Category: Press Releases and Statements

Statement Of The National Foreign Trade Council Board Of Directors On Offshore Outsourcing

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The National Foreign Trade Council Board of Directors notes the growing controversy in theUnited States over the movement of jobs offshore. The Board does not view this as a new phenomenon but rather as a continuation of a forty-year trend of global integration that has provided net benefits to the U.S. economy. What is new is that the offshore outsourcing of jobs has moved beyond the manufacturing sector into a growing variety of service sectors, particularly information technology.

The National Foreign Trade Council views this trend as an inevitable component of growing global economic integration. American companies are under increasing competitive pressure to cut costs and improve productivity, and in many cases one way to do that is to transfer some functions outside the United States. While this produces some job reductions here, it also has other, beneficial effects – more competitive companies, lower-priced goods and services for American consumers, and, to the extent offshore outsourcing is part of an overall foreign investment strategy, job creation as well.

These gains, however, are long term and diffuse while the losses tend to be short term and specific. The result is the public controversy we are now experiencing. It is the Council’s position that attempting to stop or limit offshore outsourcing would be counter-productive. It would make our companies less competitive and, as a result, would ultimately cost us even more jobs.

A wiser approach is to adjust the circumstances that lead to offshore outsourcing and deal with the immediate consequences for those that are dislocated. To that end, we support a four part approach:

1) Life-long learning; adjustment assistance.

While there is substantial evidence that foreign trade and investment produce more jobs and growth here as well as elsewhere, it is no secret that the new jobs trade creates are rarely taken by the same people who have lost theirs as a result of trade.

Government policy should address the needs of two groups:

  • Those who have lost their jobs and have limited opportunities for reemployment because their relevant skills are limited and/or their communities provide few opportunities.
  • The next generation of workers – our children – who will confront a working environment that will require more sophisticated skills and more agility and flexibility than any preceding generation has confronted.

To address these needs, we support expansion of the existing trade adjustment assistance program, including covering service workers, and we urge Congress and the Administration to devote more resources to education, particularly in math, science and engineering, and training to better equip future generations with the tools they need to deal with the rapidly changing work environment.

2) Incentives to stay here.

The reasons companies move off shore are largely economic. The creation of a more business-friendly climate here in the United States could alter the calculations companies make and lead to more decisions to maintain facilities here. A number of proposals are pending in the Congress in the tax and regulatory reform areas that could be helpful. In the tax area, we favor legislation that will provide tax relief to businesses in ways that enhance their competitiveness but do not discriminate between companies that operate primarily in the U.S. and those that have substantial foreign operations. Our tax laws should not disadvantage U.S. companies competing in the international marketplace. We also support Congressional action on tort reform and class action litigation in order to gain better control of onshore companies’ rapidly growing litigation costs.

3) Staying ahead.

America‘s strength has always been innovation – our originality coupled with our ability to run faster and stay ahead of our competition. Many of the innovations that have made America the world’s technology leader began with government support, often coming from the Department of Defense. We endorse public policies that encourage innovation, including expanded government support for R&D that will create new, job-providing industries in biotechnology, nanotechnology, and other sectors we have not even contemplated. We also endorse the President’s manufacturing initiative and urge full funding of the proposals contained in that plan.

4) Forward-looking US trade policy.

The U.S. remains one of the most globally competitive economies worldwide. Two central factors are behind this strength: the openness of our economy to international trade and investment and a trade policy that maintains open markets and advances open, rules-based trade in markets overseas through ongoing trade liberalization efforts. It is essential that the US continue to lead in opening markets and establishing transparent, non-discriminatory rules to govern trade and investment. To that end, we reaffirm our support for the Doha round of multilateral trade negotiations as well as for high quality bilateral and regional free trade agreements.

Taken together, we believe these approaches are an effective way to deal with offshore outsourcing constructively as an inevitable consequence of the global economic integration that has been instrumental in our country’s economic growth. We urge Congress and the Administration to consider these approaches and to avoid short-sighted protectionist responses.

