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tv   Washington This Week  CSPAN  November 3, 2013 4:00am-6:01am EST

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testing
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this. before i have a few questions, let me just start by i think we have become all too comfortable with loudly interrupting and talking over our witnesses. thee that may sometimes be way it appears that we operate, i think today we took it a little too far.
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worker, government questioning your public service. so let me use two words that i was always taught that are very powerful words of that is i am sorry. i join my colleagues cleaver and hines for extending their apologies. because sometimes i think we forget when we talk about challenging your commitment to public service and putting that in question today, i find it very ironic that some of my same colleagues who question your integrity are the same people who furloughed some 800,000 that cost theees government some $24 billion and certainly reduce job growth and a hundred 20,000 jobs because of our shutdown. how does that tie in today? i think we look at the housing
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market and we look at growth and the economy and jobs, there is a direct linkage. i memo said today that we were going to talk about and ask you questions so that we could share and learn more about the recent fha announcement about the mmi f. so something i read them i would like you to answer for me if this is factual in truth because in hearing, i think we have an obligation to the people who are here and to america to speak the facts and the truth and then look at how we dissect that to come to some and resolve. so what i have before me, it says that the federal credit reform act of 1990, or the fc are a, requires that at the end of each fiscal year, and is part statement,ing annual
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every agency including the fha must have sufficient reserve to cover all anticipated loss. for fha this requirement means must havem f i sufficient reserves to cover the amount that would be needed to meet all expected claims over the next 30 years. tomorrowoses its doors and has no new business to offset those claims, such an bailout.tion is not a would you agree to that statement? >> i agree. >> thank you. so, we have heard it said loudly that this would be a bailout. so thank you for clarifying that. my next set of questions would be, would you say that there has been an economic shock this year by the fiscal cliff or the sequestration or the government tot down or the threat
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the debt default. would you say this has passed on to us in any way? >> the shutdown cause economic harm in general it court into economists. i can also tell you that in that very short. of time while fha kept its doors open and continued to ensure mortgages, we did see a substantial drop in our application volume during that. partners orid other other agencies, given the lack of confidence in home buying during that. of time. lastly, let me make a comment because we have had so many comments that have attacked what we have done. i think also the american people like to hear good or positive news, especially when we're
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talking about housing and putting a roof over their heads. let me just say i am from a great city of ohio and in my , in 2009, through your operation we were able to provide housing credit assistance. and tax credit assistance tax credit exchange was a way to offset declining investors interested in to housing tax credit. i was done by some of my democratic colleagues. i want to thank your office for working with us on that. >> thank you. >> thank you and i yield back. >> i want to be clear at the outset that fha has been very for a lot of my constituents, first-time homebuyers, low income home buyers, to achieve the american dream.
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it has been incredibly helpful for them. i don't want to underestimate how important the program has been for people who live in central and northern wisconsin. it has been a very helpful program. picked up a little bit of concern on our side of the aisle and i think our westration here is that when have testimony, we continually bring up concerns about the .apital reserve ratio it hasn't been met, we are concerned about bailouts. it seems every time we get we areny from the agency told that it is sunshine and roses and tulips and unicorns, everything is great. we look at the numbers and say that is not true. we think it is far worse and you're telling us. it is always no, no, no. it is all fine. lo and behold, we were right. our concern was well wanted
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that we'renow know going to have 1.7 billion dollars go from treasury to fha. i know you said it is not a bailout. first of all come he would that it is actual money. we have had 1.7 billion dollars go from treasury to fha. that is correct, right? yes. >> is been moved to fha, right? >> is intergovernmental. >> the transfer has been made. >> these are real dollars, yes? >> yes. bailout, what't a you consider a bailout? >> couchman, let me say two
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things. i do think this whole conversation about bailout or no bailout is really beyond the point. i want to go to the fact that your earlier statement about us saying it's roses and then it is not, what we have been saying all along is that we have independent actuary and we have independent budget we estimate that is made by the budget process and as a result of changes and -- changes in condition and portfolio, those numbers change. we have always been honest about that. in fact, the conversation we're having here today -- we have this conversation with the president's budget came out and said that we are looking of a $943 million shortfall. i really just want to get this on the record because the only difference between then and is that our volume was a little bit less in the last
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quarter than we had anticipated as part of the president's budget. i admit that circumstances change and that is what caused the additional -- >> is underscore support of the testimony that we always get heard it is a bailout. it looks like a bailout, it walks, and quacks, it is a bailout. his call it a bailout. them yes give this. of theher terms repayment of the $1.7 billion? >> is is exactly why does not a bailout. again, as is all within the government agency -- >> what are the terms of the repayment of 1.7 billioney of dollars? >> the terms are every nickel we have earned goes back to the federal government. >> so are the terms of repayment? >> no. you have to repay it, do you? >> this is a bailout areas there
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you paiduirement that $1.7 billion back to the american taxpayer, not at all. so i think the transparency and honesty -- stop splicing words. this is a bailout. call it what it is. have repaid on this. we pay every year on an ongoing basis. >> i only have 15 seconds left. in the past i we discussed risksharing pilot program. is that something you would consider his fha? worthyuld to say is looking at risksharing, how it is structured, counterparty risk, there are a lot of challenges in risksharing but we are certainly willing to look at to anticipate every patient witness, we anticipate two more embers.
