(Remarks as Prepared)
Regina, thank you for the kind introduction, but more importantly thank you for all your work at USTR, and since, to translate America’s trade agenda into concrete economic results for our workers and companies.
I commend Steve Lamar’s leadership of WITA this year as president, appreciate the work of James Wilkinson as executive director, and extend my good wishes to the Ambassador of Panama who is with us today, Ambassador Frederico Humbert.
This is a knowledgeable and sophisticated audience, so I’ll make my three points quickly so we can leave plenty of time for discussion.
Here’s the bloggers version: America can’t afford to retreat from global trade, we must not take a “time out” for protectionism, and there is plenty of opportunity for compromise on Capitol Hill if leaders want to move trade forward. I’ll elaborate.
NO RETREAT FROM TRADE
This ought to be self-evident. Trade – especially exports – have been the one bright spot in our economy over recent years, accounting at one point for nearly 60% of our economic growth. A “lifesaver,” as one economist described it.
But tough economic times, harsh campaign rhetoric, and falling public support give the anti-trade forces a potent voice in Washington. And today they are calling for the U.S. to take a step back from trade. Nothing could be more harmful.
With the World Trade Organization predicting a nine percent reduction in world trade flows and the OECD projecting an overall economic contraction of 4.2% this year for member countries, world leaders led by the G20 are rightly focused on economic recovery.
There is no more proven economic stimulus than open and competitive trade.
Here at home experience teaches us that if America voluntarily benches itself, the global trade contest continues – with or without us. The last time we did this – when President Clinton was without fast-track authority from 1994 to 2002 – the rest of the world pressed ahead, negotiating over 130 free trade agreements while America sat on the sidelines, and our workers and companies lost out.
Since then, under President Bush with bipartisan support from Congress, America has worked hard to level that playing field. Where free trade agreements have been enacted, we’ve succeeded.
Today we run a net trade surplus with our trading partners with whom we negotiated FTAs under Trade Promotion Authority, a manufacturing surplus including with NAFTA, and until the global financial crisis hit, we were selling a record amount of American made products and services abroad.
Regarding an agreement especially close to my heart, the opponents of DR-CAFTA have been roundly proven wrong. Since the Central American agreement was reached in 2005, a $1.2 billion trade deficit has swung to more than a $6 billion trade surplus. Central America is gaining new investment, a stronger economy, and more rural development where it is needed most.
Should America retreat, should we walk off the trade field for any extended time, it will cost dearly in American jobs, American exports, and American leadership.
ENFORCEMENT ALONE IS NOT ENOUGH.
Even if we stay on the field, playing defense alone is not enough – because you rarely score on defense. Enforcement takes center stage in President Obama’s trade agenda and is echoed by Ambassador Kirk, Commerce Secretary Locke, and the President’s supporters on Capitol Hill.
Who doesn’t support strong enforcement? If trade is unfair, we need to address it. If our trading partners aren’t living up to their obligations, we need to call them out.
America is already using dispute settlement at the WTO effectively, winning or successfully settling over 90% of the cases we’ve brought including cases against the EU’s scientifically unjustified bans on GMO beef and poultry and China’s cross-cutting export subsidies.
We are a prolific user of our domestic trade remedy laws, although China and India are becoming more active in using these laws also.
Our anti-dumping and countervailing duties provisions are strong and should remain so. But we must do a better job of balancing interests across our economy, including the job impacts on import sensitive industries, importers, and exporters.
Our economy cannot grow on enforcement alone. It must be partnered with an offensive game plan: a pro-growth, job-creating strategy of opening markets and creating new customers for American-made products and services.
We can chew gum and walk at the same time. Enforcement and new markets work together, especially since new trade agreements can create new, additional rules to enforce investment, intellectual property rights, and labor and environmental standards.
As we speak our trading partners are moving in and taking our place. Witness the nearly completed talks between South Korea and the European Union.
Conversely, our inaction on the three pending free trade agreement hurts U.S. workers and undermines American interests.
Colombia is at the top of the list for a reason. Economically it is a clear win for America, eliminating almost $2 billion in tariffs on American made goods to date, and expanding exports to Colombia by at least $1.4 billion, according to the International Trade Commission’s updated analysis.
The foreign policy reasons may well be more critical. With our help, Colombia’s president has turned the country around, reducing violence, establishing rule of law, defeating the FARC, and establishing labor standards where virtually none had existed before.
Can more be done to address labor violence? Perhaps. President Uribe has repeatedly challenged opponents in Congress to identify the benchmarks and set the goalposts which they are committed to achieving – but to little avail. That’s no way to treat an ally. And the world notes it.
This Congress and this Administration should work together to identify clear and reasonable benchmarks soon. Allowing the Colombian trade agreement to languish without action could prove to be one of America’s short sighted foreign relations blunders.