Statement Of The National Foreign Trade Council Board Of Directors On Offshore Outsourcing

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The National Foreign Trade Council Board of Directors notes the growing controversy in theUnited States over the movement of jobs offshore.  The Board does not view this as a new phenomenon but rather as a continuation of a forty-year trend of global integration that has provided net benefits to the U.S. economy.  What is new is that the offshore outsourcing of jobs has moved beyond the manufacturing sector into a growing variety of service sectors, particularly information technology. 

 

The National Foreign Trade Council views this trend as an inevitable component of growing global economic integration.  American companies are under increasing competitive pressure to cut costs and improve productivity, and in many cases one way to do that is to transfer some functions outside the United States.  While this produces some job reductions here, it also has other, beneficial effects – more competitive companies, lower-priced goods and services for American consumers, and, to the extent offshore outsourcing is part of an overall foreign investment strategy, job creation as well.

 

These gains, however, are long term and diffuse while the losses tend to be short term and specific.  The result is the public controversy we are now experiencing.  It is the Council’s position that attempting to stop or limit offshore outsourcing would be counter-productive.  It would make our companies less competitive and, as a result, would ultimately cost us even more jobs.

 

A wiser approach is to adjust the circumstances that lead to offshore outsourcing and deal with the immediate consequences for those that are dislocated.  To that end, we support a four part approach:

 

1) Life-long learning; adjustment assistance. 

 

While there is substantial evidence that foreign trade and investment produce more jobs and growth here as well as elsewhere, it is no secret that the new jobs trade creates are rarely taken by the same people who have lost theirs as a result of trade.

 

Government policy should address the needs of two groups: 

 

  • Those who have lost their jobs and have limited opportunities for reemployment because their relevant skills are limited and/or their communities provide few opportunities.  
     
  • The next generation of workers – our children – who will confront a working environment that will require more sophisticated skills and more agility and flexibility than any preceding generation has confronted.    

To address these needs, we support expansion of the existing trade adjustment assistance program, including covering service workers, and we urge Congress and the Administration to devote more resources to education, particularly in math, science and engineering, and training to better equip future generations with the tools they need to deal with the rapidly changing work environment. 

 

2) Incentives to stay here. 

 

The reasons companies move off shore are largely economic.  The creation of a more business-friendly climate here in the United States could alter the calculations companies make and lead to more decisions to maintain facilities here.  A number of proposals are pending in the Congress in the tax and regulatory reform areas that could be helpful.  In the tax area, we favor legislation that will provide tax relief to businesses in ways that enhance their competitiveness but do not discriminate between companies that operate primarily in the U.S. and those that have substantial foreign operations. Our tax laws should not disadvantage U.S. companies competing in the international marketplace.  We also support Congressional action on tort reform and class action litigation in order to gain better control of onshore companies’ rapidly growing litigation costs. 

 

3) Staying ahead. 

 

America’s strength has always been innovation – our originality coupled with our ability to run faster and stay ahead of our competition.  Many of the innovations that have made America the world’s technology leader began with government support, often coming from the Department of Defense.  We endorse public policies that encourage innovation, including expanded government support for R&D that will create new, job-providing industries in biotechnology, nanotechnology, and other sectors we have not even contemplated.  We also endorse the President’s manufacturing initiative and urge full funding of the proposals contained in that plan.

 

4) Forward-looking US trade policy.  

 

The U.S. remains one of the most globally competitive economies worldwide.  Two central factors are behind this strength:  the openness of our economy to international trade and investment and a trade policy that maintains open markets and advances open, rules-based trade in markets overseas through ongoing trade liberalization efforts.  It is essential that the US continue to lead in opening markets and establishing transparent, non-discriminatory rules to govern trade and investment.  To that end, we reaffirm our support for the Doha round of multilateral trade negotiations as well as for high quality bilateral and regional free trade agreements.    

 

Taken together, we believe these approaches are an effective way to deal with offshore outsourcing constructively as an inevitable consequence of the global economic integration that has been instrumental in our country’s economic growth.  We urge Congress and the Administration to consider these approaches and to avoid short-sighted protectionist responses.

