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1998 Speeches

Phil Condit

The Boeing Company

"Trade: A Vision for the Future"

World Affairs Council of Philadelphia

Philadelphia, Pa.

July 15, 1998

Thank you, Charlie.

It's a real delight to be here. I do want to thank Buntzie and the World Affairs Council of Philadelphia for doing an absolute fantastic job in bringing people together today to talk about trade. Trade is something that touches all of us - our country, our cities, our companies.

First thing, I'm a realist and pragmatist. I know that you've been sitting a long time and that I'm the only thing standing between you and the I'm going to be aggressively brief so we can get to the Q&A.

I believe trade is critical to this world and our nation. I would like to talk today about why trade is crucial to us and where I see it going.

We are living, I believe, in an era of dramatic change. And this change brings both opportunity and challenge. We can lead -- and succeed, or follow -- and fail. Knowing the right move, at the right time, is chess, or in life, or in business, or in trade. I believe that open trade is the key to the success of this nation in the next century.

I'm going to give you two thoughts and a conclusion:

Now let's look at each of these closer.

First: Technology is allowing us to link as a global community.

I want you to think a little about the fact that not long ago life was very different. No jet airplanes, space shuttles, overnight express. No PCs, CDs, VCRs, ATMs. No cell phones, car phones, or pagers. No downloads, uploads; microwaves or laptops. No CNN, and being from Seattle, no Starbucks or Microsoft.

Flying from U.S. to Europe was a big event. When my grandfather took our family in early 1950s, I thought it was a-once-in-a-lifetime event. Now I jump on an airplane (and those of you who fly, thank you!) -- almost without a thought -- arrive ready to go to work. Often the flight is shorter than the time it takes to drive to the airport, park our car, get through check-in, and wait in the terminal for the airplane to leave. Just as an example, last month, I was in 10 cities and four countries in 10 days. We are part of a mobile, global society.

The way we get information has changed dramatically too. Fifty years ago, newspapers, radio and magazines were really our fundamental primary source for all our news. Today we have tremendous choice. We have cable into our homes and satellite dishes on our roofs. We watch the Presidents of the United States and People's Republic of China "live" on CNN. We link to the White House website and literally have a transcript of the press conference online. We tune into Congressional testimony on C-span. And we listen to the Phillies, or the Mariners, depending on the coast, on a Walkman strolling along a shore. Today, we lug laptops halfway around the world, look for the right plug in the wall to establish an online connection. Stock markets never close. As the sun rises, we move from Japan to Europe to Japan. On a business trip, you used to come down for your morning meeting and ask, "Do you know the score of last night's game?" Now, the question is, "Did you put in one or two commas after the 9?

We've come very far in a short time.

When I arrived at Boeing in 1965, the biggest scientific computer in the world had less capability than the laptop I carry today. In the 1960s, our airplanes were designed in 2-D, using pen and ink on sheets of mylar. Boeing people now create airplane designs digitally. They view colorful, solid 3-D models to see all aspects of their design in multiple locations in the world. When I returned home last month from that 10-day trip, I worked e-mail for nine hours from my flying office, via satellite, over oceans and through borderless skies. There's good news and bad news. I used to read my book when my computer batteries ran out; now we have plugs on the airplane. We need to figure out how to stop and read our books now.

Technological advances continue linking us together too. It's certainly true for me. Today I can communicate directly to almost 150,000 Boeing people with a single keystroke. Almost twice as many as it was one year ago. We are no longer like we once were. We're no longer local, regional, or even a national society. We are not in the 1940s. We are, whether we want it or not, global.

Technology is allowing us to link as a global community.

Second premise: Market economies work.

We certainly have a great case study with the comparison between the world's largest planned economy, the Soviet Union, and the world's largest market economy, the United States. But it is instructive to think about "why" market economies work better than centrally planned economies.

I think one of the fundamental reasons is the "freedom to innovate," and "the freedom to fail," and then let the market determine success or failure. Imagine in a centrally planned economy...

What bureaucrat would have paid Benjamin Franklin to invent the lightning rod?

What bureaucrat would have hired two bicycle makers, the Wright Brothers, from Dayton, Ohio, to develop an airplane?

What bureaucrat would have sought out airplane pioneers Glen Martin, or Allan and Malcolm Lockheed, or James McDonnell, or Don Douglas, or Bill Boeing "to start the first steps," in what has become the aerospace industry I now represent?

What bureaucrat would have paid two Stanford kids - Bill Hewlett & Dave Packard - to start an electronics company in their garage and help create the Information Age?

Or, again, closer to home, what bureaucrat would have picked a Harvard dropout, Bill Gates, to develop software that is currently used around the world?

The answer: No one. The data tells us that bureaucracies aren't good at innovating. Individuals are.

However, I do believe market economies must operate on a rules-based system. We don't need limits on trade and innovation, but we do need a structure that protects and ensures a level-playing field.

