Copyright 2000 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
February 10, 2000
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4814 words
HEADLINE:
TESTIMONY February 10, 2000 THOMAS J. DONHUE PRESIDETN AND CHIEF EXECUTIVE
OFFICER US STATE CHAMBER OF COMMERCE SENATE FINANCE WORLD TRADE
ORGANIZATION
BODY:
STATEMENT on U.S. TRADE POLICY
AFTER THE SEATTLE MINISTERIAL before the SENATE COMMITTEE ON FINANCE for the
U.S. CHAMBER OF COMMERCE by Thomas J. Donohue February 10, 2000 Introduction I
am Thomas J. Donohue, President and Chief Executive Officer of the United States
Chamber of Commerce. The U.S. Chamber is the world's largest business
federation, representing more than three million businesses and professional
organizations of every size, sector and region in the country. The Chamber
serves as the principal voice of the American business community. An important
function of the Chamber is to represent the interests of its members before the
U.S. Congress, the Executive Branch, the independent agencies of the federal
government, and the federal courts. The Chamber welcomes this opportunity to
present its views on U.S. trade policy after the Seattle ministerial. Perhaps
the single most important lesson we should derive from the debacle in Seattle is
that our mission is the same now as it was before Seattle. Economic
globalization will continue on its own momentum. We need to continue fighting
for U.S. interests in this global economy. We need to keep opening markets for
American agriculture, manufactured products and services. We need to keep
opening markets for American workers whose jobs increasingly depend on access to
those markets. And we also need to quit hurting ourselves through our continuing
use of unilateral sanctions. China is a case in point. Congress will soon vote
on whether to extend permanent normal trade relations (PNTR)
status to China as part of the recently-negotiated China- U.S. agreement on
China's pending WTO accession. Once China concludes the requisite additional
agreements with the European Union and others, it will enter the WTO - whether
or not Congress grants PNTR. If Congress votes not to grant PNTR, we forfeit the
benefits of improved access to China's market that we negotiated for ourselves
last year - with the big losers being American farmers, American manufacturers,
American technology firms, American service providers, and American workers.
Congressional defeat of fast-track legislation in September 1998 served to
underscore the fact that, in recent years, the principal U.S. tendency on
foreign economic policy has been to restrain or resist U.S. participation and
integration into international commerce. Since the 1994 passage of the Uruguay
Round Agreements Act, unilateral economic sanctions have represented the primary
- if not the only - form of U.S. trade policy activism. But during the same
time, renewal of presidential fast-track negotiating authority was expressly
rejected by the Congress for the first time since its inception in 1974.
Maintenance of normal trade relations with China - the world's largest nation
and one of its fastest growing economies - has remained on a year-to-year
footing for over a decade, while our major competitors in that market display no
such hesitancy. And the U.S. has proven reluctant, at best, to exercise the
leadership that is expected of it in international institutions such as the
International Monetary Fund and the United Nations. As the world changes,
continuing U.S. engagement is becoming more important to the national interest,
not less. The world is becoming more multipolar in political and economic terms.
New players are emerging on economic and political fronts. Economic issues are
increasingly recognized as important at home and abroad as trade's share of
national output grows. Economic and trade "blocs" such as the North American
Free Trade Agreement (NAFTA), the European Union, the Asia-Pacific Economic
Cooperation area (APEC), Mercosur, and others continue to gain prominence.
Beginning in the early 1970s, the U.S. demonstrated in various ways its
willingness to exert international economic leadership. Presidential trade
negotiating authority was strengthened in 1974 with the establishment of fast
track. The U.S. continued its leadership in international institutions such as
the IMF, World Bank and GATT. In the 1980s, U.S. trade laws were revamped to
defend and advance U.S. interests more effectively. Also in the 1980s, the
United States led efforts to negotiate NAFTA and the Uruguay Round. But the late
1990s witnessed a sudden and potentially very costly lapse in U.S. leadership.
Unilateral sanctions became the only "proactive" initiatives the U.S. seemed
willing to take as our foreign policy drifted toward isolationism and
sectarianism. The Congress and the Administration have been unable to agree on
the importance of effective trade negotiating leverage. U.S. companies are
facing growing disadvantages relative to their competitors as other nations
negotiate agreements that provide preferences for their firms. And the U.S. is
risking its leadership role in international economic and financial affairs as
it only reluctantly lives up to its commitments to international institutions
such as the United Nations and the International Monetary Fund. The reality is
that the U.S. must compete in international markets. The failure of the U.S. to
assert the leadership incumbent upon the world's largest national economy can
only result in a loss of competitive position and further loss of momentum in
the decades-old effort to create a world of open and competitive markets. The
United States must either resume its leadership soon or abdicate to others.
