 Okay, welcome everybody We're gonna get started with this session on priorities for the United States in 2016 My name is Rana Faroohar. I'm the assistant managing editor at Time magazine in charge of economics and a global Analyst for CNN and I'm really pleased to be here moderating this session I just want to say before I introduce the Panelists that we've actually taken a command decision to throw this a little bit beyond 2016 as well and talk about what the next administration that will be coming in and November should be thinking about in terms of priorities for the US in the world as well So with that, let me get started. I'm gonna introduce in order Michael Froman Who's the US trade representative Christopher Coons the senator from Delaware? Neil Ferguson, who is the Lawrence a tish professor of history at Harvard? Steven Paul Luca. I got it right this time. You guys very close. Look who is the managing director of vane capital and Congressman Kevin McCarthy who's the majority leader and a congressman from California. So thank you all for being here So we're gonna have a really sort of just very interactive discussion Feel free to interrupt me and each other and then about 20 minutes till the end We're gonna open it up so you all can ask questions or give comments to So I'm gonna set the frame I guess first by saying that you know We are in a period of change certainly in the kind of global economic and political paradigm We're in a period of fragmentation there's conflict almost everywhere and you know as someone was saying to me right before I came in the session in way everybody is having a crisis of the other and The US is traditionally a country that people look to to to save the rest of the world from this or you know as a guiding light You know you can argue that we haven't been that in in recent years But our value system has been about that but now we've been having a lot of that conflict at home. We have a very Polarized campaign going on right now Presidential campaign so is the US position to lead at all in a world that's fragmented What can we do? What should we be doing? And so I'm gonna just ask you guys to quickly give kind of one minute each of your high points And then we'll jump in with more Michael. Well, thank you You know there obviously are a lot of challenges in the global economy and the politics that you describe and I think there are the dynamics of globalization technology the rise of emerging economies others has been just a lot of Stress on the system over time. You know, I have to say with all of the Discussion of the strains in the system though. I think one of the high points actually over the last few years has been you wouldn't be surprised to me to say this the trading part because Even over the last year what we've made progress at the WTO and trying to revitalize the multilateral trading system in Nairobi We've made progress in closing the largest trade agreement in history The Trans-Pacific Partnership last October and we're making progress with the European Union and with China and our negotiations With them and I think it's important because as you know for the last several decades trade has actually led growth It's been higher trade has grown faster than the global economy as a whole in the last year or two It's grown slower and we need to get growth trade back on a faster path towards growth so that it can help Continue to alleviate poverty take people out of poverty Promote good jobs in all of our countries and we think that the US has demonstrated leadership And it's very well positioned given what's going on in our own economy and we're generally to Continue to lead the rules-based trading system and make sure that our values and our interests are reflected in okay We're gonna come back to trade and what it's gonna take to sort of get the next deal done and get people on the same page Chris you go ahead growth solves a lot of problems And so if we've got a crisis of the other in Europe and in the United States and around the world One of the watchwords I'd suggest is that we need to continue to do what we do best Which is grow through an open market economy in a rules-based system, but also be America which has been defined As a country that welcomes refugees that welcomes Those who are immigrants and that welcomes those of different backgrounds My hope is that the conduct of the 2016 campaign and how we Grow as a country Will continue to secure our place as a country that is welcoming and that is supportive and that is open And not reinforce some of the worst traditions some of the worst instincts that have been seen or heard around the world We can develop a model for high-skill high-wage Innovation-led growth and we can develop a model by being a good at this at home That then is also encouraging to the rest of the world that makes open markets and global trade not threatening Not a zero-sum game, but positive and attractive and that shows how it is possible to welcome and fully integrate those Who are refugees from conflict elsewhere, but it'll be very difficult to do Reminding us of the best in our values and the best in our history. I think is the right path forward Okay, Neil you wrote a book about America's position in the world and how it's changing What do we have to look forward to in the next year or two? Well, I'm determined to be upbeat I think almost everybody in this room is in a state of of Davos fatigue And the more fatigue people become I've noticed that this conference the more Cassandra like the utterances And I heard a few of those at lunch today, you know compared with the the period I've been studying which is the late 1960s and early 1970s In fact, the position is not nearly as bad as you might think to listen to some people at Davos I mean take yourself back to 1968 now there was an election year. I mean you had an outright segregationist running in that election You had far more violence Forget Ferguson, Missouri the race riots that were going on in American cities in the late 1960s We're all together worse the homicide rate was double what it is today And if you think we have foreign policy problems, can I just say the word v it now? I mean if you compare our present predicament with the the legacy that Lyndon Johnson Handed to Richard Nixon and Henry Kissinger. I actually don't think we should be too panic-stricken I do think that there is a foreign policy mess to be sorted out By the next president and whoever it is will have to sort it out Whatever he or she says on the campaign trail and I'd like to characterize the mess as follows The pendulum swung from one extreme to the other both administrations Bush and Obama got the Middle East wrong The intervention in Iraq was ham-fisted And in many ways went awry But the non-intervention In Syria has been as costly in human life arguably more so And we have yet to strike the right balance and I think to learn from