Where Is U.S. Trade Policy Going?

By: Jan Mazotti Issue: Global Trade Section: Jewel Of Collaboration

An Inside Look At Trade From U.S. Trade Representative, Ambassador Ron Kirk

Where Is US Trade Policy “The jobs of American families depend on our success,” proclaims United States Trade Representative (USTR) Ambassador Ron Kirk. “Most people assume that trade equals job loss and that’s not true. When done correctly, trade can breathe life into our economy,”

Trade can be a pillar of America’s economic recovery. In fact, trade is already a major element of our economy: exports accounted for a record 13 percent of our GDP (Gross Domestic Product) last year. In the three years leading up to the global recession, export expansion accounted for almost half – 47 percent – of America’s overall GDP growth. And while some may think that if we just stop trading, everything will be okay, we need trade to grow our economy. U.S. unemployment has risen as exports have fallen. An aggressive effort to keep trade flowing and open more markets to American goods and services absolutely must be a big part of our economic recovery here at home. To get our economy back on track, we need to increase exports, which means the U.S. needs access to growing economies abroad.

The U.S. is already the most open, major economy in the world. Until the recent global recession, real export expansion had been a support to U.S. economic growth for several years. On an annual basis, exports increased by 26% between 2005 and 2008. Current dollar exports exceeded 13% of U.S. Gross Domestic Product (GDP) for the first time ever in 2008. Export expansion accounted for nearly half (47%) of the moderate 2% average annual GDP growth over the last three years. In fact, manufacturing exports increased 141% since the end of the last multilateral round more than a decade ago (through 2008, based on current dollars) and the U.S. services industry experienced a $144 billion surplus in 2008 on exports totaling $550 billion with these exports more than doubling since 1994 (up 174%).

President Obama's trade agenda, as detailed in the 2009 Trade Policy Agenda Report, reflects respect for entrepreneurship and market competition, the environment, an opportunity for all, and rights of workers. The agenda is designed to benefit American workers and their families, along with increasing the well-being of those living in the poorest regions of the world. And, because trade is a significant and increasingly important factor in the U.S. and global economies, the jobs influenced by trade are significant and well-paying.

That’s why Ambassador Kirk is so motivated to stabilize the six priorities of the new Administration’s trade policy agenda. The strategy is to combine the best elements of previous trade policies, especially a rules-based system of global trade, with a determination to make trade a powerful contributor to the national economic agenda for revival of the global economy and renewal of growth that benefits all people. It’s really nothing radical – just common sense.

Priority #1 - Support a rules-based system

At USTR, there is a commitment to rules-based trading systems and a belief that these systems will advance the well-being of the citizens of the United States, as well as our trading partners. Says Kirk, “we all win from building on the foundations for peaceful commercial exchange.”

Continued commitment to the World Trade Organization’s (WTO) system of multilateral trading rules and dispute settlement will be an ongoing focus too. Explains Kirk, “the WTO is both a venue for multilateral liberalization and serves as a defense against protectionism. It is a place to defend our rights and benefits under the rules-based trading system and is in the interest of all Americans.”

According to the Administration, a contributing factor to restore trade’s role in leading economic growth and development would be a strong, market-opening agreement for both goods and services in the WTO’s Doha Round negotiations. However, it will be necessary to correct the imbalance in the current negotiations whereby the value of what the United States would be expected to give is well-known and easily calculable. But, broad flexibilities available to others leaves unclear the value of new opportunities for U.S. workers, farmers, ranchers, and businesses.

Priority #2 - Advance the social accountability and political transparency of trade policy

As the scope of trade policy expands to address non-tariff and other barriers to trade, the USTR recognizes that trade policy must meet strong standards of social accountability and political transparency.

Social accountability, for example, could include tackling adjustment issues for the work force that are created by changes in global trade. In the 2009 stimulus package, Congress expanded eligibility for Trade Adjustment Assistance (TAA) by adjusting the criteria for receiving benefits and broadening the sectors of the workforce (i.e., services workers) eligible for TAA. Or, social accountability could mean collaborating with our trading partners to improve the status, conditions, and protections of workers. “We need to ensure that expanded trade is not at the expense of workers’ welfare and that competitiveness is not based on the exploitation of workers. Building on the labor provisions in some of our FTAs is a way forward,” said Kirk.

