Transatlantic Business Dialogue

Friday, November 6, 1998

Let me begin by saying that North Carolina -- the Tarheel state -- is a place close to my heart. I grew up right next door, in Tennessee. For President Clinton and me, North Carolina is also a place where nobody speaks with an accent.

Back in 1939, an American guide book described North Carolina as a state...where "industry's dependence on outside capital for growth" was "relatively small." Today, it's the exact opposite.

The State of North Carolina -- with the ever-out front leadership of Governor Jim Hunt --is on the cutting edge of the global economy. In fact, today there is no better place for leaders from the United States and the E.U. to come together to focus on the global economy. More than six percent of North Carolina's Gross State Product comes from exports. That's more than eleven billion dollars, and represents more than 120,000 well-paying jobs. North Carolina is also now a center of high technology -- in the Research Triangle and right here in Charlotte as well.

The changing story of commerce in North Carolina is also the story of the TransAtlantic Business Dialogue. When Commerce Secretary Ron Brown first created this dialogue three years ago, he did it with the firm conviction that the people who are actually in the global arena every day have an invaluable role to play in shaping policy. I know that you are proud of the fact that of the 129 recommendations TABD has made in the past three years, over 50 percent have been implemented into law. I wish we had that same level of success with Congress!

It is appropriate that this conference comes just days after our national elections. Because, for six years now, President Clinton and I have worked to build a new political consensus on economic policy -- to try to change the terms of the debate not just in America, but around the world.

I'm here today to make a simple point: today, amid the continued volatility of our international economy, we have an urgent obligation to promote strong growth, rising wages, and higher living standards around the world. And I want to address both America's special role -- the steps we must take to keep our own house in order -- and the responsibility other nations share, especially the E.U. and Japan, in revitalizing our world economy.

When President Clinton and I came into office, there were already many important changes taking place in the private sector, both here and in Western Europe -- changes that were making many businesses more competitive. But too often, our government was either in the way, or not providing the right investments to encourage longer-term growth. We believed strongly in a market economy -- but we also believed that government had its place, as long as government knew its place.

So we developed a three-part economic strategy, merging elements that had never before been combined: cut the deficit, open markets while advancing labor rights and environmental protections around the world, and make aggressive new investments in education and R&D. It's a strategy that is working. Today, America's economy is strong, even at a time of turmoil in the world economy.

But throughout the political season that just ended, we faced many challenges to that strategy, from all sides: a pitched debate over our investments in education, research, and technology, and a dangerous and growing financial isolationism, which led some in the Congress to fight against America's fair share of IMF funding and U.N. dues -- and led others to oppose the traditional trading authority known as "Fast Track." Even as we were making the case for greater fiscal responsibility around the world, we had debates over a whole series of proposals that could have compromised America's own fiscal discipline.

I don't expect those debates to end any time soon. But this I do believe: now is the time for America to push even harder -- to move even more aggressively to promote growth and stability in the global economy. Especially in this time of turmoil, America cannot and will not take growth for granted. If we want to build a strong, productive economy for our own families and communities -- and if we want to provide the kind of leadership today's overseas economic crises demand -- America must be even more disciplined, and even more strongly committed to pro-growth policies. That is a course we intend to follow -- and it is a course we hope other nations will follow as well. If economic growth is to be global; economic leadership must also be global. Each nation, and each region, must do its part.

Let me tell you very briefly what I believe America must do to maintain strong and steady growth at home.

First, we must maintain our commitment to fiscal discipline. Our economic power comes from a vote of confidence in America, a vote cast in markets around the world that evaluate every government's policies every day, through billions of transactions. Forget the gold standard -- today's economy operates on the information standard. If investors think you're playing fiscal games, interest rates climb almost instantly. It took a lot of painful decisions, and two herculean battles in Congress. But for the first time in thirty years, we have balanced the federal budget.

Balancing America's budget was right for our economy -- and the right example forforeign economies as well. That is why, barring an economic reversal, a national emergency, or a foreign crisis, I believe we should balance the budget this year, next year, and every year. The benefits to our country will be immense.

Because of our success in replacing a $300 billion deficit with the first federal budget surplus in a generation, more than a trillion dollars that would have gone into sterile government debt is now going into new plants and equipment for our America's workers, and new homes for America's families.

Second, we must use our good economic times to tackle tough, long-term economic problems -- and that means grappling with America's entitlement problem, and saving Social Security before my generation of Baby Boomers retires. Just this Wednesday, President Clinton and I began a new phase of our work toward creating a bipartisan plan to meet this challenge --and this is exactly the time to do it. We shouldn't wait for it to start raining before we begin fixing the roof.

