*EPF407 10/30/2003
Transcript: Evans Reminds Business Leaders of "Responsibilities"
(Secretary of Commerce press conference in Tokyo Oct. 30) (6230)

Business leaders everywhere must remember their responsibilities to the societies they serve, says Secretary of Commerce Donald L. Evans.

Speaking October 30 in Tokyo to the American Chamber of Commerce in Japan Luncheon, Evans said that business has a "great responsibility."

"The business world's role, the private sector role, is to create jobs," he said during his luncheon address. "So when you think about how critical that is and how strategically central that is to any civil society, if business in those societies don't honor their responsibilities to their shareholders and to their employees and to their suppliers, then who else in society will honor their responsibilities, their moral responsibilities included?"

The secretary of commerce said that while job security, job growth and economic growth are in large part dependent on free trade and fair trade, "we've all got to play by the same rules."

Fair competition, he said, leads to innovation, higher productivity, economic growth, and a higher standard of living. Ultimately, he said, it "leads to people demanding the kind of freedoms that they are entitled to, that leads to a greater quality of life."

"You've got to be able to look your workers in the eyes, in your own home country, and say listen, this is you, we're going to have a free global trading system, but we're all going to be playing by the same rules," Evans said.

Fair trade across the globe, the secretary said, "does not mean that we have the same labor rates, that we're paying the same wages."

"What it does mean is that government policies are such that we're allowing free market forces to make decisions. Governments are not trying to micro-manage their economies by controlling and owning banks, for instance, in deciding who gets loans and who doesn't get loans, and government does not own plants and sectors of the economy that are being subsidized. Government does not control prices for raw materials and inputs in their economy."

"It's the concept, really, of allowing free market forces to make the decisions in the economy and not government interfering with the economy," he said.

"We need to continue to work very hard on the Doha Round and WTO (World Trade Organization)," Evans said. "Those are the kinds of places you can go to create standards, rules, laws, regulations so we're all on the same playing field."

Following is a transcript of the event from the Department of Commerce:

(begin transcript)

Secretary of Commerce Donald L. Evans
American Chamber of Commerce in Japan Luncheon
October 30, 2003
Capitol Tokyu Hotel
Tokyo

ACCJ PRESIDENT LANCE LEE: Now I have the honor to ask a man who needs no introduction, Untied States Ambassador to Japan Howard Baker, to introduce Secretary Evans. Mr. Ambassador?

(applause)

AMBASSADOR HOWARD H. BAKER, JR.: Lance told me at the table here that when I say "Ambassador", that's your cue to come to come to the platform, and I appreciate it, Lance. This is the second time in as many days that I have had the opportunity to appear before this group. I carefully noted the previous encounter though, and it was the annual meeting and you were voting on officers, and you neglected to give me a ballot. For an old politician, that is a serious strategic oversight. But notwithstanding, I am pleased to be here today, and to see all of you again, to meet with many friends here. Mr. Secretary, this is a great group, and indeed I do meet with them once a month at the early morning hour in the conference room where you had your brief this morning, and we discuss a variety of issues. I believe, I hope, it is usually beneficial. But in any event, I am glad to be here today.

For the special purpose of introducing our Secretary of Commerce... Don Evans is here, as Lance pointed out, on a second visit to Japan as Secretary of Commerce. He is a distinguished American, even aside from his position as Secretary of Commerce in the President's cabinet. As Secretary of Commerce, he is the voice of business in government. He oversees a diverse cabinet agency of 40,000 workers, focused on promoting and advocating for American business, both at home and abroad. His department also gathers vast quantities of economic and demographic data, he issues patents and trademarks, helps set up industrial standards, forecasts the weather, researches the ocean and oversees communication policy, and other than that he doesn't have much to do.

