Fighting Back Against the New Isolationism, Remarks

X Air Cargo Americas and IV Sea Cargo Americas Conference

Luncheon Keynote Address by
MYRON BRILLIANT
Senior Vice President for International Affairs, U.S. Chamber of Commerce
November 5, 2009

As Prepared For Delivery

Introduction

Thank you very much, Steven (Goddard, Vice President of Sales, FedEx Express Latin America and Caribbean Division) for the kind introduction.

Thank you as well to Charlotte (Gallogly, President, World Trade Center Miami) and the World Trade Center Miami for the gracious invitation.

And good afternoon ladies and gentlemen. I'm grateful for the opportunity to be with you today.

If you think you like it hot in Miami, you should try Washington, DC these days. We're feeling the heat at the U.S. Chamber for sure.

But you know what they say – "If you don't like the heat, stay out of the kitchen." It helps that we're not afraid to break a few eggs!

Of course, our first and last choice is always to work cooperatively with our country's leadership in Washington and in the state capitals to find constructive solutions to shared challenges.

And that's exactly what we're doing and will continue to do – political rhetoric notwithstanding. That's when it comes to health care and climate change, and it's of the economic challenges we are all facing today.

Florida's workers and businesses are weathering one of the harshest economic storms we've seen in nearly a century. These winds have blown away 452,000 jobs and left thousands of shop doors shuttered.

In the eye of this storm the first instinct is to turn inward; to protect the remaining businesses and jobs.

But the best way to protect the remaining jobs and create new ones is to see the economic opportunities that exist in selling to 95% of the world's customers who live outside of our borders.

President Obama shares this belief. He recently said, "We know that the success of American businesses, small and large, depends on their ability to sell their products across the globe."

Yet, many politicians are questioning the benefits of open trade, wondering whether the unfettered flow of goods actually helps the average family.

They see that today nearly half of the world economy is centered in the Asia-Pacific region, and they fear the fierce new competitors—from China to India to Brazil—that are rapidly emerging.

These emerging nations are reshaping global economics, and altering geopolitics.

They are projecting their commercial influence —securing capital and the best human talent, making deals for oil and natural resources – and they are flexing their economic muscle to advance their strategic interests.

Yes, these global developments are challenges, but let's acknowledge them as opportunities, as well, always recognizing that the overwhelming majority of Floridians and Americans derive great benefits from trade.

Florida's exports reached $57 billion last year and more than half a million of the state's jobs depend on trade and investment. Across the country, one in five factory jobs depends on exports, and one in three acres on America's farms are planted for consumers overseas.

And now, just when trade is needed most, a creeping sense of protectionism is throwing sand into the gears of economic recovery.

The misnamed "Buy American" provision that snuck into the stimulus bill, for instance. It sounds good in theory, but in reality it creates red tape for businesses, raises costs on new projects, and stalls job creation.

Florida businesses are also being held back from selling their products competitively overseas by other countries that are slapping steep tariffs on our exports.

Meanwhile, Washington is failing to implement trade agreements with the countries that are ready and willing to open their markets.

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?

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:

First, why trade matters here in Florida and across the United States;

Second, the apparent ascendancy of a new economic isolationism that threatens that trade and consequently our livelihoods;

And, third, the steps the U.S. Chamber is taking to address that threat and preserve and enhance our competitiveness in the global economy.

The Importance of Trade to Florida and the United States

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 Florida.

With its well-deserved title of Gateway to the Americas, and its unique relationship with Latin America and the Caribbean – I'm reminded here of the old joke that Miami is the closest Latin American city to the United States – it's no wonder Florida has long been among the nation's leading exporters.

Last year, Florida exports were more than double what the state sold overseas as recently as 2003. The state has eighteen – 18! – billion-plus-dollar export markets around the world.

Take a look at the list sometime – Brazil, Venezuela, Canada, Mexico, India. Wait a minute… India?

I talked about Latin America – but that's not the end of the story. Florida exports to India, for example, barely topped $150 million in 2004. Last year, they came in at over $2.3 billion.

Switzerland, the United Kingdom, Germany, and Japan are also billion dollar markets for Florida.

Back closer to home - remember all the doom and gloom talk in the early 1990s about how NAFTA would hurt the United States, including workers and businesses in this state?

Well, turns out the naysayers didn't get it quite right. Florida exports to Canada and Mexico totaled $6 billion last year.

I should also mention that Florida exports to Chile have more than doubled since a trade agreement with that nation went into effect just five years ago.

Florida companies and farmers aren't running from the competition, they are meeting it head on! And 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.

Consider that one in nine manufacturing jobs in Florida is sustained by exports.

Consider that U.S. services companies—the most competitive in the world—export $550 billion in services annually, with a $140 billion surplus.

And consider that Florida exported its agricultural products to the world last year to the tune of $2.2 billion.

That's why I continue to be amazed by the lament 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. 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 – 250,000 of them in Florida alone - 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. Our nation must attract and remain open to global capital, with capital markets that are vibrant and competitive.

The Threat and Costs of the New Isolationism

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.

The "Buy American" mandate, which was inserted into the economic stimulus package, may be the best illustration of how a protectionist policy can sound good—but in fact hurt the very workers and industries it is supposed to protect.

In February, the Chamber helped get these rules modified so that they did not violate our international trade agreements.

But the federal government is forcing states and localities to apply these "Buy American" mandates in unprecedented ways. And that's delaying stimulus projects, eliminating jobs, and raising the specter of retaliation.

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.

Our government's decision to terminate the pilot project that allows trucks to operate across the U.S.-Mexico border is another illustration of the new isolationism in America.

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.

How can we call on other countries to meet their obligations under trade agreements if we refuse to keep our own?

Meanwhile, U.S. exporters are being denied the benefits of already signed trade agreements with Colombia, Panama, and Korea because the Administration and the U.S. Congress won't take the steps necessary to implement them.

Keep in mind that the United States has unilaterally waived import tariffs on Colombian products since 1991, and on Panamanian products since 1983.

We have everything to gain from these agreements and nothing to lose.

When are we going to recognize that we are shooting ourselves in the foot with protectionism?

Recently, the Chamber released a study that shows the combined effect of these protectionist policies is the loss of half a million American jobs — a staggering number, and one that we just can't afford. Future job losses will be even greater if we don't change course.

The Path Forward – A U.S. Chamber Plan of Action

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.

Let me tell you how the U.S. Chamber sees it.

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.

It means reinforcing our relationships with critical Western Hemisphere allies and advancing trade policies that enhance our mutual competitiveness.

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.

Agreements like the Trans-Pacific Partnership that will tie the fast-growing markets of Asia to the limitless potential of Latin America.

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.

Recently, the Obama administration announced it would slap 35 percent tariffs 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 underway 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.

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 Steven's company, Fed Ex, 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.

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. The Chamber worked hard to see Congress approve legislation early this year to expand Trade Adjustment Assistance.

But there is much more to do – most importantly, better prepare our students for the high tech, global economy.

It's a national disgrace that one third of U.S. 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.

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, 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.

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.

Just a few weeks ago, the U.S. Chamber launched 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. I urge you to see what it's all about at www.freeenterpriseamerica.com/.

Expanding our exports and advocating open markets at home and abroad is a critical plank of this campaign.

We are driving 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 will 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.

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