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we now recognize the german from washington. thank you very much for presence or today. thanks to fha is for four years ago this for months enabling me to buy my very first home. thank you as well for your kind comments about both my role and that of congressman for fitzpatrick's nearly effort to reform the reverse mortgage market. indeed, i would like to flip that around a little bit and take this opportunity to express my gratitude to congressman fitzpatrick for his exceptional advocacy for the members of the the reverse mortgage industry, who really stepped up to be a part of this. and to you personally as well. will you i don't happen to think your reputation as a public ant needs a lot of defense.
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it is beyond reproach and exceptional and i thank you for it. i thank you as well for the the agencyin which moved to implement the reverse mortgage act. i think it helped a lot and finds about the fha. here, to coinmes a verb, complex of five -- comp lexify things. eight,stand that on page transfer says that the was triggered are required almost entirely as a result of the performance in the program? >> that is correct. true that the accounting transfer of $1.7
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billion was calculated based on ofa prior to the enactment the reverse mortgage reform stabilization act and its implementation? is a little more difficult because i would just the 1.7 -- there is an element of the receipts that are low but alas, as it was soon to an earlier question. >> the implementation of the reverse mortgage stabilization reform act, i am getting the title all screwed up. but think you know what i'm referring to. >> just to be fair, the next time you will see numbers like this is when the president does the re-estimate that will be in february or so of
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next year. >> and to what degree will that reflect any experience for implementation? >> it will reflect the projections of what the future experience will be, yes. >> two i also understand correctly that when you all make money, you transfer back to the treasury? >> that is correct could >> have you done that in the years leading up to the great recession? >> yes. >> can you give me some kind of a range of estimate of how much money? >> i don't have that. we keep it all in the capital reserve, capital reserve went well above the two percent, up to the eight percent level in earlier years. >> it does not literally get transferred to other. >> they are all sitting at
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treasury, all these accounts are sitting at treasury. >> just to summarize, and please do correct me if i'm oversimplifying. for theirement accounting transfer was thegered in large part by experience in the home equity conversion mortgage program. identified some legislation for this congress, which responded with able assistant in which you immediately implemented and projections of how fha's balance sheet will be affected by all of that, are not going to be made available until sometime in the winter or spring, reflecting the corrections to the single program that was dragging us down. you have a electric? >> yes you do sir. >> i think that about says it all. thank you again for your service. with that, mr. chair, i yield back the balance of my time. >> mr. stivers from ohio for
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five minutes. >> i appreciate your willingness to be here today and i appreciate what you do on behalf of the federal government at fha. what i want to look at is how fha might be able to improve its performance so that any additional infusion of capital taxpayer capital, whether you want to call it a bailout or accounting transfer, doesn't matter what you call it. i want to figure out how we can improve your performance to avoid it in the future. the severe testimony that he thought fha had taken every reasonable action to improve its risk management. i want to look at a few areas. you talked about reo real estate -- are youwn familiar with the report from june of 2013? in one of the highlights here, it said that if you had dealt
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with the dispositions on timelines the same way as a government-sponsored enterprises , both fannie and freddie, you would have been able to save as much as $600 million a year in your costs such as taxes, homeowner association fees, maintenance fees and others and he would have increased your program seeds by up to $400 million. it is taking about a year, taking them about 200 days to dispose of their reo real estate . tommy what you have done with that to improve your performance going forward. i'm not here to blame you, i want to see how we going to fix it. , wees, just to be clear changed how we do government takeacting for those who responsibility. >> imaging results from that yet? >> at me just give you an example. we now do and reo alternative disposition.
