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�May 1, 1998
No. 1
CENTER FOR
raAOE POUCY STimfiES
The Blessings ofFree Trade
by James K. Glassman
Executive Summary
Why do Americans trade with people in the rest of the world? That basic question seems to be lost today in the political debate over trade deficits, fast-track negotiating authority, and the World Trade Organization. Americans trade because doing
so allows us to concentrate on what we do best, thus raising productivity and
incomes. Wc trade because the imports we receive allow us to enjoy a higher standard of living. And wc trade because exchanging what we produce with others for
mutual benefit is an inalienable human right, whether we trade with a neighbor down
the road or a worker on the other side of the world. Given the inherent blessings of
free trade, we should not insist that other nations lower their trade barriers before we
lower our own. Unilateral trade liberalization is its own reward.
James K. Glassman is a columnist for the Washington Post and a fellow at the
American Enterprise Institute in Washington. This Trade Briefing Paper is adapted
from a speech Glassman delivered at the Cato Institute's invitation on February 23,
1998, to a meeting of congressional legislative aides on Capitol Hill.
GOO
INSTITUTE
�05/13/98
13:26
© 2 0 2 395 6100
©002/002
U.S.T.R
BO
Under GATT/WTO leadership, global tarifffs have been cut by roughly 90%, falling from rates
of roughly 40% to 4% in major markets. Reductions in global tariffs relative $5.3 trillion in
global imports last year, represents a lowering of global trade taxes of roughly $1.5 trillion.
This and many other measures to open global markets have helped world trade increase by over
1400% since 1950.
Falling trade barriers and rapidly expanding trade have also helped fuel global growth. Since
1960, the 9-fold increase in exports has helped raise global output 4-fold. As a result, even
though global population nearly double to 5.85 billion, world average per capita income was also
able to double from rougly $3100 to $6300 (constant 1997 dollars)
�•U5/13,'98
WED 1 3 : 1 1 FAX
12)002
Expanding Trade Through Fast-Track Will Raise American Incomes
United States Treasury
Office of Intemationai Affairs
New trade agreements negotiated under fasttrack will expand trade by reducing tariffs and
other barriers to trade. They will cut the taxes
that foreign governments iinpose on U.S.
products,
making our products more
attractive to foreign consumers and fueling
continued growth in American exports. By
allowing the United States to maintain the
momentum generated by previous trade
liberalizations, new fast-track agreements
could contribute to an increajse of at least $200
billion in U.S. merchandise exports, relative to
what they otherwise would be, in the year
2010. Faster export growth is important.
Studies show that jobs in export industries pay
about 15% more on average than other jobs.
Fast-Track Cuts Taxes on U.S. Products
The benefits of fast-track agreements for the
United States are clear. U.S. tariffs are
already quite low-only about one-third of the
average tariff rates applied by the major
countries in Latin America and Asia with
whom we are most likely to attempt to
negotiate trade liberalizing agreements over
the next decade. Fast-track agreements will
cut barriers to U.S. exports to these countries
far more than our barriers to their products.
In 1996, foreign governments
collected
approximately $31 billion from tariffs on U.S.
exports- Coimtries in Latin America, who
imposed an estimated $6.2 billion tax on U.S.
exports, and in APEC, whose Asian members
imposed an estimated $13.4 billion tax,
account for most of these tariffs. If an
agreement had bean in place to cut these
foreign taxes on American products by even
one-half taxes on U.S. exports would have
been reduced by nearly $10 billion in 1996.
Effective T a r i f f Rates
Thailand
China
Philippines
Peru
Uruguay
Venezuela
Brazil
Chile
Colombia
Indonesia
Argentina
Australia
Korea
New Zealand
Malaysia
Japan
Singapore
Hong Kong
Weighted Ave. of Above
United States
1
26.1%
23.0
19.0
14.6
14.6
12.4
11.7
ll.O
10.9
10.7
10.3
8,9
7.7
6.8
6.4
2.8
1.3
0.0
7.5
2.8
Agreements negotiated under fast-track
authority will reduce trade barriers in some of
the most rapidly growing markets in the
world; they will also allow the negotiated
reduction of trade barriers in sectors where the
United States has a comparative advantage.
' World Bank. Effective average
applied tariff rates on total merchandise
imports. For China, the arithmetic average
of tariff rates. National rates are weighted
by 1996 U.S. bilateral exports to compute
the weighted average.
�.05/13/98
il00.3_
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The United States hopes to negotiate
agreements on a global basis in the many
areas of export interest, including agreements:
in agriculture, a global market of $536 billion;
in services, a market of $1.2 trillion; in
govemment procurement, a market estimated
to be worth $1 trillion in Asia alone in the
next decade; in medical equipment; and in
environmental technology. It also hopes to
expand the scope of the successful
information technology agreement.
1996 U.S. Exports ($ billion)
Plus, tariffs are not the only, or in many cases,
the most important, barriers to trade. While
non-tariff barriers (NTBs) are difficult to
quantify, fasl-track agreements clearly provide
one of the most effective ways to address
NTBs as well as to reduce barriers to trade in
services and to improve the protection of
intellectual property rights.
Lower Barriers Mean More Trade
During the post-World-War-II period, trade
has expanded rapidly-more rapidly, in fact,
than overall economic activity. This expansion
is not just a product of lower transportation
costs and technological innovation. Trade as
a share of economic activity actually fell when
trade barriers rose sharply after World War I .
Trade as a share of economic activity onIy\
recently returned to the levels experienced \
100 years ago because of tlie reduction of j 7
trade barriers after World War II,
/
m
Services
Agriculture
Chemicals
Wood and Paper
Medical Equipment
237
61
71
26
11
Focusing on the gains from reducing average
tariffs understates the gains from fast-track
agreements in many ways. Average effective
tariff rates often mask higher tariffs in
products where the United States is extremely
competitive. For example, many Asian APEC
countries impose tariffs on transportation
equipment and electrical machinery that are
nearly twice as high as their average tariffs.
Many countries -- particularly countries in
Latin America and Southeast Asia - have the
right to impose higher tariffs on U.S. goods
than they currently proposing.
Fast-track
agreements are needed to lower these tariffs.
2
2
For example, Brazil, which
currently imposes an average tariff of only
11.7%, could increase its tariffs to an
average rate of 31% without violating any
WTO rules. Similarly, Indonesia could
increase its tariffs to produce an average
tariff of 38.4% even though its current
average tariff is 10.7%.
During the past 10 years global trade has
grown at an average rate of 10% per year —
faster than global GDP, which has grown by
7% per year. The Uruguay Round agreement,
the most recent set ot tanH reductions
hegotlaiea unaer fast-track authority, has
contributed substantially to the recent prnwth
of trade. In addition to creating new GATT
limits on barriers to trade in agricultural
products and to trade in services, the Uruguay
Round reduced average tariffs by almost onethird. Treasury baseline forecasts assume that
tTS. trade will continue to grow by 9% per
year—its average over the past 10 years —
between 1996 and 2000 because of the
ongoing benefits from the Uruguay Round.
Fast-Track Needed to Sustain Momentum
Without continued U.S. leadership and fasttrack agreements to assure that the U.S.
�05/13/98
0004
WED 13:12 FAX
captures a growing share of key export
markets, U.S. trade will not be able to grow as
rapidly. Since tlie content of future fast-track
agreements is not currently known, the precise
magnitude of the increase in trade likely to
stem from future trade-liberalization
agreements remains uncertain.
3
Treasury analysis indicates that each one
percentage point increase in the annual rate
of growth in U.S. trade between 2000 and
2010 translates into an additional $200
billion in U.S. exports in the year 2010. If
further trade liberalization aided byfast-track
agreements increased the annual rate of
growth in U.S. trade between 2000 and 2010
by two percentage points — not an unrealistic
assumption given the estimated gains from the
Uruguay Round — this would increase total
U.S. merchandise exports by more than $400
billion in 2010, or roughly 2.4% of estimated
US. GDP in 2010.
More Trade Means Higher Incomes
Increased trade raises American incomes in
many ways,
Trade allows America to
concentrate on producing tlie goods and
services that we produce best. This increases
the income of U .S. workers; studies show that
jobs in export industries pay around 15%
more than jobs in the rest of the economy.
Trade provides workers with better jobs and
lets consumers benefit from greater
competition, lower prices, and a wider
selection of products.
It is very difficult to quantify all of the
beneficial impacts of expanded trade on U.S.
income. However, a substantial body of
statistical evidence does demonstrate that
countries that trade more are better off than
countries that trade less. The results of a
recent study that takes into account other
factors and influences in order to better isolate
the impact of trade on income suggests that
the extra trade associated with fast-track trade
agreements will raise the average incomes of
Americans substantially by the year 2010.
5
In terms of 1997 purchasing power, each
additional percentage point increase in the
rate of growth in U.S. merchandise trade is
estimated to generate between $800 and
$1600 in extra income for a typical American
family of four in 2010. A two percentage
point increase in the rate of growth of U.S.
trade from fast-track agreements would
increase the income of a typical family of four
by between $1600 and $3200 in 2010.
These calculations understate the likely gains
4
3
The deadline for free trade in the
proposed Free Trade Agreement of the
Americas is 2005; for APEC industrial
countries, 2010; and for APEC developing
countries, 2020. 2010 was selected as an
intermediate date.
4
David J. Richardson and Karin
Rindahl (1996), Why Exports Matter:
More! Institute for International Economics
and Manufacturing Institute; Lester Davis
(1996), U.S. Jobs Supported bv Growth in
Services Exports. 1983-94. Department of
Commerce.
5
Jeffrey Frankel and David Romer,
NBER Working Paper No. 5476: Jeffrey
Frankel, David Romer and Teresa Cyrus,
NBER Working Paper No. 5732. Frankel
and Romer examined a cross section of a
100 countries and found that trade, along
with investment in human and physical
capital, is a key determinant of a country's
growth rate.
�.85/13,;98
WED 13:12
FAX
from fast-track agreements. They onJy look at
the benefits of liberalizing merchandise trade
and thus do not incorporate the benefits
associated with fast-track agreements that will
lower the barriers, particularly the non-tariff
barriers, to trade in services. Plus, many
countries still have the right to impose higher
tariffs than they currently impose, so
continued rapid trade growth in the absence of
future trade agreements should not be taken
for granted.
The Cost of Inaction
Many countries of the world, including many
of the most dynamic emerging markets, are
moving to expand trade in preferential
agreements that do not currently include die
United States. Canada already has reached an
agreement with Chile -- an agreement which
is causing U.S. firms, like the Quaker Fabric
Company of Massachusetts, to lose business
to Canadian competitors simply because U.S.
products face a 11% tariff in Chile and
Canadian products do not. The European
Union is exploring a preferential deal with
Mercosur, a customs union that includes both
Argentina and Brazil, that would give
European products an edge over American
products in the two largest markets in South
America.
American leadership is needed to assure that
the United States continues to exercise a
dominant voice in the development of the
global trading system. If we choose to sit on
the sidelines, other countries will proceed
without us, both undermining tlie world
trading system that the U.S. has worked hard
to create during the past 40 years and hurting
U.S. exporters.
\^005_
�.05/12/98 17:40 FAX 202 482 4636
001
POLICY OFFICE
FAX TRANSMISSION
U.S. DEPARTMENT OF COMMERCE
Office of the Secretary
Office of Policy and Strategic Planning
I -471-1 & CoNsTmjnoN
AVENUE, NW, RH
WASHIMGTOH. DC
Z0Z30
TELEPHONE: (202)
A Q Z - A I Z7
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5835
FAX: (ZOZ) AB 2-4636
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�,05/12/98
17:40
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at
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POLICY OFFICE
121002
Remarks by
Secretary of Commerce W i l l i a m H. Daley
B u i l d i n g the Case f o r Open Trade
the John F. Kennedy School of Govemment
Harvard U n i v e r s i t y
February 10, 1998
Cambridge, Hassachusetta
[As prepared f o r d e l i v e r y ]
Thank you, Dean Nye, f o r t h a t k i n d i n t r o d u c t i o n and f o r y o u r
work i n t h e P r e s i d e n t ' s f i r s t term a t t h e Defense Department.
And t h a n k you Senator Simpson, f o r y o u r f r i e n d s h i p and welcoming
remarks. I t i s a p r i v i l e g e t o be here.
I have many s t r o n g t i e s t o Harvard and t h e Kennedy School o f
Government. Of course, my f a m i l y always admired John Kennedy,
and h i s l i f e o f p u b l i c s e r v i c e . Today, I am surrounded a t the.
Commerce Department by many o f y o u r f i n e graduates.
And you may n o t r e a l i z e t h i s , b u t a f t e r Teddy Roosevelt
g r a d u a t e d f r o m Harvard and was e l e c t e d P r e s i d e n t , he s t a r t e d t h e
Commerce Department. So, 1 even owe my j o b t o a Harvard alumnus!
L a s t week was a g r e a t week i n Washington. The P r e s i d e n t
s u b m i t t e d t h e f i r s t balanced budget i n 30 y e a r s .
I n f a c t , i t was
t h e f i r s t one s i n c e I was a sophomore i n c o l l e g e .
And we announced new employment numbers. L i s t e n t o t h i s ;
s i n c e P r e s i d e n t C l i n t o n t o o k o f f i c e , n e a r l y 15 m i l l i o n j o b s have
been c r e a t e d -- one m i l l i o n i n t h e l a s t t h r e e months a l o n e .
Unemployment i s t h e l o w e s t i t ' s been i n 24 y e a r s .
T h i s t r u l y i s a New Economy. I t i s an economy where
t e c h n o l o g y i s t h e engine o f growth.
Think about t h i s :
f i v e y e a r s ago, when P r e s i d e n t C l i n t o n came t o o f f i c e ,
t h e I n t e r n e t was unknown t o most Americans. Today, t h e y t e l l
t h i s speech i s b e i n g c a r r i e d l i v e on t h e I n t e r n e t .
me,
I t i s an economy where t r a i n i n g and e d u c a t i o n must be second
n a t u r e f o r a l l . We must develop human c a p i t a l -- t h r o u g h a
l i f e t i m e of l e a r n i n g .
And i n t h i s New Economy, t r a d e must be our f u t u r e . That i s
what I came here t o t a l k about. When you t h i n k about how t h e
U.S. economy has grown, I want you t o t h i n k about t h e f a c t s :
We have had t h e most c o m p e t i t i v e economy i n t h e w o r l d f o r f i v e
y e a r s r u n n i n g . Since 1993, e x p o r t s have accounted f o r f u l l y onet h i r d of our growth.
Today, 12 m i l l i o n Americans owe t h e i r j o b s
t o e x p o r t s . And n e a r l y 2 m i l l i o n of those j o b s were c r e a t e d i n
t h e p a s t f o u r y e a r s . Those are t h e f a c t s .
�JI5/12/e8
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So, my message i s very clear:
leadership i s economic leadership.
12)003
i n a post Cold War era, world
For America to be the world leader, f i r s t , we must lead i n
our support for open trade. Second, we must lead i n our
commitment to the global economy. And, third, we must resolve to
build a domestic consensus for that system of open trade.
with the help of Presidents educated at t h i s greatest of
i n s t i t u t i o n s , c l e a r l y we have led in our support for open trade.
Franklin Roosevelt pursued that path. He brought us back
from the disasters of the Smoot-Hawley t a r i f f b i l l to the
Reciprocal Trade Agreements Act of 1934. President Kennedy told
the nation: we must either trade, or fade. He put i n motion the
GATT round of trade negotiations that now bears h i s name -the Kennedy Round.
And President Clinton puts i t very simply: we need to
compete, not retreat. In the face of strong opposition,
he completed - - i n h i s f i r s t term
the NAFTA and Uruguay Round
agreements.
In fact, i n the l a s t five years, we opened new markets,
through numerous trade agreements. We removed foreign b a r r i e r s
to American-made products -- from agriculture to forest products,
from telecommunications to information technologies.
Yes, there i s more to be done. But we have made
considerable progress, and we can be proud.
And we have led i n our support of trade i n another way.
The
President knows not a l l people have shared in the benefits of
trade. We could l e t them fend for themselves.
Instead, he wants
to help those who are adversely affected -- whether by
technology, trade, or anything else.
So, he doubled the funding to help dislocated workers.
And now, working in partnerships with communities, he wants to
invest several hundred million dollars to help people adjust.
By the way, this i s something President Kennedy started.
When he worked with Congress to reduce trade barriers,
he i n s i s t e d on doing more to help American workers adjust to
economic change. That program -- Trade Adjustment Assistance -i s s t i l l i n place today at the Commerce and Labor Departments.
Secondly, I firmly believe, we must lead i n our commitment
to the global economy. Some look at Asia's problems and wonder-,
why do we need to get involved with Asia ... or Latin America ...
or Eastern Europe? Why don't we just deal with our own concerns
�05/12/98 17:41 FAX 202 482 4636
here a t home? Why?
interdependent.
POLICY OFFICE
©004
Because our world i s interconnected and
I do not need to t e l l t h i s audience the scope of the A s i a n
financial crisis.
You know the p o t e n t i a l consequences i n the
short term t o our export growth. We face the r i s k of a growing
trade d e f i c i t t h i s year.
Four days from now, I depart f o r a t r i p to Japan, South
Korea, and Singapore. I intend to re-emphasize the U.S.
commitment t o help r e s t o r e sound economic c o n d i t i o n s . But I a l s o
intend to i n s i s t that American firms and workers not u n f a i r l y
bear the burden of flawed p o l i c i e s that produced the c u r r e n t
problems.
F i n a l l y , we must r e s o l v e to b u i l d a domestic consensus f o r
open t r a d e . I t i s obvious to me that the important r o l e trade
p l a y s i n our successes has not t r a n s l a t e d i n t o g r e a t e r p o l i t i c a l
support f o r an open trade p o l i c y .
• Look a t the d i f f i c u l t y we had l a s t f a l l on f a s t t r a c k .
Congress has not y e t given the President the a u t h o r i t y necessary
to open new markets, and create new jobs.
I t i s something every President has had f o r more than two
decades. T h i s i s not good f o r our country.
The u n c e r t a i n t y
complicates our e f f o r t s to open a d d i t i o n a l markets. And i t does
not c r e a t e a s i n g l e new job.
The problem l a s t f a l l was that those who s i n c e r e l y opposed
f a s t t r a c k a u t h o r i t y had t h e i r v o i c e s heard -- loud and c l e a r .
But f r i e n d s of open trade -- we i n the Administration and those
i n the p r i v a t e s e c t o r -- d i d not get our message a c r o s s .
We t r i e d . We t r i e d hard. We took our message t o the h a l l s
of Congress. But we f a i l e d to take i t to normal people a c r o s s
America.
So, members of Congress d i d not hear from t h e i r c o n s t i t u e n t s
that they needed to vote yes f o r trade.
I s a y we have to ask: how can we do a b e t t e r job of
reaching the American people?
My view i s t h i s : we need to challenge those who helped us
pass NAFTA, and the other agreements - - t o speak up outside the
Washington Beltway. We need to challenge the next generation of
l e a d e r s -- a l l of you -- to speak up.
We need to make the p u b l i c understand trade c r e a t e s
a d d i t i o n a l wealth and r i s i n g standards of l i v i n g . L e t ' s not
�X)5/12/-98
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POLICY OFFICE
©005
forget the big picture here. I t creates wealth not for a select
few, but for a broad cross-section of Americans.
We need to take on the c r i t i c s of trade more forcefully.
We
need to challenge them without hesitation. We need to defend
what we have accomplished. And we need to make sure the c r i t i c s
do not take potshots -- without offering their own affirmative
answer to f i x what they think i s wrong.
