the drivers to that position in 2050 are different than they were in the 20th century. It’s not as one-sided as it used to be. It’s not the province of just the Defense Department and a little bit of the State Department and a little bit of the National Security Council. It’s a big – it has a lot to do with our Energy Department, our secretary of Commerce, and just the whole – the whole-of-government approach. And I think that this transition of how we make all of these pieces work more – in greater cohesion and to understand that this century is not about any one department solving any particular problem is just – it’s much more complex than that, and the problems arrive at us in waves now that we haven’t seen before.
We built a world in the 20th century to deal with problems – serious problems, but with a sense of order. And we built the institutions that dealt with those problems, and there was a sense of order as well. This world is more disordered. We have to deal with not only the national – community of nations, but also non-state actors, and the evolution of – and the importance of organized crime and drugs and illegal trafficking of arms and human trafficking and terrorism and everything else. And these people are all working much more closely together.
So the way we respond to that has to be much more holistic. And I think that one of the things that I hope comes as a result of this period is a reaffirmation of America’s commitment to do what it can to not only participate, but lead where it can, and to also convey the image that we’re all in this together and that, you know, the day where you can just throw it to the U.S. and say, OK, you guys fix it, you know, is probably – those days are probably gone, and that’s probably a good thing.
So I think there’s enormous opportunity. This is a time and this is a moment where our friends and allies and the United States can work together and really adopt a spirit of what I would almost say conflict prevention. How do you prevent these things from happening? And if you can get to that point, the investments that you make will be a lot cheaper and you’ll – and you’ll really, I think, strike a blow against radicalism wherever it manifests itself because, at the end of the day, if you can show people that there’s a better future by using your – the totality of your assets – your energy, your private sector might –
MR. KEMPE: Absolutely.
GEN. JONES: – and with a public-private partnership that we’re increasingly talking about where the United States is concerned, I think you can – you can do some amazing things in this century. And by 2050, I think the position of the United States in terms of affecting many things that are going on in the globe will be secure.
MR. KEMPE: Thank you very much for that.
Questions? Please. And identify in your question to whom you’d like to – identify yourself and to whom you’d like to pose your question.
Q: Hi. I’m Tim Ridout from the German Marshall Fund.
I guess my question is for the whole panel, really. But you know, given the importance of this trade agenda and national security agenda, are we going to use it, especially in the context of TTIP, as an opportunity to fix our own agricultural problems, with our subsidies, our local content requirements, a lot of things that are actually in violation of rules but which domestic lobbies make it difficult to change? And I think that would actually help the sense – to create a sense that we’re all in this together and there is a free and fair global trading system. Thanks.
MR. KEMPE: To get in as many questions as possible, I’ll just give this one to you, Caroline. And also, how – what role will agriculture play in TTIP?
MS. ATKINSON: Thank you.
Well, maybe I’ll just remark that agriculture is playing an important role in TPP and we look forward to getting that completed. American farmers are actually big supporters of trade in many ways.
I think we have to – with Europe, we will – you know, we share much more of – much more similar economic structures. So what’s particularly important about that agreement will be the setting of rules and standards, norms based on values, and understanding in the field of agriculture that we should have science-based regulation and that sort of thing.
I don’t want to get into the details of how we might be negotiating on some of the different topics. I believe that we have, you know, a very strong and ambitious negotiator on our side, and also very good negotiators on the other side who want – and Cecilia Malmström from the Commission really believes in making a good deal. And a good deal I think we have to recognize, in any negotiation, it has to be good in the end for both sides. As Paula said you give a little, you take a little, but you have to believe that there is a whole that is in everybody’s interests.
MR. KEMPE: You are a wise public servant. (Laughter.)
Kevin, microphone up here, please.
Q: Thank you very much. Thank you very much, Fred. Nelson Cunningham, McLarty Associates. And thanks for putting this panel together.
As someone who worked in the Clinton White House the last time a Democratic president tried to get fast track through, I know how difficult this can be. Newt Gingrich, speaker of the House, was unable to muster a majority in favor of fast track, and it had to be pulled in 1997 before a vote and went down in defeat. Facing the difficult congressional agenda today, Caroline, you’re faced with the fact that Senator Obama voted against CAFTA in 2005. How do you – how do you address those who raise that?