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not requiring the property, although it back and enabling can ask you, etc. one --mple can you have the same -- >> am looking for how to move your average, though. >> are recovers have improved by our recovery on strategies that we have been going through. alternatives. >> i guess i just as you to continue to monitor that. atould like you to look up the slide up there that shows your capital ratio continued to worsen. you talk about premiums as you have done. slide.ove to the next
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there were some things that you could have done to change your and heror her premiums is a life as the magistrates over time. we are still with enough takeover last few months that historically low interest rates. he have the ability, if you want to go back one like, to increase your annual fees i another funny five basis points, which would be a rounding error on the amount that interest rates have come down over the last two years. why have you chosen not to go ahead and max set out and require less taxpayer infusion, what he caught a bailout or because something us? >> we have spent enormous amount of time balancing, bringing the fun back as quickly as possible with ensuring continued access to credit. by the way, just when you take a look at what happened when we made our latest justases in june, and not
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premium increases but our policy changes, you saw a huge amount, our application volume dropped off by -- >> let's go back to it again. is that how much interest rates have come down. we're talking about rounding errors for this 25 days. it could have helped you significantly. i would ask you to look at that again. this is the fifth time you come to testify before the committee in my three years here and every time a you, so i'm going to ask you again why fha has not instituted a risk-based pricing yet. you have had the authority since 2010. i believe i've said this before, that fha believes that the way we do pricing and the way we do risk-based , was not risk-based pricing, we do that because it is in the best interest of the baros and access to credit. --are always balancing our
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xm erd should do both. thank you. >> there are no other members in the queue so i would like to thank ms. gallant take for her .estimony our members will have five legislative days in which to submit additional written questions to the witness and to the chair which will be forwarded to the witness. if you answer is probably as you are able. hearing stands adjourned.
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>> agriculture secretary tom vill sack talks about the farm bill which is currently being worked on by 41 member house and senate congress committee. fundinghe components is for the supplemental nutrition assistance program come otherwise known a snap. here's a brief preview of secretary bill sack talking about the program. >> every dollar that is spent in to theth benefits struggling family also benefits economy. generates $1.85 in economic activity. it stands to reason if you can buy more at the grocery store, you will buy more at the grocery store. if you can buy more, that means the grocer has to stock more. it means the grocer has to purchase more that is been packaged and processed and truck it to the facility. all those of jobs in the supply chain. it also means producers, farmers and ranchers. producers have to sell more and have a market to sell more. it has an impact. with itse able to do
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additional support was to give a lecture help -- was to give a little extra help. occurredhat has not takes, i'm told, $11 billion out of that system. why are more people dependent on food stamps even as the economy improves? >> when we came into office, with the president came to office there were a number of states were less than 50% of the people who were eligible already for snap were not participating in the program. now the states you see participation rates somewhere in the neighborhood of 60 to 65% rate i think we now have an historic high in terms of the number of people who are eligible for the program participating. i think the numbers are not necessarily a reflection of the current economic circumstance, they are a reflection of something more systemic in the american economy that has spent the last several decades.
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the gap between rich and poor continues to grow in this country. can watch the entire interview with secretary bill sack today on newsmakers at 10 a.m. and 6 p.m. eastern here on c-span. >> what is the most important issue, congress should consider in 2014. that is the question for middle and high school students. make a five to seven minute documentary that shows varying points of view and include c- span video for your chance to win the grand prize of $5,000. this year we have double the number of winners in total prizes. entries must be in by january 20th, 2014. for more information, go to student camp.org. a firm believer in what they call the unauthorized atrophy.