Like you, I am encouraged by the President’s interest in moving the Panama agreement “relatively quickly” and for establishing benchmarks for the South Korean and Colombian trade agreements.
More important than the order in which Congress votes on these agreements is identifying at the outset what the road forward entails for each of them. This work can – and should – happen in tandem with formal action on the Panama agreement.
Here’s one way to start: hold hearings. The Trade Subcommittee in the House has not held a hearing on a free trade agreement in two years while the Foreign Affairs Committee has already held three hearings in this Congress alone.
Let’s bring forward the challenges and opportunities of each agreement so we can address them. And then let’s start identifying new trade opportunities – like the Trans-Pacific Partnership talks – that can create new export markets and expand U.S. ties to this critical region.
As forDoha, which is a major priority, we must exert leadership if we hope to conclude a meaningful and ambitious round. The President and Ambassador Kirk are correct in conducting a careful assessment, but I can tell you that what is on the table right now is not enough. Not enough market access and not enough clarity as to emerging economies’ obligations.
The current financial uncertainty should not be an excuse to settle for a timid round that will lead to buyer’s remorse once the global economy strengthens. And we should be mindful that, after all this concerted effort, a small agreement will undermine confidence that the WTO going forward can address the complicated challenges facing the global trading system in a meaningful way.
At the same time, America should be open to new ways to move forward.
NO ‘TIME OUT’ FOR PROTECTIONISM
I’ve heard Trade Subcommittee Chairman Levin, the EU trade commissioner, and others advocate for a “time out” to protect local industries during tough economic times. That feeling seems to be shared by other members of the G20, seventeen of whom — despite their November commitment to fight protectionism – have announced protectionist measures.
They are not alone. Last week the WTO reported more than 75 trade restrictive measures by nations taken since the financial crisis began.
Of course we should be free to take all steps that are within our rights and obligations, but we invite other countries to reciprocate if we go beyond. And we should take care when considering whether to impose a new barrier that may be perhaps within our technical, legal rights – other countries will follow our example, to our detriment.
That’s why the Buy America provision concerns me. It gives other nations the green light to impose their own trade barriers – even if legal.
That’s why unilaterally ending the cross-border trucking pilot program with Mexico is so potentially damaging. In these days of economic anxiety, when the whole world is measuring each others’ actions against their own, sending the signal that America will unilaterally break our NAFTA trade obligations is risky behavior.
And that’s why efforts to impose new tariffs and trade barriers on imports in the name of cap-and-trade foster the image among our trading partners that America is part of the problem rather than the solution.
When it comes to fighting protectionism, unfortunately our deeds don’t yet match our words. America ought to lead by example to make sure the world does not lock in a longer and more severe global recession by hastily imposing new trade barriers and trade limiting actions.
OPPORTUNITY FOR COMPROMISE
Trade can be contentious on Capitol Hill, but Congress has a long history of working together on trade issues such as preference programs, the Miscellaneous Tariff Bill, and customs matters.
I am eager to work together to extend the Generalized System of Preferences, which expires at the end of the year, and to identify other opportunities. I am opposed, however, to the labor provisions included in the Haiti agreement, which require the country to comply with standards that exceed U.S. law and could discourage new investment in Haiti.
Many were disappointed that the last Congress didn’t complete the Miscellaneous Tariff Bill before adjourning. I’ve asked Chairman Levin that we have a bill on the floor by May, if possible, to give ample time for the Senate to consider and Congress to pass legislation by year’s end when some of the existing suspensions expire.
And there is no reason we won’t continue our bipartisan oversight of Customs, particularly on its rulemakings and World Customs Organization developments, both on the cargo security side and commercial enforcement/trade side.
The May 10th agreement represented a significant bipartisan compromise that was hard, but that Republicans stand by even though it has produced only one agreement. I’m troubled by statements from USTR about “building on” the compromise, especially since there has been so little return for the bipartisan framework in place.
I am encouraged that Ambassador Kirk has pledged not to use trade agreements to make changes to U.S. labor laws. I would caution that labor standards in trade agreements should not be written as to allow the U.S. to be challenged and pressured to change our labor standards. The May 10th agreement threads the needle on that issue and should be recognized as such.
Already this year Congress has shown it can work constructively in a bipartisan manner on difficult trade challenges, such as modernizing Trade Adjustment Assistance. This new law helps workers negatively affected by trade, expands the program to meet the new realities of globalization, and creates more flexible and better training options.
Two years ago a compromise on TAA seemed impossible. It is law today, and it is hard proof that Congress can deliver bipartisan action on a proactive trade agenda that will help our economy, nurture export growth, and create U.S. jobs.
In difficult economic times, the opportunity to lead is never greater.
If America chooses to stay engaged in the global trade contest, resist protectionist measures, and seek bipartisan efforts on trade, this Congress and our new President have a unique opportunity to hasten our economic recovery and lay the foundation for greater prosperity throughout the world.
I look forward to helping make that happen.