**FTS-COMMERICA-ITA-1**

**Moderator: J. Marc Chittum**

**June 25, 2008**

**2:30 pm (EDT)**

Coordinator: Welcome and thank you for standing by. At this time all
participants are in a listen-only mode. Today's conference is being
recorded. If you have any objections you may disconnect at this time.

Now, I would like to introduce Mr. Bill Marriott of Marriott
International.

Bill Marriott: Okay. (Chase), will you please take the roll?

Coordinator: Tim Smucker from J.M. Smucker.

Sharon Allen from Deloitte.

> Jim Morgan from Applied Materials.

Juan Carlos Iturregui from Sonnenschein Nath & Rosenthal LLP.

Arthur Collins from Medtronic.

Betty Manetta from Argent Associates.

James F. Dicke, II from Crown Equipment

Christopher Jenny of the Parthenon Group

Cecilia Levine of MFI International

Lenny Sands of Worldwide Alchemy

John F. Smith, Jr. of GM Corporation

Lee J. Styslinger, III of Altec

Coordinator: Okay, sir. And you may begin.

Bill Marriott: Okay. Welcome everybody. The meeting is called to order.
We have two letters of recommendation today; one, on the fact-finding
trip to the Ukraine and Russia, and the other on the Environmental Goods
and Services Agreement. And before we introduce the letters of
recommendation and the final report I'd like to call on Under Secretary
Padilla to give us some of his thoughts.

Chris Padilla: Good afternoon, Bill. Thank you very much everybody for
joining us. I apologize on behalf of Secretary Gutierrez who could not
be with us today, but it's my pleasure to welcome you on his behalf.

I also want to thank you in advance for the proposed letters to the
President that you're going to consider today on the recent trip to
Ukraine and Russia and on the Environmental Goods and Services Agreement
that we're negotiating with the Europeans.

I want to thank those members of the PEC who took the time to travel to
Ukraine and Russia. The Secretary told me he felt the trip went very
well. I hope the PEC members feel the same way. I know that you had some
good meetings with former Minister Greff and other senior Russian
officials and Russian and Ukrainian counterparts and I know our staff
worked hard to make that visit a success. So, thank you for those who
took the time to travel and added to your service on the PEC by
traveling overseas.

I want to say a couple of words about the current trade environment.
It's a tough time for trade. Since the last time we met we have seen no
movements in Congress on any of the pending free trade agreements. The
Congress voted to remove Trade Promotion Authority Protection from the
Columbia Free Trade Agreement and has not taken up or even offered to
hold a hearing on Panama or Korea or other trade agreements that are
currently pending.

I think at this particular point in time with trade having become an
issue in the election it's looking less and less likely that the
Congress is going to move ahead in a positive direction on trade this
year. I think it's very, very important that all of us that believe in
openness continue to deliver the message that openness is a unique
strength for the American economy.

And when I say openness I don't just mean openness to trade I mean
openness to foreign investment, openness to people in the form of legal
immigration and openness to foreign ideas. It is important that we try
to maintain some sort of a bipartisan center that supports the basic
concept of openness and that will continue to be our message throughout
the remainder of this Administration.

And I hope that PEC members will join us in reminding people that
America's uniquely strong and because it is open and that we must resist
isolationist tendencies whether it's opposition to trade agreements or
opposition to common senses immigration policies or opposition to
foreign investment in U.S. companies and assets.

We, I believe, are uniquely vigorous and dynamic as an economy precisely
because we're open. That's what is our crucial differentiating factor
versus the Japanese or the Chinese or others, but openness is hard and
we're having a difficult time right now where folks want to blame
economic anxiety on imports or immigrants. And I think it's important
that leaders in the business community as well as leaders in government
from both sides of the aisle step up and remind people that we are in
fact, stronger because we are open, not weaker.

I want to express on behalf of the Secretary our appreciation for all
the work that the PEC has done to advise us on private industry's views
on the benefit of an open trading and investment environment. We
appreciated the letters on bilateral investment treaties with BRIC
countries, on immigration reform and on trade promotion authority.

I would note by the way, that we have taken your recommendations on
board and last week we announced the beginning of negotiations on a
bilateral investment treaty with China which I think is a very
significant step. To have a bilateral investment treaty with China which
is one of the fastest growing economies in the world and a significant
source - or a significant destination for U.S. investments, we believe
having a BIT with China would be a significant step toward
on-discrimination and equitable treatment for U.S. investors in China.