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now, unauthorized does not mean untrue. it means that you are doing it without the cooperation and blessing of your subject. i do believe it is a legitimate wonderful way to cover history. specially public figures that have spent many years and millions of dollars creating their own image. so i think it is viable sometimes to go behind that. usually, i am the one who is that and get behind tell you what is going on. >> presidential history, political intrigue and american culture. bad for kitty kelley sits carlson comments-three hours beginning at noon eastern. today on book tv's in depth on c-span two. the commerce department recently hosted a two-day summit
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in washington dc focused on business investment. next, one of the discussion from the event. it focuses on free trade and includes remarks by u.s. trade representative michael froman and the ceos of caterpillar and bmw north america. they talked for about an hour. [applause] >> good morning everyone. secretary kerry thank you very much for that excellent excellent speech. thank you for joining us on the second day of our summit. we had a great day yesterday with president obama, with speakers and panelists and all the networking and matchmaking opportunities that were not. today, promises to be even better. let's get started. i am very pleased to announce the start of our first panel entitled, "why select the usa -- using the usa as the next core
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platform. >> we have a great lineup including my friend u.s. trade representative kirk a froman. house form of tennessee, lewd week village, the ceo of bmw north america and dug over helmand, the ceo of caterpillar. i'm going to let the moderator go into a little more detail about each of our panelists. let me introduce who will moderate today's panel. erwin is a washington columnist and the economics editor of a widely read blog in the post. gethe walk block, you can the post news on policy and analysis. an author who is cover the federal reserve and led the post coverage during the financial crisis. lazy gentlemen, please give a warm welcome to our moderator,
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neil erwin. [applause] >> takes a much. we heard from the secretary, we have been through an era in which trade deals were the small piecemeal things with individual companies, -- countries. we have a great town to discuss he sings. the governor of tennessee, bill , i am proud to have him with us. [applause] another of america's great export success charges caterpillar, the giant exporter of mining and construction equipment.
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the ceos with us today. [applause] caterpillar is a great story of an american company that is exported to the world. we are the leader of a great that makes aany great deal of stuff united states. here is the ceo of bmw north america. and the man who sticker showing these trade agreements on both side of the atlantic united states, the u.s. trade rep is ambassador michael froman. we would start with lessons from a few the panelists. but governor of tennessee for three years. wasn't select asterisk levy learned. enters a whole lot. one of the quick things you learned is this. international trade agreements
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strictly impact the job of a state governor. when i started running several years ago, that surely would've been one of the key issues on my horizon, but it is definitely true. the give you low context. in tennessee we are part of the fact that we still make things. ore a lot of automobiles, make a lot of furniture, which people thought had gone from being produced in the u.s.. weekthe country just last and also removing jobs from china back to tennessee to produce things. of medicalot supplies. i could go on and on partner out of the fact that we still make things. as you'll see from so my comments, ability to make and sell us into strictly impacted by many of our foreign agreements. export aboutwe $5.3 billion a year, about two going to china. he was talking foreign direct andstment in the u.s.
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tennessee. never let 880 different companies located in tennessee, largely led by japanese countries. nissan can't tennessee 30 plus years ago and a lot of automotive industry has sprung up around them. million americans working in manufacturing jobs with foreign ownership. in tennessee, even though it about two percent of the population, i think would make up about six or seven percent of that total number of folks in the manufacturing business with foreign ownership. we're proud of the fact that for the last four years running we have been named the leading state for automotive manufacturing strength. rep are the fact that we have the largest cargo hub in the u.s. and the second largest in the world due to a small little company called fedex which happens to look at in memphis. we enjoyed it manager that. we have for international expert
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development offices in the uk, and germany, in mexico and china. estimatedexports are to tariff treated as been talked about, we think our exports europe will grow about 35% rate so close to $2 billion would be at stake if that agreement will be passed. we rank second in the nation for manufacturing jobs created over the last year. per capitaoutheast income growth and gdp for 12 months in the southeast. we are the second leading state in the country for medical equipment supply exports. about 11% of the nation x ported medical equipment happens at a tennessee even though we are two percent of the population. as in most business numbers, there's a reason.
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fedex dominates in that business, it a medical community needed. having fedex has made a huge difference for us. as a wrapup, let me give an example of three large companies that export out of tennessee and white is important and why the trees that were talking about are particularly important. these are chemicals located in upper east tennessee has about 7000 employees, it is their global headquarters. .hey about $1.5 billion a year if the teacher treated past it --ld increase chemical sales or exports about $800 million year to europe. we think eastman would get their share of that. headquarters in the americas. the plant in the western hemisphere. about 14% of the vehicles that they produce are exported. -- the valueh and
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of their exports is about a billion are there other large medical carbon suppliers there. the lighter note to export a few other things from tennessee. we export this brown liquid that people seem to know no matter where i go by the name of jack daniels. i say high, on the governor of tennessee and to matter what country you're in around the world sao, jack anis, dolly parton. we got it. some ofso are proud of the nice things that we export. we make 300 million m&ms every day. unilever just announced a building the worlds largest i can plant in tennessee, so no matter whether it is from chemicals to autos to sugar, we have you covered area which is talk once for i turn it over. the stakes are we're talking about in terms of trees and free-trade agreement and the impact. soon after coming into office, he was looking at locating an suv plant. it is a $1.3 billion investment.