So l e t me s t a r t the process -- right now.
I want to explain
why I disagree with the c r i t i c s -- many of whom are my friends i n
my own party, I might add.
The c r i t i c s say trade leads to a lowering of l i v i n g
standards and wages for Americans. This i s simply incorrect.
In fact, export-related jobs, on average, pay 15 percent more.
And look at family incomes -- after stagnating for 20 years, they
are r i s i n g again.
Since 1993, the income of a typical American family has
increased by $2,200 -- even adjusting for i n f l a t i o n . In fact,
the r e a l incomes of every income group of the workforce increased
between 1993 and 1996, with the largest increase for the lowestp a i d workers.
Other c r i t i c s point to the trade d e f i c i t as a reason to
oppose new trade expansion efforts and even close our own borders
to imports. This i s t o t a l l y ill-founded.
The trade d e f i c i t as a percentage of GDP has dropped
dramatically -- from 3 percent in 1987 to just over 1 percent i n
1996. The trade d e f i c i t i s primarily a function of the health of
the U.S. economy, and how much fuel i t needs to keep i t going.
We, as a nation, simply do not and cannot supply a l l we need for
t h i s booming economy.
I s e r i o u s l y doubt any c r i t i c s would recommend we go back to
the 1970s, when we actually had a trade surplus
yet also had
s p i r a l i n g i n f l a t i o n and high unemployment. In i t s place, today
we have high growth, good job creation, and i n f l a t i o n at a
32-year low.
Put another way, I do not think any one would want us to
trade places right now with countries l i k e South Korea, or Japan
-- which have trade surpluses. We need to move off our fixation
with the trade d e f i c i t .
There also i s the contention that we should trade only with
those more or l e s s at the same level of economic development as
the United States -- such as Canada, Europe, and perhaps Japan.
I t i s as i f we have something to fear, and are bound to lose,
�05/ia/e8
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POLICY OFFICE
i|006
i f we expand our trade with developing c o u n t r i e s , where wages are
w e l l below our own.
I don't mean to be a broken record, but again, l e t ' s look at
the f a c t s . The U.S. economy i s the strongest, and our workers
are the best t r a i n e d , most h i g h l y educated, and most productive
work f o r c e i n the world.
In the l a s t 10 y e a r s , U.S. exports to developing c o u n t r i e s
jumped 240 percent -- f a s t e r than exports to high-wage c o u n t r i e s .
Exports to low-wage c o u n t r i e s now account f o r 42 percent of
America s t o t a l exports.
1
F i n a l l y , there i s the charge we are not committed to
promoting l a b o r and the environment around the world -- t h a t we
see t h i n g s only from the bottom l i n e .
The f a c t i s , t h i s Administration, as never before, has
pursued these i s s u e s a g g r e s s i v e l y . With very l i t t l e help from
other c o u n t r i e s , we pushed s u c c e s s f u l l y to put environmental
concerns s q u a r e l y on the agenda of the World Trade Organization.
We continue to p r e s s to include labor i s s u e s , as w e l l .
And we want to b u i l d c l o s e r t i e s between the WTO and the
I n t e r n a t i o n a l Labor Organization.
Our t r a d i n g p a r t n e r s are w e l l aware of P r e s i d e n t C l i n t o n ' s
determinatibn to improve adherence to core labor standards, l i k e
freedom of e x p r e s s i o n . We are committing new resources to
addressing the worst problems, such as abusive c h i l d l a b o r
p r a c t i c e s . We have a l s o asked more of our own companies to
monitor t h e i r overseas f a c i l i t i e s through the anti-sweatshop
initiative.
But l e t ' s be honest. To a s i g n i f i c a n t extent, t h i s i s s t i l l
us a g a i n s t the world. There i s no consensus.
And we confront deeply held f e a r s -- p a r t i c u l a r l y i n
developing c o u n t r i e s
t h a t our hidden agenda i s not to r a i s e
standards, but r a i s e new b a r r i e r s to trade. I s t r o n g l y dispute
t h a t . But we do need to a l s o work with other c o u n t r i e s to
improve t h e i r p r a c t i c e s -- and not merely l e c t u r e them about
t h e i r shortcomings.
And most importantly, we s t i l l need to do
more to f i n d the common ground a t home. We need to work with a l l
of those who have strong f e e l i n g s on t h i s .
And when I hear we somehow put i n t e l l e c t u a l property r i g h t s
on a higher plane than labor or the environment, I say t h i s :
i t took y e a r s to f i r s t forge our own consensus on i n t e l l e c t u a l
property, and then pursue an i n t e r n a t i o n a l agreement through long
negotiations.
�05/12/98 17:43 FAX 202 482 4636
POLICY OFFICE
Consensus w i l l not happen overnight.
b u i l d t h a t consensus.
0007
But we are working to
The bottom l i n e is-, nobody should doubt our commitment to
p r e s s ahead on labor and the environment, even on our own and at
s u b s t a n t i a l p o l i t i c a l c o s t . But at the same time, we cannot
a f f o r d to make trade, and the chance to add good jobs at home,
hostage to other p o l i c y concerns
however good they may a l s o
be.
The United S t a t e s already has the most open market of any
major t r a d i n g nation. I n c e r t a i n areas, we w i l l face growing
import competition r e g a r d l e s s of what we do -- u n l e s s the c r i t i c s
are w i l l i n g to acknowledge that they want to r a i s e new w a l l s and
c l o s e our borders.
The r i g h t course i s to demand others open up as we a l r e a d y
have -- and to use the t o o l s at our d i s p o s a l to push them to do
so. But make no mistake: i t i s i n our i n t e r e s t -- economically
and s t r a t e g i c a l l y - - t o trade more with developing c o u n t r i e s . I t
i s i n our i n t e r e s t to help them grow, and at the same time
improve t h e i r l a b o r and environmental p r o t e c t i o n s .
Turning our back on these emerging markets w i l l l e a d us to
slower economic growth at home, while doing nothing to improve
wages or l i v i n g conditions abroad. That i s not what we want.
As the P r e s i d e n t says; The people with the biggest stake i n t h i s
s t r u g g l e are those who go to work every day a t jobs a l l a c r o s s
America, jobs of a l l kinds.
I would l i k e to say something to the students i n t h i s room.
Many of you, I hope, w i l l go i n t o government s e r v i c e one day
And maybe someone w i l l serve i n the Cabinet, as I do.
As such, you w i l l make the p o l i c i e s t h a t determine our economic
leadership.
Those p o l i c i e s w i l l be as important as the products t h a t
your f r i e n d s , who go to work f o r corporations, w i l l produce.
I t has been a year s i n c e I became S e c r e t a r y .
I remember a t my confirmation hearing, a senator asked me:
how would I f e e l c a r r y i n g out the r o l e of salesman f o r American
i n d u s t r y throughout the world? One year -- and 18 c o u n t r i e s
l a t e r -- I can respond: when the United S t a t e s government stands
with American companies and workers around the world, i t has an
impact.
�05/12/98 17:43 FAX 202 482 4636
POLICY OFFICE
ilOOS
Very e a r l y i n my tenure, I s e t my p r i o r i t i e s . Among them,
I thought we need to be a g g r e s s i v e l y promoting on behalf of U.S.
companies.
The manufacturers know they have to change. They know the
product they s e l l i n Chicago, where the competition i s a guy i n
Kansas C i t y , now i n v o l v e s three companies from Taiwan t r y i n g to
get the same b u s i n e s s .
Today, we are more aggressive. With the f e d e r a l
government's help, companies i n t h i s s t a t e have won c o n t r a c t s to
produce p a r t s f o r a computer network i n China. They are doing
engineering work f o r a water reclamation p r o j e c t i n I n d i a . They
are b u i l d i n g an a i r t r a f f i c c o n t r o l system i n Mongolia. That i s
good f o r t h i s s t a t e .
Another p r i o r i t y of mine was to b e t t e r enforce compliance
w i t h our trade agreements. My predecessor. S e c r e t a r y Kantor,
opened a Trade Compliance Center.
And today, I am pleased to announce the Compliance Center
w i l l a l s o serve as a Complaint Center. We are s e t t i n g up a
complaint h o t l i n e , so smaller companies, e s p e c i a l l y , can get help
-- q u i c k l y . Companies w i l l be able to e l e c t r o n i c a l l y complain to
us, i f they see or suspect an u n f a i r trade p r a c t i c e .
F i n a l l y , a p r i o r i t y of mine was to i n c r e a s e our focus on
s m a l l and medium-sized businesses. So, l a s t year, we completed
opening a network of 100 centers around the country to help them
export.
I am e s p e c i a l l y i n t e r e s t e d i n s m a l l - and medium-sized
firms, because today more than 100,000 of them are exporters.
And I t h i n k government can do more. I want producers and
consumers to understand the b e n e f i t s of trade: new o p p o r t u n i t i e s ,
lower p r i c e s , and b e t t e r q u a l i t y .
And the younger we s t a r t to make the case, the b e t t e r . The
P r e s i d e n t ' s Export Council, began a p i l o t program -- c a l l e d the
V i r t u a l Trade Mission.
I t i s operating i n 20 s t a t e s , t r a i n i n g high school teachers
to teach trade i n the classroom. My Department i s p a r t n e r i n g
with them. We hope i t expands to every s t a t e , and we reach every
c h i l d i n America.
And t h i s week I am d i r e c t i n g our 100 c e n t e r s around the
country to s e t up a comprehensive program i n t h e i r communities
with other l o c a l p a r t n e r s . They w i l l e x p l a i n the r o l e of trade
and exports -- both the b e n e f i t s and c h a l l e n g e s .
�05/12/98 17:43 FAX 202 482 4636
POLICY OFFICE
12)009
8
I want every high school senior in America knowing trade i s
producing one-third of our economic growth. I want them to
understand trade i s where the high-paying, high-skilled jobs are.
I know you understand that. And i f we start teaching i t to
those younger than you, they w i l l genuinely understand the
importance of trade to their future.
Let me close on t h i s . As we approach the 2 l s t century, i t
i s time government and the private sector work together -- more
than ever. When i t comes to trade policy, c l e a r l y , that means
taking on the c r i t i c s . We need to take on those who t r y to wish
away economic interdependence. And we need to take on those who
think nothing we do would ever help those struggling to make the
adjustment to more trade.
But we also must challenge those who have gained i n the
economy to share i n their rewards and experiences. They need to
educate and t r a i n America's youth. They need to work with us in
government to do more to help those who have not shared i n the
prosperity.
We must, i n short, expand the winner's c i r c l e .
Our success w i l l be measured not so much by the l a t e s t round
of economic indicators. But by whether the American people
believe we i n government are acting i n their own best i n t e r e s t s .
The challenges are substantial, but so are the opportunities
when you are the world's economic leader.
Thank you.
-30-
�PAGE
11TH
Copyright
STORY o f L e v e l
1997 D e m o c r a t i c L e a d e r s h i p
The
2
1 p r i n t e d i n FULL f o r m a t .
Council,
Inc.
New Democrat
September, 1997 /
O c t o b e r , 1997
SECTION: COVER STORY; Pg. 12
LENGTH: 2777 words
HEADLINE: THE TRUTH ABOUT TRADE;
A Historical Rebuttal of Protectionism
BYLINE: BY SUSAN ARIEL AARONSON; Susan A r i e l A a r o n s o n i s a v i s i t i n g p r o f e s s o r a t
George Mason U n i v e r s i t y a n d a g u e s t s c h o l a r i n economics a t t h e B r o o k i n g s
Institution.
BODY:
At f i r s t g l a n c e , t h e congressman f r o m K e n t u c k y and t h e congressman f r o m M i s s o u r i
d o n ' t seem t o have much i n common. The K e n t u c k i a n , Henry C l a y , s t r u g g l e d f r o m
t h e 1820s t o t h e 1850s t o f o s t e r compromise among A m e r i c a ' s c o m p e t i n g p o l i t i c a l
and economic i n t e r e s t s . The M i s s o u r i a n , R i c h a r d G e p h a r d t , i s t h e e l o q u e n t l e a d e r
of t h e House Democrats.
A l t h o u g h one man l i v e d a t t h e dawn o f t h e I n d u s t r i a l Age and t h e o t h e r l i v e s
on t h e cusp o f t h e I n f o r m a t i o n Age, b o t h c o n c l u d e d t h a t p r o t e c t i o n c o u l d
p r e s e r v e A m e r i c a n p r o s p e r i t y and s o v e r e i g n t y . " G r e a t B r i t a i n p r o t e c t s most h e r
i n d u s t r y , and t h e w e a l t h o f G r e a t B r i t a i n i s c o n s e q u e n t l y t h e g r e a t e s t , " C l a y
o b s e r v e d . " S p a i n most n e g l e c t s t h e d u t y o f p r o t e c t i n g . . . and S p a i n i s one o f
t h e p o o r e s t . " He t h o u g h t t a r i f f s c o u l d n o t o n l y n u r t u r e A m e r i c a n i n d u s t r y b u t
a l s o f u n d a n a t i o n a l s y s t e m o f r o a d s and b r i d g e s . I n t h i s way,
Northern
p r o d u c e r s c o u l d s e c u r e t h e S o u t h e r n and f l e d g l i n g W e s t e r n m a r k e t s f o r t h e i r
m a n u f a c t u r e d goods a n d c o m m o d i t i e s . N a t i o n a l harmony and economic p r o s p e r i t y
would r e s u l t .
Gephardt has an e q u a l l y complex and p a s s i o n a t e v i s i o n o f p r o t e c t i o n . E a r l i e r
t h i s y e a r , he a r g u e d t h a t "we must n o t n e g o t i a t e away o u r j o b s and o u r l i v i n g
s t a n d a r d based on o u t d a t e d t h e o r i e s . . . a b o u t t r a d e and i n t e r n a t i o n a l
economics. . . . Many A m e r i c a n s see t h e m s e l v e s as v i c t i m s . . . o f t r a d e
agreements."
Today as i n C l a y ' s age, some A m e r i c a n s argue t h a t f r e e t r a d e w o u l d l e a d t o
massive unemployment and s o c i a l u p h e a v a l . The o n l y s o l u t i o n , t h e y t h i n k , i s
p r o t e c t i o n i s m . Y e t t h e w o r l d has changed d r a m a t i c a l l y s i n c e C l a y ' s t i m e s , and
t h e r e i s no e v i d e n c e t h a t p r o t e c t i o n i s m p r e s e r v e s j o b s o r c r e a t e s economic
o p p o r t u n i t i e s over the mid t o long term.
For most o f o u r h i s t o r y , A m e r i c a n s e q u a t e d p r o t e c t i o n w i t h c o m m e r c i a l
p o l i c i e s such as t a r i f f s , exchange c o n t r o l s , and q u o t a s . B u t t h i s d e f i n i t i o n i s
o u t o f d a t e and d o e s n ' t r e f l e c t g l o b a l r e a l i t y . As t r a d e r s , e c o n o m i s t s , a n d
government o f f i c i a l s have l e a r n e d , b a r r i e r s t o t r a d e now i n c l u d e a wide range o f
p o l i c i e s t h a t were once c o n s i d e r e d s o l e l y d o m e s t i c , i n c l u d i n g h e a l t h , s a f e t y ,
and e n v i r o n m e n t a l s t a n d a r d s ; i n v e s t m e n t and p r o c u r e m e n t r e g u l a t i o n s ; and
antitrust policies.
�PAGE
The New
Democrat September, 1997
/ October,
3
1997
Ideas, technology, and c a p i t a l are g l o b a l today, but i n s t i t u t i o n s , p o l i t i c a l
a l l e g i a n c e s , and c u l t u r e s remain n a t i o n a l . Giant g l o b a l c o r p o r a t i o n s produce
much of the goods and s e r v i c e s Americans consume. These c o r p o r a t i o n s can move
jobs and operations around the world, eroding the power of n a t i o n a l governments
to p r o t e c t the economic and s o c i a l welfare of t h e i r c i t i z e n r y . As i n the 18th
century, some Americans have c a l l e d on government t o e r e c t p r o t e c t i o n i s t w a l l s
of t a r i f f s , quotas, or r e g u l a t i o n s . Protectionism, however, i s not the answer.
I f we are t o t h r i v e i n the 21st century, our best hope i s t o make the system of
r u l e s governing the w o r l d economy more e q u i t a b l e , transparent, and e f f e c t i v e .
The E a r l y H i s t o r y of American P r o t e c t i o n
P r o t e c t i o n i s t s have argued t h a t the United States grew strong behind t a r i f f
w a l l s . However, U.S. policymakers have always mixed p r o t e c t i o n i s t and f r e e - t r a d e
p o l i c i e s . This mix has changed over time, r e f l e c t i n g p o l i t i c a l and economic
conditions.
Throughout most of American h i s t o r y , the debate about trade centered on
t a r i f f p r o t e c t i o n . From the moment the founding f a t h e r s f i r s t set q u i l l t o
parchment, Americans have c a l l e d on government f o r p r o t e c t i o n . America's
founders were i n i t i a l l y r e l u c t a n t ; they g e n e r a l l y agreed w i t h Thomas J e f f e r s o n
t h a t " f r e e trade w i t h a l l p a r t s of the world" was a " n a t u r a l r i g h t . " But both
F e d e r a l i s t s and J e f f e r s o n i a n Democratic Republicans concluded t h a t although open
markets were i n the American i n t e r e s t , t a r i f f w a l l s could help n u r t u r e a
d i v e r s i f i e d and h e a l t h y economy. T a r i f f s had an a d d i t i o n a l a d d i c t i v e side
e f f e c t : They provided revenue t o finance government w i t h o u t seeming t o tax
c i t i z e n s . As a r e s u l t , p r o t e c t i o n spread t o many sectors. A f t e r the War of 1812,
l e g i s l a t o r s learned i t was simpler t o compensate those i n j u r e d by t a r i f f s by
p r o t e c t i n g them too, r a t h e r than by reducing the p r o t e c t i o n given t o the f i r s t
party.
But not a l l Americans favored t h i s r e l i a n c e on p r o t e c t i o n . Southern and
Western farmers f e l t doubly burdened by t a r i f f s . F i r s t , they paid higher p r i c e s
f o r the goods they consumed. Second, because our t r a d i n g p a r t n e r s u s u a l l y f e l t
compelled t o match our t a r i f f p o l i c i e s , the farmers' products o f t e n were less
c o m p e t i t i v e i n f o r e i g n markets. T a r i f f s soon a f f e c t e d the outcomes of e l e c t i o n s
and helped separate Americans i n t o two p o l i t i c a l p a r t i e s . By the end of the
1850s, the Democratic Party g e n e r a l l y argued t h a t t a r i f f s should e x i s t " f o r
revenue only" w h i l e the new Republican Party argued f o r a p r o t e c t i v e t a r i f f t o
promote i n d u s t r y .
U n t i l the C i v i l War, the t a r i f f issue remained unresolved, i n t e r s e c t i n g w i t h
c o n t i n u i n g disagreements over s l a v e r y and the a p p r o p r i a t e r o l e of government i n
the economy. A f t e r the war, Republicans l e d the n a t i o n and, not s u r p r i s i n g l y ,
p r o t e c t i o n i s m spread t o even more sectors. Although p r o t e c t i o n i s m was
e s s e n t i a l l y "corporate w e l f a r e , " many policymakers as w e l l as the p u b l i c
b e l i e v e d p r o t e c t i o n preserved the nation's r e l a t i v e l y high standard of l i v i n g .
