The United States cannot afford to sit on the sidelines of the international economy

American International Economic Engagement is Essential. This is the time to reassert U.S. leadership on international economic issues. Once an engine of domestic and international growth, international trade is set to decline by nine percent in 2009 – far faster than the projected decline in global economic growth. And international trade could collapse altogether – turning a very bad recession into a second Great Depression – if growing protectionist and isolationist initiatives here and abroad are not decisively challenged and rejected.

Domestic and International Economic Initiatives are Linked. America needs to move forward forcefully on all economic fronts. We need to move forward with our new domestic stimulus and financial stability programs and new domestic competitiveness initiatives. Additionally, we must recognize that our domestic economic recovery and competitiveness initiatives will not deliver their full potential if the United States does not have international trade and investment policies that help our companies and workers compete in the global marketplace.

Our companies and workers can succeed domestically and internationally with the right policies and priorities in place and energetic U.S. leadership – policies and leadership that restore our domestic competitiveness and also address the real challenges American workers and businesses face in the international marketplace – providing a level playing field for international competition, and preventing discrimination against U.S. goods and services, and businesses and workers.

Isolationism and Protectionism are Destructive. The path out of our domestic and global recession cannot embrace closing borders or taking a break from the international economy. If we do not lead with strong international engagement initiatives, our competitors will shape the future global economy without us, and to America’s detriment. As a matter of history, the Great Depression taught us that closing borders will exacerbate an economic crisis, not grow us out of it. As a matter of reality, the U.S. economy is more deeply internationalized than it has ever been, and exports and foreign investment earnings are important drivers of U.S. economic growth and job creation.

If America abandons international economic engagement or, worse, drifts into its own economic isolation – or lets other countries’ protectionist, isolationist and unfair trade policies go unchallenged – we run a high risk of undermining domestic and international initiatives to stabilize financial markets and rebuild the foundation for new economic growth necessary to create jobs and wealth at home and abroad.

New Ideas for International Economic Engagement. Comprehensive domestic growth initiatives deployed in concert with a renewed commitment to international engagement and enforcement of U.S. international trade agreements and laws that embrace fair trade and investment values, is our best hope for new American economic growth and the creation of jobs.

Business Roundtable believes that the fundamental policy of American international economic engagement set in place by President Roosevelt in the Reciprocal Trade Act of 1934 and pursued by all his Democratic and Republican successors – opening markets through bilateral, regional and multilateral negotiations – is as sound today as it was 75 years ago. Over the last year, there has been a great deal of discussion about the need to take time to review U.S. international trade and investment policies to make sure they will promote sustained economic growth in the 21st century. Business Roundtable believes this is an important challenge for the Obama Administration, Congress and the private sector.

This paper is part of Business Roundtable’s ongoing efforts to meet that challenge, to engage with the Obama Administration and Congress in a constructive dialogue on how to pursue international trade and investment issues in the future. In this paper, Business Roundtable outlines a blueprint for a 21st century policy of international engagement and leadership based on the fair trade and investment values of leveling the playing field for American companies and workers and preventing discrimination against our goods, services and investments. The following are highlights of the paper’s wide-range of recommendations.

1. Move Forward Unfinished Business.

• FTAs. Move the pending Free Trade Agreements (FTAs) with Colombia, Korea and Panama forward.
• WTO Doha Round. Re-energize the WTO Doha Round negotiations with a goal of completing them within the next 12 months.
• Bilateral Investment Treaties. Complete the BIT negotiations with China and India to make sure American companies are getting the same investment protection as their foreign competitors in these key markets.

