American Business and Economic Statecraft: An Agenda for Shared Prosperity, Remarks by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
Global Business Conference
Thank you very much and good morning ladies and gentlemen. It’s terrific to see so many of my colleagues here today, including from the worldwide Chamber Federation—the 115 AmChams that the U.S. Chamber is pleased to work with every day.
I’d like to thank officially the secretary and the State Department for hosting this forum, bringing together American business leaders and diplomats from around the globe to talk about the fundamental reality that has already been explored here—and that is economics and security are very closely tied.
Last March, after the devastating tsunami rocked the shores of Japan causing heartache for the Japanese people and many of us who have dealt with them on a regular basis, the State Department and the U.S. Chamber promptly joined forces and showed the world that the American business community and the U.S. government stand united in the face of turmoil and disaster. I was pleased to make that trip to Japan with the secretary. I was astounded by some of the things that we learned and by the progress that was being made. We’ve tried then to add our help and encouragement in every way we can.
I suggest that we forget what the critics say—the world still looks to America to lead … in times of prosperity and in times of crisis. As we confront the persisting global and domestic economic challenges, it’s incumbent on all of us to take up the mantle of leadership.
When Secretary Clinton delivered her Economic Statecraft address last fall, she quoted Harry Truman, who said: “Our relations, foreign and economic, are indivisible.” In other words, you can’t do one without the other. It’s true, and I would add that in foreign and economic relations, business and government, too, must be indivisible and very closely aligned.
What do I mean by that? Economic growth cannot be generated without the private sector. And the private sector cannot generate economic growth without realistic policies from government that encourage and enable free enterprise.
We don’t always agree on what those policies should do and be—and I’ll get to that in just a moment. But let me start by highlighting a key point of agreement—the U.S. government and the business community agree that America’s power abroad will largely be measured by the strength of our domestic and international economy. And it also happens to be a fact that the business America does abroad has the power to strengthen our economy at home.
The American Chambers of Commerce are on the front lines of America’s global business efforts. You are fostering free enterprise around the world and strength for the economy where you are located. And the Chamber is fighting to advance policies that will strengthen your efforts and make you even more powerful advocates for American business. I’d like to outline some of the ways we can better work together to shape our policies, empower the private sector, revitalize our domestic economy, and strengthen our global leadership.
Expanding Trade and Global Commerce
I’ll start with the biggest opportunity—expanding trade and global commerce. One of the best ways we can spur economic growth is by advancing a bold trade agenda. Don’t forget, from a domestic point-of-view, 95% of the people we want to sell something to live beyond our shores. The State Department and the Chamber share the goal of doubling U.S. exports in a five-year period.
Last fall, we celebrated the hard-fought passage of free trade agreements with South Korea, Colombia, and Panama. And I must say, it was long overdue. We waited too long, and it lost us jobs and influence. But we’re on the right track. Since that achievement, there has been a strong emphasis on trade enforcement—among all our partners. Indeed, when our trade partners don’t play by the rules, we will call them out on it.
But more than that, we’ve got to move forward and we need to think big. We’re pushing the administration to build momentum with aggressive policies that will leverage opportunities around the world with new and existing partners. Doing it will spur growth and create more jobs for Americans. Here’s how the U.S. Chamber believes we can do it:
First, the Trans Pacific Partnership. As you heard from Ambassador Kirk, completing the Trans-Pacific Partnership agreement is the best place to start. Doing so will expand our access to booming markets in the Asia-Pacific, and it will help boost U.S. exports and create jobs at home. We’re pushing for completion of that agreement this year.
I was at the APEC meetings in Hawaii, and lots of people wanted to know what’s going on in Europe—particularly the Chinese. I asked President Hu Jintao why that was such a big issue, and here’s the answer. He said, “EU is our biggest export market, and we’re really worried about it.”
Well, the bottom line is there are things we can do about trade and improving relations both economic and otherwise in the EU. We should also build on our existing relationship with European partners. The U.S. and EU economies are already very open to trade, but even relatively small barriers impose steep costs when you’re talking about the world’s greatest economic relationship—that’s the U.S. and EU.
The Chamber is advancing the idea that we can strengthen our partnership through a Transatlantic Economic and Trade Pact. Basically, we want to expand these relationships. We talked about starting originally with a free trade or a zero tariff arrangement in the trading of goods. We are now up to five: goods, finance, technology, etc. We’re going to push them, and we’re not going to make them all wait until the rest of them are done.
In the beginning, it was very hard to get attention. That was before the difficulties in the Doha round, or before the economic difficulties in Europe. The leaders of Germany, France, Britain, and the Netherlands have publicly voiced support in the past month for a transatlantic trade accord. And we will be pushing it very hard, and I’m sure we will have the secretary’s help on that matter.
Let me say a word about some other multilateral opportunities. We have to find a way forward at the World Trade Organization. The U.S. business community remains committed to the WTO and the global rules-based trading system that it supports. The Chamber applauds the accession of Russia to the WTO. We will work with the trade office and others to get it passed through the Congress. A failure to do so will leave us on the outside looking in while everyone else gets the benefits.
In addition to expanding existing relationships, we’ve got to go after new markets with new partners. Currently, there are more than 300 trade agreements in force around the world, and we’re only involved in 20 of them. That’s not very smart. We can and must do better.
Brazil, Egypt, India, and Indonesia, just to mention a few, are all countries with bright economic prospects and rising geopolitical importance. In each case, negotiating a bilateral FTA with these countries is a long-term proposition. But we believe they would make excellent FTA partners, and they should be on the list for consideration.
For any new agreements—even the TPP—to move forward, Congress must renew Trade Promotion Authority. Every president of any party needs to be able to negotiate trade agreements that won’t be picked apart by Congress, but, instead, be subject to consultation and then an up or down vote.
