Bloomberg News

Clinton Links Foreign Policy, U.S. Economy as Companies Applaud

July 13, 2011

July 13 (Bloomberg) -- Secretary of State Hillary Clinton is strengthening the link between foreign policy and U.S. prosperity, stressing the role of trade and diplomacy in generating economic growth.

“Our foreign policy must be a force for economic renewal here in America,” Clinton said yesterday in an address to the U.S. Global Leadership Coalition, a group of businesses that support federal spending for international affairs.

Clinton has made commercial diplomacy a hallmark of her tenure, promoting U.S. trade interests and investment in the almost 600,000 miles of travel she has logged as secretary of state.

As lawmakers and the administration seek to pare federal spending, the top U.S. diplomat is making the case that State Department resources must be protected so the agency can continue to open markets for U.S. companies and create U.S. jobs. She is getting the backing of major U.S. companies as she does.

“The 1 percent of our budget we spend on diplomacy and development is not what is driving our deficit,” Clinton told the business group. “Not only can we afford to maintain a strong civilian presence, we can’t afford not to.”

The pressure to cut the international affairs budget, which makes up 1.4 percent of the federal budget, “is enormous and that’s why we’re talking about the importance of that 1 percent,” Chris Policinski, the president and chief executive officer of Minneapolis, Minnesota-based Land O’ Lakes Inc., the farm-owned marketing company, said in an interview. “In tough economic times, cutting this budget would actually be harmful to our ability to have jobs here at home.”

Trade Benefits

Clinton’s emphasis on commercial diplomacy reflects an awareness that 95 percent of the world’s consumers live outside the U.S., according to U.S. Chamber of Commerce figures. It is also driven by her belief that economic engagement can promote political stability and more transparent government in countries such as Vietnam and Iraq.

“Developing our commercial ties, two-way trade, investment relations are ways of also strengthening our overall relationship with these countries,” Robert Hormats, under secretary for economic affairs, said in an interview. “Commercial diplomacy works hand in hand with strengthening ties in various areas of foreign policy and national security.”

Clinton has backing in her mission from the Chamber of Commerce and major U.S. companies ranging from Caterpillar Inc., the Peoria, Illinois-based maker of mining and construction equipment, to Wal-Mart Stores Inc., the Bentonville, Arkansas, operator of discount stores and supermarkets.

U.S. Jobs

Land O’ Lakes is a member of the Global Leadership Coalition along with Caterpillar, Wal-Mart, defense contractors and drug companies. The coalition draws a link between the State Department’s efforts to help them expand exports, the spread of political stability and democracy, greater access to markets and the creation of jobs at home.

“We really do understand and respect the deficit discussions that are going on now, but folks need to look at spending in terms of its return,” Policinski said. “These development dollars that are spent are really dollars spent on U.S. jobs programs.”

As an example of the importance of having a State Department that can advocate for open markets, Policinksi points to a Land O’ Lakes plant in Central Valley, California, that produces butter, cheese products and milk powder. With much of that going to Asia, the plant employs 2,000 people, making it the largest of its kind in the U.S., Policinksi said.

“If you don’t have a market, you don’t have jobs,” he said.

‘Economic Opportunity’

Clinton described development aid as “a major economic opportunity.”

The U.S. spent about $110 billion in today’s dollars on the Marshall Plan rebuilding Europe after World War II, Clinton said. “We now export $240 billion of goods to the EU every single year,” she said.

Export opportunities are growing, particularly with the developing world, Clinton said. As urban centers grow by 65 million people a year, countries are building ports, stadiums and highways, she said.

She pointed to India’s announcement of a $1 trillion plan to improve its infrastructure over the next five years and Brazil’s plan to pour $100 billion into preparations for the 2016 Olympics.

“We need to make sure that American construction companies are positioned to compete for contracts and take part in this global construction boom,” Clinton said.

China’s Shadow

As she urged U.S. companies to “lean forward” into overseas markets, Clinton pointed out that there are larger stakes, as economic strength often translates into political influence.

“If we don’t seize the opportunities available today, other countries will,” she said in one of a few veiled references to China. Those countries will fight for their companies, promote their own economic models, win the jobs “and even claim the mantle of global leadership,” Clinton said.

The effort to promote U.S. trade is being taken up across the administration, including the departments of Treasury and Commerce. Within her own agency, Clinton has announced the creation of a chief economist position, an Under Secretariat for Economic Growth, Energy and the Environment and a Bureau for Energy and Natural Resources.

Clinton has also expanded the practice of “reverse road shows,” in which U.S. diplomats travel domestically to promote opportunities in the region where they are posted, particularly to smaller- and medium-sized businesses.

‘Level Playing Field’

Those companies willing to make the plunge will get the administration’s “full support,” Clinton promised.

Clinton referred at one point to China’s procurement policy of favoring domestic companies, saying her agency will push back against such steps.

“We work to protect intellectual property, resist favoritism for state-owned enterprises and protest discrimination against our companies in procurement,” she said. “And we insist on a level playing field for our investors.”

Doing that will take resources, she said. “To win the resources, we need political will,” Clinton said.

--Editors: Terry Atlas, Jim Rubin.

To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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