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they ended up locating that in mexico. there are a lot of reasons for governors. clinical somewhere else, we have lots of reasons why went somewhere else. one of the reasons were the data exportmport from the u.s.. and we are brazil confident that one of the reasons that $1.3 billion investment went to mexico was because of the tariff agreements. with info instrumentation of q- tip tipple increase tennessee auto exports to europe by about 900 million. and talk afrom bmw lot about the added costs of that and why that is true. countries that we have free- trade agreements with our per times theorts are 16
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countries that we don't. struckhe agreement was with chili, or exports to chile went up 10 times. the medical quitman business, our exports for medical equip into australia went up about eight times after the free-trade agreements were set. i'll come back to the point i made to begin with. as a governor, we are not involved in negotiating treaties, we don't debate them in the senate or the house. but those treaties have incredible impact on the things that we do. i look forward to discussing it more. >> we have a now. i'm hoping to your pitch. >> us why we are here. >> thank you, neil. governors, thank you for a great review. we have a fairly strong presence in nashville with our financial
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service business there. there are several hundred employees could is a big business of everyone there is happy and really likes tennessee for lots of reasons. >> can you say one more time often ask about manufacturing an american can we really compete in the u.s. on a level playing field they stood at liberty us what we build anything here? well, in fact we got a lot here. it's very timely that i came from athens georgia last evening because yesterday we cut the ribbon on a brand-new greenfield feet,y, 850,000 square 1400 people strong when it is fully operational at the end of next year and these will be smallbulldozers and excavators that were formerly only produced in japan. regardless united states for several reasons, one, we can compete from a base year. two, we like the port system near and a lot of that production will stand the u.s.
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and a lot of that will be exported to south america and europe. we feel there is a very good condition a very good to not only build your but compete from a us-based. a year ago we did the same thing in victoria texas, south texas. these are very large machines. 40 to 50 ton machines. it also came in from japan and we will be building is the first time in the united states and exported to south america. some of that is coming back to the u.s. and i'm very happy and proud of that is the u.s. manufacturing company. in fact, we spent about $6.5 billion in capital expense in the last five years in the united states. we invested heavily here. about $10so spent billion in research and development over that same five- year. we have plant after plant in our system here in the united states that exports very large ironing equipment. states,rom the united
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we have factories in the midwest where 80% of the production is for export only. we work hard at being competitive both internally -- in our system that caterpillar, but we were part of the u.s. government with michael and many others in terms of open markets outside the u.s.. after all, 95% of all potential customers are not in this country, they outside. we desperately need that very over the last five years, our total exports have exceeded $82 billion. those are destined for virtually every country in the world at some point or another. i can't over emphasize the benefits of trade. sometimes it is a hard message. free-trade, open trade and globalization sometimes have a pretty tough context and a lot of the small towns where plants are. that is a message that all of us have to get out and work on because without that, without access to the 95%, consumers
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outside his country come out of nowhere we will be a generation or two from now. we all need to work on that. finally, as an editorial comment and i will conclude, we used x and bank and needed to compete on a global basis. export credit agencies are part of the competitive landscape. other countries use them aggressively and anytime we go up against them because most of the competition if not all of it is outside the u.s.. they are competing with us for customers, for our people, for that matter. we have to compete. xm needs to be a critical element of that play as we go forward. edison is also on the genital opens free-
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trade initiatives in this country have provided the basis for b&w to make a major investment in the facility which not exports a majority of its vehicles worldwide. has a success story to share in our south carolina plant, however there is more that could be done to foster even more economic opportunity in the u.s. when all parties come to the table to ensure more open bilateral trade agreements. back in 1989, when i come and he was looking for a place located new plant in the united states, we received invitations from many state governors. they all had an rsvp attached. obviously, we understand the responsysnch phrase s'il vous plait. we did respond to all.
