Emergency Committee For American Trade - Publications

ECAT 2008 AGENDA

SECTION I.1: IMPORTANCE OF TRADE AND INVESTMENT AND ECAT’S ROLE

ECAT and its member companies recognize that trade and investment are critical components of a healthy U.S. and world economy. ECAT’s mission, since its formation over forty years ago, has been to promote economic growth through the expansion of international trade and investment. This section provides an overview of the importance of trade and investment to the U.S. and global economies and of the role that ECAT and its member companies play in the promotion of liberalized trade and investment.

Why International Trade and Investment Are Important

Trade and investment liberalization and strong rules on transparency, investment, intellectual property and government procurement, are essential elements in promoting economic growth and improvements in the standard of living in the United States and throughout the global economy.

The United States remains the world’s largest trading nation, accounting for approximately:

25 percent of world goods trade in 2006, as the world’s second largest exporter and the world’s largest importer of goods; and
25 percent of world services trade in 2006, as both the world’s largest exporter and importer of services.

Source: World Trade Organization, International Trade Statistics 2007

In 2007, U.S. exports of goods and services alone have accounted for 42 percent of overall U.S. GDP growth. Overall U.S. trade accounted for 29 percent of U.S. GDP in 2007.

In 2007, both U.S. goods exports and imports increased, with exports increasing more rapidly: U.S. goods exports rose $125.6 billion to $1,162.7 trillion and U.S. goods imports rose $98.6 billion to $1,963.7 trillion. U.S. services exports rose $113 billion to $473 billion and U.S. services imports rose $88 billion to $368 billion.

Current U.S. proposals in the WTO on trade liberalization of nonagricultural goods could raise the level of U.S. GDP by $144 billion a year, equal to an additional $2,000 or more for the average family of four. According to economic analyses by the Office of the United States Trade Representative, NAFTA and the WTO Uruguay Round Agreements combined have increased U.S. national income by $40 billion to $60 billion a year. Combined with the lower prices that the reduction in import barriers provides, the income gain for American families equals $1,000 to $1,300 a year from these two agreements.

In assessing the importance of trade and investment, it is also important to consider that:

96 percent of the world’s consumers live outside the United States.
One in three acres in the United States is planted for export.
27 percent of farm income is linked to exports.
Approximately 43 percent of all U.S. manufactured products are exported and workers producing those products are paid 13-to-18 percent more than the average wage in the overall U.S. economy.

The Importance of Exports

Liberalized trade and investment have helped spur the significant growth in U.S. exports, which, in turn, are important to spurring growth and a higher standard of living in the United States. Exports support one in six U.S. manufacturing jobs. As discussed below and in section II.2, U.S. export growth is particularly strong after the entry-into-force of free trade agreements.

The Importance of Imports

The benefits of imports to the U.S. economy are also widely enjoyed, but not always recognized.

Imports increase the variety and availability of products accessible to consumers throughout the United States, providing Americans with improved choices, such as fruits and vegetables now increasingly available all year, a wider variety of consumer products, and access to products not produced in significant quantities in the United States, such as coffee, spices and other food products.
U.S. consumers and the economy as a whole also benefit from the lower prices and, therefore, greater purchasing power, that increased international competition promotes. This has enabled, for example, 73.4 percent of households to own a personal computer.
Imports support millions of American jobs in the transportation, wholesale distribution, retail, marketing and other sectors, while also supporting American manufacturing jobs by allowing use of lower-priced inputs.
For many companies, imports of key inputs improve their competitiveness in the global economy.
The impact of imports on prices also plays an important role in dampening inflationary pressures and, in turn, keeping interest rates low.

The Importance of Investment

Global flows of foreign direct investment also have been an increasingly important source of worldwide economic growth and integration. The International Monetary Fund estimates that since 1970 global capital flows as a percentage of GDP have increased almost tenfold for advanced economies and more than fivefold for developing economies. Such outflows, as well as foreign investment inflows into the United States, are critically important drivers of economic growth and productivity. U.S. foreign direct investment outflows also generate substantial U.S. exports; indeed, the largest market for U.S. exports is foreign-based subsidiaries of U.S. companies, as discussed in greater depth in section III.2.

