Emergency Committee For American Trade - Publications

Trade: Discover the Opportunity™

Importance of Trade and Investment to Global Growth and the U.S. Economy

Trade is an increasingly important component of the world economy and now accounts for 37 percent of the global gross domestic product (GDP). In the United States, the share of U.S. GDP attributable to trade has more than quadrupled since World War II, rising to more than 25 percent in 1998. Global flows of foreign direct investment are also an increasingly important source of worldwide economic growth and integration, and have increased twenty-five fold from $14 billion to $350 billion during the period of 1970 to 1996. The annual flows of U.S foreign direct investment have grown too, increasing from just under $5 billion annually in the 1960s to nearly $19 billion, annually in the 1980s.

Global integration has strengthened the U.S. economy by generating new U.S. economic activity here at home for American companies and their workers in the form of expanded research and development, capital investments, purchases of inputs and services, exports, and better, higher-paying U.S. jobs. As illustrated in the chart below taken from the 1999 update of ECAT’s study, Global Investments, American Returns (GIAR), American companies with global operations account for the majority of total U.S. research and development, exports, and manufacturing capital stock.

In addition, in 1997 alone, American companies with global operations purchased more than 90 percent of their intermediate inputs--totaling $3 trillion--from U.S. suppliers. The fact is that American companies with global operations are generally able to make greater contributions to U.S. economic growth than purely domestic firms because of the opportunities provided by world economic growth.

ECAT’s GIAR study and the "1999 Update" also demonstrate that the foreign direct investment of American companies has complemented, rather than substituted for, economic activity in the United States in areas determinative of productivity, such as research and development and capital investments. In addition, over 70 percent of the total income earned by the foreign affiliates of U.S. firms is repatriated. This in turn has promoted economic growth and a higher standard of living in the United States.

While job dislocations have occurred in the process of global integration, they have not weakened the U.S. economy. Over the past two decades, as American firms have sought opportunities in global markets, they have maintained some three-quarters of their total employment in the United States. At the same time, the foreign affiliates of American firms are an important market for American companies with global operations, accounting for over 40 percent of U.S. exports. Furthermore, the output of the foreign affiliates of American companies is not flooding U.S. markets; over 90 percent of their exports are sold outside of the United States.

The Continued Need for Trade Education and ECAT’s Trade: Discover the Opportunity™ Program

In this time of economic expansion coupled with a record trade deficit, the need is greater than ever for the Administration, the business community, and our allies in Congress to continue efforts to educate the public about the importance of open trade to sustaining our economic growth. As former Secretary of Treasury Robert Rubin recently remarked, " In many ways our greatest enemy today is the complacency of good times."

It is important to remind ourselves that the world achieved a high degree of global integration during the period from the late 1800s to World War I. The following chart from a recent National Bureau of Economic research working paper illustrates the recapture of this high degree of economic integration by the United States.

The chart is reprinted from a recent paper by Michael Bordo, Barry Eichengreen and Douglas A. Irwin entitled "Is Globalization Really Different than Globalization A Hundred Years Ago," National Bureau of Economic Research, Working paper 7195.

What was an era of trade and investment expansion ended as the result of political conflicts and the enactment of short-sighted protectionist trade policies, such as the prohibitive Smoot-Hawley tariffs of the 1930s that presaged the great U.S. depression. It was only in the early 1980s that the world exceeded the level of economic integration achieved in that earlier period.

To avoid the risk of complacency in times of prosperity, ECAT continues to expand its trade education program. Last fall, ECAT released an update of its 1998 study, Global Investments, American Returns, which further documents the ways in which trade and U.S. foreign direct investment generate new economic activity in the United States. At the same time, ECAT implemented Phase II of its trade education program by providing a new set of messages to use to communicate the benefits of trade to American workers and their families through a website-based employee trade education program, entitled Trade: Discover the Opportunity™ .

ECAT’s New Trade Education Messages

ECAT’s new trade education messages are based on focus group research on public attitudes and sentiments about trade carried out with ECAT member company employees and the general public in different parts of the country. The findings of the research indicate that pro-trade supporters need to talk about trade in ways that not only inform, but also respond to public anxiety about the impact of trade and economic expansion. The research also revealed that to be successful in communicating positively trade messages must be: 1) credible, and not "oversell" the benefits of trade, 2) centered around how trade and investment support a better home and family life, 3) focused on the ways in which employees personally benefit from their company’s role in trade, and 4) organized around the theme of trade as a road to life and growth.

The research also found that certain words and phrases are more effective than others when talking about trade. Words such as higher standards of living, unlimited possibilities, choice, pioneer, opportunity, growth and explore are all positive terms to use when describing the benefits of trade. In contrast, words such as open trade, free trade, open markets, competition, more jobs, or global economy are likely to raise public anxiety about trade and should be avoided in communicating the benefits of trade.

