SPECIAL BRIEFING VIA TELEPHONE
KEITH KRACH, UNDER SECRETARY FOR ECONOMIC GROWTH, ENERGY, AND THE ENVIRONMENT
BONNIE GLICK, DEPUTY ADMINISTRATOR OF THE U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID)
Moderator: Good day, everyone, from the U.S. Department of State’s Asia-Pacific Media Hub in Manila. I am Zia Syed, the Hub Director, and I would like to welcome our participants dialing in for this briefing.
Today we are very pleased to be joined from Washington, D.C. – Keith Krach, Under Secretary of State for Economic Growth, Energy, and the Environment, and Bonnie Glick, Deputy Administrator of the U.S. Agency for International Development, or USAID. We’ll begin today’s call with opening remarks from Under Secretary Krach and Deputy Administrator Glick. We will try to get to as many questions as we can during the time that we have, which is approximately 35 minutes.
Finally, as a reminder, today’s call is on the record. And with that, I will turn it over first to Under Secretary Krach.
Under Secretary Krach: Thanks so much, and it’s great to be here with you all today to talk about my favorite subject, and that’s the digital economy. Because now more than ever, almost every aspect of our economies are impacted by technology, and the pandemic has only accelerated the transition to digital commerce and digital everything.
While technologies like 5G are creating tremendous growth opportunities, they also increase the risk posed by untrusted countries and companies, especially those beholden to authoritarian governments like the Chinese Communist Party. I think the year 2020 will go down in history as the year that the CCP was exposed for what it truly is. It’s not what the world hoped for. Consider its rap sheet for the year: the concealment of the pandemic; the co-option of Hong Kong and eviscerating its freedoms; the human rights abuses in Xinjiang; the skirmishes at the Indian border; and then of course the activity around Taiwan.
I just got back from a couple of trips through 16 countries, and one thing I can tell you is the citizens don’t like it. And I think this has given the political will to government leaders and CEOs everywhere to stand up to the China bully and its tactics of intimidation and retaliation. Here in Washington, this is the most unifying bipartisan issue of our time — Democrats and Republicans alike — for a long time.
And the world is also waking up to the dangers of entrusting our critical 5G networks to untrusted, high-risk vendors. But the good news is, the tide has turned against the CCP with the announcement of the Clean Network just a few months ago. And the Clean Network is a comprehensive approach to addressing the long-term threats to data privacy, security, human rights, and trusted collaboration posed by the Chinese Communist Party. It’s rooted in internationally accepted digital trust standards, and it represents the execution of a multi-year, enduring strategy built on a growing coalition of over 49 Clean Countries, 170 clean telcos, and leading companies around the world like Oracle, HP, Reliance Jio, NEC, Fujitsu, Rakuten, Cisco, SoftBank, VMware, and many others. I think the key to the Clean Network’s rapid success is that it provides strength in numbers and power in unity and solidarity to stand up to the CCP’s bullying tactics of intimidation and retaliation.
I think we’ve all experienced bullies sometime in our life. And if there’s anything I’ve learned, when you confront bullies, they back down. And they really back down when you have your friends by your side, and 49 Clean Countries and 170 clean telcos — plus a ton of industry-leading companies — are a lot of friends.
In the Indo-Pacific region, Australia, Japan, Vietnam, Taiwan – they’re all members of the Clean Network. And all of the top telcos in Singapore, India, and also in Korea – KT and SK are clean telcos and all members of the Clean Network. And just last week, the Clean Network was endorsed at the annual Three Seas summit. Now 11 out of the 12 Three Seas countries are members of the Clean Network. And already, 31 of the 37 OECD countries are members. In Europe, 27 of the 30 NATO countries are members of the Clean Network, and 25 of the 27 European Union nations are members of the Clean Network. And just in a few short months, two-thirds of the world’s GDP is represented on the Clean Network.
