**FTS COMMERCE ITA-1**

**December 17, 2004**

**12:00 p.m. CST**

J. W. Marriott Good morning and welcome to the Secretary, Principals,
staff, and public. I call this meeting to order. Today, we will discuss
a letter of recommendation submitted by the Subcommittee on Export
Administration.

> Before we get started, I want to express my gratitude to the Council.
> The letters and reports we have approved since our work began have
> been poignant and well received. They have covered a variety of topics
> that PEC Members identified as important when we first began our work.
>
> As the President enters his Second term, we have more work cut out for
> us. With trade agreements signed with Morocco and Bahrain, and the
> Administration's consideration of a Middle East Free Trade Agreement
> and agreements with Oman and the United Arab Emirates, the Middle East
> is a new hot spot for trade. The same is true of South and Central
> America. And, as we all know, China continues to be a growing trading
> partner.
>
> All of these current and potential agreements present a great
> challenge for exporters and this Council, but I am confident that we
> will be able to meet these challenges.
>
> While we have a lot to look forward to, today is also bittersweet
> because we bid farewell to Secretary Evans. There is no question that
> the reason the PEC has accomplished so much in such a short time frame
> is because of your dedication and leadership.
>
> You have been a great friend to the President, a leader to the
> business community, and a role-model for the PEC. We appreciated your
> accessibility and your guidance on issues through the couple of years
> we've been together. We had a great China trip. We enjoyed our
> association with you there. We've enjoyed working with you. We thank
> you on the part of the group and wish you very well in the years
> ahead.

If you'd like to take a minute, Mr. Secretary, and just tell us a little
about what's going on where you're going?

Secretary Evans Yes. Well, Bill, thank you so much. Let me just begin by
saying what an absolute honor, pleasure, privilege it's been to not only
serve the American people under the leadership of the President, but
also serve with all of you. One of the things I certainly take away from
here are many new friends that certainly I will cherish for my lifetime.
While I might be leaving this particular post I hope that our paths will
cross from time to time. I'm very confident they will. I do plan to stay
engaged in the global economy in some kind of way. I'll just deal with
that on down the road, but dealing with the U.S. economy, global
economy, as well as just serving America like all of you are doing; I'm
sure that our paths will cross again. I certainly want to say how much I
will look forward to that.

> Also, on behalf of the president, I just had lunch with the president.
> I told him I was coming over to visit with his Export Council. He said
> to be sure and pass on his appreciation for all of your service, all
> of your work. It's important to have your voices making important
> contributions to the process as we continue to globalize this economy
> in the world. America's got a lead. We've got to be hearing from
> people that are in the private sector and understanding the kinds of
> challenges that they face.
>
> Bill, your chairmanship of this council, obviously appreciated by the
> president, by me; you talk about example, a role model for leadership
> in this world, you are it. You set up the standard. You were there
> every time I called on you. I thank you.
>
> Jim Morgan, the same goes to you. It's been really a pleasure getting
> to know you better, going to China with you and Bill and others. Thank
> you so much for all of your good work on not only this council, but
> also just good work out there in moving the economy forward around the
> world.
>
> Let me thank the subcommittee chairs and vice-chairs, everyone. It's
> been a team effort and that's how these things work well is when they
> work as a team. This certainly has been a team effort.
>
> Although I don't think they're on the call, I do want to acknowledge
> Glen Barton, Mike Armstrong for their service on this council over the
> years. They both indicated a desire to step down and step aside.
> They've served admirably, served well for quite some time and I want
> to thank them for that.
>
> Today we are discussing the Council's 16^th^ recommendation, which
> addresses export control legislation. It's certainly a very important
> part of us continuing to globalize our economy and integrate the U.S.
> economy into the global economy. It's an agenda that the president has
> certainly pushed on. We pushed to update these laws and the president
> certainly agrees that more work needs to be done in this area. He will
> appreciate receiving this letter and your thoughts on it. As I said,
> the president values your input and takes it very, very seriously.
>
> You all share many of my core beliefs as business leaders: How
> important free and fair trade is and fundamental to moving this world
> to a place of freedom and prosperity. I think, Bill, you talked about
> a number of the accomplishments in the free trade agreement area
> recently. There are more to come, but what's vitally important is we
> move ahead.
>
> I want to thank all of you for being good corporate stewards and being
> good stewards of capitalism in this economy. You're a shining example
> for that and I appreciate that. You have been focused on China. It's
> important we stay focused on China. I feel like we're making headway
> in China, particularly in the area of just level of communication. It
> takes place on a much more frequent basis, a much higher level, a much
> more serious basis, I think, than ever before. I think it's a level of
> engagement that will ensure that they kind of understand what we're
> thinking and we understand what they're thinking. There won't be a lot
> of daylight between the two. We'll keep the communication active and
> open and continue to press them very hard on some of the issues you
> have asked us to press them on, like protection of intellectual
> property, like currency issues. Those are issue that, among others,
> we'll continue to press very hard on them.
>
> We've had some great success in the last four years in the area of
> trade. We've eliminated or reduced tariffs by \$6.4 billion, which is
> no small accomplishment. We have completed free trade agreements with
> 12 countries. We're working on ten others. We moved the WTO around
> forward or the ... around forward and moved the FTAA agreement
> forward. We're not complete on either front; there's more work to be
> done, some real challenges, but I think the world is certainly
> understanding clearer every day how serious we are about leading the
> global economy and more market access and more opportunities for not
> only American entrepreneurs, business, and workers, but the same for
> other companies around the world.
>
> The economy is very strong. I don't need to tell you. I wouldn't say
> it's frustrating that we've not been able necessarily to deliver the
> message through the media as effectively as some people think, but I
> mean the facts speak for themselves and the results are there in the
> economy. We're the fastest growing economy of any industrialized
> country in the world. We've seen unemployment go from 6.3% to 5.4%.
> We've got low interest rates, low mortgage rates, low inflation,
> record high levels of productivity. We've got small business owners
> optimism index at an all-time high.
>
> There are always challenges out there. The president has obviously
> laid out an agenda to address those challenges. Part of the ongoing
> agenda will be free trade and fair trade and opening up trade and
> doing what we can to improve the export controls so that the markets
> are open to high-tech industry from America around the world. That's
> something we've been pushing on since we showed up here. We've made a
> lot of progress.
>
> As a matter of fact, with respect to increasing ... limits and
> increasing limits on microprocessors, so there are certainly areas
> we've made some good progress. More needs to be done. It's a somewhat
> more challenging environment today to move it forward because of 9/11
> and all of the issues that revolve around national security, but that
> doesn't mean that we shouldn't continue to pursue it. We will continue
> to pursue it. Your letter will be very helpful in allowing us to do
> just that.
>
> Again, I thank all of you for your hard work, for your commitment to
> serving your country under the leadership of the president. It's been
> an absolute honor and joy and privilege to work with all of you. I
> look forward to seeing you on down the road.
>
> Having said all of that let me, Bill, pass it back to you.

