U.S. and New Zealand Partnership Forum - Welcome by Tom Donohue
AS PREPARED FOR DELIVERY
U.S.-New Zealand Partnership Forum
Breakfast remarks by Thomas J. Donohue
President & CEO, U.S. Chamber of Commerce
April 22, 2006
Thank you, Jennifer [Dunn]. I’m delighted to participate in this forum with our friends from New Zealand – even at 8am on a Saturday morning!
I’d like to recognize a few people who are instrumental to the strong relations between the United States and New Zealand. Conference co-chairs Jim Bolger, Mike Moore, and Clayton Yuetter – thank you for your help in putting this conference together.
It’s good to see ministers Goff and Cunliffe, opposition leader Brash, and ambassadors Ferguson and McCormick. We greatly appreciate your work in strengthening U.S.-New Zealand ties.
I’d like to take this opportunity to comment on U.S. attitudes toward global trade and give you a sense of what the Chamber is doing to influence those attitudes and advance trade and investment opportunities around the world.
Increasingly, we’re seeing and feeling anxiety and resistance to openness, trade, and foreign investment. Let me share with you two examples.
In the failed Dubai ports deal, anti-free traders seized the issue of national security to advance their protectionist agendas – and take a few shots at the president in the process.
Somehow, Congress managed to ignore the fact that the security of our nation’s ports has and will always be the responsibility of U.S. Customs, the Coast Guard, and the Department of Homeland Security.
They also chose to ignore the fact that foreign companies operate some of our ports already—not to mention sanitation systems, oil refineries, highway systems, chemical plants, railroad tracks, and power plants.
And guess what? American companies own and operate critical infrastructure in their countries as well. That’s the beauty of the global economy.
Last year, in the most important trade vote in Congress since NAFTA, the House of Representatives passed the free trade agreement with Central America and the Dominican Republic, or DR-CAFTA, by just two votes. Two votes!
It was one of the biggest knock-down, drag-out legislative fights in Washington in recent memory…and for an agreement in which our trading partners – not the United States – had to make almost all of the concessions.
That deal immediately eliminated 80% of tariffs on U.S. goods imported to that region and will phase out the rest over 10 years, giving American businesses, workers, and farmers greater access to a market of 44 million people.
But 215 members of the House – including all but 15 Democrats - and 45 Senators didn’t see that as a good idea and voted against the deal.
The DR-CAFTA voted came on the tough 2002 vote on trade promotion authority. As most of you know, that’s the legislation that permits the executive branch to negotiate free trade agreements and global trade deals without fear that the agreements will be amended to death by Congress.
The Chamber fought tooth and nail for that legislation as well because without it, the international trade agenda had lost momentum, and the U.S. had ceased to be a key driver of global trade liberalization.
And by the way, TPA expires next July, and we are expecting a major battle to renew it.
These are just two examples of the type of political environment that supporters of trade and international investment are facing in Washington.
Slow progress on the WTO Doha Round indicates that the world – not just the United States - is taking only a lukewarm approach, at best, to opening markets and reducing trade and investment barriers.
The U.S. Chamber is counterbalancing the anti-trade movement with an agenda focused around a few key principles.
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First, we’re working to ensure that our market remains open to foreign investment, provided that it does not pose a legitimate threat to our national security interests.
Foreign firms have $1.5 trillion invested in the United States, and they directly provide 5.3 million American jobs…many millions more indirectly.
Shutting off that spigot would significantly hurt our economy and the relationships we have with our investment partners.
We want New Zealand to invest in the United States, and if we make it harder for you to do so, I would imagine that you might give U.S. businesses the same treatment. That’s what you call a lose-lose situation.
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Second, the Chamber is working to ensure that American businesses maintain the freedom and flexibility to source around the globe.
You’ll recall that outsourcing became topic de jour during the 2004 presidential campaign, and though it’s not on the front pages like it was, it’s barely under the surface.
There is a movement out there to make it very difficult for our companies to operate overseas.
