 Good evening. Welcome to this plenary session of the World Economic Forum. The subject is the U.S. economic outlook, particularly in the background of recent fiscal developments. I'm Gerry Baker. I'm the editor-in-chief of the Wall Street Journal. Delighted to be joined by Jack Lew, Secretary of the U.S. Treasury. Mr. Secretary, let me start by asking you, since we are talking about the fiscal background, yesterday you sent a pretty aggressive warning letter again to Congress about the need to act on the debt ceiling. Can you just fill us in on what's going on? Because we sort of thought this Icelandic saga was over. The last few years we had the 2011 debt ceiling crisis, we had the fiscal cliff, we had the government shut down last year. We kind of thought the last couple of months that we were past that, Congress has just passed a two-year budget finally. We're not going back into another round of brinkmanship over the debt ceiling, are we? Well, it's good to be here with you, Gerry, and I certainly hope that we are not about to enter another round of brinksmanship. There's no reason for it. Let me go back and kind of say where we are, what I said in the letter yesterday. Congress last year passed legislation extending the debt limit, our borrowing authority, till February 7th. After February 7th, we have some measures we can take, they've been called extraordinary measures, but because they now happen almost every time the debt limit runs out, they don't feel quite extraordinary as they once did. And at different times of the year, those measures have a different length of impact. Because we're now at a time of year when people file for their tax refunds and we have a lot of checks going out. And it's a good ways down the road that people file and send in their taxes in April. The extraordinary measures don't last as long as they would in the fall or in other times of the year. It's also some of the measures themselves have different value at different time of the year. We don't have a lot of some transactions between trust funds that take place in June. You can't move them in January or February. So the reality is we track these numbers closely. It looks more likely to us that the extraordinary measures will run out at the end of February. I had indicated to Congress a few weeks ago, at the end of the year, that it was the end of February or early March. All I did in the letter yesterday was clarify that based on what we now know, it's more likely the end of February. My policy is to keep Congress fully informed. Is Congress's responsibility to raise the debt limit? You know, the budget agreement you described, it actually made the policy, it put in place the spending policy that we now have to finance. There's really no choice but to raise the borrowing authority to accommodate the policies that have been enacted. Otherwise, it would be going back to revisit what Congress just agreed to. So I think that as a practical matter, there's a necessity for Congress to act. It is Congress's responsibility, and we owe them to keep them fully informed, which is what my letter does. And I hope that they can do it quickly and without the kind of drama that we saw in October, because that kind of self-inflicted wound hurts the U.S. and the global economy for no reason. So just to be clear, there's no gamesmanship here, and there's no room for maneuver here. At the end of February, U.S. Treasury runs into the debt ceiling, runs out of borrowing authority, no extraordinary measures, then you've got to decide that decision. Who do you stop paying? Well, at that point, you end up with whatever amount of cash you have and no more borrowing authority, and that's not an acceptable place to be because it puts in question the ability of the government to meet its obligations. And, you know, since 1789, it's been a rock-solid guarantee that the United States government meets its obligations on time. Now, I know you and the President consistently ask for, and indeed previous Presidents have, too, ask for a clean debt ceiling increase, as they say. That is a straight increase in the total amount of borrowing authority. Increasingly, realistically, that's very, very hard to come by, right? So you must be expecting—you're not really expecting Republicans in the House to agree to a clean debt ceiling increase. Yeah, Jerry, we've been very clear with the Congress. The President will not negotiate with the threat of a default that Congress has a responsibility to raise the debt limit. I think Congress understands the President's position. You know, I've had conversations with leaders. I know they understand it. And we now have to wait for the Congress to act. I would urge them to act sooner rather than later. And if they have to go through some rounds of debate, better get it started than to wait till the end. But what kinds of things might—are you expecting? I mean, you know, if they said, if the Republicans in particular in the House are the key issue here, obviously, if they came to you and said, well, you know, we'll give you another whatever it is you need on the debt ceiling, but we've really got to have some action on corporate tax reform or on unemployment insurance. I mean, what's the answer? Not negotiating means not negotiating. So I'm not going to do it indirectly if I won't do it directly. I mean, I'm happy to talk about corporate tax reform and business tax reform. We have urged Congress to work on business tax reform. President laid down in July a frame where I think there is the possibility of there being a bipartisan approach that could work where we lower our statutory tax rates, get rid of some of the deductions that would flatten the system, and use some of the one-time revenue to invest in infrastructure and help build our economy for the future. So we very much look forward to a discussion with Congress on that. But on the debt limit, we've made clear that it is not a lever that can extract something from the White House. As you said, you can use some extraordinary measures to roll over for a few days, but these other measures that some people have sometimes talked about, dramatic, colorful ones, you know, minting the trillion-dollar coin or whatever, that's off the table. I think we've been through this enough times that people have looked at these ideas over and over again, and what this requires is congressional action. There is no magic. The