Trade's importance to the U.S. economy has grown enormously since 1959. The
share of U.S. output purchased by foreigners has grown almost three-fold since
then - as has the share of U.S. income used to purchase foreign goods and
services. Over 95% of the world's population lives outside of the United States.
It should make common sense not only to trade with them, but also to work with
other nations to solve international crises and promote expanding trade and
sustained economic growth. Accordingly, the U.S. must pursue both a regional and
multilateral agenda for commerce abroad and a legislative agenda in the U.S.
Congress which advances our interests in all of the world's major trading
regions. But such leadership can be resumed only if certain fundamentals are
attended to: - The United States must resume its place at the trade agreement
negotiation table so that markets can be further opened to U.S. business as well
as our competitors. This means providing U.S. negotiators with the tools they
need to close deals and bring them home for expedited consideration by the
Congress. Without such tools, other nations will continue to initiate
negotiations and conclude agreements which establish preferential terms for our
competitors, to the disadvantage of U.S. interests. For this reason, approval of
permanent normal trade relations (PNTR) status for China (a
necessary precondition for enjoying the benefits of any final market-opening
China WTO accession agreement) and "fast track7 trade negotiating authority
should rank at the top of the nation's international economic and business
agenda. Increased public awareness of trade's importance generally and China's
normal trade relations status in particular is right now the major focus of a
major public education effort - called "TradeRoots" - by the National Chamber
Foundation, a separate affiliate of the U.S. Chamber. At the same time, the U.S.
Chamber itself is committed to an all-out effort to obtain Congressional support
for requisite legislation to ensure PNTR's approval by this summer. - The United
States must meet fully its obligations to international institutions on which it
must depend for stabilizing and growth-enhancing influence in the global
economy. International institutions such as the International Monetary Fund and
the United Nations are necessary tools for the management of global financial
and economic crises in a coordinated, complementary fashion. Similarly, the
United States must maintain sufficient financial support for domestic U.S. trade
development institutions (e.g., Eximbank, OPIC, Trade and Development Agency)
that meet financing, insurance and other needs that are not fulfilled by the
U.S. private sector. At the same time, the U.S. must work to ensure that these
institutions are structured and directed to meet carefully defined objectives
that are consistent with their overall missions. Care should be taken to prevent
enactment or implementation of policies that might undermine, distract from or
conflict with these institutions' missions. - The United States must cease its
continuing preference for unilateral economic sanctions and ' Cold War-era
controls on exports of widely available goods as foreign policy tools of choice.
History demonstrates that the primary result of such sanctions and export
controls is to inflict economic injury on U.S. businesses and their workers
while at the same time strengthening - rather than weakening - the intended
targets of the sanctions and controls. But even more damaging in the long run,
such sanctions and controls cast a lingering pall of unreliability over U.S.
companies which subordinates U.S. firms' price- and quality-competitiveness to
concerns that U.S. Policy may compromise U.S. enterprises' ability to fulfill
their business partners' expectations. - The United States must recognize the
importance of maintaining viable trade remedy laws that are designed to
eliminate, offset or obtain compensation for unfair trade practices or
violations of international trade agreements by our competitors. Such remedies
are necessary to enhance U.S. negotiators' leverage and credibility. They will
also help instill public confidence in the system, so that a political mandate
for future trade negotiations can develop. This will be easier to accomplish if
appropriate checks and balances are effective. - The United States must find a
basis for addressing substantive labor and environmental concerns without
holding U-S- competitiveness hostage to special interest efforts to achieve
extraterritorial application of policy objectives that are not relevant to
international commerce. THE WTO AFTER SEATTLE: RESUMING OUR PLACE AT THE
NEGOTIATING TABLE The WTO Ministerial Meeting in Seattle has come and gone. The
Chamber and others in the business community worked long and hard on proposing
an agenda for advancing new global trade talks at that meeting. However, the
Ministerial failed to produce agreement on that point among the principal
players. Moreover, opponents of trade expansion are clearly more energized, and
were not shy about completely disrupting an entire city to make their points.
