topic: Upcoming Clean Energy Trade Mission to China and Indonesia

The Washington Foreign Press Center, washington, d.c.

Wednesday, May 12, 2010, at 1:00 p.m. edtSecretary Locke: Thank you very much Neil, for the hospitality and letting us use the Foreign Press Center here. I look forward to your questions. I have an opening statement and want to get on with the issues that you have at the top of your agenda.

I’m really pleased that you’re able to join us today as we discuss the Commerce Department’s upcoming clean energy trade mission to China and Indonesia. This is the first cabinet-level trade mission under President Obama, and it comes on the heels of President Obama’s National Export Initiative which seeks to double American exports over the next five years --supporting some two million new jobs in the process.

Joining me on this trip will be 29 American companies that represent a cross-section of the best that America has to offer on clean energy, energy efficiency, and electricity storage, transmission and distribution. Innovative companies like these bringing emerging technologies to a dynamic new market are going to play a big role in meeting President Obama’s ambitious goals laid out in his export initiative because this administration understands the math. Energy is a $6 trillion market, and green energy is the fastest growing sector.

The race to develop new technologies that the world will one day rely on is a race that this nation and all developed nations must engage in. Consider that one wind turbine is made up of some 8,000 parts and 200 tons of steel. As it does with technologies still to be imagined, America has a chance to be the place where these parts and components are made. But we won’t if we fail to understand, as we have in years past, the dramatic opportunities ahead of us. Because while the companies on this trade mission can help create economic opportunity and good jobs here in America, they can also help both China and Indonesia, and countries all around the world, grow their own economies and meet energy demand in a way that won’t put our planet and our way of life at risk.

Just in the last week I saw a striking example of the potential, and even the necessity, of growing clean energy cooperation between our countries. We read reports that China’s leaders are growing increasingly concerned about the rapid increase in the use of fossil fuels. In the past six months, China had the largest increase in human generated greenhouse gases of any country in history. And in the first quarter of this year alone, coal and oil sales in China jumped 24 percent, which is twice as fast as their economy grew. Chinese leaders have promised to redouble their efforts to stop and reverse those trends, and Premier Wen Jiabao in speaking about China’s promise to improve its energy efficiency 20 percent over the year 2005 levels by the end of this year said, “We can never break our pledge, stagger our resolution, or weaken our efforts, no matter how difficult it is.”

But this steep global challenge will take global cooperation -- cooperation built on the foundation of open markets and transparency.

So when we go to China next week, we will inform the leaders of China that American companies have both the technology and the resources to help China, and indeed Indonesia, solve the unprecedented energy and environmental challenges that their two countries face.

We will carry that message, as I said, to Indonesia where the government aims to increase its renewable energy production from 7 percent of generating capacity today to 15 percent by 2025. Even Indonesia has very aggressive goals to move in the area of clean energy. And again, U.S. companies have the expertise and the resources to help the leaders of both countries achieve their goals.

Here at home every American should know that when a U.S. clean energy company finds success abroad it creates more jobs here, at home in the United States. In fact some of the companies on this trip produce over 90 percent of the components for the products that they sell overseas right here in the United States.

So this trade mission is really an opportunity for win/win scenarios for both American companies, their workers here in the United States, as well as for the people and the governments of both Indonesia and China to address their goals of becoming more energy efficient and reducing their emissions of greenhouse gases, and ultimately saving our entire planet and our way of life.

With that, I’ll be more than happy to open the floor up for questions. Diana will be the moderator and she knows all of you, so I’ll let her be responsible for deciding who gets to ask the questions.

Question: Thank you, Mr. Secretary. My name is Donghui Yu with the China Press.

The United States government has begun to reform the high-tech control systems. I just wonder how significant it is to facilitate exports to China, not only the environmental and energy technology but also the [inaudible] technology? How the new system will work regarding China? Will it still be reviewed case by case, company by company? Or there will be a regular procedure that the companies can follow? Thank you.