rest of the world, I think, watches this spectacle in Washington. It seems every six months now, and thinks, what on earth is going on? This is the most powerful country in the world, the biggest debtor in the world, as it happens too. But, you know, obviously the most important economy in the world, democracy, thriving and long-standing democracy, why on earth do you go through this? Why not just eliminate the debt ceiling? So I think that the time is overdue for a discussion about the debt limit as a mechanism. If, as I was saying earlier, the policies you make, set in motion how much you spend and how much you raise in taxes, the difference is what you need to borrow. And to pretend that you can make the decision on policy at the back end doesn't make any sense. So there have been discussions over the years about how to reform the debt limit. I would welcome a discussion on that. At the moment my concern is actually that Congress do exactly what you said at the outset, which is act in a way that avoids creating a false crisis. There is no economic crisis. This is simply a politically difficult thing to do. You know, I talk to people around the world, and they do scratch their heads a little bit about this. Very few countries have a debt limit. In most countries, the act of committing funds and committing to a borrowing strategy are connected. There are a few countries that have debt limits. Some are stepping away from it because of the same challenges that we face. I hope we can have a serious discussion. But for right now, we have an economy that's doing well. We ended the year with a strong economy. We have a good first quarter, I believe, underway. There's every reason to believe that this is going to be economically a good year for the United States. And if you look at the IMF report for the global economy, what we don't need is to have a lot of noise around something that should be more of a ministerial act, creating headwinds that offset the natural tailwinds that are occurring because the economy is doing better. Let's talk about those tailwinds in the broader economic outlook. You mentioned there's a growing optimism. What do you think? You said you're going to get stronger growth this year. You think you're going to get 3% growth in this 2014? I'm always reluctant to use specific numbers in making predictions, but you look at last year and we were in the twos, but we had about 1.5% of fiscal drag from spending cuts, from other tax increases, things that policies that were kicking in, the payroll tax was rolling off. And we don't have those headwinds this year. So we have a core economy continuing to show broad strength. We have the absence of the resistance that comes from fiscal consolidation. Confidence as measured by all of the surveys is strong. I really think that there's every reason to be hopeful that we'll do well this year. And I think it's perfectly reasonable to be looking at breaking through three, but I'm not going to sit here and predict where we'll end up. We're redefining well, aren't we? We're kind of defining success downwards these days. I mean, it's pretty remarkable that the U.S. has not had a single calendar year of growth above 3% since before 2005. That's the longest period I think the U.S. has gone without that kind of growth. We've seen obviously a very deep recession and a very weak recovery where we normally expect to see stronger recoveries. And we're all getting kind of incredibly excited and bullish about the fact that we might get 3% growth this year, but we might have an unemployment rate if you add back in those people who've dropped out of the labor force, which is still really around 10%. What's wrong here? There is clearly granted things are getting better, but the U.S. economy is not performing how we used to see it before. Look, I think if you look at how, if the U.S. were growing at 3% or more a year for a number of years, you'd start seeing a serious dent in the kind of built-up need for jobs because of the deep recession. It's very hard at 2% to make up for the lost grant. You'd start seeing that at 3% in a more serious way. You know, I talk to my colleagues in Europe and I tell them that we're in the twos and we think it's reasonable to talk about 3%. They look at us as if they can't even dream of breaking through a barrier that's like 1%. You'd rather have your problems than that. So they think we have a high-class problem thinking how do we get to 3%. We feel like our work is not yet done. I mean, we're not satisfied with an economy until we're creating enough jobs so that everyone who wants to work can get a job and can have a good middle-class lifestyle. We don't think it's okay to work full-time and be below poverty. There are things going on in the economy that are real structural changes that in addition to the recovery from the recession, the problems we have to deal with didn't all pop into existence in 2008, but the recession really exaggerated the impact and hopefully has focused attention so that as we go through the recovery, we can also focus on building an economy that for the next 10, 20 years is able to generate more good middle-class jobs. You know, at 3% plus growth, it would feel a lot better than at 2%. But until every American who wants a job has a job, we'll have work to do. So what is the structure? Do you buy this secular stagnation debate that there are either structural problems or fundamental long-standing demand efficiency problems in the economy? I mean, it is very striking. The proportion of Americans who are working is the lowest it's been, I think, in 40 years. You have this weakness in growth. You haven't really had strong growth without artificial monetary or fiscal stimulus for a decade or more. I mean, what is wrong? What's your diagnosis of the U.S. economy? Look, I think it's complicated. It's not a simple answer. You know, I think we've gone through a period of great change in terms of the kinds of jobs people have. You go to any manufacturing facility and you can see it. The kinds of work people are doing is different. But there are still good jobs to be had. You know, every computer app has a programmer. Every production line that's automated has technology and equipment behind it that high-skilled jobs are required to produce. You know, every fancy system requires welders and people who make good middle-class livings. We need more economic