The Importance of Strong Rules on Transparency, Investment. Intellectual Property and Government Procurement

Strong rules are also critical to support U.S. competitiveness in the global economy. Four key types of rules are of primary importance:

Transparency. Transparency, both in the terms of the open flow of information and the accountability of government officials, is a vitally important component in eliminating barriers to trade and investment and promoting economic growth and reducing poverty worldwide. Opaque government processes, in areas ranging from regulatory rulemaking and certification and approval processes to government procurement, impede competition and lend themselves to corruption and discriminatory practices. Multiple and non-transparent bureaucratic structures also impede full fact-based and efficient decisionmaking, undermining the ability of governments to promote most efficiently and effectively the welfare of their citizens. With its long history of governmental transparency, the United States has been an important leader on transparency in international organizations and in negotiation of strong transparency principles in recent free trade agreements. Section III.5 explores the importance of transparency in the international trade and investment context more fully.
Investment Protections. Fundamental to the U.S. legal system is the right of individuals to protect themselves against arbitrary, discriminatory and expropriatory government actions. From the Due Process, Equal Protection and Takings Clauses of the U.S. Constitution to the Administrative Procedure Act to a host of other federal and state laws, the U.S. legal system guarantees Americans and foreigners the right to protect themselves against fundamentally unfair government action. The same protections form a critical piece of bilateral investment treaties and a number of trade agreements – promoting broader U.S. national interests in the rule of law and the protection of individuals. Section III.1 provides an in-depth examination of these important rules.
Intellectual-Property Protections. Intellectual property is a major contributor to U.S. economic growth, employment and success in the global economy. The protection of intellectual-property rights is, therefore, a vital component of U.S. trade and investment policy that is necessary to support continued U.S. competitiveness worldwide. ECAT strongly supports the negotiation, implementation and enforcement of strong protections for intellectual-property rights worldwide. This issue is explored in depth in Section III.4.
Government Procurement. Government procurement comprises a significant share of the global economy, representing from 10-to-15 or even 20 percent of the gross domestic product (GDP) for many countries around the world. More efficient, accountable, competitive and transparent government-procurement structures are increasingly critical for all governments, as they seek to provide their citizens with the highest quality goods and services within significant fiscal constraints. The importance of strong rules on access, accountability and transparency in government procurement are detailed in section III.3.

Key Facts about International Trade and Investment

Despite the many benefits of trade, investment and the trade and investment agreements that the United States has negotiated and entered into over the last several decades (detailed in section II.2), numerous myths have arisen around the impact of trade and investment on the United States and in the developing world. Indeed, some seem to suggest that trade is the cause of most of America’s or the world’s ills, from job loss to income inequality to poverty. The solution, they say, is to pause from globalization, walk away from trade agreements and limit imports.

In fact, claims of the loss of millions of jobs or of U.S. manufacturing as largely due to trade and foreign investment are simply false. And the proposed “remedies” would have a much more adverse effect on U.S. workers and the U.S. economy than the “ill” they are trying to cure. Below is a brief review of the facts about the role of international trade and investment for the United States and the world, with respect to trade deficits, leveling the playing field, jobs, wages and income inequality, and the developing world:

THE FACTS ABOUT TRADE DEFICITS

Trade deficits are often portrayed as a measure of how well the United States is doing in the global economy: If the U.S. trade deficit is increasing, some claim, the United States must be losing. Some even make claims that for every million dollars of the trade deficit, the United States is losing a certain number of jobs. In fact, such claims are far from the truth.

Trade Deficits Are More than Trade

Trade deficits are a result of many factors beyond trade, including the U.S. savings rate, oil-import prices, exchange rates and other factors. For the United States, trade deficits have often been counter-cyclical to economic growth, meaning trade deficits expand as the U.S. economy grows and fall during periods of recession. Indeed, the last year that the United States had a trade surplus was in 1991, during a recession. Economists note many factors that create trade deficits. For the United States, its low or negative savings and its generally strong GDP growth are often noted as the primary indicators of why the United States has generally run trade deficits from the 1970s onward, in contrast to countries with high savings rates and low growth.

