President Barack Obama is heading to Kenya this week to address the sixth Global Entrepreneurship Summit, along with roughly 200 US investors. I sat down earlier this week with Secretary of Commerce Penny Pritzker, who is arriving there Thursday night, to talk about US economic ties to Kenya, American business in Africa, and the president's trade agenda.
Pritzker said trade deals will strengthen the American worker, that she wants to organize a second US-Africa Business Forum, and that she just doesn't understand politicians who want to kill the Export-Import Bank.
Here, edited for brevity and clarity, is my Q&A with Pritzker.
Jon Allen: If we're going to do trade deals with countries that have lower standards and try to get them to improve their standards, does that mean American workers will have to accept lower standards?
Penny Pritzker: I don't agree with that fundamental premise. I think that by raising the standards around the world, you make the American worker more competitive. Remember, we have the most productive workforce in the world. Why do so many companies want to put a base of operation, and sometimes their largest base of operation, here in the United States? It's not just our rule of law. It's not just our intellectual property protection. It's not just our abundant and low-cost energy. It's the productivity of our workers. And what companies are able to do is they're able to look at the total cost of production. They're not just looking at labor, they're looking at a total cost. These trade agreements make the American worker more competitive.
JA: What's the best the US can hope for out of a relationship with Kenya?
PP: The president created the global entrepreneurship summit six years ago — this'll be the sixth one — with the fundamental belief, and this is something we know to be true, that entrepreneurs and new businesses create opportunities, create jobs, create both better economic and political stability. As the point person on entrepreneurship and innovation for the administration, as well as an entrepreneur myself, I get it. This is for me intuitive, which is that if we help other countries that have huge youth unemployment, help their young people be able to start and build businesses, that creates a more stable local fabric and it will inure to the benefit of that country. The president is committed to that concept.
So what we can hope for in terms of trade? There's a lot of potential, but to unlock it we need to help them develop not just their entrepreneurial class but also their ways of doing business, so that American businesses can do more trade with Kenya. Last year, we had the US-Africa Business Forum. We're looking into doing that again. That's something we want to do again because there's been enormous energy, and the amount of activity that has come and engagement that has come through sub-Saharan Africa after that summit has just been incredible.
JA: How do you measure that?
PP: Our advocacy has more than tripled. [Editor's note: "Advocacy" is a measure of assistance to US companies in getting foreign government contracts. A Commerce aide said they have 17 "wins" for contracts totaling $17 billion but did not specify over what time period.]
That's one way that we engage. But the other thing that we've been doing is diaspora outreach. We've also had a global markets summit, where we brought together US companies to work with our foreign commercial service officers, November of last year. We did this, 300 companies came, and we helped them figure out, How are you going to engage in the countries throughout Africa that your product has demand for?
We've done infrastructure trade missions there that were led by the Secretary of Transportation, and our ITA team went with him. The renewal of the African Growth and Opportunity Act is a big opportunity. I think AGOA has helped make it easier for African businesses to sell into the United States by lowering tariffs. But the real question is going to be helping them take their capabilities and bringing them to the next level. So Kenya is, I think its biggest export to the United States is apparel, and the question is how does that continue to grow?
JA: Kenya's one of the most corrupt countries on Earth. When you are asking American businesses to invest in Kenya and other African countries that have corruption problems, aren't they taking a big risk not only of falling victim to corruption but also of becoming corrupt in order to get business?
PP: I don't think American businesses are going to fall victim because there's too much at stake. Really what the opportunity is is for those countries to recognize they have to do business differently if they want American business there. And my experience, when we went to Africa last year, was that the countries very much want US businesses. Some are committed to reforming and want to see more US business presence as a balance to the presence of other countries. But it's a challenge.
And part of the work I do when I go, which is commercial diplomacy, working with our American businesses, is to sit with the governments and to say, "Look, if you want more US business presence, which you say you do, you have to change the way you do business." And we go through specific changes and things they need to do. The focus of this trip will predominantly be for me around the Global Entrepreneurship Summit. But I'll also work on the issues of ease of doing business and corruption and rule of law.
One of the things we benefit from is we have the President's Advisory Council on Doing Business in Africa, which is 15 private sector CEOS and business leaders, and they've given us a set of things to focus on to help make it easier for them to do business and for American businesses to do business in general.