activity. We also need to train people to have the skills to do it. I often talk to CEOs in the United States and they are always asking the question, can we be sure we'll have the skilled workers we need? That's our job. One of the jobs of government is to make sure we provide education and training so that people have the skills that have jobs in the marketplace. You know, we have millions of unfilled jobs in the United States while we have high unemployment. Part of it is a skills gap. So we have more work to do to close that. I also think if you look, I don't agree with the arithmetic you did in terms of kind of adding the unemployment rate and people who have fallen out of the workforce because it's more complicated than that. There are some people who have retired. There are some demographics. There are certainly some discouraged workers. One of the things that we have focused on is we've got to really undo the stigma that's attached to being out of the workforce for a long period of time. We've had a deep recession. There are young people whose entry into the workforce was delayed. We've got experienced workers who were separated from their job and have to re-enter in a different job. It can't be that if you're out of work for 18 months, you become damaged goods and you have nowhere to go. And the president will be convening CEOs to have this conversation with business people as well as within government because it's not just a governmental solution. There has to be across the economy the notion that we have open jobs, we have people looking for work and we need to match them together. And if there are skill gaps, we know how to close those skill gaps. I'm actually optimistic that we can deal with these issues, but we have to talk about them. In the short run, you know, there are also questions, you know, we've had a debate in Washington about whether or not to extend long-term unemployment benefits. At a time when we still have lingering high long-term unemployment rates, at a time when the economy is doing much better, it's still the right thing to do to make sure that people who are looking for work can also get the support of being able to put food on the table while they're looking for work. Anyone who wants to work, you know, and is looking for work who's been affected by the recession and the way people have, should get a little bit more time before they're cut off the benefits and we're going to work hard to restore them. Let's talk briefly in the time we have about the financial system. First of all, in the U.S., your administration has been pretty active in pursuing financial sector reform. We've had, obviously, Dodd-Frank Act. We've had a pretty aggressive enforcement approach from the government agencies, whether it be over the miss-selling of mortgage securities and others. Are you now satisfied with where the U.S. financial system is after, you know, five years on from the crisis with this new regulatory regime in place? Well, I think there is no question that the U.S. financial system is in a much better place now than it was in 2008. We have much deeper capital. We have resolutions, processes in place where if a bank or financial institution fails, it is going to be able to work out its own problems and not come to taxpayers for relief. For the largest firms, we have stress tests. We have a single point of entry. We have now put the Volcker rule in place to limit the amount of risk that firms take in an area that was a problem. And, yeah, if I may, the system is now dominated even more than it was before by huge banks, by these Levites. I think the reality is that when financial institutions failed in 2008, the end result was the pieces had to be picked up and institutions got larger. But I think that the cost of being a large institution is much higher because of the capital requirements and other new provisions that have been put in place. But I've tried to make very clear, as I've looked at this, that we still have challenges ahead. We're not completely done in the United States implementing, but we've made great progress. It's been a real priority of mine in my year at the Treasury Department to get... It's not acceptable for hard things to just lay unfinished. You have to tackle them and work through, whether it's the Volcker rule or capital requirements, and you have to be clear and institutions have to know what requirements they're dealing with. I think if you look at the kind of global financial regulatory situation, we still have work to do because cross-border resolution is a big, big issue. When laymen collapsed, the thing that made it become an international financial crisis was the inability to see all of the positions that were affected by it, and the cascading dominoes that started to fall, and whether they'd be covered or they wouldn't be covered. And we're still a long way off from having clarity of cross-border resolution, in the case of a failed financial institution. Real progress has been made. I think just in these last few months, Europe has made progress, but it still has more work to do. And we've got other issues like that that I think this year will use the G20 as a forum to really draw attention to. In the area of non-traditional banking, sometimes called shadow banking, it's been an issue that we've focused a lot on, and I know regulators and policymakers around the world have been looking at it, from different perspectives, because there are different ways that non-regulated banking has evolved in different places. But in the United States, we're taking a hard look at money market funds, and the SEC has a rulemaking underway to look at what can be done there in the kind of overnight market called Tri-Party Repo. The Fed has been looking at it and taking action. We still have more work to do, but I think it's important for us to have an international conversation about this as well, because there are global connections here that are very real, and if you had a collapse of one of these kind of non-bank financial institutions, it could just as easily cause a global problem. And that's why we've taken action in the United States, and there are much lower balances in these kinds of accounts than there were at the time of the financial crisis. So again, I think great progress since 2008, but I can't say the job is completed. I can't say that great progress will continue to be made, and we're going to