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U.S. DEPARTMENT OF STATE
95/04/20 BRIEFING ON BUSINESS OUTREACH EFFORTS
OFFICE OF THE SOKESMAN


[EXCERPTS FROM APRIL 20, 1995,

                               BRIEFING BY
                               JOAN SPERO
UNDER SECRETARY OF STATE FOR ECONOMIC, BUSINESS AND AGRICULTURAL AFFAIRS
                                  AND
                              DAVID RUTH
                 SENIOR COORDINATOR FOR BUSINESS AFFAIRS

                         THURSDAY, APRIL 20, 1995


     MR. JOHNSON:  Good afternoon, ladies and gentlemen.  We're going to 
begin today's briefing with a special briefing by Under Secretary of 
State for Economic, Business, and Agricultural Affairs Joan Spero, and 
the newly designated Senior Coordinator for Business Affairs, David 
Ruth.  They're going to talk about the State Department's business 
outreach efforts -- that is, our efforts to better assist U.S. companies 
doing business abroad and to consult with business on a more systematic 
basis in order to ensure that the views and the concerns of the American 
business community are heard and fully taken into account in the 
Department's policy-making process.

     The Secretary's decision to establish the position of Senior 
Coordinator for Business Affairs reflects his personal commitment to 
giving U.S. economic interests and support of U.S. business top priority 
in the formulation of our foreign policy.

     David Ruth recently came to the Department from American Express to 
serve as Senior Coordinator for Business Affairs, and we welcome him.

     Under Secretary Spero and David will be glad to answer your 
questions at the conclusion of their remarks.

     UNDER SECRETARY SPERO:  Thank you.  Good afternoon.  I'll start off 
with some general comments about what we're doing in support of our 
economic mission here at the State Department, and then I'll turn it 
over to David, who will go into more detail about some of the specific 
work that we're doing for U.S. companies.  Then we'll be happy to take 
your questions.

     Secretary Christopher has said that the promotion of economic 
security is one of his highest priorities, and we're trying to carry out 
that mission and those priorities in three principal ways.

     First of all, we're working to build and modernize what we call the 
economic architecture for the post-Cold War world.  Many of you are 
familiar with the preparations that we're now going through for the G-7 
Summit in Halifax.  We are doing this not only in a multilateral way, 
but regionally and bilaterally.  All of this is with a view to creating 
an international system that is more open, more market-oriented, and 
that is better for world prosperity, and we believe better for world 
peace.

     In doing all of that, we are increasingly working here with U.S. 
business.  Let me just give you a couple of quick examples.  One is 
APEC, the Asia-Pacific Economic Cooperation forum.  The purpose of APEC 
is to foster open trade and investment in the region.

     In my view, APEC is an example of what I would call a modern, 
international organization in that it integrates business directly into 
its activities.  Business sits at the table in the APEC working groups; 
they roll up their sleeves; they deal with very practical problems like 
telecommunications or energy or transportation.  So they are part of the 
process.

     Business also plays a very important formal and informal advisory 
role at the policy level.  In fact, business was quite important in 
developing the agreement in Bogor last November which called for the 
achievement of free trade and investment in the region by 2020, and we 
continue to work very closely with the business community as we are 
trying to figure out how to get from here to 2020.

     Another couple of examples of the role of business in this new 
post-Cold War architecture.  I've just come back from India where we re-
launched after five years the Indo-U.S. Economic Commercial Sub-
Commission.  I co-chair that with the Deputy Finance Minister of India.

     We and our Indian counterparts agreed to focus in this coming year 
on the issue of developing India's infrastructure.  That's a subject 
that's of great interest to U.S. business.  In fact, we work very 
closely with U.S. and Indian businesses as we develop the agenda for the 
meeting, and in fact, we will have a working group of this sub-
commission composed exclusively of Indian and U.S. companies.  That's a 
model that we are applying elsewhere.

     We have established the so-called Gore-Mubarak initiative -- the 
U.S.-Egypt partnership for economic growth and development.  I traveled 
with the Vice President to Egypt to have the first meeting of that 
commission within the last month.

     That commission also has a joint private sector commission that 
will work in very practical ways to foster the growth of the private 
sector in Egypt and to foster greater U.S.-Egyptian trade and 
investment.

     The second thing we're doing on the economic front is using 
economic policy to support peace and democracy, the more traditional 
missions of this Department.

     I personally have been very much involved in the economic side of 
the Middle East peace process, and again here, the private sector is 
playing a very important role.  There was a meeting, some of you were 
there, in Casablanca last October.  There will be a follow-up meeting in 
Amman this October.

     Those meetings involve not only government leaders but business 
people, and they were designed to foster economic cooperation among 
businesses in the region, designed to support not only prosperity but 
also the peace process.