Workers thought t a r i f f s brought them higher wages; farmers b e l i e v e d t h a t t a r i f f
w a l l s p r o t e c t e d them from f o r e i g n c o m p e t i t i o n i n the home market.
A Change i n A t t i t u d e s
A t t i t u d e s toward t a r i f f s began t o change as the American economy became more
urban, i n d u s t r i a l , and d i v e r s e . By the 1880s, some Americans were angry t h a t
f e d e r a l and s t a t e p o l i c i e s seemed t o b e n e f i t monied i n t e r e s t s i n s t e a d of small
�PAGE
The
4
New Democrat September, 1997 / O c t o b e r , 1997
f a r m e r s and w o r k e r s . Even t h e new A m e r i c a n F e d e r a t i o n o f Labor was no l o n g e r
c o n v i n c e d t h a t h i g h d u t i e s p r o t e c t e d h i g h wages. A d i v e r s e g r o u p o f A m e r i c a n s
c a l l e d f o r t a r i f f r e f o r m . Some b u s i n e s s l e a d e r s r e c o g n i z e d t h a t t h e y c o u l d
c a p t u r e f o r e i g n m a r k e t s and a c h i e v e f u r t h e r economies o f s c a l e and scope i f t h e
United States o f f e r e d the c a r r o t o f lower t a r i f f s f o r r e c i p r o c a l t a r i f f
r e d u c t i o n . A t t h e same t i m e , some p r o g r e s s i v e r e f o r m e r s c o n c l u d e d t h a t t h e
t a r i f f s were " t h e m o t h e r o f t r u s t s , " h e l p i n g many o f A m e r i c a ' s e v e r - b i g g e r
b u s i n e s s e s r e a p h i g h e r p r i c e s f o r t h e i r p r o d u c t s and g a i n g r e a t e r power t o use
a g a i n s t w o r k e r s , consumers, and s m a l l e r c o m p e t i t o r s .
T r u e t a r i f f r e f o r m , however, came o n l y a f t e r Woodrow W i l s o n and t h e Democrats
c a p t u r e d t h e W h i t e House and Congress i n 1913. The Underwood T a r i f f l o w e r e d
d u t i e s s u b s t a n t i a l l y . I n 1916, Congress passed an income t a x , making f i s c a l
p o l i c y l e s s r e g r e s s i v e a n d f i n a l l y b r e a k i n g t h e l i n k between t a r i f f s and
r e v e n u e . Y e t t h i s i m p o r t a n t p o l i c y change d i d n o t d e s t r o y t h e p u b l i c p e r c e p t i o n
t h a t t a r i f f s c o u l d p r o t e c t A m e r i c a n s f r o m unemployment.
Ever so g r a d u a l l y , t a r i f f p r o t e c t i o n s p r e a d i n t h e 1920s. The R o a r i n g '20s
were i n f a c t a t i m e o f m a j o r economic d i s l o c a t i o n f o r many A m e r i c a n s , i n c l u d i n g
f a r m e r s . Thus, Congress imposed h i g h d u t i e s on about 40 a g r i c u l t u r a l p r o d u c t s i n
1921 and added p r o t e c t i o n f o r m a n u f a c t u r e r s i n 1923. The T a r i f f A c t o f 1930,
commonly known as t h e Smoot-Hawley t a r i f f , r a i s e d r a t e s on many d i f f e r e n t t y p e s
o f m a n u f a c t u r e d a n d a g r i c u l t u r a l p r o d u c t s , even p r o d u c t s t h e U n i t e d S t a t e s d i d
not produce.
But Smoot-Hawley c o u l d n o t save j o b s o r s p u r economic g r o w t h . The U.S.
economy was i n t r o u b l e and began t o u n r a v e l i n 1929. W i t h t h e s t o c k m a r k e t
c r a s h , many banks f a i l e d , a n d c r e d i t f o r l e n d i n g and i n v e s t m e n t s h r a n k . As
i n v e s t m e n t d e c l i n e d , unemployment r o s e , and economic s t a g n a t i o n s p r e a d
throughout the world.
I n 1933, F r a n k l i n D. R o o s e v e l t and a D e m o c r a t i c Congress began s e v e r a l y e a r s
of p o l i c y e x p e r i m e n t a t i o n . W i t h unemployment as h i g h as o n e - q u a r t e r o f t h e work
f o r c e , many A m e r i c a n s were l e s s c e r t a i n t h a t m a r k e t s w o u l d " c o r r e c t " t h i s
p r o b l e m . I n 1934, Congress gave R o o s e v e l t l i m i t e d a u t h o r i t y t o n e g o t i a t e
b i l a t e r a l t r a d e l i b e r a l i z a t i o n agreements t o expand g l o b a l m a r k e t s and t h e r e b y
c r e a t e j o b s . However, t h i s e x p e r i m e n t was n o t expanded u n t i l 1947. Congress gave
P r e s i d e n t H a r r y S. Truman t h e a u t h o r i t y t o f u r t h e r l i b e r a l i z e t r a d e t h r o u g h
m u l t i l a t e r a l t r a d e n e g o t i a t i o n s under t h e aegis o f a c l u b c a l l e d t h e General
Agreement on T a r i f f s a n d T r a d e .
I n i t s 5 0 - y e a r h i s t o r y , t h e GATT has s p o n s o r e d e i g h t m u l t i n a t i o n a l
n e g o t i a t i o n s t o r e d u c e t r a d e b a r r i e r s . I n t h e most r e c e n t r o u n d , members o f t h e
GATT (now t h e W o r l d Trade O r g a n i z a t i o n ) a g r e e d t o r u l e s g o v e r n i n g t h e p o t e n t i a l
t r a d e d i s t o r t i o n s o f a w i d e range o f d o m e s t i c p o l i c i e s , such as r e g u l a t o r y
p o l i c i e s , s u b s i d i e s , a n d t a x systems. Thus, t h e GATT/WTO s y s t e m n o t o n l y
e n c o u r a g e s t r a d e , i t g o v e r n s how n a t i o n s p r o t e c t t h e i r c i t i z e n s , p r o d u c e r s , and
consumers.
A l t h o u g h Henry C l a y m i g h t be b a f f l e d by many o f t h e goods and s e r v i c e s
A m e r i c a n s make a n d consume t o d a y , he w o u l d f e e l p e r f e c t l y c o m f o r t a b l e w i t h
c o n t e m p o r a r y p r o t e c t i o n i s t a r g u m e n t s . What modern p r o t e c t i o n i s t s d o n ' t s a y ,
however, i s as i n t e r e s t i n g as what t h e y do say. They r a r e l y base t h e i r case on
t h e e f f i c a c y o f p r o t e c t i o n -- w h e t h e r i t r e a l l y p r e s e r v e s o r c r e a t e s j o b s o r
o p p o r t u n i t i e s . C o n s i d e r t h e f o l l o w i n g common p r o t e c t i o n i s t a r g u m e n t s :
�PAGE
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* Jobs and wages. T h r o u g h o u t much o f A m e r i c a ' s 221 y e a r s , U.S. w o r k e r s have
been r e l a t i v e l y w e l l - p a i d because l a b o r has been s c a r c e compared t o o t h e r i n p u t s
such as r e s o u r c e s a n d c a p i t a l . Y e t p r o t e c t i o n i s t s have a r g u e d t h a t U.S. w o r k e r s
c a n n o t compete w i t h f o r e i g n w o r k e r s who a r e p a i d l e s s .
Economic h i s t o r y r e v e a l s t h a t , i n g e n e r a l , U.S. w o r k e r s have r e a p e d a g r o w i n g
s h a r e o f t h e f r u i t s o f t h e i r l a b o r because U.S. w o r k e r s have been more
p r o d u c t i v e t h a n t h e i r o v e r s e a s c o m p e t i t o r s . However, i n r e c e n t y e a r s wage
i n e q u a l i t y has i n c r e a s e d . And r e a l wages have f a i l e d t o keep pace w i t h w o r k e r
p r o d u c t i v i t y s i n c e 1983, a l t h o u g h t o t a l c o m p e n s a t i o n has r i s e n m o d e s t l y .
P r o t e c t i o n i s t s have blamed t r a d e f o r t h e s e t r e n d s . B u t t h e l a r g e i n c r e a s e i n t h e
i m p o r t a n c e o f t r a d e t o t h e U n i t e d S t a t e s o c c u r r e d i n t h e 1960s and 1970s, w h i l e
wage i n e q u a l i t y i n c r e a s e d i n t h e 1980s. Moreover, most o f t h e goods and s e r v i c e s
A m e r i c a n s consume a r e p r o d u c e d i n o t h e r high-wage i n d u s t r i a l i z e d n a t i o n s such as
Canada, Japan, a n d Germany. Today, t h e U n i t e d S t a t e s p r o d u c e s a p p r o x i m a t e l y 25
p e r c e n t o f t h e w o r l d ' s t r a d e d goods and s e r v i c e s w i t h o n l y 5 p e r c e n t o f t h e
w o r l d ' s w o r k i n g p o p u l a t i o n , i n c l u d i n g some o f t h e h i g h e s t - p a i d w o r k e r s .
P r o t e c t i o n i s t s have a l s o a r g u e d t h a t f r e e r t r a d e w i l l l e a d t o unemployment.
I n h i s c h a l l e n g e t o t h e N o r t h A m e r i c a n Free Trade Agreement, b u s i n e s s l e a d e r H.
Ross P e r o t c l a i m e d i t w o u l d r e s u l t i n a " g r e a t s u c k i n g sound" as j o b s moved
a c r o s s t h e b o r d e r t o M e x i c o . Some A m e r i c a n s d i d l o s e j o b s -- as o f J u l y 1997,
t h e Labor D e p a r t m e n t h a d c e r t i f i e d t h a t 128,303 w o r k e r s had become unemployed
because o f NAFTA. However, most a n a l y s t s b e l i e v e t h a t NAFTA has e n c o u r a g e d
e m p l o y e r s t o h i r e a commensurate number o f employees as a r e s u l t o f new o r
expanded b u s i n e s s . M o r e o v e r , i n J u l y , unemployment s t o o d a t 4.8 p e r c e n t -- i t s
l o w e s t l e v e l i n 23 y e a r s .
* E q u i t y . By d e f i n i t i o n , p r o t e c t i o n i s m i s i n e q u i t a b l e , f a v o r i n g some
communities and p r o d u c e r s over the g e n e r a l p u b l i c . P r o t e c t i o n i s t s e x p o r t t h e
i s s u e o f e q u i t y , a r g u i n g t h a t f o r e i g n e r s a r e t r e a t i n g A m e r i c a n s u n f a i r l y and
t h a t t h e r e f o r e t h e f e d e r a l government s h o u l d i n t e r v e n e t o p r o t e c t U.S. p r o d u c e r s
f r o m unemployment o r l o s t o p p o r t u n i t i e s . But i s i t e q u i t a b l e t o f a v o r s p e c i a l
i n t e r e s t s a t a c o s t t o most t a x p a y e r s and consumers? Moreover, does g o v e r n m e n t
r e s p o n s i b i l i t y f o r e q u i t y end a t t h e U.S. b o r d e r ? I s i t e q u i t a b l e f o r U.S.
p o l i c y m a k e r s t o deny i m p o r t s , j o b s , and a p o t e n t i a l l y r i s i n g s t a n d a r d o f l i v i n g
to c i t i z e n s o f other nations?
* U n f a i r t r a d e . P r o t e c t i o n i s t s argue t h a t many o f o u r t r a d i n g p a r t n e r s a r e
u n f a i r t r a d e r s . To a g r e a t d e g r e e , what i s c o n s i d e r e d f a i r and u n f a i r r e f l e c t s
d i f f e r e n c e s i n economic, s o c i a l , and p o l i t i c a l c u l t u r e s as w e l l as economic
d e v e l o p m e n t . C l e a r l y , some n a t i o n s do dump t h e i r p r o d u c t s h e r e a t a p r i c e l o w e r
than the domestic p r i c e , s u b s i d i z e favored i n d u s t r i e s , o r devalue t h e i r workers'
c o n t r i b u t i o n s t o p r o d u c t i o n . B u t s i n c e 1947, t h e U n i t e d S t a t e s has h a d r e c o u r s e
under t h e GATT/WTO s y s t e m t o d e a l w i t h many o f t h e s e examples o f " u n f a i r " t r a d e .
When A m e r i c a p e r c e i v e s t h a t o t h e r n a t i o n s a r e p l a y i n g u n f a i r l y , we can r e t a l i a t e
o r b r i n g a t r a d e d i s p u t e t o t h e WTO f o r s e t t l e m e n t . And A m e r i c a i s t h e b i g
w i n n e r i n such m e d i a t e d s e t t l e m e n t s . S i n c e t h e i n c e p t i o n o f t h e WTO, t h e U n i t e d
S t a t e s has won t h e b u l k o f i t s d i s p u t e s w h e t h e r d e f e n d i n g i t s own p r a c t i c e s o r
c h a l l e n g i n g those o f i t s t r a d i n g p a r t n e r s .
* S o v e r e i g n t y . As n o t e d above, o u r f o u n d i n g f a t h e r s p r o t e c t e d i n f a n t
i n d u s t r i e s t o m a i n t a i n a s t r o n g , i n d e p e n d e n t n a t i o n . B u t p r o t e c t i o n i s t s have
broadened t h i s argument, s t r e s s i n g t h a t p r o t e c t i o n i s t h e g o v e r n m e n t ' s s o c i a l
r e s p o n s i b i l i t y . Some n o t e t h a t d u r i n g t h e Uruguay Round o f t r a d e n e g o t i a t i o n s ,
�PAGE
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n a t i o n s a g r e e d t o r u l e s g o v e r n i n g h e a l t h and s a f e t y s t a n d a r d s t h a t may d i s t o r t
t r a d e . P r o t e c t i o n i s t s a s s e r t t h a t t h i s would g i v e " i n t e r n a t i o n a l t r a d e
b u r e a u c r a t s " a u t h o r i t y t o n u l l i f y U.S. laws and r e g u l a t i o n s , making A m e r i c a n
sovereignty meaningless.
A l t h o u g h A m e r i c a must a d j u s t t o g l o b a l economic i n t e r d e p e n d e n c e , A m e r i c a ' s
a b i l i t y t o c o n t r o l i t s economic and p o l i t i c a l d e s t i n y i s u n a f f e c t e d . F o r
example, i f an A m e r i c a n t r a d i n g p a r t n e r c h a l l e n g e d U.S. e n v i r o n m e n t a l
r e g u l a t i o n s p r o t e c t i n g d o l p h i n s , and i f such r e g u l a t i o n s were f o u n d t o be de
f a c t o t r a d e i m p e d i m e n t s i n a d i s p u t e m e d i a t e d by t h e WTO, t h e U n i t e d S t a t e s
w o u l d l o s e none o f i t s p o l i c y o p t i o n s . We c o u l d i g n o r e t h e WTO r u l i n g and r i s k
r e t a l i a t i o n by f o r e i g n t r a d i n g p a r t n e r s . We c o u l d change o u r laws o r
r e g u l a t i o n s . Or we c o u l d keep t h e laws o r r u l e s w h i l e making commensurate t r a d e
c o n c e s s i o n s t o compensate t h e c o m p l a i n i n g n a t i o n . E i t h e r way, t h e U n i t e d S t a t e s
w o u l d r e t a i n i t s s o v e r e i g n t y because U.S. c i t i z e n s ( e l e c t e d and a p p o i n t e d
o f f i c i a l s ) w o u l d choose t h e p o l i c y r e s p o n s e .
A c o r o l l a r y o f t h e s o v e r e i g n t y argument i s t h e c l a i m t h a t t h e GATT/WTO s y s t e m
w i l l l e a d t o a m a s s i v e w o r l d w i d e r e v e r s a l o f e n v i r o n m e n t a l , w o r k e r , a n d consumer
p r o t e c t i o n s . B u t g l o b a l economic i n t e g r a t i o n c a n a l s o s p u r p r o d u c e r s t o compete
i n a " r a c e t o t h e t o p . " F o r example, C a l i f o r n i a and Germany have h e l p e d d r i v e up
U.S. and European Community r e g u l a t i o n s , r e s p e c t i v e l y . As p o l i t i c a l s c i e n t i s t
D a v i d V o g e l has n o t e d , "When r i c h n a t i o n s such as t h e U n i t e d S t a t e s a n d Germany
e n a c t s t r i c t e r p r o d u c t s t a n d a r d s , t h e i r t r a d i n g p a r t n e r s a r e f o r c e d t o meet
these standards . . . t o m a i n t a i n e x p o r t markets." This process o f t e n encourages
consumer o r e n v i r o n m e n t a l o r g a n i z a t i o n s i n t h e e x p o r t i n g c o u n t r y t o demand
s i m i l a r s t a n d a r d s a t home. Thus, n a t i o n a l s t a n d a r d s can be s t r e n g t h e n e d as
i n t e g r a t i o n increases.
A Progressive
Case f o r F r e e r Trade
I t i s i n t e r e s t i n g t o n o t e t h a t i n 221 y e a r s p r o t e c t i o n i s t s have been u n a b l e t o
p r o v e t h a t p r o t e c t i o n i s m a c t u a l l y p r e s e r v e s j o b s and c r e a t e s o p p o r t u n i t i e s . One
h u n d r e d y e a r s o f economic r e s e a r c h shows why. Frank T a u s s i g , a n o t e d economic
h i s t o r i a n and t h e f i r s t head o f t h e I n t e r n a t i o n a l Trade Commission, was u n a b l e
t o c o n c l u d e w h e t h e r t a r i f f s b e n e f i t e d A m e r i c a ' s economic g r o w t h . More r e c e n t l y ,
s e v e r a l economic h i s t o r i a n s ( i n c l u d i n g Nobel P r i z e w i n n e r R o b e r t W F o g e l ) who
.
have s t u d i e d w h e t h e r t a r i f f p r o t e c t i o n b e n e f i t e d t h e i r o n , w o o l , and c o t t o n
i n d u s t r i e s have a l s o r e p o r t e d i n c o n c l u s i v e r e s u l t s .
Economists g e n e r a l l y agree t h a t p r o t e c t i o n can h e l p c e r t a i n s e c t o r s . But
t h e r e i s no e v i d e n c e t h a t m a i n t a i n i n g most modes o f p r o t e c t i o n w o u l d i m p r o v e t h e
economic w e l f a r e o f most A m e r i c a n s o r t h e economy as a w h o l e . I n 1995, t h e
I n t e r n a t i o n a l Trade Commission r e p o r t e d t h a t i f t h e U n i t e d S t a t e s h a d r e d u c e d
most o f i t s o v e r t t r a d e b a r r i e r s ( n o t i n c l u d i n g d o m e s t i c p o l i c i e s such as
r e g u l a t o r y s t a n d a r d s ) i n 1993, t h e U.S. economy w o u l d have g a i n e d a p p r o x i m a t e l y
$ 15.5 b i l l i o n . A 1994 s t u d y b y t h e n o n p a r t i s a n I n s t i t u t e f o r I n t e r n a t i o n a l
Economics f o u n d t h a t e a s i n g p r o t e c t i o n w o u l d c o s t t h e j o b s o f some 192,000
w o r k e r s i n 21 h i g h l y p r o t e c t e d s e c t o r s . B u t t h a t same s t u d y a l s o c o n c l u d e d t h a t
p r o t e c t i n g t h e s e w o r k e r s c o s t s a l l A m e r i c a n s on a v e r a g e some $ 170,000 p e r y e a r ,
f a r more t h a n we w o u l d spend t o r e t r a i n t h o s e w o r k e r s o r m a i n t a i n t h e i r incomes.