focus on the international piece going forward. Let me very quickly ask you about another international aspect. You are the Treasury responsible for the enforcement of sanctions, and President Rouhani has been here today. We've got a deal in place. We've got a nuclear deal in place. The clock has started ticking on the six-month time period. There's a lot of concern among some people, critics back home, particularly in the U.S. Congress, that this sanctions regime is going to unravel now, that you've granted these sanctions concessions. It's very, very hard to put that genie back in the bottle. Are you confident that whatever happens over the course in six months' time, the measures that were taken to ensure that Iran does not pursue a nuclear security strategy are going to hold? I think it's very important to take a step back and look at what's in this joint plan, which is the interim agreement. It is very, very specific sanctions relief and very incremental measured sanctions relief against very real changes in Iran's policy in terms of how it's proceeding with the nuclear program and actually rolling back parts of its nuclear program. You know, on the scale of the sanctions impact on Iran, it's a very small fraction of the impact that this measured relief will grant. At the same time, the core architecture remains in place of the sanctions. The financial sanctions and the oil sanctions remain in effect. Each year, the impact of the sanctions that go into effect is far greater than the one-time relief that was in the joint plan. I've been very clear with businesses, both in the United States and internationally, that they should be very clear-headed as they think about going and doing business in Iran now because the sanctions regime has not been removed. The oil sanctions, the financial sanctions are in place and we will continue to enforce it and we will monitor it with their violations. The reason for the sanctions is to bring Iran to the table. I think the sanctions work to bring Iran to the table. The modest relief in exchange for the interim steps, it was appropriate. Now the question is get on with the serious hard business of the final negotiation. It is way too early to predict the outcome of that, but the only real significant relief from sanctions would have to be connected to a real change in policy that makes it no longer the case that there's a possibility of Iran developing a nuclear weapon. One minute, just time for one last question. I'm going to ask you, you've been at the Treasury for a year and the Secretary of the Treasury for a year. What's the most important thing you've learned in the course of the year as Secretary of the Treasury? Well, I think anyone who sits where I sit learns a lot every day and has a kind of global nature of what we do. I understood it from a distance, but when you're in the role you experience it differently and that has a very positive aspect which is much if not most of the world wants the United States out there as a strong player on the field with clarity. So things like the noise in Washington, it's more than a domestic issue. It is really a question of international confidence and international stability. And in areas where we take leadership the world looks to us to set a standard. And while I knew that before it is a different thing to experience it and to play that role and it's a great honor. Mr. Secretary, thank you very much. Please join me in thanking very much Secretary Treasury Secretary. Thank you very much, Mr. Secretary. Thank you all for being here. You heard from the Secretary an overview particularly of the fiscal situation in Washington. As I said we have seemed to have gone through this movie many times over the last few years in Washington. I think the level of optimism that actually we will avoid either the crisis of summer of 2011 when for a moment it looked like the US was in danger of defaulting briefly or indeed the problems we got into last year when the US Government was actually shut down for a few months. It looks like people are pretty optimistic that we're going to lose that. But let's move on to we're going to discuss the broader some broader aspects of US policy, particularly the international aspects of US economic policy. I'm going to be joined now by Penny Pritzker, the Secretary of Commerce and by Mike Froman, the US Trade Representative. So please join me in welcoming them to the stage. Thank you. Thanks again. Thank you for joining us. Let me start with you if I may, Madam Secretary. We you've probably heard Jack Lu and I talking about the outlook for the economy. One of the things that people are very concerned about is employment and the fact that for whatever reason, whether it's a result of the continuing effects of the financial crisis whether there's some structural change going on in the US economy and other economies actually too the US is just not, the economies are just not generating enough jobs. You know, we had even with a reasonably strong performance in 2013 job growth payroll growth, non-farm payrolls averaging 180,000 a month increase. That's not by historic standards particularly strong. As I said, we have a lower proportion of the workforce in the population in work than the US has had in 40 years. What in your view can we do first of all, does it matter and as the Secretary said, maybe we need to get used to the idea that not everybody is going to be in work. But what can we do, what can you do especially in your role working with businesses to create an environment in which we can get more jobs? Well, first of all, of course it matters. We have too many people in America who want jobs who can't find jobs but we also have a lot of, we have 4 million jobs that are open that are unfilled. So there's a lot of things that we can do. First thing that we're doing is we're really looking at companies about exports. You know, for every billion dollars of additional export, there's 5,000 new jobs created. And so at the Department of Commerce we have our export assistance centers that help companies export foreign commercial service in country that helps companies get their products into the markets that we deem together that make sense. There's also a big effort, a new effort that the President has started called SelectUSA Foreign Direct Investment where we're really welcoming companies and helping them at the federal level to figure out where they want to be in the United States. We just had a summit at the end of October. 