He is a key member of the President's economic team, he is an advisor to the President, he is a friend of the President's, he is a fellow Texan and he speaks with authority on the responsibilities of government in terms of its coordination with economic policy and the industrial and commercial enterprises of our country. A former businessman in the oil and gas industry, Secretary Evans believes very strongly in the free enterprise system and corporate accountability. He sees his main mission in government as working to create a climate in which the U.S. and global economies can grow. While he is here, he is scheduled to have a series of meetings. I have been privileged to attend the one so far, and look forward to the others. But let me tell you on a personal note that he interacts well and effectively with his Japanese counterparts. I think that his knowledge of business in America and his native tact and talent go a long way toward making sure that the Japanese understand fully our point of view, and that we understand the Japanese point of view on important industrial, commercial and economic matters. Don Evans describes himself as an optimist, who believes the highest calling in life is serving others. As a result, he has been active in community service over the years. He is a board member of the Scleroderma Research Foundation for eight years and a driving force behind Native Vision, a program that provides services to about 10,000 Native American children. He has been involved with the United Way for many years, serving as President in 1989 and Campaign Chair in 1981.

Given his calling to serve others, it comes as no surprise that our Secretary of Commerce is here today. He arrived last night from China, and starting from early this morning and continuing until late this night, Secretary Evans has a full schedule of meetings with business and government leaders, all in the name of maintaining and increasing the strength of the U.S.-Japan business relationship. His schedule is grueling and his time is limited. So we are especially pleased that he would take time today to meet with this group. My friends, it is a special pleasure for me, then, to introduce to you the distinguished Secretary of Commerce, my friend, the man for whom I have great respect, to a group and an agency for whom I have great respect. We work closely together, Mr. Secretary, and I'm sure they welcome you here, as do I. Secretary Evans.

(applause)

SECRETARY EVANS: Mr. Ambassador, thank you so much. I am deeply honored to be back here. I can't tell you how honored I am to be introduced by the Ambassador, a man for whom I have great respect, a man who is one of my heroes, been a hero of mine for many, many years as I have watched his life that has been filled with public service, giving to others and giving to our country in a very exemplary and noble way. Mr. Ambassador, thank you for your service and the example you set for all of us. Lance, it's good to see you again. I had the chance to meet Lance when I came through here a year and a half ago. Congratulations on your promotion in this wonderful organization here. It's always good to get out and talk to chambers around the world. I really enjoy that, because you're all about business, and I enjoy talking about business, because that's where I spent 26 years of my life, in the oil and gas business. As the Ambassador said, I am a self-described optimist. I am a risk taker. If you are in the oil and gas industry, you have to be an optimist. You're a risk taker as well. I am taking a little risk today, as a matter of fact. I am one that does not particularly enjoy listening to prepared text, prepared speeches. I have been delivering those for about the last month, and so today I have decided to take a different tack, and tell you a little bit about my experiences over the last month, which have been remarkable.

Today has been one of those remarkable days, and I want to spend time on that. I am taking another little risk in that I have taken off my watch, so I can watch my watch and tell what time it is. The last time I did that, I finished my remarks and I sat down. The host of the event came to the podium, called me back up to present to me an award, or gift, as his thanks for me being there and presenting to that group, and he presented me my watch. (laughter) So maybe today I will remember to take it back with me.

Greetings from the President. It's a defining moment in the history of the world. The President is doing well. The President understands that this is a defining moment in the history of the world. The President is focused on taking this world to a place of peace and prosperity and freedom, in doing that, by uniting the world, in doing that, by showing the world the compassion it has for other people all around the world. I know the President was here recently. I know he had dinner with the Prime Minister. They had steak for dinner, so the Prime Minister started calling the President the "Beef Man". We had chicken today. That must mean I am the "Chicken Man", I guess. (laughter)

But the President is doing well, and I must say that my travels of the last month or so have really given me a great grasp of how this world is at a moment that is going to define the future for our children and our grandchildren and it has given me an absolute crystal-clear understanding of the role that you play, that each and every one of you play in leading this to a prosperous world. I spent 26 years of my life in the private sector. Businesses are at the strategic center of any civil society. I say that because every place I go in the world, and in the last month I have been to Russia, I've been to Iraq, I've been to Afghanistan, I've been to China, I'm here in Japan today, I'm off to Poland, I'm going to Czech Republic... Every place I go in the world, people want the same thing. They want a job, so they can put a roof over their family's head, they want to be able to feed their children, they want to educate their children, and they want their children to live in a safe and secure environment. That's what we are all here to do.