Trade Deficits Are Not an Indicator of Job Loss

Claims that trade deficits automatically or necessarily result in U.S. job loss are simply false. U.S. unemployment has fallen significantly as trade deficits have increased: U.S. unemployment has fallen significantly from its 7.5-percent level in 1992, at the same time that trade deficits have grown by about 300 percent. As the United States undertook significant trade liberalization through the NAFTA and the Uruguay Round Agreements creating the WTO, total U.S. employment grew by 22 million jobs between 1990 and 2000, and U.S. average per-capita real income rose by 26 percent over the same period.

TRADE AGREEMENTS ARE PART OF THE ANSWER
Since the U.S. market is largely open, the main effect of trade agreements is to eliminate foreign trade barriers and open other countries’ markets to our goods and services.

WTO Agreements Have Produced Enormous Gains for the United States

U.S. annual incomes are $1 trillion higher, or $9,000 per household, due to increased trade liberalization since 1945.
Since the founding of the multilateral trading system in 1948 and eight successful rounds of negotiations, the world economy has grown six-fold and per-capita income worldwide has tripled.
Since the establishment of the WTO in 1995, U.S. exports and overall trade have continued to expand significantly, with:
- a $570-billion or 99-percent increase in U.S. agricultural and manufacturing exports; and
- a $270-billion or 132-percent increase in U.S. services exports.

Bilateral and Sub-Regional Free Trade Agreements (FTAs) Also Produce Major Benefits:

U.S. trade with our 14 FTA partners now accounts for approximately $1,069 billion or 34 percent of total U.S. trade and 41 percent of U.S. exports.
U.S. exports to countries with which the United States has concluded an FTA since 2001 have increased by 70 percent.
U.S. exports to each of its major FTA partners have increased significantly after each FTA has entered into force.
- U.S. goods exports to the NAFTA countries more than doubled between 1993 and 2007, from $142 billion to $385 billion, growing faster than U.S. exports to the rest of the world.
- U.S. goods exports to Chile increased by more than 300 percent between 2003 and 2007, increasing from $2.7 billion to $8.3 billion in just four years.
- U.S. goods exports to Singapore increased by 58 percent, from $16.6 billion in 2003 to $26.3 billion in 2007.
- U.S. goods exports to Australia increased almost 35 percent, from $14.3 billion in 2004 to $19.2 billion in 2007.
- U.S. goods exports to the five CAFTA-DR countries where the agreement has entered into force have increased 15 percent in just one year to nearly $18 billion.

U.S. services exports and U.S. investment have also increased, supporting greater economic growth, better paying jobs and greater productivity here in the United States.

Imports from U.S. FTA partners have also increased significantly, expanding the variety and choice of products available to U.S. consumers at competitive prices, lowering costs to U.S. manufacturers and dampening inflationary pressures.

THE FACTS ABOUT TRADE AND JOBS

1. Job Churn Is Part of the U.S. Economy

There are many reasons for job loss in the U.S. economy, including technological change, productivity improvement, changing consumer preferences, voluntary separation and increased competition from trade or new domestic market entrants. Indeed, in a typical quarter, 7.5-to-8.0 million U.S. private-sector jobs are created and 7.0-to-7.5 million jobs are lost, with a net increase in recent years of about half-a-million jobs per quarter.

2. Job Losses Attributable to Trade Are Limited, But Important to Address

Contrary to the generalized myth, however, trade and investment agreements actually account for a very small percentage of total job loss in the U.S. economy. For example, official government data show that approximately 500,000 job losses could be actually attributed to trade with Canada and Mexico (the NAFTA countries) between 1994 and 2002. Claims about millions of jobs lost to NAFTA or CAFTA or other agreements are unfounded. Trade and globalization have certainly produced job losses, but overall these job losses are relatively small compared to other sources of job loss in the U.S. economy. It is also important to recognize that the United States’ participation in the international economy has had differing effects on different communities across the United States, strengthening some who initially were able to compete more successfully in the international economy and adversely affecting others that were more vulnerable to the import pressures of foreign trade.

