STREAMLINE

FTS-COMMERCE-ITA-1

April 24, 2007

11:00 am CT

J.W. Marriott, Jr.: Good afternoon. May we have a roll call?

Marc Chittum: Yes sir, I’m happy to do so. Thank you very much.

J.W. Marriott, Jr.: Okay.

Marc Chittum: We know you’re here and - has (Jim Morgan) joined us?

All right, we know Sharon Allen is here.

John Chen?

John Chen: Yes.

Marc Chittum: Jim Dicke?

((Crosstalk))

Marc Chittum: Is he there?

James Dicke: Here, Jim Dicke is here.

Marc Chittum: Great. Yeah, I know Warren’s there.

One moment please.

(Arnold Donald)?

Juan Carlos Iturregui?

Juan Carlos Iturregui: I’m here.

Marc Chittum: Chris Jenny?

Cecilia Levine?

Betty Manetta?

We know Prakash is still with us, correct?

Prakash Puram: Yes.

Marc Chittum: Great, Prakash.

Lenny Sands?

Harold Smith?

Harold Smith: Here.

Marc Chittum: And Warren Staley.

Warren Staley: Yes.

Marc Chittum: Thank you.

J.W. Marriott, Jr.: Jim Dicke.

James Dicke: Yes?

J.W. Marriott, Jr.: You’re there.

Okay.

Marc Chittum: We have, yourself included, Mr. Marriott, eight of the PEC members other than Secretary Gutierrez and Ambassador Schwab.

Is Jim Lambright with us?

Undersecretary Lavin?

Frank Lavin: Here.

Marc Chittum: Thank you for joining us.

That’s the roll as of now, Mr. Chairman.

J.W. Marriott, Jr.: Okay. I’ll call the meeting to order.

Welcome all of you. Thank you for joining us.

We’re going to discuss our recommendation on Trade Promotion Authority. And as we all know, the council is very supportive of us doing the free trade agreement and the expanding markets of our trading partners are of great interest and concern, I think, to all Americans.

In fact, we wrote a letter to the President two years ago in favor of renewal of Trade Promotion Authority, continued US involvement in the WTO and the pursuit of free trade agreements.

With the pending expiration of TPA on June 30, we are revisiting the issue.

Secretary Gutierrez and Ambassador Schwab have been leaders on the issue, and I’m pleased they’re joining us today and I would first like to call on Secretary Gutierrez to give us any thoughts he has on the matter.

Carlos Gutierrez: Thank you, Mr. Chairman.

And I want to thank you and the council for your clear statement and leadership in support of extending the President’s Trade Promotion Authority. We believe that it’s very important for President Bush and very important for every president to have TPA.

Without confidence that negotiated agreements will be voted on as presented, our trading partners will be reluctant to enter into talks or negotiations. So, not having Trade Promotion Authority would be a disadvantage.

We have a solid track record with TPA, and I’ll just mention a couple of highlights.

Under President Bush’s leadership, we have implemented free trade agreements with 11 countries. That’s more than has ever been done before.

Last year, very importantly, our export growth outpaced our import growth and just remarkable that we are able to grow exports 13% for a total of
1.4 trillion.

So not only are we the largest exporter in the world of goods and services but also growing off that base a very impressive 13%, and that’s above the rate of growth of imports, which was 11%.

So we’re seeing the impact of these trade agreements rolling up and achieving momentum in our export numbers and that - all of that is being reflected in our economy.

Our economy is clearly the fastest growing of any industrialized nation. In March, we created 180,000 new jobs. Our unemployment is at 4.4%, which is below the average of the past 40 years. Our growth rate in 2006 was 3.3%, that’s also above the last 15-year average.

So, exports are clearly contributing to this. And as we talked before, exports are supporting millions of high-paying US jobs.

So I thank you again for your leadership and we look forward to working with you to ensure that we can get TPA renewal and continue to have trade work in favor of US firms and US workers.

So, thank you again, Mr. Chairman.

J.W. Marriott, Jr.: Thank you, Mr. Secretary, appreciate your good comments.

