Copyright 2000 Federal News Service, Inc.
Federal News Service
February 8, 2000, Tuesday
SECTION: PREPARED TESTIMONY
LENGTH: 2040 words
HEADLINE:
PREPARED TESTIMONY OF STEVE ROBERTSON PRODUCT MANAGER MARCONI COMMERCE SYSTEMS
ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS
BEFORE THE
HOUSE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON TRADE
BODY:
Good morning. I am Steve Robertson,
product manager at Marconi Commerce Systems. On behalf of Marconi, and also of
the National Association of Manufacturers (NAM), of which we are a member, I am
pleased to have this opportunity to testify. I commend the House Ways and Means
Trade Subcommittee and Chairman Crane for holding these hearings on determining
the direction of trade negotiations after Seattle. This is a subject of critical
importance to both Marconi and the NAM, so we are pleased to offer you our
views.
The NAM spearheaded the U.S. Alliance for Trade Expansion (US
Trade), a coalition of American agriculture, consumer, manufacturing, retailing
and service organizations, to promote the benefits of expanded international
trade. I was in Seattle to promote our belief that trade expansion, and the
rules-based trading system in particular, is beneficial to all Americans.
Admittedly, the relatively sober pro-trade message we delivered had difficulty
competing with the chaos that prevailed on the streets. Good theater doesn't
necessarily mean good policy, however.
While few Americans have the
time, interest or patience to follow the political wranglings in Washington over
a new round or permanent normal trade relations (PNTR) status
for China, it is important to take a step back and consider what the failure to
expand trade opportunities will mean to the bottom line of a small manufacturer
in North Carolina. Marconi is headquartered in Greensboro. We produce and ship
gasoline dispensers and related equipment, from pump controllers to total site
management systems for convenience stores and service stations. Marconi also
provides customers with several payment-at-the-pump and merchandising options,
such as built-in card readers, cash acceptors and transmitter/receiver in
dispenser technologies.
The pamphlet in front of you shows the most
familiar tangible example of what we produce - a gas pump. We have two factories
in the United States, both in Noah Carolina. We believe that our Greensboro
factory is the largest of its kind anywhere in the world. We moved to Greensboro
from Springfield, Massachusetts, in 1966, and opened with fewer than 900
employees. We have grown, as our international trade and domestic opportunities
have expanded, to 2,500 people total, with 1,500 of them in Greensboro today.
The Greensboro plant produces gasoline dispensers for the world. About
20 percent of our U.S. production is shipped to 85 different countries. We have
high hopes and targeted plans for expanding sales to the African countries. In
the past, our African sales have been limited to Egypt and South Africa. We
recently have signed new distribution agreements in East and West Africa.
Furthermore, Marconi has a worldwide presence, which includes manufacturing
facilities in Australia, England, Germany and the People's Republic of China.
For that reason, a sound, multilateral, roles-based commercial trading system is
of paramount importance to Marconi. Without such a system, it would be much,
much harder and costlier to operate internationally. Our production and sales
here in the United States would stagnate if our consumers were limited to the
domestic market.
Certainly the Uruguay Round of negotiations and the
resultant creation of the World Trade Organization were a groundbreaking
exercise in global trade expansion. Marconi has capitalized upon these
developments, as evidenced by the fact that revenue directly related to
international trade at the Greensboro plant has increased 585 percent in the
past 10 years. In 1989, we were only shipping products to a handful of
countries; today, as mentioned above, 85 countries receive our products.
Several different explanations have been offered for the failure to
agree on the agenda for a new round. First, the "Doomed To Failure"
theory: Apart from agriculture and services -both of which were part. of
the so-called "built-in" agenda for which negotiations would be automatically
launched on January 1, 2000 -- there was never any broad consensus on the need
for a comprehensive round, which was a European Union (EU) idea to begin with,
to create as much possible compensation for much-needed agricultural reforms
within Europe. Moreover, countries needed more time to digest the Uruguay Round,
major aspects of which (TRIPs and TRIMs) have not been implemented in many
developing countries.
Second, the "Protesters Derailed It" theory: The
sometimes violent protests in Seattle undoubtedly had some chilling affect on
the negotiations; they certainly gave the United States a black eye as the host
for this international meeting. But did the protest derail the talks? I don't
think so.
Third, the "Angry Developing Countries" theory: Expecting a
shot in the arm from the President's appearance in Seattle, the talks were
thrown into crisis when the President explicitly called for sanctions to enforce
"core" labor standards, despite assurances given by senior Administration
officials that only an analytical working group was contemplated. Unlike
previous rounds, the developing countries were not going to be excluded from the
high-level, "Green Room" political discussions geared to cutting a final deal.
Finally, the "Miscalculation of the Dynamics of the Talks" theory: The
logistics of negotiating a consensus within a now unwieldy 135-member
organization was unrealistic to begin with, given the politically charged
atmosphere, and the complexity and scope of the issues. Moreover, negotiators
did not enjoy the high-level support back home to cut politically sensitive
deals.