history One thing I've learned from writing the life of Henry Kissinger is that the united states is really bad at learning from its own history It has a kind of amnesia problem Is anybody good? I think we can correct that but we have to address that partly through educating our leaders better I'm proposing a council of historical advisers for the next president So that we can stop making these same dumb mistakes that we've been making decade after decade I want to just say a few more things of an upbeat nature Okay, very quickly and really briefly because I think American leadership cannot just be defined in terms of foreign policy interventions here There and everywhere. It's about economic leadership. Let's not forget. It was the us that caused the crisis But the Fed also led the world Out of the crisis and I think we we perhaps asked too much of central bankers these days But let's not forget how much economic leadership the united states is still expected to offer not only in the realm of trade But in money in monetary policy too the us leads an education. It's got the world's greatest universities I'm privileged to teach at one of them and that is a form of leadership We've got to preserve that means not letting crazy safe space politically correct trigger warning Lunatics take over the campuses of the greatest universities and finally technology walk down promenade What are the things that really are striking this year compared with previous years? I'm seeing palantir I'm seeing facebook and I'm reminded that when it comes to technological leadership It's the only show in town and ultimately those technologies are going to transform not only the united states But the world they'll keep doing that and that's a reason. Sure. This would be cheerful. Okay, um, steven you go ahead by four quick points first Grew with michael 100 percent that global trade has really benefited the world and that is probably the way to uplift the world Bain capital was formed 30 years ago with the concept that we would bring knowledge and best business practices from consulting and actually do that by funding Venture capital companies and buying companies and growing those companies In that 30 year history, we've gone from venture capital to buying large companies in the us Expanded into europe expanded into china and the model has worked We are living proof the model work. We've taken companies from the us like jimberey and brought them into china We've taken chinese packaging companies brought them into europe and vice versa We brought we brought technology in terms of payment space into into europe as well So it does work. It does uplift people and and it's a model that america has to lead in Second big issue. I think the world and certainly america's facing is this income inequality You know the the vast Middle class is not better off than they were and you're seeing that as a result in our elections people are going for extremes Many would describe the election as a cartoon so far with people going towards the extremes Why is that it's because they're angry and in the absence of any positive momentum or cohesive government or cohesive policies People get angry and and and they go to extremes third point is is that I think people are looking for a kind of government that works I think you can summarize some of now's remarks that to say that you know history repeats itself But no one listens. So we've got to listen to the past mistakes and go forward with without doing that And and finally, uh, I think this the the salvation of the us will be The development which happened in a big way already in san francisco It happened in boston 128 of these cluster economies and that will spread to the world. So Silicon Valley has created an ecosystem a cluster economy That is I think for the short term unassailable because if you want to get something new and innovative done Companies are moving out there. Boston is doing that in biotechnology using the health sciences And now we're coming back in engineering with harvard mit And the innovation district would be coming back into boston now That should happen on a widespread basis throughout our country and then and then spread to the rest of the world And you see singapore's copying that model that that'll be the final salvation So those are the things I think we're facing last point is education. I think our university education is great The one thing that we haven't changed in 100 years is our high school k through 12 education We're letting people down on that. That's the only way ultimately close the income back gap and emerging the politicians to focus on that Uh, you know, because that is the only way to close the income gap. It's not about redistribution Although that'll be helpful in some cases, but we've really fundamentally got to lift the educational ability of the united states because We are not going to have a three dollar an hour labor anymore in the united states So we will not Lead and survive unless we fix the education system apply technology to that and have fundamental reform Okay, great kevin lust. All right. Your question was Not just this year, but in 2017 and take it from a global approach Now I happen to be an optimistic conservative. I agree with the senator growth solves a lot of problems I also agree what Winston Churchill said about america. You can always count on americans do what's right after they exhausted every other option So If we are in a global economy We have to reform our tax code Right now we're driving business out. We're not able to compete On a competitive basis special with trade. That's a global answer That's the first thing we need to do. We cannot ignore terrorism Regardless of what part of your end that's going to be a top issue. It's a top issue around here It's a top issue around the world and one simple action By terrorists can destroy an economy as well and put uncertainty in there third I like a campaign. I like a campaign about ideas I want this election to be about policy not about personalities Why because we are divided But there's a unique thing that happens in an election It's kind of like putting your hand in a bucket of water and you pull it out There's a hole right but it gets filled what's going to feel it If we have an election about policies and ideas of where to go The next person who is president who have ever elected to the senate in the house There is a mandate and a direction and a support to carry it out Lastly, I just talked to my conference I want us to think different in government. I want us to become uber Thank for a moment. I happened to be in the republican party in 2010. We took the majority In 2010 uber had three cars today. They're worth 62.5 billion dollars more than ford And what did they do they took a a large bureaucracy Listen to the consumer Gave them choice gave them accountability and gave them efficiency What if we take that