And we appreciate that you have supported that and we remain interested
in doing bilateral investment treaties with other countries \-- Brazil,
Russia and India \-- and I would note that just yesterday we announced
the launch of a bilateral investment treaty negotiation with Vietnam.
So, even in these closing months of the Administration we continue to
try to move forward on initiatives that make sense for our economy and
our businesses.

I want to say a couple of words about the trip to Ukraine and Russia. As
some of you may know this was the first time that a Secretary - a
serving Secretary of Commerce ever visited the Ukraine. I know the
Secretary found it a particularly useful visit even though he had to
deliver some stern messages to the Ukrainian government on some issues
related to intellectual property and investment rights and other things.

And I hope the PEC members found it useful as well and I'd be curious of
your views. I also hope you found useful the meetings that you had when
you were in St. Petersburg. Both of these emerging economies are very
important to us. While they still pose a lot of challenges I am
constantly amazed by how many American companies tell me that they are
just doing so well, particularly in Russia. Those who have invested
there or done business there for awhile report fairly consistently that
they're having remarkable business success and strong profitability.

So, I know that this will be the last public of the PEC during this
Administration and in that venue I want to thank all of you for your
service to the country, for your recommendation and particularly to you,
Mr. Chairman, for the efficient way in which you have handled the
meetings and lead this organization. Thank you very much.

Bill Marriott: Thank you. Thank you, Chris. And we'll go right in to
learn a little bit more about the Ukraine and your Russia visit and ask
Art Collins who is a member of the Subcommittee on Trade Promotion and
Negotiations and who went on the trip to give us a report. Art.

Arthur Collins: Thanks, Bill. I will try to brief for two reasons; one,
of which is unfortunately I'll apologize in advance. I need to get off
the call in about eight minutes and also, I think the letter that you
all have received a copy of fairly well outlines the major issues.

Just a few comments \-- the PEC was with Secretary Gutierrez on June 4th
and 5th in the Ukraine, specifically in Kiev and then we spent June 6th
and 7th in St. Petersburg. It coincided with the St. Petersburg
International Business Forum which is really put on in concert with the
World Economic Forum. It gave us an opportunity to meet, I believe, a
number of government officials and heads of business that perhaps we
wouldn't have had the opportunity to meet.

A few comments \-- the advance teams did a great job. The individuals at
Commerce were very accommodating and couldn't have handled the visit any
better. We got good support from the Embassy staffs. The American
Chamber of Commerce sponsored luncheons in both Kiev and St. Petersburg
\-- Tom Donahue was there to attend the forum in St. Petersburg.

And I would echo what Under Secretary Padilla mentioned, I think the
heads of the U.S. companies that attended these luncheons were
universally positive about the changes that are taking place in both
Ukraine and Russia and all were reporting that their businesses were
doing exceedingly well. Not that there aren't challenges to both deal
with and resolve and there are, but I think everyone was feeling upbeat
about the future.

A few comments \-- Ukraine I will also underscore, it was clear that the
Secretary's trip being the first Secretary of Commerce to visit Ukraine
was very well received. We had a press conference that was also very
well attended and I thought the Secretary did a good job of balancing
the opportunities with the number of issues that remained, including
transparency. He talked about the protection of intellectual property,
the rule of law, reducing barriers to imports and also having exports be
able to freely move out of the country, particularly is an issue Ukraine
and in the agricultural area.

We got a good mix of government officials and business officials and
again, I'll just echo that I think the challenges are well understood,
but the opportunity is very real. Ukraine just recently moved into the
WTO. They are still struggling on some of the final steps that need to
be taken to make sure that that entrance is, you know, is fruitful for
all concerned.

Russia was a real eye-opener. I don't think I've seen a set of
international executives be more positive about their area of the world
as the individuals were that represented a broad range of major U.S.
companies at the luncheon that the American Chamber hosted for us. Many
reported growth rates that are in the high teens, 20%, 30% range,
growing much more rapidly than the rest of their corporations.

We had an opportunity to meet with very senior government officials both
at the national level as well as the Governor of St. Petersburg. We had
very unique opportunities to interface with major Russian businessmen
and I would again say that the situation was upbeat.

A few comments on the governments \-- there are very different, but very
important relationships between the President and the Prime Minister in
the Ukraine. It is clear that Yushchenko and Tymoshenko are openly
hostile towards each other and it will be very interesting to see how
the elections work out.

In Russia, Medvedev is early on in his tenure and I think most people
are taking a wait and see attitude on how he will end up sharing power
with Putin. He did address that at the economic forum, a very popular
leader, but I think it's just too early to say.

