Calls For Timely Renewal of TPA to Advance Trade Negotiations to Open Markets and Boost Economic Growth

Washington DC – The National Foreign Trade Council (NFTC) today joined several other leading U.S. business groups and companies in launching Trade for America, a campaign dedicated to supporting the timely renewal of U.S. trade negotiating authority, also referred to as Trade Promotion Authority (TPA).  During a press conference at the National Press Club with U.S. Trade Representative, Ambassador Susan Schwab, Trade for America underscored the importance of renewing U.S. trade negotiating authority before it expires on June 30, 2007.

“Timely renewal of TPA is vital to U.S. trade leadership in expanding and opening markets to American firms, workers and farmers. The United States is the world’s largest trader and most open market, but 95% of the world’s population is outside the United States,” said NFTC President Bill Reinsch. “We must, as a nation, and with a united voice, continue to negotiate market-opening trade agreements to advance continued US economic growth and opportunity.  Above all, we need to conclude as soon as possible a successful and ambitious Doha Round to open markets on a multilateral basis, which will generate the most good for the most people.”
 
“We cannot afford to be sidelined on trade.  The world is not waiting to negotiate market-opening trade agreements, many of which exclude the United States.  According to the WTO, between January 2004 and February 2005, over 45 preferential trade agreements were negotiated.  There are well over 200 of them today,” said Mary Irace, NFTC Vice President of Trade & Export Finance. “Without U.S. trade negotiating authority, other countries will be unwilling to negotiate with the United States for fear that U.S. commitments and concessions would not hold weight.  In particular, they would be unwilling to put important politically sensitive concessions on the table.”
 
Today’s launch of Trade for America is comprised of a wide range of companies and trade associations representing key sectors of the U.S. economy.  All of the groups involved, including the NFTC, believe that trade negotiating authority is a fundamental part of U.S. global economic leadership.
 
According to Irace, “We are hopeful that there will be a breakthrough on the Doha Round in the next month or two.  Timely renewal of U.S. trade negotiating authority will demonstrate that the United States remains committed to leading the trade talks to a successful conclusion. At a minimum, a short-term, one-year extension of TPA should be enacted as soon as possible to ensure that the Round is completed within a year.”
 
“We’re in support of the Administration’s push to renew this legislation with all deliberate speed and will work with Congress over the course of the next few months in support of legislation to extend the negotiating authority,” concluded Irace.

 Advancing Global Commerce for Over 90 Years

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 hundreds of member companies through its offices inWashington and New York.

The Joint Economic Committee of the 110th Congress held a hearing on January 31 to consider the growing challenges facing the middle class. Members present included the chairman, Senator Schumer (D-NY), Senators Bennett, Klobuchar, Webb, and Casey, and Representative Saxton.

 Four witnesses testified: former Treasury Secretaries Robert Rubin and Lawrence Summers, Alan S. Blinder, Professor of Economics at Princeton University and Richard Vedder, Professor of Economics at Ohio University. The focus of the hearing was on the changes occurring as a result of the dramatic advances in technology as well as the effects of globalization on the domestic economy and the middle class. The committee and three of the four witnesses believed economic inequality has eroded the middle class. Technology proliferation has given advantages to other countries, leaving middle class Americans to search for jobs outside of their technology fields. Some witnesses felt that technology advances have had more of an effect over the middle class than international trade. In addition, another large contributing factor to the economic challenges of the middle class has been the lack of educational resources and opportunities to train younger generations in other professional positions.
 
Perhaps the most pressing issue is the decline in sustained economic growth which, as was mentioned by Sen. Klobuchar, causes financial instability for the middle class. Sustained economic growth is imperative for the middle class because it provides jobs with competitive wages that are needed to support the middle class. Fluctuations in the economy harm U.S. investments in foreign countries, and make foreign investors apprehensive about investing in the U.S. Former Treasury Secretary Lawrence Summers stated that the substantial trade deficit begs the question of “how long foreign investors will be prepared to lend us funds on such generous terms to support deficits of this magnitude.” The repercussions of a deteriorating relationship between foreign investors and the U.S. economy could lead to foreign investors seeking capital investments in other countries due to the current condition of the U.S economy, further weakening economic growth in the U.S.

Globalization has brought about a profound change in the American economy.  As former Treasury Secretary Rubin pointed out “the global economy is undergoing change of historic proportions, including technological development, globalization, effective productivity policies […], and, as a consequence of all this, the emergence of China and India as potentially large markets but more immediately, as powerful competitors.” Senator Webb agreed that the impact of globalization was affecting the American workforce, especially in blue and white collar professions. Rubin also argued for more effective use of trade adjustment assistance for workers who had been dislocated from their jobs as a result of outsourcing to other countries like China and India.

In the future, more jobs will be outsourced to Asian countries, leading to a scarcity of jobs in the manufacturing and high technology sectors in the United States. This will potentially affect wages and future job security, widening the gap of income inequality. Interfering with the markets will not stop the effects of globalization; as a matter of fact, erecting trade barriers may inflict more harm on the U.S. economy. Sustaining economic growth involves continuing to welcome foreign investment. Enacting policies that draw foreign investors into the U.S. creates more jobs for middle class Americans, most of which make up a majority of the manufacturing and technology sector. If the middle class benefits from these policies promoting international trade, they will be more receptive to foreign investments. If however, the middle class ends up supporting protectionist policies, there will be a loss of economic productivity, decline in imports, and U.S. exporters may face retaliatory measures. Free trade facilitates sustained economic growth, which provides a strong domestic market for U.S businesses, and in turn, provides a strong job market for American workers, especially those in the middle class.