The c h a l l e n g e s o f t h e d a w n i n g I n f o r m a t i o n Age a r e w o r l d s a p a r t f r o m t h e
c h a l l e n g e s o f t h e I n d u s t r i a l Era. A c c o r d i n g l y , we s h o u l d n o t r e l y on
19th-century ideas t o f a s h i o n s o l u t i o n s t o 2 1 s t - c e n t u r y problems. A r i s i n g
�PAGE
The New Democrat September, 1997 / O c t o b e r , 1997
s t a n d a r d o f l i v i n g f o r t h e w o r l d ' s p e o p l e depends on how we g o v e r n t h e w o r l d ' s
economy. I n s t e a d o f t h r o w i n g b r i c k s o r e r e c t i n g p r o t e c t i o n i s t w a l l s , A m e r i c a n s
s h o u l d work t o s h o r e up t h e f o u n d a t i o n s o f t h e GATT/WTO system.
LANGUAGE: ENGLISH
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'KGROUND POINTS QN THE MAY 18-20 WTO MINISTERT, U;,
ry focus of the meeting will be on setting the trade agenda of the list century
..nues the critical agricultural reform that we achieved in the Uruguay Round;
embraces the contribution of high technology (e/commerce and IPR) to the system, and
responds to the concerns of constituencies that believe that they have been left out of the
debate (e.g., labor and environment).
Ministers are to agree on a procedural, but nevertheless important, decision that will set in
motion a process over the next 18 months that prepares for negotiations enosioned in
1999. We've already agreed on some aspects in the built-in agenda -- agric alture and
services for example » and we are prepared to consider adding other items to the WTO's
work program.
We also believe that there will be agreement on e/commerce that shows the world that the
WTO ~ which has landmark agreements on ipr ~ is ready to add t o these a greements by
embracing technology and e/commerce by maintaining duty-free cyberspace and setting a
work program that ensures that e/commerce is at the center of trad e expans on in the next
century.
Part of setting the agenda must befindinga way to engage our publics on tl e issues. And,
we need to change our practices to address new realities and the real anxiet' and fear that
is being generated against trade liberalization. Making the WTO a more tra isparent, open
and responsive organization will be vital to gaining support for the agenda f the next
century.
The WTO has no official, formal mechanism to have regular and continued contact with
the private sector and NGOs. There are symposiafromtime to time, but nc regular
channels of communication, and no contact with workers. We faced this pi oblem in the
FTAA process and created a civil society committee. We think that there sl tould be some
way we can give stakeholders a similar kind of opportunity in the WTO to s hare their
views, particularly as we move ahead to prepare for 1999 in the WTO.
Similarly, we will pursue greater openness and transparency in the work of I he WTO.
Two years ago we made a good start, and agreed, along with our Quad pan ners to pursue
this issue further —fromimproving access to WTO activities, including doc intents related
to dispute settlement ~ to considering whether there are ways to make son e of the
meetings and proceedings more accessible to the public.
We also will be looking carefully at the commitments made at Singapore on labor
standards and the progress in the ILO in June towards an agreement on con • labor
standards and an enforcement mechanism. We certainly will continue to rai: ; labor
e
standards as an issue for the WTO, including for example in the trade policy reviews.
An important outcome of the Quad was agreement on the need to develop < broad-based
12)001
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E
U.S.T.R
agenda for the WTO and to explore how best to proceed, including coming up with
innovations that strengthen the system, put each of us at the best possible o >mpetitive
advantage, and can be widely accepted politically. We were creative and innovative with
ITA and Basic Telecom, we are ready to be similarly creative and innovativ 5 about
pursuing the future agenda.
0002
�05/13/98
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'
U S T R
i-.a.i.n
Remarks Prepared for Delivery
note Address of Ambassador Charlene Barshef sky
The Global Trading System
A GATT SO" Anniversary Forum
The Brookings Institution
March 4,1998
1
Good morning. [Acknowledgments.]
All of us here today can be justly proud of the GATT's achievements over :he past half
century. The work of my predecessors and of this Administration has contributed to a
progressively more liberal world trading environment for goods, services, and invi stment. An
environment where world consumers have more choice, and therefore mere freedem. An
environment where human, financial, and natural resources are used mon: efficien ly and
productively with gains to all rather than a select few.
y
Over its existence, the GATT has successfully addressed increasingly com plex
I restrictions to trade. Starting off with border measures such as tariffs and quotas; moving in the
\ Tokyo Round to non tariff barriers; and in the Uruguay Round to include more fu ly agricultural
1 trade, services, investment, intellectual property rights (IPR), and in so doing, to t egin to address
I the trade impact of domestic regulations.
Our task for the future is of course broader than each of these parts, althou gh even
traditional barriers are still too high in many areas and must be reduced. As we r tove forward,
we must fashion an intemational trading system that can accommodate the tremei idous
technological change that is sweeping the global economy. We are looking to fos ter a trading
system that is transparent and genuinely pro-competitive. A trading system wher ; bribery and
corruption no longer sap economic vigor from economies. A trading system that develops
effective instruments to address the social dimension of trade, including respect f workers and
the environment. A trading system that recognizes the challenge of domestic reg tiation. A
trading system that can accommodate proliferating regional trade agreements as Trellas
transitional economic systems without sacrificing free-market principles.
And perhaps most importantly, a trading system that answers the; concern \ that trade is
the enemy of jobs and high living standards. Misplaced though they are, these c( incems have the
very real potential of derailing future economic progress..
Contributions of the GATT System to World Econom ic Grow th
Let me start by summarizing the contributions of the to world economic growth. The
-1-
~
[gjOOl
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U.S.T.R
121002
standard portrayal of the economic achievements of the GATT is to describe stead) progress in
reducing global trade barriers, the rapid expansion of trade, and trade's contributioi i to post-War
prosperity. While agreeing completely, I would like put the's contribution in a brc ader context.
Immediately after the Second World War, many nations concentrated on th; potential of
markets to spin out of control and emphasized the superiority of alternative economic systems. It
is remarkable today to recall that even in the late 1950s, when a Soviet Premiere threatened to
bury the U.S. because in part of the systemic preeminence of the Soviet economy, lis threat was
taken with the utmost seriousness.
One of the great issues of the post war period has in fact been the question nf how
governments ^create the best environment for allocating scarce resources to meet ct rrent and
future human needs and desires. As we saw earlier this decade with the collapse o f the Soviet
economic model, and as we see today with the discredited Asian economic model, free markets J
will repeatedly win hands down.
*^
v
One has neither to idealize free markets -- competition is sometimes painf.il and divisive
nor to believe that there is no useful role for govemment in modifying market o itcomes, in
order to understand that there is simply no substitute for resource allocation made under more
competitive market environments.
The GATT was the post-War institution in which we most clearly expressed Western
faith in the role of an integrated and increasingly open and global market. The G 'V.TT System
has not let us down. It has served as a catalyst for the greatest expansion of globa I growth and — ^
opportunity the world has ever witnessed. It has succeeded in fostering freer mai kets through
trade agreements, resulting in a 16-fold increase in global trade that has helped le:id to a four-fold
increase in real global output in the post-War period.
The ascendency of freer, more open global markets offers great promise f »r contributing
importantly to a world of expanded prosperity and peace, in which many hundrecs of millions
will be lifted out of poverty and in which the economic aspirations of Americans - who already
enjoy the world's highest living standard can be better met.
The Uruguay Round
It was clear to everyone heading into this last Round that the GATT rules were
increasingly unable to deal effectively with the full range of issues presented by trade growth and
more global markets. Many areas of trade aich as intellectual property l ights am I investment
were not covered by GATT rules; GATT disciplines such as agriculture were inadequate, and the
dispute settlement mechanism was in many cases ineffective. The old GATT rules also created
unequal obligations among different countries, despite the fact that many of the < ountries that
were allowed to keep their markets relatively closed were among the greatest bei letlciaries of the
system.
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These deficiencies were largely the subject of the Uruguay Round. WTO members, for
example, are now required to accept all obligations of the GATT and its corollary ; greements,
rather than being able to pick and chose among obligations.
The WTO's new dispute settlement system has met our key objectives of a swift, sure and
effective mechanism to resolve trade disputes through a rules-oriented system. Going into the
Uruguay Round, we consistently argued that disputes took eidier too long to resoh e or remained
unresolved at the end of the process due to the ability of countries to block the adoption of a
panel report.
The WTO's committee structure and requirement for biennial ministerial meetings have
also given us a new opportunity to press for agreements on a much more real-time basis. Given
the speed of both economic change and technological advances in communication;, it is
imperative that we have a WTO structure that can move rapidly.
The Uruguay Round's cuts in tariffs are already helping to boost U.S. expc rts throughout
the world. In the sectors in which duties were eliminated or harmonized, U.S. exports have
grown by nearly 34 percent, far outpacing the increase of all U.S. exports.
The Uruguay Round also made important strides in touching on issues tha' had not been
seriously addressed before, such as agriculture, trade and the environment and sor ie investment
disciplines. In the areas that had never been covered by GATT rules, such as intel lectual
property rights and services, the new disciplines of the WTO are essential.
CHALLENGES FOR THE 21ST CENTURY
Now that the results of the Uruguay Round are being implemented, it is til ne, in part
because of the SOth anniversary but also because we are approaching the 21st cen' uiy, to
examine the GATT System and assess the operation of the WTO. There are many challenges
facing us that will bear upon the future direction of global trade policy. ] want to highlight
several of them this morning.
Trade Policy for the Information Age
I think it fair to say that the GATT System is well on its way to entering tlie 21st century.
Just last year we completed a "trifecta" of global agreements that frame Ihe foundation of the
21st century economy: information technology, telecommunications, and financii 1 services.
These three agreements, which cover literalty tens of trillions of dollars in trade, 'vere recently
described by Renatto Ruggiero as the equivalent of a major trade Round, so signi Eicant is the
amount of commerce involved.
The three agreements recognize that we are in an era characterized by inte nse
technological change. A time when product life cycles are measured in months and information
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and money move around the globe in seconds. A time where we can no longer affc rd to take 7
years to finish a trade Round, or decades pass between the time a trade barrier is idi :ritified and it
is acted on.
The Information Technology Agreement (ITA) will result in the elimination of tariffs on
a wide range of global infonnation technology products over the next seve ral years Covering
93% of global output in this trillion dollar sector, the negotiation of this agreement should help
dispel the myth that significant trade liberalization can only occur through comprel ensive
negotiating Rounds. And we are moving forward with negotiations for an ITA II f >r expanded
product and country coverage.
The Agreement on Basic Telecommunications, which came into elfect in Js nuary, covers
over 95% of world telecom revenue in a $600-billion industry, and was negotiated among 70
countries - both developed and developing. It provides U.S. and foreign companies access to
local, long-distance and intemational service through any means of network technc logy, and
ensures that U.S. companies can acquire, establish or hold a significant stcike in tel :com
compahies around the world.
This agreement represents a change of profound importance for the telecon imunications
industry and, potentially, for the GATT. A 60-year tradition of telecommunicatioi s monopolies
and closed markets has been replaced by market opening, deregulation and compel ition,
reflecting American values of free competition, fair rules and effective enforcemer t.
In this regard, sixty-five countries bound themselves to enforceable regulatory principles
based upon theframeworkfor competition that our Congress enacted in tlie landm irk
Telecommunications Act of 1996. Sixty of these countries have agreed to a specil ic: set of
regulatory principles that even we did not have one year ago. The global adoption of these procompetitive principles is binding. Foreign countries are committed to establishing independent
regulatory bodies, as well as forbidding anti-competitive practices such a:; cross-si bsidization,
and mandating transparency of govemment regulations and licensing.
And lastly, in December, we secured the multilateral Agreement on Globa Financial
Services that will open markets to U.S. suppliers of banking, securities, insurance and financial
data services. This agreement covers 95% of the global financial services market and 102 WTO
members now have market-opening commitments in the financial services sectors The
commitments before us encompass $18 trillion in global securities assets; $38 trillion in global
(domestic) bank lending; and $2 trillion in worldwide insurance premiums.
A well-functioning financial services industry is key to economic growth i n any country,
as we have seen in the United States. With tlie most open financial services mark :t in the world,
competition in the financial services industry has delivered lower prices and great ;r choices and
contributed enormously to prosperity here. The agreement will foster the: development of
financial markets, especially in emerging economies, helping to lay the fbundatioi» for sustained
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Eioos
growth. Many countries had already begun the process of financial sector liberaliz ition, but in
the past had hesitated to lock in those measures. This agreement locks in that prog -ess and in
addition, substantially advances the process of market opening abroad.
Financial Services, together with the ITA and the Telecom Agreement, con pletes tlie
triple play of global market opening agreements we have reached in the past year. These are the
infrastructure of the 21st Century economy- information, communications, and fu ance. Yet
although these agreements are still warm, we must move ahead, and this means adi Ircssing global
electronic commerce — electronic transmissions and especially the Internet.
As the President noted in his speech last week to the Technology '98 Conference, the
Internet is the fastest growing social and economic community in history, with 1.5 million new
web pages created every day; 65,000 every hour. This phenomenon and the ability of people
throughout the world to access it has remarkable possibilities to empower people all over the
world. The rapid changes in technology and electronic commerce are something licit trading
system must recognize and address, and it must do so quickly.
1
The changes are indeed staggering. The Ford Taurus that you drive today tas more
computer power than the Apollo 11 that Neil Armstrong took to the moon. The e solution of
computers and the electronic commerce that they make possible is likely to revolu tionize the way
many industries do business. Already it is projected that by 2002, electronic commerce between
businesses in the United States alone will exceed $300 billion. And today, Intem< t use is already
divided rather evenly between the United States and the rest of the world,, with gk bal growth in
usage at an accelerating rate.
When we look at the global trading system, we see 50 years of effort to un :lo what
governments have done-working to undo government-imposed tariffs an d non-ta i f f barriers to
trade. But the world of electronic transmissions is, in trade terms, pristine. Today, no member
of the WTO considers electronic transmissions as importations for customs duty j uiposes. There
are no customs duties on cross-border telephone calls, fax messages or computer i lata links, and
this duty-free treatment should include electronic transmissions oii the Internet. , Wi agreement
to this effect would be an important next step in preparing for the 21st Century economy, and
supporting this wholly new form of commerce.
Building Transparent, Open and Competitive Markets
All countries have regulatory systems in place to protect such cri tical inte: ests as the
health, safety, and security of their citizens. »These are essential functions of gov< mment. The
must be sufficiently flexible to identify further areas of needed regulation that rec uire a global
response, while ensuring that regulatory systems already in place in fact result ir the transparent,
pro-competitive markets they Eire intended to foster. The Asian financial crisis se rves as a stark
reminder that genuine transparency is more than the mere publication of rules am I regulations.
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As we look to potentially new areas of needed regulation, certain basic principles should
apply. The role of the WTO is not to demand a system of uniform regulation nor t > detract in
any respect from the absolute right of governments to establish a particular set of regulatory
norms, provided they are neither discriminatory, arbitrary, nor disguised barriers tc trade.
Rather, the role of the WTO is to ensure that national regulatory practices are fully transparent
and not politically directed. This includes the principles of genuine national treatn .ent and due
process, commitments to publish and make widely available all regulations, and to ensure that it
is those public regulations and not others that are actually applied. Inherent in the iced for clear,
enforceable rules is also the need for impartial regulators. In short, fundamental fa iniess must
prevail.
There are many areas of regulation that may well require a global response, but let me
touch simply on two: competition policy, and bribery and corruption.
It has been a long-held theory among many countries that sound competitic n law
enforcement is crucial to the health of national economies. Indeed, economic glob alization has
dramatically increased the importance of strong competition policies due to the inc reased risk of
intemational cartels and the tremendous growth in transnational mergers,
Reaching agreement on competition policy within the WTO will tie difficu It, given the
great disparity between countries on antitrust rules — both in substance ard in the • 'igilance of
their enforcement - and the fact that almost half of the WTO members do not hav: competition
laws of their own. What is critical, however, is that we develop an intemational ci ilture of
competition and sound antitrust enforcement, built on the basis of shared experien re, bilateral
cooperation and technical assistance. From that base we should focus on those p£ iticular
practices and industries where the most egregious anticompetitive practices have l een
concentrated. If we can do that, we will have a solid foundation from which to bu Id a more
comprehensive regulatoryframeworkfor competition policy.
Global action is also needed to address the pernicious problem of bribery and corruption.
Governments have begun to recognize what many throughout the "world have known for decades:
bribery subverts and can destroy political processes, it stifles efficient markets anc it acts as an
invisible tariff on most imports and contracts. The price paid by both the develof ed and the
developing world for the continuation of bribery and corruption is simply not sust unable.
Our most visible efforts to address the problem have taken place in the OliCD. In 1994,
the OECD adopted a recommendation on combating bribery and in 1996 adopted i
recommendation that would prohibit the ta* deductibility of bribes in internationa business
transactions. In 1997, an agreement was reached to pursue a Convention that woi Id require
governments to put in place criminalization statutes. This agreement was signed 1 > 34 countries
y
and obligates parties to criminalize bribery of foreign public officials in international business
transactions.
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In addition, the WTO has established and begun enforcing basic rules that cirninish the
opportunities for bribery and corruption to take place in, for example, government | jrocurement
and customs valuation. Work is already underway to ensure greater transparency in government
procurement procedures, an area where bribery is most vexing.
While these are important first steps, much more needs to be done to ensure that strong
rules are in place, that those rules are vigorously enforced and that we creaite a glob al ethic
among govemment leaders that condemns bribery and corruption in all foims. Ont e the
foundation has been laid through the efforts just mentioned, the WTO should utiliz t the work of
the OECD and begin the process of tackling head on bribery and corruption.
Last, establishing a regulatory framework to address important issues like c ompetition
policy, bribery and corruption, and others is necessary, but not sufficient. The real challenge is
to ensure that regulatory systems do not create false process, i.e., the appearance ot transparency
undermined by de facto decisionmaking based on factors divorced from the regulal Dry
framework. The WTO must demand enforceable regulatory transparency at all lev :1s of
decisioh- making, if trade concessions are to yield tangible benefits.
The WTO Must Insist on Real Market Access
Another challenge for the WTO is to integrate fully all nations into the glol al trading
system. This challenge extends beyond the accession of new members. We are, ol 'course, right
to reach out to the billions of people who live in countries that lie outside of the inl srnational
trading system. But we also need to look inside and ask how, over decades, some i :auntries have
been members of the GATT System, while maintaining home markets essentially 1 .ostile to
competition.
The Asian financial crisis points to this phenomenon - successive Rounds ;vhich
nonetheless fail fundamentally to open major markets, including Japan's. As we look ahead, we
need to examine whether GATT or the creation of the WTO should have been mor; alert to
structural and systemic barriers which allowed these circumstances to endure. In t lis regard,
many of the seeds of the Asianfinancialcrisis: excessively close linkages between government,
business, and banks, a lack of transparency and a suppression of competition and market
mechanisms have their parallel in the trade realm. How can the WTO system deal with structural
barriers, the nature of which will invariably reduce or negate the value of trade cor cessions
made?
Other countries, long members of the have also failed to open up to global competition
although the mechanism has differed. India has long maintained balance of paymt nts restrictions
on imports, now under challenge. Many African nations have never undertaken th J basic
bindings ~ commitments — that would open their markets and enable them to grovand some
have actually increased overall levels of protection, plunging them further into po\ erty. New
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trade incentives, anchored in economic reform and embodied in both the Administjation's Africa
policy and pending legislation should help to alleviate this vicious cycle. Yet, in ei ich of these
cases, we must again ask how the failed to engender more fundamental economic reforms.