ECAT has shared its message research with the broader U.S. business community, to help to shape communications on key issues on the U.S. trade agenda. Last year, ECAT’s message research formed the basis of the communications developed by the U.S. Alliance for Trade expansion for the Seattle WTO ministerial.

ECAT also has used the message research in developing its "food chain" proposal intended to put the spotlight on the human aspects of trade liberalization by focusing on the elimination of barriers to food trade. Congressman Cal Dooley (D-20 CA) and Jim Kolbe (R-5 AZ) joined ECAT Chairman Ernest Micek, Chairman of Cargill, in presenting a food chain pro-trade video at a press event in Seattle during the ministerial. The video was aired on Seattle television during the ministerial meetings, and it embodies ECAT’s new messages about the importance of trade in our everyday lives.

ECAT’s Trade: Discover the Opportunity (TDO)™ Employee Education Program

Last October, ECAT Chairman Ernest Micek and Congresswoman Jo Ann Emerson (R-8MO) inaugurated ECAT’s innovative, website-based employee trade education program at a full day trade education training session for ECAT member companies in St. Louis, Missouri. The TDO program is based on ECAT’s message research and is constructed around the themes of opportunity, growth, and success for individual employees. The program messages focus on how trade is helping employees achieve a better life and offers real life examples of ordinary Americans who are achieving their dreams because of expanding trade opportunities.

Under the TDO program, each subscribing ECAT member company is supplied with a set of trade education materials, such as posters and a newsletter template, which can be downloaded from the TDO portion of ECAT’s new website. The TDO website also includes a "best practices" bulletin board, where we are encouraging ECAT member companies to share their experiences in implementing trade education programs. The materials are designed to be easily modified to fit individual company communications styles. ECAT will be providing additional TDO materials to subscribing ECAT companies early this year, including a trade education video.

ECAT is in the process of surveying member ECAT member companies to determine ways the initial system and set of materials can be improved. ECAT will be providing a set of materials to use in educating employees about the importance of enacting PNTR treatment for China. The TDO materials on China will be provided to all ECAT member companies and shared with the broader business community working in support of China PNTR legislation.