Governments, what do they do? We try and create the conditions for you to do what you do so well. We have to provide for security, for capital to be invested. We have to provide for global security, for national security, for you cannot have economic security if you don't have global security or national security. So that's a role that we must play as governments. But remember that your role, the business world's role, the private sector role, is to create jobs. So when you think about how critical that is and how strategically central that is to any civil society, if business in those societies don't honor their responsibilities to their shareholders and to their employees and to their suppliers, then who else in society will honor their responsibilities, their moral responsibilities included? So yes, you have great responsibility.

As I have traveled the last month or so, I went to Russia. I was there to conduct the second of a U.S.-Russia energy dialogue. I speak about energy because I know how critical energy is to the future growth of our global economy. You cannot grow an economy without available, affordable, reliable energy. Russia happens to be the largest energy producer in the world today, when you combine their oil production with their gas production about 15 million barrels a day. But more importantly than that, it is putting the focus for the entire world on how important it is to be developing our energy resources in this world and making sure that we have available, affordable energy to continue to grow our economies. I was impressed today, talking to Minister Takenaka and others about Japan's vision of providing for the necessary energy resources in this country and your plans to build more power plants, nuclear power plants, I think you are on the right track. I would like to see us in America have the opportunity to build more nuclear power plants. So I am talking about delivering energy into a global market place, and I do it all around the world, not just Russia, but every place I go.

I went to Iraq and Afghanistan, and I saw the incredible power of freedom, how it transforms lives, the incredible progress that has taken place there in the last six months. You don't read a lot about it, you don't often see it on the television screen, but I promise you, when you look in the eyes of the young people of Iraq, when you look in the eyes of the children of Iraq, the women of Iraq, the entrepreneurs of Iraq, the business owners of Iraq, you can see it. When you sit down and talk to the good governing council and the city council and the ministers, you can feel it. You can feel the sense of responsibility they have now for their own country, for moving their country to one of security and a country that is self-governing. It's a powerful, powerful feeling to see what freedom will do. Because Iraq, that region, is continuing to become more secure, it means the world is more secure, it means that America is more secure, it means Japan is more secure, it means the entire world is more secure.

I had a terrific meeting with Minister Takenaka today and had the chance to say to him how much the American people appreciate the leadership of this strong ally, this good friend. This great country, standing side by side with the United States, fighting the war on terror and providing one and a half billion dollars in grants to the reconstruction of Iraq, and three and a half billion dollars in loans. It sends a powerful message to the world. All you have to do is go there and feel it and sense it, about what freedom can do, what more security can do to leading us all towards this ultimate destination that we all aspire for, which is a world that lives in peace and prosperity and freedom. I would say to you that I have been asked many times since coming back, what do you feel about investment in Iraq? There are tremendous opportunities in Iraq for investment in capital to flow into that country, and the companies that I talk to that are on the ground there and working, they say to me that the Iraqi people are some of the best workers they have anywhere in the world. Their work ethic is good, they're resourceful, and so there is a ready labor force in Iraq to strengthen and build that economy.

I had the chance to go to Afghanistan. Just think about this real quick. We've got a country that four years ago had 800,000 students in school, and they were all boys. Now they've got four and a half million students in school, and one and a half million of them are girls. That's the future, that's the hope. So when you go to these countries and get on the ground and see what's taking place because of freedom, you just can't help but think about how creating a free, more secure, more self-governing environment is going to be critical in leading this world to a place of peace and prosperity and freedom.

I just got here from China. Spent a few days there. Had a chance to go west, and spent a couple of days in Beijing. It's remarkable what is taking place there as that economy continues to move toward a free market economy. Been on that road for the last 22, 23, 24 years, still has a long way to go. They know it. They have big challenges in front of them. Had a very constructive meeting with Premier Wen. He knows that they have much to do, but they are to be commended for the progress they have made today. If you look at what capitalism is doing for that country, it has lifted hundreds of millions of people out of poverty. They are one of the real engines of growth in the global economy today. If you look at their growth rate over the last ten years or so, you have to say that China is one that is really providing tremendous growth opportunities for the good people right here in Japan.

I mean, I know the flow of capital from Japan into China, I know the flow of goods from Japan into China. Japan doesn't have the same kind of trade deficit issue that we have with China. There is a tremendous amount of goods that are being manufactured right here in Japan that are flowing to China. I see great promise there, and I see a commitment of the part of the leadership to continue to move toward free market reforms, and they know how important it is.