500 companies came from 60 countries. We had 1,300 participants and we also had 200 economic development officers. So get the right people in the room and deals get done. We had 1,000 people who wanted to come that we were oversold. So very much demand to figure out how to invest in the United States by foreign companies. The third thing we can do for the first time, we've made skills and workforce development a priority for the Department of Commerce. And one of the things we know is that training, we can no longer afford, as my friend the Secretary of Labor would say, we can no longer afford to train and pray. We've got to get the business community involved in making sure that the curricula and the content of training is aimed at the jobs that exist and the jobs that will exist. And that's a big cultural change that needs to go on where really workforce training is industry led as opposed to just training led, if you will. So there's a lot of things that we can be doing. One of the things you hear all the time from corporate executives, former corporate executives yourself, is one thing you could do that would help is tax reform. Particularly reform of the very American let's say very singular tax structure and the treatment particularly of the taxation of profits earned overseas which does seem to penalize companies does penalize companies if they bring money back to the United States to invest in businesses in the United States. You know this is a longstanding debate that's gone on. Everybody seems to be in favor of it. The President has talked in favor of it. Republicans in Congress are in favor. Democrats in Congress in favor. We don't seem to be achieving it. Why can't we break through this logjam? Well I think that corporate tax reform continues to be a high priority, but I think there's a few things we have to get done first. Immigration reform being one which also would have a huge economic benefit and frankly would also create jobs in America. So I think it's a question of we have to move through the agenda first. So corporate America has made a big case that by lowering the tax rate that it will increase their investment in the United States and increase job creation and the President endorses that. So I think that it's a question of how much are we going to get through Congress this year and what are the priorities. Not the least of which is let me say trade promotion authority which is a big priority that Mike and I are working on together. Which brings this very nicely to Ambassador Froman. Let's talk about trade. Let's talk about trade promotion authority. Congress is still just right now debating this. Can you explain to us what the administration's position, what your position is as to what the Congress needs to do and how that would affect the President's ability to actually go and negotiate some of these very important trade deals you're trying to get. So trade promotion authority is the mechanism by which Congress gives us our marching orders, tells us what our negotiating objectives are, how to work with Congress during the negotiation and then what the process is by which they'll approve or disapprove an agreement once we're done negotiating with it. The last of trade promotion authority bill expired in 2007 and so we think it's time for Congress to update their role in trade by telling us again what our negotiating objectives would be and what the process should be. The last couple weeks a bill has been introduced there's been a hearing and the administration, the President's made clear we'd like to get trade promotion authority and want to have as broad bipartisan support for it as possible. In the absence of trade promotion authority we've been working with Congress under the procedures that had already expired so we consult constantly with Congress about our trade negotiations. We've had over 1100 briefings on TPP alone with Congress and going through every proposal and every chapter with our committees of jurisdiction. So we work hand in glove with Congress but we think this TPA bill gives people an opportunity, gives Congress an opportunity to redefine how it wants to see trade done and what role it wants to play in that process. But this is an issue that cuts across party lines, right? I mean you said you talked about bipartisan pros but there's also bipartisan opposition to doing the kind of things, some of the things that you want to do there's powerful labor interests on the Democratic side and there's kind of increasing among some Republicans very strong opposition to what they regard as unequal unfair trade packs. How do you what's the likely outlines of the kind of promotion authority that you're expecting to get? Well, I think there's been a lot of progress over the last year in defining what the negotiating objectives should be and it's not just the old objectives of old trade agreements but very importantly it talks about labor standards, environmental standards striking the making sure we're both promoting innovation and assuring access to affordable medicines by poor people in developing countries and I think this process is now underway in Congress where people will look at those negotiating objectives decide what further steps need to be taken to define them and very importantly a lot of the debate that we hear is about the consultation process and what role Congress should play in that process and I think that's a very legitimate discussion to be had and where Congress should help us define and should help define for us what the process is they want to go through. Jerry, just jumping in here a little bit, you know when I first was sworn in I went around the country and talked to hundreds of business leaders the number one thing that they wanted was trade agreements whether they were a bicycle manufacturer or a Fortune 50 company they understood that so much of supply chain now is global that it's necessary for them to be able to produce their goods and even if it's selling just to the domestic market sometimes the inputs come from other places in the world and so this is a high priority and I think part of our job is to help explain to those on the hill their own constituents what their own constituents need and what they've said is give us trade agreements and we will sell more of our goods and create more jobs. How