MS. ATKINSON: I think the president himself has addressed remarks that he made about NAFTA. And he said, look, trade deals have not always delivered what they’ve been – what they’ve promised.
What we’re doing is improving on – or, what Mike Froman is doing is improving on previous trade deals. You know, you learn as you go along, never before have issues of labor and environmental standards been included as enforceable full parts of a trade agreement. Ambassador Beazley referred to all of the nature of – the sort of modern nature of this agreement that is being negotiated with the Asia-Pacific.
Of course, the politics are difficult. And the politics are difficult because when, you know, middle class families have been disappointed and seen stagnant wages for a long time, they’re looking for what is going to make life better. We believe this will make life better, but we understand that there have been, you know, a difficult time. The president came in with a – with a terrible financial crisis.
And so I think our answer is that this agreement is different from previous agreements. This is a better, stronger agreement. It may not be the final state of the art. No doubt things will change in the future and require even more improvements. But this is a step change from previous agreements, both in its breadth amongst different countries – you know, TPP ranging from Vietnam to Japan – but also in its scope of areas that it addresses.
AMB. BEAZLEY: Could I just –
MR. KEMPE: Please.
AMB. BEAZLEY: I think one of the things – and I think I heard the president trying to articulate this in a slightly different way. The U.S. has already given at the counter, all right? In terms of the trading relationships with – not simply with the countries that are being signed up here, but you’ve got to remember, the 11 are not as important as the outside waiting 20-odd. And that’s – and it’s the rules that will ultimately impact on them that really count.
What the U.S. is getting from this is a cracking open of the barriers, what others have always left in place. In most of the areas that matter, the U.S. has collapsed the protective devices that it’s had in place – perhaps not in agriculture, but in the manufacturing area. So this is your one chance to get into other folks’ situation as they are into yours. And it’s the only chance, really.
Like I – if this falls apart, if this does not happen it doesn’t mean trade agreements go away. Probably it will mean that – don’t ask me to say what these initials mean because I’ve never been able to get them though we’re involved in negotiating it ourselves – RCEP, which has by no means the comprehensive character of the rules concerned, but will be – in the TPP – but will be the rule set that will go into place.
This will disappear. It will re-emerge probably about four or five years from now on the initiative of the Chinese and their idea of a free trade agreement for the Asia-Pacific region. This is the last chance café.
MR. KEMPE: General Jones.
GEN. JONES: One of the most interesting things I was asked to do during my time as national security adviser was to lead a delegation composed of the secretary of defense, the secretary of state, secretary of commerce and the U.S. trade rep to Capitol Hill to meet with the leaders – the congressional leaders on both sides of the Hill to talk about the importance of the U.S. export control reforms.
Not something you would typically associate with a national security adviser, but it really gave some insight into the president’s thinking, even back in 2009, about the urgency of doing that kind of thing. And I think this is an opportunity for Congress to really do what’s in the best interest of the American people. I think most Americans favor trade. They favor free trade. They favor opportunity and growth. And they don’t approve of anything that gets in the way.
And we have a lot of things that I think the Congress could get together on to make it easier for our private sector to compete and to enter the markets and so on and so forth, and also to make other countries willing to invest in the United States. The Emir of Qatar announced not long ago an intent to invest $35 billion into the United States. And that is remarkable.
And we’re working to try to make sure that it – that when that happens that’s done the right way, that they get a fair return on their investment, that it also helps where we need help, in perhaps our – reviving our decaying infrastructure and so on and so forth, and that it brings the bilateral relationship closer together. So trade is really an important not only economic issue, but also a geopolitical and geostrategic issue, and an international security issue.
MR. KEMPE: Thank you, General Jones.
I saw these two questions first, so let me go here, the two people here. And we’ll pick up both of those questions since the microphone is over there.
Q: All right. Thank you. My name is Chan Chalna (ph). I’m an independent reporter.
My question to honorable Atkinson about the AIIB, the China-proposed Asian Infrastructure Development – the bank. How do you explain to the audience and the American people the administration’s handling the playout that your close allies, like Britain, Germany and France, all joined the bank in defying of the U.S. government opposition? Thank you.
And Ambassador, a question –
MR. KEMPE: And the question – that question is for?
MS. ATKINSON: It goes to me.
