Business Roundtable is an association of chief executive officers of leading U.S. companies working to promote a thriving economy and expanded opportunity for all Americans through sound public policy.
It is in the national interest and imperative for the President, Congress and private sector to work together on economic initiatives that support stronger U.S. economic growth, create more economic opportunity and well-paying jobs for Americans and boost the competitiveness of U.S. companies and workers. To promote these goals, we need to move forward forcefully with a pro-growth economic agenda that includes a range of domestic initiatives and a proactive and constructive U.S. trade agenda.
That U.S. trade agenda should include supporting the rules-based international trading system and U.S. trade agreements that have shaped it, modernizing existing agreements and negotiating new high-standard agreements and strongly enforcing U.S. trade laws and agreements. Such an agenda should broadly aim to expand U.S. trade opportunities – exports and imports of goods and services – and address unfair foreign trade and investment practices and unfair imports, not narrowly focus on U.S. trade deficits. This document lays out key principles for U.S. leadership in achieving these objectives.
The Administration, Congress and private sector need to collaborate on a range of domestic economic policy initiatives. These include modernizing the tax system, taking a smarter approach to regulation, investing in infrastructure and helping Americans develop new skills throughout their lifetime.
We also need to recognize that the U.S. economy will not realize its full potential unless the United States does more to create trade opportunities with other countries and attract foreign direct investment to the United States. The U.S. economy and American jobs benefit from both U.S. exports and imports and their central role in global and regional supply chains, which also lower costs for U.S. consumers. Expanded trade will allow U.S. companies and workers to sell more American-made goods and services to the 95 percent of the world’s consumers who live outside the United States. A fully functioning and globally competitive U.S. Export-Import Bank is a vital trade tool for maximizing such U.S. export opportunities and directly and indirectly supporting American jobs at U.S. companies of all sizes.
The United States needs a winning trade agreement negotiating strategy because our foreign economic competitors are not standing still. Such a strategy should rely on negotiating trade agreements – bilateral, regional, plurilateral and multilateral – that will maximize U.S. leverage and ensure the United States actively shapes the international trading system so U.S. companies and workers are not disadvantaged.
There are now more than 270 bilateral and regional trade agreements between countries worldwide, and the United States is a party to only 14 of those agreements. These U.S. free trade agreements (FTAs) have greatly benefited the U.S. economy and American jobs by increasing U.S. exports and creating strong, enforceable rules for U.S. trade and investment with those countries. For example, while they include only six percent of the population outside the United States, the 20 U.S. FTA partner countries purchased nearly half of all U.S. goods exports worldwide in 2015. In that same year, the United States had a nearly $8 billion surplus in goods and services trade with FTA partner countries. This compares to a $509 billion U.S. deficit in goods and services trade with non-FTA countries. In the United States, U.S. trade and the trade agreements that help enable it support nearly 41 million U.S. manufacturing, services and other trade-related jobs – more than one in five.
Our foreign competitors are using their own FTA negotiations to advance their own national interests and gain competitive advantages over U.S. companies and workers by: (1) opening foreign markets and creating export opportunities on preferential terms for their companies and workers; (2) creating and supporting higher-paying domestic jobs tied to trade for their workers; (3) writing “free and fair” trade rules on their terms; and (4) advancing their foreign policy and national security goals.
Here are a few examples of other countries’ FTA efforts around the globe. The European Union (EU) has completed FTAs with Singapore, Vietnam and Canada. The EU is also negotiating FTAs with Japan, India, Indonesia, Mercosur (Brazil, Argentina, Uruguay and Paraguay), the Philippines, Australia and New Zealand and modernizing its existing FTA with Mexico. China is negotiating the Regional Comprehensive Economic Partnership with 15 countries, including seven of the 11 Trans-Pacific Partnership countries, and a trilateral FTA with Japan and South Korea. Moreover, Mexico, which is the second- largest U.S. goods export market, has a network of FTAs with 44 countries.
New U.S. trade agreements and existing U.S. trade agreements that need to be updated should achieve high standards, build on the rules-based international trading system and effectively address emerging economic and technological developments. They should ensure free and fair trade by breaking down foreign tariff and non-tariff barriers and addressing unfair foreign trade and investment practices and unfair imports.
Existing U.S. trade agreements should be periodically reviewed to see if they should be strengthened and modernized to address any trade issues and challenges that have emerged since they were negotiated. Examples of newer trade issues and challenges include: (1) promoting e-commerce and digital trade in goods and services, including the elimination of foreign barriers, for all sectors, to the free flow of data and requirements to store data locally; (2) ensuring market access for new types of services; (3) strengthening intellectual property rights; (4) eliminating foreign localization policies and domestic content requirements for goods and services; (5) ensuring fair competition with foreign state-owned and controlled enterprises; (6) simplifying and harmonizing rules of origin across U.S. trade agreements; and (7) promoting regulatory cooperation and coherence between the United States and its trading partners.
If trade agreements are not fully and properly implemented, enforced and upgraded over time, they risk delivering less value to American businesses and workers. In updating existing U.S. trade agreements, it is critical to maintain these agreements and build on the many benefits they have created for the United States.
The key objectives for negotiating new U.S. trade agreements and modernizing and strengthening existing U.S. trade agreements are set out in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015 law). The TPA-2015 law also establishes procedures for: (1) congressional oversight and consultation as well as public input on trade negotiations; and (2) implementation of a completed trade agreement. These requirements ensure that negotiations on U.S. trade agreements are as transparent and informed by Congress and the public as possible.
It is essential to create a level playing field for U.S. companies and workers by stopping unfair foreign trade and investment practices and unfair imports. This should involve strong and effective enforcement of U.S. trade and investment agreements – including World Trade Organization agreements – and U.S. trade laws and trade-related regulations, consistent with U.S. statutory requirements and international trade obligations.
A successful enforcement strategy depends on the United States having strong trade agreements to enforce. This means strengthening and modernizing existing U.S. trade agreements and aggressively pursuing new U.S. trade deals.
Such enforcement efforts provide an important opportunity to hold our trading partners accountable to strong trade rules. These efforts are also critical to opening international markets, halting unfair foreign trade and investment practices and unfair imports and addressing emerging economic and technological developments vital to U.S. innovation and competitiveness across all sectors of the economy.