Miami FTAA Agreement Should be Only the Beginning

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Statement by Bill Reinsch, President, National Foreign Trade Council

 

Washington DC – In the following statement, Bill Reinsch, President of the National Foreign Trade Council, called on the Western Hemisphere trade ministers to use the framework agreed upon at the conclusion of yesterday’s Miami meetings to move forward toward real progress on the Free Trade Area of the Americas by 2005. 

 

“Establishing this framework for the FTAA gives ministers the leverage they need to move on with this agreement, which has the potential to greatly impact the economies of an entire hemisphere.  While the new agreement unfortunately appears to scale back some of the original goals of the FTAA, we hope that it will be sufficient to keep the negotiations going so that a more ambitious final agreement can be reached before the deadline in 2005.

 

“It is apparent, however, that all of us, including business, industry, and agriculture throughout the hemisphere, have a lot of work ahead of us if the FTAA is to fulfill its original promise.  The NFTC encourages the trade ministers to maintain their strong relationships with the private sector, as we believe business can play a key role in helping to bring the negotiations to a successful conclusion and in ensuring that the final FTAA framework is economically viable.”

 

The National Foreign Trade Council is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves 400 member companies through its offices in Washington and New York.

 

Remarks of Lee R. Raymond, Chairman & CEO, ExxonMobil in acceptance of the NFTC 2003 World Trade Award, November 10, 2003

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“Champion of Free Trade” Award

 

Remarks by Lee R. Raymond

Chairman and Chief Executive Officer

NFTC Award – New York City

November 10, 2003

 

I am truly delighted to be recognized as the recipient of the “Champion of Free Trade” award. In past years this award has been given to several prominent figures in the movement for a more open and liberal trading world. I am honored to be asked to stand among them.

 

The National Foreign Trade Council itself has much to be proud of. For nearly 90 years the NFTC has been a strong proponent of more open trade, and the fundamental wisdom of that advocacy is reflected in the enormous expansion of the world’s prosperity.

 

Yet this is also a challenging time for those of us who support increasingly liberal global trade and investment policies.

 

The Doha round in Cancun provided a stark reminder of the enormous obstacles that must be overcome if trade and investment liberalization is to continue. Governments were unable to find common ground and it remains unclear when or even if a major trade liberalization round can be reinitiated.

 

In Cancun, public advocacy groups were again active in their opposition to trade and investment liberalization. Their arguments may well have influenced some government representatives, and their opposition represents an ongoing challenge to further liberalization.

 

And of course, much has been said publicly about the need for China to advance reforms if it is to faithfully implement the commitments it made when it joined the World Trade Organization. This was the subject of a lengthy letter to President Bush from the President’s Export Council, of which I am a member. Achieving reforms in the areas mentioned in the letter are fundamental to expanding one of the world’s largest and growing markets.

 

So we continue to face a challenging environment in which to pursue trade and investment liberalization, with opposition coming from some commercial sectors, a number of NGOs and from countries slow or even unwilling to progress the changes needed to achieve the wider economic benefits from a more open and liberal system.

 

But the challenges should motivate rather than discourage us.

 

There will clearly be a lot of discussion about what advocates of continued liberalization should do next.  I would suggest a number of steps are needed.

 

The first step, it seems to me, is to ensure we prevent further erosion in the trade and investment system that has been painstakingly created over many decades.

 

As one example, we should be vigilant when countries are suggested as possible targets of sanctions. The NFTC has long understood this and has spoken out against the imposition of unilateral economic sanctions as a foreign policy weapon.

 

The next task is to continue progress on the series of bilateral or regional free trade agreements that are in the pipeline, or are being considered.

 

Following on the recently approved agreements with Chile and Singapore are bilateral negotiations with Australia, Morocco, South Africa and Bahrain. And several other countries are now in line for possible negotiations, including Thailand, Colombia, Peru, Panama, New Zealand and Sri Lanka.

 

Regional agreements underway include one for the Americas in general and Central America more specifically.

 

There has clearly been some controversy over the wisdom of bilateral and regional trade agreements, but that debate must now be viewed in the context of the outcome of Cancun. If multilateral avenues prove unachievable in the near term, bilateral and regional agreements are a sensible approach to further liberalization.