Q: This question – the question –
MR. KEMPE: OK, right. And you can – and, Ambassador, you can comment on that as well.
OK, go ahead.
Q: If I may, about Australia’s China policy – in a private conversation with visiting German chancellor and your prime minister said the China policy is based on two words: greed and fear. How – that was reported by Australian media, but is a private conversation reported. How do you explain that? Thank you. (Laughter.)
MR. KEMPE: Thank you. And because we’re running short on time now, let me turn to that – the second question there. And this may – I’ll watch people, but this may have to be our final round. We’ll see. Please.
Q: Yeah. It’s sort of a follow up there. So just to delineate some more differences between RCEP and some of the other games in town, as I believe you put it, and the U.S. TPP.
MR. KEMPE: And can you identify yourself too, please?
Q: Tobias Burns, Northwestern University. Thanks.
MR. KEMPE: Great, thank you. Please.
MS. ATKINSON: Thank you very much. So first of all, I want to repeat what Treasury Secretary Jack Lew and many others have said, that we welcome the provision of financing for infrastructure in Asia. We see that there is a great need for it. We are encouraging the existing institutions – the World Bank and the Asian Development Bank – not just to move forward with their own plans for infrastructure but to work closely with the Asian Infrastructure Bank when it – when it is established.
We have maintained, I think along with many of our allies, that it’s important that this bank complement the existing institutions and that if it is to be useful for borrowers that it has high standards, high standards of governance and also high standards of procurement, high standards of – for the infrastructure projects that are put in place. And we’re glad to see that there are active discussions along these lines. We believe that it’s important that this bank works with the other institutions and the other institutions work it. And we have been and continue to be directly engaged with China on laying out what we see as the importance standards.
The question about RCEP, there are –
MR. KEMPE: Before you go there, Ambassador, do you have thoughts on the AIIB?
MS. ATKINSON: Oh, OK. Yes, I’m sorry.
MR. KEMPE: We had Christine Lagarde, the IMF chief, here. And she was actually pretty embracing of it and thought that this was – this could be brought together with what IMF and others are doing and really be of additional value.
AMB. BEAZLEY: Well, it could be. And I do think that – you know, when you’re dealing with a situation where there are rising powers in the globe, you do actually from time to time have to make way to see – allow them or to see what they have got to offer in terms of new thoughts they may have on the way in which global financial institutions, trade arrangements and the like, should be conducted.
I think the main point here though is to ensure that as the bank is developed it does not undermine very strong standards that are being put in place for (governance/governments ?) associated with banking arrangements in the region. And I think the American position outside the negotiation, ours inside, and the British now inside and the Europeans and others inside is to try to get into the structure before it is finally settled. The sorts of standards that can The sorts of standards that can give you a level of confidence that what may become an important financial instrument in the Asian region is also operated with the highest level of integrity and dispassionate character and judgments by its board on the loans that it ought to be putting out there.
This is very much a work in progress. And from what we can see, the pressures from inside and outside are causing Beijing to adjust quite a bit the governance arrangements that they’re putting in place for the bank. So I think something quite – much more interesting and a great deal better than initial offers will be created out of that process.
Now, the good fellow asked me about fear and greed. And I thank God my private conversations are not broadcast to the rest of the world, because most of them would have meant my political defeat and demise an awful lot earlier than it actually happened. (Laughter.) But the – and greed and fear, it has to be said, are very strong motives in human intercourse and in relations between nations.
I think – I think we have a different view, actually. We see the rise of China in the region as positive in principle – positive in the possibilities it offers for mutual prosperity in the Asian region. That does not mean that we accept all the judgments that are made emanating from Beijing about what is in the security interests of the region, or even what is in the economic interests of the region. We need a decent discourse of the Chinese. And if the Americans are in it, the chances are it will be a much better discourse than otherwise.
MR. KEMPE: You had a part you were still wanting to answer?
MS. ATKINSON: No, that’s fine.
MR. KEMPE: OK. And, Paula, General Jones, do either of you want to make a final comment here as we wrap up?
MS. DOBRIANSKY: No, I think we’ve –
MR. KEMPE: OK. First of all, I want to thank our panelists here. This was a really rich discussion. As you can see, there were many more questions people would have liked to ask. I’m going to ask you all to remain in your seats for a short period of time. There – the security detail has asked you – asked us to ask you to do that while we change the stage and rearrange the stage. And then in a few minutes, Secretary Kerry will join us.