And the Clean Network is about more than just 5G. It covers everything from electrical grids to autonomous vehicles, cloud computing, apps on your phone, clean underwater cables, clean app stores, and clean internet of things, and more. It includes lines of efforts also, such as clean supply chains, clean investments, clean financing, clean labor practices, which are focused on standing up to those human rights abuses in China. And I think all of us – governments, business, civil society, and I think especially the press – can continue to turn that tide against authoritarianism in the favor of freedom and security. There’s no sustainable prosperity without liberty. We appreciate your help in spreading that word.
Now let me turn to my good friend and partner, Deputy Administrator Bonnie Glick from USAID. And she has a few words to share. Bonnie, take it away.
Deputy Administrator Glick: Thank you, Keith, so much. And thank you all for letting me speak to you a little bit about what USAID, the U.S. Agency for International Development, is doing jointly with the private sector in the Indo-Pacific region.
At USAID, we prioritize working with the private sector to pursue market-based and enterprise-driven solutions to today’s development challenges. And we do this also because, by joining with the private sector, we’re also looking toward the development challenges and solutions of the future. Because private enterprise and free markets offer countries a powerful tool to help achieve self-reliance and prosperity.
Since last year’s Indo-Pacific Business Forum (IPBF), which was in Bangkok, USAID has dedicated $250 million to expand partnerships with governments, civil society, and the private sector in countries across the Indo-Pacific region in support of economic growth activities including energy, infrastructure, digital connectivity, and trade. These partnerships work to advance the U.S. Government’s vision for a prosperous, free, and open Indo-Pacific region.
One example of this type of partnership is the new, five-year, $36 million program in Vietnam to advance Vietnam’s energy security further. This investment will build on our past success working with policymakers, regulators, and businesses to accelerate Vietnam’s transition to clean energy. Vietnam is massively increasing its solar energy production. In 2017, solar power was less than 2 percent of Vietnam’s total power generation. But by the end of 2019, solar exceeded 10 percent of the country’s total power generation. That’s just in two years.
In the remarks that I gave in the panel where Keith and I last spoke together on the digital economy at the opening of the Indo-Pacific Business Forum, I highlighted how USAID is a global leader in promoting the adoption by emerging economies of open, inclusive, and secure digital ecosystems such as those that are championed by the growing coalition of like-minded countries, companies, and telcos that the Under Secretary referenced as part of the Clean Network.
I also highlighted some of USAID’s work in this area, including the leading role that we played in delivering reliable, secure digital connectivity for Palau under the Trilateral Partnership for Infrastructure Development between the United States, Australia, and Japan.
It’s impossible not to recognize at this year’s Indo-Pacific Business Forum how COVID-19 has affected all of us in government and in business. In the Indo-Pacific, the garment industry has suffered immensely. I announced a new memorandum of understanding with a consortium of U.S. retail, apparel, and footwear companies and industry associations to help supply chain workers — most of whom are women — in Bangladesh, Sri Lanka, Vietnam, and Cambodia. We’re aiming to foster a more resilient sector, enhance energy worker rights and welfare, and empower women workers.
I’d also like to remind everyone of the Blue Dot Network, announced at last year’s second Indo-Pacific Business Forum in Bangkok. The Blue Dot Network brings together governments, the private sector, and civil society engaged in infrastructure development. The Blue Dot Network will serve as a globally recognized symbol of market-driven, transparent, and financially sustainable development projects.
So, you’ve heard a little bit now about the development work that we’ve been involved in over the past year in the Indo-Pacific region, and I look forward to your questions. Thank you so much.
Moderator: Thank you very much. We will now begin the question and answer portion of today’s call.
We will go ahead and start the questions with Dong Hyun Kim from the Voice of America Korean Service, who I believe is calling in from Washington, D.C.
Question: Yes, this is Dong Hyun Kim from Voice of America Korean Service in D.C. I have a question to the Under Secretary. You mentioned South Korea. Actually, the South Korean Government, there is one vendor that still is sticking on Huawei. And the South Korean Government actually explained that this is a private matter, that the government cannot intervene. What is your take on that? And there’s also a prospect that U.S. is considering a possible option of secondary boycott to nations or private companies that does not cooperate on this initiative. How do you see a response to that speculation? Thank you.