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aesthete he has another meaning for the gimp group in this meaning help us to determine the actual place he chose. to us, rsvp is an acronym for the values that had to be met for this new manufacturing facility to be successful. our as an responsible, s as in sustainable, v is invaluable and p as in profitable. after evaluating many american spartanburg,se south carolina and open the plant in 1994. today, it is an unqualified success in terms of production and worldwide export. i will give you some metrics in the moment, that is how rsvp worked for the bmw group. , weing about responsible received some offers that while financial attractive to us might
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not have been equally beneficial for the local business environment and infrastructure, so we refused them. we felt and still feel that responsible approach to locating a new facility has to be a win- win for the state, county, city or town and the local population. responsibility also means being able to provide jobs for skilled local area residents and not rely on the importation of an outside work force. a strong network of technical schools and motivated workforce, the southeast u.s. and the state of south carolina fulfills these requirements. also, the i 85 transportation trustor on the order of and provided us with an infrastructure for future export opportunities. so, we took the responsible choice and located in south carolina. now for sustainable.
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to is committed sustainability. in fact, it has been selected as world's most sustainable automotive company by the dow jones sustainability index. just a few facts about how seriously we take sustainability at spartanburg. we use methane that normally would be burned in the atmosphere from a landfill to provide 50% of the plants total energy in about 30% of its electricity. we have an 11 megawatt on-site energy center. we also have a solar farm to 200 piecesrgy with of hydrogen fuel-cell material handlers, where the largest single fleet of hydrogen fuel cells in the world. we are zero waste to landfill for all nonregular waste. this program has earned us the number one spot on the epa's list of on-site green energy producers for the automotive
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industry. to vs and valuable our plant at spartanburg provides not only to the local or state economy, but to the entire country's economy as well. ,s soon as we open the plant manufacturers flocked to the area in order to supply of parts and materials necessary to produce a vehicles. today, there are 40 of them in the state and there is a total of a hundred 70 nationwide supporting the plant and contribute into the u.s. economy. we are truly committed to a role as a major exporter from the united states. since our initial $300 million investment in the early 90s, within and a capacity of about 50,000 vehicles, we have invested an additional $6 billion over the years and expanded the facility to the point where annual production is over 300,000 in w's. employshe plant alone
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over 7000 people supporting the local economy to the tune of 8.8 million dollars per year and supports an additional 31,000 jobs through south carolina. from the suppliers to our workers, the local coffee shop, our manufacturing plant in spartanburg is a force it up struck the economy and -- in ever widening circles. now we come to the final letter of the acronym, profitable. why we have selected spartanburg in the usa as an export platform. to help youew facts understand the scope of what we do. x.3, xly we produce all five and x export utility vehicles are soon there will be a new x for. production in 2012 was 300,000 units, we expect to grow to over 350,000 units this year. think that fact i may surprise you.
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70% of these vehicles are shipped overseas. that is correct, 70% of these didn't of these are shipped to about 140 countries worldwide. we are the largest exporter of vehicles from the united states. kitsdition, we also ship to another six markets around the world as well as parts from port charles and will soon you -- will soon utilize other port. it is probable for the nation come the state and county and local cities as well as the manufacturing partners that surround us. with humble beginning, producing 50,000 cars annually, our plant in south carolina has become a global success story. by producing exceptional products with a strong group of dedicated workers come our plant continues not only to generate prosperity for b&w, what gives back to the region and to the usa. this could only be made possible
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by the trade agreements in place through the auspices of the united states and its partners. as positive as all these facts may be, there are still room for more comprehensive bilateral free trade agreements. bison jonah, we strongly support efforts to further open unhindered trade throughout the world and will continue to lend our voice to such efforts. that usingly state the united states as an export platform has been and continues to be the correct and profitable arece for bmw because we careful about how we rsvp to any invitation. [applause] >> i'm a native of spartanburg south carolina and i vouch it is a very different place than 1994 and you guys are the reason. >> thank you very much for having me. it is a great pleasure to be
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here for also's of reasons. first, to have colleagues like secretary kerry him secretary lew, secretary pritzker who have been so supportive of what we're trying to do the negotiation of these trade agreements makes a real difference. i am very grateful for all her support. is great you the governor's comments about the critical importance of trade agreements to quitting jobs and expanding economy. iparty talk to governors. i hear that story. when i hear that story all over -- isn't necessarily as much understanding of how these trade agreements have an impact on job creation, on growth on communities and how we can make sure that if we do the trade agreements are away, there is going to be a very positive impact on people back home. i'm very grateful to doug in particular for the leadership role he has played in mobilizing the community to convey that message. my job is to talk about how what