Secretary Locke: That review is underway right now. We hope to have announcements in the next few months that will apply to the entire world. But first of all, Secretary Bob Gates of the Defense Department is one of the leading officials under President Obama, helping reform those efforts along with Secretary of State Hillary Clinton and myself at the Department of Commerce. We really want to make sure that on those items that are of great concern to our national security, that we actually have stronger controls. National security must be our overriding objective.

Second of all, we all agree that there are so many things now that are on the various control lists that really should not be on the control list. So we want to both have stronger protections for those things that are acutely sophisticated and could impact and a bearing on our national security, and all other things, that are readily available from around the world, that really makes no sense. So we need to reduce those restrictions and make it easier for those items to be exported. So that is all undergoing review right now.

I do want to point out that less than five percent of exports to China right now even require a license, and the overwhelming majority of those items, something like 95-98 percent of the applications, are in fact approved. Almost 90 percent of the items that are on the various lists have in fact been exported to China. Even without a license or using exceptions to licenses. So there is a great deal of trade right now in some of these controlled items going to China in a very fast, expeditious way. But we still want to improve the system not just for China, but really for all countries, and at the same time enhance our security. That’s the paramount objective: enhance our security and controls on selected items that we truly believe are important to our national security.

Moderator: I’d like to take a question from New York and then come back here. Go ahead, New York.

Question: I’m Fei Zai with Jiefang Daily. I have two short questions.
The first one, how many Chinese companies will be involved in this project? The second one, do you think both countries have the possibility of cooperation on nuclear energy in the future? Thank you.

Secretary Locke: We have, as I said, some 29 American companies going with us on this trade mission, some to China and some exclusively to Indonesia, and there is a great deal of overlap as well. Some companies will be going to both Indonesia and to China. We’re not sure how many Chinese companies the U.S. companies will be meeting with. That’s really up to the American companies. We’ve helped supply lists of potential partners and customers on the Chinese side for the U.S. companies, but it’s up to the U.S. companies to decide ultimately who they want to meet with and which ones might be a good fit.

I also want to indicate that in terms of the energy potential or in the energy front, there’s a great deal of cooperation occurring between the United States and China. A year ago, when Secretary of Energy Steve Chu and I went to China on our first trip, we announced a cooperative arrangement of joint research and development. We want to put the best minds of both countries to this task because both countries have much at stake. And as the two leaders of greenhouse gas emissions, it’s really incumbent upon us to set the example for the entire world on reducing greenhouse gas emissions and becoming much more energy efficient.

Finally, let me say there is cooperation on nuclear power. In fact, numerous U.S. companies are involved in nuclear power plants in China and we hope for greater cooperation and greater collaboration and partnership to help China meet its energy needs without having to rely so much on coal powered electrical plants.

Moderator: We’ll go back here.

Question: Zoltan Mikes, World Business Press Online. I have a question regarding environment and about the binding regulations of environment. Is China an ally, or does the U.S. now feel closer to EU, which proposed strict regulations and which the U.S. and China opposed in the past? So do you feel much closer to the stricter regulations under the Obama administration, can be things that U.S. is moving in this direction? Or if China may be an ally with regard to not approving the strict regulations like the Kyoto Protocol was?

The second question is, will there be anything new about the reevaluation of the yuan, of the currency?

Secretary Locke: Let me just say there were far-reaching agreements made in Copenhagen, and the United States and the other developing countries as well as the countries like China and India and Brazil have made very strong commitments toward reduction of greenhouse gas emissions. The President, of course, has been very vocal about the need to reduce greenhouse gas emissions.

So we have all set our targets, and there has been an international agreement now. And the question is: how can we implement, each country move forward in implementing the targets that have been agreed upon and that were set in Copenhagen? Of course the Chinese have set very aggressive targets. Indonesia has set a very aggressive target as well. We in the United States, of course, are prepared to move forward. We want the Congress to give us the tools and create the incentives for American companies to reduce their greenhouse gas emissions, become more energy independent, and we need that help from the Congress. But the Environmental Protection Agency is prepared to move ahead if there is not that action by Congress. I think we all prefer a congressional solution, a comprehensive solution that only the Congress can provide.

