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Council of the America?s Washington Conference - Remarks by Thomas J. Donohue

Monday, May 2, 2005 - 8:00pm

Council of the America's Washington Conference
Remarks by Thomas J. Donohue
President and Chief Executive Officer
U.S. Chamber of Commerce U.S. State Department
May 3, 2005

Introduction

Good afternoon. I'm delighted to be here with you this afternoon and to offer my warmest congratulations as the Council of the Americas marks its 40th anniversary.

For four decades, the Chamber has regarded the Council as a good partner. We've enjoyed working alongside you on many important issues—from NAFTA to CAFTA.

Bill Rhodes and Susan Segal [SEE-gull] are doing a great job steering this wonderful organization.

I'd like to open with a salute to David Rockefeller.

You all know him as the consummate business diplomat in the Americas and one of the founders of the Council of the Americas. But he also was a founder of the Association of American Chambers of Commerce in Latin America, known to its friends as AACCLA.

Many of you know AACCLA as the U.S. Chamber affiliate that brings together the 23 American Chambers of Commerce in this hemisphere — a natural partner for the Council.

David, thanks for all you have done and are doing for the Americas.

Global Economic Integration

I appreciate the opportunity to talk about the competitiveness of the United States — and the competitiveness of the entire hemisphere.

To grasp where we stand in the world, let's step outside the Western Hemisphere for just a minute. What do we see

We see China emerging as a manufacturing power with a vast appetite for commodities, energy, and consumer goods.

We see India emerging as a global power in services, with a highly trained and educated workforce and a growing ability to attract global investment.

We also see the increased opportunity a newly consolidated and enlarged European Union presents to its member countries.

A natural byproduct of this economic growth is greater economic integration among the nations located in those parts of the world.

For example, despite increased tensions between the two, China is now Japan's largest trading partner, bumping the United States out of the top spot.

In addition, China has signaled its intention to foster stronger economic ties within East Asian by signing a free trade agreement with the 10-country Association of South East Asian Nations.

The quickening economic integration of Asia and Europe spurs some interesting questions:

"What about the Americas"

"What must we do to speed economic growth and integration in the Western Hemisphere"

"How can we in the Western Hemisphere sharpen our own competitive edge"

The answers to these questions lie in our international policies and our domestic policies.

Internationally, the ability of American business to move goods, services, people and capital across borders is critical to our competitiveness.

Domestically, we need policies that will ensure we have an educated workforce, a secure energy supply, and a legal system that rewards entrepreneurship.

In other words, we must remember that competitiveness begins at home.

Trade

First, looking at the international agenda, we must enact free trade deals that remove tariffs and create a level playing field. The next step forward is DR-CAFTA, which, of course, has been a major focus of today's conference.

The U.S. business community recognizes DR-CAFTA as the biggest free trade agreement in a decade — and an absolute "must win" trade deal.

Why is it a "must win"

First, for our economy. The Chamber has issued a series of state-specific economic impact studies that show DR-CAFTA will generate nearly $4 billion in new sales by American companies and more than 25,000 new jobs — just in its first year.

DR-CAFTA is also the key to future trade agreements further down the road …

If protectionist voices and special interests manage to defeat DR-CAFTA, it's difficult to see how we can secure a global trade deal in the Doha Development Agenda negotiations — or free trade agreements with the Andean countries or Thailand.

However, the most compelling reason why we need this agreement goes beyond business — and beyond trade.

DR-CAFTA is an urgent foreign policy priority for the United States. It's a matter of the national interest and national security.

Remember the last time Central America loomed on the hemispheric agenda — it was during the civil wars of the 1980s.

Since that time, the region has taken tremendous strides forward, consolidating its democracies and building free market economies.

So consider the two paths before us today.

If DR-CAFTA is approved, our friends and neighbors in Central America will be able to continue the progress of the past 15 years.

If it's approved, people in Latin America and elsewhere will see that the United States is prepared to forge trade partnerships with its friends and allies to foster development and economic growth.

A stronger economy will provide governments with additional resources for education, health care, and infrastructure projects.

On the other hand, if DR-CAFTA is defeated, hundreds of thousands of jobs in the region's apparel industry will likely disappear within just a year or two.

The blow to Central America's economy would be devastating.