So thank you very much. I also – before we go off, I really want to salute the team that not only puts together this, but also is putting together our work in this space, both our new initiative in trade and security and our business coalition to back the Trade and Security Initiative, and that’s Andrea Workman – or, excuse me – Andrea Montanino, the director, and his deputy, Garrett Workman, Mary Kasparic (ph) and Ardoan Yagobi (ph). This is just an incredible can-do team and I want to salute them in front of all of you.
So thanks very much to the panelists.
MS. ATKINSON: Thank you. (Applause.)
GEN. JONES: Mr. Secretary, excellencies, ladies and gentlemen, good morning and thank you very much. It gives me great pleasure to be here this morning to introduce my friend and a great statesman, Secretary John Kerry, to the Atlantic Council.
For those of you who watch the Atlantic Council closely, and I put myself in that category, you’ll know that Secretary Kerry spoke at the council just a month ago about the national security implications of climate change. The fact that he’s spoken to the council twice in a month is a compliment to the impact the Atlantic Council is making to the important issues of our time, under Fred Kempe’s tireless leadership. And, Fred, we congratulate you for that.
But more importantly, it also demonstrate that the secretary is providing leadership on the issues that are shaping the international agenda of the 21st century. Secretary Kerry and I began our young careers in Vietnam, fighting in the defining conflict of the 20th century, the Cold War struggle to contain communist totalitarianism. The peaceful end of the Cold War and the onset of globalization ushered in a new security environment.
In this new environment, American leadership is defined as much by our capacity to endow and enrich as it is by our ability to defeat adversaries through military force alone. Of course, a strong defense remains critical to American national security and global influence, but American diplomatic and economic leadership must complement our great military power if the 21st century is to remain an American century.
Along with his visionary colleague, Penny Pritzker at the Department of Commerce and Secretary Ernie Moniz at Energy, Secretary Kerry understands that the American private sector is a critical asset of American diplomacy. American trade and investment with our partners advances prosperity at home and abroad in what has become a fiercely competitive global landscape. This is why it’s so important the secretary is here with us today to talk about the strategic importance of trade to American leadership and security.
Throughout his long political career, John Kerry has worked tirelessly to advance the cause of international peace and security to benefit global interests and values. Secretary Kerry and I have known each other for many years, dating back to his distinguished service as chairman of the Senate Foreign Relations Committee. During his time at the Senate, he was a recognized friend of the U.S. military and a supporter of American leadership at NATO, which I came to appreciate in my time as commandant of the Marine Corps and as supreme allied commander in Europe.
In my time as national security adviser to President Obama, I found Secretary Kerry to be a thoughtful and trusted adviser, an ally on Capitol Hill on whom the president could always rely to do what’s best for our country. Few people may appreciate the critical leadership he played for our country at difficult times, such as during the Christmas period of 2009, when his personal diplomacy helped repair a perilously difficult moment in the U.S. relationship with then-President of Afghanistan Hamid Karzai.
The American people should be proud of the tireless efforts of Secretary Kerry on behalf of American interests and values. He’s working diligently to bring a number of critical diplomatic efforts across the finish line on matters of great importance to American security and prosperity – in fact, global security and prosperity. We should celebrate his leadership and tireless work ethic, even if it takes a terrible toll on his personal health.
I’m pleased that he’s chosen to speak at the Atlantic Council and be with us today to speak to the importance of trade to American national security. Would you please join me in welcoming the 68th United States Secretary of State John Kerry. (Applause.)
SECRETARY JOHN KERRY: General Jones, thank you very much for a very, very generous introduction. More importantly, thank you for your absolutely extraordinary years of service to our country. You’ve held so many important positions, and working your way up from a young lieutenant in Vietnam all the way to the national security adviser, and many, many places in between. We admire – I admire and I think the world appreciates the extraordinary contribution to our country’s security. I mean it. Thank you very, very much. (Applause.)
The only thing I worry about is this notion of a terrible toll on my health. I feel great, folks. (Laughter.) I haven’t noticed it, so. (Laughter.) I thought you were going to say terrible toll on my family and their life.
