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Press Briefing by Secretary of Commerce Ron Brown

February 16, 1994

The Briefing Room

11:20 A.M. EST

SECRETARY BROWN: Well, obviously, as the President said, this has been a good day for American business and industry, a good day for American workers, a good day for the American economy. We've worked hard on it for almost a year now, and obviously we're very pleased with the announcement that was made today.

Q: Mr. Secretary, is this a payback for the Gulf war?

SECRETARY BROWN: No, not at all. What it represents is hard work on the part of American companies and the American government. We've made a basic decision that if we're going to compete and win in the global marketplace, it's going to take a real partnership between business and industry.

We have been locked in a time warp for several decades, engaged in an ideological debate about the role of government, while our international competitors figured that out a long time ago. That's why they're doing better than they should be doing in international competition. And we're not doing as well as we should be doing. And so what this demonstrates is that we're serious about opening markets; we're serious about competing effectively; we're serious about working in conjunction with American business and industry to win those battles.

Q: But the Ambassador said that King Fahd was moved by geopolitical concerns. Isn't one of the large ones --

SECRETARY BROWN: That was the Ambassador -- you'll have to direct those questions to the Saudis. And it certainly wasn't a part of our discussions --

Q: But you negotiated with them.


Q: How much was the American role --

SECRETARY BROWN: It was not a part of the discussion that we had.

Q: Can you characterize the differences between the financing arrangement that the Airbus Industries offered the Saudis, and what the United States offered --

SECRETARY BROWN: I really can't. I do know that the Export-Import Bank, under the leadership of Ken Brody, stepped up to the plate early in this game to indicate that they would be an important part of this transaction, but I really can't speak to the financing of Airbus.

Q: But today there were no plane sales announced, there were no -- breakdown of who was going to buy what or --

SECRETARY BROWN: This is not -- the issue is not financing, the issue is really delivery dates, the sequencing of the aircraft, those kinds of discussions. This is not a set of negotiations that might break down. These are the final details of a deal that has already been announced.

Q: But what has been negotiated for the past year? I mean, specifically what was agreed to?

SECRETARY BROWN: Well, several things. One, the number of aircraft that would be bought. The Saudis had to make a decision about who they would buy them from -- whether they'd get them all from Boeing or all from McDonnell Douglas or all from Airbus -- those kinds of judgments were made. They looked at quality of product. They looked at servicing arrangements. They made a judgment that American products were the highest quality and therefore they made the decision that they made today.

Q: But was financing part of the negotiations?

SECRETARY BROWN: Yes, it certainly -- financing discussions -- but my understanding is financing was not a major factor in the decision.

Q: Have they made a decision on the breakdown between Boeing and McDonnell Douglas -- they're just not it yet, or is that still being dickered on?

SECRETARY BROWN: I believe that that decision has been made but has not been announced.

Q: Do you know what types of planes they're buying? Any specifics on --

SECRETARY BROWN: They're buying planes in the full range of sizes that a commercial fleet would need. And I guess the best answer to that question is to look at what Saudi presently has and look at what they are going to replenish. So it'll be a full range of aircraft.

Q: Do you have any concerns about the cash flow and the --


Q: the ability of the Saudis to actually --

SECRETARY BROWN: None whatsoever.

Q: their terms of this deal?

SECRETARY BROWN: None whatsoever.

Q: And why not? What have they --

SECRETARY BROWN: Well, first of all, this is a transaction that'll take place over a series of years. The leadership of the Saudi government has taken appropriate steps -- a reduction of the budget -- 20 percent across the board, all departments -- a very responsible action. We have full confidence in the Saudi economy and their ability to meet their obligations.

Q: Are you concerned about retaliation from European industrialists since one point they were talking about splitting the order between U.S. and European firms?

SECRETARY BROWN: Retaliation because we won and they lost? No, I can't imagine -- I can't imagine that that would be the case. I assume -- but we're happy that they're not happy. But we deserved to win. We did win. And I can't really speak to the psychological impact that's had on our competitors.

Q: What is the Export-Import Bank's role? What's the financing --

SECRETARY BROWN: In financing.

Q: And what will they do?

