Remarks by Deputy Secretary of Commerce Don Graves at the Information Technology Industry Council

Remarks by Deputy Secretary of Commerce Don Graves at the Information Technology Industry Council
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Tue, 01/31/2023 – 16:05

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Tuesday, January 31, 2023

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Don Graves

An American Industrial Strategy for U.S. Tech Leadership: Investing in Competitiveness, Innovation, and Equity

Thank you to the Informational Technology Industry Council for bringing us together for this summit. It’s an honor to be here.

Today’s Tech and Policy Summit comes at the right time, as the United States and our allies are in a high-stakes technology competition with authoritarian adversaries.

How this competition plays out will profoundly shape our economic security – our ability to innovate, grow exports, create jobs of the future, and provide opportunities to all our people. It will also shape our national security – our ability to protect our advantages while preserving our freedoms and democratic values at home and abroad.

And let us not be mistaken, who leads on technology will shape the future of a stable, inclusive, rules-based world order – whether one based on democratic norms like the free flow of information, data privacy, and an open internet, or the alternative.

Thanks to President Biden’s leadership – a renewed sense of urgency and purpose on the part of business, government, and communities around the country – we have a generational opportunity for business, government, and communities to work together to ensure continued U.S. tech leadership.

This work is already underway. I saw it firsthand when I traveled to Upstate New York last year and visited the Albany Nanotech Complex at the SUNY Polytechnic Institute.

The complex is an advanced R&D facility led by NY CREATES, which is a resource for public-private and academic partnerships, and it specializes in commercialization projects, enabling access to semiconductor design and prototyping for startups, smaller businesses, and universities, as well as helping to attract investment for entrepreneurs.

Alongside this effort is SUNY’s Career Alignment Platform Initiative, partially funded by the Commerce Department. It provides students and workers with training and support through the Nanotech Complex, as well as strong university partnerships with Historically Black Colleges and Universities and other premier research universities, in order to access jobs in the chips industry.

This ecosystem is laying the groundwork to create hundreds of new chip companies and build a world class semiconductor workforce right here in the U.S.

The private semiconductor industry is taking notice: Micron Technology has committed to build a semiconductor manufacturing complex – a chips cluster – in Syracuse.

This is how we will establish U.S. tech leadership – not with silver bullets – but, step-by-step, with government, business, educational institutions, and communities working together to create the conditions that will drive innovation, attract investment, and grow quality, middle-class jobs.

We’ll need to replicate the Upstate New York example many times over, especially in technologies that will have an outsized impact on our economic and national security. But we haven’t always done that.

The Challenge We Face

For years, policymakers took a hands-off approach, pursuing deregulation and tax cuts, rather than making investments in industries, infrastructure, communities, and workers.

Some state and local leaders pursued a race to the bottom, prioritizing the attraction of corporations at the expense of local communities and workers.

Many corporations, for their part, prioritized short-term cost-savings and failed to factor in supply chain risks. Tech companies, for instance, focused on software and services to the detriment of domestic hardware production, like chips.

Along the way, too many Americans were left behind. Manufacturing jobs were outsourced, our industrial base was hollowed out, real wage growth declined, inequality increased, and our workforce was left undertrained and disconnected from the opportunities and training and support they needed.

And in the meantime, our competitors and adversaries – in particular China – moved aggressively to establish their tech advantage – and erode ours. They’ve done this through massive government support for their own domestic industries; strategic use capital to gain access to our early-stage commercial tech and know-how; unfair trade practices including using loopholes in our circumvention and countervailing duties; and in many cases, rampant technology theft. They’ve also sought to obtain U.S. dual-use technologies to further their military modernization.

These efforts are allowing them to exercise leverage through supply chain choke points, undertake economic coercion, and undermine democratic institutions here and in allied countries. It is imperative to counter these efforts and deepen our partnership with countries that abide by the international rules-based order with democratic norms and principles.

The Biden Administration’s Approach and the Commerce Department’s Agenda

The Biden Administration understood early that we needed a different approach: a modern industrial strategy focused on groups of technologies that will be the source of growth, innovation, and jobs for the next generation, and—as National Security Advisor Jake Sullivan laid out in a speech last fall—are key to our national security and our geostrategic advantage.

One is computing-related technologies – comprising chips, quantum, and artificial intelligence – which are re-shaping every sector of our economy. From household appliances to defense capabilities, from the energy sector to transportation, and in virtually every scientific field, computing-related tech is creating new sources of growth and innovation and driving the military modernization that is essential to our security.

Another is clean energy tech that will reduce our dependence on fossil fuels and protect against the costs of the climate crisis.

And third is biotech and bio manufacturing. Thanks to our ability to read, write, and edit genetic code, biology is now programmable. And together with computing tech, these are enabling breakthroughs in everything from drug discovery to chemical and material manufacturing. 

Across these areas, the Administration and the Commerce Department are focused on doing three things to ensure U.S. tech leadership for the next generation:

First, reinvesting in our techno-industrial base and tech workforce with strategic, place-based investments in innovation ecosystems. These ecosystems are not about picking winners but enabling and jump-starting many winners across the country.