Third, we must continue the hard work of cutting regulations and reforming and reinventing government -- so that it costs less, works better, and keeps pace with today's fast-moving economies. When we took office we took a long, hard look at the way American industry has made itself leaner, smarter, and faster -- in order to bring those lessons to government. We call it reinventing government, or REGO -- that's Gore spelled sideways. I've worked very hard on that. My work with REGO has taught me a great deal about disciplined management, and the kinds of choices business has been making for years. One look at the rigid regulatory structures in so many Asian economies -- how they have squeezed the life out of industry and prevented those economies from getting back on their feet -- shows why we need to redouble our efforts to reform and reinvent our own regulatory systems.

Fourth, we must continue to make strategic investments in human capital -- namely, education, and research and development -- that are the heart of productivity, and give everyone a chance to share in our prosperity. Last month, we fought for and won an aggressive increase in civilian R&D, to stay competitive in the world. And I want to take just a moment to talk about the crucial importance of education.

We are in the early stages of an information revolution -- a revolution that is bringing about dramatic changes that make knowledge the strategic resource and learning the strategic skill. We're seeing jobs emerge where brainpower is replacing muscle power -- and companies with jobs that are crying out for a workforce that has the benefits of a better education system. Look at the want ads in any newspaper in any city anywhere in the country, and you will find jobs that require higher levels of education.

There's a second trend underway that makes education more important than ever. Like President Clinton and many of the people in the room today, I am a member of the Baby Boom generation. We grew up with the distinction of being the largest generation in American history. When we first started flooding into elementary and secondary schools in the early 1950s, a lot of members of our generation went to school in temporary classrooms and quonset huts. But that didn't last long, because our parents and grandparents did right by us. They built new schools, hired new teachers, and opened up colleges and universities to our generation.

Earlier this summer, the Census Bureau reported that the generation of young people 18 and under just passed the Baby Boom generation in American history. In too many places, children are being forced to learn in crumbling classrooms and temporary trailers.

I went to a school in California where they had actually modified a janitor's closet into a temporary classroom. In Florida, I saw a school that goes to lunch in shifts -- starting at 9:30. In Hawaii, I went to a school where power goes out every week. In Missouri, I was at a school where ceiling tiles routinely fall on students -- and squirrels actually nest in a ceiling above one class.

Just as our parents did right by us, I believe it is our turn to do right by our children. That's why President Clinton and I fought so hard for a new budget that makes a down payment on hiring 100,000 new teachers. Now, we have to finish the job and rebuild and modernize America's public schools for the 21st Century.

We must also invest in other critical infrastructure, including transportation, just as we must invest in maintaining some of the treasures we have always taken for granted, but are now at risk. Let me mention one that is the subject of international negotiations in Buenos Aires right now -- the attempt to stabilize the world's climate.

I know Under Secretary Stuart Eizenstat, who will be leading our delegation in Buenos Aires, spoke with you about this issue last night. I believe it is essential for business to be an active partner in this process, because private sector innovation can help us stop global warming without economic cooling. A number of firms in the United States and Europe have already taken steps to reduce their own greenhouse gas emissions, and some are finding it to be a significant economic opportunity.

So while we are committed to meeting this challenge, we believe we can do it through market-oriented approaches such as emissions trading and cleaner technology -- which allow us to eliminate greenhouse gases in a way that actually creates jobs and promotes growth. I believe we owe it to our children to do both.

Fifth, and finally, America must remain engaged with the world, and not pretend we can shut it out -- a tendency we see all too often in good economic times. In the 21st Century, the global economy and Information Age hold a promise of opportunity and prosperity that could never have been imagined when the Bretton Woods institutions were founded. The trading community has grown from 23 nations to 132, with 31 more on the way. Partly as a result, more than half the world now lives under governments of their own choosing. And the pace of changeis accelerating. Within three years, we will have high-speed wireless Internet access from anywhere on Earth -- and some estimate that global electronic commerce will soon grow to more than $300 billion per year.

I have also worked very hard on the development of a new Global Information Infrastructure -- a proposal I made four years ago in Buenos Aires at the plenary session of the International Telecommunications Union for a network of networks that sends messages and images at the speed of light, on every continent. Last month I spoke at the latest ITU plenary session about the latest updates to the GII plan.

And let me add that there has been no greater leader in global electronic commerce than the TABD. You have been at the forefront in making sure that Internet standards and domain names and addresses are governed by a highly-effective self-regulatory process. And you are helping to fulfill one of my highest priorities: making sure that this powerful new economic medium does not compromise our oldest and most cherished values, such as the right to privacy. We have been working with many companies within the TABD to find meaningful ways to protect privacy -- and we have been working with the European Commission to assure that our combination of laws and self-regulation meets our shared privacy goals and principles.

Of course, as these advancements make our world smaller, we find ourselves more vulnerable to risk. The Asian financial crisis that has spread to Russia and now threatens Latin America gives us serious cause for concern. Ninety-five percent of the world's customers live beyond our borders, and no business or nation can live unaffected by the economic fortunes of its customers. As Chairman Greenspan has said, we can't remain an "an oasis of prosperity" in such a turbulent world.