Latin American politicians and journalists from left to right will point to the triumph of special interest politics over the U.S. national interest.

Ladies and gentlemen, if DR-CAFTA is defeated, our friends, allies and neighbors in Latin America will view it as a kick in the teeth.

Never before has Congress rejected a carefully negotiated free trade agreement, let alone one so clearly beneficial to the United States.

This is why the U.S. Chamber of Commerce is devoting a tremendous amount of resources in the effort to push DR-CAFTA through Congress.

We have held hundreds of face-to-face meetings with members of Congress.

We are active across the country through a nationwide tour with the Central American and Dominican ambassadors that has taken us to more than 15 cities.

Next week, the Chamber is taking the presidents of the six DR-CAFTA countries on a nationwide tour to generate support for this critical agreement, covering a dozen cities in two days before reconvening in Washington for a meeting with President Bush.

Before I move on to the rest of our agenda, I'd like to comment on the challenge we face from America's sugar growers.


Today, sugar is the most protected commodity in U.S. agriculture.

And it will continue to be the most protected commodity in U.S. agriculture even after DR-CAFTA is implemented.

The amount of sugar that will enter the United States under DR-CAFTA amounts to just 1 percent of U.S. consumption. That comes out to a teaspoon and a half of sugar each week for every American.

I find it difficult to accept the argument that importing a teaspoon and a half of sugar per person a week will ruin the livelihoods of North Dakota beet growers and Louisiana cane growers alike.

DR-CAFTA will have no noticeable impact on sugar prices whatsoever — which is more than you can say about the weather, Splenda, and the Atkins diet.

This free trade agreement is far too important to be derailed by the interests of a single industry. I hope those in the sugar industry will understand this and join the side of growth and opportunity instead of protectionism and isolationism.

Other Trade Deals

DR-CAFTA is not only important for the reasons I've stated, but also because of what it will do for the broader trade agenda in the Americas.

From where I sit, we are well on our way to hemispheric free trade — and we are getting there in three stages.

We reached the first stage in 1993 with NAFTA, with tremendous success to show for it.

The second stage is under construction. It started with the new U.S. free trade agreement with Chile — which generated a 33 percent surge in two-way trade in its first year.

It's gathering momentum with DR-CAFTA and the pending FTAs with Panama and the Andean countries.

The final stage, of course, is Mercosur, Venezuela, and the Caribbean.

The quickest path to hemispheric free trade is through the Free Trade Area of the Americas, which as you know, is at a standstill.

But we're prepared to wait for the right FTAA — a truly high-standard free trade agreement that enhances the competitiveness of all involved. I am sure it will come, and no one will be working harder to see it become a reality than the Chamber.

The results will be good for business and economic growth. They will be good for the hemisphere's young democracies. And they will show the world what good neighbors can do when they work together.

Balance between Security and Mobility

To recap, our first priority in promoting economic integration and competitiveness in the Americas is to move forward with new trade agreements.

Our second priority must be to ensure that enhanced border security does not compromise the mobility of good and services, people, and capital.

I've said all along that if the Unites States shuts down its borders and otherwise slows down the engines of commerce for security reasons, then Osama bin Laden will achieve the victory he's after.

Last Friday at the Chamber, we had a good discussion with the new Secretary of the Department of Homeland Security, Michael Chertoff.

We agreed that business must have a seat at the table as the United States seeks ways to protect itself from terror while at the same time protecting our way of life.

The Chamber is working with the Department of Homeland Security and others to achieve a cargo security strategy that detects and stops dangerous or suspicious cargo without causing logjams and putting undue strain on the global supply chain.

In a similar vein, we must ensure the safe and expeditious passage of people – both those who come here just to visit and those who come to fill jobs and strengthen our labor market.

We understand the frustration our friends in the hemisphere feel in trying to obtain visas, and we want to create a system that is more welcoming to them but which also screens those who might intend to cause us harm.

We also want to make it easier for immigrants to fill jobs in America for which there are not enough qualified or interested Americans. I'm talking about everything from high-tech computer jobs all the way down to custodial jobs.

Because of demographics, in just a few short years we will have millions more jobs than U.S. workers.

The answer to this pending crisis is immigration reform that expands the guest worker program and creates a pathway to earned legal status for the undocumented workers already contributing to our economy.

