Remarks at the Americas Competitiveness Forum Competitiveness and Innovation Luncheon

Charles H. Rivkin
Assistant Secretary, Bureau of Economic and Business Affairs
Port of Spain, Trinidad and Tobago
October 9, 2014

Remarks as prepared

Thank you, Minister Tewarie. And also to Janelle Commissiong, Deputy Chairman of the Trinidad and Tobago Tourism Development Company.

I am delighted to have the opportunity to speak to business representatives and government officials from throughout the hemisphere because – as the Assistant Secretary of State for Economic and Business Affairs, promoting increased linkages between U.S. companies and companies overseas is my top priority.

These linkages have the ability to help both our economies and people. And that’s a top priority for Secretary of State John Kerry.

He recognizes the importance of business engagement as part of our foreign policy.

In the Americas, even though we have our geographic differences – from tropical jungle terrains to statuesque mountains – from bustling cities to rustic hamlets – it is our connections that will truly bring about prosperity. And the more we adapt to a rapidly changing world, the more powerful and vibrant those connections will become.

Look at us today. Thanks to technology and many other factors, the world has flattened. The new watchwords and phrases of our time are globalization and integration, connectivity and intra-regional trade.

More nations in the hemisphere are recognizing that we can no longer let geography or politics stand in the way of mutual prosperity. More and more of us are asking more practical questions – about how we can deliver results to our businesses, our consumers, and ultimately, all our citizens.

As President Obama said in his speech at the 2012 Summit of the Americas in Cartagena, and I quote, “The challenge for this hemisphere is how do we make sure that globalization and integration can benefit a broad base of people, that economic growth is sustainable and robust, and that it is also giving opportunity to a growing, wider circle of people, and giving businesses opportunities to thrive and create new products and new services and enjoy this global marketplace.”

Two years later, we are working to answer that challenge.

And today, I want to underscore the importance of trade integration in the development of value chains to link businesses across countries, especially for small businesses. I also want to share with you some U.S. initiatives that will help small businesses in the region link up across borders. I’ll also talk about opportunities to engage with U.S. businesses.

Latin America and the Caribbean have seen significant growth in intra-regional trade as value chains have developed. Many countries have reduced many barriers to cross-border trade and investment. And intra-regional trade has more than quadrupled from an estimated $92 billion in 2002 to $380 billion in 2012.

But at the same time, we need to look at what percentage of trade is intra-regional versus inter-regional. Right now, the figure is low. Intra-regional trade is about 18 percent. In Europe, for example, intra-regional trade represents almost 60 percent of total trade.

Now, why are these numbers important? Because they directly benefit small and medium businesses – commonly referred to as SMEs. And that supports a culture of entrepreneurship, which unlocks economic potential and lifts people out of poverty. It also promotes economic growth, job creation, and political stability and empowers youth and women.

That’s why working to ensure small businesses can start, grow, and thrive in an integrated regional economy with few barriers to trade is critical.

So what are the things to be done? For one, we need to create or amend laws and policies so that entrepreneurs find it easy – not prohibitive – to establish a business… easy – not prohibitive – to obtain finance and have access to technology.

While Latin America does not suffer a financing gap as severe as Asia, an estimated 40 percent of SMEs are unable to secure financing needed to expand.

Stringent collateral requirements, inadequate protection of creditor rights, and lack of credit risk guarantee schemes exacerbate the problem.

Today’s economy requires SMEs to have an understanding of available technology and innovation, and how to use it to reach customers, partners and new markets. They need to conduct e-commerce. They need to provide and access digital products, services and information. They need to transfer data to run their global operations, and they need to utilize ICT infrastructure.

When they embrace the Internet in these ways, they will open huge doorways for themselves. They’ll have access to markets relative to the larger players. They’ll be able to connect with one another. They will be able to share information and tips. This will radically change the ways they do business – and ultimately help grow economies in our hemisphere.

Fortunately, organizations like the Inter-American Development Bank are developing new Internet-based communications platform – such as ConnectAmericas – which are designed to support SMEs.

Obviously, the more we can help SME’s gain access to modern technology and tools, the more they’ll be able to innovate, create new products and services, enhance productivity, enable cost-savings, improve efficiency, protect consumers, facilitate trade, and create jobs.

And the more we can create environments that support small business, the more we will encourage investors, who – as we all know – are a key mechanism for integrating local SME’s into global value chains and the world trading system.