Last, our attention must also be focused on bringing new countries into the China,
Russia, and the other countries of the former Soviet Union come to mind. The inte ^ration of new
members, whose economies are in transition or take alternative form, is complex. ' n order to
.
ensure that market-based rules are not undermined, these countries should be brouj hi; in, but only
on the right terms. The accession process must result in significant and enforceabl;
commitments to open markets, to operate transparent, non- discriminatory regulato ry systems,
and to afford effective national treatment both at the border and within the domesti; economy.
Our task is difficult, but I believe ultimately attainable.
The Broader Dimensions of Trade
An equally important challenge for the GATT System will be to recognize md address
the fundamental relationship between trade and the environment and trade and woi ker rights.
With respect to the environment, we start from the obvious: both trade and environment
are critical. No one is being asked to choose one over the other and no one should The key is
how to manage the demands of the two in a way that protects a rules-based trading system while
addressing legitimate environmental concerns.
While some initial progress was made in the establishment in the Uruguay -tound of the
Committee on Trade and Environment, the Committee's work thus far has proved :ii.sappointing.
The issues are contentious and the Committee's agenda remains somewhat ill-defined. Yet we
mustfinda way to move forward. Sustainable development is not only beneficial :o the , it is its
very predicate.
As with the environment, the issue of trade and labor must be addressed or tlie WTO risks
sending the unintended message that there is no link between trade and ths welfare of workers.
Obviously, this is absurd.
Core labor standards are not a matter of Western values but of intemationa ly recognized
human rights. Indeed, many if not most WTO members have agreed to these slant .ards within
the ILO.
While the importance of adherence t*) core labor standards stands on its ov, n
substantively, addressing the issue in the trade policy context is also critical to maintaining
support for open trade regimes. If the trading system is not seen as contributing tc tlie solution of
problems such as exploitative child labor, slave labor or subhuman working condi ions, it
becomes all too easy to assume that the trading system is part of the probl em.
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Yet, as the OECD has noted, more open economies grow faster, and faster growth and
rising incomes promote more sustainable development, facilitate adjustment and the efficient
redeployment of a society's productive resources, starting first and foremost with i s human
capital —its workers. Market liberalization (and the rise in incomes it allows) form > part of the
solution to low labor standards, since above all else, low labor standards are so ofte n rooted in
poverty.
As we know from experience in many countries, market liberalization alone, is not
enough. The challenge for the GATT System is to build a consensus that open trac e should
promote not only economic wealth but fundamental worker rights.
Public Confidence and Global Growth
As critical as the issues I have just outlined may be, the lack of public unde -standing and
acceptance of the role of trade in economic life threatens to undermine the GATT System. The
next step for the GATT is not only a pro-competitive, forward-leaning trade agenda, but also
gaining the support for trade of consumers and workers across the globe.
We are perhaps victims of our own success. Large increases in world trade have fueled a
tremendous global expansion of wealth -- the United States is in the 7th year of ecc nomic
expansion, in large part because of trade. But we have also witnessed here and aro and the world
a growing gap between the "haves" and "have nots."
We can pretend that the rules of intemational trade are the dominion of elites and
businesses, or we can recognize that the pace of change in today's economy ~ largf ly fueled by
technology ~ is increasingly a source of apprehension and anxiety even among the workers and
consumers who are reaping the benefits of global trade. If the global trading systei n does not
factor in this social dimension, the credibility of an open markets policy will be sei iously
jeopardized,
In the United States there is a growing recognition that an effective econorr ic safety net
must exist to respond to economic change that moves faster by the day. Worker tn lining,
educational opportunities, health care, adjustment assistance and many other programs must be
responsive to the needs of individuals and communities. This is one part of the an: wer.
To comprehensive domestic education and trade adjustment policies, we m ist add a
sustained effort to improve public understanding about the role of trade in the glob it economy.
As the OECD noted in a report late last yeap, the combination of govemment polic y and
education is critical if supporters of greater market openness are to withstand the h icklash from
those who are most exposed to therisksof change, and from those who choose to i riake political
hay out of protectionist arguments.
And third, greater transparency of the itself is necessary. Any alleged secretivene: s breeds
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distrust and misapprehension. The work of the WTO, including its dispute settlement bodies,
must become more open and accessible to our domestic publics if we are to build c H ifidence in
the intemational trading system.
An effective safety net, public education, and transparency are necessary co nponents to
addressing anxieties in this new age. But, our challenge goes beyond that, and I be ieve the First
Lady framed the task best at the recent World Economic Forum in Davos when she asked: "How
do (governments) create the instruments that are needed ... today to provide tlie kin 1 of support
for the economy at the same time that they provide the ... capacity for their people 1 o be able to
thrive in this new economic environment?" We must find the right balance betwee i government,
business, and civil society that permits real competition to flourish, but which ansu ers the social
demands of our citizens.
Thank you.
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©OlO
�The SOth Anniversary of the GATT
Ambassador Charlene Barshefsky
May 17, 1998
On January 11th, 1994, as American soldiers fought on Guadalcanal and Italy,
President Franklin D. Roosevelt asked us to look ahead to peace. He believed, as he
said in his State of the Union address, that:
"A basic essential to peace, permanent peace, is a decent standard of living for
all individual men and women and children in all nations. Freedom from fear is
eternally linked with freedom from want. [And] it has been shown time and time
again that if the standard of living in any country goes up, so does its purchasing
power - and that such a rise encourages a better standard of living in
neighboring countries with whom it trades."
Roosevelt's successors took that advice to heart. Tomorrow will mark the SOth
anniversary of their creation -- the General Agreement on Trade and Tariffs, or GATT.
And the last fifty years have more than confirmed Roosevelt's faith in trade both as a
means to build prosperity and as a contributor to peace.
In these years, the more open trade promoted by the GATT system, and its
successor the WTO, has helped trade grow sixteen-fold. That, in turn, has catalyzed a
quadrupling of the world's economic output. And so America and the world are more
prosperous. Consumers have more choice and more freedom. Producers find markets
and workers find jobs more easily. And with the right vision, the next fifty years can be
even better.
But as we mark this fiftieth anniversary, we must also look ahead to four great challenges.
First is the GATT's traditional task of reducing its members' trade bamers and ensuring
rules-based trade. Traditional trade barriers continue to hold back prosperity and reduce living
standards. And in some cases ~ especially in agriculture and services - these barriers are highest
where the United States is most competitive. So the WTO's "built-in agenda," including
negotiations on agriculture and services beginning next year, is critically imprtnat.
Second is the end of the Cold War. A quarter of world population - Russia, the other
former Soviet Republics, China, Indochina - remains outside the WTO. The admission of these
nations, on commercially meaningful grounds, is achance to commit virtually the entire world to
the principles of the market and the rule of law. Tfwill mean vast new markets tor the wofld; full
participation in the world economy for Russians, Chinese, Vietnamese, Ukrainians and others;
and, by integrating Russia and China into the world offreemarkets based on the rule of law, it
will help us complete the larger task, begun with Japan and Germany after World War II, of
�laying a permanent foundation for peace among the great powers.
Third is the technological revolution. New products, services and ways of doing business
are changing the world in every walk of life. In health, we have telemedicine and new
pharmaceuticals. In agriculture, biotechnology, genetically manufactured organisms and the use
of information technology to improve productivity. In environmental protection, improved
monitoring of biodiversity, pollution cleanup and energy technologies that can produce power
more efficiently and thus slow global warming.
And most spectacular of all, in computers, information and electronic commerce. By the
year 2002, electronic commerce will grow from about $8 billion to over $300 billion in the US
alone. And the world of electronic transmissions is, in trade terms, pristine. The right trade
policy, beginning with a decision to keep the Internet duty-free and moving on to ensure open
trade in new technologies as they emerge in other fields, will help set ground rules that provide
incentives for development of new technologies, ease their transmission from the laboratory to the
market, and help people live healthier, safer and more enjoyable lives.
Fourth » and I believe most important ~ is winning the support of ordinary people. The
GATT system, through its fifty years, has made tradefreerand more open. That in turn means
imports and exports affect more people on the job and in their daily lives.
So trade policy naturally comes under greater scrutiny from citizens. And people care not
only about tariffs and quotas but transparency, labor practices, and environmental protection.
And the WTO must respond. First, it must address issues like the links between trade,
environmental protection and labor rights.
Economic growth has gone hand in hand in our country since 1970 with the recovery of
the bald eagle and the gray wolf; with rivers where you can swim and eat the fish you catch; and
with diminishing urban air pollution, so can world trade. Likewise, if the trading system is not
seen as part of the solution to exploitative child labor, slave labor or subhuman working
conditions, many will assume it is part of the problem.
And, like all our institutions, the WTO must be open to citizens and citizen associations.
There is absolutely no reason, for example, for its dispute panels to be closed to ordinary people.
And on the other hand, the more the WTO is perceived as a secretive body, the less it will eam
the confidence of the public and the more it will raise unfounded rumors and fears.
At the same time, the WTO cannot do it all alone. Policymakers must work harder to
build consensus for trade policy among the public — not just in Washington, Brussels and Geneva,
but in small towns, schools and city neighborhoods. If not, those who make political hay from
protectionist arguments will advance; and the world's prospects for prosperity in the next century
will recede.
The agenda for the future may be daunting. But the rewards will be worth the effort. And
as we mark this SOth anniversary of the GATT, the work ahead should not make us forget the
�most important thing of all.
That is, the faith its founders had in freedom, the rule of law, and the open market has
been borne out. The development of the world trade system in the past fifty years has enriched
the world immensely. And at the same time, it has advanced the perhaps more important cause of
values ~ free markets, peaceful resolution of disputes, and the rule of law. And thus, it has
brought us toward the ultimate goals that Franklin Roosevelt saw so clearly even in the darkest
days of the century:freedomfromwant; and freedom from fear.
�|wjopjocl^joc
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Open World Trade
World has prospered under open global trading system created 50 years ago. WTO
has lifted economic growth, strengthened democracy and enhanced rule of law
throughout the world. WTO and its predecessor paved the way for remarkable
economic performance. Trade has grown sixteen fold -- world economic output has
increased four fold. Consumers and citizens have more choice and freedom.
•
U.S. economic strength, to significant extent, built on open trade. One third
of economic growth in U.S. due to exports. Foreign investment supports [ ]
jobs. Unemployment at [ ] year low, family income up. 14 million new jobs,
record exports in agriculture. World's most competitive economy
' w o r l d has changed markedly. Trade touches the lives of every citizen. As WTO
looks to next 50, should celebrate success achieved and move boldly to complete
unfinished business and address new challenges. Must make the WTO fit the new
world.
Agenda for the 21st Century
I.
Open Trade
•
UR went far to bring down barriers. Since 1994, WTO agreements have
produced X in increased trade. WTO did not stop there. In last year alone,
reached landmark agreements in information technology, financial services
and information technology, covering $ in trade. These agreements will I
speed the building of the global infrastructure for 21st century.
/
We cannot stop there. Barriers that remain continue to hold back prosperity
and reduce living standards. WTO needs to move forward to tear down
remaining barriers in critical areas already agreed for future negotiations in
the WTO, such as agriculture and services, and expand its agenda to include
industrial tariffs and new frontiers for trade such as electronic commerce.
Agriculture
Goal: Substantially reduce agricultural subsidies and tariffs in WTO talks to
begin in late 1999.
Ensure regulatory regimes governing trade in
agriculture protect health and safety of U.S. citizens and are based on sound
science..
"
New Initiative: Challenge other WTO to continue subsidy and tariff
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reductions as negotiations proceed - no pause in WTO mandated reductions.
•
U.S. Benefit: One out of three acres of America's farms dedicated to
exports, supporting nearly one million jobs. U.S. is largest agriculture
exporting country. Agriculture trade faces some of highest tariffs and most
trade distorting government subsidy practices of any sector. For example,
EU budget for export subsidies was $6.1 billion, as compared to the U.S.
budget of $0.12 billion in FY 98. Regulatory restrictions cost U.S. exporters
$5 billion annually.
Services
•
Goal: Further reduction in barriers to services including in
telecommunications, audio visual, multimedia and professional services.
•
New Initiative: nothing yet- Issue challenge on audio visual???
•
U.S. Benefit: U.S. world's largest services exporter, with global market share
of 20 %. U.S. exports more than doubled over past ten years, totaling $254
billion in 1997 (against imports of $169 billion) supporting an estimated 4
million U.S. jobs. World trade in services totaled 1.3 trillion. Yet the
preponderance of global services trade is not yet subject to WTO rules. New
negotiations to commence in 2 0 0 0 should tackle new areas and expand
existing commitments in such areas as telecom, audiovisual, multimedia and
professional services.
-fetootronio Commorco
•
Goal: Develop market oriented rules for the future market place.
•
New Initiative: WTO consensus or agreement among critical mass of
countries to not impose duties on electronic commerce. Develop broader
framework of rules for electronic in appropriate multilateral fora.
U.S. Benefit: By 2 0 0 2 , electronic commerce will grow from about $8 billion
to over $300 billion in the U.S. alone. Right trade policy, beginning with
decision to keep Internet duty free and moving on to ensure open trade in
new technologies as they emerge in other fields, will help set ground rules
that provide incentives for development of new technologies, ease their
transmission from the laboratory to the market, and help people lead
healthier, safer more enjoyable lives.
^Industrial TariffP"^
"Page 2 '
�Goal: Broad based, significant reduction in industrial tariffs, including 15
APEC sectors.
Initiative: Inclusion of industrial tariff reductions in next set of WTO
negotiations. Not currently included. Quad countries (Japan, U.S., EU,
Canada) support.
•
U.S. Benefit: UR cut foreign tariffs on manufactured products by a third,
largest in history. More remains. The U.S. maintains one of the lowest
industrial tariff rates in the world ( 2 . 8 % post Uruguay Round), while many of
our trading partners in Asia (e.g, India 3 0 . 9 % , Thailand 2 6 % , Indonesia
1 0 . 7 % , Korea 7.7%), Latin America (e.g., Brazil 1 1 . 7 % , Argentina 14.6%)
and the developing world maintain much higher tariffs.
Integrating Transition Economies
•
Goal:
Bringing transition economies into rules based trading system.
•
Initiative:
•
Benefit: 1 32 nations are members of the WTO, yet a quarter of the world
population - Russia and the other former Soviet Republics, China, and
Indochina - remains outside the WTO. 39 currently in accession process.
The admission of these nations, on commercially meaningful grounds, is a
chance to commit virtually the entire world to the principles of the market
and the rule of law. Will mean vast new markets for the world, full
participation in world economy for Russians, Chinese, Vietnamese, Ukranians
and others. Integrating China and Russia into world of free markets based on
rule of law will help complete larger task of laying permanent foundation of
peace among nations. Open markets help lead to more open societies.
II.
Opening the WTO and Advancing Good Governance
To be effective, WTO and other Bretton Woods institutions must reform and adapt
to rapidly changing marketplace and population impacted by trade as never before.
WTO must change to respond to the broader base of those affected by trade. The
WTO must open itself to view and to the views of others, as it strives to forge the
rules of global commerce. Policy cannot be made in darkness.
Open Doors: Transparency in WTO Process
•
Goal: Open WTO processes and dispute settlement system to stakeholders.
�New Initiative:
•
•
•
Starting today, U.S. will open dispute panels/cases to public and call
upon other countries to do the same. Open processes, disclose and
derestrict documents.
Propose WTO establish formal consultative mechanism for
stakeholders, including NGO's.
Benefit: No reason dispute settlement panels should be closed to ordinary
people. The more the WTO seen as secretive body, less it will earn
confidence of public. WTO cannot do it all alone. Need to build consensus
for trade policy in small t o w n s , schools neighborhoods as well as capitals.
If fail to do so, forces of protectionism will advance, and prospects for
prosperity recede. Establish formal channels for meaningful input by NGOs.
Environment and Labor (NEEDS MORE HERE)
•
Goal: Meaningful integration of labor and environmental concerns in WTO.
•
Initiative: Call again on WTO to create Committee on Trade and Labor and
challenge Committee on Trade and Environment to undertake concrete
agenda.
Good Governance
•
Goal: Build on OECD agreement on bribery to develop strong, enforceable
multilateral disciplines on bribery and corruption.
•
Initiative: Advance WTO transparency initiative (what exactly is this?).
•
Initiative: Strengthen existing WTO rules on government procurement and
get more countries to join the Procurement Agreement.
•
U.S. Benefit: U.S. exports associated with foreign government contracts in
1996 totaled $200 billion in a world market of $600 billion, supporting 2.4
million jobs.
New Architecture for Trade Negotiations
Goal: negotiations structured to yield early agreements
�New Initiative: Announce new architecture for global trade negotiations in
21st Century.
Rationale: Vision that fits times. Cannot afford to wait decade or more
between rounds when product cycles measured in months. Keep pace with
technological change, yielding early agreements where possible.
Negotiations of sufficient breadth to allow tradeoffs.
�c
so
Tooia
�Stats from USTR
David Walters 5-9552
103 billion dollars in tariffs have been cut since the Uraguay Round. [14 B in 1995, 28 B in
1996,44 B in 97 with the technology agreement implemented, and 17 B so far this year - as of
May 14th].
With full implementation, the Uraguay Round will cut global tariffs by $75 billion per
year.
Over the next 10 years we can expect to save 1.2 trillion in trade tariffs.
By 2010 we can expect to save 1.7 trillion in trade tariffs.
zoo®
�Prepared for Delivery
Ambassador Charlene Barshefsky
The Institute for International Economics
April 15,1998
Good morning. Thank you all, and thank you, Fred, for that kind introduction.
I am very happy to be with you this morning. I have always enjoyed and benefited from
working with the Institute for Intemational Economics, and with many of you here for the
conference today. And it is a particular pleasure to address this forum, as we mark the SOth
anniversary of the GATT system, and look ahead to its prospects in the 21st century.
INTRODUCTION
We don't stop to think about it often enough; but we should be grateful that we are alive
at this very unusual time in history.
Looking out at our country, we see a prosperous age. More of our citizens at work than
ever before. Science, technology and medicine surging ahead. The government's budget in
balance; crime and welfare rates falling; the air and water much cleaner than they were a
generation ago. And, if we stay on the right path, we should expect the economy to continue to
grow; productivity to advance; inflation to stay down; and living standards to rise.
Looking out at the world, we see an era of peace. For the first time in decades, our
country faces no global threat to our way of life. Fewer people are hungry than ever before.
Infant mortality drops every year. Literacy rates rise; science advances; trade flourishes.
And looking to the future, we see a chance to build a world in the 21st century that
reflects our most cherished values. A world of open and accountable govemment. Fairness. A
clean, healthy environment. Rewards for creativity and entrepreneurialism. Decent treatment for
working people. The rule of law. And peace among nations.
This morning I would like to talk about the place intemational trade, and specifically the
multilateral system, has in the Administration's plans to help make this future a reality. The
issues it must address, from traditional trade barriers, to bringing in new members and making
sure today's members live up to the spirit as well as the letter of their commitments. Thefieldsit
must cover, from promoting transparency and fighting bribery and corruption; to the social
questions of labor standards and environmental protection; to the'new world of electronic
commerce. And perhaps most important, the growing concerns and anxieties of ordinary people
it^nus^answer-thaMrade-agreements or trade itself may be the enemy of jobs and high living
-1-
�standards.
THE LAST FIFTY YEARS
But let me begin by looking back at the people, ideas and institutions that brought us to
this point. And the establishment of the multilateral system is a good place to start.