Second, protecting our tech advantage and national security from malign actors, in particular authoritarian regimes that seek to expropriate our tech and alter the norms that underpin a stable, inclusive, rules-based world order.

And third, expanding our international tech engagements to forge high-standards, strategic partnerships with allies that expand opportunities for our workers and communities, and theirs.

I want to take a few minutes to expand on each of these items.

Reinvesting in Our Techno-Industrial Base and Workforce

First, reinvesting in our techno-industrial base and workforce. To rebuild our industrial capabilities and maintain our geostrategic tech advantage, the Biden Administration is making strategic public investments – and leveraging private investments – in manufacturing, R&D, and workforce development in key technologies.

The bipartisan CHIPS and Science Act that President Biden signed into law last year provides $50 billion to the Commerce Department to revitalize our domestic semiconductor industry. We are administering this funding through our new CHIPS for America program to provide manufacturing incentives that will facilitate domestic production of the most advanced chips and expand production of mature chips essential to our national and economic security.

How we intend to make these investments is also important.  Indeed, public-private partnerships are an essential building block of modern industrial strategy. As we help build out semiconductor clusters in communities across the country, we are enlisting producers and suppliers, as well as consumers, universities, and research institutions. The goal is to foster conditions for these clusters to be more the norm than the exception.

I’m also very excited about the CHIPS program’s R&D portfolio, led by our National Institute of Standards and Technology, or NIST, which will help us – the private sector, government, scientific and educational institutions – push the research and tech commercialization frontier. NIST’s collaborative R&D efforts are already keeping us ahead of the curve with quantum-resistant cryptography.

Our work on tech isn’t just limited to semiconductors. Under the Inflation Reduction Act, the Administration is making the largest-ever federal investment in clean energy innovation and leveraging private capital to scale clean technologies of the future—from electric vehicles to clean hydrogen to offshore wind.

And using funding from the American Rescue Plan, the Commerce Department launched the billion dollar Build Back Better Regional Challenge to invest in a new kind of community development that supports business, labor, local government, and educational institutions, and leverages private capital.

The 21 awardees range from biotech clusters in Oklahoma to a regional energy hydrogen hub in Louisiana and will provide tens of thousands of workers with new skills to adapt to changing tech and access good jobs.

We’re also building on these efforts with the Regional Technology and Innovation Hubs, recently enacted as part of the CHIPS and Science Act. Congress has appropriated $500 million for these Tech Hubs to help U.S. regions continue to build and evolve into the Tech Hubs, Valleys, and Corridors of the future for critical, emerging technologies.

We also have to recognize that a techno-industrial strategy that does not focus on workers, especially historically underserved communities, including communities of color and rural communities, is doomed to repeat the failures of the past.

Millions of workers are sitting on the sidelines of our economy or on the sidelines of industries that desperately need their talent, especially in the high-tech, high-demand industries that drive America forward.

Government, business, and educational institutions need to work together to expand workforce pipelines, train workers to fill high-paying jobs, expand access to finance to small business and small manufacturers, and ensure that historically underserved communities have the tools to participate and thrive in the economy.

To this end, we are deploying nearly $50 billion under the Bipartisan Infrastructure Law to bring affordable, reliable high-speed internet to every American, with a dedicated focus on equitable access so that unserved and underserved communities aren’t left behind.

We also recently announced that the Commerce Department’s Minority Business Development Agency is allocating nearly $100 million under the Capital Readiness Program to provide technical assistance to equip underserved entrepreneurs with the tools and skills to access capital and support in order to build innovative and scalable businesses. And this is just part of the billions of dollars that President Biden has made available to support businesses and entrepreneurs across the country.

For all these investments, where we invest, along with investing in workers, matters a great deal. That is why a central feature of our investments in tech competitiveness is a place-based approach that seeks to leverage the competitive advantage of diverse communities and regions.

We also want our regional and local leaders to think more collaboratively about how they can leverage existing strengths to lift up their own communities.

The goal is to see tech clusters and tech jobs in all types of regions of the country – urban and rural, coastal and heartland – so that the economic prosperity that comes with innovation is shared beyond our existing superstar cities.

Protecting Our Tech Advantage from Malign Actors

But it is not enough to just invest in our tech competitiveness.

Our adversaries are seeking to expropriate our technologies and gain a foothold with tech that threaten our national security, including systems that underpin our critical infrastructure.

That’s why our second area of focus is protecting our tech advantage from malign actors.

Through our Bureau of Industry and Security, the Commerce Department is administering and enforcing controls on sensitive goods, software, and technology to ensure our products are not used by bad actors.

The Biden Administration has broken new ground in our export control partnerships. Nowhere is this better illustrated than the measures we imposed against Russia for invading Ukraine. In record time, we built a coalition of 38 like-minded partners from Europe to the Indo-Pacific, all of whom agreed that Russia’s actions represented a global security threat that could not go unanswered.

This momentous and unprecedented collaboration is having its desired effects. Russia is struggling to access vital technological inputs.