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we are doing on trade investment helps contribute to the export platform that was just talked about. as penny said earlier, 20% of our exports come from the subsidiaries of foreign firms in the united states. is a critical part of driving job creation and growth in the united states. through twoissues things trade agreements and investment agreements. we have 40 bilateral investment treaties across the world. we have 17 trade agreements that have investment chapters. those chapters give investors here in united states protection from expropriation, from discrimination, from the denial of justice critic gives them access to neutral international arbitration and if they are real companies based here doing real work here, it gives those that protections and other markets that we have agreements with. it protects them from localization requirements. it protects them from something called performance requirements
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where their products might be substituted out the local products. our network of bilateral investment treaties is really absolutely critical to making this an attractive platform for foreign investment to be used not only here in the united states, but as my colleague said, for export to the rest of the world as well. side, we are involved in a number of initiatives that have been alluded to. , we'rein the in game trying to do with the outstanding issues to reach closer, we have a launch of the transatlantic trade investment partnership. this will deal with those two giant markets and hopefully bring them closer together, limit costs, bring regulatory and standards regimes closer together. when we complete those two trade agreements, we will have created free trade with 65% of the global economy. there are other countries waiting in the wings to join each of those agreements. i fully expect the time this is at 65 to 70% of
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the global economy and able to be accessed from the united states to free-trade agreements. why stop there? anhave launched international services agreement. in geneva it now covers 70% of the global services market very i.t. agreement also in geneva covers 90% of the i.t. market. have free-trade and a whole series of products in those markets. we are pursuing bilateral investment treaties with countries like india and china. china has made some very dramatic steps in recent months by not think that they're willing to negotiate a bilateral treaty with us on the basis of something called a negative list and on national treatment during a company's pre-establishment phase before it up and running. was a new breakers with china. now the details need to be worked out to see whether those can be translated into real and meaningful commitments. you have all heard over the last day all the reasons why it makes sense to invest in the united
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states and use this as your platform. i have to say i have been visited by companies all around the world some of whom are represented in this audience in recent weeks who have said that between our legal system, our innovation, ecosystem, workforce , the access to cheap and cleaner energy, that this is a platform that they want to base themselves that. when you add to that, the network of trade agreements that were currently negotiating, this can be a global platform for exports and i think we will see more and more investment as a result. we are seeing a renaissance of investment in manufacturing. in certain sectors that we never thought we would see additional investment heard we're seeing the expansion of global services. investments in our agricultural sector, which is a world-class character. it is -- we are optimistic about the u.s. being a platform for global investment. with these trade investment
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treaties providing the context is that in a very -- the sum bringing attention to that and it is nice to be on a panel where everybody supports what it is we're doing. agreements and we are very grateful for all your support as we go forward. >> the place to start is with >> executives on the panel for the last series of users but a series of bilateral agreements with south korea, with columbia. we're in this world are talking about these more sweeping agreements with the eu and with pacific rim countries. >> doug, as you're making -- how isecisions and that different for you in terms of bilateral agreements. .> is highly important to us very worried that
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columbia and a number of our other country competitors would do a free-trade agreement and we would not be included. , so much of at that our competition is non-us. in this case all of it. we would be looking at tariffs for exports to colombia that columbia and japan, germany, sweden, others would not have to encounter. i would go to our workers out in central illinois and say look, we have a 10% premium, but with an eight to 10% premium be? we have to find a way to be more efficient or we will lose a sale. we just cannot find ourselves in that position. it is critical to us. most of our big equipment from sole-source is u.s.. we need to access to those markets are the tpp example is a great one because i'm convinced, michael, that most of those countries will sign an agreement with or without us. at some point down the road, we
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will potentially be looking in on that. i'm really worried about that as an exporter and employer of some 50,000 people in the united states and what happens to our workers and opportunities as a result of that. of course he asked five cars are going all over the world and ringing incidents from germany, how does that prospect of those agreements affect? >> we still our if you look at relationship between united states and europe, we still pay import duties to europe like 10%. we have 2.5% to go into the u.s.. that sums up year-by-year to a millionorth of $550 just as costs related to that. it is not only about the import fees that we had to carry, there