Under Secretary Krach: The way we would look at it is that we respect the country of [South] Korea, and we respect their decisions. At the end of the day, I think it’s all about trust. And the good news is that this is playing out, and more and more countries and companies are asking the question: Who do we trust with our precious personal information? Who do we trust with our customers’ most sensitive data and our most valuable intellectual property? And the answer is more and more coming back: it’s certainly not a company like Huawei, who’s the backbone of the Chinese Communist Party’s surveillance state. And certainly not a country that has a National Intelligence Act that says any Chinese company, state-owned or otherwise, or any Chinese citizen is required to hand over any information, proprietary technology, intellectual property, or data upon request to the Chinese Communist Party or the People’s Librarian Army — or you’re going to suffer the consequences, which are pretty severe.
And this is a big issue for the U.S. private sector as well as a lot of the other private sectors in different countries, particularly the innovation sector. Because when you look at these companies like Oracle and HP and so forth, that are on that Clean Network, what they’re saying is that in order to expand our operations – to enter a country, we can’t put our intellectual property at risk. We can’t put our proprietary technology at risk.
So, I think there’s consequences with regard to a private sector’s investment in that. And I think also — let alone Huawei’s running out of its most sophisticated chips for their smartphones, and they’re running out of chips for 5G due to export controls, and I think that’s had a dramatic effect on their business.
And the other thing, too, is I think countries have seen retaliation from China, and companies have too. When the UK made that famous decision to reconsider letting Huawei in the 5G networks, and immediately Beijing threatened the HSBC British bank and then the Chinese ambassador to the UK threatened the $100 billion Chinese investment in that railway in northern England. And that’s when Secretary Pompeo shouted out: We stand with the UK. We stand with our friends. We stand with our allies against the China bully. And Korea’s seen that retaliation before, and we stand with them.
As a matter of fact, the Swedish post and telecom authority, based on assessments by the Swedish military and security service, said that in Sweden, the four wireless carriers for their 5G networks cannot use Huawei or ZTE in wireless – in their telco infrastructure. And if they have any of that, they have to rip it out; they have to rip Huawei and ZTE out.
And then today, the foreign minister of China told Sweden: If you don’t reverse your course, we’re going to have a negative impact on bilateral trade and the operation of Swedish companies in China. So once again, we stand with them because at the end of the day, democracies around the world are the vanguards for this epic battle of freedom versus authoritarianism. Thank you for the question.
Moderator: Thank you very much. Next if we could go to Wenshin Chang from United Daily News Group calling in from Washington, D.C.
Question: Yes, thank you. This is Wenshin Chang of United Daily News Group. I have a couple of questions to the Under Secretary about the U.S.-Taiwan economic and commercial dialogue which is led by you. Well, it happened this year. Would you provide more details, for example, about the talking points or the timing about a next dialogue? Thank you.
Under Secretary Krach: Yes, well, I went to Taiwan a little over four weeks ago for President Lee’s funeral. As you know, I was the highest-ranking State Department official since 1979. So, my purpose was to honor President Lee. But we also had some great discussions about economic collaboration in areas like digital, energy, infrastructure, semiconductors, supply lines, and all of that, and met with a number of their CEOs. I had dinner with the president as well as Morris Chang, the chairman of TSMC. So, it was really talking about how do we tighten these bonds of collaboration. And so, we’re working together in a number of areas.
And I think that Taiwan is, to the United States and to many other countries, just a great friend, a great ally. They’re also a role model in the region as well as around the world for a great democracy, as well as capitalism. I mean, these guys are outstanding. After I was the vice president of General Motors, I built companies in Silicon Valley for 30 years, and Taiwan was always [great] to do business with. Thank you so much for that question.
Moderator: Thank you very much. I’m going to pass you a question that we received in advance. We received a question for Ludi Escolano from Greenfields Magazine here in the Philippines, and his question was if you could speak a little bit about any IPBF discussions that were held or any agreements reached with regards to the overall digital economy. If you could please respond to that question. Thank you.