same approach to government? We all talk in business about this disruption The same things happen in politics. Why don't we be bringing positive disruption to government because you know what happens at the end of the day There's more accountability and more efficiency If we simply have that debate and a tax policy I believe the next century if I was investing I'd invest in America Okay, those are great points. Thank you for setting the stage so well I'm struck Neil actually by what you said about you know people becoming Cassandra like at the end of the day And I think that that's true, but I also hear a lot of different views very bifurcated views on the u.s Depending on what our political Situation is going to look like in the next year. So I actually want to take a little poll and ask people Let's let's put aside a trump presidency and we're going to talk about that in a minute But let's assume a candidate aside from Donald trump Show of hands if you think the u.s. Is going to be in a better economic position next year than it is today Okay, so about half and half Okay, um Dare I ask trump presidency better better economic situation next year than this year Okay, all right, so a lot a lot hinges on what happens in november But um, why don't we start since we are at the world economic forum? Let's start with um With economics and how the u.s. Can lead on on sort of Reframing rebalancing the global economic system and more particularly the global financial system Neil I was also struck by your point that central bankers have had to carry a lot of load in the last few years Not just in the u.s. But everywhere they've smoothed out The the business cycle that's now changing as everybody can see we're entering an era of more volatility Um, we still you know have this sort of system where the u.s Is propping up growth in the rest of the world who knew we would be here We thought the emerging markets were going to account for that We still have debt bubbles not so much in the u.s anymore, but um, although in some parts of the corporate sector But you have a huge debt bubble in china What can the u.s do? What now eight years on from the financial crisis to actually move forward With rejiggering the financial system making it safer and more sustainable Well, I think we need to stop Assuming that the fed can do everything including be the world's Central bank that that's not its role though It has had to play it on occasion and I agree a lot with something that that kevin mccarthy said We have to set our fiscal house in order. How long have we been talking about this and not doing it I mean really tax reform is the lowest hanging fruit that there is in the united states And and I don't understand why it hasn't got done because it would deliver growth We've heard we've heard twice now that growth will solve many problems. Well, I'll give you growth Let's do something about the most complex tax code in the world and and set an example Goodness me at the moment other countries are setting the us an example as to how to do tax reform So that seems to me to be a really high priority For the next president and I think it will deliver Significant benefits in addition to addressing a really quite nasty fiscal crisis that we've been pretending had gone away And those of us who've been warning about it slightly like, you know stuck records are going to finally I guess Get some airtime again now that the cbo pointed out that oh the deficit's just about to go back up because yet again Congress has widened it as always happens It always happens and it will carry on happening and one day There is a day of reckoning because of the unfunded liabilities Of the of the healthcare And social security systems. So these are the things that need to get done Expecting the Fed to tackle those problems I think is really dangerous and we kind of are because essentially what we're saying if I may just finish the point Is there's just any amount of debt out there the world is just super leveraged Please could you central banks make sure that we don't have to pay any interest in the debt? Can we just have real interest rates at zero forever? And and the central bankers say not a problem because we actually can conjure up inflation at will leave it to us Because we all did economics and we got phd's and it's easy Actually, it turns out that it's not easy and they are not delivering the higher inflation that they said they could do Ask anybody in japan take a look at the inflation expectations as they're panning out The Fed already looks like it moved too soon in december So I think we need to redefine this debate get away from the assumption that monetary policy is the only game in town Get our fiscal house in order and then get back to some supply side reform Some of the deregulation that we there's there's nothing left in monetary policy to do by the way It may be the only game in town, but I think there's very little Kind of weapons. I want to just mind told us qe4 was just around the corner Michael you were giving a thumbs up earlier. Let's let's hear what you have to say Well, look, I just wanted to make sure this isn't intended to sound partisan But it is intended to sound historical that that six years ago seven years ago. We were losing 800,000 jobs a month Now we're creating on average 200,000 jobs a month Got 14 million new jobs in the u.s. Unemployment. It's been cut in half from 10 percent to 5 percent The deficit is the physical deficit has been cut below from 10 percent to below 3 percent Which doesn't mean we don't have more work to be done whether it's on some of those unfunded liabilities or Taxes or structural reforms and I mentioned this only because I think you're absolutely right One needs to take a look at the whole array of tools that one has out there But when you look at how the u.s. Delved the crisis with congress on a bipartisan basis versus how Europe has dealt with the crisis or how China is dealing with its challenges It just underscores how important it is to take bold action and particularly on the hard issues of structural reform To put the the growth back on the on the right track You know, we went through an incredibly painful period over The 2009 2010 period with structuring our our auto sector We structuring our financial sector our housing sector It was incredibly painful and we have much more work to do wages have not risen It's been stagnant for a long time. We now finally see a little bit of wage growth over the last year about two and a half percent But when you talk about wage inequality, um, it's not just the growth figures that matter It's how the growth, you know, ultimately benefits the uh, the the citizenry as a whole So we have a lot more work to do But what I think it's very important is we look particularly as we look at china right now China has enormous challenges and it's very important that they take them on head on including