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As Prepared

UNDER SECRETARY FERNANDEZ: Good morning and thank you for that introduction. I would like to thank the international trade center for this opportunity to speak at the world export development forum on trends in international trade. I want to thank the Mongolian government and people for welcoming us all to your beautiful country.

As Under Secretary of State for Economic Growth, Energy, and the Environment at the State Department, one of my most important goals is promoting international trade. Today, I would like to discuss three key trade trends: resilient trade, sustainable trade, and green trade. First, I will provide some context.

I entered government service in the Obama Administration. When I returned to government in the Biden Administration in 2021, I saw cracks in the international economic order that the United States and our partners had built over more than seven decades.

We faced a new environment of geopolitical and security competition. We saw an accelerating climate crisis and, consequently, the urgent need for an energy transition.

U.S. domestic economic policy has responded to these challenges and is shaping the future of international trade. This includes massive domestic policy and spending initiatives under new laws such as the Chips and Science Act, the Inflation Reduction Act, and the bipartisan infrastructure law.

At the same time as the U.S. focuses on domestic policy, we remain one of the most open and competitive economies in the world, as reflected in our trade statistics.

Compared to the pre-pandemic peak in U.S. trade in 2018, in 2022 total U.S. trade had grown 23 percent by value, with goods trade up 27 percent and services up 12 percent. These are record levels. U.S. tariffs are among the lowest in the world. Average tariffs are less than one percent. This shows us that economic development is more than about trade. It’s about improving investment climate, ensuring transparency and good regulations, eliminating corruption, and ensuring that the benefits of economic growth are fairly allocated. According to UNCTAD [United Nations Conference on Trade and Development], the U.S. continues to attract the largest inward flow of foreign direct investment [FDI] at 367.4 billion dollars. Total stock of FDI in 2021 stood at 13.6 trillion dollars. The U.S. is also the world’s largest investor with FDI outward stock of 9.8 trillion dollars.

As these figures underscore, the openness of the U.S. economy to goods, services, and investment remains a critical driver of global economic growth, higher living standards, and sustainable development. and macroeconomic figures don’t tell the entire story.

International institutions are critical, and the U.S. remains committed to the WTO [World Trade Organization] and its key principles – fair competition, openness, transparency, and the rule of law. However, we recognize the serious challenges posed by non-market policies and practices that have undermined the WTO. So, we are working with other WTO members to reform the multilateral trading system so it benefits workers, accommodates legitimate national security interests, and addresses pressing issues like intellectual property theft, sustainable development, and the clean energy transition.

I see three emerging trends that present opportunities for the U.S. and our global trading partners in these fast-changing times: resilient trade, sustainable trade, and green trade. I’d like to touch upon each of these briefly.

First, let me explain what resilient trade is. The COVID-19 pandemic led to fluctuations in demand that produced a dramatic recession and stretched our supply chains to the breaking point. We learned that shutdowns in China could lead to shortages of medical equipment in Malaysia. So, we have worked with a growing network of partners to make supply chains and global trade more resilient. Last July the U.S. hosted a Supply Chain Ministerial and since then 28 economies have endorsed a Joint Statement that outlines four key principles of supply chain resilience: transparency, diversification, security, and sustainability. We welcome partner governments’ consideration in joining this growing community by endorsing the statement.

We are working with trading partners to build resilience through a range of mechanisms. These include the U.S.-EU Trade and Technology Council, where we cooperate on semiconductors, critical minerals, and clean energy supply chains – and an early warning system for semiconductor manufacturing, to identify supply chain vulnerability before they materialize. Last month, the 14 members of the Indo-Pacific Economic Framework reached substantial conclusion of negotiations on a landmark supply chain agreement that will support trade by monitoring and responding to supply chain crises, and through the Americas Partnership for Economic Prosperity, we will leverage our geographic proximity and deep trade ties in the Western Hemisphere to further strengthen supply chains.

The second trend is sustainable trade. For trade to be sustainable, it must contribute to environmental protection. As trading partners, we all should strive for high levels of environmental protection and effectively enforce our environmental laws. This includes addressing marine litter, plastics pollution, and fisheries subsidies, as well as air and water quality, wildlife protection, illegal logging, and biodiversity. Sustainable trade also levels the playing field.

Sustainability also includes sustainable labor practices that ensure workers as well as employers benefit from trade. This means including effective measures to prohibit the goods trade made with forced labor and the elimination of forced labor domestically. Nobody can compete in trade with goods made with forced labor. In addition, trading partners must adopt and enforce internationally recognized labor rights in their domestic labor laws, including freedom of association and collective bargaining. Governments need to hold companies accountable when an entity violates labor laws. These are big steps for some economies, and we want to collaborate constructively through capacity building and sharing best practices.

Sustainability issues can be addressed in new legislation, such as the Uyghur Forced Labor Prevention Act, through provisions in Free Trade Agreements, and increasingly through due diligence efforts promoted by governments and industry. This trend is likely to continue. USMCA [U.S. – Mexico – Canada Agreement], for example, provides for our governments to engage in consultations when labor unions believe employers have violated fair labor standards. macroeconomic growth should not be pursued at the expense of labor rights.

Finally, I will describe the third trend – green trade. We know that the climate crisis and energy transition require urgent action by our governments.

Through the Inflation Reduction Act and Bipartisan Infrastructure Law, the U.S. has taken action to drive innovation, reduce costs, and accelerate deployment of new green technologies. We’re catalyzing private investment in green infrastructure – including $137 billion in electric vehicles and batteries, and $84 billion in clean energy, such as wind and solar power.

Where investment flows, trade follows. We worked closely with our trading partners to communicate how our public investments need to be at the center of the energy transition. We are aligning our incentives with Europe. We signed an agreement on critical minerals cooperation with Japan and launched negotiations with the EU and the United Kingdom. And earlier this week right here in Ulaanbaatar, the U.S., Mongolia, and the Republic of Korea held a trilateral meeting on critical minerals. Yesterday, we took a next step with the U.S. and Mongolia signing an MOU [memorandum of understanding] to deepen cooperation in this sector.

To conclude, the movements toward resilient trade, sustainable trade, and green trade are clearly shaping the international trading environment of the future. Through a policy focus on these three trends, the U.S. wants to make trade work for all our stakeholders – including industry and labor – and to ensure trade contributes to inclusive global growth.

Thank you for your time today, and I’m glad to be part of the conversation on these and other trends shaping our trading future.

U.S. Department of State

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