Under Secretary Krach: Yes. By the way, there are a lot of discussions going on, a lot of discussions on the margins. One of the great ones that I had was a CEO roundtable with a number of companies talking about how the U.S. can further invest in the Indo-Pacific area, and what are the tools that we can bring to the region. And so we talked a lot about the Development Finance Corporation, how we increased that from 30 billion to 60 billion and also be able to take equity, and it’s for all kinds of infrastructure, including IT infrastructure. And the United States doesn’t have to be the nexus of the project. In other words, you could have a Vietnamese or Philippine [citizen] be the project manager and the prime contractor on it. And then I’m going to let Bonnie talk a little about USAID, because it’s a very powerful force in the region.
We also talked about the Export-Import Bank and how we’ve rejuvenated that, and the capabilities there. We also talked a lot about how the U.S., and actually a lot of European countries are no longer investing in production capacity or manufacturing in China. As a matter of fact, a lot of those companies are pulling their supply chains out. And that represents a great opportunity for all the countries in the region. And here again, it comes back to you want to make sure that there’s trusted infrastructure there, so it’s important that these countries and telcos are members of the Clean Network.
So, Bonnie, I know you participated in a lot of that, and talk about that, and then also about USAID and some of the things you’re doing along those lines.
Deputy Administrator Glick: Sure, and Keith, thanks. As all of you know, when the U.S. Government comes to the table, we come as a whole-of-government approach to whatever the issue happens to be. One of the reasons that Keith and I get along so well is that we carry each other’s water along the way to advance the interests of the Clean Network, and to – which is in – fundamentally advancing [inaudible] U.S. interests.
One of the things that I participated in during the Indo-Pacific Business Forum along with the Under Secretary was this panel discussion with senior executives from Google and AT&T and the U.S. Chamber of Commerce and the U.S. Trade and Development Agency. And in this conversation, across the board, we were talking about what the significance is of investing in the digital economies of Indo-Pacific countries. And the fundamental bottom line in all of it is the level of investment that is open and ready for — just to meet current needs, which is over $2 trillion by 2030. That’s to meet what is projected to be the regular needs — not to expand beyond that. So, imagine that growing exponentially, which is probably what is likely to happen.
So, when you’re talking about in the next 10 years — $2.3 trillion of investment — you’re not talking about this being something that the U.S. Government alone is going to invest in. USAID jointly, with our other agency partners like the State Department, the Commerce Department, Export-Import Bank, the Development Finance Corporation — we will play a role in this. But what we like to highlight is the critical role that’s going to be played by the private sector. And in developing countries in the region, the type of development that we’re talking about for digital economies is going to be enterprise-driven and market-based growth, where the private sector will play a primary role.
Where AID and where foreign assistance comes in and where the Development Finance Corporation comes in is to provide loan guarantees, first-loss capabilities, as well as other investment incentives to leverage in, and crowd in, 10x, 20x times the amount of funding that we’re providing to come in from the private sector and from private investors.
So, the key for all of you to be aware is we’re open for business, we bring business with us, and the concept of an open, free, and reliable digital economy in the Indo-Pacific is critical for the world’s economic advancement. The key to this being free and open, secure, and reliable. And the more countries, companies, and telecommunications companies that join the Clean Network, the better the momentum is to push for these internationally recognized, trusted standards.
Moderator: Thank you very much. We have probably another 10 minutes or so. I’ll ask one more question that we received in advance. Perhaps I’ll also direct it towards the Deputy Administrator. We received a question from Monira Munni from The Financial Express in Bangladesh, and Monira was asking: “Will you kindly elaborate on the MOU signed between USAID and U.S. retail, garment, and footwear companies, regarding how the workers are to be supported in Bangladesh? If you could provide us some details on the situation.