the very difficult issues of structural reform and getting to more Demand-led consumer-led balanced growth strategies so that the global economy can continue on a more sustainable path Chris, I want to talk to you for a minute about about tax and reform I mean everybody wants tax reform. Why can't we get this done? What's what's the what's the problem and then I want to hear kevin's view on this too Well two things there is broad agreement There's been a lot of work done on what tax reform would look like and what tax reform would look like that would promote competitiveness in the United States Michael referenced the hundreds of thousands of new jobs that are being created every month in the american economy I want to briefly touch on the hundreds of thousands of jobs that are waiting to be filled in the american economy specifically in the manufacturing sector We have the opportunity to be stronger and have stronger more sustained growth But in a way that also leads to wage growth and to our showing that our innovation our innovation capability Can lead the world But there are a few simple and important things we need to fix and get right in tax in trade in intellectual property In immigration that would help accelerate that there are other areas and you reference them where we can and should improve not just k12 education But the transition from high school education to work and with the hub strategy that on a bipartisan basis Got enacted in the last congress the administrations rolling out. We are learning lessons from europe We're learning from the german and swiss models about apprenticeships and about Communities that are centered around particular innovations. Why can't tax reform get done? Because there's a fundamental difference about what we should use the the new revenue or the savings for rate reduction Deficit reduction or to pay for new programs and this is a simple disagreement. You're absolutely right. Our balance sheet is fundamentally out of whack And long term we cannot be A global leading country in anything in security and trade in innovation if we don't have our balance sheet in better order Although the u.s. Has an entire i mean you could argue the u.s. Has an entitlement crisis, but not a debt crisis at least relative to other countries Um, so it's not as though we need to panic about in in every one of these areas. It's not that we are so great It's that we are less bad than everyone else Right. What is it the the mohamedal area is always saying there are the prettiest House on the ugly block and our challenge is in every one of these areas Agreement on a bipartisan basis to actually take on The practical solutions that are right in front of us. Yeah would accelerate our growth our solutions or innovation and our leadership capability My hope is that after a vigorous 2016 presidential campaign We will actually find ourselves in 2017 in a place where america finally decides to do the right thing And to celebrate compromise and to make progress in our political system I want to come back in In a minute to the hub idea because I think that actually Capsulates a lot of what you guys were talking about but kevin first. Let me get your your thoughts on tax reform And what is the lever to pull to make this happen? Um Why we don't have it. Yeah, what can we I mean how can this get done? Everybody says I give you all inside baseball Um, this is where we have a fundamental Disagreement When we say tax reform one side will say oh that means you got to raise more taxes instead of simplifying it I think everybody agreed to simplifying it and going forward Um There's two things you want to look at when you look at debt in america In the past you always looked at discretionary spending that was everything you thought government was to our salaries department of ag and everything else You know what we've taken a hold of that and we put caps on that fromers Taking a lot of credit for that. That's when we came in republicans and be able to cap that in the real challenge Is the mandatory spending that's much more than you've ever thought in the past and that's the entitlement reform We've got small entitlement reform, but if we don't capture that someone qualifies every single day You're 65. You're there. You're going forward and we're going to have a very big problem Now if we have tax reform, we're going to have an unbelievable amount of growth And if we have entitlement reform, we're going to be in a much stronger position. This is why We just came off our conference the republicans on house and senate And we believe to put out a very clear agenda now. We know this is not going to become law in 2016 But we want it debated We want the public and the country to decide where they want to go because there's no way it's going to be done Where you're just going to craft it inside of congress without having that debate And talk about it If I look at america we look a lot like we did in 1979 1980 Fromer gave you some growth inside of jobs, but our participation rate is 62.7 percent the lowest participation rate since 1978 We look like government is dysfunctional We have a weakness when we look at internationally where we are did america step back and not strong as before And we look what happened after the 1980s and what drove that was tax reform What drove that was going out and helping leadership and putting Putting other countries together with shared values And I think that's what the country and also the world is poised for They're craving leadership. I think that's a responsibility that we all have. Okay, so um earlier Someone mentioned uh, this idea of sort of I think steven. It was you localization Chris you've talked about manufacturing hubs even though we do have the issue of stagnant wages inequality We also have as we you know all of us who have traveled in the u.s. No these kind of incredibly vibrant local hubs in places like columbus or You know parts of the southwest And how a lot of times these communities knit together what we're all talking about here this fourth industrial revolution advanced manufacturing Interesting innovations around education You know rethinking high school community college All of that How can we sort of harness the power of those local models nationally and how can we leverage that economically and politically in the world? Well, michael porter has studied this extensively these cluster economies and really that starts with infrastructure, you know back in the day Hundred years ago in america. They built roads. They built railways and we benefited enormously for hundreds of years And we've really short shrifted infrastructure in this latest eight-year recession So but it comes back to what the what the government's talking about is How do you get the money to do those things when you're running deficits? And when I got out of school graduate school in 82 The national debt the number that the country