So, let me conclude by saying I think it was a fruitful trip. Betty and
Juan Carlos and others are on the call. I know, Tim, you had a few
things going on the acquisition front that didn't allow you to join, but
the eight people that were there provided a good cross-section of large
and small companies. We had Export-Import Bank with us and I think
everyone enjoyed the trip and found it very useful, Bill.

Other than that I think the letter fairly well outlines the summary
points we wanted to make.

Bill Marriott: Perfect. If you have any - any of the members have any
questions on the letter or the visit?

Betty Manetta: This is Betty.

Bill Marriott: Yes, Betty?

Betty Manetta: That was just, the letter was a great summary. I think
that we're missing one point which I found that I'm already sharing with
my customers. The fact that the Euro Cup is going to be held in the
Ukraine in the year 2012 and they're starting now to look at their
infrastructure and to start building out broadband opportunities,
hotels, stadiums, highways. I think there's going to be - and they're
looking for U.S. companies to come in and assist in that endeavor as
well as European company.

So, I thought that maybe we should add something in there because there
was ExIm and USAID dollars for American companies. So, I think that's an
added sweetener to the pot as we're looking for potential opportunities
in the future, especially given that the Euro Cup is going to be held
there.

That was my only comment.

Bill Marriott: Okay. Can we add that sentence?

Arthur Collins: Sure. Betty, I agree with you.

Betty Manetta: Yes and I could send you a little blurb that I had
drafted before. So, I could send that over to you and you can add that?

Bill Marriott: That's fine.

Betty Manetta: Okay. Thank you.

Bill Marriott: Anybody else have any comments or questions? If not,
there's seems to be agreement and we'll pass on the letter to Secretary
Gutierrez to submit to the President. Thanks, Art and thank you,
Secretary Padilla for your participation.

Arthur Collins: Okay, Bill.

Chris Padilla: Thanks.

Betty Manetta: Thank you.

Bill Marriott: Thank you very much. We'll move on now to the second
letter regarding Environmental Goods and Services and I'd like Jim
Morgan who is Vice Chairman of our Council and member of the committee
to give his report. Jim?

Jim Morgan: Thank you. I think this Environmental Goods and Services
Agreement letter is important and it's a focus that commends the USTR
and it urges continued strong support for the Administration for the
Environmental Goods and Services Agreement as part of the Doha round. I
think it's reasonably straight forward and it's first and foremost a
call to lower tariffs and spur trade which I think should be viewed
favorably by every PEC member.

The agreement would permit all WTO members to remove barriers to trade
to a specific set of climate friendly technologies. I think it's
important to the U.S. because we really at the moment are one of the
world leaders in environmental goods and services and so, we've got a
lot to gain from this.

And I think that if people went in the barriers for environmental goods
and services that would really impact our economic potential over the
next several decades because at least I know out here in California and
in other places in the country there's a lot of R&D work going into
environmental and energy efforts that we'll - could pay off in
significant business opportunities for the country and therefore, good
wages and taxes for our - for the U.S.

So, I think it's the right thing to do and I think this is a good time
to do it and I'd request your approval of the letter.

Bill Marriott: Thank you, Jim and think particularly to Bill Morin on
your staff who had really done a great job here. Would you - anybody
have questions or comments on this letter? Any objections. Then none.
Then we'll pass it on to Secretary Gutierrez and he'll pass it on to the
President.

Jim Morgan: Thank you.

Bill Marriott: Thank you very, very much. Next, open the floor for
discussion about the final report to the President.

Jim Morgan: I might just make a couple of points. This is really kind of
a summary of our activities and I think it's pretty straight forward.
We're asking the PEC members to approve the report in the - as far as
general scope and content. There was a language that may get adjusted
some and - but we won't make any - the staff won't make any substantive
changes after today's post and you'll see the final text before it's
closed. And so, what we'd like is to ask for your approval of the report
content more - and not every work, but more they - if it needs what you
think is important for us to include.

Bill Marriott: Okay. Let's open it up to first some questions and
comments then on the final report. Anybody have anything they'd like to
ask or add or any objections.

Betty Manetta: This is Betty. I just have a quick question. I think that
there was some language that we're going to put in there regarding that
the next PEC Administration or the next PEC Council should really look
into biofuels and I know that it had a lot of - there's been a lot of
activity around that trying to find the right words and I think that
given we - our subcommittee had suggested this at the last meeting and
it received very - a lot of interest from everyone. And again, I think
we would be remiss if we didn't put some language in there, especially
given - and I don't know how many of you have seen the *Time* Magazine
article dated June 9th which is a very - it has a lot of bad things
about this Administration and the lack of concern about looking for
alternative technologies and research.