And also, let me just mention this as well, we received another question on a related matter from Bangladesh saying, “How did the IPBF discuss matters of Chinese involvement and interference in Bangladesh and other countries? Okay, please go ahead.
Deputy Administrator Glick: Sure thing. I’ll address first the MOU announcement. I announced a new memorandum of understanding that was with a consortium of U.S. retail, apparel, and footwear companies and industry associations with an eye toward helping supply chain workers, most of whom are women, in Bangladesh, in Sri Lanka, Vietnam, and Cambodia. These are countries that rely heavily for their growth in income on the garment industry, and this is a sector that was particularly hard-hit by the COVID-19 pandemic.
So COVID-19 has had a devastating impact on global supply chains. It has disrupted trade and investment. It has put frontline workers at risk and eliminated the jobs of millions of other workers, especially women, and it has done so with unprecedented speed and scale. The apparel, footwear and fashion accessories sector in Asia has been among the most affected industries challenged by supply-and-demand constraints that arose from stay-at-home orders, temporary business closures, production stoppages, backlogs in shipment, cargo delays, and other things.
The MOU that we signed establishes an intent to work together over the coming year on efforts that will help alleviate hardships faced by the predominantly women workers in the companies’ supply chains in these four countries. And these efforts, in collaboration with local partners, are aimed to help to foster a more resilient sector and workforce. It will enhance factory worker rights and welfare, and it will better empower women workers.
So, what’s important for everyone to understand and know is who the participating companies and industry associations are that we are partnering with through this MOU. They are Carter’s Incorporated, Gap Incorporated, Global Brands Group, Levi Strauss & Co, Nike, Tapestry, Target, VF Corporation (that’s V like victory, F like francisco Corporation), Walmart, American Apparel and Footwear Association, the National Retail Federation, the Retail Industry Leaders Association, and the U.S. Fashion Industry Association.
I may ask you to repeat the question on China vis-a-vis Bangladesh and the Indo-Pacific Business – and the IPBF. Can you repeat that question?
Moderator: Sure. It was actually a fairly general one which was coming in from Mohammad Imrul Hasan from Rtv in Bangladesh, and it was just about how the IPBF discussed questions of Chinese involvement and interference in Bangladesh, but also we can say in the region.
Deputy Administrator Glick: It’s a good question. I wasn’t in a lot of the conversations specific to Bangladesh alone, so I’m afraid I don’t have a sense of how the PRC was discussed in those venues. I can tell you that from the U.S. Government perspective, one of the things that we’re looking at to help Bangladesh with, is how Bangladesh can diversify its private sector to move some of it away from the ready-made garment industry into other, high-value areas to include the digital economy. And again, in order to be a competitive player in the Clean Network, Bangladesh has taken some important steps, I understand, towards the Clean Path, and coming in line with Clean Network requirements.
And so, this is the way that Bangladesh, jointly with the United States and with its friends in the region, is able to address the Chinese presence in the Indo-Pacific region.
Moderator: Thank you. We probably have time for just one more question. So, if we could turn it over to Nhu Nguyen from OEC, dialing in from Vietnam. Nhu, if you’re there, if you could please go ahead.
Question: Yes. I’m Nhu Nguyen from OEC [inaudible]. Mr. Under Secretary, in the conference of [inaudible]? Could you provide more data on [inaudible] Vietnam [inaudible] the next [inaudible].
Moderator: I’m sorry, I’m actually having a lot of difficulty understanding the question. If you could please perhaps slow down and simplify the question just a little bit.
Question: Yes. Could you please provide more data on the plan [inaudible] in the context of recent moratorium [inaudible].
Moderator: Okay. I’m sorry. Unless – Under Secretary or Deputy Administrator, unless you could hear that, I’m afraid I cannot hear that question and I’m afraid we’ll probably just move on.
Under Secretary Krach: Here neither.
Deputy Administrator Glick: I can probably address it. I think it had to do with Vietnam and our investment and our assistance —
Moderator: Excellent. Please go ahead.