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is also about the different standards. you wonder why because it is about crash testing and emission standards. , it is the same human being sitting in the car, yet we have different standards tunehey cost also to the of a few hundred million. we just have to develop different cars or encompass all these different rules. so not having these additional costs must have a huge impact on our competitiveness, on our what q-we have to see tip is going to be in detail, but this will have a huge impact on us. it is my responsibility to see how well we're doing with canada and mexico as opposed to brazil or argentina. purcell for example overnight has raised import duties by 30%, so you are a very exclusive
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brand. >> governor? >> in a development context, how ahead of these agreements are you? >> the true number you start with as export 16 times more per capita with the companies we have free-trade agreements. we think the q-tip ribbon talking about, specifically disavowed automobiles, we could just in tennessee increase our automobile exports are most $1 billion. it is huge in terms of the jobs created. more nissansding being built in tennessee. >> if you take it back to the eu, there's 10% as rich as set, 10% tariff and then another seven to 10% in additional cost to to double checking come across safety and a lot of other things. 17 to 20% hisat a advantage, that is huge. >> we just watched canada and
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finalize a pretty good agreement , which i really hope of was a door on many things we could be doing with europe as a result of that. after all, we have nafta with canada, there's not as much a difference between what they're doing and what we are. it should help us get that done. >> how are things coming, what do you see as prospects for both of these agreements over the next months or years? >> i am optimistic. we're are much further along on is been underway now for three plus years. we are in the endgame. we are trying to work on the outstanding issues which are still significant. all the countries on the table are working very hard to try and get this done. are atgard to q-tip, we an earlier stage, but we have also been spending a lot of time over the last year and half with our european colleagues coming to a common understanding of having similar or different
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approaches to the issue. there's no great surprise here. we know how to work our way through it. it does mean it will be difficult, i think it is doable. the great opportunity, but also the challenge with the european agreement is that we are going to try to bring our regulatory standards systems more closely deregulation or lower health safety standards, but trying to eliminate unnecessary costs and unnecessary frictions to get in the way between two well- regulated markets. that is something that will take some creativity. it is a new area that we are focused on, but i think it is one that holds out a lot of promise. one thing i would like to add to doug's point earlier, we don't live in a static world. other countries are not just waiting to see what it is we do. they're out there negotiating preferential access to key markets for our exporters. we need to be on the field as well. we need to make sure that not only are we on the field and
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getting access to the markets, but that we're doing it in a way that raises the overall standards of the international trading system, that introduces new disciplines to do with the emerging issues in the international trading system. there's a real stark choice out there. we have made that choice. the choice is are we going to go for a race to the top where we are trying to raise the , and i think our partners about into that, or do we get dragged into a race to the bottom which we can't and don't want to win? that is what other trading nations might have us do. our goal is to reach his agreements on high standards so that it can level the playing field so that our workers in the u.s. have a chance to compete on a fair and level playing field because they are the most productive workers in the world. we need to have a level playing field if we're going to succeed. >> to be blunt, this is an unrelated issue, but to the tensions over spying and nsa stuff, is a damaging to the prospects for a cheap tip agreement.
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48ttip agreement. i think you have heard from a number of european officials that they see the logic of isng ahead withttip/ important to the strategy. we are hopeful we will be able to continue to make progress on that. we have teams in brussels as we speak. they are in negotiations that had to be canceled due to the shutdown of the government. now they're back on track. we hope to continue those discussions in the coming weeks. >> a number of people have mentioned regulatory alignment. can you give us more detail of what that means in practice? if you are bmw, one of the challenges of having different regulatory regimes on the sides of the atlantic and what kind of savings would you be looking at
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if those were better aligned? >> one as obvious a crash testing. cars have to be crashed in a different way in europe than they funnily enough, and mexico, mexico has the european crash testing. over the border, there must be some different animal living, because there are different crash tests. i have to say, if we only can agree that we accept mutually the standards of crash testing that would be already great success. so we can have, either the european or the u.s., the same that would be great. it does add a considerable amount of research and development, i.e., costs, and we lose competitiveness. the same holds true for all of the emission standards, where the u.s. is more focused on mileage. where europe is focused on emiss.

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