Immigration reform would be as great a benefit to our closest neighbors — Mexico, Central America, and the Caribbean – as it would to this country.

I've covered mobility of goods and people. Finally, there's the importance of allowing capital to move freely.

The outsourcing debate in the United States has not completely disappeared since the election. It is very much alive, if not in the headlines.

Several governors and state legislatures have enacted—or are attempting to enact—measures that seek to punish U.S. companies that choose to invest capital overseas.

These efforts are fueled by emotional appeals and anecdotal evidence. When you strip those things away, a few important facts stand out.

First, many lost U.S. jobs aren't going to China or anywhere else. They are going to a country you've never heard of — a country called "productivity."

Think about this: In 1980, it took 454,000 General Motors workers to build 5 million cars. Today, it takes 118,000. Even nations such as China are shedding manufacturing jobs due to productivity gains.

We also know that the United States "insources" far more than it outsources. In 2003, the United States enjoyed a $60 billion surplus in services trade – that is, foreign owned companies hired far more U.S. white collar workers than U.S. companies hired overseas.

Finally, let's not lose sight of the fact that though U.S. companies do ship some jobs overseas – some are projecting 250,000 jobs a year over the next decade – that number represents the new jobs our economy creates in a month or two.

It's a miniscule fraction of the more than 140 million Americans on employer payrolls – the most in our nation's history.

The global sourcing issue is not "yesterday's news," and the Chamber will continue to lead the fight against artificial restrictions on the free flow of capital.

Other Priorities for Increased Competitiveness

As the third and final step toward greater economic integration and competitiveness in the Americas, we must get our own house in order.

We urge our friends in the Americas to make a stronger commitment to transparency, rule of law, and the protection of intellectual property rights. Similarly, the United States has its own challenges.

We must bring lawsuit abuse under control. The U.S. tort system drains $246 billion from our economy every year, and a good chunk of that ends up in the pockets of trial lawyers.

We achieved a significant battle two months ago when Congress finally passed class action reform – a top Chamber priority.

We are continuing to seek reform in states and counties that lay out the welcome mat for the most predatory elements of the trial bar, and at the federal level, medical liability reform and a legislative solution to the asbestos litigation crisis are critical.

We must also ensure access to reliable and affordable energy supplies, and we saw the President again last week make an impassioned plea for a national energy bill. High energy prices are dragging down economic performance.

Increased production—including nuclear, alternative, and renewable sources—and greater investment in energy infrastructure will reduce American dependence on foreign energy and put us on a path toward more stable prices.

The United States must also close the growing gap between itself and its competitors in math, science, and engineering training and education.

U.S. eighth graders rank 19th in the world in math, behind Singapore, South Korea, Taiwan, Hong Kong, Japan, and others. China is producing four times as many engineers as the United States.

We must do a better job providing our young people with the skills and training required for the high-tech jobs of the future, and I know that Latin America has its own educational challenges and needs for reform and new investment.

Finally, the United States must upgrade a transportation system that is overburdened and in disrepair.

To handle the increasing volumes of trade that DR-CAFTA and other free trade agreements will generate, we need major investments in our roads, airports, railways, and seaports.

Conclusion

Ladies and gentlemen, the economic future of the Americas is at an important crossroads, and the United States must take the lead in steering it down the right path.

On the homefront, legal reform, investments in education and training, improved infrastructure, a liberalized immigration policy, and a national energy strategy.

All of these things will demonstrate to our friends in Latin America that we are serious about our role as an economic leader and eager to spur growth in the region.

Continued U.S. leadership on matters of trade and investment is also critical to the future of the Americas.

DR-CAFTA represents a unique opportunity to strengthen that which binds us and keeps us competitive with the rest of the world. The United States can ill afford to fall down at the hour it's needed most.

Business will lead the way, and I pledge to all of you that we will put the full strength and resources of the Chamber of Commerce of the United States behind the effort to pass DR-CAFTA and strengthen and expand our vital commercial relationship.

We will work closely with our good friends at the Council of the Americas every step of the way.

If we do this and do it together, then we will not only preserve the blessings of liberty, democracy and prosperity for all the citizens of the Americas, but we will also extend these wonderful blessings around the world.

I look forward to your questions. Thank you very much.