Because stakeholders are frustrated with the lack of consultation involved in the development and implementation of trade policy, transparency measures will be instituted to include public participation in U.S. trade negotiations. In fact, interactive websites and additional public consultation will occur going forward.

Priority #3 - Make trade an important policy tool for achieving progress on national energy and environmental goals

Since early in his campaign, the President has called for new policies to advance a cleaner environment, a stronger response to the challenge of climate change and more sustainable natural resources and energy supplies. Trade policy makers will be working to examine how trade can advance these goals.

Commented Kirk, “We will build on the environmental goods and services negotiations that began during the Doha Round. We will assure that the frameworks for trade policy and for tackling global climate complement each other so as to reinforce sustainable economic growth. We will ensure that climate policies are consistent with our trade obligations, but we also will be creative and firm in assuring that trade rules do not block us from tackling this critical environmental task.”

Priority #4 - Make sure that trade agreements are addressing the major unresolved issues that are responsible for trade friction

“Behind the border” measures and other non-tariff barriers are major impediments to trade. The USTR will negotiate for improved transparency and due process in trade and will work to open markets and secure fair treatment for American service abroad. Strong intellectual property protections and enforcement on behalf of American innovations is also high on the priority list.

Priority #5 - Build on existing Free Trade Agreements and Bilateral Investment Treaties in a responsible and transparent manner

We will do this in a collaborative spirit and emphasize ways in which this process can benefit the citizens of all three countries

Supporting political transparency, the USTR will engage the public regarding policy relative to the three outstanding Free Trade Agreements (FTAs) with Colombia, South Korea and Panama, and their relevance to advancing the interests of the U.S. and our current trading partners. Another agenda item will focus on improvements to NAFTA and ways in which trade between the U.S., Canada, and Mexico might be improved without adversely effecting trade. “We will do this in a collaborative spirit and emphasize ways in which this process can benefit the citizens of all three countries,” said Kirk.

Priority #6 - Uphold our commitment to be a strong partner to developing countries, especially the poorest developing countries

Typically, expanded trade can make an important contribution to boosting growth in developing countries and economic growth in developing countries benefits the U.S. economy by expanding markets for American exporters. Going forward, the USTR will promote trade policies, including technical assistance for capacity building, which will help these developing countries, engage successfully with the world economy.

Historically, trade preference programs help entrepreneurs in developing countries compete effectively in the world trading system. In the near term, the USTR will work with Congress and public stakeholders on the renewal and reform of preference programs, giving careful consideration to proposals that concentrate benefits more effectively on the poorest countries and those that need the margin of preference to compete.

In addition to preferences, building trade capacity in developing countries will help them to reap the benefits of the global economy. Says Kirk, “The United States is already the largest bilateral provider of trade capacity building assistance, and we will continue to support these efforts.”

And finally, during this international financial crisis, credit for trade financing is critical. The USTR will work with international financial institutions and export credit facilities to ensure that there is adequate trade financing available, especially for small and medium-sized exporters. In fact, some credit financing programs have been expanded through the SBA. Where Is US Trade Policy

What’s On The Horizon?

The U.S. is the world's largest trading nation. Exports of goods and services accounted for more than $1.8 trillion in 2008. Manufacturing exports supported nearly one in six manufacturing jobs in the U.S. and more than 808,000 jobs in agriculture.

Going forward, Ambassador Kirk is committed to addressing U.S. trade related issues because Americans generate and earn more than one-fifth of the world's total income even though we have only one-twentieth of the world's population. America is the world's largest national economy and leading global trader.

Trade is critical to America's prosperity - fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services. Trade keeps our economy open, dynamic, and competitive, and helps ensure that America continues to be the best place in the world to do business.

United States Trade Representative (USTR), Ambassador Ron Kirk is a member of President Obama's Cabinet and serves as the President's principal trade advisor, negotiator and spokesperson on trade issues. The office of USTR is responsible for the development and oversight of U.S. trade policy, including strategy, negotiation, implementation and enforcement of multilateral, regional/bilateral and sector-specific trade agreements. These include the ongoing Doha Development Agenda multilateral trade negotiations, as well as seventeen countries with which the United States has Free Trade Agreements (FTAs). As well, Ambassador Kirk is responsible for U.S. trade policy involving agriculture; industry; services and investment; intellectual property; environment; labor; development and preference programs. Ambassador Kirk has more than 25 years of diverse legislative and economic experience on local, state and federal levels.