As an illustration, here in North Carolina, figures show that in the first quarter of the year, North Carolina imports were up, while North Carolina exports were down -- particularly exports to the Far East. That means that our trading partner exporters are profiting from the rising economy of North Carolina, while North Carolina's exporters are suffering from the slowing economies of their trading partners.

These numbers -- now common across the United States -- make it clear that one of the best steps we can take to boost the U.S. economy is to act decisively to revive the global economy. That is why President Clinton, in a series of recent speeches, outlined a set of specific actions to halt the spread of the contagion, to spur global growth, and to begin work on establishing a new global financial architecture that can help maximize the benefits and minimize the risks of this increasingly global economy.

Just last Friday, the G-7 countries released a statement very much in line with the President's priorities. In particular, they agreed to establish a new precautionary line of credit to help support countries with basically sound economic policies fight off the effects of the global crisis -- and to do it early, when it can do the most good for the least cost.

They agreed to establish a new World Bank emergency fund to provide support in times of crisis to the most vulnerable members of society. And they are moving ahead with efforts to build a modern framework for the global markets of the 21st Century -- with plans for greater openness and stronger standards for finance in the international marketplace. Most important, the G-7 reaffirmed that the balance of risks had shifted in favor of policies aimed at supporting strong and stable growth.

Already, much is being done to spur growth. The U.S., Japan, Canada, and several European nations have cut interest rates. America has met its obligations to the International Monetary Fund. Japan has committed substantial resources to repair its banking system. And just last week, Brazil committed itself to a strong program to address its fiscal problems and provide a solid foundation for recovery.

But we need to do more, and we need to do it together. The policies pursued by the United States over the past six years -- policies that have delivered a balanced budget, lower interest rates, low inflation and strong growth -- have done much to support growth and financial confidence around the globe. But we cannot carry the burden alone. The United States certainly cannot be the importer of only resort. We must all do our part for the sake of global economic recovery.

Europe faces an especially complicated task -- as dramatic economic change is going on not only outside the E.U. countries, but also within them, with the advent of economic and monetary union, or EMU.

The United States has supported the move to a single European currency ever since Dean Acheson discussed Jean Monnet's plans for a European Coal and Steel Community in Paris in the 1950's. But in this current climate of reduced confidence in international financial markets, the United States and the international community as a whole have an even greater stake in its success. Now more than ever, America will be well served by a Europe that is a larger trading partner for the United States and a stronger partner in helping to confront global challenges.

We hope the E.U. sees the advent of EMU as an opportunity to press ahead with long-needed structural reforms -- and more broadly -- to ensure that their policies support strong growth in domestic demand, so that Europe, too, can assist in the Asian recovery and can stand with the United States as a bulwark of global stability.

The E.U. must resist any urge to insulate itself from the global economic crisis. Instead, it must join global efforts to confront the crisis, and contain it. In this economic climate, it is especially vital that Europe look outward as well as inward and continue to focus on how we can work together to restore a healthy global trading system.

Most important of all will be the contribution of Japan. Japan is now in a serious economic recession, the most protracted in its postwar history -- and that has had dramatic worldwide impact. Even in the midst of recession, Japan generates nearly three-fourths of Asia's combined GDP. By achieving strong growth, driven by domestic demand, Japan can provide the spark to restart every economic engine in the region.

The United States welcomes the Diet's decision to make available a significant amount of public funds to strengthen Japan's banks -- provided that these funds are used forcefully and with appropriate conditions. But in light of the depth of its recession, we believe it would also be appropriate and beneficial if Japan were to make greater use of the tools of tax cuts and new spending to inject a still stronger fiscal stimulus into the economy.

A bold, pro-growth strategy by the leading nations of the world is simply essential if we are to steer the world safely beyond the stormy seas of this global crisis and into the swift and sure current of global economic growth. There is no higher priority for the United States, and I believe we must seize this moment and make it happen.

Let me close by emphasizing that America itself still has a lot of hard work to do. If we hope to work with other nations to strengthen the world trading system, and to stabilize other economies, America must be a model of discipline, of targeted investment, of a fast-moving economy that lays the right foundation for free markets, then steps out of the way. In a healthy democracy, that can be easier said than done. But I want you to know that President Clinton is personally committed to that work -- and I am personally committed to that work. We must put prosperity ahead of politics. And we must embrace our role and our leadership in the world economy. Above all, we need a world economic climate that allows you to continue to do what you do best -- create good jobs, fuel growth and prosperity, and lift the wages and living standards of people across the world.

I am an optimist. I have faith in the people in this room, and in the countries and economies you represent. I believe that all of us -- recognizing the scale of our resources, and the weight of our responsibility -- will meet our obligation for global economic leadership. I believe that by working hard at home, and reaching out eagerly abroad, together we can spark a worldwide economic renaissance as the sun rises on a new century. Thank you.


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