     We are working now on a Middle East Development Bank.  Again, that 
Development Bank will be heavily focused on lending to -- should it 
actually be agreed and implemented -- will focus heavily on lending to 
the private sector.

     We're doing similar things in Russia and the Newly Independent 
States, Haiti, and South Africa -- involving the business community 
directly in our activities.

     Finally, we are -- and this is really what we want to focus on 
today -- we also work on a very practical level to ensure that American 
workers and American business can compete in the global economy.  That's 
what we call the "America Desk."  The message has gone out in the 
Department and abroad that economic policy matters and that looking out 
for U.S. business matters.

     The embassies, we believe, are absolutely critical in this effort.  
From my ex-business perspective, I see the embassies as a distribution 
channel, a delivery service for a lot of the products and services that 
the Department offers to business.  We do a couple of things primarily.

     First, we support U.S. business in its efforts to export and invest 
in a variety of countries around the world.  We work closely with our 
colleagues in the foreign commercial service, and where there is no 
foreign commercial service, we do it ourselves.

     Increasingly, we're finding that the leadership of the ambassador 
and the expertise, knowledge, and contacts of the economic and political 
officers in the embassies are very important tools for supporting 
business.

     There's another thing we do, and I don't think this is recognized 
or understood enough, and that is problem-solving on behalf of U.S. 
businesses.

     One of the biggest problems we deal with on a day-to-day basis, 
that our businesses face as they operate abroad, is intellectual 
property.  We're constantly working with governments abroad to urge them 
to develop, to pass, to implement, to enforce intellectual property 
legislation.

     Another area:  We've negotiated bilateral investment treaties 
around the world that provide fair treatment for our businesses, and we 
work with local governments to make sure that those treaties are 
implemented.

     Another long-term example that I'll cite briefly is dealing with 
the problem of corruption.  One of the major issues facing our companies 
around the world -- I hear from them constantly when I travel -- is the 
practice of bribery, which is prohibited by U.S. law but is fair game in 
a lot of countries.

     We've pressed hard with other developed countries through the OECD, 
and we've successfully concluded a code on bribery.  That's just a first 
step.  We're now pushing the other developed countries to develop and 
implement things -- things that we would take for granted here, like you 
can't deduct bribes from your tax return.  (Laughter)  You can in some 
countries.  We think that's kind of basic.

     We're also taking the show on the road to developing countries.  At 
the Summit of the Americas, for example, last December, one of the 
initiatives that we agreed on was expanding the work on combatting 
corruption, which is increasingly seen as undermining democracies around 
the world.

     We've been working hard for the last couple of years.  I think 
we've been able to bring about a dramatic change in the way the 
embassies do business.  Business people, whom I've known for many years, 
tell me that whereas before they never would have thought of going to 
the U.S. embassy, now it's their first port of call when they go to do 
business abroad.

     Our goal for the next two years is to try to bring that same 
perspective to Washington, to bring business closer to the Department 
itself.  To explain some of that, I'm going to turn the podium over to 
David Ruth.

     MR. RUTH:  I have some of my own private sector experience with 
government to draw on, but I've talked to a number of companies over the 
past month or two to see what it is they want from State and what it is 
they feel they get and where we need to do better.

     First of all -- and Joan has described much of this -- they want 
advice and orientation as they're planning strategies for a market.  
They want to know who's who, what's the politics, what's the economic 
policy, what's the current state of relations with the United States, 
and where are some of the leverage points.

     Second, they want assistance with business problems, either in 
policy or sometimes very practical things like making sure that they can 
get in the door to make a bid.  In some instances, they want advocacy, 
which is to say, a visible expression of U.S. official interest, which, 
coming from an ambassador or a senior official here at the Department of 
State, can often be extremely effective in supporting a business deal, 
particularly when there's government support for our competition.

     In the past, State wasn't always seen as ready or willing to use 
those assets and exercise our influence.  Frankly, this was often 
frustrating for a business, especially when other governments were 
acting on behalf of their companies' own interests.  That has changed 
over the last few years, particularly in the embassies.

     However, companies still tell us that it's difficult for them here 
in Washington; it's difficult to find their way around this building; 
it's difficult to get a fast response sometimes.  What is more, they 
don't always feel as though their views are as fully integrated into the 
policymaking process as they should be, which is the point of my office, 
which is the point of the creation of the role of the Coordinator for 
Business Affairs.

     Our role has three separate parts.  The first is to be a service 
center for business, a first point of contact for companies, to help 
them tap into the resources of the Department.  And part of that is 
really speed.  When a company is trying to make a deal, sometimes being 
able to move fast, get a fast word of support, some fast information, 
will make all the difference between them getting it or somebody else 
getting it -- a foreign competitor getting it.

     Part of our service is going to be to keep track of companies more 
closely so we're not just giving them one-shot advice, but we're 
following them through the building and helping them to make sure we've 
got effective follow-up and effective action.