 

And in pursuing bilateral or regional agreements, we should maintain a firm position with regard to the importance of investment protection, particularly through provisions such as the ability of companies to seek international arbitration of any disputes that may arise.

 

By saying this I am not advocating that we give up on a truly multilateral initiative. There are still very good arguments for the broadest possible agreements on liberalizing trade, and there are very good reasons to include in such agreements issues related to government procurement, investment rules, and the like. It’s just that such omnibus agreements are very difficult to conclude successfully because the issues are so diverse and the countries participating are so numerous. Bringing a truly multilateral agreement into being may require some institutional changes in the way such agreements are achieved, and that in itself will take a while, perhaps a long while.

 

Still and all, we must not lose sight of the fundamentals. Trade and investment rules are being liberalized, however slow the process may appear, and attempts to backslide are in most cases being successfully resisted. This is the basic reality.

 

And one of the reasons for this continued progress is the exceptional work that has been and is continuing to be done by the National Foreign Trade Council and the groups allied to it in the common cause of freer trade.

 

That is why I am proud to have been associated with the NFTC for so long, and both proud and honored that you have chosen to recognize me for my involvement in the important mission of this group.

 

Thank you.

 

Remarks of The Honorable John D. Negroponte, U.S. Ambassador to the UN, Keynote Speaker, NFTC 2003 World Trade Dinner

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Remarks of

The Honorable John D. Negroponte

U.S. Ambassador to the United Nations

Keynote Speaker

at the National Foreign Trade Council

2003 World Trade Dinner

November 10, 2003

 

 

Thank you very much for that kind introduction.

 

I’m delighted to be here again at the National Foreign Trade Council’s annual dinner—an event that has become a welcome and elegant New York tradition.  Diana and I were here as guests two years ago, and I’m honored that you have asked me to address you this evening.

 

Before proceeding to the heart of my remarks,  I’d like to acknowledge the NFTC leadership, including its board of directors; its chairman, Michael Jordan; its president, Bill Reinsch and NFTC’s hardworking staff including my former colleague, Anne Alonzo.  Anne worked with me in Mexico city to help ensure the successful negotiation of NAFTA while I served as U.S. Ambassador to Mexico.  

 

For almost a century, of course, American business has used the NFTC to champion global commerce and open foreign markets to American trade and investment.  

 

Your fundamental belief – that America’s values and interests require active involvement in world affairs by an engaged private sector—has sustained you and the American economy through some stiff challenges and tough times.  The fact that you have seen more ups than downs proves that you have been, and remain, 100% right. 

 

There is no better, or even plausible, alternative to American business doing its utmost to shape an increasingly globalized world according to the principles of a free marketplace.

 

This is good for the United States in more ways than I can enumerate.  It is good for American investors; it is good for American workers; and it is good for our broader national ability to promote peace, security, and stability—in a word, democracy—abroad.

 

 As we seek to advance the full range of U.S. interests at the UN, therefore, I want to recognize the substantial contributions U.S. business and the National Foreign Trade Council make to America’s standing in the world every day of the week and every week of the year.

 

A cornerstone of U.S. involvement in the UN is promoting fundamental freedoms, and one of the most basic catalysts of economic growth and development in the developing world is trade liberalization—allowing free markets to work to create jobs and opportunity for all elements of society.  That is a cardinal principle of the president’s millennium challenge account, which will enhance core development assistance fifty percent by fiscal year 2006. It is also the foundation of what the NFTC has advocated for almost 90 years.

 

In this regard, I thank you for your leadership of business coalitions supporting free trade agreements between the U.S. and Morocco and the Southern Africa Customs Union. These FTAs are a priority of the administration.  Business support is vital to their successful negotiation.

 

Here let me note that Morocco’s Ambassador to the United States, His Excellency Aziz Mekouar, is with us tonight.  Mr. Ambassador, you deserve a special round of applause for your leadership in the U.S.-Morocco free trade agreement negotiations.

 

The NFTC itself deserves high praise for its important work on the WTO Doha Development Agenda. Your leadership in pushing all nations to seek bold outcomes will increase economic opportunity everywhere, especially in parts of the world that need it most.

