What’s Next for Trade—A New Agenda for the Asia-Pacific Region and Beyond, Remarks by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
The Chamber of Commerce of Hawaii
November 9, 2011
As Prepared for Delivery
Thank you very much, and good afternoon everyone.
Jim, thanks for the opportunity to address your members during a very busy week. Jim is a valued member of our Chamber of Commerce Committee of 100 and a strong U.S. Chamber partner. He’s done great things for your organization.
You won’t be surprised to learn that we are here this week for the APEC Leaders Meeting—along with 20,000 other delegates and 2,000 journalists from around the world. Although government officials from APEC countries will far outnumber private sector representatives, we have an essential role to play. APEC cannot successfully tackle major challenges like jobs, economic growth, and trade without cooperation from the private sector. So we need to be working hand in hand.
We intend to do that. We have three objectives for this week.
The first is to advance a bold and aggressive new trade agenda—not just for the Asia-Pacific region but for the entire globe. This will be the major focus of my remarks today.
Second, we’re here to participate in a meeting with APEC ministers convened by Secretary Clinton that focuses on disaster preparedness and response. Large-scale disasters across the Pacific Rim have caused more than $500 billion in economic damages over the past decade. All stakeholders—governments and their militaries, NGOs, disaster relief agencies, and the private sector—need to communicate and cooperate more effectively and to share lessons learned.
The Chamber is working with USAID to share information and best practices from disasters throughout the APEC region. And we’ve signed an MOU with the Pacific Command pledging to work together to respond to disasters. This is a critical issue for Pacific nations.
Third, this Monday, the U.S. Chamber and the Hawaii Chamber will co-host a Hiring Our Heroes job fair at Pearl Harbor. The U.S. Chamber’s Hiring Our Heroes program has already connected more than 55,000 veterans and military spouses with more than 2,500 employers in 37 states. More than 3,400 have gotten jobs so far.
But right now, the main event is APEC, and the United States is honored to host the meeting this year. Jim, I want to congratulate you, your staff, and your members for doing such an exceptional job rolling out the red carpet. Your chamber has done everything possible to leverage this great opportunity.
As a member of the APEC Host Committee, you’ve helped put the state’s best foot forward—and that will pay dividends for years to come.
Trade—An Economic Imperative
The most urgent issue on our APEC agenda is advancing an aggressive and bold trade agenda. We start from a simple premise—trade is not an optional luxury; it is an economic imperative.
Trade can be an antidote to our weak economy and the answer to doubts about American economic leadership at home and abroad. It can create hundreds of thousands of badly needed jobs without a single tax increase—and without adding a dime to the deficit. It can help attract foreign investment that will spur our economy and put even more Americans back to work.
In October, Washington finally ended its long holiday from the trade debate. It sent a message to the world: American trade policy is back in business. After long delays, Congress approved trade agreements with South Korea, Colombia, and Panama—and with large and bipartisan majorities. These votes show that America can still lead on trade.
Given the broad consensus that exports must play a central role in creating American jobs and boosting economic growth, we must capitalize on this momentum. It’s time to think big. It’s time to be bold. It’s time to commit to an aggressive new international trade and investment agenda.
Asia-Pacific Trade Agenda
At the top of the agenda is a Trans-Pacific Partnership Agreement, or TPP, that would expand access to American goods and services in the fastest growing and most dynamic region of the world.
The APEC economies—including North America—account for two-thirds of the world’s population and GDP. U.S. trade with East Asia reached nearly $1 trillion last year.
To boost U.S. exports and create jobs at home, the United States needs to improve its access to Asia-Pacific markets. TPP is the vehicle to accomplish that. And it happens to be the one trade agreement under negotiation today in which the United States actually has a seat at the table!
Let’s be crystal clear about what’s at stake.
For Hawaii, a successful TPP could result in a huge influx of new visitors from the Asia-Pacific, helping power the largest part of your economy—travel and tourism. I’ll have more to say on that in a minute. It could also further cement Hawaii as the essential gateway to the Pacific. Hawaii is where American and Asian cultures blend seamlessly, creating the perfect environment for establishing new relationships and cutting business deals.
For the United States, TPP represents our best chance of tapping into the world’s most exciting and lucrative markets. The fact is we are already behind the eight ball in Asia. While our trade is up, the U.S. share of Asia’s international trade has actually declined by 9% since 1990 as Asian nations have negotiated preferential trading agreements among themselves. Asian nations are designing a new architecture for trade, threatening to draw “a line down the middle of the Pacific.”
