Trade in the America Key to Stronger Growth
Remarks as prepared for delivery by John Engler, President of the Business Roundtable at the Palm Beach Strategic Forum in Palm Beach, Florida, April 8, 2014. The forum is sponsored by The International Economic Forum of the Americas
Thank you, Chris [Jamroz] for the kind introduction.
I’m delighted to join the International Economic Forum of the Americas again for your Palm Beach Strategic Forum. I had the pleasure of attending the Toronto forum last year
President [Leonel] Fernández, I enjoyed your remarks.
This year marks the 10th anniversary of the signing of the Central American-Dominican Republic Free Trade Agreement, and it has certainly proved beneficial to all our countries. Bilateral trade between the United States and your country amounted to $11.5 billion in 2012.
I was interested to read about your travels to Europe in 2010, where you encouraged the Germans and French to take advantage of CAFTA-DR to increase their investments in the Dominican Republic … a great example of how trade agreements can create more opportunities beyond just the participating countries.
I’ll talk more about these kinds of links in a moment.
Trade is a matter of intense interest to Business Roundtable CEOs, who lead more than 200 companies – most with a global presence – that generate $7.4 trillion in revenues annually.
So it should come as no surprise that we have made the negotiation and completion of high-standards trade agreements a top policy priority ... the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and the Trade in Services Agreement.
In fact, trade represents a cornerstone of our major report for the year … a policy guide for Congress and the Obama Administration, “Invested in America: A Growth Agenda for the U.S. Economy.”
Growth is key. When the United States limps along with a 2 or a 2.5 percent GDP growth rate, it makes it much more difficult to address the issues that face the nation: Deteriorating infrastructure … the looming entitlement crisis … inadequate investment in R&D … just to name a few.
Slow growth in the United States also represents a drag on regional economies, as I’m sure you appreciate.
Business Roundtable believes the United States economy is capable of much more robust growth – 3.5 percent… or 4 percent … the kind of growth needed to put more Americans back to work.
Washington just has to enact policies that enable growth.
We recommend three top ways of accomplishing that critical goal.
- Business tax reform … our CEOs support reducing the U.S. corporate tax rate to 25 percent while at the same time moving to a modern territorial system of taxation.
- We believe our system of immigration is broken, and the demands of a 21st century dynamic economy require all nations to compete for talent.
- And, just as important, expanding trade, opening markets, protecting intellectual property, and ensuring disputes can be resolved swiftly.
It is imperative that Congress passes Trade Promotion Authority so our negotiators can get the best possible outcomes in trade negotiations and ensure that agreements will actually come to a prompt vote.
Trade is so important that Business Roundtable founded and leads the Trade Benefits America Coalition. The membership embraces nearly 200 associations and companies all dedicated to the pursuit of international trade agreements and passage of Trade Promotion Authority.
Of course there’s enlightened self-interest in these efforts: The coalition’s steering committee includes the American Farm Bureau, the National Association of Manufacturers, and the Coalition of Service Industries, among others.
The coalition members believe increasing trade is a sure way to increase incomes and jobs. With so much on the trade agenda, the calendar is becoming crowded.
We at the Business Roundtable are urging everyone to work hard and stay motivated, because there’s a powerful vision we agree upon – a vision that pending and future U.S. trade agreements will lead to a more prosperous, more free world, one with deeper economic integration that creates more opportunity and sets strong rules for trade.
While this vision holds much promise, we have to acknowledge that at times, even in our own hemisphere, the results can be mixed. Some countries have erected trade barriers to protect their domestic industries or have acted in a purely political fashion.
Unfortunately, these policies can, and often do, damage the private sector, creating a downward spiral…. where nobody wins.
Being an optimist, I believe we’re generally headed in the right direction.
Coming from Michigan, I look back to the U.S.-Canada Automotive Products Agreement of 1965 as getting the ball rolling. The U.S.-Canada FTA followed, and then NAFTA in 1994.
The result? In 1993, before NAFTA, trade within North America amounted to around $290 billion. In 2012, that number has reached more than $1.1 trillion – a nearly fourfold increase!
Today, when trade sometimes becomes the subject of campaign fodder in the United States, I recall the leaders who signed these agreements.
- The auto agreement? Democratic President Lyndon Johnson … Liberal Prime Minister Lester Pearson.
- The U.S.-Canada FTA? Republican President Ronald Reagan and Prime Minister Brian Mulroney, a Progressive Conservative.
- NAFTA? Mexican President Carlos Salinas, a member of the PRI, Mulroney again, and George H.W. Bush, a Republican. And it was President Bill Clinton who led the fight for ratification.
And in the U.S. Congress, these agreements all passed with bipartisan support. International trade has always been an issue that crosses political lines. The economic opportunities of trade liberalization are just so great.
One place we can start is building on NAFTA … modernizing it after two decades of growth. In 2012, Business Roundtable CEOs met in Washington with their Canadian and Mexican counterparts.
Represented by the BRT, the Canadian Council of Chief Executives and the Consejo Mexicano, the CEOs endorsed Canada and Mexico’s participation in the TPP talks.
They also urged our governments to do more to ease cross-border regulatory burdens and take greater advantage of North America’s abundant energy resources.
Today, as you know, the United States has Free Trade Agreements with the CAFTA countries: Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. … An FTA with Chile, of course, and then the most recent agreements with Peru, Panama and Colombia.
I won’t go through the whole list, but the EU has Free Trade Agreements with a number of countries in South America and Central America and has one pending with Canada.
Meanwhile, Mexico, Canada, Chile, Peru and the United States are all negotiating parties in the Trans-Pacific Partnership.
The interlocking ties and the total GDP of all these countries tell me that TTP and TTIP can have an enormous impact on the economy in the Americas.
If we can accomplish these agreements, we will not only facilitate trade in goods and services, and encourage cross-border investment, we will draw closer together as countries.
Mutual recognition or respecting different approaches to testing products are among the steps that can reduce duplication that increases the cost of doing business.
Regulatory issues today are often more serious barriers to trade than any of the remaining tariffs, especially when the more developed nations are in negotiations.
Congratulations to Canada on the successful completion of the Canada-EU trade pact. We’re anxious to see what the details of that agreement reveal. I, for one, hope that it can serve as an ambitious blueprint of what might be possible in the U.S.-EU “T-TIP” negotiations.
Ultimately, successful multilateral and bilateral negotiations should help re-energize support for trade and investment across the globe. Can they save the WTO? I don’t know.
But it’s clear that the WTO process is broken, and that the organization itself needs reform if it’s going to remain relevant in the more interdependent world of the 21st Century.
It’s equally clear that in this century, economic growth has to be a priority for all nations. Just as the United States must enact policies that have more vibrant economic growth as their goal, so too must the countries in Europe, Asia, Africa and the Americas to meet the needs of their people.
The CEOs I work for believe that trade is an essential ingredient of a successful economic growth recipe.
Ladies and gentlemen, we have a lot of work to do. Hopefully this conference can move the agenda forward.
Thank you for the opportunity to join you today.