	Trade: Discover the Opportunity™ Importance of Trade and Investment to Global Growth and the U.S. Economy Trade is an increasingly important component of the world economy and now accounts for 37 percent of the global gross domestic product (GDP). In the United States, the share of U.S. GDP attributable to trade has more than quadrupled since World War II, rising to more than 25 percent in 1998. Global flows of foreign direct investment are also an increasingly important source of worldwide economic growth and integration, and have increased twenty-five fold from $14 billion to $350 billion during the period of 1970 to 1996. The annual flows of U.S foreign direct investment have grown too, increasing from just under $5 billion annually in the 1960s to nearly $19 billion, annually in the 1980s. Global integration has strengthened the U.S. economy by generating new U.S. economic activity here at home for American companies and their workers in the form of expanded research and development, capital investments, purchases of inputs and services, exports, and better, higher-paying U.S. jobs. As illustrated in the chart below taken from the 1999 update of ECAT’s study, Global Investments, American Returns (GIAR), American companies with global operations account for the majority of total U.S. research and development, exports, and manufacturing capital stock. In addition, in 1997 alone, American companies with global operations purchased more than 90 percent of their intermediate inputs--totaling $3 trillion--from U.S. suppliers. The fact is that American companies with global operations are generally able to make greater contributions to U.S. economic growth than purely domestic firms because of the opportunities provided by world economic growth. ECAT’s GIAR study and the "1999 Update" also demonstrate that the foreign direct investment of American companies has complemented, rather than substituted for, economic activity in the United States in areas determinative of productivity, such as research and development and capital investments. In addition, over 70 percent of the total income earned by the foreign affiliates of U.S. firms is repatriated. This in turn has promoted economic growth and a higher standard of living in the United States. While job dislocations have occurred in the process of global integration, they have not weakened the U.S. economy. Over the past two decades, as American firms have sought opportunities in global markets, they have maintained some three-quarters of their total employment in the United States. At the same time, the foreign affiliates of American firms are an important market for American companies with global operations, accounting for over 40 percent of U.S. exports. Furthermore, the output of the foreign affiliates of American companies is not flooding U.S. markets; over 90 percent of their exports are sold outside of the United States. The Continued Need for Trade Education and ECAT’s Trade: Discover the Opportunity™ Program In this time of economic expansion coupled with a record trade deficit, the need is greater than ever for the Administration, the business community, and our allies in Congress to continue efforts to educate the public about the importance of open trade to sustaining our economic growth. As former Secretary of Treasury Robert Rubin recently remarked, " In many ways our greatest enemy today is the complacency of good times." It is important to remind ourselves that the world achieved a high degree of global integration during the period from the late 1800s to World War I. The following chart from a recent National Bureau of Economic research working paper illustrates the recapture of this high degree of economic integration by the United States. The chart is reprinted from a recent paper by Michael Bordo, Barry Eichengreen and Douglas A. Irwin entitled "Is Globalization Really Different than Globalization A Hundred Years Ago," National Bureau of Economic Research, Working paper 7195. What was an era of trade and investment expansion ended as the result of political conflicts and the enactment of short-sighted protectionist trade policies, such as the prohibitive Smoot-Hawley tariffs of the 1930s that presaged the great U.S. depression. It was only in the early 1980s that the world exceeded the level of economic integration achieved in that earlier period. To avoid the risk of complacency in times of prosperity, ECAT continues to expand its trade education program. Last fall, ECAT released an update of its 1998 study, Global Investments, American Returns, which further documents the ways in which trade and U.S. foreign direct investment generate new economic activity in the United States. At the same time, ECAT implemented Phase II of its trade education program by providing a new set of messages to use to communicate the benefits of trade to American workers and their families through a website-based employee trade education program, entitled Trade: Discover the Opportunity™ . ECAT’s New Trade Education Messages ECAT’s new trade education messages are based on focus group research on public attitudes and sentiments about trade carried out with ECAT member company employees and the general public in different parts of the country. The findings of the research indicate that pro-trade supporters need to talk about trade in ways that not only inform, but also respond to public anxiety about the impact of trade and economic expansion. The research also revealed that to be successful in communicating positively trade messages must be: 1) credible, and not "oversell" the benefits of trade, 2) centered around how trade and investment support a better home and family life, 3) focused on the ways in which employees personally benefit from their company’s role in trade, and 4) organized around the theme of trade as a road to life and growth. The research also found that certain words and phrases are more effective than others when talking about trade. Words such as higher standards of living, unlimited possibilities, choice, pioneer, opportunity, growth and explore are all positive terms to use when describing the benefits of trade. In contrast, words such as open trade, free trade, open markets, competition, more jobs, or global economy are likely to raise public anxiety about trade and should be avoided in communicating the benefits of trade. ECAT has shared its message research with the broader U.S. business community, to help to shape communications on key issues on the U.S. trade agenda. Last year, ECAT’s message research formed the basis of the communications developed by the U.S. Alliance for Trade expansion for the Seattle WTO ministerial. ECAT also has used the message research in developing its "food chain" proposal intended to put the spotlight on the human aspects of trade liberalization by focusing on the elimination of barriers to food trade. Congressman Cal Dooley (D-20 CA) and Jim Kolbe (R-5 AZ) joined ECAT Chairman Ernest Micek, Chairman of Cargill, in presenting a food chain pro-trade video at a press event in Seattle during the ministerial. The video was aired on Seattle television during the ministerial meetings, and it embodies ECAT’s new messages about the importance of trade in our everyday lives. *ECAT’s Trade: Discover the Opportunity* (TDO)™ Employee Education Program** Last October, ECAT Chairman Ernest Micek and Congresswoman Jo Ann Emerson (R-8MO) inaugurated ECAT’s innovative, website-based employee trade education program at a full day trade education training session for ECAT member companies in St. Louis, Missouri. The TDO program is based on ECAT’s message research and is constructed around the themes of opportunity, growth, and success for individual employees. The program messages focus on how trade is helping employees achieve a better life and offers real life examples of ordinary Americans who are achieving their dreams because of expanding trade opportunities. Under the TDO program, each subscribing ECAT member company is supplied with a set of trade education materials, such as posters and a newsletter template, which can be downloaded from the TDO portion of ECAT’s new website. The TDO website also includes a "best practices" bulletin board, where we are encouraging ECAT member companies to share their experiences in implementing trade education programs. The materials are designed to be easily modified to fit individual company communications styles. ECAT will be providing additional TDO materials to subscribing ECAT companies early this year, including a trade education video. ECAT is in the process of surveying member ECAT member companies to determine ways the initial system and set of materials can be improved. ECAT will be providing a set of materials to use in educating employees about the importance of enacting PNTR treatment for China. The TDO materials on China will be provided to all ECAT member companies and shared with the broader business community working in support of China PNTR legislation. ECAT - Homepage About ECAT \| Hot Issues \| ECAT Positions Press Releases \| Trade Resources \| Key Trade Votes \| Publications Steel \| CAFTA \| Search \| Members Only Copyright 1999-2002, the Emergency Committee for American Trade