TPP negotiators must think boldly and creatively and go well beyond the standard objective of trade negotiations, which is simply to reduce tariffs. Based on what we have seen and learned so far, the negotiators are reaching well beyond that objective.
We need an agreement that will set new goals and standards on key emerging issues like state-owned enterprises, regulatory coherence, and the protection of intellectual property. Serious attention to these issues in TPP could help define the rules of commercial engagement throughout the region.
For example, state-owned enterprises engaged in commercial transactions around the world are increasingly distorting competition with private commercial actors, creating an unlevel playing field and allowing governments to circumvent many of their multilateral and bilateral trade and investment obligations. TPP represents an opportunity to craft limits on the ability of state-owned companies to use government preferential treatment and subsidies to outcompete privately owned firms.
Regulatory divergence diminishes the benefits of trade agreements, resulting in fewer jobs and less growth and competition. Conflicting rules gum up the works of trade and constitute a pernicious form of both unintentional and intentional protectionism.
TPP negotiators need to ensure that regulators are more transparent, more accountable, and do not use regulations and standards as tools to gain an unfair competitive advantage.
In addition, we are urging the negotiators to make supply chain efficiency a priority. We need to break down global obstructions to enhance efficiency, ensure predictability, and facilitate trade. This is a major concern of our members as they compete around the globe, and if solved appropriately, will enhance the competitiveness of all countries participating in TPP.
The protection of intellectual property is a key element of a rules-based global trading system. IP industries contribute to more than 60% of U.S. exports—therefore, strong IP protections are essential for these companies to grow and compete globally. IP theft and lax enforcement are rampant in some Asia-Pacific nations—and the U.S. Chamber’s Global Intellectual Property Center is leading a worldwide effort to champion IP rights.
The American business community wants and needs an ambitious TPP agreement completed as soon as possible—an agreement with high standards that will create jobs, spur growth, and raise living standards and strengthen our nation’s commercial, strategic, and geopolitical ties across the region. A strong agreement, swiftly concluded, which welcomes others such as Japan to join on the same robust terms—that’s what Hawaii and the United States need.
What an economic shot in the arm it would be. And what better way to send a clear, unmistakable message that America’s leadership in the Pacific is here to stay.
We’re a nation of the Pacific. We have been for hundreds of years. We’ve spilled our blood, spent our treasure, opened our markets, mobilized our humanitarianism, and shared our innovations and technologies. We have helped defend the peace, promote liberty, and advance human progress. We aren’t going anywhere—nor should we.
The Global Agenda
Now, as we look beyond the Asia-Pacific region, we can see additional opportunities and potential.
The EU is by far America’s largest international economic partner and, in the size of its economy, our only true economic peer. We can strengthen that partnership through separate negotiations launched on parallel tracks.
One agreement would eliminate tariffs on U.S.-EU trade, which one study found could boost trade between us by more than $120 billion within five years and generate an additional $180 billion in GDP.
Another track would ensure compatible regulatory regimes. Additional agreements would address investment, services, and procurement.
If there’s one thing the U.S. and EU economies need right now, it’s growth. Given our demographics and our precarious fiscal conditions, we must have greater growth in order to create jobs, pay down debts, care for the elderly, and both compete and partner with emerging economies.
So why not build on a commercial relationship that already works pretty well, that’s already substantially integrated—and take it to the next level? That’s what we intend to do.
We must also find a way forward at the multilateral level. The U.S. business community remains committed to the World Trade Organization and the global rules-based trading system.
The U.S. Chamber supports the accession of Russia—the world’s 11th largest economy—on the strongest possible commercial terms, with all concerns addressed relating to IP protection and other key areas.
As for the Doha Round, it’s stuck. And although no one wants to say this in polite company, it’s probably not going anywhere. So what should we do? Throw up our hands and turn our backs on decades of trade liberalization that have lifted hundreds of millions of people out of poverty?
Not on your life. The leading economies of the world must first underscore their commitment to a rules-based trading system, with strong and fair procedures to air grievances and resolve complaints. Only the WTO can do this.
And, second, the WTO should assemble a “coalition of the willing” to negotiate a new agreement that would liberalize trade in services—the most rapidly growing sector of the global economy.
The invitation would go out to all WTO members: If you want to join the party, then you’re welcome. If you’re not interested, don’t come. You’d be surprised at how many nations would quickly decide that they are interested and want to come!