So really the issue is how do we move forward? Whatever the targets, how do we move forward? And how do we make sure that U.S. companies can join forces with the governments of Indonesia and China and the utilities in the private sector within those two countries to achieve our goals -- China’s goals, America’s goals. We believe that given the technology that American companies have and the resources that American companies have, it’s a win/win opportunity to meet those targets and create jobs in both countries.

Question: John Zang with CTI TV of Taiwan. Mr. Secretary, has there been any understanding between China and the United States on the currency revaluation issue? Will absence of an agreement impede your upcoming mission to China? Thank you.

Secretary Locke: Treasury Secretary Geithner has spoken at length about that. Our U.S. position is very well known. There’s nothing more that I can add to that. At the same time, our trade mission is really to help create those opportunities for U.S. companies to partner with either the governments of China and Indonesia or the private sector or state-owned enterprises within China and the companies of Indonesia. So we have simply to operate with what we are given, the status quo, and this trade mission is about increasing those opportunities and creating those linkages and helping promote U.S. companies.

Question: And the currency?

Secretary Locke: That I’m sure will be brought up during the S&ED (Strategic & Economic Dialogue) meeting which starts a week from Monday. Of course Secretary Geithner will be in Beijing, along with Secretary of State Hillary Clinton, that’s all part of the S&E Dialogue, but that is not a topic per se of the clean energy trade mission.

Question: Thank you, Xiong Min with 21st Century Business Herald. My question is about China’s indigenous innovation policy. The Chinese Technology Ministry has just finished the latest review and they’re considering how to move forward. I wonder what is your method, if you were to meet with people from China’s Technology Ministry? And are you going to meet with the Minister over this trip? If not, how do you approach this issue in upcoming S&ED? Maybe you can tell us your schedule of meetings with ministerial level people over the two weeks in China. Thank you.

Secretary Locke: Thank you very much. We do have concerns, the United States government does have concerns about the indigenous innovation policy that’s been proposed by China. We note that it has been recently revised. We still want to engage with the Chinese leaders at the various ministry levels and the top Chinese government officials expressing our concerns. And so I’m sure that will be part of the dialogue of the S&ED.

Question: Lin Zengxin from Caixin Media. On your trip there will you be talking with your Chinese counterparts about the fossil fuel subsidy issues? And also on this trip, on the U.S. side will you be offering any incentives to U.S. companies and what do you expect the Chinese are doing with their companies? Thank you.

Secretary Locke: We are not offering incentives to U.S. companies that want to sell or share their technology in China or Indonesia. This trade mission is really to help promote those U.S. companies, help link them up with potential customers and partners in China so that we create win/win opportunities to help China achieve their goals of reducing greenhouse gas emissions, becoming more energy efficient, more energy independent. At the same time we’ll be talking with the Chinese government on a whole host of trade barrier issues. That will be part of our trade mission as well as the specific trade missions during the strategic and economic dialogue which begins a week from Monday.

Question: (Caixin Media) The fossil fuel subsidy, will you be talking about that?

Secretary Locke: There will be a whole range of issues that we’ll talk about, and I don’t think we should be trying to negotiate through the press, but we have indicated to the Chinese governments the various topics that we would like to discuss.

Question: Yuni Salim from VOA Indonesian Service. I have a question about the U.S. trying to increase trade within U.S. and Indonesia, but it seems it also increased the protectionism against Indonesia. For example, last year was about tobacco, this year it’s about coated paper. For some people it seems like discrimination against products from Indonesia. Can you comment on that? Especially on coated paper?

Secretary Locke: With respect to some of these trade issues, that is part of the WTO protocols in which any country, any industry within a particular country which feels that it is subject to unfair competition from products from another country, can raise these issues of either products being sold at a below normal price or concerns about improper government subsidies. We have these disputes between the United States and European countries, disputes between the United States and Mexico. And Mexico, for instance, has complained that some American producers, whether it’s in agriculture or products, is unfairly selling products or goods at a below normal price. The same thing happens with respect to Brazil and the United States over cotton. So these are all part of the process by which companies and countries can resolve these disputes and allegations of improper sales practices.