The founders of the GATT system began their discussions just a few months after the
Second World War. They had learned two lessons. First, in the political field, that tolerance of
human rights abuses and intemational aggression had brought disaster upon the world. And
second, in economics, that the economic detachment of countries from one another after the trade
wars of the early 1930s had deepened the Depression and made it easier for dictators and
demagogues to come to power. To quote President Roosevelt:
"[A] basic essential to peace, permanent peace, is a decent standard of living for all
individual men and women and children in all nations. Freedom from fear is eternally
linked withfreedomfromwant. ... [And] it has been shown time and time again that if
the standard of living in any country goes up, so does its purchasing power - and that
such a rise encourages a better standard of living in neighboring countries with whom it
trades."
The result of these lessons was the network of intemational institutions familiar to us
today. The United Nations. The IMF and World Bank. The Intemational Labor Organization.
And the General Agreement on Trade and Tariffs, or GATT. All of these had in common a
commitment on the one hand, to the rule of law; and on the other hand, a faith in human freedom
as the best guarantor of peace and a better life.
The GATT system began with border measures such as tariffs and quotas; moved in the
Tokyo Round to non tariff barriers; and in the Uruguay Round to agricultural trade, services,
investment, intellectual property rights, and increasingly, the trade impact of domestic
regulations. The result has been more liberal trade in goods, services, and investment. More
choice and morefreedomfor consumers. Human, financial, and natural resources used more
efficiently, more productively and to the benefit of all rather than to a few. Trade has grown
sixteen-fold, and economic output fourfold; and, at least in the economic sphere, the rule of law
is honored more each year.
THE QUESTION OF THE 20TH CENTURY ANSWERED
At the same time, another great part of humanity was, mostly unwillingly, enlisted in a
different experiment. On the other side of the Iron Curtain, rulers saw human planners as
preferable to the less ordered and predictable forces of the market.
The American socialist Edward Bellamy, writing much earlier, forecast the development
-2-
�of the Soviet system very well and with approval in Looking Backward: a nineteenth-century
Bostonian awakes in the year 2000 to find a comprehensive plan for all economic output directed
by a few people in the nation's capital; citizens enrolled in an "industrial army" directed to carry
out that plan each year and held in their jobs by "captains," "colonels" and "generals"; at the top,
a "president" who got his job without a popular vote. In essence, as the metaphor of the
industrial army indicates, a system based on coercion rather than freedom.
One of the great questions of the 20th century was which of these systems - ours, based
on freedom, markets and the rule of law; or the Soviet system, based on coercion, central
planning and force -- would succeed. As late as the 1950s, Nikita Khrushchev could threaten to
bury the U.S. because of the superiority of the Soviet economy, and we took the threat seriously.
And the Soviet model continued to win adherents in developing countries until the mid-1980s.
But history's judgment is now clear. One must neither idealize free markets -competition can be painful and divisive, market failures in areas such as environmental
protection are real ~ nor believe govemment has no useful role, to understand that there is
simply no substitute for the market. When judged by economic productivity; by scientific and
technological progress; as well as by the basic values of freedom and the rule of law, free
markets will always win hands down.
The GATT system deserves much of the credit for this. It catalyzed the greatest
expansion of global growth and opportunity ever in human history. And the world, now almost
unanimously, agrees that its principles offer the best hope for the future. The best proof is that
China and Russia — for decades the great enemies of the free market ~ now hope to join the
system. And as it develops in the next century, we have every reason to expect that freer, more
open global markets can continue their contribution to a world prosperous and at peace, lifting
hundreds of millions out of poverty and better meeting the economic aspirations of Americans.
But our ability to create such a future depends on our willingness to confront four great
challenges. First, to continue the work of the past fifty years and finish the work which remains
undone in today's GATT system. Second, to update the system to address new products,
services, and methods of trade, in particular those created by new technologies. Third, to find a
consensus on addressing the social questions posed by trade. Finally, and most important, to
ensure that the system continues to reflect the values of and thus win the support of citizens.
COMPLETING TODAY'S SYSTEM
And let me begin with the first of these challenges: the unfinished work of today's
system.
1. Traditional Trade Barriers Too High
Traditional trade barriers remain too high- And they are highest of all in some of the
-3-
�areas where the United States is most competitive. Agriculture, where we will begin a new set of
talks next year, is the obvious example. Eliminating these barriers will mean new economic
opportunities and higher living standards; as, in the areas where the Uruguay Round eliminated
or harmonized tariffs, US exports are up nearly 34 percent, far above the overall rise of our
exports. Beginning in 1999, negotiations commence on the "built-in agenda" of the Uruguay
Round, including new negotiations to expand the liberalization of trade in agriculture and in
services; negotiations to improve and extend WTO rules concerning govemment procurement;
negotiation on intellectual property rights and others.
2. New Countries
The system also does not include some of the world's biggest countries, fastest-growing
economies and largest traders. China, Russia, and the rest of the former Soviet Union come to
mind. Taiwan and Saudi Arabia as well; soon Vietnam. As long as they are outside, the system
will be incomplete, imperfect and subject to distortion from those who are not bound by its rules.
Integrating many of these economies, which are in transition or take alternative form, is a
complex task. To strengthen rather than undermine the world's market-based rules, they should
be brought in, but only on the right terms. The result must be enforceable commitments to open
markets; transparent, non-discriminatory regulatory systems; and effective national treatment
both at the border and within the domestic economy. The task is difficult, but I believe
attainable.
3. Membership in Spirit as Well as Letter
At the same time, some countries have over decades been members of the GATT System
but maintained home markets hostile to competition.
Successive negotiating Rounds significantly changed the letter of the laws governing the
markets of these countries, as tariffs fell, quotas relaxed and so on. But nonetheless they did not
meet the spirit of their goals. Markets remain largely closed, opaque and driven more by
informal cliques than by laws, rules and contracts. Japan is a classic case in point. The seeds of
the Asian financial crisis in other nations are another example: excessively close ties between
govemment, business, and banks, lack of transparency and suppression of competition and
market mechanisms. As we look ahead, we must examine whether GATT or the WTO should
have been more alert to these structural and systemic barriers to trade, how we can correct them,
and how we can prevent similar problems in the future.
Other countries, long members of the system, have used different methods to avoid
opening up to global competition. India has long maintained balance of payments restrictions on
imports. Many African nations never undertook the basic tariff bindings that would open their
markets and enable them to grow. Some, despite GATT membership, have increased overall
-4-
�protection, exacerbating their economic isolation and worsening poverty. New trade incentives,
anchored in economic reform and, for example, embodied in the Administration's Africa policy,
should help. But we must again ask why the system did not address these problems.
THE 21ST CENTURY ECONOMY
Second, the system must evolve to fit the economic world of the 21st century. Today,
and more So tomorrow, services as well as goods cross borders. Business is done by e-mail and
computer as well as in person. And human ingenuity creates new categories of goods, new forms
of services and entirely new ways to conduct trade every day.
The GATT System is already changing to reflect this reality. Lst year we completed
three global agreements at the foundation of the 21st century economy: information technology,
telecommunications, and financial services. So significant are these agreements that WTO
Director General Renato Ruggiero speaks of them as the equivalent of a major trade Round.
The Information Technology Agreement (ITA) will eliminate tariffs on a wide range of
global information technology products over the next several years; products that even today
make up about one in every thirty dollars of world GDP. And we are moving forward with
negotiations for an ITA II for expanded product and country coverage.
The Agreement on Basic Telecommunications includes 70 countries and over 95% of
world telecom revenue in a $600-billion industry. It provides U.S. and foreign companies access
to local, long-distance and intemational service through any means of network technology, and
ensures that U.S. companies can acquire, establish or hold a significant stake in telecom
companies around the world. In doing so, it replaces a 60-year tradition of national
telecommunications monopolies and closed markets with market opening, deregulation and
competition, reflecting American values of free competition, fair rules and effective enforcement.
And last December, we secured the multilateral Agreement on Global Financial Services,
including banking, securities, insurance andfinancialdata services. It covers 95% of the global
financial services market, and 102 WTO members now have market-opening commitments in the
financial services sectors. They encompass $18 trillion in global securities assets; $38 trillion in
global (domestic) bank lending; and $2 trillion in worldwide insurance premiums.
These agreements recognize that we are in an era of intense technological change. When
product life cycles are measured in months and information and money move around the globe in
seconds. When we can no longer afford to take 7 years to finish a trade Round, or let decades
pass between identifying and acting on a trade barrier. When the infrastructure of the 21st
century economy is as much information and communications as roads and ports.
And we will have to do more. In particular, we will have to address global electronic
-5-
�commerce -- electronic transmissions and especially the Internet.
As the President noted in his speech to the Technology '98 Conference, the Internet is the
fastest growing social and economic community in history. A survey this month concluded that
the World Wide Web has at least 320 million pages today, and will have more than three billion
by the turn of the century. Experts predict that by 2002, electronic commerce between
businesses in the U.S. alone will exceed $300 billion.
And today, the world of electronic transmissions is, in trade terms, pristine. The GATT
system, to oversimplify only slightly, represents fifty years of undoing the tariff and non-tariff
barriers governments created over a century. The right vision today will spare the next
generation that work in electronic commerce. No member of the WTO now considers electronic
transmissions imports subject to duties for customs purposes. There are no customs duties on
cross-border telephone calls, fax messages or computer data links, and this duty-free treatment
should include electronic transmissions on the Internet. We hope to keep it that way, as a first
step to make sure electronic commerce remains a catalyst for growth and expansion of trade.
TRANSPARENT, OPEN AND COMPETITIVE MARKETS
The system must also address problems that have existed for many years, but which it
does not now reach.
For example, all countries have regulatory systems in place to protect such critical
interests as the health, safety, and security of their citizens. These are essential functions of
govemment. We must be sufficiently flexible to identify further areas of needed regulation that
require a global response, while ensuring that regulatory systems already in place in fact result
in the transparent, pro-competitive markets they are intended to foster. The Asian financial crisis
serves as a stark reminder that genuine transparency is more than the mere publication of rules
and regulations.
As we look to potentially new areas of needed regulation, certain basic principles should
apply. The role of the WTO is not to demand a system of uniform regulation nor to detract in
any respect from the absolute right of governments to establish a particular set of regulatory
norms, provided they are neither discriminatory, arbitrary, nor disguised barriers to trade.
Rather, the role of the WTO is to ensure that national regulatory practices are fully transparent
and not politically directed. This includes the principles of genuine national treatment and due
process, commitments to publish and make widely available all regulations, and to ensure that it
is those public regulations and not others that are actually applied. Inherent in the need for clear,
enforceable rules is also the need for impartial regulators.
Let me offer two concrete examples: competition policy, and bribery and corruption.
1. Competition Policy
-6-
�Many countries believe - as we have since Teddy Roosevelt at the tum of the last century
~ that sound competition law enforcement is crucial to economic health. Economic globalization
has made strong competition policies even more important for national economies. And it has
raised the question of whether an intemational regime is necessary, as intemational cartels
become more feasible and transnational mergers more frequent.
Such a regime cannot be created quickly or simply. WTO members have very different
antitrust pdlicies, both in the substance of laws and in enforcement policies. Almost half the
WTO members have no competition laws of their own. What is critical, however, is that we
develop an intemational culture of competition and sound antitrust enforcement, built on shared
experience, bilateral cooperation and technical assistance. From that base we should focus on
the most egregious practices. And over the long mn that will provide a foundation for a more
comprehensive regulatory framework for competition policy.
2. Bribery and Corruption
Global action is also needed on bribery and corruption. Governments have begun to
recognize what any ordinary person dealing with a corrupt official knows immediately: bribery
subverts and can destroy political processes; stifles efficient markets^and acts as an invisible
tariff on most imports and contracts. The price paid by both the developed and the developing
world for the continuation of bribery and corruption is not sustainable.
Our most visible efforts to address the problem have taken place in the OECD. In 1994,
the OECD adopted a recommendation on fighting bribery and in 1996 adopted a
recommendation to prohibit the tax deductibility of bribes in intemational business transactions.
In 1997, we agreed with 34 countries on a Convention requiring governments to make this
conduct a criminal offense.
The WTO itself has established and begun enforcing basic rules that diminish
opportunities for bribery and corruption in, for example, transparency in govemment
procurement and customs valuation. But while these are important first steps, we must do much
more to put strong rules in place, ensure their vigorous enforcement, and create a global ethic
among govemment leaders that condemns bribery and corruption in all forms. Once the
foundation has been laid through the efforts I have just mentioned, the WTO should take up the
work of the OECD and begin tackling head on bribery and corruption.
THE BROADER DIMENSIONS OF TRADE
Third, the system must recognize and address the fundamental relationships between
trade and the environment and trade and worker rights.
1. Trade and the Environment
-7-
�With respect to the environment, we start from the obvious: both trade and the
environment are critical. The key is how to manage the two in a way that protects a rules-based
trading system while addressing environmental concerns whenever necessary and working in
concert with them whenever possible.
The opportunity is clear: a practical agenda for the next decade that will benefit both trade
and the environment. An example is the agreement in the Asia Pacific Economic Cooperation
forum, which we hope to make worldwide through the WTO, to eliminate tariffs on
environmental goods and services. To protect the environment, especially in developing
countries, what we need is attention to practical problems: making sure cities have waste-water
treatment plants, power facilities have coal scrubbers and so forth. A global agreement to
eliminate tariffs on these types of goods and services will make them cheaper for developing
country governments; and thus trade will grow as air, water and public health improve. This will
also help us in our efforts to slow global climate change, as developing countries find efficient
power generation more affordable.
Despite this opportunity, wide gaps remain between industry and environmental groups,
and among countries, on how to proceed. We made a big step forward in the Uruguay Round by
establishing the Committee on Trade and Environment. But the Committee's pace of progress is
slower than we would like. And the recent decision in the case of shrimp and turtles shows that
the system must work harder to distinguish between sound environmental laws and disguised
barriers to trade, even while WTO rules clearly recognize the right of members to adopt laws to
conserve natural resources. There is a way forward, and we must find it. Sustainable
development is not only beneficial to world trade, it must be a basic principle of the world trade
system.
2. Trade and Labor Standards
Likewise, the WTO must address trade and labor. Core labor standards - banning
slavery and exploitative child labor; freedom to associate and participate in collective bargaining;
safety on the job — are not only Western values but internationally recognized human rights.
Many if not most WTO members agree to these standards in the Intemational Labor
Organization.
As the OECD has noted, trade and growth are an important way to advance these
standards. More open economies grow faster. Faster growth creates disposable income for
individuals and revenue for governments. And that helps parents to keep their children in school;
governments to appoint and train good law enforcement officers to enforce labor laws;
businesses to improve the conditions in which people work; and countries generally to upgrade
jobs.
But we knowfromexperience that market liberalization alone is not enough. Addressing
-8-
�the issue in the context of trade policy is critical to maintaining support for open trade. If the
trading system is not seen as part of the solution to exploitative child labor, slave labor or
subhuman working conditions, many will assume it is part of the problem. The challenge for the
system is to build a consensus that open trade should promote not only economic wealth but
fundamental worker rights.
PUBLIC CONFIDENCE AND GLOBAL GROWTH
Finally, and perhaps most important, the WTO system must have the support of the
public here and across the globe.
Increases in world trade have fueled a tremendous expansion of wealth - in the world
generally, and here in America, where in large part because of trade we are in the 7th year of
economic expansion. But the pace of change in today's economy causes apprehension and
anxiety even among workers and consumers who reap the benefits of global trade. Many fear
growing trade and technological progress will devalue the work of those with less education and
skill.
Today, the Labor Department reports that while unemployment for those with college
degrees is under 2%, for those without high school degrees it is over 7%. And if these fears are
not allayed, the efforts of govemment to advance trade will likely fail.
The answer to this final challenge falls in three parts.
One,we must recognize that trade policy cannot solve everything. Trade will continue to
grow as long as the world is at peace. Technology will advance as long as people are creative.
What we need to make sure our country and people keep up is education and adjustment. There
is absolutely no reason that everyone should not have the skills to succeed in a new world; but at
present, not all of us do.
Education, from elementary school to college, must be available to every child. That is
why the President has asked Congress for the money to help schools across the country hire
100,000 new teachers; link every school to the Internet; and give all young Americans the skills
they need. Why he has asked for lifelong learning programs to help older workers upgrade their
skills, through Pell Grants, tax credits and tax deductions to finance returns to school. And why
worker training, health care, adjustment assistance and other services must be there, not only as
the initiative of particular companies, but when workers change jobs. Thus we are working to
reform trade adjustment assistance, and to increase funding for worker training generally.
Two, the trading system itself must be more open to civil society. There is no reason the
interested public should be excluded from observing dispute settlement proceedings or filing
amicus briefs. Public input is very valuable to us in all our WTO litigation. Likewise,
secretiveness breeds distrust. So we must make the WTO, including its dispute settlement body,
-9-
�more open, transparent and accessible to the public if the public is to have confidence in it.
And three, to these policies we must add a sustained effort to improve public
understanding of the role of trade in the economy. The facts are plain: one in five new American
jobs depends on exports; these jobs pay 13% to 16% above the average wage; we will not
prosper in the future if we cannot sell to the 96% of humanity that lives beyond America's
borders; and the right education and training policies can help everyone take advantage of these
opportunities. But the public -- at home, not just in Washington ~ must get the facts. As the
OECD noted last year, policy must be combined with public understanding if supporters of
greater market openness are to withstand the backlash from those who are most exposed to the
risks of change, and from those who choose to make political hay out of protectionist arguments.
CONCLUSION
And the consequences of failure could be severe. A half-century march toward
prosperity; jobs; growth; and higher living standards might be interrupted. And the ability of the
United States to shape the 21 st-century world shrunken or eliminated.
But if on the contrary we, at the beginning of this new century, redouble our efforts, the
rewards ~ both moral and material — will be enormous. Here in the United States we will see
higher incomes. New products and services. Business made easier. More rapid spread of
medicines, environmental technologies, and other things that improve the quality of life.
And beyond our borders, a world that reflects our most deeply held values.
Where new technologies help freedom of inquiry and expression blossom.
Where hard work, creativity and individual initiative find rewards.
Where the rule of law is stronger than the rule of force.
Where ordinary people have more power to shape their lives, and offer their children
better prospects still, than at any time in human history.
In short, a world that, as the founders of the GATT system hoped and believed, will offer
its peoplefreedomfrom want; andfreedomfrom fear.
Thank you all very much.
-10-
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William Shpiece
USTR.USTR2.DWOSKIN DOROTHY, USTR.USTR2.COLLINS PET...
4/20/98 4:06pm
Services trade numbers
Here are Some Services factoids
- U.S. Trade in services totalled $443 billion in 1997 (Exports of $254 billion and imports of
$169 billion)
- The U.S. has a surplus in services trade of $85 billion in 1997.
- U.S. exports of services in 1997 supported an estimated 4 million U.S. jobs.
World trade in services totalled $1.3 trillion, of which the U.S., the largest services exporter,
accounted for nearly 20% ($254 billion in exports).
~ Production of World services for low and middle income countries totalled over $2.5 trillion
in 1994 (latest data available, World Development Report, World Bank). For high income
countries, total is far greater, as much as 5 times or even more. While not all services are
tradable goods, the opening of the services sector in the world could/[should] lead to a sizable
increase in U.S. services trade.