So, I think if don't put something in there we have not done a good job
in supporting this Administration or at least guiding him and giving him
some coaching as to what needs to happen in the future. And timing is
everything. And as well all we - I was recently on the train to Russia
all these other countries are really looking at alternatives. We need to
be in the forefront because again, Secretary of Commerce Gutierrez said
at his meeting in Chicago that I attended on competitiveness; the key
thing is going to be innovation that's going to continue to spur our
economy here in the U.S.

So, given that we need to be innovative. We need to be in the forefront
of this. So, I really believe that we need to have very nice language,
you know, that means something versus just fluff. So, I know Marc
Chittum sent out something recently on the language that was recommended
by \-- I can't remember. So, I\'d like to really think that we should
put something in there in the final report.

Bill Marriott: Is this okay, Jim?

Jim Morgan: Yes, we'll - we've been working on trying - I know the
staff's been working on trying to get a way to incorporate that, you
know, language.

Betty Manetta: Thank you.

Bill Marriott: Okay. Thanks. Any other questions or comments?

Tim Smucker: Bill, this is Tim Smucker. I just - I do agree with Betty.
I think that there was a very healthy dialogue and I think that we would
be remiss if we didn't reference and recommend that the next PEC at
least consider the biofuels subject and its impact on exports.

Bill Marriott: Yes, I agree. Anybody else have any comments or
questions? That's great. Jim, thank you very much for your work. And
again, Jim, thank you so much for all you've done and Bill Morin and for
a really great job. And it's hard to believe it's been seven years now
we have been together.

Betty Manetta: I know.

Bill Marriott: And we've introduced over 40 different letters and they
cover the waterfront. They're all well done. I've read them all and I
think it's very impressive. Anything else on the final report? If not,
we'll prepare it and send it on to the Secretary who will send it on
then to the President.

Betty Manetta: Thank you.

Juan Carlos Iturregui: Excuse me, Mr. Chairman. It's Juan Carlos. Do we
have a final title for this report? I think the PEC staff had circulated
some suggested titles. Or is that a moot issue?

Caroline Swan: Mr. Chairman, this is Caroline Swan. If I could just
answer that question on the PEC Executive Secretary's behalf? We will
work on those titles and they will be discussed at the staff reps
meeting on July 9th. That's when we will take up that issue.

Juan Carlos Iturregui: Oh, okay.

Bill Marriott: I think we have a final meeting don't we? In this Fll?

Caroline Swan: Yes, sir. That final meeting is with the - we're trying
to get it with the President in September; however, that's not a public
meeting. So it's an administrative meeting where you'll give him the
final meeting.

Bill Marriott: Okay.

Caroline Swan: So, we'll need to approve the title of the report. It's a
July 9th staff reps meeting.

Chris Padilla: And Mr. Chairman, this is Chris Padilla. I was just told
by the staff that 42 letters in the time that this PEC has been in
existence covering a waterfront and I'm told that twice as many as the
previous PEC. So \--

Betty Manetta: Yeah!

Bill Marriott: Good job everyone. That is really terrific.

Juan Carlos Iturregui: One more final letter from the number 43 as a
tribute to the President?

Bill Marriott: Yes. Good idea. Mr. Under Secretary, do you have any
parting comments?

Chris Padilla: No, just to note that that many letters on that many
subjects is why we have advisory committees. We welcome your advice,
have taken this seriously and tried to act on it. I realize that all of
this is required from all of the members and your staff people's time
away from your other important work and that's service to the country
and to us, the Commerce Department that we really value. So, thank you
all very much.

Bill Marriott: Well, thank you all.

Betty Manetta: Thank you.

Bill Marriott: Thank you. And if there is no other business \-- do I
hear any other business coming forward today? If not, the meeting is
adjourned and thank you all for all you've done and for all these
wonderful letters. And we'll look forward to seeing you soon.

Betty Manetta: Thank you.

Juan Carlos Iturregui: Thank you.

Tim Smucker: Thank you.

Sharon Allen: Thank you.

Arthur Collins: Thank you.

Jim Morgan: Thank you for all your efforts as Chair. That's been a great
contribution.

Bill Marriott: Thank you very much, Jim.

Betty Manetta: Thank you, Bill. Great job.

Bill Marriott: Thanks, Betty. Take care everyone. Bye.

END