WTO rules require member nations to eschew high tariff and nontariff barriers,
subsidies and other protectionist domestic policies which provide unfair and
market- distorting advantages to their interests. Under these rules, other
countries commit not to discriminate against U.S. trade, and agree to abide by
fair trading practices that safeguard U.S. workers and firms. To ensure that the
U.S. secures the full benefits of WTO rules, the United States sought and
obtained unprecedented discipline over the resolution of international trade
disputes. As a result, under the WTO we have better enforcement of U.S. rights
and greater assurances that our trading partners will abide by the rules and
open their markets to American exports. More broadly, participating in the WTO
permits us to advance our democratic values. Countries that subscribe to WTO
rules - rules we had a disproportionate role in shaping - are obliged to adhere
to these rules in commercial transactions. In short, the WTO reinforces the rule
of law. Those who successfully disrupted Seattle's civic life for a few days
last fall may have made the evening news. But they did nothing to stop or even
slow down international commerce. Nor did they create any jobs, solve any
environmental problems, or advance any causes which have a meaningful chance for
international agreement. But these disruptions were and are symptomatic of a
much more serious lack of U.S. resolve to continue "pushing the envelope".
Trade's share of U.S. GDP has roughly tripled since the late 1950s. U.S.
leadership in international fora, has led to strengthened trade rules that have
allowed American businesses, farmers and workers to find new opportunities,
create new jobs, and raise living standards and, in other words, enjoy
substantial benefits from the growing impact of trade on our lives. There are
those who, during the struggle to implement the North American Free Trade
Agreement (NAFTA), argued that NAFTA's implementation would be followed by a
"giant sucking sound" of U.S. jobs head south to Mexico. But what has really
happened? Since NAFTA's implementation, the U.S. economy is enjoying record
employment. Indeed, while progress has been somewhat uneven, significant areas
of this nation are facing labor shortages, particularly in higher-skilled jobs.
Notwithstanding the failure to launch a new WTO negotiating round in Seattle,
global trade continues to expand with attendant benefits for consumers, workers
and business. Continued progress toward trade liberalization requires we
recognize that: 1. The WTO continues to serve United States' interests: - Large
international trade flows continue to move without hindrance under existing WTO
rules and thereby make an important contribution to current U.S. prosperity. -
The structure of rules governing trade in goods and services remains in place
within the WTO. We should work vigorously in the coming year to insure rapid and
full implementation of all existing commitments by WTO members. 2. The U.S.
should vigorously support the WTO while at the same time seeking reforms that
improve its performance: - The U.S. is a principal beneficiary of the WTO
dispute- settlement mechanism's (DSM) enforcement of WTO rules and has a large
stake in its continued operation. Nevertheless, rapid action is necessary to
make the DSM more transparent and effective. - The WTO's less advanced members,
especially the least developed countries, need to be given a deeper stake in the
WTO system through additional trade liberalization initiatives and through
education in the benefits of global trade liberalization for their economies. 3.
The rapid pace of global economic integration will insure that continuing delays
in further trade liberalization pose serious risks and burdens for global trade.
Every attempt should be made to move forward as much as feasible in the already
mandated negotiations on agriculture and services. Opportunities for limited
progress, such as sectoral initiatives, should be pursued wherever feasible.
OTHER INTERNATIONAL INITIATIVES Lack of progress on trade liberalization in the
WTO underscores the importance of achieving progress wherever possible in other
international fora. The U.S. must continue to pursue several regional and
multilateral objectives in a manner that further advances U.S. interests in the
world economy. They include: - achievement of free and open trade in
Asia-Pacific region by at least 2020, and sooner (by 2010) among the developed
countries in the region; - reinforced Europe-U.S. trade and economic cooperation
in specific disciplines under the auspices of the Transatlantic Economic
Partnership; - early achievement of a Free Trade Area of the Americas by 2003;
and -continued strengthening and reform of the IMF, World Bank Group, the United
Nations and other international financial and multilateral institutions. U.S.
CONGRESSIONAL OBJECTIVES Finally, the U.S. Congress should focus anew its
attention on several key priorities in 2000 and beyond: 1. Establishment of
"permanent "normal trade relations" (PNTR) status with China;
2. Fundamental reform of U.S. trade sanctions policy, including application of
cost- benefit tests and other reforms to U.S. economic sanctions; 3. Completion
of action on Africa/CBI trade legislation; 4. Renewal of fast-track trade
negotiating authority; 5. Application of "trade and commercial impact" analysis
requirements to proposed international agreements on environmental and labor
issues; 6. Oversight of International Monetary Fund reform efforts; 7. Provision
of appropriate resources to U.S. trade development programs; 8. Removal of
counterproductive or anachronistic export controls; 9. Repeal of the
anachronistic "Jackson-Vanik" provisions of the 1974 Trade Act; 10. Long-term
renewal of the Generalized System of Preferences; 11. Renewed emphasis and
support for "function 150" and other programs that are critical to U.S.
international diplomacy; 12. Fulfillment of all U.S. obligations to the United
Nations; and 13. Elimination of double taxation of income earned by U.S. workers
abroad. That concludes my testimony. I will be happy to try to answer any
questions you may have.
LOAD-DATE: February 13, 2000