owed was somewhere around a trillion dollars Now it's approaching 19 trillion And so we're in a little bit of a conundrum. It can be fixed. It's it's actually these are these are these are They're actually pretty simple solutions if we get the political will to do it And it's going to be some combination of tax increases And reform and some combination of spending cuts and reallocating that spending to an entitlement reform to other places If we get those engines going you could support the cluster economy in boston You can support the cluster economy austin San Francisco all throughout the united states and use those models the best demonstrated practices to get that out there And throw in a dose of the kind of german education reform where we're getting people into high value added vocational Tech jobs, which we haven't done well in our country and and really making making colleges universities junior colleges Targeted towards working in the knowledge economy and better jobs. That's really how to do it One more thing on the math, you know, if you look at the history of deficits, I think we've run up to 24 percent of the gdp in terms of spending And we we're collecting 21 22 percent over time the last time these numbers were in balance It's really simple if you collect 21 spend 21 year in balance was in the clint administration Right, we haven't done that since the clint administration now when you look at those numbers and percentages You can draw a line from here today at whatever it is 23 and say let's get that down to 22 increase taxes to get Up to 22 do it over six or seven years So it doesn't have a shock to the economy slowly raise interest rates back up So you have a normal kind of risk-free rate not the very low one we have right now And then I think you see the thing take off But we need the political will to make those trade-offs and do it and both parties have to come together to do that And again, that's why I think you see the anger and electorate because it's not happening They're looking for extreme solutions. You know, you want to talk about education. How do we? Well, I was thinking before we get to that I think there's a piece that we need to include right now and that's the regulation problem There's 63 different government agencies pouring out regulation It's legislations long enough God knows, but when you get to the number of words that are produced in the form of regulation It is truly Mind-blowing we're leading on regulation. Well, this is a pathology It's it's something I wrote about in a book called the great degeneration And and we have a major pathology in the american system Which I think is causing massive headwinds, particularly for small and medium-sized businesses Full disclosure unlike most academics who pontificate on the subject of economics I have in fact started and run a business and when you start and run a business in new england You discover that it's actually harder to do than it is in old england And why is that a tangle of regulation that simply bewilders you and then on top of the regulation come the lawyers to help Explain it to you and fleece you in the process this Unholy alliance between regulation and litigation is the thing that makes it really hard for small and medium-sized enterprises to grow And that has been one of the characteristic features of the whole post-crisis period real Stasis in the small and medium-sized sector. They're not adding Employees and why don't they want to because it's just a headache. Well, but they're not they're also not adding because They can't get the lending that they want in some cases because we have a financial system that isn't actually set up to service Main Street anymore, which is a whole nother issue the disconnect I have with the regulation thing is We are the most robust nation in terms of venture capital investment in the history of the earth And I think 600 billion of capital was raised last year All these funds are filled up. We had been capital, you know founding companies in our venture business every year Now we get around those regulations. Are those regulations good? No, they were dragging the economy But I don't know if that's in the 80 20 we started, you know, probably 100 different businesses And if you look at california google airbnb all these companies they started with these regulations I think it's at the I think it's important You'd be the first to acknowledge that the one area that is not heavily regulated is tech And that that of course is why it's been growing gangbusters In the last 20 years if if other sectors of the economy were as lightly regulated as silicon valley my god I'd show you a miracle economy and I do think there's a big difference there You got more cash on hand than at any other time And as I walked and listened to people at this conference That's was the one uniting thing I found They all talked about no matter what country they're from the uncertainty and the regulation making them hold back the capital Okay, I'm going to push back on that for a minute because I don't I don't know either if that's making them hold back What's making them hold back is uncertainty about demand So, uh, we would double and triple the investment in a company if we found fundamental demand for it Why don't we have fundamental demand? It's because it's because you need more global trade. You need more Transportability of money. You need more free markets. You need you need better Legal systems in china and india and and the emerging markets You know, there's been a pullback in the emerging markets precisely because I think we've gotten to the edge of the envelope to say to get really big in those markets You need much more A legal system that is fair and outside legal system that gets you results So we've done well in those countries because we can kind of play by the rules there now But if they want to be big, you know growing they've got to improve those systems Notice the phrase get around the regulation that you just heard there I mean that that's I think a very revealing turn of phrase It's hard to get around the regulation if you're a small business And I'm not talking here about small businesses that grow to be ubers I'm talking about the small businesses of main street Getting around the regulation is really difficult if you don't have a compliance department Guess what if you're a really small business you don't If you're trying to start a new bank forget it The big boys already have it covered because they have the regulation the compliance department And in that sense we are let's face it. We're a big business conference Small business is not terribly well represented at Davos just a hunch, but I would say that If you think if you look at what it's like to run up just a small business But maybe a dozen employees that studies are absolutely clear The regulatory burden is much higher in relative terms on those little