SECRETARY BROWN: Well, they are determining that role. They've indicated that they could handle the full level of this transaction. The transaction initially was talked about in terms of a $6 billion to $9 billion. It looks like it's somewhere in the area of $6 billion.

Q: But is there role strictly loan guarantees or --

SECRETARY BROWN: Yes, their --

Q: what exactly do they do?

SECRETARY BROWN: -- typical role is loan guarantees.

Q: So they will guarantee the loan --

SECRETARY BROWN: It frankly depends on Boeing and McDonnell Douglas, what their needs are in order to complete this transaction. And since the split has not been announced, it's impossible to determine exactly what role Ex-Im will play. Ex-Im was prepared to play a full and complete role in guaranteeing loans for the full deal.

Q: Are you suggesting that the split has been negotiated, because the other people have suggested that that's still to be negotiated?

SECRETARY BROWN: My understand is that they have made a determination of the split; they're not prepared to announce that as yet.

Q: Would you expect it to be or -- can we expect it to be about 50-50?

SECRETARY BROWN: I can't comment on that. And the fact that you had the top executives of both companies here, which certainly indicate that they both get substantial orders from this transaction.

Q: Mr. Secretary, what kind of message do you want to be sending to U.S. exporters by talking about a more active government role? Can anybody sort of walk into your office these days and expect you to go to bat for them?

SECRETARY BROWN: Well, we've been doing that for the last year, through the work of the Trade Promotion Coordinating Committee, which I had the privilege to chair. We've brought together the 19 agencies of the federal government involved in promoting exports. And through that work we've come up with a national export strategy, which the President has approved and which we have embarked on. It's a new strategy for the United States. The United States government has generally not been proactive in helping American business and industry compete in this tough global marketplace. We have found that this is not a one-way street. Not only are we reaching out to the business community indicating that this is pro-business administration. We're pro-growth, we're proworker, and we've got to prove it. We think this is an important vehicle for demonstrating our commitment to promoting exports. The fact is that every billion dollar increase in exports means 20,000 new jobs for the American people. It seems like a pretty good way for an administration to spend its time.

Q: Secretary Brown, along those lines, has the President determined to restore the Super 301 -- (inaudible) -- if not, when is it --

SECRETARY BROWN: We have indicated that we are looking at all options. We're very dissatisfied with our present imbalance of trade with Japan. We have taken an aggressive, proactive approach since this administration came to office. We have said it would be unacceptable and irresponsible for us to sit on our hands and do nothing in the face of a $60 billion trade deficit with one country. And the fact is that that trade deficit is increasing rather than narrowing. So we have indicated that we want a results-oriented approach. We want measurable, monitorable results. And we continue to press in that direction.

Q: No decision on Super 301 --

SECRETARY BROWN: No decision on anything yet. We're reviewing, as the President has said, a full range of options. So everything is on the table.

Q: How many jobs specifically will the $6 billion Saudi sale create -- new jobs, old jobs? And where will they mostly be? Can you break them down --

SECRETARY BROWN: We believe it will create at least 100,000 jobs. Now, whether they're new or old depends on what the companies do with other sales. For example, just yesterday Kazakhstan announced the purchased of six Boeing aircraft. If all things were equal, this would create 100,000 new jobs. Obviously if the company continues to do business elsewhere, you have to make judgments about how many new jobs those additional sales create.

Q: aerospace or in all fields? Is that just aerospace or --

SECRETARY BROWN: No, that's just in the aerospace industry.

Q: There have been a lot of numbers thrown around -- 20,000 jobs for every $1 billion in exports; 10,000 jobs for every billion -- for every billion dollars in planes. How do you quantify these jobs?

SECRETARY BROWN: No, no -- a lot of numbers haven't been thrown around --

Q: By other officials --

SECRETARY BROWN: We've said $1 billion increase in exports equals 20,000 jobs. If, in fact, this is a $5 billion transaction, that's 100,000 jobs. It is likely that it might be a $6 billion transaction.

Q: It is a $5 billion or a $6 billion?

SECRETARY BROWN: It's $5 billion to $6 billion.

Q: It's $5 billion to $6 billion, not $6 billion?