 

This is enormously important to us at the UN, where we have worked hard to build a strong partnership to fight famine.  As I noted in a speech before the UN Economic and Social Council in Geneva last June, over 800 million people are malnourished around the globe.  Nearly 80% of these hungry souls are women and children.  This is intolerable.  Answers have to be found, and found quickly.

 

The administration believes that increased agricultural productivity is a critical component of fighting poverty and hunger. As a consequence, we took action last year when we rolled out the “initiative to end hunger in Africa,” augmenting funding for African agriculture by 25%. 

 

The U.S. is pleased that the African Union Heads of State and Government are addressing the critical agricultural and rural development sectors.  Our commitment to implementing the initiative to end hunger in Africa rests on the recognition that success requires sustained investments in agriculture-based strategies, programs, and policies, in conjunction with improvements in health, education, infrastructure, environment, and public policy management.

 

Science and technology, in particular, offer tremendous potential for increasing productivity and income for the poor without further degradation of the environment.  Biotechnology, for example, is capable of boosting the nutritional value of foods, increasing crop yields, reducing pesticide use, making crops disease and drought resistant, generating income in rural areas, and even vaccinating infants against diphtheria, tetanus and measles.

 

Sadly, some in the world use campaigns of misinformation and fear in an attempt to squelch this promising technology’s usage.  In our view, decisions about food safety should be based on scientific fact, not political conjecture or public hysteria.

 

I therefore applaud the NFTC’s leadership in bringing together business groups concerned about the growing use of non-science based risk regulations as disguised protectionist trade barriers. Your efforts to make sure that sound science remains the benchmark for international trade regulation are enormously helpful in keeping hope alive for the world’s malnourished millions.

 

Another important feature of the president’s Millennium Challenge Account is its emphasis on transparency in government and fighting corruption.  I know NFTC shares his concern, so I am pleased to highlight for you last month’s adoption by the General Assembly of the United Nations Convention Against Corruption.

 

Like other anti-crime treaties before it, the new convention establishes commitments to criminalize certain undesirable and harmful conduct – in this case, corrupt actions such as bribery, embezzlement, and money laundering.  But the convention does not stop there.  It also requires that governments take action in a number of areas – for example in public procurement, public financial management, and in regulating their public officials — that will help prevent corruption from happening in the first place.

 

This is vital not only to the rule of law, but to the fundamental confidence citizens must have for representative government and private enterprise to succeed.

 

Corruption and democracy are incompatible; corruption and economic prosperity are incompatible; and corruption and equal opportunity are incompatible.

 

But our work at the UN and NFTC’s efforts are compatible, and so I am sure we can count on your support for the new convention just as we count on you to keep making the case for free trade and scientific and technological innovation.

 

I’d like to conclude my remarks this evening by noting that even as we face critical challenges in places like Iraq, we must always remember that real peace, real freedom, and real opportunity are ultimately created through commerce, once the guns have been silenced. 

 

Men and women living ordinary lives do the most extraordinary things.  Our soldiers in Iraq know this.  They are making incalculable sacrifices so that Iraqis—and all the citizens of the Middle East—can join the rest of us who rejoice in the blessings of an ordinary life, giving them the chance to rebuild their destroyed institutions and fix their broken economy.

 

This is where the NFTC’s policies and initiatives come in.

 

 By helping develop a world built on free market principles, you are doing nothing less than helping develop a world built on freedom itself—and a free world will be a peaceful, well-fed, and well-educated world as well.

 

Again, I appreciate the opportunity to speak here this evening, and I am grateful for your support of what America is trying to accomplish at the United Nations.

 

Thank you very much.

 

Testimony of Bill Reinsch, President, NFTC, Before the U.S. Trade Policy Staff Committee on a U.S.-Bahrain Free Trade Agreement

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Washington, DC – In testimony today before the U.S. Trade Policy Staff Committee on a U.S.-Bahrain Free Trade Agreement, Bill Reinsch, President of the National Foreign Trade Council (NFTC) urged the United States to begin negotiations on a U.S.-Bahrain Free Trade Agreement. “In strengthening U.S. ties with a key strategic ally committed to trade liberalization and economic reform, a U.S.-Bahrain FTA will demonstrate to other countries in the region the importance and benefits of free and open rules based trade,” Reinsch stated.

