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Rural Partners Forum

2004 Rural Partners Forum

Leslie Schweitzer
Senior Trade Advisor, U.S. Chamber of Commerce
September 30, 2004

This is a very exciting day to be here, and I congratulate Tom [Lambeth] and Billy Ray [Hall] and all that has been going on in the state of North Carolina. And as Jim [Clinton] said, you could not talk about a "New Day Dawning" without discussing international trade. I do want to mention to Jim that yesterday at the U.S. Chamber in Washington we honored the CEO of UPS Mike Eskew, as we do on a regular basis - we honor major CEOs throughout the country. He talked about globalization and about trade, and he introduced his comments by quoting the Southern Growth Policies Report and the surveys and summaries that you have done. So you have reached great fame throughout the country - high praise for you.

A new day dawning ... It really is a great pleasure to be here with you today because when I look out into this audience, you may not realize it, but you truly are the most major international traders in the country. Most international businesses do come from rural communities. I was looking at your program over the course of the next two days, and you're going to be talking about entrepreneurism, workforce development in rural communities and tomorrow you'll talk about a rural homegrown jobs initiative. I'm especially honored to be speaking with you today because it is you - it is you, rural America - that comprise the most successful group of international traders.

Also, how to energize and help rural America prosper is a subject very near and dear to my heart. I grew up in a very small town in Kansas, a rural community of 2,500 people. My father was the third generation owner of a small, family business. That explains some of my entrepreneurial background. My international passion came from, believe it or not, the Girl Scouts. The first time I went to Europe I went with the Girl Scouts and the second time was with the Girl Scouts. That bug bit me and bit me hard, and it was because then I understood what international trade was about and the potential of international business.

I must mention to you that when I was 16, I started my first very small international company. A couple of years later, I went to my father, who was running a hundred-year-old family business, and I suggested that he get involved in international trade. And of course that was a time in my life when I knew a lot more than my father did. My two years of experience were much, much more important than his lifetime of experience. So I tried to convince him he should take his business, our family business, international. We had really quite a large family argument about this; it was pretty heated. He won primarily because he had the experience and the resources and I didn't and probably it was a very good decision on his part, and in retrospect, I agree with it. My father was a very wise man.

When I chatted with Billy Ray before coming here today, he emphasized to me that there are numerous issues that are on all of your minds regarding international trade and how it is impacting your communities on a local basis. You're all having to deal in some manner with this new, really dirty word called "outsourcing." I know that outsourcing has become truly a household word. I was on the way to the airport today, and my cab driver is talking about outsourcing instead of the Redskins losing last week to the Dallas Cowboys or the new team in Washington. Outsourcing has become a common household word. How do you, the business leaders, the economic developers, the leaders in your communities throughout the state of North Carolina, how do you meet those challenges? How do you answer the questions? How do you deal with globalization and all that globalization brings with it? As we well know we can't legislate against it. It is here. You can't dream of old days when globalization wasn't on the forefront. It's here. It's in Raleigh, it's in Durham, it's in small towns throughout this state. It is something that we can't avoid. So how do we deal with it? How do we meet the challenges? How do we live with it?

We really do live in quite extraordinary times. Globalization has taken on a completely different perspective in 2004 than it had in previous years. We live in a time of dramatic and historic change; a transformational period. The by-products of such change are uncertainty, complications, instability, danger and fear as well as vast opportunity. America today is sort of like it was at the end of WWII. It's in a position to lead and to shape the direction of the 21st century and you are all a part of that. So how do you, living in rural North Carolina - living in communities in this age of globalization and in an atmosphere that is anything but one of unification behind the issues of globalization and trade - how do you adapt, how do you prepare for those new opportunities? How do you literally re-engineer your communities to meet these challenges?

Obviously it is more difficult right now because of a couple of issues and what we're learning is that there is a real change in the environment now. Until last year, as the U.S. Chamber has pursued a very aggressive trade education program throughout the country, we felt the American public was supportive of international trade, although passive, but very supportive, and we felt as though we were on the offensive. We now are very much on the defensive when it comes to discussing international trade. The emotions of formerly somewhat passive American farmers and consumers and workers and business people are now fueled by the very loud and forceful anti-trade antagonists. We've always had trade antagonists. We've always had anti-trade protesters. We had them in Doha [Qatar], we had them in Seattle, we had them in Miami at the FTA [Free Trade Agreement] ministerial. We have them in Washington every time the MIF [Multilateral Investment Fund] or the World Bank meets. But most rational people had always just sort of chalked up all of those protests, and those people dressed in dolphin outfits running around naked to protest offshore garment manufacturing, as misguided radicals. But the time has changed. Those misguided messages are being further and further confirmed.