That said, job loss for any reason is extremely difficult and should be addressed through appropriate mechanisms. Workers who lost jobs due to trade with Canada or Mexico or as a result of trade agreements are provided specific Trade Adjustment Assistance (TAA) benefits, including job training and income support. As discussed in Part III, section 10, however, much more work remains on adjustment-assistance programs to improve their focus and effectiveness in helping workers and communities transition to new opportunities.

4. Income Inequality and Poor Wage Growth Are the Result of Many Factors

While there is evidence of increasing income inequality in the U.S. economy, claims that trade and globalization are solely or largely the cause are simply not accurate. Extensive research on wage inequality more often cites technological and educational inequalities as the leading causes. See, e.g., Christopher Wheeler, Evidence on Wage Inequality, Worker Education, and Technology, Federal Reserve Bank of St. Louis Review (May/June 2005):

While globalization overall (as opposed to particular trade agreements) may have some wage impact, independent economists do not view that impact as major. As a 2001 Congressional Research Service report concluded:

Slow average wage growth is fully and credibly linked to poor productivity growth. A small share of rising wage inequality can be linked to trade, but the great bulk of this trend is probably more soundly rooted in a rising relative demand for skill, growing out of a changed pattern of technological change.

Craig K. Elwell, Is Globalization the Force Behind Poor U.S. Wage Performance?: An Analysis, Congressional Research Service, Short Report for Congress, Updated January 12, 2001. See also Robert Lawrence, Blue-Collar Blues: Is Trade to Blame for Rising U.S. Income Equality? Peterson Institute (2007).

The Facts About Trade and Developing Countries

Study-after-study shows that developing countries that have integrated more into the global economy have been able to grow faster and make greater strides in eliminating poverty. See, e.g., World Bank, Globalisation, Growth and Poverty: Building an Inclusive World Economy (Washington DC: World Bank, 2002); Martin Wolf, Why Globalisation Works (New Haven and London: Yale University Press, 2004). Broadly, as trade and globalization have expanded, developing countries’ per capita incomes grew more than 3.5 percent a year in the 1990s and the number of extremely poor people in the world declined significantly – by 375 million people since 1981. While China is oftentimes viewed as a competitor, it is also a country that has moved more than 220 million people out of poverty in less than two decades, in significant part as a result of its integration into the global trading system and adoption of domestic-market reforms. At the same time, as made by clear by Beyond Assistance, The HELP Commission Report on Foreign Assistance Reform (December 2007), more work can also be done to improve foreign assistance and align U.S. trade and development policies.

While the United States can do more to open its market to developing countries, many of the barriers to trade faced by developing countries are found in other developing countries; about 70 percent of tariffs paid by developing countries go to other developing countries. While trade and investment play important positive roles in creating new economic opportunities and supporting growth, they are not panaceas and cannot solve every issue that a developing society faces. Strong governance and the rule of law, capacity building and other key features of a modern economy are critical to help move developing countries toward sustainable development, growth and poverty elimination.

As further documented in ECAT’s Global Investments, American Returns (GIAR), 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, and exports, as well as better, higher-paying U.S. jobs. 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 their participation in world markets.

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.

In January 2003, ECAT released Mainstay IV: Technology, Trade and Investment: The Public Opinion Disconnect. This study documents that trade and investment are critical components supporting the growth in productivity and the increase in U.S. living standards that the United States has enjoyed over the last decade. This study examines in particular the relationship between trade and investment and the growth in the production and in the use of information and communication technology (ICT) products. The production and use of ICT products have accounted for about two-thirds of the acceleration in U.S. labor productivity over the last decade. This acceleration has been much celebrated, as labor productivity is the single best measure of a country’s overall standard of living. The faster growth rate of recent years implies that U.S. living standards now double in only 28 years – a generation faster than with the previous growth rate.

The key conclusion of Mainstay IV is that trade and investment play a critical role in fostering the growth of and the demand for ICT in ways that support increased productivity and economic growth. Yet there is a disconnect in public opinion that needs to be addressed. Americans strongly embrace technological progress, even if it results in job loss, while, at the same time, they are apprehensive over the trade and investment liberalization that helps make such technological progress possible. The study recommends:

Action by policy makers and business leaders to articulate the essential role of trade and investment in the production and use of new technologies.
The promotion of expansionary trade and investment policies, including new trade- and investment-liberalizing agreements and policies that promote and protect U.S. investment abroad.
The promotion of further trade and investment liberalization in the technology sector.
Bipartisan reform and modernization of the adjustment-assistance programs.