Reinsch testified on behalf of the NFTC, the Business Council for International Understanding (BCIU), and the National U.S. – Arab Chamber of Commerce (NUSACC), organizers of the U.S.-Bahrain FTA Coalition, a diverse group of U.S. corporations and associations supporting a bilateral free trade agreement between the two nations.

In his testimony, Reinsch noted that Bahrain is already a reliable market for U.S. goods and services. Last year while U.S. imports from Bahrain totaled $395 million, U.S. business exported almost $420 million. American companies are exporting aircraft, machinery, vehicles, pharmaceuticals products, toys, sporting equipment and other products. U.S. business is also participating in the expansion of the aluminum smelter and many of the other oil related upstream and downstream industries being developed.

 

“Bahrain is a dependable and longstanding U.S. business partner in an unstable region. It has worked hard to diversify its economy; it has invested substantially in transportation and communications infrastructure, and already serves as an important hub for U.S. business in the Gulf region,” Reinsch continued. “As home to the U.S. Navy’s 5th Fleet, there is a strong foundation of U.S.-Bahraini relationships and familiarity with U.S. products, services and technology, as well as the U.S. educational and healthcare system.”

In the last two years, Bahrain has embarked on an historic program of democratic reform, instituting a constitutional monarchy with an elected lower chamber of parliament, undertaking the creation of an independent judiciary, and granting women the right to vote and stand for office.

“A free trade agreement with the United States will serve to increase economic opportunity in Bahrain which will in turn encourage further reform,” Reinsch stated. “Bahrain‘s commercial and economic reforms and market opening measures as reflected in a high quality FTA are likely to encourage neighboring countries to pursue the same path.”

Creating the FTA with Bahrain builds on President Bush’s proposal for an overall Middle East Free Trade Area by 2013. Currently, the U.S. has a free trade agreement with Israel and Jordan, and is well under way in negotiating the proposed U.S.-Morocco Free Trade Agreement. The NFTC serves as the co-Secretariat of the U.S.-Morocco FTA Coalition and has been a major champion of concluding a U.S.-Morocco FTA by the end of the year.

 

 

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves 350 member companies through its offices in Washington and New York.

 

National Foreign Trade Council Honors ExxonMobil CEO for Trade Leadership

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NFTC award recognizes Lee Raymond’s leadership in advancing open trade and investment

 

New York, NY – Continuing a proud tradition, the National Foreign Trade Council (NFTC) today announced its “World Trade Award” winner, Lee R. Raymond, Chairman and CEO of Exxon Mobil Corporation.  Raymond will receive the award at the NFTC’s annual World Trade Dinner on November 10, 2003, in New York City.

 

“With more than 40 years as a top business executive for a global commercial leader, ExxonMobil’s Lee Raymond exemplifies the spirit of the NFTC World Trade Award.  His tireless efforts to advance an open and rules based world trading system make him the natural choice for such an honor.  The NFTC is proud of its over 60-year association with the Exxon Mobil Corporation, and we are honored to give our World Trade Award to the company’s renowned leader,” said Michael Jordan, Chairman of the NFTC and Chairman & CEO of EDS.

 

This year’s NFTC World Trade Award Committee, chaired by Rick Fuest of Active International, chose Mr. Raymond for the award based on his leadership in advancing global commerce.  In addition, all nominees for the award must be respected in the community for building consensus and promoting the benefits of open trade and investment.  Dating from 1937, NFTC’s World Trade Award was established by the Dollar Family of San Francisco in memory of Captain Robert Dollar, pioneer in American shipping and world trade and a charter member of the National Foreign Trade Council. 

 

The Award has been given to 47 Americans, including Government officials, industrialists, bankers, and shipping, publishing and association leaders.  Last year, U.S. Secretary of Commerce Don Evans accepted the award.  Other past winners include Cordell Hull, Secretary of State, awarded in 1938; George Schultz (Bechtel), awarded in 1974; David Rockefeller (Chase Manhattan Bank), awarded in 1964; and William E. Brock (United States Trade Representative), awarded in 1982.