about looking at the rest of the world and how it views US trade policy? Are you coming across either of you concerns particularly Ambassador, concerns about the advantage that the United States is clearly gaining now from the changing energy picture in the United States a lot of manufacturing, we've heard this story a lot coming back to the US cheap natural gas, cheap oil astonishing turnaround in the US the way in the US energy balance and I can see your point about whether they be bicycle manufacturers or whatever else that US companies based in the US want to export, they want trade deals and they are benefiting from significantly lower energy prices are you starting to whether countries that you deal with are concerned that actually the US may become actually a source of relatively low cost manufactured goods now? Well not concerned I think interest virtually every week we're visited by companies American, certainly European but also from the rest of the world who say precisely for the reasons you've noted one were a large economy in a good market, we got a good rule of law strong innovation environment, strong intellectual property protection affordable and abundant energy and now with these trade agreements a trans-specific partnership and the trans-Atlantic trade investment partnership will have free trade with about two thirds of the world that makes the US the production platform of choice for manufacturing and we see a lot of companies scouring the US and saying they want to put their next factory in the United States in manufacturing to make it in the US and then ship it all over the world and that has led countries to say they very much want to be part of that story they want to be integrated with us, they want to be part of our supply chain and it's not just American companies we're seeing as I was saying we're seeing companies from all over the world saying I want to be here in fact I think you know VW just announced they're going to expand and invest another 7 billion dollars over the next 5 years here in the United States so you're seeing it from very large multinational companies all the way to LaRue electronics which is this 25 person electronics firm that has expanded their business 10 fold by virtue of being able to trade with Mexico I know this is a tangential point but it's interesting nonetheless one of these issues about energy is whether or not the US should be exporting some of this energy to equalize costs around the world do you have views on that I know the president has authorized some changes there but it's very very small scale do you think the US should be exporting this energy abundance? I think there are studies I've talked to the Secretary of Energy a little bit about this there have been studies done about what's a reasonable amount of export that won't implicate or hurt American business I think it merits further study now that we're but what we need to do is see that the current licenses that are being given they need to come to fruition and better understand what are the implications what's the reality of all of that so I think it's it's going to take time for this to play out Ambassador, can you negotiate trade deals without agreeing to export cheap US energy to help so that other countries can benefit well we don't tend to talk about energy in our trade deals and Congress has set out in the natural gas act what the criteria are for that and the Department of Energy is the institution responsible for implementing that but I think certainly people are very interested around the world in what's going on in the US in energy and that's leading to a lot of inward investment a lot of insourcing back from US companies a lot of American companies deciding to expand in the US and that's all good for creating jobs and again when you put the overlay of the trade agreements there it creates a powerful incentive to be based in the United States and to ship to the rest of the world and so we believe that our trade policy is very much part of our inward and our investment policy and very much part of our job creation policy let's move on to talk about those specific trade deals that you're in the process of negotiating TPP first walk us through you had been hopeful that we may have seen more progress by now what's going on you've got 12 countries is it 12 countries? It's 12 countries representing about 40% of global GDP and we've had tremendous progress over the last 6 months a real sense of momentum and we're continuing those discussions now we have teams in Southeast Asia we're meeting with our counterparties we'll gather the negotiators and the ministers together in the near future but our goal is to have a high standard comprehensive ambitious agreement and we want to make sure we take the time necessary to get that right and that means raising labor standards environmental standards striking the right protection of innovation as well as access to medicines but also taking on new issues this will be a trade agreement that takes on the issue of state-owned enterprises and of disciplines should be put around state-owned enterprises when they compete with private firms and a number of other new issues in conservation and the environment for example so we're breaking a lot of new ground all the countries are working very well together all the governments are being creative and innovative in how they approach this negotiation and I'm confident we're going to come out with an agreement that sets a new high standard around the world and very importantly supports job creation and growth in the US or who are the most difficult issues at the moment because initially the Japanese were somewhat skeptical but they now seem to be very enthusiastic I mean what's I know these things take time especially with 12 countries a multilateral process but what's what are the sticking points it's a very complicated negotiation because it's not just a bilateral trade talk and it's not a multi-lateral trade talk where you have some independent body like the WTO putting out compromise tech so it's a very complicated negotiation there are lots of different issues I mean it's certainly on the market access side I'll just use agriculture access to Japan we've been clear that we need to get further than where we are right now but also on the rule side everything from intellectual property to labor to environment to SOE reform these are all key