It is also important to note that the global integration of the U.S. and other economies is not a new phenomenon. Indeed, the world achieved a relatively high degree of global integration during the period from the late 1800s to World War I. That integration was reversed, however, as a result of political conflicts and the enactment of shortsighted protectionist trade policies, such as the prohibitively high Smoot-Hawley tariffs in the Tariff Act of 1930 that presaged the great U.S. depression. Much of the last half of the 20th Century, then, was an effort to regain the level of integration that had been achieved by World War I. It was only in the early 1980s that the world was able to exceed the level of economic integration achieved in that earlier period.

ECAT’s Activities to Promote Greater Trade and Investment

Since its formation in October 1967, ECAT has played a leading role in promoting trade and investment liberalization, promoting strong protections for international investment and opposing protectionist efforts to restrict trade. Throughout 2007 and into 2008, ECAT has been active on the full spectrum of trade and investment issues, including the following:

Bipartisan May 10th Trade Deal. ECAT actively supported Administration and Congressional efforts to reach a bipartisan agreement on moving forward on trade- and investment-liberalizing agreements as well as the renewal of trade-negotiating authority. After months of negotiation, a bipartisan trade deal was announced on May 10th by U.S. Trade Representative Susan Schwab, House Speaker Nancy Pelosi, Ways and Means Chairman Charlie Rangel and Ranking Member

Jim McCrery. Under this deal, the Administration committed to modify certain provisions in pending trade agreements, including on labor, environment, investment, procurement, and intellectual property, in exchange for Congress moving forward on key trade agreements. The May 10th trade deal enabled, however, only one trade agreement – the U.S.-Peru Trade Promotion Agreement – to move forward in 2007.

Leading up to and following the announcement of the bipartisan May 10th trade deal, ECAT engaged in extensive advocacy with key Administration and Congressional players to seek outcomes that would reflect ECAT’s trade- and investment-liberalizing priorities. ECAT is, however, disappointed that the bipartisan May 10th deal:

has not secured Congressional movement on the other pending trade agreements or on the renewal of trade-negotiating authority; and
included reductions in intellectual-property protections for innovative pharmaceutical products, over the strong objections of ECAT, many ECAT companies and other business groups.

Trade and Investment Negotiations. Building upon its prior work, ECAT has actively continued its efforts to promote concrete trade and investment liberalization through the negotiation and implementation of regional, sub-regional and bilateral free trade agreements, as well as the global negotiations undertaken as part of the Doha Development Agenda of the World Trade Organization (WTO). ECAT has been active on several different fronts in promoting this agenda:

Doha Development Agenda: With the full-scale resumption of the Doha Development Agenda (DDA) negotiations in early 2007, ECAT has intensified its efforts with the Administration, Congressional leaders, the broader business community and foreign governments and industry in support of concrete progress on an ambitious outcome across all major negotiating areas. ECAT has continued meetings with U.S. and foreign delegations and is working to help promote breakthroughs in the negotiating stance of key countries.
Russia’s WTO Accession: ECAT continued efforts with key Administration officials and Members of Congress to promote concrete progress on Russia’s WTO accession negotiations, supporting company efforts to promote Russia’s improved commitments in agriculture, goods, services, intellectual property and encryption, among other issues. ECAT also helped lead business community efforts to lay the groundwork for Congressional authorization of permanent normal trade relations (PNTR) with Russia as early as 2008.
Bilateral Trade Agreements: ECAT continued to work extensively to support the negotiation of trade- and investment-liberalizing FTAs and Trade Promotion Agreements (TPAs) with the highest standards possible on investment, intellectual property, government procurement and transparency.
- Congressional Approval of U.S.-Peru Trade Promotion Agreement. ECAT played an important leadership role in support of Congressional approval of the U.S.-Peru Trade Promotion Agreement, which the House and Senate approved in strong, bipartisan votes on November 8th and December 4th respectively. ECAT developed key messages on the pivotal issues raised by the agreement’s opponents, including enforcement, procurement and investment.
- Conclusion of High-Standard U.S.-Korea Free Trade Agreement. ECAT was a key leader in promoting the negotiation of a high-standard trade- and investment-liberalizing agreement with Korea. ECAT and ECAT companies led a major business-community campaign to secure a high-standard investment chapter as part of the final Korea FTA that was signed on June 30, 2007, successfully preventing the inclusion of proposals that would have substantially weakened investment protections or limited U.S. investment in Korea.
- Promotion of Congressional Approval of Colombia, Korea and Panama Trade Agreements. ECAT has worked actively to support Congressional understanding and approval of the pending trade agreements with Colombia, Panama and Korea. In December 2007, ECAT released, with key Congressional leaders, a letter from ECAT chief executives urging Congress to move forward quickly with the Colombia trade agreement, as well as the other pending agreements.
- Other FTA Negotiations. ECAT continues to monitor the status of a number of negotiations that are effectively on hold, including with Malaysia, the United Arab Emirates, Ecuador, South Africa and the Western Hemisphere.
Investment Negotiations: ECAT continued its intensive efforts to promote strong and high-standard bilateral investment treaties (BITs), along with strong investment chapters in trade-agreement negotiations. In addition to its extensive work on the Korea FTA, ECAT renewed business efforts to secure full investment protections for financial services firms, starting with the Rwanda BIT negotiations. More broadly, ECAT led business-community efforts to advocate the initiation of bilateral investment treaty negotiations with the four BRIC countries (Brazil, Russia, India and China), helping to spur interest in such negotiations by the Administration. Despite the difficulty in these negotiations, successful agreements would address many of the key access and investment-protection needs of ECAT companies in many of the most important markets around the world.
Implementation of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA): ECAT built upon its leadership of business-community efforts from 2003 onward in promoting the negotiation and subsequent Congressional approval of a comprehensive and commercially meaningful free trade agreement (FTA) with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. Following U.S. approval and implementation of the agreement in 2005, ECAT has focused its work on the Administration, the other CAFTA governments and industry to support strong and full implementation of CAFTA in each of the countries that has ratified the agreement. In particular, ECAT has provided advice and support to promote full implementation on such key areas as intellectual property, distribution, services and investment with the five countries that have ratified the agreement. ECAT has also welcomed Costa Rica’s successful efforts to ratify CAFTA in 2007 and is supporting Costa Rica’s full implementation of the agreement as soon as possible.
Intellectual Property. With respect to intellectual property (IP), ECAT worked extensively to support the negotiation of strong commitments in new agreements and the implementation of IP commitments in existing agreements. Covering IP issues of importance to the information technology, publishing, consumer products and pharmaceutical industries, ECAT played an active role in promoting IP protections in negotiations on Russia’s WTO accession and in trade-agreement negotiations, as well as in the implementation of FTAs, particularly CAFTA. As discussed above, ECAT continues to work with the pharmaceutical sector to seek new ways forward after the Administration and Congressional leaders agreed to a reduction in important IP protections for innovative pharmaceuticals.

China. China trade and investment policy was again a top priority for ECAT in 2007. ECAT worked extensively to develop greater Congressional understanding of the complexity of the U.S.-China economic relationship and to counteract pressure to impose penalty tariffs on Chinese imports. ECAT actively engaged with the Senate Committees on Banking and Finance as they developed and considered currency and China-related legislation, providing detailed comments on legislation as well as amendments considered during the committee processes. ECAT also provided detailed testimony to the House Committee on Ways and Means on each major piece of China trade legislation being considered. In addition, ECAT remains one of the lead organizers of broader business-community advocacy work, including letters and business community-wide principles, to promote more constructive engagement with China and a rejection of protectionist responses.

Throughout the year, ECAT also worked to help support progress in key aspects of the U.S.-China trading relationship, particularly with regard to China’s implementation of its WTO commitments in the areas of government procurement and intellectual property. With respect to government procurement, in December 2007, China submitted its first offer of coverage to join the WTO’s Government Procurement Agreement.

