REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - AMERICAN LEGISLATIVE EXCHANGE COUNCIL - WASHINGTON, DC

FRIDAY, DECEMBER 7, 2007

AS PREPARED FOR DELIVERY

• Thank you Speaker Brubaker (SC) for the introduction.

• Greetings from the Secretary.

Thomas Jefferson said “information is the currency of democracy.” For more than 25 years ALEC has advocated for responsible government, free markets and thoughtful, informed policymaking at all levels of government.

This conference is a testament to your commitment to making your members more informed and knowledgeable about key issues that will impact our nation’s future.

Growing America’s Economy Through Good Policies

At the Department of Commerce, we work every day to create an environment that increases American competitiveness and fosters growth. There is no substitute for growth. Economic growth means stronger neighborhoods and a healthier and higher standard of living for America.

This Administration’s policies have helped create an environment that has made our economy grow:

• We are on track to meet the President’s goal of eliminating the budget deficit by 2012 without raising taxes. In fact, in 2004 President Bush established the goal of halving our budget deficit by 2009 – we accomplished that goal three years early in 2006.

• The President’s tax cuts, which eliminated tax liability for over 5 million Americans, have returned more than $1 trillion to American familes and businesses and have also led to record Federal tax receipts collections. Tax receipts are up over 10% over last year and since the tax cuts were implemented revenue to the Federal Treasury is up 35%.

• Exports last year were a record $1.4 trillion, and they are growing this year at a double-digit rate. And for the first time in memory, the rate of increase in our exports is outpacing the growth of imports, which is leading to a narrowing of our trade deficit.

• We have experienced more than six years of uninterrupted GDP increases, including a 4.9% annual rate of growth last quarter.

• This year, there are more Americans working than ever before. Our employment rate is 4.7%, which is below the level my econ professors told me was the rate of “full employment”. Furthermore, we have had positive job growth in America for 50 consecutive months – and if that sounds like a lot, it is. In fact, it’s a record. We are now in the midst of the longest job expansion this country has seen – ever.

How do we keep growing? We keep growing by focusing on the issues that you’ll be discussing over the next few days -- policies that encourage entrepreneurship, innovation, and investment by the private sector.

This includes:

• Lowering the tax burden for all Americans;

• Restraining government spending;

• Encouraging innovation;

• Keeping the American people secure at home; and

• Improving our competitiveness in the global marketplace.

These are the right things to do for our country, and President Bush and the Commerce Department will continue to be strong advocates for these policies.

Internet Tax Moratorium

One policy that will keep taxes low and encourage innovation beyond this Administration is the extension of the internet tax moratorium.

This extension for 7 years, advocated by both this organization and the Bush Administration was proudly signed into law by President Bush. This Act will help make internet access affordable to all Americans, encourage E-commerce, and support the development of innovative business applications.

The internet has been an important driver of economic growth. It’s a dramatic example of American leadership in global entrepreneurship and innovation, and I thank the members of this organization for your advocacy in this important effort.

Foreign Direct Investment

An important measure of our competitiveness is foreign direct investment. Last year we attracted more foreign investment than any country—$175 billion. These long-term investors in our economy employ more than 5 million Americans. We cannot take this leadership for granted.

Many states are working to aggressively attract foreign investment. At the Department of Commerce, we have created a program called Invest in America. This initiative will support State economic development organizations and will promote the United States as the most attractive place in the world to invest in.

As New York Times columnist Tom Friedman says, the world if flat. In our flat, 21st Century economy, our competition is not necessarily the company next door, or city next door, or even the state next door from the company next door. Our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection. This challenge of the 21st Century global marketplace also provides an immense opportunity. Fully 95% of the potential customers for American businesses and workers live outside of our borders. This is a huge opportunity to sell our goods and services to waiting customers in countries not called America.

FTAs and Exports

A measure of competitiveness is exports. Exports have been a driver of GDP growth—nearly a quarter of U.S. GDP growth last quarter was attributable to trade and our engagement in the global marketplace.

The more we can do to open up markets for American products—from wheat flour milled in Kansas to jet engines built in Ohio, the better off our economy—and the American people—will be.

One of the best tools we have to increase our exports is free trade agreements. It’s a fact that while countries with which we have FTAs make up only about 7% of global GDP, they receive more than 42% of our exports.

When this Administration began, the United States had free trade agreements in force with just three countries. Now we have agreements in force with 14 countries. In each and every case, we’ve seen our exports increase and a rise in overall trade flows.

On Tuesday, the Senate passed the U.S.-Peru Trade Promotion Agreement, which the House had previously approved. We’re looking forward to building on this momentum by working closely with Congress to pass pending free trade agreements with Colombia, Panama and Korea in the coming months.

These agreements will strengthen our relationships with important allies.

In South Korea, for example, an FTA will remove virtually all their developing economy protections and diversify our engagement in Asia.

We’ll also be able to modernize our alliance with a country willing to compete on a level playing field.

The Peru agreement and the other two pending agreements in our hemisphere will not only make our exporters more competitive, they will promote democracy, social justice and the rule of law in our own neighborhood.

This is important because it improves our security, increases regional stability, and represents the fulfillment of America’s foreign policy goals.

President Reagan saw the wisdom of this approach nearly 20 years ago when he said:

“One of the greatest contributions the United States can make to the world is to promote freedom as the key to economic growth. …We should always remember: protectionism is destructionism. America's jobs, America's growth, America's future depends on trade--trade that is free, open, and fair…Our goal must be a day when the free flow of trade…unites the people of the Western Hemisphere in a bond of mutually beneficial exchange.”

Colombia

Nowhere is President Reagan’s vision clearer and more significant today than in our relationship with Colombia.

The Secretary has been to Colombia with bipartisan Congressional delegations 3 times in the past three months and he tells me it’s the most incredible turnaround story he has ever seen.

The United States has made a substantial bipartisan investment in Colombia’s success, with support and leadership from both Democrats and Republicans. That investment has paid off:

• Today, Colombia’s democratically elected president is our staunchest ally in the region, and has stood with us in the global war on terror;

• The Colombian government and people have stood up to guerilla movements and narcotics traffickers. Since 2000, violent crime and terrorism dropped by nearly half, kidnappings are down 76%, terror attacks by 61%, and homicides by 40%;

• Cocaine production is down 27% and seizures bound for the U.S. have increased by 112%;

• The Columbian economy is growing strongly. Since 2002, the economy has grown an average of 5.2% every year…poverty has been reduced by nearly 20%...and U.S. exports to Columbia are up 86%.

To deny Colombia this trade agreement would be a huge foreign policy blunder.

We must keep in mind that our democratic ideals of liberty and freedom aren’t the only system being promoted in the world today.

While we seek empowerment of the individual, others seek to suppress people, ideas and debate. While we encourage the free flow of investment and business, others seek to stifle free enterprise. We cannot let them win.

Conclusion

Now is not a time to retreat. We must move forward with these FTAs and the other policies that have kept our economy strong and our country secure. It is no accident that despite the terror attacks of September 11th, the global war on terror, increased global energy prices, and significant challenges such as Katrina, our national economy has been so robust.

Some are fearful about our capacity to compete in the global economy. I'm not, the Secretary is not, and the President is not. With the playing field level, we can compete with anybody, anytime, anywhere. One of the great things about my job is that I get to travel this great country and see first-hand the innovative spirit, hard work, and passion of the American people and businesses. One of the many things that makes our country great is our ability and willingness to ask and answer the critical question of what’s next.

Thank you for your commitment to public service, and thank you for the opportunity to be here on behalf of President Bush and the Secretary.

# # # # # #