U.S. Chamber’s Donohue Makes the Case for More Trade, Releases Study

May 17, 2010

The current state of world trade can be summed up as dazzling potential and lost opportunity, Chamber President and CEO Tom Donohue told a National Press Club audience in Washington, D.C.

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

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

Despite the record of success on trade, Donohue noted that “behind the border” protectionist barriers being put in place by government and political leaders at home and abroad are slowing down the global business community’s ability to create jobs, lift people out of poverty, raise living standards, and foster greater understanding and stability among nations. “There are politicians and special interests working to limit America’s ability to expand trade—and this defies common sense,” Donohue said.

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

China Protectionism
Donohue singled out China for its use of industrial policies and an array of regulatory tools, particularly its “indigenous innovation” strategy, which requires that a product submitted for a government contract be produced by an enterprise that owns the intellectual property (IP) in China, has a trademark owned by a Chinese company and is registered in China, embodies a high degree of innovation, and is certified by the Chinese National Certification Commission. The effect, Donohue said, is to “restrict market access and deny a level playing field for foreign enterprises and investors.”

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

Donohue also criticized the U.S. for its own protectionist policies, including the Buy American provisions included in the 2009 Recovery Act that delayed shovel-ready infrastructure projects as local governments sought legal advice on how to comply. He also pointed to the ongoing standoff over U.S.-Mexico cross-border trucking. Mexico has imposed $2.4 billion worth of retaliatory tariffs on U.S. manufactured and agricultural products at a cost of 25,000 jobs because of the United States’ refusal to allow Mexican trucks to cross the border.

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

Donohue stressed that when it comes to trade, the U.S. is falling behind. On May 19, the EU will sign an FTA with Colombia. The EU concluded negotiations for an FTA with South Korea in November 2009. Canada is scheduled to sign an FTA with Panama on May 14, and its parliament is poised to give final approval to an FTA with Colombia as early as June. “With unemployment near 10%, it is inexcusable for Congress and the administration to be sitting on three excellent FTAs,” Donohue said. “If we let our own agreements with these countries languish, we will be consigning American companies to a major competitive disadvantage and destroying U.S. jobs.”

Read the speech.

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