First, we must seek an open system where any person anywhere can participate in markets everywhere.
Second, we must seek a free system, one in which ideas, information, products and capital can flow unimpeded by unnecessary or unjust barriers. That is why President Obama has mobilized a government-wide effort to attract foreign investment to America. Now, in the past, foreign investment has been seen as controversial. But today we know it helps create growth and jobs, and it can attract American dollars held overseas back into the U.S. economy. As we welcome investors to our country, we hope that all investors, including those from America, will receive an enthusiastic welcome overseas.
Third, we must seek a transparent economic system. Rules and regulations need to be developed out in the open through consultation with stakeholders. They must be known to all and applied equally to all. Hong Kong is a testament to the power of transparency, good governance, the rule of law, freedom of the press, an independent judiciary, and a vibrant civil society, all of which help to explain why so many people choose to do business here.
Openness, freedom and transparency contribute to the fourth principle we must ensure: fairness. Fairness sustains faith in the system. That faith is difficult to sustain when companies are forced to trade away their intellectual property just to enter or expand in a foreign market, or when vital supply chains are blocked. These kinds of actions undermine fair competition, which turns many off from competing at all.
A growing number of countries in Asia are proving the value of these principles. And the United States deeply believes in them, because their value has been proven time and again, not only in times of prosperity but also in times of hardship, as well. At the end of the Vietnam War, there was a thriving commentary around the world on the idea of America's economic decline. That seems to be a theme that kind of repeats itself every couple of decades. But all the while, then and now, these principles were nurturing a system of entrepreneurship and innovation that allowed two college students to found a small tech startup called Microsoft. And today, they are helping power companies like Solyndra, a green-energy startup in California that began producing solar panels in 2007 and now installs them in more than 20 countries worldwide.
Every time in history when the United States has experienced a downturn, we've overcome it through reinvention and innovation. Now, these capacities are not unique or innate to the people of the United States. They are activated by our economic model, which we work hard to keep open, free, transparent, and fair, a model that has its imperfections but remains the most powerful source of prosperity known to humankind.
Of course, no nation is perfect when it comes to safeguarding these principles, including my own. We all recognize the temptation to bend them. And we all recognize the inevitability of human nature's capacity to look for ways around them. Some nations are making short-term gains doing that. Some developing countries-admirably focused on fighting poverty-might be slow to implement at home the same rules they benefit from abroad. And a number of nations, wealthy in the aggregate but often poorer per capita, might even think the rules don't apply to them.
In fact, all who benefit from open, free, transparent, and fair competition have a vital interest and a responsibility to follow the rules. Enough of the world's commerce takes place with developing nations, that leaving them out of the rules-based system would render the system unworkable. And that, ultimately, that would impoverish everyone.
The businessmen and women of Asia seek the benefits that these principles offer. Malaysian manufacturers want access to markets overseas. Indian firms want fair treatment when they invest abroad. Chinese artists want to protect their creations from piracy. Every society seeking to develop a strong research and technology sector wants intellectual property protections because, without them, innovation comes with a much higher risk and fewer rewards. People everywhere want to have the chance to spend their earnings on products from other places, from refrigerators to iPods.
Now, these four principles are easily uttered and embraced, but they do not implement themselves. So our challenge is always to translate them into practice. And my country is hard at work doing that, and we encourage other governments to join us in this effort.
The United States is taking steps to promote these principles around the world through multilateral and regional institutions, new trade agreements, and outreach to new partners, to enlist us all in the quest for inclusive, sustainable growth. These steps are connected to and build upon the work we are doing to revitalize our own economy.
First, we are working through regional and international institutions to achieve balanced, inclusive, and sustainable growth. That starts with our commitment to APEC, the premier organization for pursuing economic integration and growth in the Asia-Pacific region. And President Obama is pleased to be the chair and host of APEC this year in Hawaii.
We want APEC to address next-generation trade and competition challenges, like strengthening global supply chains; empowering smaller companies to connect to global markets; promoting market-driven, non-discriminatory innovation policy. We are pursuing a low-carbon agenda by working to reduce barriers to trade in clean-energy technologies, and we hope to reach agreement on implementing transparency principles to promote economic growth and the rule of law on a 21st century field of play.
Because burdensome regulations and incompatible sets of rules in different countries can hold back trade and growth every bit as much as tariffs, we are also working at APEC to find common ground on transparent, effective regulation, with broader public consultation and better coordination. The quality of the rules we put in place is just as important as our willingness to enforce them.
And I have to mention that discrimination against women is another barrier to fair competition and economic growth. A 2007 United Nations study found that the Asia-Pacific loses at least $58 billion of economic output every year because of restrictions on women's access to employment and gender gaps in education. So, as host of APEC, we are organizing a high-level Summit on Women and the Economy in San Francisco this September.
We are also working though the World Trade Organization to address continuing challenges to fair competition. Take government procurement. The purchases that governments make represent an important part of the global economy, and citizens everywhere deserve to know that their governments are getting the best product at the best prices. Consistent with the WTO Government Procurement Agreement that we signed, America lets companies from other nations who have signed that same agreement compete for appropriate American Government contracts. We would naturally expect countries that want access to our government contracts to offer our companies genuine access to theirs in return.
Across the full spectrum of international institutions-the G8 and G20, the IMF, OECD, ILO, WTO, and others-we are working to level playing fields and encourage robust and fair economic activity. Just as the WTO eliminated harmful tariffs in the 1990s, today we need institutions capable of providing solutions to new challenges, from some activities of state-owned enterprises to the kinds of barriers emerging behind borders.
We also support innovative partnerships that develop norms and rules to address these new concerns. We should build on the model of the Santiago Principles on sovereign wealth funds, which were negotiated jointly by host governments, recipient governments, the World Bank, IMF, OECD, and the sovereign funds themselves. This code of conduct governing sovereign investment practices has reassured stakeholders - investor nations, recipient nations, and the private sector. And it may prove a useful model for other shared challenges, like ensuring that state-owned companies and enterprises compete on the same terms as private companies.
As a second step, we are pursuing new cutting-edge trade deals that raise the standards for fair competition even as they open new markets. For instance, the Korea-US Free Trade Agreement, or KORUS, will eliminate tariffs on 95 percent of U.S. consumer and industrial exports within five years. Its tariff reductions alone could increase exports of American goods by more than $10 billion and help South Korea's economy grow by 6 percent. So, whether you are an American manufacturer of machinery or a Korean chemicals exporter, this deal lowers the barriers to reaching new customers.
But this trade deal isn't simply about who pays what tariff at our borders. It is a deeper commitment to creating conditions that let both our nations prosper as our companies compete fairly. KORUS includes significant improvements on intellectual property, fair labor practices, environmental protection and regulatory due process.
