Remarks Before American Business Groups of 
Riyadh, Jeddah, and Dhahran Riyadh, Saudi Arabia
Sunday, February 26, 2006

Let me begin by welcoming Saudi Arabia as a full member of the World Trade Organization. Let me also express our appreciation for the longstanding economic cooperation between Saudi Arabia and the United States.

We are proud to note that American companies and their innovative technology were early partners in helping Saudi Arabia unlock the vast potential of its natural resources.

This commercial partnership has brought great benefits to both parties. And we look forward to working closely with the Kingdom for many decades to come.

Saudi Arabia is entering a new age. And we stand to help the Kingdom diversify its economy as it expands its manufacturing and services sectors, and unleashes greater entrepreneurship.

We should always remember the historical strength of our bilateral relationship. U.S. companies have consistently offered the best technology, best product lines and best value--n virtually every industry.

The commercial relationship between our countries is a key international economic priority for this administration.

The reforms begun by King Abdullah will bring greater diversity and opportunity to the Saudi economy.

Obviously, the oil sector will continue to represent a large portion of the economy. To the extent that other additional sources of employment are developed, Saudi Arabia can develop in a more stable and diversified way.

President Bush has focused the U.S. economic agenda on our national long-term challenges. And countries like Saudi Arabia are also correct to think long-term. We need to position ourselves to compete in the global economy, not just for the next three years, but for the long haul.

There are many reasons why the U.S. economy is showing solid results. And let me highlight the factors that we see as making the largest contribution to our economic performance. Here's the most important element: We rely on the private sector, and the role of our government is to create an environment that attracts capital and creates jobs.

Stability plays a large part. We have a stable economic system that allows market forces to influence supply and demand and to set prices. We have a body of law that protects property rights.

Our long-term stability empowers us to pursue a credible, low-inflation monetary policy. This trend frees capital for growth and investment.

By relying on the private sector, we build greater flexibility and, in the face of globalization, we can respond quickly.

We have flexible labor markets with a highly-educated male and female workforce that can adapt to the demand for new skills.

Our capital markets are also flexible. They let investors balance risk and reward and, in so doing, allow capital to flow to the most productive uses. Although there is room for improvement, the burden of taxes and government spending is comparatively low. The level of regulation is also fairly low, compared to other countries, but we are still not satisfied.

Every country faces a defining choice about the way it interacts with the world. They can turn inward and pursue protectionist policies or they can participate actively in the global economy.

We choose openness. We are open to trade with any responsible partner. We know that competing in markets around the world makes America stronger and more flexible at home.

Saudi Arabia's accession to the WTO is an acknowledgement of the Kingdom's commitment to also participate actively in the global economy. WTO membership signals the global economy that Saudi Arabia is open for business.

However, a country's membership in the WTO only benefits its people and economy if it fully leverages the opportunity by implementing the commitments made during accession.

Saudi Arabia began reforming its economy over the course of the last ten years and WTO accession is the crowning achievement of this continuing effort.

Saudi Arabia's reforms have already brought positive changes to the economy as a whole. Further progress will continue strengthening and diversifying the Saudi economy.

There is still room for additional improvement within the investment climate.

Specifically, loosening equity caps on foreign business ownership within Saudi Arabia will signal investors that the Kingdom welcomes even more foreign investment and therefore it will compete for capital with larger economies.

U.S. businesses should be playing a larger role within the Saudi Arabian market. I hope that the government of Saudi Arabia will welcome and encourage additional participation by American companies. We have a strong commercial relationship and a history of business partnership.

And there is a great deal more business that we could be and should be doing together.

We believe a stronger business relationship between the U.S. and Saudi Arabia is in the interests of both countries.

We believe that successful 21st century economies will be those that unleash the power of private enterprise and innovation.

Innovation is the most important resource in our increasingly knowledge-based economy. Global trade in pirated and counterfeit goods threatens innovation.

We can't allow the creation of a world environment where patents and trademarks and copyrights don't mean anything. We should work together to protect intellectual property, which will invite and nurture the type of innovation that leads to economic growth.

A recent study shows that 75 percent of the value of publicly traded U.S. company--some $5 trillion--comes from "intangible" assets such as brands, copyrights, and patents. IPR protection for brands and innovative technologies has never been more important.

The global trade in counterfeits is estimated to be $600 billion annually. The scale of this problem is global and it is increasing rapidly.

The goal of creating secure markets for IPR around the world is one of my highest priorities as Secretary of Commerce.

This area is an Administration priority because we see both developed and developing economies increasingly competing on the basis of knowledge and innovation.

For example, the Business Software Alliance estimates that if software piracy were lowered to 48 percent in Africa and the Middle East:

�  Regional economies would grow by $5.4 billion
�  IT companies would create 13,000 jobs. And,
�  Local industry revenues would grow by $3.7 billion

We need to continue creating an environment where innovation flourishes.

I know that the Kingdom is seeking to create additional employment for the influx of young people who will enter the workforce over the next 20 years. Economic liberalization is the most powerful way to create jobs.

Our experience teaches us that economic reforms often help countries make other improvements that advance the lives of its citizens.

Building a civil society, allowing for more public participation in the political process, expanding education, strengthening the rule of law, establishing commercial law, and instituting greater transparency are all ways to attract capital and create jobs.

We applaud the foresight and the courage of any country in the region that is pursuing reforms.

America recognizes that a future of shared opportunity and expanding prosperity nurtured by broad economic cooperation is the best strategy for peace, stability, and the triumph of hope in the Middle East and the world.

Any country that seeks these same goals will always find loyal friends and partners among the people of the United States.

Thank you very much.

Source: Department of Commerce Newsroom