 

Lee Raymond continues the tradition of esteemed World Trade Award nominees with a storied career in global business.  Before the merger of Exxon and Mobil on November 30, 1999, Mr. Raymond was chairman and chief executive officer of Exxon Corporation.  A Ph.D. in chemical engineering, Mr. Raymond joined Exxon in 1963 and has served in various capacities for the corporation in his four decades there.

 

Mr. Raymond will accept the NFTC award on November 10 alongside United States Ambassador to the U.N. John D. Negroponte, the keynote speaker at the World Trade Dinner.

 

The National Foreign Trade Council is a leading business organization advocating a rules-based world economy. Founded in 1914 by a group of American companies that supported an open world trading system, the NFTC now serves more than 500 member companies through its offices in Washington and New York.

 

Testimony of Bill Reinsch, President, NFTC, Before the U.S. Trade Policy Staff Committee on a U.S.-Bahrain Free Trade Agreement

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Testimony of Bill Reinsch, President, National Foreign Trade Council

Before the U.S. Trade Policy Staff Committee on a

 U.S.-Bahrain Free Trade Agreement

November 5, 2003

 

Mr. Chairman and members of the Committee, thank you for the opportunity to testify today on the proposed United States-Bahrain Free Trade Agreement. I am Bill Reinsch, President of the National Foreign Trade Council (NFTC). The NFTC’s members are leading U.S. companies actively trading and investing around the world. We are also a founding member, along with the Business Council for International Understanding (BCIU), and the National U.S. – Arab Chamber of Commerce (NUSACC) of the U.S.-Bahrain FTA Coalition, a diverse group of U.S. corporations and associations supporting a bilateral free trade agreement between the two nations.

 

For almost ninety years, the National Foreign Trade Council has worked to promote an open rules based world trading system.  Our mission is to assure that our member companies have the opportunity to pursue active commercial engagement that creates economic opportunity both at home and in the foreign markets they enter.

 

I am here today to testify on behalf of the U.S.-Bahrain FTA Coalition, which is being formed to support the rapid negotiation and passage of a commercially meaningful U.S.–Bahrain Free Trade Agreement (FTA). 

 

We believe an FTA with Bahrain is in the strong interest of the United States.  It provides the opportunity to eliminate bilateral tariff and non-tariff barriers, boost bilateral and regional trade flows, and stimulate economic growth and prosperity.  Whereas U.S. business competes and thrives in markets with economic, regulatory and political stability, a U.S. – Bahrain FTA offers expanded potential for U.S. business and will enhance stability in Bahrain and ultimately in the region as a whole.

 

In strengthening U.S. ties with a key strategic ally committed to trade liberalization and economic reform, a U.S.-Bahrain FTA will demonstrate to other countries in the region the importance and benefits of free and open rules based trade.

 

Finally, pursuing a bilateral FTA strengthens our trade relationship in the context of our overall friendship and alliance with Bahrain.  It fosters shared values and recognizes Bahrain’s strategic contributions to overall U.S. policy.

 

I would like to elaborate briefly on these points.

 

 

 

Increased Bilateral and Regional trade

 

Bahrain is already a reliable market for U.S. goods and services.  Last year while U.S. imports from Bahrain totaled $395 million, U.S. business exported almost $420 million.  American companies are exporting aircraft, machinery, vehicles, pharmaceuticals products, toys, sporting equipment and other products.  U.S. business is also participating in the expansion of the aluminum smelter and many of the other oil related upstream and downstream industries being developed.

 

We see the potential for a high quality FTA to increase U.S. sales by:

 

–         eliminating tariffs,

–         improving customs and other trade facilitation procedures,

–         assuring that product and safety standards are based on sound science that does not create unjustifiable barriers to trade,

–         locking in intellectual property protection and enforcement to deter counterfeiting and piracy,

–         undertaking a comprehensive approach to increased access to services markets that improves transparency and predictability in regulatory procedures and adequately addresses discriminatory and other barriers,

–         building on the existing U.S. – Bahrain bilateral investment treaty to increase investor protection and increase opportunities for U.S. investment,

–         taking necessary steps that encourage e-commerce, and

–         increasing transparency and predictability in and access to Bahraini government procurement.