I just want to point out that we even have these disputes with European countries. We have these disputes with Japan. The United States will file claims that let’s say the European Union is improperly subsidizing Airbus airplanes. And Brazil has alleged that U.S. cotton producers sell at improper prices and have improper subsidies for American cotton growers. These are all part of the mechanism by which the countries of the world can resolve these in a fair and impartial way.

I don’t believe that just because an industry or a country is entertaining an investigation on coated paper or airplanes or cotton that it necessarily means that one country or another is engaging in protectionist policies. It’s really up to the individual companies that are selling as to whether or not they are selling fairly in another country.

I want to point out that for instance even in China, of all the different sanctions or duties that have been imposed for selling below normal price, for dumping, or for receiving improper government subsidies, these orders and these duties and remedies that the United States government has imposed apply to less than three percent of the total value of all goods coming from China. So when you look at all the trade between Indonesia and the United States, this issue of the coated paper represents a minute fraction of all the goods coming from Indonesia.

Question: Hanying Wu from China Central TV. I noticed that your visit would take you to Shanghai. Could you please brief us more of your schedule in Shanghai? Will you visit the Shanghai Expo Garden? And how do you think of the Shanghai Expo theme of “Better Life, Better City”? Thank you.

Secretary Locke: Thank you very much. I’m very much looking forward to visiting Shanghai. I’ve been to Shanghai many, many times and it’s a city that has transformed so dramatically since my very first visit to Shanghai in 1989. I’ve been back many times. When I was in private practice working for a law firm, we had an office in Shanghai. We were the first U.S. law firm approved by the Beijing government to open an office in Shanghai. Of course my in-laws live in Shanghai part of the year.

I’m looking forward to going to World Expo in Shanghai, and I’m very proud that the United States has a pavilion. Secretary of State Hillary Clinton did an incredible job helping raise money for that, and I also helped get contributions from U.S. corporations to build and have a U.S. pavilion.

So I’m really looking forward to it. I’ve seen some pictures of some of the pavilions. They look spectacular. But we will have some events and receptions at the World Expo, so I’m looking forward to that.

Question: Dan Neumann with Inside U.S. Trade.

I wanted to follow up on the indigenous innovation question that was asked earlier. It seems to be the top concern of U.S. industry heading into the S&ED. Throughout the year we’ve seen a number of letters to you and to Chinese officials complaining about it. If a U.S. firm on this trip were to be offered a contract to supply to the Chinese energy market but was told you have to partner with a joint venture in China and you have to move your IPR to the U.S. market, what would the Commerce Department’s advice to that company be? Should they comply with that or would you advise them not to take that contract?

Secretary Locke: We, as the United States government, have concerns about even the more recent proposal on indigenous innovation. That will be a major topic of discussion. We’ve already expressed our views to the Chinese government. I and other members of the administration have sent letters previously about that policy, so this is nothing new. The U.S. position is very, very clear.

What U.S. companies do is an individual decision. It’s for them to decide how it fits within their business plan and their viability and strength moving forward. So the U.S. government cannot dictate policy to those U.S. companies.

Question (Inside U.S. Trade): Have you gotten any assurances from the Chinese government that the companies on this trip won’t be subject to the more stringent version of the indigenous innovation policies in terms of locating IPR in China or anything?

Secretary Locke: Again, these companies are signing up and wanting to go on this energy trade mission because they believe there are incredible opportunities. They believe they have both the technology that can create win/win scenarios of jobs for people here at home in America as well as helping China meet its energy goals and reduction of greenhouse gas emissions. So you really have to talk to those individual companies as to what communications they may have received from the Chinese government.

Question: Betty Lin of the World Journal. Hi, Mr. Secretary! You did a follow up on the export control reform. You said in general that you already went to members on the Hill for that, and I wonder whether there are any disputes between the administration and the Hill on export control reform, and what are the Hill’s concerns? Also do you agree with the Chinese that part of the problem for the deficit is the U.S. is not willing to export more high-tech products to China?

Secretary Locke: We did brief members of the Hill on our overall proposal and we got some very good feedback and some very positive statements. Of course, members of the Congress want to see some of the actual details of our proposal, so we’re trying to keep them informed. We’re still as an administration moving forward internally, as we discuss these issues, as we try to refine our proposals. We hope to make significant announcements over the next several months.