Now, in case you haven't noticed, it is an election year. And in case you haven't noticed, it has gotten pretty heated, and trade has once again become truly a four-letter word - something that one does not utter in polite comfort zones. It has become a very difficult issue to discuss and, if any of you are going to watch the debate tonight between Kerry and Bush, it would be very interesting to see how they both discuss the issues of trade. Public debate is focused on lost jobs, shuttered factories, and Chinese competition. And the losers in this globalized world we live in are politically far more vocal than the more quiet winners. The people that you are going to hear about on the panel after this, they are the winners of international trade. Small business, small businesses in rural North Carolina. Trade is on the front page of the newspapers and the media everyday. Trade is the evil to be blamed for nearly for all of the world's economic ills. Do we have any media in the room? Good. They're one of the problems. Oh is that a hand, did I see a hand back there? I'm sure you are enlightened. But there are others who are not as enlightened. Check out the front pages of your newspapers on a daily basis in some of your towns. They don't tell the stories about companies who have hired four more people because they just started trading with Chile. They're talking about the factories that have closed. They're not talking about those faces of trade out there, the small business owner who's added ten more people to his payroll because of international trade. Trade is tied negatively in the press and on the political campaign trail to unemployment, political instability throughout the world, changes in the manufacturing culture of America, all the world's poverty, global warming and certainly, not to make light of the issue, but I'm sure there are those out there, people in Kansas City that are blaming the end of their 13 game winning streak to the Carolina Panthers last week, on trade. Every night, on CNN, Lou Dobbs has launched a public crusade against trade on his Export America show. Every night he launches into an attack on free trade that verges on demagoguery. Unfortunately, the business community, those people that are doing international trade successfully have no similar platform to provide the rebuttal to these arguments. That is honestly why such forums as today - and I congratulate you and commend you for doing this to have an interactive dialog on trade and what it can do to your community - are so important. When Lou Dobbs talks about outsourcing, don't forget that in the state of North Carolina over 200,000 jobs are due to in sourcing from foreign-owned companies. North Carolina can proudly say that you rank 9th in the country on jobs due to in-sourcing, and 40 percent of those jobs are manufacturing jobs. North Carolina exports $16.2 billion to 198 countries throughout the world; 3.9 billion of those to NAFTA [North American Free Trade Agreement.] The good news about Lou Dobbs is that the American public is getting a lot smarter than he gives them credit for, and his audience has dropped 20 percent recently to a mere 532,000 people. I truly believe that if he's not careful, he's going to be replaced by some American Idol TV show and some low budget TV show filmed in Shanghai. That would be poetic justice.

So why is America so fearful about trade? Is it the outsourcing issue? Is it the economic conditions of the past few years? Is it fear of change? Is it fear of increased terrorism? Is it xenophobia? A recent Newsweek poll conducted by the Princeton Survey Research Associates revealed a very interesting statistic. They did a summary of polling over the last four years, asking people, "Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports, or do you see it as a threat to the economy from foreign imports?" In May of 2000, 50 percent said that they saw trade as an opportunity; 36 percent saw it as a threat. In February of 2002, 56 percent saw it as an opportunity; 39 percent as a threat. The numbers are beginning to change. In November of 2003, 49 percent thought that trade was a negative and 41 percent saw it as a threat. A steady decline in the perception regarding the value of international trade.

Now, I realize that this is not the most scientific monitor, but when you all go back to your offices today or tomorrow, go to google and do a search and type in pro globalization and see what comes up. You'll get 5,500 entries. Type in anti-globalization, and it's a much different picture: 112,000 entries. So if you just looked at Google, which we're not just looking at Google, but if you did, you'd see that the antiglobal advocates have captured about 96 percent of the thought leadership market on this issue. And that's just one example of how international trade is being slammed.

I realize that possibly I am preaching to the choir today, but it's very important that I give you some really good, cold, hard facts about trade, trade in general and trade in North Carolina.

I could spend an hour talking about the cold, hard facts regarding international trade and the positive aspects of it, but we don't have that much time. But it proves the American public, the business community in particular, has done a lousy job promoting the value of international trade, particularly to small and medium sized businesses. We have to start to educate the citizens of North Carolina as to the importance of international trade and how vital it is that your farmers and your manufacturers and your service providers, and all of your companies. Companies such as the ones that we have on the panel have access to the world's market through market access agreements with our major trading partners throughout the world. We need to tell the success stories that are existing in your communities because it is the small and medium-sized businesses in your communities, whether it's Smithfield or Murphy or Lumberton. Those are the success stories. Companies are thriving due to international trade.