Investors want to have confidence in rule of law. They want to know that foreign firms are treated on an equal basis with local and other foreign firms. They want to see that regulations are transparent and that our firms can understand and comment on them. They want to see that intellectual property is respected.

These changes may threaten elite stakeholders of the old system, but they will benefit many more people who will not only change their own futures but generate more prosperity for everyone.

That is why the United States has launched so many initiatives to make these changes real, not only for the businesses, but the citizens of this hemisphere.

Through the Pathways Innovation Challenge we have taken a new approach to sharing best practices: We give individuals and organizations in the field the opportunity to offer solutions to challenges we all face. What the Innovation Challenge demonstrates is that solutions already exist within communities. And what we provide is access to a network and resources that can help bring their ideas to scale.

The Innovation Challenge has actively sought out community-based, bottom-up approaches that can help small businesses in Latin America grow. And you can hear more about these from our competition winners at the Innovation Village.

Another way in which we are supporting economic growth is through the Small Business Network of the Americas – or SBNA – which President Obama launched in Cartagena. Through this initiative, U.S. Small Business Development Centers work with their counterparts elsewhere in the Americas to help entrepreneurs who are interested in investing or forming partnerships across our borders.

We know that investing in women is key to accelerating economic growth. Studies to support this are overwhelming. So, WEAmericas – which President Obama also launched in Cartagena – does just that, by working to reduce barriers that women entrepreneurs face, by promoting their access to markets, capital, skills and capacity building, and leadership opportunities.

We will also launch the first in a series of four WEAmericas TechCamps in Colombia next week, to provide women the training necessary to utilize technology to expand their businesses. To date, we have invested more than $2.7 million in WEAmericas partnerships and programs. And those programs have reached more than 20,000 women in the region.

Small businesses are key economic drivers virtually everywhere. SMEs are responsible for 70 percent of net new job creation in the United States and that figure is very likely the same or even more in the Americas. But even in the U.S., even though 98 percent of U.S. firms are small businesses, only one percent of U.S. businesses export.

So, there are countless opportunities for partnerships and growth potential that can benefit all of our countries.

Through my Bureau, we work with our embassies to help U.S. businesses find opportunities overseas. The Direct Line to American Business Program is a valuable resource offered by our embassies where U.S. companies can talk directly with our ambassadors and economic teams about the business climate in markets overseas. Our ambassadors provide U.S. exporters and investors with actionable market intelligence on specific industries and answer questions from potential exporters.

We have also created something called the Business Information Database System, or BIDS. This was launched to give U.S. businesses the latest information on foreign government procurement opportunities. U.S. companies exploring these bidding opportunities have great potential to partner with local companies on projects.

My Bureau also works to encourage investment in the United States, which is part of President Obama’s SelectUSA program. Launched in 2011, the program highlights the many advantages the United States offers as a location for business and investment.

We also lead the Global Entrepreneurship Program, which catalyzes and coordinates private sector and U.S. government programs to support entrepreneurs around the world.

There are many more things I could talk about that we do – and many more measures and actions that would benefit SMEs across the region. Efficient regulation, for one. Administrative and procedural simplification is also critical. SMEs need more representation and voice for small to medium enterprises in government policy making and administration processes. And if SMEs are to participate in cross-border trade activities and contribute to their home economies, they need trade and customs policies that help not hinder them.

All of these points lead to the same conclusion: The state of an SME’s economic health is directly related to the health of the whole region. The more that countries can reform their policies to let domestic SMEs compete and thrive, the more those SMEs will become engines for their economies – and responsible and profitable businesses on the global stage.

I have great faith in what we have done together – and what we are continuing to do.

I’d like to leave you with a small example of personal success, because we get so busy talking about programs we sometimes forget to focus on the people they affect.

Vanessa Mazorra is an entrepreneur from El Salvador who owns a clothing and accessories company. She used to produce about 500 pieces a month. Since she started participating in WEAmericas programs, she now produces 3,000 pieces a month and exports internationally. That’s a change that benefits her family – and her community. And when there are more Vanessa’s, that’s a benefit for entire economies.

So let’s continue to work together to reduce technical barriers to trade and share best practices on how we work to make sure our regulatory frameworks can ensure the flow of goods across our borders, but also protect the interests and safety of consumers… so more Vanessa’s can thrive.

Thank you.