We know these measures have made it difficult for the Russian military to replace many of its weapons systems, as evidenced by the lengths to which it has gone to find microchips. Starved for microchips, the lifeblood of their military, Russia has been cannibalizing semiconductors from dishwashers, refrigerators, and even electric breast pumps in order to fix its military hardware.

The aerospace controls we put in place are also restricting Russia’s ability to generate revenue, resupply, and support its military aviation sector. Russia may be forced to ground between half and two-thirds of its commercial aircraft by 2025 in order to use them for spare parts.

Our tools do not end there. We are pushing back against unfair trade and investment practices by global competitors by rigorously enforcing our antidumping and countervailing duty laws to level the playing field for American companies and workers. We are also monitoring trade agreements to ensure foreign governments are complying with their obligations.

And we are bolstering our investment screening capabilities, including our review of inbound investment in U.S. companies and operations under CFIUS, the Committee on Foreign Investment in the United States, to identify adversarial capital, especially in emerging tech fields.

We are also considering outbound investment screening in areas where we may inadvertently be furthering our adversaries’ efforts to undermine our economic and national security interests.

Expanding Our International Alliances

The third area I mentioned is expanding our international alliances. We cannot establish U.S. tech leadership without working closely with allies and like-minded partners on shared rules of the road and high standards that align with our interests across trade, technology and cybersecurity, supply chains, infrastructure, climate action, and workforce development.

Together with our allies, we can create more resilient supply chains that enable us to avoid factory furloughs at home and manage costs for consumer goods. Just as importantly, we can keep essential technology out of the hands of our enemies.

And by setting standards at home – like NIST did last week with its new AI Risk Management Framework – and raising standards in other countries around the world, we can alleviate downward pressure on American wages and environmental standards. We can set the rules of the road for international standards for emerging technologies like AI and biotech, and protect essential intellectual property that ensures a level playing field for the future. Here are just a few examples of what we’re doing with our partners in the Indo-Pacific, Europe, Latin America, and Africa:

We created the U.S.-E.U. Trade and Technology Council – or TTC – to help shape the rules of the road on emerging technology, including through technical standards bodies.

President Biden also recently signed an Executive Order to implement the U.S. commitments of the EU-U.S. Data Privacy Framework, which is the culmination of important work and negotiations by the U.S. and the European Commission to restore trust and stability to transatlantic data flows.

We are negotiating the Indo-Pacific Economic Framework for Prosperity with 13 partner countries. IPEF includes commitments around the digital economy, where, for instance, we are promoting trade-enabling environments for digital and emerging technologies; supporting private sector digital upskilling; facilitating data flows; enhancing cybersecurity practices; and increasing 5G supplier diversity.

We are also working with partners through the Quad and the TTC to promote trusted telecom infrastructure that is secure, effective, and promotes existing U.S. and allied technological advantages. We believe that open radio access networks are a key part of the equation.

We worked with Canada, Japan, Korea, the Philippines, Singapore, and Taiwan to jointly announce the establishment of the Global Cross-Border Privacy Rules Forum. The CBPR is a government-recognized and multilateral data privacy certification that is facilitating cross-border data flows across different data privacy regimes and allowing companies to certify their global operations to internationally recognized data privacy standards.

I was also thrilled to travel to Romania last year to help elect Doreen Bogdan-Martin as the first female Secretary General of the International Telecommunication Union. Through the ITU, we are partnering with developing nations to address broadband deployment, connect the unconnected, increase digital adoption and inclusion, and develop digital skills.

We have already amplified these efforts by facilitating private sector infrastructure deals – including digital and clean tech projects – that featured prominently in the $15 billion in deals announced by President Biden at the recent U.S.-Africa Business Forum here in Washington. This is a major opportunity for the U.S. businesses – and hopefully just the start, as leaders of many of these countries repeatedly tell us that they view the U.S. private sector as partners of choice.

All these international engagements that I’ve just outlined are the result of a tremendous amount of work both inside the Commerce Department and across the Biden Administration. And they are worth celebrating.

But it’s going to take participation from the U.S. private sector – especially in the form of public-private partnerships and commercial deals in areas like digitization, space commerce, clean tech, health security, R&D, upskilling, and SME development – for us to be successful.

Conclusion

And that’s part of my broader ask to you today. You represent some of the most innovative companies across our private sector.

The investments, actions, and engagements that I’ve outlined are all geared toward preserving U.S. tech leadership. But if we’ve learned anything in recent years, it’s this: our long-term competitiveness is about more than what government can do for business. It’s also about how U.S. businesses can lean forward.

From my conversations with CEOs, entrepreneurs, and small business owners, I know that the private sector gets this. They want to be part of the solution, and we’re glad they’re participating.

Consider how you can innovate not just what you’re producing, but how you work, your business models, and your human capital and talent management strategies, including diversity and inclusion.

Engage with our department, and with the Biden Administration as a whole. Lean into public-private partnerships that further our shared goal of U.S. tech leadership.

If we work together on this agenda, I believe we preserve our technological advantage; spur innovation, productivity, exports, and jobs into the next generation; and ensure our national security in ways that promote democratic values and norms around the world.

Thank you again to ITI for bringing us together today.

Read the full report from the U.S. Department of Commerce: Read More