J. W. Marriott Thank you. Thank you, Mr. Secretary. Thank you for your
great service, your friendship, and your devotion to free enterprise and
free trade around the world. You set a wonderful example for all of us
and we're very, very grateful that you've been our secretary for the
last four years.

As you're all aware, we have one letter of recommendation today. The
Subcommittee on Export Administration has approved a letter and
submitted it to the full council for our consideration. Once our
Subcommittee Chairman, Brian Ferguson, has finished his presentation
I'll open the floor for comments.

Brian, will you go ahead and give your report?

B. Ferguson I will. First of all, again, my congratulations and thanks
to you, Secretary Evans and all of your staff for all of the success and
dedication. We very much appreciate that.

I also thank the ... members today for taking time to review this letter
on export control statutory reform. As you know, this is an important
issue for business and industry in general.

You may recall that at our last meeting in September the president's
Export Council approved a letter to the president on export controls and
it outlined suggested steps that the administration could take to
strengthen the U.S. economic competitiveness and to promote national
security. Those steps were largely administrative in nature, either
through executive order or statutory or regulatory changes.

The letter also stressed that implementation of these recommendations
should be accompanied by statutory reform. Why do we say that? The
Export Control Administration Act that we have today lapsed in 1979. We
have been operating for several years under an emergency authority of
the president and at least a very inefficient administration of export
controls. As I said, this bill was written in 1979, so it's a cold war
statute that was primarily aimed at the Warsaw Pact. You can imagine how
much out of date it is in the way that it was shaped and the targeting
that it does, the kinds of processes that it uses. The truth is that our
commerce and our technology have moved passed this act in many ways and
it does not ideally manage the things, such as dual-use export controls,
things that are truly sensitive. It doesn't necessarily predict both
U.S. national security and the economy.

We were charged by the Department of Commerce and we accepted the task
of starting the process to outline principles for a renewal or a new
Export Administration Act. The president had this on his priority list
in the last session. It did not successfully pass. There's an awful lot
of work that goes into the process of developing these principles and
then trying to shape statutory reforms around that.

The central purpose of this letter is to get a reaffirmation from the
president that this is a priority for his administration; get some
reflection back from the administration about where this fits into the
pecking order of their priorities so that we have some perspective
before we start our work in the .... That's the primary purpose of this
letter; no other purpose. This is not a letter that lays out the
principles of how the act should look. It's not trying to make the
points of what we should change, just trying to get a sense of where
this subject fits into the pecking order of priorities the president is
undertaking.