companies And I do think we need to address that I think you'd also address some of the anger that people feel in main street today Absolutely, I mean and you know one of the reasons that Community banks and you know some of the regulation exists that you're talking about is because we have a system of money politics That is totally out of control. We need another panel for that so But Steven I want to get to something that you touched on which seems really important that We're at a change moment in terms of global institutions The rules are changing in many cases the rules aren't being followed There are new rules that need to be developed around legal systems IP Privacy Data, you know, how can the us particularly at a time when we haven't been so great about Leading and institutionally, how can we kind of get in this game and make sure that That our agenda that the u.s. Agenda is you know put forward Well, I think it's a huge it's a very complex question It's a huge huge issue if you talk to the business community and the companies that we have One of the number one issues is the technology being transported the patent technology takes years to build being transported to other countries So Whereas we might have had a cold war before with military people fighting, you know We really have a war cyber war going on right now To take those products and technologies that have been invested in in many countries not in the u.s Other countries as well that are protected in those countries and then have them, you know show up in the emerging markets The exact same products, you know piggybacking off that technology So again, I think michael should speak to this if you had a free and fair global trading system And you had some some some clear guidelines around that of what you couldn't do and couldn't do and patent protections I think it would benefit everybody even the countries that now think they're not benefited by that They would benefit because they would develop a robust Innovation economy because why does someone you know work in a garage 100 hours a week and maybe fail six times to make a Product if you make that product and somebody can copy it the next day So I think michael would have a great perspective on this Why don't you speak to the challenges? I think steven's absolutely right and one thing we've been trying to do TPP is a good example of this is that it's got rules against forced transfer of of technology Which has been one of the new forms of protection of them so to speak. I mean, it's uh, it's sort of uh Government policy to force countries to move their technology move their ip Um, share their code in order as a way of of circumventing Uh, intellectual property rights is the first trade agreement to have disciplines on cyber Issues and the theft of trade secrets, which senator coons has been so involved in theft of trade secrets, including through Cyber means and to strengthen the enforcement of Intellectual property rights anything a country like china, which is in part of tpp And this has been a major focus of our effort with them To try and get them to commit not to Force companies to transfer their ip or their technology as a condition of entry into their market And it's something we're working through in the context of some of our negotiations With them too, but I think we have to be very vigilant about this It's there as tariffs have come down around the world There have been all sorts of new forms of protectionism and one form is local content requirements Now beyond government procurement you've got to build a product in a country in order to serve that market And we get it the countries want to have manufacturing in their country. We want it other countries want it It's a legitimate public policy objective But by saying you can't enter our market unless you move your production here You know, you're going to end up building walls around these various markets and that's going to end up producing less innovation rather than more Okay, we've only got about 15 minutes left. So I want to open up the floor now to questions over here I think we've got a couple of mics folks can Raise their hands and we'll get someone to you Nicholas Nicolas Mariscal from Mexico You talk a lot about uh, all over the world know what's going on But you never talk about what's going south of the border, you know Now mr. Trump is talking a lot and he's doing a lot of big messes down here on the contrary But something that worries me very much is the arms Most of our killing and all the arms coming 95 percent of all the arms are coming from the us What are your thoughts on that? When is the us going to do something related to arm control or I would like just like to hear that and also about immigration about all Our mexicans on the other side that they just wanted to send it back here to to mexicas or worlds Kevin and maybe chris. Do you want to say to those points? There is a challenge and Just recently mexico captured What was his chapeau? There's early reports that they may have had some weapons from fast and furious In process not sure yet. We just got some of that through have to take a look at that America has a strong second amendment I I I believe in our second amendment from the process. I still believe Um, if we look and want to talk about south of the border, I think we should look at the whole continent and canada as well I think north america can easily be energy independent I think the changing of your constitution your ability to open up your fields I know where the price of oil is today, but you know oil demand has actually increased last year This year over last year and then some yeah, we're having overproduction, but that's a that's a big growth That's going to come back. That's going to be a shared value I think we have a lot of shared values throughout all of north america if we work closer together I don't think you're going to have this immigration question But i'm one who believes we have a broken immigration system And america is a country of immigrants and we got to have a system that actually works in the process And this isn't something that we should just make politics about we should actually sit down and solve it because I said with the senator here. I think it's crazy in america as somebody comes and gets an engineering degree And we tell them to go to another country and compete against us There's an easy place that I think we could have very secure But I'll be the first one to tell you I want mexico to have secure borders and I want america to have secure borders at the same time And I think when you start with that basis of making sure the borders are secure I think you'll have a very open discussion about immigration in america christy You want to one of our challenges in that conversation is How much is enough? We are spending more on border security than on every other federal law enforcement function combined