Professor Blinder argued that income inequality is not rooted in globalization or outsourcing; it stems from wage inequality. Of the forty million jobs in the technology sector, fewer than a million have been outsourced, suggesting that another reason must explain the economic inequality within the middle class. Globalization, he argues, is not a struggle between higher and lesser skilled workers, nor is it between more or less educated workers but between different professions. Based on his research, Blinder predicts between 22 to 29 percent of current American jobs could potentially be outsourced in the future. To rectify the problem, governments must be willing to “repair and extend the social safety net” for dislocated workers, create employment insurance and trade adjustment assistance. The U.S labor force and businesses must be willing to maintain a supply and demand for jobs remaining in the U.S.

In contrast, Professor Vedder argued economic sustainability was in decline due to increased government expenditures; in the fiscal years from 2001-2006, government expenditures increased by 42.4 percent for national security and non-defense issues. The government needs to curb its spending habits in order to regain economic growth.

With regard to the middle class, he believes workers shared in the nation’s prosperity and are living better than they have in the past. Americans were consuming more than ever, and wage inequality and outsourcing were not the central challenge to the middle class. Excessive spending over consumer products was a central reason for the economic challenges faced by the middle class.

To the extent there was consensus, it was that policies that permitted free international trade would aid in regaining economic growth and alleviate the burdens felt by the middle class.

Two leading organizations representing major U.S. exporters today endorsed a proposal by the Bush Administration to change the federal government’s accounting for the U.S. Export-Import Bank.  The proposal is contained in the President’s FY 2008 budget, which was delivered today to Capitol Hill.  Implementing the accounting change will require approval by Congress.

The two organizations are the Coalition for Employment Through Exports (CEE) and the National Foreign Trade Council (NFTC).  CEE represents some 30 U.S. exporters, banks and industrial associations and specializes in issues related to export finance.  NFTC represents 500 export companies, banks and others involved in global trade and investment.  It is the oldest U.S. international trade organization.

Under the President’s proposed accounting change, the Export-Import Bank for the first time will be allowed to directly utilize its revenues to cover all its operating expenses, without federal appropriations.   Under the current accounting system, the Bank may apply its revenues to its loan-loss reserve account, but cannot use its revenues to cover its operating expenses, which have required appropriations.  Instead, the Bank’s revenues that are not used for loan-loss reserve are credited to the U.S. Treasury as a “miscellaneous receipt”.

Each year, the Bank generated substantial revenues from its fees, premiums for guarantees and insurance, and interest charged on its direct loans.

“In essence, the President is proposing that Ex-Im Bank finally be recognized as a financially self-sufficient entity”, said Edmund Rice, CEE President.  “Ex-Im does not need taxpayer funds to operate, if Congress will agree to allow the use of the Bank’s own revenues”, Rice added.   “This proposal underscores that export finance can be done on a financially sustainable basis”, Rice said.

The proposed accounting change also addresses growing pressure in the World Trade Organization (WTO) to reduce direct government funding of exports.  “By making Ex-Im a truly self-sustaining agency, the U.S. government is bringing the Bank into line with the clear direction of global trade policy”, commented NFTC President William Reinsch.  “This change puts the U.S. ahead of the curve in the WTO”, Reinsch added.  “We believe this change is a ‘win-win’ for American exporters and the American taxpayer”, Reinsch added.

Washington, DC – The National Foreign Trade Council (NFTC) today released a statement commending the U.S. House and Senate for working together into the weekend to reach consensus on important trade legislation before adjourning for the year.

“We are pleased that Members, led by champions of trade in both chambers, were able to set aside a number of differences to pass a robust tax and trade package this year. It would have been a shame to see all the hard work that took place over the year go down the drain over what were reconcilable differences,” said NFTC President Bill Reinsch.

“Though a lot of unrelated measures were attached to the bill in the final days leading up to its approval, the package includes a number of policy priorities we’ve been pressing for. Primary among these was granting permanent normal trade relations to Vietnam. Without PNTR, Vietnam’s imminent accession to the WTO would have benefited all other WTO member nations, but perhaps not the United States.  The U.S. and Vietnamese business communities and the many workers who stand to benefit from the trade pact definitely welcome Congressional approval of PNTR,” Reinsch continued.

The omnibus bill, approved by the House late Friday and early Saturday morning by the Senate, extends the Andean Trade Preferences Act for six months and the Generalized System of Preferences for two years. The legislation also extends important provisions of the African Growth Opportunity Act, providing beneficial treatment for apparel manufactured in developing nations until 2012.

“We’re now looking forward to next year and working with the new Congress to move forward on sound trade policy, including a number of matters left over from this year – ratifying trade agreements with Peru and Colombia, granting PNTR to Russia and remedying a broken visa system that undermines the United States’ competitiveness,” said Reinsch. “While the first hundred hours of the new Congress’ agenda will be full of important domestic issues, we will urge Congress to also get a jump start on trade legislation when the 110th session begins.”

Advancing Global Commerce for Over 90 Years

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 hundreds of member companies through its offices in Washington and New York.