Secretary Espinosa, thank you. Through your efforts in Cancun and here in Los Cabos, Mexico is emerging as a leader in bringing nations together to solve problems that none of us can solve on our own. When you call for stronger leadership to ensure that global institutions deliver results for people everywhere, you have a partner in the United States.
One of the welcome trends we have seen in recent years is the rise of more flexible groupings that are working on creative solutions to shared challenges, from piracy to climate change. I am delighted to have this chance to exchange ideas with so many colleagues from the G20 and beyond.
At the height of the most severe financial crisis in my lifetime, we recognized that simply gathering the world’s eight industrialized economies would no longer be enough to stabilize the global economy and promote balanced growth. We needed to include a broader range of stakeholders. Together, this broader group quickly expanded emergency lending capacity. We helped prevent a deeper slide. And in so doing, we set ourselves and the G20 a high bar for the future.
The countries of the G20 make up more than 85 percent of the world economy. As we work to create the conditions for sustained recovery, more inclusive growth, and widespread prosperity, we should aim to summon the same political will we showed in a crisis.
Of course, in a conversation about breaking deadlocks in the multilateral system, we have no shortage of topics to choose from. I look forward to discussing the range of issues Minister Espinosa has raised, including green growth, the fight against corruption, and how we can meet our global development objectives. I also look forward to speaking with many of you as this conference proceeds about how best to support the legitimate aspirations and humanitarian needs of the Syrian people despite the current deadlock at the United Nations Security Council, and about how the international community can persuade Iran to meet its obligations.
I’d like to spend the balance of my time today talking about the global trading system of the 21st century—specifically, the need to update the rules of the road to ensure that our businesses compete on the merits and our economies can grow together.
These issues are important to all of us here this evening because today, our foreign relations and our economic relations remain inseparable. Prosperity is a core foreign policy goal for all of us, and economic forces influence virtually every aspect of how our nations engage with the world. So I believe it is natural that we, as foreign ministers, should gather at this forum.
Last March, I laid out four attributes that I believe characterize healthy economic competition and—by extension—a healthy global economy: It must be open, free, transparent, and fair. An open system is one where any person anywhere can participate in markets everywhere. A free system is one in which ideas, information, products, and capital can flow unimpeded by unnecessary or unjust barriers. A transparent system is one where rules and regulations are developed out in the open through wide consultation. And a fair system is one where companies compete on a level playing field based on agreed-upon rules, which sustains our faith in the system itself.
These principles have underpinned the greatest era of growth the world has ever seen. They have empowered entrepreneurs in all of our societies and fueled the emergence of middle classes from Seoul to Sao Paolo to Nairobi.
No nation is perfect in honoring these principles, including my own. But all who benefit from open, free, transparent, and fair competition have a vital interest in protecting it and a responsibility to follow the rules. Enough of the world’s commerce now takes place with the developing economies in this room that the failure of any group of nations to participate in the rules-based system would render the entire system unworkable. And that would impoverish all of us.
I don’t need to tell anyone here that we face significant challenges to this system. I’d like to highlight three of them.
First is the rise of barriers behind borders. We have made great progress over the years in addressing tariff barriers to trade. But today, many of the most important barriers are emerging not at borders, but behind them. These anti-competitive practices take many forms, including protectionist regulations, sub-market subsidies, mandatory technology transfer, and unfair joint venture requirements. They all interfere with the G20’s core mandate of promoting balanced and sustainable growth. Just as the GATT and then the WTO have eliminated harmful tariffs over the last several decades, today we need institutions and arrangements capable of providing solutions to this new challenge of barriers emerging behind borders.
Second, I would like to talk candidly about the challenges countries face from the emergence of what has been called “state capitalism”—the rise of sovereign wealth and the growing presence and influence of state-owned and state-controlled enterprises that operate globally.
Of course, every nation will decide how involved its government should be in its economy. But for our interconnected global economy to grow together, and for all countries to keep faith in the system, we need to work together to ensure that all companies compete by the same set of rules. When favored state-owned or state-supported enterprises enjoy preferential access to government resources and special protection from competition in their markets, that harms foreign competitors and local entrepreneurs alike.
Several years ago, when sovereign wealth funds began to increase their presence around the world, governments and the private sector came together and developed the Santiago Principles, a code of conduct designed to reassure the world that sovereign wealth funds would act transparently and focus on growth rather than other purposes.
Today, we need to develop similar understandings to ensure that companies compete on a level playing field, whether their owners sit in corporate boardrooms or in government ministries. We call this common-sense principle “competitive neutrality.” It is a principle that G20 members should reaffirm.
The third challenge I’d like to discuss is how we protect intellectual property and innovation—which all of our countries depend on to create the new technologies, products, and industries that will drive growth and create the high quality jobs of the future.
I know that there are differences of opinion on some aspects of intellectual property protection and how we enforce intellectual property laws. There is a healthy debate within my country as well.
But we all agree on certain fundamental principles—and we all need to be working to implement them. There is no excuse for allowing a company to steal trade secrets from a competitor and then use them to make a competing product. We all acknowledge that the wholesale copying of movies, books, and other media without paying royalties to the people who created them is theft. On the other hand, we also all agree that information and ideas need to be able to cross borders freely. Our countries have an opportunity to create a flexible framework that encourages rather than stifles, supports rather than suppresses, and connects rather than separates, innovators around the world.
I know that many companies in your countries share our concerns about the issues I have discussed: barriers behind borders, state-owned enterprises and sovereign wealth, and intellectual property. These are multilateral issues, not the cause of any one nation. They bear directly on our discussion this evening about breaking deadlocks in the multilateral system. We have to get them right, through cooperation and effective rules of the road.
A level playing field is not just a rhetorical device. Countries that benefit because we honor our commitments should know we expect them to honor theirs. This is important to the United States, and to protecting fair economic competition around the world for many years to come.
And so are our efforts, here at the G20 and elsewhere, to ensure that growth is not just balanced, but sustainable and inclusive. I believe we have entered an age of participation—where every individual, regardless of race, gender, hemisphere, or region, is poised to be a contributing and valued member of the global marketplace. Across the full range of our efforts at the G20, it must be a priority to involve women—as partners, planners, and implementers—because the evidence is clear: the economic participation of women is as powerful a driver economic growth as we have today.
Ultimately, our progress should be measured not by GDP, but by the quality of people’s lives: How widely growth is felt. How inclusive our economies are. Whether men and women can take hold of the opportunities to build the world we want for our children and our children’s children. The G20 has already proved its potential to help nations emerge from crisis. Today, let us redouble our efforts to recover and prosper together.
Thank you, Madam Secretary.