Foreign Investment Issues. In addition to its work in support of strong investment agreements with other countries, ECAT played a major role in business-community efforts to prevent changes in national-security reviews of foreign investment in the United States (administered by the Committee on Foreign Investment in the United States (CFIUS)) that would undermine U.S. investment at home or abroad. From the inception of controversy surrounding the acquisition of U.S. port terminals by Dubai Ports World, ECAT worked with Congress and the Administration to explain the benefits and interrelationships of investment by foreign companies in the United States and U.S. companies abroad. ECAT issued letters, policy papers, and testimony, and also provided draft legislative language throughout the CFIUS-review process to ensure that the resulting legislation, enacted on July 26, 2007, would not undermine the open-investment policy of the United States.

Government Procurement. ECAT continued its role as the secretariat to the International Government Procurement Coalition and worked for improvements worldwide on procurement activities. A significant focus this year has been on preparing for China’s negotiations to join the WTO’s Government Procurement Agreement (GPA), which China formally launched in December 2007. Working with Coalition members, ECAT is seeking to provide detailed advice to the Administration on key business-community priorities. ECAT also monitored the completion of WTO efforts to simply the text of the GPA and continues to focus on efforts to expand GPA commitments, as well as bilateral government-procurement commitments in FTAs.

Enhancing U.S. Competitiveness and Liberalizing the U.S. Market. ECAT continued work in several areas in 2007 to promote enhanced liberalization of the U.S. market and expanded U.S. competitiveness in key areas, including sugar and U.S. agricultural policies, trade remedies, export controls, and international tax policy.

Sugar and U.S. Agriculture Policies: ECAT continued to support greater liberalization of the U.S. sugar market and improvements in U.S. agricultural policy through the U.S. farm bill. ECAT was part of a broad-based coalition of companies and associations advocating sugar reform in the United States.
Trade Remedies: ECAT continued work to encourage greater attention to export interests within the trade-remedy laws of the United States and other countries through the Doha Development Agenda negotiations.
Export Controls and Unilateral Sanctions: ECAT continued to support export control policies that fully reflect the commercial issues faced by our companies and the elimination of unilateral sanctions.
International Tax Policy: ECAT also sought to ensure that changes to international tax policy would enhance and not undermine the global operations of U.S. companies, including opposing tax changes in the U.S. farm bill that would undermine investment in the United States and other legislative provisions that would negatively affect the global competitiveness of U.S. industries.

The Continued Need for Trade Outreach

Despite the importance of trade and investment liberalization in supporting economic growth and a high standard of living in the United States, there remains much skepticism in Congress and the broader public on whether the United States should continue to pursue liberalized trade and investment. In their 2001 book, Globalization and the Perceptions of American Workers, Kenneth Scheve and Matthew Slaughter review public-opinion surveys dating back to the 1930s documenting this uncertainty. Their review indicates that while a large majority of Americans acknowledge the gains from globalization, a plurality to a majority are worried about the impact of trade and globalization on labor issues, particularly wages and jobs.

Given the gap between public perception and most economic studies that demonstrate the value of trade and investment liberalization to the growth of the U.S. economy, it is clear that trade-outreach efforts must continue and be reinvigorated. ECAT is committed to continuing and heightening its efforts in this area. ECAT also plans to continue the use of and further develop trade-outreach messages to communicate the benefits of trade to Congress, as well as to American workers and their families.

ECAT’s Trade Outreach Messages

ECAT’s trade-outreach 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 positive 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. In 1999, 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 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. In 2000, ECAT’s message research was used as the basis for the advertising and development of materials to promote PNTR with China. In 2001 and 2002, ECAT’s message research helped form the basis of the communications developed by USTrade in support of Trade Promotion Authority and of pro-trade advertising developed by ECAT and The McGraw-Hill Companies. In 2005, similar themes were also included in advertising in support of Congressional approval of CAFTA.

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

In October 1999, then ECAT Chairman Ernest Micek and Congresswoman Jo Ann Emerson (R-8 MO) 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 website. The TDO website also includes a “best practices” bulletin board, where we encourage 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.