As you look at creating the conditions for jobs in this country, in this world, what you have to think about is, what I always say is, job security, job growth and economic growth are in large part dependent on free trade and fair trade. We've all got to play by the same rules. We love competition in America. We think competition, we know competition, has been one of the absolute keys to our success, because competition, what does it do? You have fair competition, where we're all playing on the same level playing field. Competition leads to innovation, that leads to higher productivity, that leads to economic growth, that leads to a higher standard of living, that leads to people demanding the kind of freedoms that they are entitled to, that leads to a greater quality of life. So we love competition, and we want to continue to expand competition and free trade all around the world. But it's got to be fair trade. You've got to be able to look your workers in the eyes, in your own home country, and say listen, this is you, we're going to have a free global trading system, but we're all going to be playing by the same rules.

Let me spend a couple of minutes talking about the U.S. economy, and then what I see happening in the Japanese economy. There are certainly, as you know, I don't need to tell you some of the encouraging signs. We've had our challenges in the Bush administration. We showed up and there was a recession on our plate, then 9/11, then corporate scandals. But from the very beginning, the President has been totally focused on what we can do with fiscal policies, monetary policies, regulatory policies, to create the conditions for you to do what you do so well, businesses to do what they do so well, which is to create wealth and prosperity. What our President said about doing was not only after 9/11 telling the country but the world that we're going to win the war against terrorism, and we're going to provide for the national security of this country and the homeland security of this country, which is what the financial markets need to hear, what the investors need to hear, both business investors as well as consumers. He also said that we need to cut our taxes. We need to get the incentives in the right place for people to be more productive. So we've had a series of three tax cuts over the course of the last three years, and those tax cuts are beginning to feed their way into the economy, and we're starting to see the signs of it, the evidence of it.

The stock market is up about two and a half trillion dollars in value this year alone, 3.3 per cent GDP growth in the second quarter, we've got another GDP number coming out tomorrow morning. The odds are that's going to be a pretty attractive number. At least all the private forecasters are saying it's going to be a pretty attractive number. So you can look at that number, but it will be just one number. But it will be an indication, I think, that we're on the right track. There are other indications that we're on the right track.

When I talked to Minister Takenaka today, he was pointing out that you're starting to see business investment here again in this economy. That's healthy, that's good, that's what has been lacking somewhat in this economy. It's been lacking in the American economy, and we're seeing it begin to take hold in the American economy. The businesses are beginning to invest again. We've seen job creation begin to pick up, not at the pace it needs to be yet, but again, the trends are in the right direction. We are in an environment right now, in large part because of competition, that inflation is low. With inflation being low, it allows you to pursue pro-growth fiscal policies and pro-growth monetary policies. That's precisely what we are doing.

In terms of Japan, well, what I would say is the relationships between the United States and Japan have not been better in my lifetime. I feel not only a strong sense friendship, but I feel a strong sense of commitment to lead this world in a direction of peace and prosperity, and understand the importance of our leadership role. I mean, I know a lot has been said about how the Japanese economy has been relatively flat for the last ten years, but it still represents two-thirds of the economy in this part of the world, and the second largest economy in the world. So it's an incredibly powerful force. I compliment the Prime Minister for his leadership in pursing the kinds of courageous reforms, structural reforms, you need to have to get the conditions right, like the reduction of non-performing loans. Minister Takenaka was telling me today that they were at 8 per cent and they've drifted down to 6 per cent, and they feel like they are going down, heading in the right direction. I know they hope soon to get them soon down to 4 per cent. That's constructive, that gives a good signal, and I tell you who it's giving a good signal to - the stock market. The stock market is up 30 per cent during a time period, the most the stock market has been up in 50 years in terms of percentage growth during this time period, even going back to the 1980's. So the stock market is beginning to recognize that the leadership of Japan is taking the country in the right direction.

We talked about the importance of deregulation in other areas of the economy, and privatization. We talked about the importance of trade and opening up trade, opening up trade even to a greater extent between the United States and Japan, where are the areas where we can bring down more trade barriers so that there is a more free flow of products and services between our two countries. And what does that mean? More competition, which in my mind is good.