For my part, having witnessed the event, I concur with aspects of
all four theories. Whatever the cause, we highly support further trade
liberalization and urge you to ensure that these negotiations are launched in
the year 2000. Time is of the essence: negotiations should not be put off.
These negotiations should provide for the reduction of tariff and non-
tariff barriers to facilitate the expansion of market access for companies such
as Marconi. With reduced barriers, our potential is endless, and there is still
much room to grow and further facilitate the operations of the international
marketplace. By way of illustration, let me describe for you one particular area
of great concern to Marconi. For several years our company has, through hard
work and good fortune, been the leading supplier of gasoline- dispensing
equipment in Latin America. We sell to all countries in the region -- fully
one-half of all Marconi exports end up in Latin America.
In response to
our success, competitors have established manufacturing facilities in the
Mercosur region of South America. Since we must pay duties, ranging from 17
percent to 30 percent, on the products we ship into these countries, we find
ourselves at a serious price disadvantage. To deal with this problem, our
short-term position is to cut costs as best we can and to sacrifice profits to
maintain our number-one market position. This is clearly not a tenable
longer-term, approach. In the future, we will overcome this situation by
elimination of tariffs through successful negotiation of the Free Trade Area of
the Americas (FTAA) and further WTO negotiations, or we will build a factory in
Brazil.
If we are forced to go, foreign workers will permanently replace
up to 10 percent of our highly skilled, highly paid U.S. production workers in
Greensboro. But that's not all. Currently, about $0 percent of
the parts and components in our products come from U.S. suppliers.
The
pamphlet I have given you today lists some of these suppliers. These companies
throughout the country will also suffer the loss of business, as components for
South American built gas pumps are sourced in South America. This example
clearly illustrates how important it is for U.S. companies and U.S. workers to
have better access to world markets.
For this reason, Marconi urges the
U.S. government to be a strong leader and an aggressive negotiator for the
speedy elimination of trade barriers. These negotiations must proceed apace, and
it is our serious hope that they last not more than three years. Three years is
an eternity in terms of profitability and competitiveness for a company. The
early phase-in of reduced tariffs on capital goods, like our gasoline pumps,
should face little opposition from our South American trading partners.
I mentioned earlier in my testimony that Marconi has operations in
China. Not surprisingly, China will soon be the largest market for
petroleum-dispensing equipment. I want to reiterate here the importance of
China's accession to the WTO. The deal that closed in November is a welcome and
healthy development. A deal should be closed as soon as possible with other
trading partners so that China can be assimilated into the WTO, and therefore be
a participant in future multilateral negotiations.
To give you an idea
of just what kind of a deal we got, I would like to submit for the record a
one-page document titled "Why American Manufacturers Support China's Entry into
the World Trade Organization." In May, 1998, the NAM issued a report that set
forth key commitments that China should make in order for American manufacturers
to support China's accession to the World Trade Organization (WTO). The
scorecard indicates just how much was achieved. The deal provides genuine market
access to all sectors. It includes not only the right to export goods, services
and agricultural products to China, but the right to market, sell and distribute
them as well.
In considering whether to support PNTR
for China, it is important to keep the following facts in perspective:
China makes the concessions. The U.S. gets the benefits. China must take
on the challenge of opening its market. The United States makes no concessions.
Our market is already open to Chinese imports. This agreement levels the playing
field.
China's market-access commitments are enforceable. The strong
multilateral dispute settlement mechanism of the WTO will help ensure that China
adheres to its commitments. Violations would subject China to authorized trade
sanctions under these same WTO dispute settlement procedures.
China's
commitments to these disciplines will translate into jobs, profitable business
ventures, increased productivity and competitiveness for U.S. workers and
manufacturers.
For Marconi specifically, only the southwestern tier of
China, near Hong Kong, is open. The rest of China has recently been divided
between two state-owned oil companies. To the extent that China's accession
means a commitment by the Chinese to transition from state- run commerce to a
market-driven economy, and multinational companies are permitted to enter the
Chinese market, Marconi stands to benefit dramatically as our customers build
retail fueling facilities in China. Additionally, tariff-reduction commitments
would, we hope, reduce the up to 30-percent import duties we now face when
sending parts to our operation in China. Obviously, China's accession to the WTO
is of importance to Marconi.As a final note, our company and the NAM continue to
urge Congress to extend the currently expired trade- negotiating authority
procedures. The extension of fast-track trading authority is critical to
enabling U.S. trade representatives to negotiate "final" trade agreements;
authority they must have in order to be taken seriously. The current situation
puts American companies' products and workers at a disadvantage. I don't have to
tell you that while our trade negotiating authority has lapsed, competitor
countries are concluding trade agreements without us. We are falling behind our
competitors.
Marconi, like most other U.S. manufacturers, looks forward
to competing on a level playing field with other worldwide manufacturers because
we believe that our workers are the most productive in the world and the
products they make are of the highest quality in the world. That is why Marconi
Commerce Systems is working hard, on its own, through the NAM, and through the
recently formed U.S. Alliance for Trade Expansion, to support increased trade
liberalization and to spread the message about the benefits of free trade. Thank
you.
END
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