     Another extremely important part of this, from my own experience, 
is that we are now coordinating much more with other federal agencies -- 
the Department of Commerce, the Export-Import Bank, the Treasury 
Department, a whole range of other agencies that are involved in trade 
promotion work.  And we coordinate among ourselves more than used to be 
the case.  It used to be you'd have to go door-to-door and make sure 
that Commerce was talking to State was talking to Treasury.  We now can 
bring that all together.

     There's an Advocacy Center that works interagency in a trade 
promotion coordinating committee, that is also an interagency body that 
allows us to talk to each other, and that works a lot better than it 
used to.

     So this kind of service is really -- it works for a big company 
like my former company, but it also is particularly useful for the 
smaller and the medium-size companies that don't have the Washington 
resources, don't know their way around the building, and need a first-
point of contact and some additional assistance.

     The second part of our role will be to encourage outreach to the 
business community to make sure we're consulting business as we make 
policies that affect their interests.  A lot of this happens as a daily 
matter here and has for years.  People talk to business about things 
like civil aviation, commodities policy, telecommunications policy, a 
whole range of things where business has a direct interest and where 
State has a lead negotiating role.

     And as Joan has outlined, there's a number of new policy 
initiatives in APEC, in India, in the Middle East, where business is now 
being brought into the process more closely and earlier and more 
intensely to make sure the outcome reflects their economic interests.

     We'll also be helping the Secretary and other senior policy-makers 
get the benefit of hearing business views, and the Secretary is already 
doing a lot of this.  We have a lot more planned to really bring people 
through the door so that on a regular basis we're getting private sector 
advice.

     I should hasten to point out that business is not always going to 
be happy with the policies we decide on in the end.  The Department has 
responsibility for a wide range of cross-cutting interests, everything 
from human rights and national security matters and environmental 
issues.  These are not always going to work in favor, in support of what 
business would have us do.

     However, even in these areas, we have a particular responsibility 
to make sure that we hear business concerns about them, understand the 
economic costs, the economic impact, and weigh those concerns in the 
process.

     Finally, the last piece is really making all this permanent.  We 
will be working to integrate support for business as a permanent part of 
the State Department culture.  We're already involved heavily in 
training.  We're training people when they come into the Foreign Service 
for the first time.  We're training Desk Officers.  We're training DCMs, 
talking to the Ambassadors as they go out the door, and a lot of that is 
already having its effect.

     So I'll conclude.  The three pieces that we're doing are -- in 
fulfilling this mission to use the State Department's assets more 
effectively for business really are direct assistance to companies, 
greater outreach on policy issues, and making this a permanent part of 
the culture.  Thank you.

     Q     I'd be curious, how do you prevent individuals in embassies 
who are out there now charged with this new intensity mission to help 
business to treat all companies fairly?  You know, I could see where a 
company would go to a political officer and say, "You know, if you ask 
the Ambassador to make this a high priority issue, if you leave the 
Foreign Service in five years or so, you can be assured of a job."  How 
do you make sure that there's a --

     MR. RUTH:  There's clear ethical guidelines that apply to all 
Foreign Service Officers, and every year -- I've just been through it 
for my first time -- every officer must go through a briefing that 
spells out in great detail exactly what one can talk to a company about, 
especially if a company might be a potential employer.  So there's very 
clear guidelines on that front.

     The other probably more common issue is what do you do when two 
American companies, both of whom are going to be exporting products from 
the United States, come to the embassy and are involved in the same bid?  
There we're committed to give them exactly equal treatment.  Before we 
do any advocacy, we do a due diligence process, which we ask the company 
to tell us a number of things about what they're going to do, how much 
they're going to export, who their partners are, and if they know of any 
other American competitors; also, what other foreign government 
involvement there is.

     Based on that, if there is more than one American competitor, the 
Ambassador, who's the ultimate arbiter of this, goes in and really 
speaks on behalf of all of the American bidders.  If it comes then down 
in a re-bid where there's just one American company, the advocacy will 
go directly to that point.

     Q     Mr. Ruth, on your last point involving competing points of 
view, a lot of people -- a very robust part of the American economy is 
the export of conventional arms, aircraft, armored vehicles.  A lot of 
people, some of them in this building, think that one of the problems in 
the world is that there are too many arms awash in the world, 
particularly in places like south Asia.

     Given that an arms manufacturer comes to you, what is the 
philosophy that the State Department uses?  On whom is the burden of the 
proof to -- in other words, if there is no compelling reason not to 
sell, then will you promote the sale of arms?  Or is there a different 
process or mechanism working here?

