U.S. Chamber’s Donohue States Case for Expanded Trade

"If I had to describe the state of world trade today, I would do it in two words: missed opportunities," U.S. Chamber President and CEO Tom Donohue told a National Press Club audience in Washington, D.C. Photo: David Bohrer

If Congress and the administration want to put Americans back to work, they should move forward on trade, U.S. Chamber President and CEO Tom Donohue told a National Press Club audience in Washington, D.C.

“World Trade Month is the perfect time to point out that expanding American exports makes more sense than ever,” Donohue said in his May 14 State of World Trade speech. Donohue unveiled a Chamber-commissioned study, Opening Markets, Creating Jobs, that “settles once and for all the debate over whether America’s trade agreements have been good for the country and our workers.”

The study examines the U.S. free trade agreements (FTAs) implemented over the past 25 years covering 14 countries and concludes that the FTAs created 5.4 million American jobs. The overall trade relationship with those 14 countries supports a grand total of 17.7 million American jobs. “I defy anyone in town to name another budget-neutral government initiative that has generated anything like this number of jobs,” said Donohue.

Despite trade’s record of success, Donohue noted that “behind the border” protectionist barriers put in place by government and political leaders at home and abroad are slowing down the global business community’s ability to create jobs, lift people out of poverty, raise living standards, and foster greater understanding and stability among nations. “Countries all over the world continue to raise protectionist barriers to tilt the playing field to their advantage, favor domestic industries, and keep markets closed,” Donohue said.

The foremost threat to free trade abroad is the growing economic power of the state and the resurgence of state-owned companies and enterprises that benefit from policies that favor national producers at the expense of foreign companies.

Barriers to U.S. Exports

China’s “indigenous innovation” strategy, for example, limits government contracts to companies that develop their intellectual property (IP) in China. The effect, Donohue said, is to “restrict market access and deny a level playing field for foreign enterprises and investors.”

According to a March 2010 survey of American companies released by the American Chamber of Commerce in China (AmCham China), 28% of the 203 respondents said that they are losing business because of China’s indigenous innovation policy, and more than half of the 49 technology companies surveyed said that the new policy would affect their businesses.

U.S. Trade Representative Ron Kirk echoed Donohue’s comments about China just days later during his May 17th speech at U.S. Chamber headquarters. “Our next steps with China include continued pressure to strengthen their IPR [intellectual property rights] regime—and to step back on their flawed and troubling policies across the industrial sector, like indigenous innovation,” Kirk said.

U.S. Policies Slow Trade

Perhaps the biggest impediment to job growth and trade is “America’s appalling lack of action on free trade agreements,” Donohue said, taking the opportunity to once again call on Congress to pass pending trade agreements with Colombia, Panama, and South Korea.

Donohue stressed that when it comes to trade, the United States is falling behind. According to the World Trade Organization, there are 262 free trade agreements in force around the globe today, but the United States has FTAs with just 17 countries. America is party to only 1 of more than 100 negotiations of bilateral and regional trade agreements.

In May 2010, the EU signed FTAs with Colombia and Panama. The EU concluded negotiations for an FTA with South Korea in November 2009. Also in May 2010, Canada signed an FTA with Panama, and its parliament is poised to give final approval to an FTA with Colombia.

The United States stands to lose more than 380,000 jobs if it fails to implement its pending trade agreements with Colombia, Panama, and South Korea while the European Union and Canada move ahead with their own agreements with the those countries, according to a recent study by the Chamber. “With unemployment near 10%, it is inexcusable for Congress and the administration to be sitting on three excellent FTAs,” Donohue said. “If we let our own agreements with these countries languish, we will be consigning American companies to a major competitive disadvantage and destroying U.S. jobs.”

During his speech at the Chamber, Kirk said that he was working with the U.S. Congress and other stakeholders to move ahead with the FTAs with Colombia, Panama, and South Korea. “The Obama administration understands and values the economic benefit and strategic relationship with each of these three important friends and economies,” he said. “I want these done.” But, he hedged, it’s important to “get the agreements right.”

The federal government must also do a better job promoting exports, Donohue said. “More than 280,000 U.S. small and medium-size companies export, and they account for nearly a third of U.S. merchandise exports. Even so, 99 out of every 100 U.S. small companies don’t export—and we need to change that.”

Read the study at www.uschamber.com/trade.