But Messrs. Ambassadors, Madam, thank you so much for being here today. It is an important statement about the importance of this topic that so many ambassadors are here, reflecting their interest in this issue of trade. And I’m really delighted to be here with all of you fellow Atlanticists. It’s good to be here. I’m going to surprise you a little bit because I’m going to talk both about the Atlantic and the Pacific today. I’m going to talk about security and trade, which is a very timely topic and almost a guaranteed way to get into a pretty good argument – (laughter) – within or without – outside the Beltway.
But that’s exactly why we’re here. The Atlantic Council has certainly never shied away from controversy. And for more than half a century, the – this product, the council of the greatest generation, has been an extraordinarily important bulwark of support for NATO, for close economic ties between the United States, Canada and Europe. And in that time, the council has had a lot of superb leaders, beginning with Christian Herter, coincidentally a former U.S. secretary of state from Massachusetts. Fred Kempe also belongs to that good tradition of visionaries and internationalists. And I appreciate his invitation to be here, but I also appreciate his leadership, and I think all of you do too – what he’s doing with the Atlantic Council.
The introduction of the Bipartisan Congressional Trade Priorities and Accountability Act is in fact very good news. Why? Because it reflects exactly what our nation needs, a bridge over three divides – the executive and legislative, between the Senate and the House, and between the two major political parties. So I want to commend Senate Finance Chair Orrin Hatch, the panel’s Ranking Member Ron Wyden and House Ways and Means Committee Chair Paul Ryan. And I commend them for providing a framework for moving forward on a pair of the most significant trade negotiations in our history – the Trans-Pacific and the Trans-Atlantic Trade and Investment Partnerships, those of you fond of acronyms, TPP and TTIP.
Now, if enacted the new bipartisan bill will fully respect and preserve the rights of Congress. But it will also give the president of the United States the flexibility that he has to have to negotiate credibly and effectively on our nation’s behalf. And make no mistake, the question of whether a president should have trade promotion authority in the end really does come down to whether the United States should even pursue significant free trade agreements. That’s what’s at stake.
During my 20-plus years of service in the United States Senate, I had a lot of conversations on this subject with factory workers, union representatives, business people and other professionals. And often these discussions were heated, emotional, challenging, because men and women are understandably upset if they see a company close down, jobs lost and they deem the causation to be directly responsible for a particular trade undertaking. It’s only natural that people are going to look around and in their distress they’re going to find someone or something to be able to blame. And it’s sometimes easy.
As a Democrat, as somebody who won the nomination of my party for the presidency, I understand those tensions as well as anybody. But I voted for the trade agreements, including NAFTA, when they came to the United States Senate. I had a lot of other conversations too on the other side of that coin with entrepreneurs and innovators, people who were eager to take advantage of new opportunities and whose ingenuity helped to create jobs, move our country forward, change our economy, open up new opportunities, reinvent the mix of our economic base in cities like Boston, Philadelphia, Chicago, Los Angeles, New York, elsewhere.
Now, whether we like it or not, my friends, what is new, particularly in business – not in everything, but particularly in business – ultimately catches up with and ultimately overtakes the old practice. That’s the reality. You can trace that from the beginning of the industrial revolution. It’s what we’ve always called progress. And yes, with unevenness sometimes in the social fabric, it has more generally than not brought you that progress. But the resulting gains, it is fair to say, don’t come often without some element of loss at some point. And that’s why we put in place trade adjustment assistance. That’s why we’ve done a lot of other things in order to respond.
It’s always created somewhat of a dilemma for policymakers. But should we try to stop change, as inevitable as it is? Is that even realistic? Should we fight as hard as we can to maximize the benefits and minimize the dislocation that sometimes accompanies that change? My own convictions are twofold. First, in the modern world, we simply cannot expect our economies to grow and generate new jobs if all we do is buy and sell to ourselves. Ain’t going to work. Trade is a job-creator – period. And the record of the past five years, the past 20 years, the past hundred years or more bears that out.
As I speak, exports support about 11.7 million American jobs – exports. And that number is only going to go up. Why? It’s pretty simple math. Ninety-five percent of the world’s consumers live beyond our borders. If for some reason we decide not to do business with them, our economy absolutely will gradually wither and shrink. And we will see boarded up windows and going out of business signs from one side of America to another. Embracing globalization is not easy. I understand that. In fact, it can be hard. But trying to pretend that it doesn’t exist would be catastrophic.