issues difficult issues and issues where we want to make sure we get it right and so we're still working on them right now of course China is not included is it assuming this goes through expanding an expanded area that would include China well we've always said TPP should be an open platform to which other countries who can meet the high standards should be able to a seat in the future and there are a number of countries in the Asia Pacific region that have already indicated that once we're done once the 12 of us are done with this agreement that they'd like to be considered for the next round but the key for any country wanting to join is to be able to meet the high standard and the comprehensive agreement with regard to China I'd simply say recently China indicated it wanted to negotiate a bilateral investment treaty with us on the basis of a so-called negative list and pre-establishment and that's where I think our focus should be because those are key elements of any investment chapter and we'll want to see whether we can make progress there first Before moving on to Europe so just quickly when can we expect at least the out, I mean I know you've there've been soft deadlines and they've passed and other things, what's your, I mean again I know I'm not going to pin you here I'm not going to get news out of you to tell me what the deadline is but give us a sense of is this going to go on all the way through this year I mean you're coming up to an election but once you get to the summer you're into pretty full on US election campaigns Our view is that we should let the substance drive the timetable and the key thing is to make sure we achieve that high standard, high level of ambition and we'll take the time necessary to do it I'd say that all the countries are actively involved, they're very much focused on this they're highly motivated, there's a lot of momentum and we're going to build on that momentum to try and get it done as soon as possible Madam Secretary how do you see the domestic politics in the US affecting affecting the whole debate about trade, I mean it has been it's been a difficult process as the ambassador says you know over a long period of time although you know some bilateral, some significant bilateral deals have been signed but there is you know without TPA in place now for some time do you think the political climate is shifting at all in favor of being more open towards some of these possible deals? Well I'm an optimist and I believe that we're going to get trade promotion authority and ultimately approval of TPP and TTIP, I think that you know Mike is absolutely right first we need to TPA is an opportunity for the House and the Senate to express themselves about the things that are important to them to make sure they're in those agreements and obviously the negotiations are taking that into account but getting that done is really important as we finalize TPP but I think these are imminently doable particularly as we make it you know information is a very powerful tool and I think as it becomes clear what's the quality of the agreement as it relates to some contentious issues as well as what's the benefit in other words we know that if we have more exports we're going to create more jobs we also know that if we have more foreign direct investment we're going to create more jobs and so you know it's a balancing act to make sure that we're touching all of these issues but I think it can get done and so I tend to be optimistic about this and it's a chicken and egg thing but I think it really helps even in advance of trade agreements if you get stronger growth you get the unemployment rate down a little bit people are going to feel a little less because obviously one of the things that people feel about negotiating trade deals in other countries is a certain vulnerability they don't see the upside they always see the downside and presumably if you got some stronger growth that would but I think it's really it's incumbent upon us to be understood obviously more growth begets more confidence but I think as secretary Lou has talked about the United States is in a pretty terrific position relatively speaking in terms of its potential for growth as you look at we've talked about energy but you have to combine that with really our commitment to rule of law our investment in R&D and our intellectual property protections and the ingenuity and flexibility of our people which is a tremendous asset I don't think you would see the kind of recovery that we've come through in a very difficult time if you didn't have people who are flexible and able to react to the situation so I was in Detroit last week and at the consumer electronics show the week before the innovation is a bounding in this country it's exciting what's happening in the United States maybe in Switzerland too forgive me in the United States and so I think that I think that confidence is building and this goes back to your first point we've had 46 months of job creation 8.2 million private sector jobs 1.3 million of those jobs are due to exports a third of our GDP growth coming out of the Great Recession was due to exports and trade and so I think the more we can tell the story about how exports by us opening markets leveling the playing field by raising standards around the world and then very importantly fully enforcing our trade rights and taking cases to the WTO as necessary is a key part of driving job creation here in the US and yet the reason I ask the question is as you well know one of the hottest political topics talked about a lot here talked about in the US all the time and around the world is this issue of inequality and look people wrongly maybe sometimes ascribe it to globalization but what we do seem to have one of the phenomena that do seem to be at play is that globalization is certainly is certainly aiding those who have capital and access to capital you're going to make the point and I'm sure factoring jobs tend to have higher wages than service jobs and that's true but there is also there's a profound sense of unease in the United States in particular you saw it in the election of Bill de Blasio in New York you hear it all the time in political rhetoric and there is an association with a global economic elite whether it's in the financial sector or more broadly that is making hay while the middle class is really really struggling and I'm just wondering