We must also facilitate trade through the Export-Import Bank. This is the one thing the government does that makes a profit. The Chamber is pressing Congress to reauthorize the Ex-Im Bank before its authority runs out in May. Ex-Im supports billions in exports and makes money for American taxpayers—that’s cash. Too many people are concerned about what goes out, but don’t count what comes in. And I thought the president the other day was very strong in his points on how that would help U.S. exports.
We should also dedicate greater resources and attention to ensure U.S. firms can get in on the ground floor of Africa’s economic development.
Let me say a word about international investment. Another critical way we can boost global commerce and strengthen our own economy is by attracting more investment. Foreign investment in U.S. enterprises already supports 5 million American jobs. We can draw more global capital and add more U.S. jobs by negotiating more bilateral investment treaties, or BITs. The U.S. ranks 44th in the world in the number of BITs we’ve negotiated. We need to conclude the model BIT review and get back in the game.
One of my favorite subjects is travel and tourism. While we’re negotiating new trade pacts and investment treaties, let’s not overlook a big way we can put people to work in this country right now, that we can show people around the world what we are, what we stand for, and what the American dream is all about. We need to better promote the United States as a primary travel destination. If we don’t welcome people who are legitimately here, we are making a big mistake. I will tell you, we will create millions of jobs in a hurry if we go back to simply having the amount of tourism we had 10 years ago. And let’s expand the visa waiver program so more countries can take part.
Balanced Trade Agenda
I want to talk about a balanced trade agenda before I wrap up my thoughts. There’s a lot of talk in Washington about the need to boost exports because they drive U.S. growth and jobs here.
But let’s face facts—imports are also vital to Americans jobs and competitiveness, not to mention global development. Imports make our businesses more competitive and bring more choices at lower prices for American consumers. Half of all our imports are raw materials or components that go into products made here in the United States.
We should also readily “import” talent for our workforce. We must encourage foreign nationals, particularly those who were educated in the United States, to stay here so that they innovate, start-up businesses, and create jobs in our economy.
The same need for balance applies to investment. As I said, we want more foreign investment here. But American companies investing abroad is very, very important to us. The suggestion that investing abroad is all about offshoring jobs is uninformed nonsense. In reality, investing abroad makes U.S. companies stronger and makes them better—and remember that 95% of the people live somewhere else.
When the U.S. economy shed eight million jobs in the recession, U.S. companies that had invested abroad—multinational corporations of every size—actually created nearly 700,000 new American jobs. Something to think about.
So let’s be fair and tell the whole story. Trade and investment is a two-way street with benefits on both sides. The arguments for boosting trade and investment are simple. The policies are clearly not. But trade is too important to be sacrificed on the altar of politics. So my charge and challenge to this administration, and to the business community, is to be bold on trade—politics be damned.
Before I conclude, I’d like to take a step back and consider the big picture.
Expanding exports and attracting more foreign investment and visitors are fundamental growth drivers. But those efforts must be part of a broader agenda to strengthen our economy through critical domestic reforms.
At the U.S. Chamber, we’re strongly focused on economic growth and job creation. Go by the building and look at the sign that’s hanging on the front. Our plan involves a number of commonsense objectives.
First, we need an all-of-the-above energy policy. This country in the last ten years has gone from where are we going to get our energy to having enough here for at least two hundred years. That means developing our own abundant resources, using them domestically, and selling them around the world.
It also means investing in critical infrastructure, like the Keystone XL pipeline, which would put 20,000 people to work right away and 250,000 people to work as the pipeline is built. The State Department gave it a thorough review and blessed it, and now we’ve got to get back and do it.
Second, we’ve got to maintain and modernize our infrastructure. If we don’t have a great infrastructure, we can’t support a supply chain that makes trade work. Legislation is moving through Congress as we speak. Let’s put the screws in, it’s got to get done in the next few days.
Third, we need an internationally competitive tax code. We have a few problems with taxes. We’re the only guys left as big players that double-tax American companies and American individuals. That’s not going to last very long because it makes it more sensible to do your business overseas if that’s the case.
Fourth, we need comprehensive regulatory reform. Everybody understands that’s a problem—and we’re all over it.
Fifth, we need spending restraint, deficit reduction, and entitlement reform. And nobody wants to do that. We can do it in a modest and thoughtful way, but if we don’t do it, we’ll be in a position in a few years where we will wish we had.
However, it’s nonsense to think we can balance the budget by “ending foreign aid.” In fact, the International Affairs budget is just over one percent of the federal budget. The Chamber supports a robust International Affairs budget for the State Department and other agencies. It funds critical efforts to boost exports and jobs, protect our national security, and promote our humanitarian values.
The primary driver of our debt is runaway entitlement spending. We need to reform our entitlement programs so they remain solvent for future generations—and won’t push our nation over an economic cliff.
In conclusion, the more effective we are in these efforts, the more successful the State Department, the AmChams, the Chamber and others will be in promoting American companies and their workers as reliable partners.
You can be sure that the U.S. Chamber will be helping make the global sales pitch. This year, I’ll be traveling to Europe, South America, Asia, and other places to build the case. We’ve got talented staff from our international team dispatched around the world. And we always stand ready to help you with your efforts.
Here in the United States, and increasingly in other lands, free enterprise is the engine of prosperity. It’s driving our recovery at home and development abroad.
The U.S. Chamber is celebrating its 100th anniversary this year. We’ve never been prouder of free enterprise—or more dedicated to advancing and protecting it.
We all have a stake in restoring America’s economic stability and global leadership—and we all have a role in making it happen. The private sector drives enterprise. The government can support our efforts by setting policies that will enable business to be nimble and competitive in the global economy.
I look forward to hearing your thoughts, ideas, and questions.
Thank you very much.
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