     MR. RUTH:  It's a fairly clear standard where our foreign policy 
interests will determine how much we would support a defense sale like 
that.  Commercial considerations will be there, but the security and 
foreign policy considerations weigh in quite highly.  Our challenge 
really is to make sure that they don't weigh in -- that we are making 
that we're up to date on what the technology is.  Is the technology 
still defense-oriented?  Is it defense consistent?  But where there's a 
foreign policy concern about those exports, that will weigh out.

     Q     And that would prevail over a company saying that if we don't 
do it, the British or the Germans or the French will do it?

     MR. RUTH:  It may, although the availability of the product 
elsewhere will be weighed into the decision, too, and sometimes that 
would be compelling.  But our export controls policies would be driven 
by our foreign policy objectives.

     Q     So are you saying that ultimately, when push comes to shove, 
the State Department still puts a priority on foreign policy, as opposed 
to deals?

     MR. RUTH:  There are a number of competing priorities here, and 
what's happening now is business and economic interests are higher on 
the list than they used to be.  The Department still has to weigh a 
whole range of other considerations, and the challenge is to make sure 
that we don't completely ignore and don't push the economic issues off 
the table when, in fact, those are real, vital American interests.

     It's not when push comes to shove.  There's more of a discussion 
now and more of a review of economic impact before you make a policy 
decision, and that's really the objective.  But ultimately foreign 
policy objectives on security matters, on a range of other things might 
well weigh out if they're vital U.S. interests.

     Q     How long have you been on the job?

     MR. RUTH:  Just about two months.

     Q     Would the State Department refuse to help a company if there 
was a problem -- like with FDA -- or if there were health issues 
involved?  For instance, if a tobacco company wanted to dump cigarettes 
on a foreign market, would the State Department help them further that 
project?

     MR. RUTH:  For legal products,  we would assist companies.  We do 
ask questions about environmental impact and things like that.  Those 
come into the due diligence process as we're asking companies the 
information we need before we go in and support them or advocate on 
their behalf.

     But for a product that's legally available, yes; we do support a 
whole range of products.

     Q     How are you getting the word out to American companies about 
all these new services and new philosophy?  Are you being proactive in 
approaching smaller-sized American companies, saying "We can offer you 
these services overseas"?

     MR. RUTH:  Yes.  Mostly we've been talking to Washington-based 
associations and getting the word out through them and through a lot of 
those larger companies.  But we've started a process -- it's harder to 
reach small business to make this available, but I met this morning, 
actually, with the National Association of State Development Agencies, 
which is the state-level people involved in economic development.  Those 
are a good distribution network for small business.  They're talking to 
small business all the time.  Small business is more likely to come to 
the city or the state level for help.

     So once we connect with them and get our phone number and services 
out to them, that will be a channel to come back.  But there's a lot 
more to do.  I've started traveling around the country to sort of talk 
about this, too, and to make sure that smaller business-level people 
have access.

     Q     I just missed something in the preceding question.  You said 
that if a product was legally available, you'd essentially go to bat for 
that company.  Does that mean legally available in the U.S., or -- for 
instance, a pesticide that's banned in the U.S. but is available in 
other countries?  Would you --

     MR. RUTH:  I don't know the answer to that question.  I'll have to 
look into it and get back to you.  I don't know exactly how far we would 
go and how much we would look at it.  I know on environmental issues it 
weighs into the consideration, but whether the standard would be U.S. 
legal, international legal -- what standard, I'm just not sure.  So I'd 
have to get back to you on that one.

     Q     How much of the business service offering advice you give 
here -- how does that duplicate what's already on offer at the Commerce 
Department, and why would a company come to you rather than -- come here 
rather than go to the Commerce Department?

     MR. RUTH:  Commerce and State have different but complementary 
functions.  The Commerce Department, which has got a very active export 
promotion function, particularly in the last couple of years, can be 
very single-minded in its pursuit of business and can be much more 
focused and single-minded.

     They come to State because partly sometimes policy will affect them 
constructively where we're leading policy efforts, as Joan talked about.  
Sometimes it cuts the other way on things like export control.  So they 
come to talk to us about that because they need to work through the 
process.

     But they also come to us to access the system.  The people here -- 
the embassy network and the State Department people in the embassies -- 
tend to be people who have more policy-level contacts with the 
government, whereas the Commerce Department's commercial service person 
is setting up trade shows, really meat-and-potatoes contacts, person-to-
person trade leads, information sharing.

     The State Department person has a complementary function which is 
more insight into what's going on in policy.  They're more likely to be 
the ones involved in trade negotiations so the company can feed into 
that.  They'll have policy-level advice.

     So that's one of the differences, and the other difference is some 
of the resources here at State.  A lot of what companies come to meet 
for now is, as they're thinking about a region, they want a briefing 
from people who are sort of looking at the overall politics, economics, 
security issues in the region and help them make a decision about where 
to go, what to do, and what to do when they get there.

     So it's different levels of advice, but it's complementary.

     Q     Thank you.

     MR. RUTH:  Thanks.

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