And and I frankly was deeply disappointed that a bipartisan bill That came out of the senate was never taken up by the haps that in my view would have allowed for A balanced path for comprehensive immigration reform now. There's different opinions on what the right path is forward But I agree that we should have legislation that allows everyone who comes to the united states to pursue higher education To have an opportunity to stay in the united states and to start a business and to contribute But I also think that there are some humanitarian considerations about how Those who seek to emigrate to the united states have been treated And there's been some very regrettable Very frankly, nativist statements made in the current presidential campaign that I think don't respect The best values of either of our political parties or of our country We have to find a way to be genuine partners with mexico with canada with our hemisphere And as the majority leader suggests there are things we can do Better stronger together, but I think it begins by giving real comprehensive immigration reform a chance Taking it up debating it and adopting it and not Suggesting that there's more that needs to be done first before we have that debate. Okay. Um, the gentleman here with the mic Congratulations to all. Thank you Ambassador from and I wanted to congratulate you on the 12 nation tpp. I think it's job. Well done difficult A lot of work. I wanted to ask Why china did not join and the second question is when will it be approved by the united states congress? Thank you Let's see we've got your crystal ball right under here Yeah, you know when we launched tpp It's a fairly diverse set of countries there around the table You have some of the most advanced in countries in the world u.s. Canada Japan australia you have some of the least developed countries vietnam Peru and The goal was to create a high standard agreement for the region and I commend the other 11 countries for All working together to come up with a very high standard agreement there I think with regard to china china is is pursuing its own course. It's got its own regional agreement that it's pursuing called rsep RCEp it's got 16 countries. It's a very different standard than tpp But that's the direction they've gone down What we've done bilaterally as we've had conversations with the chinese is to say let's See what we can do through a bilateral investment treaty to help encourage china to adopt the kind of reforms that it needs to adopt to Make sure that its market is liberalized and open up and that's A step towards a high standard agreement, but that's where our focus has been and in terms of congress i'll defer to The majority leader, but you know, we're working with congressional leadership and with the committee Leadership in both of these gentlemen very active In in supporting the trade agenda over over the last year To to make sure members of congress are Know what's in the agreement address their concerns and address their questions And to work to find the best window the one that's most conducive for getting it approved and I'm I'm confident and optimistic that we'll get that done this year I'll come. I just want to quickly though ask kevin. Do you want to respond to Whether congress is going to pass this and as soon as we have the votes Yeah, okay Neil you wanted to make I do I do want to compliment Trade representative he's worked very close with congress on all sides of the issue getting tpa was not easy And we had not had that for quite some time and in the time period that america did not have trade promotion authority There were a hundred trade agreements and america was part of zero So it was very important to get that done and now the work that he's gone It is a time where we're now looking at it members are looking through it. He's on the hill Explaining where it is, but our hope is to get that done this year Okay, neil you wanted to make a quick point. Is it true that the legislation is about three and a half feet high If you print it out we live in the digital economy. I don't know Okay, maybe It's just one simple little policy Slap down here with the digital version. You can do a word count and I believe it runs into millions of words All right. Okay. We're gonna we're gonna move on to the next question the gentleman here with the point Thank you Washington ball from china Actually president obama still has one year to go as the president It's interesting that all the all the penalties. I haven't mentioned this so putting yourself in his shoes What will his agenda look like for 2016 and what are the priorities? Thank you Michael do you want to well? There he's got a series of priors and you're absolutely right as the president said after the the last midterm election he said We're entering the fourth quarter and lots of things happen in the fourth quarter and we've shown over the last year Working very closely with congress and congress Uh produced a number of very important pieces of legislation near the end of last year that we can get things done Uh, certainly getting tpp done this year as a priority He's talked about criminal justice reform and he's talked with members of congress about that And as you saw on the state of the union and some of the subsequent messages everything from trying to move Minimum wage forward to a number of other issues to make sure that the us Remains and a leader in the global economy remains competitive And that the that we're dealing with some of the difficult economic issues including issues like wage stagnation Okay, uh question over here Can we get a mic to the lady here in the second row? Hi, my name is Yasmin shahata. I'm from egypt. I just wanted to ask a question regarding your policy in the middle east as in egyptian what we see is whether you're getting Involved with the force or by supporting certain governments It always leads stuff for us destabilization negative economy We always feel the effects and now there's a new thing Frontrunner that's openly racist Against muslims as a republican. I'd love to hear your thought about that Is it just going to keep getting worse? For arabs in the middle east and in the us with the way us foreign policies going Okay, great question, uh kevin. Do you want to start and then others should try? Yeah, but it's interesting. She thought you were republican Oh, okay One thing you have to know and I want everybody in the audience to know Because one person is in a party and says a certain view does not mean that everybody in the party has the same view and There is an interesting thing inside the debate Um, some candidate gets more airtime than others Um, I would listen to them all Uh, I'm proud of my party. My party is a party of lincoln My party has displayed many times in the basis and if you watched our speaker of the house Um, he stood up the day that something was said and said that's not a conservative