2. New Approaches to Make Trade Agreements and Negotiations Work Better for the United States.

• Improve Enforcement. Reinforce American rights with more effective enforcement of international trade and investment agreements and U.S. trade laws. It is also essential to recognize that a successful enforcement strategy is dependent on the United States having strong agreements to enforce. This underscores the importance of moving forward with pending and new international trade and investment agreements.
• Promote U.S. Exports. Catalogue U.S. export incentives and disincentives (such as outdated and ineffective export financing and export controls) and move forward with comprehensive proposals to make sure government policies support rather than hinder American exports.
• FTA Integration, Expansion and Modernization.
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    Integration to harmonize different rules that have developed, making it easier for companies and workers to use the FTA system.
  • Expansion to help the United States pursue strategic economic, foreign policy and national security on a more comprehensive basis in key regions. Developing FTA negotiating strategies for our most commercially important bilateral markets like Japan and the European Union and regional markets like Asia should be a priority.
  • Modernization of agreements to make sure they reflect new economic developments and incorporate new understandings on important issues like labor and the environment.
• Consider New Flexible Negotiating Strategies.
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    Negotiating services-only FTAs with commercially important markets may be necessary to overcome obstacles in negotiating comprehensive FTAs with commercially important markets like Japan and the European Union.
  • New WTO negotiations should consider alternatives to the “single undertaking” approach used in the Uruguay and Doha Rounds, like “rolling negotiations,” plurilateral negotiations, including on a non-most-favored-nation (MFN) basis, and non-binding “best practices” negotiations to provide building blocks for enforceable agreements in the future.
• Prevent Foreign Regulatory Discrimination. Countries are replacing more traditional border restrictions like tariffs with regulatory barriers to give their own companies and workers a competitive advantage. U.S. negotiators, in cooperation with the private sector, should devise and execute a more aggressive strategy to promote fair and non-discriminatory regulatory systems, including:
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    The adoption of U.S. or international product standards, and harmonization of standards wherever possible.
  • The negotiation of strong and enforceable transparency rules.
  • The negotiation of mutual recognitions agreements.
  • Comprehensive high-level bilateral regulatory dialogues for commercially important regions and countries like NAFTA, China and India, for example.
• Establish Confidence in the Adjustment Process.
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    In the short term, make sure the new trade adjustment assistance program works, and give the President more authority to provide for adjustment assistance in “safeguard” cases in which the U.S. International Trade Commission has ruled in favor of the domestic industry.
  • In the long term, develop a comprehensive adjustment program along the lines of Business Roundtable’s America 21 proposal to help workers adjust to dislocations regardless of the cause and to provide them with 21st century skills.
• Trade and Development. Open trade and investment have helped countries as diverse as South Korea, Mexico, Brazil, India and China to grow their economies and become advanced developing countries. The United States should continue to play a leading role in helping the least developed countries successfully integrate into the global economy through a mix of policies.
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    Capacity building and technical assistance programs for trade facilitation, infrastructure construction and customs and regulatory modernization should be strengthened bilaterally and multilaterally through the IMF, World Bank and regional development banks.
  • Trade preference programs should be reviewed to ensure they are delivering benefits to the countries that need them the most and to evaluate whether they could be more effective if they were consolidated.

3. Rebuild Bipartisan Support for Negotiations

• Bipartisanship is Essential. Rebuilding bipartisan support for international trade and investment initiatives and for closer collaboration and cooperation between Congress and the executive branch is essential for developing and implementing strong international trade and investment policies to help American industries and workers compete in international markets.
• New Approaches and Resources. Rebuilding bipartisan support for international trade and investment initiatives and revitalizing the congressional-executive branch relationship will require new approaches and resources from both branches of government to ensure there is close cooperation in launching negotiations, during the negotiations and in implementing the agreements.
• New Fast Track/Trade Promotion Authority. Fast track/trade promotion authority is an essential tool for fair trade and economic growth. Fair trade and economic growth are not achievable without the negotiation and implementation of strong bilateral, regional and multilateral trade and investment agreements. New trade negotiating authority is needed and it should be tailored to reflect differences in multilateral and bilateral negotiations.
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    Permanent authority for multilateral negotiations should be considered because WTO negotiations have proven to take much longer to complete given the size of the WTO and its consensus-based negotiating structure.
  • Permanent authority for defensive bilateral and regional negotiations is essential to protect American companies and workers from our foreign competitors when they are moving forward aggressively to complete their own preferential bilateral and regional FTAs, as evidenced by the recent announcement that Korea and the EU are close to finalizing their FTA.

As American business leaders, the members of Business Roundtable stand ready to work with the new Congress, Administration and all U.S. stakeholders to help develop and implement the international trade and investment policies that America’s workers, communities and companies need to succeed in the world economy.