Creating American Jobs Through Global Trade Remarks
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Michigan Chamber's 2009 Future Forum & Annual Meeting
Keynote Address by
THOMAS J. DONOHUE
President and CEO, U.S. Chamber of Commerce
Tuesday, September 15, 2009
East Lansing, Michigan
As Prepared for Delivery
Introduction
Thank you very much, Scott Holman, and good afternoon ladies and gentlemen. For many years, Scott has been a strong voice for business in Michigan and throughout the nation. We are proud to count him among our members and grateful for his 14 years of service on the U.S. Chamber's board.
Rich Studley has served your chamber with distinction for many years before becoming president and CEO in 2008. The Michigan Chamber could not be in stronger, more capable hands, and we deeply appreciate his leadership on many common endeavors.
We all know these are tough and painful times for our nation and this state.
Michigan's workers and businesses are facing one of the harshest economic storms in nearly a century. These winds have blown away 800,000 jobs and have left thousands of shop doors closed.
In the eye of this storm, the first instinct is to turn inward and to protect the remaining businesses and jobs. But that's an approach that simply won't work. In a new, more competitive global economy, we need to expand our engagement with the world—not shrink it.
When Michigan's business leaders gathered here to establish a state chamber of commerce 50 years ago, the United States was still calling most of the shots in the global economy. Today, nearly half of the world economy is centered in the Asia-Pacific region. Fierce new competitors and markets of great opportunity—from China to India to Brazil—are rapidly emerging.
These developments are not only reshaping global economics, but they are altering geopolitics. Emerging nations are projecting their commercial influence into other spheres—securing capital and the best human talent, making deals for oil and natural resources, and flexing their economic muscle to advance their strategic interests.
How is the United States responding to the new global race for jobs, markets, influence, and leadership?
In my view, we are not stepping up on the worldwide stage as boldly, as vigorously, or as smartly as we must.
And that's what I'd like to talk about today.
Our nation faces a fundamental choice. In a new global economy, and in the midst of a major economic downturn, do we hunker down and turn inward—or do we act boldly to ensure that America is as preeminent in the 21st century as we were in the 20th century?
Michigan's Economic Potential
Ladies and gentlemen, I strongly believe that our nation can successfully engage, compete in, and lead this new global economy.
In fact, when we look beyond the painful headlines, we can see that the seeds have already been planted right here in Michigan.
With its skilled workforce, natural resources, and leadership in engineering and R&D, Michigan is establishing globally competitive positions in technology, health care, agriculture, and alternative energy. Ten thousand Michigan companies export $45 billion in goods around the world, supporting more than 500,000 jobs.
These companies and workers aren't running from the competition—they are meeting it head-on! And in many instances, they are winning.
This is also in the auto sector—which can and must remain a key driver of Michigan's economy.
Our automakers' activities abroad are a primary part of their business. GM, for example, sells 49% of its vehicles to drivers in other countries. Ford recently reported that sales from its joint venture in China more than doubled in August from the year before.
We must now work to further open the foreign car market so that competition is fair.
As you well know, we had a big debate—an important debate—in this country over government assistance to the auto industry. I think we're at the stage where most Americans would agree that auto companies in the United States can succeed if there are labor agreements and regulations that make sense if they are allowed to build cars that consumers want to buy and if the government gets out of their business as quickly as possible.
Creating 20 Million Jobs With Free Enterprise and Trade
Whether we are talking about a single industry or the nation as a whole, the timeless values of free enterprise can overcome any economic challenge thrown in our path. History proves it.
We must now reaffirm these values and put them to work in creating jobs and opportunities for all our citizens.
The task ahead is daunting. Think about this. Over the next 10 years, our nation must create 20 million new jobs just to put the unemployed back to work and keep up with a growing population.
Twenty million jobs in 10 years! Who is going to create and sustain these jobs? The government? The unions? The politicians in Congress and in the statehouses? Can we tax, regulate, or sue our way to those jobs?
No. Only a strong private sector powered by free enterprise can do it.
We're struggling to pull out of this recession. Unemployment is still growing. The federal deficit is exploding. The IMF's chief economist and others have recently outlined in clear terms the choices facing the United States.
We could try to dig ourselves out of this hole by inflating the currency. Or we can fuel recovery, jobs, and deficit reduction through a massive surge in exports.
I don't know about you, but I'll take trade over inflation any day!
The question is whether we will have the policies and the leadership to make vigorous trade expansion our choice. And on that score, we have reason to be concerned.
At a time when our global competitors are making preferential deals that give their workers and companies a competitive advantage over ours, America is sitting on the sidelines.
At a time when we should be looking outward to attract talent, welcome tourists, and lure capital and investors, many Americans and policymakers want to turn inward.
And at a time when we must stand up to the new isolationists who apparently don't believe that Americans can successfully compete in the world, many of our leaders seem stuck somewhere between vacillation and silence.