SECRETARY BROWN: Until they complete the time of delivery, the specific aircraft that they're going to be purchasing, and when those aircraft will be delivered, you won't know the exact cost. Financing has some impact on the cost. So cost might be different if you receive a plane this year than if you receive it in 1989. So we believe it's going to be $6 billion. We said $5 billion to $6 billion earlier. It might be more than that, depending on delivery date.

Q: Secretary Brown, I'd like to go back to Japan for just a minute. Some trade analysts say that by taking the first steps toward imposing sanctions the administration could trigger a trade war that could wind up hurting American companies as much or more than Japan's. Are you concerned about that, and are you going to be taking steps --

SECRETARY BROWN: Certainly -- we're not interested in a fight just to have a fight. But we are committed -- we are resolute in our desire to open markets that are closed to American products and services. The fact is that the Japanese market is not an open market. There has been some modest progress made just as there was some modest progress made by Motorola -- notwithstanding the decision that was announced by Ambassador Kantor yesterday -- but much of that market is still closed to American products and services. We believe we have to do everything we can to remove those barriers. If American products and goods and services are the products of choice in every country in the world but one, common sense ought to tell us that there is something wrong in that marketplace, and we're going to do everything we can to correct that situation.

Q: You don't believe that this is putting American firms at risk in any way?

SECRETARY BROWN: Well, that's one of the reasons why we evaluate our options -- to make a determination about how, in fact, we open markets and not do damage to the American economy. That's one of the things you evaluate in all of these decisions.

Q: What is the total number of planes in the sale? And is there also a commitment to buy U.S-made engines?

SECRETARY BROWN: This would include the commitment to engines, yes. We believe the number is about 50. And those engines are principally Pratt and Whitney and G.E. engines.

Q: The Saudis have been concerned about flying twoengine planes across the water. Was that a major part -- and I think the United States government still hasn't certified them to fly over open water. Did that come into the negotiations at all?

SECRETARY BROWN: I never heard the discussion in relationship to flying over water. I did hear discussions about two engines versus three or four, but not in reference to your question about flying over water.

Q: What was the personal contact or involvement of the President? Did he speak to the King?

SECRETARY BROWN: One telephone conversation with the King. But he's been involved -- I have talked with the President many times on this issue. He was very familiar with everything that we were doing. I reported to him both before my -- each of my trips to Saudi Arabia and upon my return. This has been a transaction that he's been very interested in.

Q: And when was that conversation with the King?

SECRETARY BROWN: I don't know the timing of the conversation -- several months ago. It was in between my two trips. So my guess is it was probably last fall.

Q: There also have been letters -- the President -- at that level?

SECRETARY BROWN: No, there haven't been letters. There have been -- there have been letters accompanying me on each of my trips to Saudi Arabia to the King that involved the aircraft sale as well as other commercial matters.

Q: Does this presage any involvement with other industries down the road? And if so, where should we be looking for --

SECRETARY BROWN: That involvement is ongoing. That involvement is ongoing. As part of my visits to Saudi Arabia, I've also talked about telecommunications and the fact that they're about to put in 1.5 million new lines. That would be probably a $4 billion transaction. I certainly would like that to be AT&T and not our foreign competitors.

So we're doing this all over the world. We think it is a very, very important focal point for the work of the Commerce Department and this entire administration, committed to economic growth and job creation. And one way to do it is to increase United States exports.

Q: But how does the Commerce Department or the government decide whether to promote AT&T or some competitor to AT&T? How do you get into the business of picking and choosing --

SECRETARY BROWN: Oh, we don't. We don't. Just as we, in this case, we didn't promote McDonnell Douglas or Boeing, we promoted them both. We were in there standing with American business and industry. If there are two or three or four American companies competing against foreign competitors, we're going to support all of the American companies that are competing. We're not going to choose among, between American companies.

Q: Why do you think that despite the fact that President Mitterrand went personally that they rejected the French?

SECRETARY BROWN: I think they thought the American products were better products. And I honestly believe that American products are the best, that our industry and our workers are the best and they produce the best products. The Saudis made that judgment, too. Not only did President Mitterrand went, but Prime Major went, the Germans were very involved. This was a very tough international competition. We won. We're certainly heartened by that victory. We expect many more in the future.

Thank you.

THE PRESS: Thank you.

END 11:35 A.M. EST

William J. Clinton, Press Briefing by Secretary of Commerce Ron Brown Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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