My second conviction is that we – and by that I mean the United States – should be deeply engaged in helping to write the rules for trade. Once again, common sense – why would you sit on the sideline, let other people do that? Do you think they’re going to go for our high standard automatically? You can measure what happens to companies all across the world in the application of the Foreign Corrupt Practices Act. How many countries try to act their companies to operate by that standard? Failure to do this would be a felony against the future of our own economy.
We have to be engaged because if we don’t protect our interests no one else is going to, and because we’ve learned from past experience to insist on tightly written and enforceable standards on the issues that we care about the most. That is why it is so important that these lessons are the very center of the bipartisan bill that is now being considered by the Congress and of the high standard trade negotiations that are currently underway. Let me look at that for a minute.
The proposal now on Capitol Hill goes well-beyond any previous measure of its type. Rather than settling for the status quo, it is designed to raise the bar on issue after issue. It says to our trading partners that if they want to take part in this global market, then it’s important for them to comply with the core international labor and environmental standards. They have to fight trade-related bribery and corruption. They have to color within the lines on intellectual property rights. They have to enable legitimate digital trade. And they have to accept effective dispute settlement mechanisms in order to ensure that promises made are promises kept.
Now, all of this – all of those things I just listed that have to happen that are in the context of this agreement, they are the direct product of the lessons that we have learned and of the listening that we have been doing over the course of these last years. It adds up to a policy that pursues trade not just for the sake of trade, but to ensure that our workers and our businesses are in fact going to be guaranteed that they have a fair chance to compete.
Now, remember, when President Obama took office we were in a recession. In fact, we were facing the greatest financial crisis of this country since the Great Depression. And we were looking at the prospect of even entering a great depression. The entire financial structure of the country was on the brink and ready to collapse. And I’m not saying that. That’s what a Republican secretary of the Treasury said to me and to my colleagues in the United States Senate on an afternoon when he came up to literally implore us to engage in a bailout of that system.
Unemployment was approaching 10 percent. The housing market was in shambles. Today nobody’s claiming victory, but since 2010 U.S. businesses have added over 12 million new jobs. We’ve put more people back to work than all the other advanced economies combined. And the single biggest cause of this success is that our exports have reached a record level. And that’s more than a statistic, folks. That’s a policy, because when we increase the sale of U.S. goods and services, our payrolls get bigger and American paychecks get fatter. On the average, export-supported jobs pay significantly more than other jobs. And all of this matters enormously because as President Obama has often observed, America’s capacity to lead globally begins with our economic vitality here at home.
Now, if we’re all satisfied with our progress, perhaps we could sit back, forget about trade agreements and about the chance to further pry open international markets where 19 out of 20 of the world’s consumers live. But we’re not satisfied, nor should we be, because we know that if we attempt to stand still, we’re going to get blown away economically. We’ve got to keep generating new jobs. And we’ve got to ensure that American workers, farmers, ranchers and businesses receive equitable treatment. You can’t do that by sitting on the side of the road, folks, while other countries write the rules of the road for world trade, which is where the future is going to be defined.
Most Americans understand that. A recent Gallup poll shows that almost 60 percent of our citizens view foreign trade as an opportunity, not a threat. And here’s the reason: The U.S. market is one of the most open markets in the world. And our environmental and labor standards are among the highest in the world. That’s why we actually have so much to gain and nothing to lose by reaching deals that lower barriers and raise the norms of business behavior so that our businesses can actually wind up selling more in other places.
Now, consider that small and medium-sized businesses – which are the backbone of the American economy, by the way – they face a unique set of challenges when they’re trying to increase exports. For example, Health Enterprises in North Attleboro, Massachusetts ships consumer health care items to more than 60 countries, but is hurt by bureaucratic issues, such as costly re-registration process in the EU. The Seattle-based Cascade Designs company exports outdoor equipment – recreation equipment. But it faces high tariffs in TPP countries. An agreement would change that, enabling both exports and payrolls to grow. Concord Supply in San Antonio, Texas is a seller of industrial materials and it depends on patent enforcement in order to keep its innovative products from being ripped off. More generally, the United States is the world leader in many service industries and therefore stands to gain significantly from greater openness in that sector. The list goes on – long list.