Ladies and gentlemen, if we reject the path of isolation—and instead reaffirm the values of a free enterprise system and open trade—then we can emerge from this recession stronger than ever, create those 20 million jobs, and ensure a bright future for this state and our nation.
The Case for Open Trade
Anyone who doubts that trade creates jobs should consider that 57 million American workers are already employed by firms that benefit from exports.
One in five factory jobs depends on exports, and one in three acres on American farms is planted for hungry consumers overseas. U.S. services companies and their 90 million workers—the most competitive in the world—export $550 billion in services annually, with a $140 billion surplus.
One common lament we hear from many concerned citizens is that "we don't make anything in this country anymore" and that when it comes to the global marketplace, we are just a buyer and not a seller.
Don't make anything? Don't sell anything? Last year, the United States was once again the world's largest exporter, with nearly $2 trillion in exports. And our manufacturing output has risen more than 50% over the past 15 years.
The benefits of global engagement go far beyond these sales and output.
Foreign-based companies in the United States have directly created more than 5 million American jobs. They indirectly support tens of millions of additional jobs. U.S. investment in other countries is also important because it allows our firms to tap into global markets that they may not be able to access from here.
This free flow of investment in both directions underscores the importance of capital.
If you don't have the cash, you can't make the dash. Our nation must attract and remain open to global capital, with capital markets that are vibrant and competitive.
We also see great benefits from all the foreign tourists and business travelers who bring their money and spend it in a $770 billion industry.
We see the benefits in our access to a global labor and talent pool that provides us with workers at all skill levels.
Some Americans don't like the idea of issuing the various visas for these workers. But the choice is simple. Either some skilled and unskilled workers come here or the companies, along with all the jobs, go there.
We are the country that educates and trains the world's leading scientists, professors, and engineers. Why wouldn't we want many of these American-trained experts to stay here and make our economy stronger, rather than somebody else's?
The New Isolationism and Its Costs
Despite these benefits and realities, there are those who want to turn inward and erect new barriers to our markets.
Some do so out of fear, some out of ignorance, and some out of pure political and economic self-interest. These voices reside in both political parties, in labor unions and, yes, in the business community.
This new isolationism threatens to eat away at America's tradition of openness, freedom, and leadership in the world.
Buy American may be the best illustration of how such policies can sound good—but, in fact, hurt the very workers and industries they are supposed to protect.
Of course, we'd like to see America's consumers buy American products. But guess what? Ninety-five percent of the world's consumers don't live here. They live somewhere else.
We want them to Buy American too. And the way to do that is through an open trading system where consumers—not the government—decide what they are going to buy.
In February, the Chamber helped get these rules—which had been inserted into the economic stimulus package—modified so that they did not violate our international trade agreements. But localities that are not bound by such agreements are invoking the rules in ways that are prompting retaliation, delaying stimulus projects, and eliminating jobs.
Today, the Chamber is releasing a study which shows that another half-million Americans could soon lose their jobs because of the Buy American rules and the continued delay on pending trade agreements. Future job losses will be even greater if we don't change course.
Leveling the Playing Field and Doubling Our Exports
There's no question that isolationism is not America's problem alone.
Despite the concerns I have discussed, our market is still the most open in the world—while the barriers to our products and services remain unacceptably high. We therefore need an aggressive strategy to open markets and compete in the new global economy.
Our goal should be nothing less than to double our exports around the world within five years. Here's what that strategy must include:
First, reduce barriers and improve access for American goods and services in new and promising markets.
That means passing the trade agreements with Colombia, Korea, and Panama. It means successfully concluding the Doha Round, which could boost the worldwide economy by $700 billion. These agreements are the best way to level the playing field—to make trade fair for Americans.
Not only that, more than 100 bilateral and regional trade negotiations are currently under way among our trading partners—without us. Does it make any sense for the United States to sit on the sidelines while all this is happening?
Indeed, we should go beyond the deals that are already in the pipeline. Congress must give President Obama the authority he needs to negotiate new agreements to open foreign markets.
Second, we need to get tough about enforcing existing agreements. That's what a rules-based trading system is all about.
The WTO system and its enforcement mechanisms provide important safeguards for all signatories. But in using these tools and other remedial approaches, we must make sure that economically we don't cut off our nose to spite our face.
Late last week, the Obama administration announced that it would slap a 35% tariff on lower-end Chinese tires. The Chinese, in fact, agreed to the trade tool that was used to impose this tariff when it negotiated with the United States to join the WTO.
Given the structural changes under way in the global tire market, the administration's action is not likely to save or create a single American job. Instead, it will raise prices for American consumers.
No one has worked harder than the U.S. Chamber to educate, persuade, and pressure the Chinese and others to open their own markets and level their playing field. We've made some progress. We have a long way to go. We believe that markets can be pried open without punishing our own consumers, businesses, and workers in the process.
The third part of our strategy to expand trade involves bringing tens of thousands of new companies into the exporting business.
More than a quarter-million small and medium-size companies already export—and they account for nearly one-third of all U.S. sales abroad.