CC:
USTR.USTR2.WALTERS DAVID
121002
�05/12/98
THE 16:03 FAX
According to the WTO, in 1997 world exports of commercial services were $1.3 trillion. For its
part, the U.S. continues to record surpluses in its services trade, setting a newrecordof $85.2
billion in 1997, based on exports of $254 billion and imports of 168.8 billion. For 1997, total
U.S. exports of goods and semces were $932 billion, which means that services made up 27
percent of all U.S. exports.
The global services market is vast, growing, and generally still not subject to WTO rules. We
can see a forecast of what is achievable in the next GATS negotiations by looking at our
successes last year in concluding groundbreaking agreements infinancialservices and basic
telecommunications.
Thefinancialservices agreement covered 95 percent of the global financial services market as
measured in revenue, encompassing $17.8 trillion in global securities assets; $38 trillion in
global (domestic) bank lending; and $2.2 trillion in worldwide insurance premiums.
The basic telecom agreement covered over 95 percent of world telecom revenue. Before the
agreement was reached, only 17 percent of the top 20 telecom markets were open to U.S.
companies; now they have access to nearly 100 percent of these markets.
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The World Trade Organization
JOBS
FOR THE U.S.,
GROWTH FOR THE WORLD
A HISTORIC TRADE AGREEMENT
On December 15, 1993, the United States and 116 other countries concluded a major agreement
to reduce barriers blocking exports to world markets, to modernize and strengthen the
international trading system by including critical new areas of trade, and to create a fairer, more
comprehensive, more effective and more enforceable set of world trade rules. This agreement
also created a intemational organization, the World Trade Organization (WTO), whose members
oversee and enforce these rules and commitments. The agreement entered into force on January
1, 1995. Today, 132 countries are members of the WTO.
The "Umguay Round" of trade negotiations, launched in 1986 at Punta del Este, Uruguay, was
the latest comprehensive set of negotiations that have been carried our periodically since the late
1940s. Americans are today reaping the benefits of these hard-fought negotiations.
,
Following World War II, the major economic powers of the world, recognizing that obstacles to
trade hindered economic development and growth, negotiated a set of rules for reducing and
limiting barriers to trade and for settling trade disputes. These rules were called the General
Agreement on Tariffs and Trade (GATT), an agreement which symbolized the rejection of the
self-defeating, "beggar-thy-neighbor" protectionist policies which helped to trigger the Great
Depression of the 1930s.
,
While the world has benefitted enormously from the reduction of trade barriers and expansion of
trade made possible by GATT, the GATT rules were growing increasingly out of stepjwith the
rapidly changing world of global commerce. They did not cover many areas of trade such as
intellectual property and services; they did not provide meaningful rules for important aspects of
trade, such as agriculture, or disciplines that were strong enough in other areas, and they did not
bring about prompt settlement of disputes. The old GATT rules also created unequal obligations
among different countries, despite the fact that many of the countries that were allowed to keep
their markets relatively closed were among the greatest beneficiaries of the system. These
deficiencies were corrected in the Uruguay Round negotiations.
The United States continues to be uniquely positioned to benefit from the Umguay Round trade
agreement and the new world trade system it created. When we signed the Uruguay Round
agreement, we expected U.S. workers to benefit from new employment opportunities and
additional high-paying jobs associated with increased U.S. exports, we expected U.S. companies
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to gain from significant opportunities to export more agricultural products, manufactured
products, and services, and we expected U.S. consumers to gainfromgreater access to a wider
range of lower priced, higher quality goods and services. Because of the talents, commitment,
ingenuity andflexibilityof U.S.firmsand workers, we knew that our nation would be especially
well-positioned to prosper as a result of these new commercial opportunities.
Intemational trade is in America's interest. It has contributed immeasurable to wealth and
international competiveness. The Umguay Round and the WTO have helped make possible the
gains we — U.S. workers, companies and consumers— have achieved.
The aEreement's provisions:
-
cut foreign tariffs on manufactured products by over one-third, the largest reduction in
history;
•
protect the intellectual property of U.S. entrepeneurs in industries such as
pharmaceuticals, entertainment, and software from piracy in world markets;
-
ensure open foreign markets for U.S. exporters of services, such as accounting,
advertising, computer services, tourism, engineering, and constmction;
*
•
open new markets for U.S. exporters of financial and telecommunications services;
•
greatly expand export opportunities for U.S. agricultural products by limiting the ability of
foreign governments to restrict trade through tariffs, quotas, subsidies, and a variety of
other domestic policies and regulations; and
*
•
establish an effective set of rules for the prompt settlement of disuputes, thus eliminating
shortcomings in the GATT system that enabled countries to drag out the process and
block judgements they did not like.
The agreement did not and will not.
-
impair the effective enforcement of U.S. laws, including laws to combat unfair imports,
•
limit the ability of the United States to set its own environmental and health standards and
to pass its own laws; or
•
erode the sovereignty of the United States to pass its own laws.
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Implementaiion of the Agreement: More to Come
Most of the agreements reached in the Uruguay Round are being implemented over a period of
five to ten years. In spite of the fact that 1998 marks only the fourth year of implementation, we
are already see significant results:
U.S. exports of goods [and services] have increased by nearly [35% goods only] since
1994
Jobs for U.S. workers supported by exports of goods and services have increased by 18%,
or nearly jjnillinn j r r T nreJ994, [Jobs supported by exports account for almost ten
percent of all U.S. jobs.]
k
;
U.S. consumers have benefitted from greater access to a wider range of lower priced,
higher quality goods and services, which has contributed to other economic benefits such
as historically low interest rates.
THE IMPORTANCE OF TRADE TO THE UNITED STATES
[Insert some eloquent language from D. Walters]
HOW THE WTO BENEFITS AMERICANS
Recent U.S. "Wim" at the WTO
The Uruguay Round agreement included provisions for further liberalization negotiations in the
WTO in sectors of interest to U.S. workers and companies. In 1997, three important agreements
have been reached with strong U.S. leadership.
•
The Information Technology Agreement (ITA) eliminates duties on computers, telecom
equipment, software, semiconductors and other information technology equipment. These
are all products in which our country excels in designing, producing and marketing.
Industry sources estimate that the ITA will save U.S. exporters of ITA products about $5
billion in tariffs, benefiting the 1.6 million U.S. workers that produce these products.
•
Complementing the ITA, the Agreement on Basic Telecom opens the S600 billion global
telecommunications sector,' inwhlfifl IhK U.S. is the largest and most competitive player.
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This agreement will mean cheaper intemational phone calls, faxes and other
communications services that help bring down the cost of doing business for companies
operating internationally and consumers calling friends and family abroad.
In late 1997, WTO Members agreed to open foreignfinancialservices markets to U.S.
suppliers of banking, securities, insurance andfinancialdata services. Access to cheaper
capital and insurance and more sophisticatedfinancialintermediation again brings down
the cost of doing business for all our companies involved in international trade.
Helps Ensure Long-term U.S. Economic Growth.
The countriesagreed to a more than one-third average reduction in tariffs around the world..
Some tariffs will be entirely eliminated in several industries in which the United States is highly
competitive. In addition, many non-tariff barriers are being eliminated or reduced. This round of
multilateral trade negotiations, unlike the seven that preceded it, is expanding export opportunities
in services as well as^goods, and in developing countries as well as in developed economies such
as Japan and Western Europe.
The Umguay Round is reducing bamers to exports in some of our most competitive industries,
leading to the creation of new jobs that pay above-average wages. On average, every billion
dollars of merchandise trade exports results in thousands of new jobs here at home. Workers in
these trade-related jobs earn, on average, 17 percent higher salaries than workers overall.
These reductions in trade barriers and the resulting expansion of trade are already having a
dynamic impact on the U.S. economy. Both the new export opportunities and the increased
competition thatflowfromlower tariffs induce businesses to invest more, thus stimulating longterm economic growth. We have see the increased competition spur technological innovation
which, in turn, will further add to growth.
Benefits Consumers by Effectively Raising Incomes
The lowering of tariffs has contributed to lower consumer prices for imported products, which, of
course, will benefit consumers. For example, trade barriers cost Americans as much as an
estimated $27 billion for textiles and clothing. In addition, greater global competition compels
domestic producers to become more efficient and to lower their prices, thus further benefitting
consumers. And since the expansion of trade that has stemmedfromthe Uruguay Round has
contibuted to the expansion of income, Americans [will] enjoy higher incomes and purchasing
power.
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Leveling the Playing Field for U.S. Farmers, Businesses, and Workers by Strengthening Trade
Rules.
The WTO has much stronger trade rules than the GATT, thus enabling U.S. workers to compete
with their foreign counterparts on equal terms. Our market is the most open in the world. We
want to make sure foreign markets are as open to our companies and exports as our market is to
foreign companies.
Fair and prompt resolution of trade disputes.
Nations that trade with each other naturally have disputesfromtime to time. One criticism of the
GATT had been that disputes take too long to resolve, and sometimes stay unresolved.
Companies or workers injured when a GATT member country had broken a rule often waited in
vain for an effective remedy. The dispute settlement process under the WTO has eliminated
the procedural delays that so oftenfrustratedU.S. workers and firms. It sets deadlines for panel
decisions and appeals. In addition, the WTO strengthens our ability to combat unfair trading
practices by allowing "cross retaUation." If a country is found guilty of committing an unfair
practice in a certain sector, we can respond with a measure in another sector, ensuring that the
United States can use the strongest means to ensure that the rules are respected.
Addressing Environmental Issues in International Trade
The Uruguay Round marked thefirststep towards recognizing the interdependence of economic
and environmental goals in world trade rules. The preamble to the World Trade Organization
recognizes sustainable development as a goal and establishes a work program to begin to deal
with these issues. Moreover, by fostering greater efficiency and higher productivity, increased
trade can actually reduce pollution by encouraging the growth of less polluting industries and the
adoption and diffusion of cleaner technologies.
Supporting Transitions to Democracy
Our work in the WTO supports U.S. foreign policy goals by improving the export opportunities
of formerly communist or authoritarian governments and thus facilitatinmg their transition to
democratic forms of govemment and market-oriented economic policies. Nations around the
world are rejecting centralized political and economic systems. Many of the developing nations
are renouncing inward-looking, protectionist policies in the interest of their own economic
development. Proliferating and sustaining the American values which characterize open and
democratic economics and societies requires that everyone have a fair shot at growth and
prosperity if they play by the same, market-based rules. Through the rules agreed in the Uruguay
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Round, we have and will continue to ensure that these countries will become members of the
WTO on the basis of an agreed-upon set of rules.
HOW THE WTO BENEFITS U.S. COMPANIES AND WORKERS
Market Access: New opportunities for U.S. exports, jobs and growth.
U.S. products are often subject to high tariffs many of our export markets. At a minimum, tariffs
can add to the cost of doing business; at the extreme, U.S. products can be shut out of a market
entirely because high duties can prevent trade from flowing. One goal of the Uruguay Round was
to increase access to markets by reducing or eliminating tariff barriers.
Overall, the Uruguay Round agreement cut tariffs on manufactured products by over one-third,
the largest reduction in modern history. As part of the negotiation, the U.S. proposed that duties
be eliminated in major markets in a number of sectors that are particularly important to
competitive U.S. industries. Duty elimination was agreed in ten sectors in which the U.S. is a
significant exporter.
•
Duties were eliminated immediately in some sectors (pharmaceuticals and toys); over
five-six years (until 1999/2000) for five other sectors (agricultural equipment, construction
equipment, medical equipment, beer and furniture); and over ten years for the remaining
three sectors (brown spirits, paper and steel).
•
The U.S. proposal to harmonize duties on chemical products, the largest U.S. industrial
export sector, was also successful. Harmonization is occurring largely over five to ten
years.
Since the elimination of tariffs in these sectors and harmonization of chemicals tariffs
began in 199S, U.S. exports of these products have grown by nearly 34% outpacing the
increase of all U.S. exports.
•
The pace of export growth during the same period in several sectors has been particularly
impressive:
-- exports in the chemical sector grew by nearly 37%,
~ exports of agricultural and construction equipment doubled; and
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-exports of steel and steel products increased by 55%.
Since the conclusion of the Uruguay Round, we have sought new or accelerated
elimination of duties in sectors of interest to U.S. exports. For example, an agreement
reached in 1997 expanded the scope of distilled spirits to include "white' distilled spirits
and accelerated the reduction of duties on brown spirits by 3 years.
Strengthening Global Trade Rules: Helping U.S. Companies and Workers Compete.
The Uruguay Round resulted in new and expanded rules and disciphnes. Through the WTO we
are empowered to monitor and enforce compliance with these rules- all to the benefit of the
United States as the the world's premier exporter and importer:
•
Dispute Settlement: [insert catch line here]
A swift, sure and effective mechanism to resolve trade disputes ensures that the United States has
recourse to a speedy remedy when foreign countries violate intemational rules and raise new trade
barriers. Since 1995, the U.S. has used dispute settlement XX times to enforce the new rules.
•
Subsidies: (insert catch line here]
Foreign subsidies can harm U.S. firms and workers by providing competitors in other countries
with unfair advantages in the global market place. U.S. companies should not have to compete for
customers against foreign govemment treasuries, just as those governments should not be
permitted to export their unemployment to our shores by propping up inefficient and uneconomic
producers who underprice or displace U.S. sales.
*
•
Since the entry-into-force of the WTO, we now have a system in which all WTO
Members are committed to the immediate or eventual discontinuation of both export
subsidies and local content subsidies.
*
•
We have used the WTO Subsidies Agreement to get other countries to reveal information
about their subsidies, and to question their consistency with WTO rules or the need to
maintain such practices. More than 65 countries have now been subject to WTO reviews
of their subsidy regimes.
•
We have also used WTO rules and disciplines to get other authorities to question the
legitimacy of their own subsidies. The European Commission is now reviewing certain
Spanish tax provisions which may subsidize exports for their compatibility with European
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subsidy rules, partly as a result of pressure exerted by the United States on the basis of
rules set forth in the WTO.
•
Import Safeguards: {insert catch line here]
The rules have enabled the United States to take temporary actions against surges in imports
without having to pay compensation. At the same time, the rules assure that other countries will
follow the same kind of objective and transparent procedures followed in the United States.
•
Product Standards and Regulations: [insert catch line here]
WTO rules are designed to ensure that product standards and regulations are not used to unfairly
keep out imports, while allowing each country to set its own standards for the protection of
human life, health and the environment.
•
We have aggressively used WTO rules, including dispute settlement, in this area to open
important export opportunities for U.S. agricultural and food products in Japan and Korea
and in helping to battle other unjustified trade barriers in Europe and other key overseas
markets. Helpred by these rules, over one-third of U.S. agricultural production was
exported in 1996, with a value of over $60 billion
*
•
Both the Agreement on Technical Barriers to Trade and the Agreement on Sanitary and
Phytosanitary Measures require governments to publish announcements when they plan to
implement new regulations, allow interested parties to provide comments, and to have
those comments considered before a final regulation is adoption. Obligations such as
these have helped to identify potential trade barriers before they are in place.
•
Intellectual property rights—New rules to safeguard American ingenuity.:
Creativity and innovation are among America's greatest strengths. Americanfilms,music,
software and medical advances are prized around the globe. The jobs of thousands of workers are
dependent on the ability to sell these products abroad.
*
•
The Uruguay Round agreement established rules for the protection and effective
enforcement of intellectual property rights, including the protection of Americans from
global counterfeiting of their creations and innovations.
>
We have used the enforcement mechanisms in the agreement to ensure that our trading
partners have established and complied with rules that protect the fruits of American
creativity around the world.
8
o
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•
Services—International rules to govern a key part of our economy:
For thefirsttime, the services sector, which accounts for 60 percent of the U.S. economy and 70
percent of our jobs, is covered by legally enforceable rules for cross border trade and investment.
•
The U.S. leads the world in trade in services with over 5236 billion in exports annually. It
is the fastest growing sector in our economy and provides the greatest number of new
jobs.
•
Services get our exports to market. Nothing moves in intemational trade without the
contracting,financing,insurance, transport and wholesale and retail sale of our products in
overseas markets. And, our services providers are some of the most competitive
internationally.
•
Commitments made by our trading partners thus far provide for good access and fair
treatment for U.S.firmsin overseas markets.
•
We continue tofightfor an early opportunity to expand our competive edge. The next
round of negotiations in all services sectors, beginning in 2000, is expected to result in
even more commercially meaningful market access for U.S. services providers.
•
Investment-iicwovxn^ trade barriers embodied in foreign investment rules
Often, countries have erected barriers to trade in connection with their investment policies. Such
barriers can include requiring imports to contain a specified amount of local content or, through
performance requirements, allowing imports only when balanced by exports from the importing
country. Reducing these trade barriers helps keep U.S. manufacturing jobs at home and allows
U.S.firmsto be more competitive in overseas markets.
-
The rules concluded in the Uruguay Round help assure our companies that they will be
able to run their operations in the most economic and cost-effective way, keeping foreign
markets open for U.S. goods and services exports and avoiding forced investment.
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•
Agriculture-Opemrjg Markets for U.S. Exports
U.S. farmers are the envy of the world, but too often they were not able to sell the products of
their hard labor abroad, because the old GATT rules did not effectively limit agricultural trade
barriers. Many countries have kept our farmers out of global markets by limiting imports and
subsidizing exports. These same policies have raised prices for consumers around the world.
•
The Uruguay Round agreements reformed policies that distort the world agricultural
market and international trade in farm products. By curbing policies that distort trade, the
World Trade Organization has opened up new trade opportunities for efficient and
competitive agricultural producers like the United States.
•
Environment--Recognizing the Relationship Between Environmental and Trade Issues
World leaders agree that we must recognize the interdependence of economic and environmental
goals in trade negotiations. To this end, the WTO embraces the goal of promoting sustainable
development; providing a more "transparent" dispute settlement process, ensuring public scrutiny;
ensuring our own efforts at preserving the environment are not impeded; and establishing a
tangible commitment to a new initiative in the WTO on trade and the environment.
•
Customs Issues—Getting the Goods Across the Border:
Fair, equitable, and transparent customs rules and procedures and their timely administration- are
vital for U.S. exports to be competitive in world markets. Rules agreed during the Uruguay
Round have imposed both discipline and transparency on the various expensive requirements and
delays which U S. exporters have faced at the borders of our trading partners.
»
•
For example, the value of a good is determined at the border, and tariffs and other charges
are assessed against that value. To ensure that such tariffs and charges are no unfairly
inflated, U.S. exporters need to be sure that their goods are properly valued. The
Uruguay Round Agreement on Customs Valuation sets rules for the fair and transparent
valuation of products at the border.
A number of countries require that, as a condition of importation, goods must be
inspected prior to shipment by a private company in the country of export. Such an
inspection can include the quality and quantity of the goods to be exported, verification of
price, customs classification and inspection of documents. Unfortunately, such
"preshipment inspection" can lead to unnecessary delays, additional costs, and the erection
of other barriers against U.S. exporters, including the opportunity for corruption to
flourish.
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The Uruguay Round Agreement on Preshipment Inspection (PSI) provides rules in this
area, including requiring transparent procedures on the part of the private inspection
entities and other reforms aimed at minimizing costly delays and arbitrarily high
assessments of customs duties.
Another way to administratively impede theflowof goods is to require an import license
for imports and to place restrictive requirements on the grant of those licenses. The WTO
Agreement on Import Licensing Procedures provides rules to ensure the transparency of
the licensing rules, to minimize delays in the granting of licenses and to ensure that the
licensing procedure itself does not become a barrier to trade.