At the same time the President has said that we need to export more, period, all around the world, not just to China but all around the world. Ninety-five percent of the world’s consumers live outside the borders of the United States. And we are very much becoming a global marketplace. We see great opportunities for U.S. companies not just in China but around the world, and that’s why the President wants to double U.S. exports over the next five years, supporting some two million new jobs in the process.

The President has said that modernization of our export control system can be a component of helping us achieve that goal. But ultimately, national security is number one. Secretary of Defense Bob Gates gave a major speech about that whole issue, unveiling the United States approach I think about three weeks ago, and that was very well received as well.

Question: I’m Jun Zhang with Xinhua News Agency. I have a follow-up question about trade cases with China. You have said many times that the U.S. will carry out aggressive trade promotion strategies, but in China many officials worry about the rising protectionism in the United States, especially in commerce. There are so many trade cases against China, many more than in the past, especially on steel products. So what do you think of Chinese officials’ complaints? Thank you.

Secretary Locke: We’ve talked to the Chinese officials about this and we’ve informed them that it’s not the United States government that brings these cases. It’s not the policy of the United States government to file these cases. These cases are filed by companies within the United States who feel that the actions of a company from another country -- not just China, it could be from Mexico, it could be from France, could be from England, could be Canada or Japan. So when they file these cases, we at the Department of Commerce must investigate. We are like a judicial system and we conduct non-biased, thorough, neutral investigations, and we ask for information from the companies of China or the other countries that are selling these goods into the United States. And I want to repeat that less than three percent of all goods sold from China into the United States are subject to these various orders of duties and things like that. So 97 percent of all the goods coming from China are without any type of penalties or dumping duties or counter-veiling subsidies. Ninety-seven percent of all goods coming from China have no type of actions or complaints lodged against them.

We should not focus on the number of complaints, but really the total volume of the trade that is subject to these measures or free of these measures. Again, less than three percent are subject to these measures.

Question: Hi, Mark Drajem from Bloomberg. Two quick questions: One, on indigenous innovation, are you going to raise that when you meet with Chinese officials next week? And secondly, you mentioned the global marketplace, and many of the companies that are going on this trip have actual factories, production facilities in China. Do you see that as a net positive or negative for the U.S. economy?

Secretary Locke: A lot of these companies have facilities here in the United States. We’re also bringing some medium sized enterprises where all the intellectual work is done here. And if they’re able to sell more, it means they hire more people, that creates jobs. That is our overall objective. Win/win scenarios where we’re sharing and selling U.S. technology to other countries which will result in more work here in America. Of course yes, we will be raising the issue of indigenous innovation, a concern throughout our trip, including the S&ED dialogue.

Question: Thank you, Zhou Sun from China Business News. I wonder if you can talk a little bit about the clean coal technology. Is clean coal technology really achievable in both countries? And what kind of product or technology will you introduce in this trip? And also, a follow-up question on your trip to Shanghai. Except from Shanghai Expo, do you have any other agenda set up for the trip in Shanghai?

Secretary Locke: Oh, yes. For Shanghai, many of our U.S. companies will be meeting with potential partners. We hope to have various signing ceremonies throughout the trip, both in Hong Kong, Shanghai and in Beijing. So I think our trip to Shanghai Expo is only for about an hour and a half that we’re going to be in, maybe it’s two hours in the Shanghai Expo. And we may go back in July to Shanghai Expo. But we’re going to be in Shanghai for two days. So if two hours out of two days are devoted to Shanghai Expo it indicates that the rest of the trip is really focused on working with our U.S. companies to introduce them to potential customers and partners in China to help those U.S. companies sell their products and services, creating jobs here in America and helping China achieve its goals of greater energy independence and energy efficiency.

Clean coal technology. Carbon sequestration has been discussed with the Chinese officials during our first trip to China last year with Secretary of Energy Chu. Part of the cooperative scientific research and collaboration between the two countries is looking at that issue of clean coal technology, carbon sequestration.

Thank you very much.
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