Deputy Administrator Glick: If this is helpful, I’ll just give a little bit on the assistance that the United States is providing through USAID in the energy sector for Vietnam. I talked about a new five-year, $36 million program in Vietnam to further advance the country’s energy security. Our new program will build on our past success working closely with the Government of Vietnam to scale up clean energy and accelerate clean energy development. So, this has contributed to a very large increase in solar energy production in just two years in Vietnam, from less than 2 percent of the country’s total power generation in 2017, to over 10 percent in 2019. We worked with Vietnamese investors to build a grid-connect – seven renewable energy projects in 2019, utilizing U.S. technologies and expertise.
So, an example is in May 2019, the Ha Do Group, one of USAID’s partners, completed construction of its first solar-power farm in Vietnam utilizing services and advanced solar technology from SunPower, a U.S. leader in solar energy. In addition, USAID worked with the Government of Vietnam to develop a direct power purchase agreement pilot program which will allow businesses to purchase clean power directly from solar and wind generators. This $250 million in assistance is also supporting – includes a $20 million partnership with the National Renewable Energy Laboratory to develop and deploy tools, state-of-the-art approaches, and technical assistance to scale up advanced energy systems in the region. This includes an effort with the Japan Meteorological Agency to upgrade an online platform that provides solar resource data for Southeast Asia used by stakeholders, including investors and decision-makers.
So, I hope that helps answer the question on solar and renewable power in Vietnam.
Moderator: Thank you very much. We’re going to be wrapping up the call here. I was going to pass it back to Under Secretary Krach for any final remarks.
Under Secretary Krach: First of all, I want to thank Bonnie for joining me on the call. You can see why she’s just such a magnificent partner for me and the rest of the United States Government. This issue of Chinese retaliation keeps coming up. I had a great bilateral. We had a senior economic dialogue with the country of Bangladesh, really taking things to the next level — it was so very positive, as well as so many of the other nations, ASEAN nations. And the One Belt, One Road – right in the Indo-Pacific, it’s kind of the heart of it. And one of the finance ministers of one of the countries, and I won’t say which one, but he called it the “One Belt, One-way Toll Road to Beijing. He said there’s nothing win-win about it, and this intimidation and retribution has been on display for a long time.
And as a matter of fact, I just want to tell you guys something that in my trip, my last trip when I was in the Middle East, that that intimidation was on full display. At every stop, the Chinese officials were so threatened by my message about the Clean Network that they resorted to attempts to censor and bully the local journalists in several countries actually. The Chinese embassy even tried to stop the press from reporting my remarks by sending them letters. And the question that I ask is: If the Chinese Communist Party can’t handle press conferences about 5G, how do they expect to be trusted with actual 5G?
And that’s what the 5G security comes down to, it’s trust. And it’s certainly the most powerful word in every language. It’s the basis of every relationship, business, personal, or otherwise. You buy from people you trust; you partner with people you trust. And the U.S. and the Indo-Pacific nations trust each other. And among many other byproducts of that trust is sharing sensitive information with – to ensure security and stability of both the country and the wider region, and that’s why it’s so critical that Indo-Pacific infrastructure only relies on trusted vendors.
And I believe the Clean Network fits really well with the ASEAN vision of a secure, forward-looking Indo-Pacific. And global economic security depends on it. National security depends on it. Economic prosperity depends on it. And actually, so does the freedom of the press. So, I really appreciate what you guys are doing and your noble profession. So, I give you my deepest thanks and may God bless you all, and have a great day. Thank you very much.
Moderator: Thank you. That concludes today’s call. I want to thank Ambassador Keith Krach, Under Secretary of State for Economic Growth, Energy, and the Environment, and Bonnie Glick, Deputy Administrator of USAID. And I also would like to thank all of you for participating in this briefing.
Please stay on the line for information regarding access to an audio recording of the call. Also, please be aware that a transcript of the call will be posted to our social media platforms and sent out to all of you within a day. If you have any questions about today’s call, you may contact the Asia Pacific Media Hub at AsiaPacMedia@state.gov. Thank you very much.