Determination of the origin of a good for customs union is also important, particularly for
goods that could be eligible for preferential treatment (i.e. NAFTA) and subject to other
regulations. The WTO Agreement on Rules of Origin established a number of procedural
rules primarily related to transparency and timeliness in decision making by customs
authorities. The obligations of this agreement are largely modeled after the regime already
utilized for many years by the U.S. Customs Services. With this agreement in place, U.S.
exporters can have confidence that they will receive the same treatment in foreign markets
that we give to companies exporting to the United States.
•
Government Procurement—[insert catch line here]
Governments are often large purchasers of goods and services, although in many countries such
purchases are not conducted in a transparent manner or with clear rules and requirements.
»
-
The WTO Agreement on Govemment Procurement (GPA) requires GPA signatories to
follow non-discriminatory, transparent and open procurement procedures. The
agreement, which applies to over $200 billion worth of procurements by both central and
sub-central government entities and government enterprises, gives competitive U.S.
suppliers access to procurements markets for both goods and services, including
construction services, in many major markets.
For many years, U.S. companies did not face a level playingfieldin procurements made in
major sectors in other countries. With the strengthened procurement rules, the United
States suceeded in persuading one of our major trading partners to reform its procurement
system.
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QUESTIONS AND ANSWERS
Q: What is the World Trade Organization?
A: Following World War II, the major economic powers of the world, led by the United States,
recognized that high trade barriers hindered economic development and growth. In order
to have a gloval set of rules to govern international trade and help lay the ground workd
for the expansion of trade and economic growth, they created the General Agreement on
Tariffs and Trade (GATT), a set of global rules for intemational trade. As a result of the
Umguay Round negotiations, these rules have been substantially expanded and improved,
and extended to most trading nations on an equivalent basis. In light of the comprehensive
nature of the new rules, the World Trade Organization (WTO) was created to support
member governments as they oversee and enforce the new rules. These rules substantially
discipline and reduce foreign government practices that have restricted and distorted trade.
The WTO also has procedures for negotiating additional reductions of trade barriers and
for the prompt and effective settlement of disputes in all of the covered areas.
Q: Does the U.S. lose sovereignty with the WTO?
A: No. Nothing in the WTO relinquishes our sovereignty. The decision of the United States to
enter into an agreement that expands trade and creates jobs is an exercise in sovereignty,
not a surrender of it.
What does happen is that workers and companies around the world compete on a level
playing field, using the same rule book - and that helps protect American jobs.
Q: How do the rules of the World Trade Organization affect our health or safety standards?
A: The World Trade Organization does not lower our health or safety standards. It ensures that
other nations cannot block our exports by using standards not based on scientific
evidence.
Q: How does the World Trade Organization affect the environment?
A: The World Trade Organization does not impede our efforts to protect our environment, nor
does it impede efforts to reach intemational agreement on environmental issues that affect
the entire world, such as ozone depletion, the greenhouse effect, or rain forest destruction.
12
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When negotiators began the Umguay Round discussions in 1986, there was little emphasis
on environmental issues in trade negotiations. World leaders now agree that we must
recognize the interdependence of economic and environmental goals in trade policy. The
text establishing the World Trade Organization acknowledges environmental concerns and
objectives in certain specific respects. Moreover, the United States has proposed major
initiatives on trade and the environment as a top-priority under the WTO.
Q: Will there be job shifting as a result of increased trade? What happens workers during that
transition?
A: No. Increased trade results in increased jobs for Americans. With any economy that is
growing, potential rewards are great, but growth also leads to job dislocations. [The new
world trade agreement will result in substantial job creation for the United States, but we
must help those men and women who have lost their jobs for whatever reason, defense
conversion, corporate downsizing, or trade. The President is working to establish a
program of worker retraining and adjustment, which is an essential element of his
economic strategy. ] note: language in brackets was usedfor the UR white paper.
Probably needs to be updated.
Challenge is the partner to change. U.S. workers are the best in the world and they can meet the
challenges of competing in the global economy if we open new markets and our workers
can compete on a level playipgfield.That is what the World Trade Organization helps to
accomplish. It's good for our workers, it's good for America.
Q: How does the WTO affect consumers?
A: The WTO agreements are a big plus for consumers. The substantial reductions in trade
barriers contributes to lower prices and a greater variety of goods. From tropical nuts to
French wines to Japanese stereo equipment, U.S. consumers enjoy the benefit of greater
availability of foreign products. At the same time, greater competition lowers prices on
domestic products. This benefits not only individual consumers buying clothing or food,
but also businesses buying parts. That, in tum, makes those companies more competitive,
and helps protect U.S. jobs.
13
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Trade and Other States for SOth Anniversary of WTO
Since 1950, global goods exports have increased from roughly $60 billion ($58.7 billion, to be
precise) to $5.3 trillion in 1997. Even when inflation in export prices is removed, the growth of
global trade is quite staggering. In constant 1997 dollars, exports increased by over 1400% in the
47 years (from $345.8 billion to $5.3 trillion or 1433%).
Global exports of services in 1997 added another $ 1.3 trillion and are now equal to about one quarter
of the value of goods trade. Global exports of goods and services thus totaled $6.5 trillion in 1997.
(For the United States, goods exports were $678 billion in 1997 and services $253 billion, or 37%
the value of goods exports. The $931 billion in U.S. goods and services exports in 1997 represented
one-seventh of total global exports - $931 billion is 14.3% of $6.5 trillion.)
Trade growth, due in significant part to 50 years of progress in the removal of barriers, has also
regularly exceeded and helped stimulate growth of global production. In last year alone (1997), the
WTO estimates that global goods exports expanded by 9.5% in real terms while global production
was up by 3% in real terms.
Taking a longer term perspective, the expansion of global exports since 1960 has exceeded goods
export growth by more than two and one half times: in constant dollar terms global output expanded
by nearly 300% (a fourfold increase), while global goods exports expanded 800% (a 9 fold increase).
Stated differently, the average annual compound growth rate for real gross global product over the
37 years was 3.8% while the rate for real goods exports was 6.1%.
Globally, export-led growth in production was sorely needed for global living standards to improve.
Global population nearly doubled (up 92%) between 1960 (3.01 billion) and 1997 (5.85 billion).
However, the fourfold increase in global output over the same period —from$9.3 tillion in 1960 to
$36.9 trillion in 1997 (in constant 1997 dollars; 1997 GDP calculated using purchasing-power-parity
exchange rates) has allowed average real per capita incomes in the world to roughly double (from
$3089 in 1960 to $6308 in 1997). (Please note, against this standard, U.S. per capita GDP, at
$30,160 in 1997, was nearly 5 times above the global average in 1997).
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gjOlS
PERFORMANCE OF THE U.S. ECONOMY, 5/11/98
GDP: Real GDP up 4.2% infirstquarter of 1998, 3.8% in 1997. Expansion in its 7th year. At
2.9% per year since '92, U.S. growth nearly twice as fast on average as other G-7 countries (1.5%).
EMPLOYMENT/JOB GROWTH: Unemployment rate is 4.3% (Apr. '98). Rates are lowest in
28 years. Rates in France 12%, Germany 10% and EU 10%. U.S. employment is up 15.0 million
(14.957 million) since 1992. Manufacturing jobs are up over half a million (617 thousand).
Overall job growth in other G-7: roughly one half million. According to CEA, two-thirds of job
growth occurred in the higher paying job categories (Feb '94 to Feb '96).
INFLATION: Consumer prices up by 1.4% over last 12 months (3/97 to 3/98). Producer prices
down 1.8% over last 12 months (3/97 to 3/98). At less than 7%, the misery index (unemployment
+ inflation) is lowest of any major economy and the lowest index in the U.S. since the l96Q's.
INDUSTRIAL PRODUCTION/PRODUCTIVITY: Industrial production 28% higher than in
'92. Compares to 1 gain in Japan and 6% increase in Germany. Strong investment has expanded
%
industrial capacity at 3.5% a year, fastest rate since ^O's. Since '92, manufacturing productivity
up nearly 4% per year. Total private sector productivity gains, modest earlier in recovery (0.2%)
have picked up, growing 2% annually (last 2 years), fueling recent wage gains.
EARNINGS/INCOME: Real weekly earnings up 5.0% since 1992 (to 2/98). Real hourly
earnings up 4.2%. Gains may be understated by possible inflation overstatement. After 14 years,
largest percentage income gains since '93 went to lowest income quintile. Between '93 and '95
(most recent), poverty rate fellfrom15.1% to 13.8%. Long-term unemployment trended down
this year. U.S. per capita real income world's highest: 22% above Japan, 33% above Germany.
DOMESTIC INVESTMENT: Total domestic investment in 1997 reached $1.2 trillion. Real
business fixed investment up by 8.0% in '94, 9.0% in '95, 9.2% in '96 and 9.9% in '97 (and now
more than 10.5% of GDP- highest level since 1950s).
4
FOREIGN DIRECT INVESTMENT: U.S. is world's largest recipient of FDI in 96 ($85
billion). Over 4.9 million U.S. jobs supported by foreign affiliates in the U.S. in 1995 (44% of this
in manufacturing). U.S. MNCs accounted for 66 % of total U.S. exports in 1994 and 38% of U.S.
imports. Two thirds of the $797 billion stock of U.S. FDI abroad is in industrialized countries.
BUDGET SURPLUS: CBO projects surplus for FY98 between $43 billion and $63 billion, first
surplus since 1969, 6 straight year of budget improvement (deficit decline). The deficit for FY97
was $21.9 billion or 0.3% of GDP.
th
CONSUMER CONFIDENCE: index for April (136.7), one of the highest in past 30 years.
TRADE DEFICIT: Goods and services deficit (1.4% of GDP in '97; 3.3% in '87). Goods alone
(2.5% in '97; 3.4% in '87). U.S. ranked world's most competitive major economy for past 4
years by the World Economic Forum and world's most competitive country for past six years by
Intl. Institute for Management Development. With US. economy at/near full employment. Us
recent growth record unmatched by other major countries; with domestic investment and
employment booming, recent increases in trade deficit are more a sign of strength than source of
weakness.
�05/12/98
TUE 16:10 FAX
il019
SUMMARY OF FEBRUARY TRADE RELEASE FOR AMB. BARHSEFSKY
The U.S. goods and services trade deficit was $12.1 billion in February, up somewhat
from January's level of $11.6 billion. Compared to a year early, the $23.7 billion dollar
deficit in 1998s first two months was 10.4% higher than 1997's corresponding figure of
$21.5 billion. If this increase were to hold for the full year 1998, the goods and
services trade deficit would rise from $113.7 billion in 1997 to $125.5 billion in 1998.
The trade deficit, however, is widely expected to much higher than that this year.
,
•
Year-to-date goods and service exports are up 5.9% this year compared to last. The
corresponding import increase is 6.5%.
Points of note highlighted by Commerce in the data this month:
- Services imports in February were at a monthly record ($14.9 billion)
~ Goods expons in Februaiy were at their lowest level since February 1997 ($54.3
billion), due to weak demand in Asia.
The goods trade deficit in February ($17.5 billion. Census) is at an all time high.
•
Product infonnation for U.S. exports:
- Year-to-date, exports of manufactures are up 8.5% compared to a year earlier;
- Ag exports are down 4.0%;
- high tech exports are up 11.5% (and the surplus in high tech trade, at $5.6 billion in the
year's first 2 months, is more than 20% higher than last year).
•
Clearly, Asian economic problems (together with strong U.S. economic growth) appear
to be largely responsible for the deficit increase. The year-to-date goods trade deficit with
the Pacific Rim countries, excluding Japan and China, is up from $1.9 billion in 1997 to
$4.9 in 1998. (This more than accounts for the overall $2.3 billion increase in the goods
and services deficit, year-to-date.) Exports to the region are down 8.3% and imports are
up 8.3%. For Korea alone, the year-to-date balance has shiftedfroma surplus of $0.7
billion in 1997 to a deficit of $1.4 billion in 1998, largely attributable to a 44% decline in
year-to-date exports.
•
Other bad new in Asia: With Japan, the U.S. year-to-date trade deficit hasrisenfrom
$8.5 billion in 1997 to $9.6 billion in 1998 (up 12.8%). Exports are down 7.6% and
imports are up 1.5%. With China, the U.S. year-to-date trade deficit hasrisenfrom$7.0
billion to $7.7 billion. Exports are up 22.8% and imports are up 12.3%.
On a positive note: With Mexico, the year-to-date deficit has droppedfrom$2.4 billion in
1997 to $1.4 billion in 1998 (down 44%). Exports are up 23% and imports are up 10.4%.
For Latin America, excluding Mexico, the year-to-date trade balance has shiftedfroma
surplus of $0.2 billion in 1997 to a surplus $1,9 billion in 1998. Exports are up 14% and
imports are down 6.0% (probably in part due to lower petroleum import prices).
•
There is little change in the trade balances with Canada and the EU so far this year. The
year-to-date U.S. trade deficit with Canada decreasedfrom$3.2 billion in 1997 to $3.0
billion in 1998. Exports are up 3.6%; imports are up 2.7%. The year-to-date U.S. trade
deficit with the EU likewise declinedfrom$0.7 billion in 1997 to $0.3 billion in 1998.
Exports are up 12.1%; imports are up 10.2%.
�05/12/93
TUE 16:12
FAX
@021
U.S. TRADE DATA — THROUGH FULL YEAR 1997
(In Billion* ef Dollars)
IMS
WORLD
3/11/9B
H1992 1
rm
BalBnca
Export*
OOODS ALONE (BOP)
WORLD
1982
1997
1996
$617.7
$848.8
$932.3
9.8%
50.9%
Impons
S655.9
$959.9
$1,046.1
9.0%
59.5%
Chsnga
VS1966
Chsnge
vt 1992
S E R V I C E S ALONE
WORLD
1882
1666
1997
Chang,
vs 1866
Change
vs 1992
$27.4
Balance
($96.1) ($191.2) ($198.9)
($7.8)
stance
$57.8
$80.1
885.2
$5.1
Exports
$440.2
$612.1
$678.3
10.8%
64.1%
Ecerts
$177.3
$236.8
$254.0
7.3%
43.2%
imports
$536.3
$903.2
$877.3
9.2%
63.6%
.'raons
$119.5
$156.6
$166.8
7.8%
41.2%
1992
1966
1997
1992
1686
1997
$19.7
$28.1
$43.1
$60.6
$21.9
$57.1
($8.1)
-5.8%
32.4%
$23.4
$32.6
$35.1
7.9%
49.9%
MANUFACTURING
Bslonce
($66.1)
($133.1) ($137.3)
($102.8)
Chsnoe e n s n e e
VJ 1892
wi 1986
($4.2)
AGRICULTURE
($71.2)
Exports
$368.2
$529.7
$591.2
12.5%
Impons
$434.3
$658.8
$728.6
10.6%
67.8%
1992
1998
1967
Utanga
VS 1866
SjtolKB
60.6%
tnsnpe
VS 1962
HIGH T E C H
Balance
$35.2
$24.5
$32.0
$7.5
Export*
$107.1
$164.9
$179.3
16.8%
$71.9
$130.4
$147.3
13.0%
1666
1897
i 1992
104.9%
1963
PETROLEUM
($3.2)
67.4%
Imports
'rr.aom
CANADA
Chsnge
Balance
Exports
Imports
($83)
$90.2
$98.6
($21.7) ($16.6)
$134.2 $151.5
$155.9 $168.1
MEXICO
1«92
B»lanca
$5.4
Exports
Imports
1866
1997
WB198G
$6.1
12.8%
7.8%
cnange
VS18B2
($8.3)
68.0%
70.6%
Change Change
vs 1982
vs 199«
$6.9
CKinge
vslSBS
Saianea
61.1%
:
($19.9)
$71.4
26.7%
76.8%
$74.3
$86:8
15.6%
1M2
1998
1997
($2.9)
<$39.2)
$2.3
Icrnnge ICftenge 1
vs 1996
vs 1962 1
($49.4)
$47.8
$97.2
($47.6) ($55.7)
$67.6 ^ 7
$115.2 $121.4
199,
1997
5.4%
-1.0%
C W
VS1996
($8.1)
-2.9%
5.4%
46.4%
40.0%
Chance
vs'
($8.3)
37.5%
24.9%
Change I C h w ^ e 1
v* 1696 1 vs 1992 1
Salance
SBDfl*
$7.5
$12.0
$12.8
Imsorts
$25.7
$51.5
$62.6
1992
143.9% 115.0%
Change ' Change
vs 1992
VS1SB3
1997
1992
71.7%
$35.2
1998
CHINA
($16.1)
$56.8
Chans*
VS1998
r>asrts
V*1693
$40.6
$72.1
1962
($5.8)
$3.1
$10.2
$72.8
JAPAN
50.8%
ensnge
$9.6
$51.6
($14.5)
NAFTA
1 1967
Change
VS1992
iuanat
|$17. j
S
1888
vs 1996
1996
1997
PACIFIC R M
6.8%
21.4%
71.4%
143.6%
C h a n g . 1C h e w e
v» 1886
vs 1
($28.1)
($21.9]
Saanea
($15.8)
($14.7)
($16.7)
$130.8
$191.0
($31.1)
$222.8
$8.1
Exports
16.7%
70.4%
66.9%
E.»=oru
$69.2
$108.6
$115.4
6.3%
66.8%
Imports
$133.7
$230.2
$253.9
10.3%
89.9%
68.0%
Imsons
$85.1
$123.3
$131.1
6.3%
54.1%
1M2
1996
1897
1992
1966
1967
Balanca
LATIN A M E R I C A
cnange
vs199«
Change "
VS1992
Balance
$1.6
$3.1
$9.4
$6.3
$7.7
Export*
$36.1
$52.6
$63.0
19.8%
79.4%
Imports
$33.5
$49.5
$53.7
8.3%
EU1G
80.1%
Note: Latin America does not include Mexico; Pacific Rim does not include Japan or Chine
balance
$6.5
($15.2)
($16.7)
($1-0)
Chang*
VS1996
($15)
$0.2
Chanoa
($23.2)
$107.7
tff.oorts
$127.7
$140.8
10.3%
30.7%
$101.3
$142.9
$157.5
10.2%
66.6%
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Michael Waldman
Description
An account of the resource
<p>Michael Waldman was Assistant to the President and Director of Speechwriting from 1995-1999. His responsibilities were writing and editing nearly 2,000 speeches, which included four State of the Union speeches and two Inaugural Addresses. From 1993 -1995 he served as Special Assistant to the President for Policy Coordination.</p>
<p>The collection generally consists of copies of speeches and speech drafts, talking points, memoranda, background material, correspondence, reports, handwritten notes, articles, clippings, and presidential schedules. A large volume of this collection was for the State of the Union speeches. Many of the speech drafts are heavily annotated with additions or deletions. There are a lot of articles and clippings in this collection.</p>
<p>Due to the size of this collection it has been divided into two segments. Use links below for access to the individual segments:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+1">Segment One</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+2">Segment Two</a></p>
Creator
An entity primarily responsible for making the resource
Michael Waldman
Office of Speechwriting
Date
A point or period of time associated with an event in the lifecycle of the resource
1993-1999
Identifier
An unambiguous reference to the resource within a given context
2006-0469-F
Extent
The size or duration of the resource.
Segment One contains 1071 folders in 72 boxes.
Segment Two contains 868 folders in 66 boxes.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
WTO [World Trade Organization]: Benefits of FT [Free Trade]
Creator
An entity primarily responsible for making the resource
Office of Speechwriting
Michael Waldman
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 30
<a href="http://clinton.presidentiallibraries.us/items/show/36404"> Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763296">National Archives Catalog Description</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0469-F Segment 2
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/3/2015
Source
A related resource from which the described resource is derived
7763296
42-t-7763296-20060469F-Seg2-030-008-2015