Creating American Jobs Through Global Trade, Remarks

Address to the Free Trade Alliance by
ROBERT S. MILLIGAN
Chairman, U.S. Chamber of Commerce

September 24, 2009
San Antonio, Texas

Introduction

Thank you, Dennis (Nixon), and good afternoon ladies and gentlemen. I'm grateful for the opportunity to be with you today.

I commend the Free Trade Alliance, the San Antonio Greater Chamber, and the San Antonio Hispanic Chamber for all their work in promoting trade, entrepreneurship, and a free market economy.

The Chamber, through its grassroots trade education program, TradeRoots, is a proud partner of the Free Trade Alliance. In recent years, these two organizations have jointly held programs to promote trade with Korea, China, and Colombia.

Kyle Burns, Kathryn Dinnin, and the rest of the team at the Free Trade Alliance are the very best at what they do. For that reason, it is my pleasure to present them with the TradeRoots International Leadership Award.

This award honors outstanding organizations that promote international trade throughout their communities.

The vision and the work of the Free Trade Alliance have resulted in new and better jobs, increased competitiveness, and an increase in exports throughout the region.

It is my honor to present the TradeRoots International Leadership Award to Free Trade Alliance President and CEO Kyle Burns.

As a business owner, I certainly appreciate the work of local chambers and groups like the Free Trade Alliance to help small businesses capitalize on overseas opportunities.

M.I. Industries is a good example of one of the many small- and mid-size U.S. firms that depend on foreign markets for revenue growth, profits, and job creation here at home.

We're small — only about 250 employees - and strongly rooted in the Lincoln, Nebraska community and the Midwest. But we think and act globally.

We export our all-natural and organic nutritional pet products to 16 countries throughout Europe, Asia, and South America.

M. I. Industries also produces product lines for biological, pharmaceutical, and base cosmetic products derived from animal proteins and amino acids. A vast majority of these products are sent overseas. All told, exports account for nearly 15% of our company's sales.

Overseas markets are absolutely essential for our continued success. Europe, in particular, is way ahead of the United States in the consumption of all natural and organic products, whether for people or pets.

And because the bulk of the global pharmaceutical and cosmetic industry is located in Europe, it has protocols in place that utilize our products.

We also see tremendous growth opportunities in other overseas markets in which we trade, including China, Brazil, New Zealand, and Australia.

The question for us is, "Will those opportunities continue to exist and multiply, or will policies from Washington shut the door on us?"

In these difficult economic times, a natural first instinct is to turn inward, 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 I became an owner of M.I. Industries some 30 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.

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 pre-eminent in the 21st century as we were in the 20th century?

Texas' Economic Potential

I strongly believe that our nation can successfully engage, compete in, and lead this new global economy. Why?

Because I see trade working for American workers and businesses all across the country, including here in Texas.

In 2008, for the seventh consecutive year, Texas was the nation's number one exporter, based on revenues.

It exported $191 billion worth of merchandise, and a quarter of all agricultural revenue in the state comes from exports.

Remember all the doom and gloom talk in the early 1990s about how NAFTA would hurt the United States, especially workers and businesses in this border state?

Well, turns out the naysayers didn't get it quite right. Texas exports to Canada and Mexico have increased 168% since that agreement went into effect.

I should also mention that Texas exports to Chile have jumped 107% since a trade agreement with that nation went into effect just five years ago.

Texas companies and farmers aren't running from the competition, they are meeting it head on! And in many instances, they are winning.

As a nation, however, we have a long way to go to recapture our winning ways.
Over the next 10 years, we must create 20 million new jobs just to put the unemployed back to work and keep up with a growing population.

20 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 statehouse? Can we tax, regulate, or sue our way to those jobs?

No. Only a strong private sector powered by free enterprise and unconstrained by borders can do it.

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 consumers overseas. U.S. services companies—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, with Texas leading the way.

The nation's 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, including nearly 350,000 in Texas, and indirectly support tens of millions more.

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 visas for these workers. But the choice is simple. Either some workers come here or our companies, along with all the jobs, go over 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 a protectionist policy 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.

Last week the Chamber released a study showing 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.

The study also considered the fallout of our government's decision to terminate the pilot project that allows trucks to operate across the U.S.-Mexico border.

Under NAFTA, the U.S. promised to open its border to Mexican trucks—with full reciprocity for U.S. carriers—and we aren't keeping our word.

Our study shows that prohibiting Mexican trucks from traveling beyond 25 miles of the border—and Mexico's retaliation for that policy—results in a loss of $2.6 billion in U.S. exports and 25,000 U.S. jobs.

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 lifting the Cuban embargo, which has failed to bring democracy to the island, has helped prop up the regime there, and denies U.S. exporters more than $1 billion in sales annually.

It means successfully concluding the Doha Round, which could boost the worldwide economy by $700 billion. These policies are the best way to level the playing field—to make trade fair for Americans.

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.

As for the third part of our strategy to expand trade, we must bring tens of thousands of new companies into the exporting business.

More than a quarter-million small and medium-sized 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 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.

Fifth, we must also ensure that all Americans have an opportunity to benefit from the global economy and achieve the American dream.

No one disputes the fact that some workers and communities have been hurt by global economic change.

We need public and private sector investment in effective job training and fundamental school reform so that students enter the workforce better prepared to compete in the high tech, global economy.

Finally, we need stronger trade leadership from our new 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 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, a Texan, Ron Kirk. 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.

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 two million members are divided about evenly between health care and public sector workers. Precisely none of these jobs could possibly be endangered by trade.

On the other hand, 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 - the president of the AFL-CIO for 25 years.

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.

President Bill Clinton showed 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.

Conclusion

Ladies and gentlemen, a welcoming approach to global trade, capital, and talent are fundamental to a successful free enterprise system.

Next month, the U.S. Chamber will launch an historic initiative in support of that system—a positive Free Enterprise Campaign 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 of 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 the world has ever known. It can lead us to an even brighter future.

It is worth keeping. It is worth fighting for. And I invite all of you to be our partners in this vital effort.

Thank you very much.