So, as I've traveled the world, and seen different parts of the world, seen different cultures in the world, I've come away knowing that there is one thing that we all have in common. That's where we're trying to create the conditions for jobs so that people all around the world can pursue their dreams and pursue their aspirations, and I think that Japan and the United States, because of this very close relationship and friendship and understanding between each other, have got not only the opportunity but the responsibility to play a major leadership role in leading this world down the path that we would all like to see it go. I just know that there is a power in this room to make a difference. I was just handed a report just a few minutes ago that this fine organization has put out about a recommendation to the government that would even improve the environment to a greater extent for productivity growth in this economy. That's what you have to do. You have to go talk to your government, tell them what it is you feel like they need to do to get more productivity growth in your economy, you're being engaged, you're being involved, and that's what it takes.

So, again, I am optimistic, I am very optimistic because I know the power of freedom, and I know there are 50 million people in the world that are living in freedom right now that didn't have it six months ago. I know what it can do for those two countries. I know what it can do for the world. I just look forward to continuing to work with the good people of this country and the leadership of this country to see if we can't move us down this road to a place that all of our children and all of our grandchildren would want to call home a little bit faster.

Let me stop there, because I would love to be able to respond to questions that you might have and any comments that you might have, any message you want me to take back to the President. I would be glad to take that message back to him.

(applause)

QUESTION: Mr. Secretary, thank you very much for a very informative and inspiring talk. I'd like to ask you about job growth in the United States. I was in Chicago last month for a conference on the WTO post, Cancun. One of the concerns expressed among the American participants, including people in business, was the perception of the jobless recovery, and the notion, especially centered in Silicon Valley where my headquarters is, and also in New York, that many of the jobs that are being created in the manufacturing sector are floating offshore to places like China and that the white collar jobs, many of them are going to India these days. There's a real concern about the productivity growing and also about companies increasing their profitability and the GDP growing, but jobs not necessarily growing, so, could you give us a perspective on job growth in the United States?

SECRETARY EVANS: I'd be happy to, and I'd like to begin by saying high productivity growth is a good thing. That means your economy is growing, it means the people of your country will have a higher standard of living, that's what that means. But also, in the short term, when you have extraordinary high productivity growth it makes it a challenge in the short term to keep up with job growth at the kind of pace that you have workers entering into the job market.

As I've said, we've seen some encouraging signs recently in terms of the decline in jobs in our country declining, and that we added about 57,000 new jobs this last report. But I would say to you that what has happened in the productivity side in our country is that in the 1970's, 80's and early 90's productivity growth was about one and a quarter percent, and then in the mid-90's to 2000 productivity growth was in the two and half percent range, which is about double. We've seen some dramatic productivity growth numbers coming out of the recession, which is not unusual because you do have... there's a lot of pressure on companies to do what they can to cut cost and return to a more profitable situation as soon as possible. So there's a lot of pressure on the cost side. You see that occurring coming out of recessions.

But our productivity growth has been remarkable here recently. I mean, in the second quarter it was 6.8 percent. I would suspect we'll see a pretty good number. Anticipation, what the private economists are saying, is that we'll probably see a pretty high productivity number coming out tomorrow as well. Long term, that is good. I think in terms of job creation, we're just going to stay focused on it every day. It's one of the fundamental reasons that I was in China. Job creation, job security, economic growth is dependent on free trade, but fair trade. We've got to be able to make sure that we are creating a level playing field around the world, and it's those kind of conditions that I think will lift the whole world economy and create jobs in America, create jobs in Japan, and create jobs all around the world.

So while I'm not going to make any forecast as to the level of job growth that I think we should anticipate in the next year or two, I think our trends are good, I think they're healthy, but we cannot let up. We've got to be working every day to make it. Every day, we ought to have the mindset, when you're making decisions, does this make it easier for our workers to compete, or does it make it harder? Every decision ought to go through that simple little screen, and I mean easier to compete domestically or internationally. As long as you're using principles like that, I think we'll be creating the good conditions for job growth and job creation, and we'll be pleased with the kind of performance that our economy and other economies will deliver in the years ahead. Yes, Lance.

QUESTION: I want to thank you as well, Mr. Secretary, for a very excellent and informative speech. I think a lot of people are confused between the term "fair trade" and "open trade", sorry, I mean "free trade" and "fair trade". Could you please explain the difference?