For example, setting up a US-Africa infrastructure center so that we can figure out how do American businesses come together to do infrastructure projects in Africa or cold chain development. There's desperate need in Africa for better cold chain logistics, you can imagine agricultural products, perishables, and things like that. So we're doing a pilot. The Department of Commerce is doing a pilot to look at how we can work with several African governments to develop a cold chain system, which is really important. Because I think it's something like a third of the post-harvest product is lost today. It's huge. So there's a massive opportunity to work together. Health-care infrastructure is another big opportunity. Kenya is focused, for example, on cancer — it's the No. 3 killer in Kenya — and they want to partner to put together a group of cancer hospitals, both diagnosis and treatment centers, to take care of their population. These are places where we can do work with them. We have the technology. We have the capability.
JA: Are consumers the greatest resource many African countries can offer to American businesses?
PP: That's a start. It's the opportunity. It's a population that's growing. But it's bigger than just consumer products. There's business to be done here. There's the inefficiency I just talked about in agriculture. There's health care. So this not just "we'll make goods and sell you goods." This is about 1.1 billion people in Africa.
Trade is small. Our trade with Africa is small. It's about $72.5 billion, and with Kenya it's very small. This is the reason that the president is focused on it. They are trading. They are doing more business. We should be a part of that. But there's got to be a recognition that the way that our American businesses can do business is different.
JA: How much of the US government's interest in Kenya revolves around national security versus wanting to help American businesses?
PP: It's all of the above, right? It's not one or the other. And the president recognizes that we have our security relationships or our military relationships. We have our diplomatic relationships, and we have our economic relationships. And we need to use all of those tools in order to manage how we engage with countries, and by deepening our economic relations it brings the countries together and hopefully creates benefit for the people and the communities both in the United States and in the countries of Africa.
And the president recognizes that we've been so focused on aid to Africa historically, and it's not that that's going to end anytime soon. But we need to be purposeful in growing our economic relations. So as a result we've doubled the number of foreign commercial service workers that we have in Africa. We've increased our engagement on the commercial side. And you see it from the US-Africa CEO forum. I mean, it was extraordinary. And part of one of the things I want to inquire of the African CEOs that I will see is, "Tell me about your experience at the CEO forum. What could we do better? Should we do another one? And if we do another one, what would make it more successful?"
JA: You think you'll be able to do that in this term?
PP: I sure hope so. I don't see any reason why we can't do it next year. I think it's a good idea and it's something that we should seriously try to get done.
JA: What are the deliverables you're looking for out of the Global Entrepreneurship Summit?
PP: The deliverable to me that is new this year is what I talked about, which is bringing the 200 plus investors, and that we didn't do before. For me I'm going to judge the success of this forum on whether that initiative ... how did that work and how would you institutionalize it as part of these summits. I can think of some things that maybe you might layer on next year. Think about it. You've had the summit for a couple of years, then we added an additional focus on women and youth, and now we're adding investors.
What I like to do is look at not just what we said we were going to do but how do we continuously improve. What are the things that we could add to make these more and more effective for the attendees and more and more effective for the countries that are hosting us?
JA: What frustrates you in making the case for trade and investment right now? What don't people understand?
PP: I think that the fundamental thing people don't understand is the world is not standing still. To stay competitive you have to stay in the game. To stay in the game, we need these types of trade agreements that our administration is supporting, where they're multinational, where they're high standard. Because the state of trade globally is at a lower standard generally.
And what we're saying is we're going to trade with people on a set of standards that's more consistent with how we do business — rule of law, intellectual property protection, how we treat labor. What kind of advantages do state-owned enterprises have or don't have? What protections should you have for your innovation? What kind of environmental policies are acceptable?
So I think there's a lack of appreciation that we can't just assume that we have the economic stability we have here in the United States without being part of the global trading system, and that we can either lead or follow in the global trading system. And what the president is trying to do with trade agreements is lead by setting the standards.
Here's one thing that frustrates me. There are 85 entities around the world like the Ex-Im bank. Most countries that are selling products globally have an export-import bank. Why? Because the buyer of your goods doesn't have a credit rating good enough to borrow elsewhere. And so you need to help. If you want, pick your favorite country in Africa, and say to grow their travel and tourism strategy and employ more people, they have to have airplanes that are coming to their country and they can't do that on their own balance sheet. The Export-Import bank allows them to pay on credit, which they couldn't borrow elsewhere. So why would we unilaterally disarm and take that tool off the table?
The other thing is, it's not just about the Boeings of the world or the GEs of the world. ... [Smaller businesses] want to sell into fast-growing markets. We have a stable market here. We don't have a fast-growing market. They want to sell into the fastest-growing markets in the world, which are in Asia and Africa. But they need support. Not so much for us, but the buyer needs support. And the fact that Ex-Im pays for itself and contributes to the Treasury: to me it's a win-win. I don't understand the issue with that.