 

These and other elements of a high quality FTA will increase opportunities for U.S. manufacturing, financial services, distribution, construction and engineering, health, education, tourism and environmental services sectors.  As the country diversifies its economy away from oil, the financial services sector has already surpassed oil in percentage contribution to GDP.  There are strong opportunities for American financial services and insurance companies in Bahrain. 

 

Other major projects in tourism, healthcare and education are well suited for U.S. business participation.  High value U.S. food and beverage products should also see increasing opportunities in Bahrain, especially as the tourism and restaurant base grows. A high quality FTA will improve the overall investment climate in Bahrain and provide another partner in increasing free trade in the region

 

Supports Reform by a Proven Ally

 

Bahrain is a dependable and longstanding U.S. business partner in an unstable region.  It has worked hard to diversify its economy; it has invested substantially in transportation and communications infrastructure, and already serves as an important hub for U.S. business in the Gulf region.  As home to the U.S. Navy’s 5th Fleet, there is a strong foundation of U.S.-Bahraini relationships and familiarity with U.S. products, services and technology, as well as the U.S. educational and healthcare system.

 

Since the signing of the bilateral Trade and Investment Framework Agreement with the U.S. in 2002, the country has demonstrated its commitment to reform by upgrading its laws protecting intellectual property, agreeing to treat agricultural biotechnology fairly, and by taking steps to become party to the WIPO Internet Treaty. Bahrain is making valuable contributions to the WTO process, by offering to improve its existing services commitments and has joined the WTO Information Technology Agreement.

 

In the last two years, Bahrain has embarked on an historic program of democratic reform, instituting a constitutional monarchy with an elected lower chamber of parliament, undertaking the creation of an independent judiciary, and granting women the right to vote and stand for office.

 

A free trade agreement with the United States will serve to increase economic opportunity in Bahrain which will in turn encourage further reform.

 

Strategic Link in the MEFTA Strategy

 

The member companies of the NFTC and our colleague associations supporting a free trade agreement with Bahrain have been deeply involved in the negotiation of the U.S. –Morocco FTA over the past year and support the Administration’s strategy in moving toward a Middle East Free Trade Area (MEFTA).  Bahrain is an important and logical next step in that strategy. Indeed Bahrain offers the best prospect for a high quality agreement in the Gulf region and will set a standard by which other nations seeking an FTA with the United States will be measured.

 

As the U.S. works with peaceful countries in the region to accede to the WTO and offers expanded GSP status; assists nations to develop the laws and institutions necessary to open markets through the TIFA process, and negotiates bilateral investment treaties and free trade agreements with eligible regional partners, Bahrain is a good choice, along with Morocco and Jordan, to serve as linchpins in the region.  These nations all have the potential, through their FTAs with the U.S. to increase their leadership in their particular regions of the Middle East.  Bahrain’s commercial and economic reforms and market opening measures as reflected in a high quality FTA are likely to encourage neighboring countries to pursue the same path.

 

The MEFTA strategy is a brick by brick approach, constructively engaging with all willing nations in the Middle East, regardless of their level of development, and it makes sense in this context to engage with Bahrain, as it does with other nations in the future, such as Egypt.

 

Maintains and Enhances momentum in trade liberalization

 

In Cancun we experienced a setback in the process of multilateral trade liberalization.  While we maintain confidence and optimism in the negotiations of the WTO Doha Development Agenda, we also strongly support continuing efforts to identify nations and markets with opportunities to support and lock in gains in liberalization that will increase trade and access for U.S. business. Bahrain is such an opportunity. It also sends the strong signal to the world that the U.S. will continue its leadership in trade liberalization, working with nations that share these goals.

 

In conclusion, the NFTC and members of the U.S.-Bahrain FTA Coalition believe that the swift negotiation and completion of a U.S.-Bahrain Free Trade Agreement is in the national interest of the United States.  Thank you for the opportunity to testify today.