SECRETARY EVANS: Fair trade just simply means we're all playing by basically the same set of rules. That does not mean that we have the same labor rates, that we're paying the same wages. What it does mean is that government policies are such that we're allowing free market forces to make decisions. Governments are not trying to micro-manage their economies by controlling and owning banks, for instance, in deciding who gets loans and who doesn't get loans, and government does not own plants and sectors of the economy that are being subsidized. Government does not control prices for raw materials and inputs in their economy, like for instance, one of the issues that we deal with are energy prices. We see a number of countries around the world that control energy prices, and so that puts a plant in one country at a clear advantage to a plant in a country where free market forces determine what energy prices are. It's the concept, really, of allowing free market forces to make the decisions in the economy and not government interfering with the economy. It does not mean, though, that just because labor rates in one country are a lot less than another area of the country or another area of the world it means it's an unlevel playing field in that respect.

We need to continue to work very hard on the Doha Round and WTO. Those are the kinds of places you can go to create standards, rules, laws, regulations so we're all on the same playing field. Another example that I used a lot when I was in China was the enforcement of the agreements that we signed. Intellectual Property Right protection, that's a huge, huge deal. About 90 percent of the CDs, DVDs, software sold in China are pirated, or they're stolen or they're counterfeit. That means wherever that intellectual property, that knowledge, that value is coming from, is being disadvantaged or on an unlevel playing field. So it's a matter of not only signing agreements where we all know what the rules are going to be, but it's also enforcing the rules - effective enforcement of the rules.

QUESTION: Mr. Secretary, thank you for your comments today. I can't help but think back perhaps 15 years ago when a lot of the same issues that the United States and China face today, with perhaps a lopsided trade balance on the part of the Chinese, were also true here in Japan. In those 15 or 20 years, the Japanese manufacturers, particularly in automotive and in electronics, have moved manufacturing facilities to the United States and have helped create many, many, many new jobs, and continue to do so. I'm wondering is there a message there for our Chinese trading partners, and is there an opportunity for some of their newly found foreign investment to come back to the United States.

SECRETARY EVANS: A great question, and I think the answer is absolutely yes. That is a topic that we talked about while I was in China. There are opportunities for investment to flow from China back to the United States. I talked to a few companies, as a matter of fact, that are located in China but investing in the United States. I think as the global economy continues to become more integrated and more networked and more interlinked, and we have more multi-national ownership, that the economy will gravitate towards companies doing what they really, really do well. That's where they'll fit in the economy. They'll be the low-cost producer in that little segment of the economy. We will find that we have competitive and comparative advantages in the United States in some areas of the economy. China will find out they've got some comparative and competitive advantages in other areas. I think it's a matter of, again, just... I think we will see the flow of capital. We've already seen some of it. We'll see the flow of capital coming to the United States from China. We see it going the other way as well.

I wish I knew the exact numbers in Japan, and I don't. I should have looked them up before I came here to make these remarks. But Japanese investment in the United States employs hundreds of thousands of people, and vice versa. I don't know what the numbers are exactly. I know we invested about $1.2 billion, I believe it was, in foreign direct investment from the United States to Japan this last year. I think it was 7 billion going the other way. But there's a lot of American capital that's invested here that is employing the good people of Japan, and vice versa. There's lots of Japanese capital. In fact, I've been to a few of the plants. But that's the way of the world. We're going to just see the world become more integrated all the time. I thought it was very interesting what a Russian scientist told me when I was over there a year or so ago. He talked about how the aviation industry in the 20th century changed the way our world was connected, or the borders of our countries were connected, by connecting the borders with airport terminals. You get on a plane in one airport terminal, fly to an airport terminal in another country, and that's how the borders were connected. In the 21st century, because of technology, our borders are going to be connected by computer terminals all around the world. Borders are becoming more eroded all around the world, and that kind of way, the free flow of information and knowledge, is one of the reasons that we're seeing this incredible increase in productivity. Information is readily available, and doesn't cost you a lot to get it. I'm optimistic that we'll continue to see this power drive a more competitive, more productive global economy that will eventually get us to where we're all trying to be.

OK. Thank you all very much. God Bless You.

(end transcript)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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