I'm going to pause there, Bill, and see where people want to go with
their questions.

J. W. Marriott Any questions and comments?

R. Hayes This is Congressman Robin Hayes in North Carolina and I wanted
to add my thanks to yours for Secretary Evans. Thank you for serving,
Mr. Chairman. We're going to continue to work, Mr. Secretary, to educate
the brightest young people so that we can do with technology the things
that you and the president envisioned. Thank you very much. I've got to
run. Merry Christmas to all.

J. W. Marriott Thank you very much. Other comments or questions?

J. Morgan This is Jim Morgan. The thing that's going to be most critical
about this is that we get a good support from commerce and the industry
when it's in the Congress because if we're not careful this gets
hijacked by people who have a poor understanding of the availability of
technology in an effort to try to use the defense issue for other
purposes. So I think we really need to remind the people in the
administrative side, as well as our ... group, to stay engaged in this;
otherwise it has the potential of harming our exports.

J. W. Marriott Those are good comments. Other comments?

M Bill, I would endorse that and support that. I guess what I would say
is I think it might be helpful for this council to talk with ..., as
well as talk with the Manufacturing Council to get on the same page as
to the importance and support of these legislative recommendations. We
can take it upon ourselves here at the Department of Commerce to talk to
the ... and of course, the Manufacturing Council is here, but those
would be three very important advisory groups that are advising the
president, advising the administration as to legislation that's going to
make it easier for us to compete in the world.

I think in keeping with what Jim was saying, I think if we have all of
those voices kind of on the same page and working together in concert it
would be helpful. I would just suggest that, at a staff level anyway, we
make some initial inquiries as to how receptive PKS is and how receptive
the Manufacturing Council is. If they are receptive then maybe we can
take it to the next step and have the chairmen maybe even talk to each
other.

J. W. Marriott That's great. Why don't you just let us know how the
department is doing in discussions and let us know what we need to do?

Secretary Evans That sounds good. We will do that. Grant Aldonas will
help spearhead that.

B. Ferguson Bill, I guess what I heard from all of that was that besides
assessing the will of the administration or the prioritization of the
administration we need to assess the stomach of the business as well.
That's a key element in deciding how prepared we are to tackle this.

J. W. Marriott Good. All in favor? Aye.

Participants Aye.

J. W. Marriott Are there any opposed? We thank the subcommittee for
their terrific work.

I can take a few minutes now just to open up the meeting to any other
questions or comments or concerns about our work.

P. Hsu This is Paul Hsu. Since China is on everybody's mind, Mr.
Secretary, on behalf of the China Taskforce I'd like to quickly give you
an update on our progress. You know, Mr. Secretary, the taskforce was
established by PEC on September 29, 2004. Since then we have made very
good progress. We laid the foundation for the direction of the
taskforce. We understand why we're doing it. We have set the vision, the
time table to complete the task and also our collaboration Web site is
up and running. In about six months I think we will have some
recommendation and be ready to present to Chairman Marriott and the PEC
Group. Again, Mr. Secretary, thank you for your support on that.

Secretary Evans You bet, Paul.

C. Levine This is Cecilia Levine. I'd like to first thank you very much,
Secretary Evans, for your leadership and for everything you have taught
me these last few years.

I want to just remind everyone in the council of the importance of the
relationship with Mexico and how it affects our border states as far as
trade. Maybe in the next four years we can focus ourselves a little bit
more on that area.

I thank everyone for everything I have learned from everyone. Thank you.

J. W. Marriott Thank you, Cecilia. Are there other comments? If not,
we'll let you know that this spring we'll meet again in Washington and
we'll have more letters of recommendation for the president. We don't
have the date yet, but I think it will come forth pretty quick.

We're going to have, we hope, an event at the White House either before
or after our public meeting. Of course, at that time we'll have a new
Secretary of Commerce and we look forward to meeting with him.

Again, Mr. Secretary Evans, thank you very, very much for your great
support. Do you have any parting comments or things you'd like to say?

Secretary Evans No, Bill. I just thank everybody for their friendship is
the main thing I would like to leave with all of you.

J. W. Marriott Well, we think you're a great friend and we value our
friendship and relationship with you. We applaud the work that you've
done at Commerce.

W You will be missed, Mr. Secretary.

Participants Yes. Thank you.

Secretary Evans Thank you.

W Thank you, Secretary Evans. You're the greatest.

Secretary Evans Thank you.

J. W. Marriott Do I have a motion to adjourn?

W So moved.

J. W. Marriott All in favor?

Participants Aye.

J. W. Marriott Thank you very much and Happy Holidays, everybody.

Participants Same to you. Good-bye.

J. W. Marriott Good-bye.

Coordinator Thank you. This concludes today's teleconference. Thank you
for your participation. Have a great day. You may disconnect at this
time.