Our companies need agreements that will reduce both tariff and non-tariff barriers to trade, thereby enabling them to participate more fully in the new global supply chains that are creating unprecedented opportunities to establish winning connections around the world. In fact, the economic case for TPP and TTIP is actually overwhelming. And I’ve argued a lot of cases over the course of my public career.
However, as secretary of state, I’d like to offer just a little bit of additional food for thought here, wearing the secretary of state hat not the business or trade hat. It is no secret that we have reached a very fluid stage in global affairs, where people are wondering – all around the world, frankly – how the world will look a couple of decades from now. This turbulence that we are witnessing comes from a combination of factors, but it comes significantly from technology changing economic and political relationships.
It comes from the fact that even as the world grows closer, there are powerful forces driving us apart. These include terrorism, but also extreme nationalism, conflicts over resources, the imbalance between the number of people coming of age in many regions and a dangerous shortfall in economic and social opportunity. We also know that everybody in the world is in touch with everybody in the world all the time, every day. And believe me, that changes aspirations and it changes politics. It changes possibilities. It makes it harder to build consensus, harder to govern.
And when we add all of this up, we are confronted by a couple of very basic questions: Are we going to look backward and decide that the best way to prepare for the future is to try to recapture the past? Are we going to fear change and give up even attempting to negotiate a trade agreement that will spur sustained growth and address precisely the labor and environmental concerns about which critics have previously complained? I sure hope not, because the fact is that we could try to build a wall around our economy as big as Fenway Park’s Green Monster – maybe bigger. It’d be a lot more harmful than it would be helpful, my friends.
Instead of walls, what we ought to be building are alliances and partnerships and understanding and rules of the road by which we can all act with certainty, rather than hunkering down and just thinking somehow the storm’s going to pass over you and you’re going to be OK. We should be and we are, believe me, using all the diplomatic tools at our disposal to generate shared prosperity so that we and our partners can move forward together. And we need to make certain that everybody up and down that food chain – the economic food chain – shares in the benefits of this much more effectively than they have at some times in the past.
Now, the good news is that our engagement has been welcomed across every ocean, not because we always agree with all of our friends on every part of this or all of the impacts, but because we know that our markets, and indeed our very futures, all of us, are linked, and that when the chips are really down our partners will be able to count on us, and just as we know, in fact, that we can count on them. That’s what will give the world greater strength and, frankly, greater stability in this extraordinary moment of challenge on a global basis.
The right kind of trade agreements are actually critical because they create habits of cooperation that help us not only economically but in everything else that we are not only determined to do, but that we need to do in order to reduce the instability and address the challenges of the future. The United States and Europe are bound together, as Shakespeare put it, by hoops of iron. TTIP will enable us to take further advantage of our combined economic muscle. A few years ago when it was first talked about, I remember in the middle of the economic crisis people said, wow, this is going to be able to really help us get out of this crisis, lift up, create the jobs we need.
That hasn’t changed, that need. There’s still crisis in a number of countries in Europe. And as we look at Greece struggling with the euro and other challenges, TTIP has the opportunity to be able to provide the economic kick that people need and want and thereby serve as a strategic pillar of the Trans-Atlantic community. It will underscore the democratic solidarity that has defined us and united us since the Berlin Wall was pulled down by the indomitable courage of people on both sides of that barrier.
And looking ahead, TTIP will reinforce our common effort to counter violent extremism, support the sovereignty of Ukraine, build energy security and independence for many nations in Europe that currently have to rely on one source – Russia. And also, it will help us address global problems such as nuclear proliferation and climate change. That’s what comes out of this kind of cooperative effort and the growth that it will spur.
Of course, the Asia-Pacific is also a major focus of our international economic policy and our diplomacy. The markets there are huge and they are growing very rapidly. And expanding right along with them is the range of American economic, political and security interests. Seven Asian countries are among our negotiating partners on the TPP. These include Japan, whose prime minister will be in Washington next week for a state dinner and to address a joint session of Congress.
The transformation of the United States and Japan from enemies to allies over the past seven decades is truly one of the most magnificent achievements of all history for both countries, an example of a remarkable turnaround and reconciliation and of possibilities. The TPP is one way to guarantee that our bilateral ties, already strong, grow even stronger, while serving to reassure all of our allies that America’s commitment to the region is both deeply rooted and long term.