The U.S. workforce is one of the most skilled and educated in the world. But workers in other countries can sometimes make things or perform services better and at lower cost.
Sourcing to those countries enables U.S. companies to strengthen their bottom lines, reduce consumer prices, focus on more profitable operations, and create new and better jobs at home.
As the global economy expands and becomes more integrated, New Zealand and the United States will lose jobs and create new ones in their place.
Our economies will continually reinvent themselves as new technologies and processes are developed.
This is inevitable. We can deal with this by enacting policies that will ensure greater competitiveness—which in this country means greater investment in education, infrastructure, and technology; low tax rates; legal reform; improved access to health care; and more efficient capital markets.
Or we can try to keep the genie in the bottle in a desperate attempt to stall the inevitable. We all know the decision we must make.
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Third, we need to push China further down the path of openness – and this is where New Zealand and the United States can work together.
China is just beginning to realize its potential, and its continued economic rise will cause tectonic shifts not only in Asia, but around the world.
Of course, this presents economic opportunities for the United States and New Zealand – but only if China decides to become a full partner in the global trading community.
We are encouraged by some steps the Chinese have taken to open its economy and play by the rules. But China is still crawling when it should be walking.
The fact remains that it has failed to deliver on its promises and address concerns over its lax enforcement of intellectual property rights and breaches of its market access commitments it made as part of joining the World Trade organization.
Our intention during President Hu’s visit was to make clear that the global trading community’s patience with China is not limitless. While we prefer dialogue, we will support alternative courses of action if China continues to falter in key areas.
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Fourth, the Chamber is working to safeguard the global trading system from counterfeit goods and intellectual property theft – and this is another area in which we look to New Zealand for support.
Internationally, counterfeiting costs hundreds of billions of dollars a year in lost sales. The FBI, Interpol, and World Customs Organization estimate that 5% to 7% of world trade is in counterfeit goods.
It’s been said that if a company’s product has not been copied illegally, then it knows it doesn’t have a very good product.
The Chamber is spearheading a global effort to crack down on counterfeiting through greater awareness of these crimes, stricter laws, and greater enforcement.
We have to snuff out this epidemic by pulling it out by the roots, and that means attacking the problem in China, Brazil, Korea, India, and Russia.
The Chamber has anti-counterfeiting initiatives in place in all those countries, and we seek the help of New Zealand and other friends in getting tough on this issue.
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And finally, we’re working to move the ball forward on a number of multilateral, regional, and bilateral trade deals.
Some people around the world are questioning America’s commitment to the Doha Round in light of the staff change in the U.S. Trade Representative’s office.
But where were those critics when we were putting strong offers on the table six months ago while Europe, Brazil, and India were offering weak proposals?
We haven’t – and won’ t – give up on the Doha Round negotiations, but we know it would be unwise to put all our eggs in the Doha basket.
And so the U.S. business community is simultaneously pushing for several U.S. bilateral free trade deals – including one with New Zealand.
A U.S.-New Zealand FTA makes a lot of sense on many levels. Our relationship already has a strong commercial foundation. The United State is New Zealand’s second largest source of imports, trailing only Australia, and U.S. investment in New Zealand is more than in the five DR-CAFTA countries combined.
New Zealand’s track record on achieving comprehensive and high quality trade agreements, eliminating subsidies, and owning one of the most business-friendly economies in the world make it hugely inviting to U.S. business interests.
The mutual economic benefit that an FTA would deliver—and our countries’ shared democratic ideals and commitment to individual freedom, human rights and opportunity—are enough to overcome the political obstacles that stand in our way.
The U.S. Chamber is interested in working with New Zealand business and government leaders to reach a breakthrough.
Ladies and gentlemen, it’s not an easy time for supporters of free trade. Globalization can mean change and occasional disruption for some. Though the economic benefits far outweigh the costs, globalization instills fear and insecurity in many people.
The United States business community seeks the help of New Zealand to dispel the myths, to make the case for expanded foreign trade and investment, and enact policies that will create greater opportunity for people in both of our countries.
Thank you very much.