I think the other thing we need to recognize is that in a market economy, things are always changing. And the result? The result is job change. People think that companies are always downsizing, and it appears overwhelming. But what is really happening is lots of new jobs are being created. People sometimes want us to stop all the progress. But status quo, I believe, is a prescription for failure. New markets and new developments allow us to continually create new jobs. We have, as a result, a whole set of rapidly growing industries such as biotech, computing, software, and consumer electronics that didn't exist 50 years ago.

I think implications of all this change for each of us are clear: either we must adapt to change, as an economy, or simply disappear. The Darwinian imperative is: "If we're unwilling to change, someone else will, and go forward." Just as an example, of the 11 biggest companies at the turn of the century, ten no longer exist. If we put up walls, stop improvements, stop the development of new markets, we can fail and set ourselves up for disaster. Because if we don't improve, someone else will do it for us. We need to continue to move forward and create the new ideas. As a consumer, it gives us lower costs, and higher quality products. As employers, it gives us access to world markets. I believe as global competition intensifies, we will be more interdependent as companies, as countries, as people, and as products. Bottom line:

Market economies work.

So if we believe that technology is allowing us to link as a global community and that market economies work, we might conclude that we have a lot to gain as part of a world economy. I believe the global, market economy offers us a chance-of-a-lifetime. This is not a time for our nation to be shy. It is a time to lead the world. And I believe this provides an opportunity for the United States to lead. This is always easier during good times. But, I believe, the true measure of a great nation and a great people is the willingness to sustain the effort during difficult times. And right now we have some very difficult times.

Today, we face a growing trade deficit as a result of the Asian financial crisis. Japan faces its worst recession since World War II...hit by record unemployment, rising bankruptcies, and an economy off-the-track. This would be the worst possible time for the U.S. to retreat from its position of pursuing open trade by either abandoning efforts to liberalize trade or to close our markets to goods or services from other countries. We need to lead in support of worldwide market economies and a rules-based trading system.

Today China participates in international trade. But doesn't yet belong to the trading system that writes the international rules, the World Trade Organization. So, today, China doesn't have to follow the same rules as we do. They clearly have to meet a set of standards. We need a single trading system. China has, however, embraced the goal of achieving a market economy and open trade. President Jiang Zemin declared last year that China would privatize most state industries to move toward a market economy. As China moves to embrace a dramatic program of economic reform, we have a chance to support these ensure that China moves even farther down the road toward a market economy, open trade, and the rules-based system. I think if we can engage, we can all progress.

We can do that by bringing China into the World Trade Organization on commercially meaningful terms and, ultimately, granting China permanent Most-Favored-Nation trade status. We need to lead in the effort to engage China and all countries to move toward a rules-based trading system without barriers. If we continue to debate and wait, the progress made on trade, to date, will be jeopardized. In a world that is changing swiftly, the ability to respond quickly is critical to leading. If we don't lead, we will fall behind and end up standing on the sidelines -- watching as others move into the main stream of international trade.

Trade is not about a few big multinational companies such as Boeing. Trade affects almost everyone. People all over America. Like the people who work at Charles Engineering in Clearwater, Kansas. A 14-year-old company that sells all its aluminum products to companies in the U.S., including Boeing, employs 20 people who roll form aluminum parts for our aircraft. And since we export 70 percent of all our commercial airplanes, each of our suppliers, indirectly are exporters.

Last year, The Boeing Company spent $24 billion with nearly 40,000 U.S. suppliers in 50 states. Everyone of these 40,000 suppliers are part of our nation's invisible exporters, who serve Boeing customers in more than 140 countries. The effects of trade don't stop there either. Boeing people bank, buy cars, clothes, and homes. Visit museums, attend plays and baseball games. They golf, eat out, and spend money from their paycheck at the local dry cleaner. And 70 percent of that paycheck is from exports. Trade touches all of us at Boeing in one way or another.

The debate often roars around about who benefits from trade. Some argue that only big corporations are primary beneficiaries. I disagree. There is no doubt in my mind that trade has enriched the lives of hundreds of millions of people. Trade shouldn't be a free-for-all. There must be rules. Internationally recognized rules. And rules that apply to everyone.

Now I've talked about how far we've come, but we still have a long way to go.

I believe we ought to be the world leaders on trade: to work together and recognize that the world is on fast forward. I believe leading is about: recognizing change; having a vision; stating that vision clearly and forcefully. I believe leading is about being out in front of others..."pulling," making it attractive for others to go "where you are going." I don't think you can lead and push at the same time. Debating whether it's MFN, or non-MFN, bilateral or multilateral, sanctions or non-sanctions, fast-track or no fast-track, are not leadership strategies. They are push; not pull. Tactical. Not strategic.

I believe we, too, in this country can have a similar vision by recognizing that trade is a key to our future. Trade is powerful. It drives positive reform around our planet. It improves living standards. It creates new wealth and leads to more opportunity and prosperity.

Today, I am convinced that technology is bringing, and will bring, us together as a global community. I am convinced that market economies work. I think that means that we have an awful lot to gain as part of a global economy. And I think this country has a great opportunity to lead. I think we've got to take it!

Now I'd be happy to take your questions.