view That's not the view of the party and so it's unfortunate. If you weren't able to see that Um We're individuals and and have uh beliefs of where we go when it comes to the middle east I'm concerned about the challenges of where middle east is happening because I'm concerned with the re-entrance of russia Into syria. Um, they had not been a player inside the middle east I think that's going to transform and change where it's at I think there's some instability there and this is where I think growth would make a fundamental difference To the economies as well and as an american I want to support Those countries have shared values that believe in democracy and believe in individual freedoms and believe in human rights And uh, I will stand up with any muslim country that believes that Which government do you speak of? We may have a difference of opinion. Chris, do you want to jump in on this? I'll just say you asked about sort of the path forward in the middle east and and america's position And the majority leader cited his concerns about russia. I'll just simply add concerns about iran I think iran is a profoundly destabilizing risky force in the region and while the nuclear agreement has Delayed their nuclear ambitions for some time. I think we will need to be actively engaged in pushing back against their support For terrorism and some of their regional proxies in the united states, egyptian relationship There is tension between the united states and egypt today In no small part because both the administration and some members of congress Really challenged the transition and how it happened And has pressed for respect for human rights and democracy in egypt We also have to be mindful of the tremendous destabilization in the region that's coming from daesh And the collapse of syria And so as we look at what is the 2016 agenda For president obama and for congress it is my real hope that congress will do its job and authorize the war Against daesh, which we have not done And that the united states will be more successful in leading a regional coalition To really constrain and end this violent extremist terrorist movement that is creating so much destabilization and difficulty last Statements by presidential candidates That are that are hateful and disrespectful towards muslims do not reflect American values of either party Much of my family was republican historically and i was raised to be proud of The republican party's role in our civil rights movement in the united states It is my hope that at some point all candidates republican and democrat Will address this issue and speak in a constructive and positive way Nothing fuels the message of hate and separation that daesh is trying to spread More than having an american presidential candidate reinforce it and suggest that somehow We are not the welcoming tolerant inclusive country that we are So it is my hope that our presidential campaign will ultimately address this I also like that from traveling the country extensively If you go to american cities you go to new york city You go to boston you go to san francisco You go to chicago these are incredibly integrated cities with all face religions working together It works incredibly well it is It's reprehensible that a small minority is getting that message out there It is not representative of life in america and unfortunately You know for political gain you can create headlines by saying inflammatory things But when you walk the streets of new york or boston or austin for that matter You have an incredibly great society that's integrated and the whole basis of society we're all immigrants So my grandfather was an immigrant we're all immigrants And letting everybody flower and bloom and do what they want is the kind of social contract of america So so it's unfortunate that that's out there That's an extreme inflammatory thing to appeal to a small small segment of population It happened with african-americans, you know we're trying to get rid of that And i think the vast majority americans every day wake up saying you know we got to stop that Okay neil i know you have thoughts on this I yield to no one in my contempt for a candidate who's been playing a xenophobic card from day one of his campaign It began with mexicans. It moved on to the chinese and the attack on On muslims in the wake of the syrian refugee crisis was just the latest installment But there's a couple of points i'd like to make with respect to egypt and your your second question The democratization of the middle east was a project of the bush administration President obama judged it to have gone pretty badly wrong And decided that was not something that he would pursue remember the cairo speech in 2009 But when your country experienced a revolution as part of the missnamed arab spring the president really didn't have a strategy He went along with the muslim brotherhood government until it was overthrown not by the united states By the egyptian people you had two revolutions in a very short space of time Let's not make everything that happens in the middle east the responsibility of the united states I'm the last person to say that the president did a great job of handling the arab spring But you can see what happened. There was a kind of trial and error approach Well, we'll do a little bit of intervention in libya. Not the full iraq. We'll just get rid of qaddafi. That's turned out really well libya's disintegrated And confronted with events in egypt the president basically said what the crowd in tarir Square says is fine by me if the crowd says muslim brotherhood Okay, if the crowd says cc. Okay, there was no major intervention And I don't think it would have been welcome if there had been any major american intervention in events in your country Let me add one last point The president has had to evolve a strategy since these events And I think it has evolved in the direction of an attempt to create a balance of power Between the sunni and shiai powers in the region. That is the essence Of the iran deal if you look carefully at what the president has said about it Look at what he said to david remnick in january 2014 He sees his goal as being to create an equilibrium in the region by tilting slightly towards iran And away from saudi arabia and other traditional allies in the region. I think that's the strategy I think it's going terribly wrong because it doesn't necessarily produce balance It can equally well produce an arms race and an escalating sectarian conflict That's unfortunately going to be his legacy to the next president Okay, well, um, I wish that we didn't have to stop on this note But we're not going to solve the sectarian conflict in this panel today. Um, we are at seven o'clock I want to just thank all the panelists for being here. Thank all of you. Um, and Uh, hopefully we'll have more solutions and a little more optimism next year for this panel. Cheers