This is particularly significant because right now we are witnessing one of the most aggressive trade agendas in our country's history. Our U.S. trade representative and current administration has launched into a multitude of bilateral and multilateral trade agreements. All of them are intended to give you an equal playing field for your product. Ironically, most of the anti-trade groups are saying that we don't want to enter into these agreements because it's bad for the American market, but oddly enough, our market is open to products from around the world. Ninety-nine percent of all agricultural products from throughout the world come in here duty free, but we don't have access to their markets. That is the value of signing these free trade agreements. Agricultural products from North Carolina that are entering a country such as Honduras or any place in Central America can have duties from 15 percent to as high as 68 percent. That means you can't compete. What we are fighting for in Washington and throughout this country is to allow you to have an equal playing field, to allow you and your products in these rural communities throughout this state and throughout this country to be able to sell your product. You still have to have the best product. You have to have a good price and a good customer. But you need to have the ability to sell that product without unfair duties being levied on those products. That's what we're fighting for.

In the last couple of years, we've had some major pieces of trade legislation. We had China PNTR [Permanent Normal Trade Relations], and then we had trade promotion authority, and it has since [been with the] trade promotion authority that we have been able to negotiate these trade agreements around the world to open up markets to you. Right now we are preparing to take a free trade agreement with the Dominican Republic in Central America to Congress for a vote. Probably most of you are thinking we have too many products coming in from Central America. And it is true, we have many products coming in, but we are not allowed access to those countries, and this agreement will allow us to have that. Interestingly enough, one of the countries in the free trade agreement is Honduras, and that is the fastest growing market that North Carolina has anywhere in the world. That market has increased 328 percent in the last four years, and you've just touched the tip of the iceberg. There is so much more opportunity in these countries for North Carolina.

Unfortunately, the debate is not full of a lot of solid facts. ... and unfortunately, it has generated far more heat than light on all of these issues. We could argue again that the business community has been too silent, and we're trying to change that. But it is for that reason that five years ago the U.S. Chamber launched this aggressive program called Trade Routes - growing prosperity in North Carolina and the world. It's a program to help small business throughout the country to grow through international trade.

We've had a very exciting development over the last year; we have received a very large government grant from the Department of Commerce, which the U.S. Chamber is matching by 200 percent, and we have corporate funding that has been added to this as well. The purpose of this is threefold: Trade education, trade facilitation, and infrastructure building. North Carolina is one of the states that we have selected to participate in this program. We are doing this very intensely in 10 states around the country. One of the most important aspects of this program is that we have the governors' main label on this. We have found that in every state in the country, there are lots of valuable entities doing international trade economic development, but they don't always talk to each other. So, by leveraging this, under the auspices of the governor in each of these states, we are able to bring these groups together and focus on home grown businesses, focus on women and minority-owned businesses - and help them to understand the myriad of resources that are available to them, both publicly and privately; to help them understand market access; to get them financing; to expand into the global arena. We are not dealing with North Carolina right now until after the election. I don't want this issue politicized; this is a bipartisan effort. We are working with states primarily in the South and then states up in the Great Lakes area. But North Carolina is very important to us, so stay tuned because sometime after the election, we'll be coming in and making a major proposal to the state. We're asking for no money; we're bringing money. We have pretty deep pockets. There have been a lot of deep pockets around here today. But it's one of the most exciting things to get to come in here with money and we get to work in communities around the state of North Carolina, specifically to add resources, leverage limited resources that exist in the state and add to those to help companies to enter the global marketplace. I personally am sort of tired of hearing people whine about international trade. And this is a way to solve one of the problems. You've been talking about that all afternoon. These monies that have gone into the communities, your communities throughout the state are to solve the problems. And that's what we intend to do as well. This is a major initiative the U.S. Chamber has done, partnering with all of the entities in these states. Alabama was our model. We've been working in Alabama for about a year and a half. We have seen a dramatic increase in jobs and export dollars in the small business community in Alabama. We'll be issuing a report on that shortly. And I would like to be able to stand here in two years and be able to say the same thing about North Carolina, specifically pointing to the international business arena. There are many examples to how international trade is growing in North Carolina. You have a huge and bustling international trade business. But, the potential is enormous, and it is not being tapped. So we are committed to helping North Carolina do that.

As North Carolina adjusts to the new realities of a knowledge-based global marketplace, you're going to continue to build your traditional economic leadership in sectors from agribusiness to boat building to financial services and tourism. Your time-honored industries such as textiles and furniture will be adapting to meet the challenges of globalization while newer industries such as life sciences, wireless communication, digital media are shaping the opportunities for the future in every single corner of North Carolina. Hear us loud and clear, Lou Dobbs: this is a new day dawning in North Carolina. There is a lot of exciting opportunity here.

I thank you; it's been a pleasure to be with you, and I hope to be spending lots of time with you in North Carolina over the course of the next two years developing new initiatives and new tools to help rural North Carolina to not only prosper and grow, but to realize your vast potentials here. There is a new day dawning, and I am excited to be a part of this in North Carolina. Thank you very much; it's been a pleasure to be with you.