New Partners for FTAs
The United States also needs to quickly follow up the completion of our recent free trade agreements by negotiating new deals with additional partners.
Given their economic prospects and geopolitical importance, Brazil, Egypt, and India are all countries named by Chamber members as potential FTA partners.
In each case, a great deal of work would need to be done before negotiations could even begin. So let’s get started!
To seriously begin these talks as well as complete the TPP negotiations, Congress must renew Presidential Trade Promotion Authority. This sounds like a dull housekeeping detail, but it is very important. Every president since FDR has had the ability to negotiate trade agreements that could not be picked apart by 535 representatives and senators but, rather, be subject to an up or down vote.
That’s the only way our trading partners will seriously negotiate with the United States.
We also need to seize the benefits of international investment—both the foreign investment here that sustains 5 million American jobs and the U.S. investment abroad that is often the only way we can tap overseas markets.
An important way to achieve that is by negotiating more bilateral investment treaties, or BITs. The U.S. ranks 44th in the world in the number of BITs we’ve negotiated. Countries such as Germany and China have far more—and that means a competitive advantage for their companies.
The bottom line is that going forward, the needs of international investment—outbound and inbound—demand greater policy attention from the administration and Congress.
Travel and Tourism
And let’s not forget travel and tourism, a sector critical to the U.S. economy, growth, and jobs. This is a $700 billion industry providing 7.4 million American jobs. And guess what? When foreigners visit and spend money here, that’s counted as an export!
Hawaii understands this well. Tourism is the leading employer and revenue producer. Nearly 7 million visitors from around the world visited the Aloha State in 2010, spending more than $11 billion in the process.
To bring more of them here and to other great American destinations, we need to put the welcome mat back out. That means vigorously promoting what we have to offer, just like other countries do. It means reducing the “hassle factor” of visiting the United States without compromising security. It means bringing more countries into the Visa Waiver program, which is a budget-neutral way to create more jobs in the travel and tourism sector.
It means providing adequate resources at our consular posts abroad and at our ports of entry to reduce the barriers that our visa system imposes on business and leisure travel.
We’re pleased that our Congress passed—and the president will sign—APEC Travel Card legislation that will expedite customs clearance for trusted U.S. business travelers in the APEC nations.
Our businesses tell us all the time that before they can hire more people, they need more customers. Well, 95% of the world’s customers live outside our borders—many in economies that are growing faster than ours. They like American products. They like American culture. And they have the cash.
So let’s go sell them something over there and bring them to the United States as visitors and investors.
Ladies and gentlemen, a common complaint you hear in Washington is that we’d like to pump up this economy and create jobs, but there’s no money left to do it. We shouldn’t increase the deficit or raise taxes, so what can we do?
One big answer can be found here in Hawaii this week at APEC. Expand trade, attract investment, welcome tourists—and you can create a lot of jobs without new taxes or bigger deficits.
But to do it, we must have the political courage and leadership to seize the opportunities stretched out before us.
For more than five years, the United States delayed and dawdled on our FTAs with South Korea, Colombia, and Panama. We were told that the politics were too tough. That we had to wait until after the next election.
Today, with those agreements finally enacted, some are suggesting we must wait again for further progress. The politics are too tough. Another election is coming up.
Well, ladies and gentlemen, the 25 million Americans who are unemployed, underemployed, or who have simply given up looking for work can’t wait. They need action now.
Expanding trade, attracting more foreign investment, and drawing more tourists to our shores won’t solve all our problems. But it’s a win-win-win for this state and our country. It’s a win for jobs. It’s a win for our businesses—large and small. And it’s a win for government and those who depend on government—because trade, investment, and tourism pump more money into public coffers and don’t add to the deficit.
There will always be another election. Fearful politicians can always find another reason to tell us to wait. What we need in our country today are leaders—leaders who put it on the line with serious proposals to create jobs and grow the American economy.
The U.S. Chamber looks forward to continuing its strong partnership with the Hawaii Chamber in pursuing a bold and aggressive trade agenda.
What a great week for Hawaii and its business community. We’re proud of you and very pleased to be here. You sure know how to put out the welcome mat, but I’m really not surprised. After all, you’ve had a little practice!
Don’t let up when the APEC leaders and delegates go home. Build on what you’ll achieve this week. Work with us to convince leaders in Washington and throughout the Asia-Pacific to act wisely and boldly to expand trade, investment, and tourism.
Together, we can help turn this economy around. Together, we can help build a new era of security and prosperity in the Pacific—with the United States of America leading the way.
Thank you very much.