With advances in global logistics, Internet communications, and service providers such as Fed Ex and UPS, smaller companies now have tremendous opportunities to sell to foreign markets.
Government has a role to play in helping these companies get the tools, training, financing, and partners that they need to sell overseas—and we support robust federal trade promotion programs. And by improving trade facilitation regimes and the global supply chain, we can help address the increased cost in trade financing by reducing the cost of moving goods and services.
Fourth, we need more focused and coordinated leadership from those government agencies that have been tasked with promoting exports and representing America's commercial interests in foreign markets.
This support is particularly critical in emerging markets.
Recovery and growth in Canada, Mexico, and Europe are essential to our goal of expanding exports. Yet, increasingly, American jobs will be tied to markets such as Brazil, Russia, India, China, and the booming economies of APEC, which the United States will host in 2011.
Finally, we need stronger trade leadership from the administration.
The Obama administration will be stuck playing defense against market-closing proposals until it devises a forward-looking trade agenda of its own.
Several months ago, we were told that President Obama would shortly make a major speech and outline his vision for "a new framework for trade."
We're still waiting.
The president has said many of the right things about trade. He has appointed a good man as U.S. Trade Representative. But while he has taken on other controversial issues with enthusiasm, his administration seems to be hesitant and uncertain when it comes to trade. And we have to ask why.
Challenging Trade Opponents
Of course, it's no secret that the administration is facing enormous pressure from labor union leaders and other anti-trade activists.
They must not be allowed to dictate our nation's role in the new global economy.
It's hard to make sense of their opposition to trade. Consider this: The SEIU's 2 million members are divided about evenly between health care and public sector workers. Precisely none of these jobs could possibly be endangered by trade.
In contrast, the Longshoremen's jobs are almost totally dependent on trade.
Both unions have opposed every trade deal you can think of! It doesn't make any sense in either case.
Many years ago, a prominent American leader wrote—and I quote—"Millions of American workers are dependent for their livelihood on the sale overseas of the goods they produce.
We must keep in our minds the necessity to find even more markets for American-made goods overseas."
He went on to say that a Buy American campaign would "run contrary, not only to the policy of the AFL-CIO, but also against the best interests of American workers."
That man's name was George Meany.
Union leaders have traveled a long way since then—unfortunately, in the wrong direction!
No president, Democrat or Republican, can listen to these arguments and succeed.
Former President Bill Clinton showed that it is possible to be a politically successful Democratic president and be pro-trade. It took courage, and it paid off for the country, the American people, and the economy.
There was something else that many of the labor leaders of the past understood—and that is the duty to always stand first for the national security interests of the United States in everything they said or did.
As we advocate a new strategy on exports and challenge the new isolationism, we must also make it clear that much more than trade is at stake. At stake is America's leadership in the world-our geopolitical relationships and our national security.
When the United States keeps moving the free trade agreement goal posts on important allies such as South Korea, Colombia, and Panama—all because of domestic politics—that carries a high price.
We have a tremendous opportunity to exercise the "soft power" of American business, commerce, and diplomacy—to advance our national interests and improve the state of the world.
We must not squander this great potential.
Educating and Training a Globally Competitive Workforce
Ladies and gentlemen, by expanding trade we can create good jobs, help pull our nation out of the recession, and reduce the federal deficit.
To succeed, we must aggressively promote our commercial presence abroad, knock down barriers, and reject isolationist measures here at home.
We must also ensure that all Americans have a chance to participate in these opportunities and achieve the American dream.
No one disputes the fact that some workers and communities have been hurt by global economic change. The Chamber worked hard to see Congress approve legislation early this year to expand Trade Adjustment Assistance. But there is much more to do.
It's a national disgrace that a third of our students don't graduate from high school and that our job training strategies are so ineffective—this, at a time when education and training count for everything.
Smart public and private sector investment in effective job training is essential. So is fundamental school reform.
American business is seriously committed to working with this president, this Congress, the nation's governors, and our country's public and private educational institutions on these urgent challenges.
Conclusion
At the outset of my remarks, I said that open trade and a welcoming approach to global commerce, capital, and talent are fundamental to a successful free enterprise system.
Next month, the U.S. Chamber will launch a historic initiative in support of that system-a positive Campaign for Free Enterprise to inform, remind, and educate Americans about the importance of economic freedom to jobs, our economy, and our way of life.
Expanding our exports and advocating open markets at home and abroad will be a critical plank in this campaign.
We will drive home the fact that American free enterprise has done more than any system ever devised to create jobs, opportunities, and hope.
Free enterprise built the strongest economy and the greatest country that the world has ever known. It can lead us to an even brighter future.
It is worth keeping. It is worth fighting for. And we invite the Michigan Chamber, its directors, and its members to be our partners in this vital effort.
I want to thank you again for inviting me, and congratulations on your 50th anniversary.
All of us at the U.S. Chamber are excited about working with you to rebuild and revitalize the economy of our nation and this great state, so that the people of Michigan can once again share in the great, powerful promise we know as the American Dream.
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