in that environment whether how you can how easy it is really to make the case that we need more globalization we need to integrate the US more into the global economy these concerns are real and they're legitimate but we also don't operate in a static world the world is integrating itself and there are other countries out there working to negotiate agreements and we're out there with TPP as an example insisting that there be high labor standards, high environmental standards access to medicines disciplines on state-owned enterprises but there are a lot of other deals being negotiated that don't have those kinds of disciplines that aren't trying to level the playing field aren't trying to raise the standards so from the perspective of the American economy and the American worker we're part of a global economy we'd much rather be part of it in a world where there are so many individuals and raising the bar if we're involved in a race to the bottom that's not a race we want to run and that's not a race we can win but if we can help raise the bar and set a race to the top then we're in much better shape and it's much more supportive of American workers and American firms you experienced both in business but also in politics you've been involved in campaigns how do you think or both persuasion is going to address it well I think obviously it's a real issue the statistics and data have been coming forward over the past few months and something that actually the past few years I think that it's very important that we take this seriously and it's why you see the president calling for in the United States raising the minimum wage and you see companies even here I was talking with some American companies who are saying seriously they're talking about coming out and endorsing an increase in the minimum wage we've got to have a situation where the middle class continues to grow it's important for our economy it's important for the world and so I think the fact that we're focused on it is very good and I think that but I think there are a lot of things that we can be doing I think one is skills as we've talked about I fundamentally believe the case it can be made with sports and investment in the United States that will also help improve incomes if you look at you know foreign direct investment the average income for someone who's working for an American subsidiary of a foreign company is $77,600 these are good jobs and so we need to make sure that people understand the data and understand the benefit but there's also the issue of women we have to focus on the fact that we're paying women $0.77 on the dollar that we pay men for the same job and women are two thirds of families are headed by women and so I think that there's a real issue that we've got to focus on this or we're going to have there's potential serious ramifications but it's striking that you say immediately one of the main measures that you would favour and the president favours is an increase in the minimum wage again something that is an imposition on business but there is a view among business you will know that there has been a tremendously tough regulatory environment over the last five years coming out of Washington not just in the financial sector but more broadly and what business needs is to be freed of some of those regulations that would create more jobs that would create an economy that was better able to compete in the global economy you know one of the reasons that I went into the public sector to take on this responsibility is that you know an obligation and a sense of responsibility to all Americans and for me I think that you know as a business person and I've been 27 years in the private sector you know you can't be that just the leadership is winning we've got to have our employees who are making living wage who can support their families so that they can go on and educate their families and make sure that you know future generations are flourishing and if we don't have economic mobility in our country that's a very serious problem for the future economic growth of the country so it's very much intertwined and I think business leaders understand that and I'm not hearing so much of the this is an imposition what are the right opportunities how do we address this they're in favor of the minimum wage increase well I think that there's a view that it depends on what business you're in but I think there is a recognition that you can't have just the top of the food chain being successful that's not sustainable and we have to have a sustainable recovery here we have a moral obligation as leaders to think about that we're running out of time I'll quickly ask you, we mustn't forget Europe you have all these acronyms I think it's TTIP we have TPP, TTIP you have more acronyms than the US Army just give us a sense there I'm sure you'll be having meetings both of you having meetings while you're here what's the promise of progress there it's well underway we've had three rounds of negotiations we're having continued discussions over the next several months and I think we're just working through the issues the good news is we see many of the issues in the same way but the ones that are remaining are ones that have always kept us from getting to this point in the negotiation the reason we don't have a free trade agreement with Europe isn't because nobody ever thought about it it's because it's hard and there are obstacles and the question is whether the political will is there right now and the circumstances are right for us to be able to address those and we think it is and we're going to work hard to try and get that done I know there's concerns about financial about whether you can do anything in the financial field given the differing financial regulatory regimes I mean is that a key issue that's certainly an issue that the Europeans have put forward our view is financial services are a key part of the relationship there's also a lot of regulatory activity going on post crisis bilaterally through the G20 through the financial stability board the BIS the various organizations and we think that kind of regulatory cooperation is very important and should continue to proceed alongside and in parallel to TTIP Ladies and gentlemen Secretary Pritzker and Ambassador Freeman have been very generous of their time please join me in thanking them very much for being with us and thank you too