And because the Asia-Pacific matters so much, President Obama announced early in his presidency a plan for a rebalance in our foreign policy. But that rebalance is ground as well in the need for regional partners to perceive a level playing field within Asia, so that the geopolitical clout is not overly concentrated in any one country, including us. We’re not seeking that. We want to see it spread and shared and understood and engaged in by all countries rather than a great game, as we have known it in too many places through all of the last few centuries.
That equilibrium is crucial because the economic models and trade standards that hold sway in the Asia-Pacific will have a decisive impact on the norms elsewhere. It’s in America’s interests, in our allies interests that these standards be as high as we can make them, because when the competition is fair those countries that practice by those standards are the most productive in the world. And I’m glad to say the United States is among them.
The bottom line is this: 2015 is simply not the time for us to decide that trade negotiations are too hard, or to somehow vacate the field and let 70 years of lessons from the Great Depression and World War II get tossed aside. It’s not the time for us to sit back and allow the principles of free and open trade to be supplanted by the barren twins of protectionism and mercantilism. Why on Earth would we ever think that to do so would be in America’s best interests or in the interests of the world? But that’s what’s being offered by others, opponents. Why would you even consider that?
If there’s any messaging being sent by – to governments by the young people in the world today, which really was at the heart of the Arab Spring, at the heart of the revolution that was attempted in Syria, at the heart of Tahrir Square, at the heart of that terrible incident of one person, a fruit vendor, burning himself to death in Tunisia, igniting the rest of the aspirations of people to overflow in those squares and hope for jobs and opportunity and education and a future – if we don’t meet the needs of those young people today in their demand for openness and freedom, the desire to give nature and the environment the same protections that we pursue for commercial contracts and property, these young people insist that we live by the rule of law so that the corrupt are held accountable and it’s possible to achieve prosperity without being either a giant corporation or born rich.
As Americans, these aren’t the kind of demands that should worry us. These aren’t aspirations we should be scared of. We should welcome them, because we’ve encouraged them all over the world for decades. They are, on the contrary, the hopes and expectations that the United States should embrace. They reflect principles that can help us modernize and strengthen our partnerships across both oceans. They can elevate the way the whole work does business. And the road to their realization begins with the approval of trade promotion authority for the president, followed by the completion of these two agreements, each of which represents an agreement with 40 percent individually of the GDP of the world.
Ultimately, my friends, trade issues cannot be separated from larger questions about America’s global leadership or about the choices yet to be made by our generation. If we retreat on trade, our influence on the global economy will diminish. And if our economic stature is in doubt, our ability to deliver on defense and political challenges will be increasingly questioned. In our era, the economic and security realms are absolutely integrated. We simply can’t pull back from one without diminishing our role on the other. We have to be fully engaged in each.
More than 50 years ago, when Christian Herter led this council, American exports were worth only about one-twentieth of their value today. In the decade since, our commercial relationships have been utterly transformed. Our leading manufacturers have changed. Our trade in services has exploded. And technology has made what was once barely imaginable now the new normal. We are living in a wholly different world, except for one thing: The need for American leadership.
Like the greatest generation, we face tests that we cannot allow partisanship or any other source of internal division from preventing us from meeting. We have an opportunity before us to shape and to elevate the global rules of trade for decades to come. On these rules will be written the economic history of this century. In Congress, prominent leaders from both parties are poised to open that door. It is absolutely vital, my friends at the Atlantic Council, that you and we all together do everything possible to make sure we walk through that door together, and that we get this job done.
Thank you very much. (Extended applause.)
MR. KEMPE: Well, Secretary Kerry, I think you hear from this crowd that we’ve just heard a significant speech, and we thank you for that. And we thank you particularly for making this speech at the Atlantic Council and reflecting on Christian Herter, because you did call these agreements historic in nature. And I think if we go forward with these agreements, we may see that they become as historic for their times as the creation of NATO did for its times perhaps, in a different way.
And we certainly feel that way. We’ve launched our own trade and security initiative today. We’ve launched our own business initiative for trade and security. We’ll do whatever we can to help get this job done, because we also consider it historic in nature. Thank you so much for being here.
SEC. KERRY: Thank you, Fred. (Applause.)