I’d like to ask Ambassador Schwab to give us her views.

Susan Schwab: Thank you very much, Mr. Chairman. And again, let me also commend the President’s Export Council for its engagement and enthusiasm and support for Trade Promotion Authority.

We have, as you all know, a three-pronged agenda when it comes to trade agreements, the Doha round negotiations going on.

We have the FTAs, the free trade agreements, 11 new ones implemented. We have two ready for congressional action, that’s Peru and Colombia; and two ready for closure, Panama and Korea most recently.

Korea, being a free trade agreement with the tenth largest economy in the world, our seventh largest trading partner, fourth largest market, for example, for US agricultural exports; so a huge opportunity there for American farmers and ranchers and workers and businesses and service providers.

And then finally, a final prong of our trade agenda, the enforcement of this rules-based trading system, whether it’s enforcement of WTO agreements, WTO accession agreements or free trade agreements.

And as Carlos noted, you know, this agenda is showing results. And our exports to the ten free trade FTA countries that we have closed and implemented FTAs with since 2001 exports are up twice as fast, 26% to those FTA partners compared to 13% to the rest of the world.

And that 13% is a very respectable number, but obviously the 26% being very, very impressive, and even though these FTA partners account for what 7% of non-US GDP in the world, we’re talking about 42% of our exports.

Trade Promotion Authority, every president since 1974 has had this authority and we need it for Doha round agreement, we cannot, will not have a Doha round agreement without it.

And if Trade Promotion Authority lapses and is not renewed, we’re basically going to be sitting on the sidelines while lots of other countries are out there negotiating bilateral and regional trade agreements that will exclude us, that will disadvantage our competitive exporters and import-using industries.

So the sort of my message and all the more important that the President’s Export Council deliver this letter, I think it is - it’s terrific, it’s a great message.

And I would just add, when it comes to messages, it is very clear from watching the media and contemplating US trade politics in this day and age that we can’t take for granted that the American people or even workers in export-competitive industries understand the extent to which the US economy relies on trade, is benefited by trade.

A little footnote here: We have World Trade Week coming up in May, I believe the 20th of May thereabouts. There’ll be activities going on the week before, the week of, the week after.

Very, very useful for those of you in industries, whether agribusiness or manufacturing or services, to get out there and get the word out, whether that’s op ed pieces, slipping little notes into your employees’ pay stubs, letting people know, letting your communities know how very important trade is to their economic future.

So, thank you.

J.W. Marriott, Jr.: Thank you very much.

You’ll have the votes going, but if you were voted on today, do you think we’d win?

Susan Schwab: On the FTAs.

J.W. Marriott: Yeah.

((Crosstalk))

Susan Schwab: On the Doha, on the FTAs, hard to know. I think there’s a clear sense among some Democrats that they’re uncomfortable with how partisan trade had become in the last several years. A lot of moderate Democrats are interested in voting yes on trade bills where they felt they were precluded from doing in the past.

The Republicans I’ve talked to would also much prefer to see a more bipartisan US trade policy and trade agenda.

So part of - we’re in the middle of a dialogue right now. I’m in the middle of a dialogue right now with Chairman Rangel, Congressman Jim McCrery, Chairman Bachus, Senator Grassley to see what kind of changes might be made some of the pending FTAs that would really bring up - bring out the bipartisan vote count, and that’s our focus right now.

J.W. Marriott, Jr.: Yeah, that’s great.

Susan Schwab: Regardless, you know, you can squeak by with one vote, we’ve squeaked by with one in the past. That’s suboptimal. We really would like to see strong bipartisan votes for these FTAs.

J.W. Marriott, Jr.: Right. Well, thank you for your tremendous effort, both you and the Secretary.

We’d like now to go to Warren Staley, who’s Vice Chairman of the Subcommittee on Trade Promotion and Negotiation, to give a report.

Warren?

Warren Staley: Thank you, Mr. Chairman.

Secretary Gutierrez, Ambassador Schwab, and fellow council members, thanks for the opportunity to present the Trade Promotion and Negotiation Subcommittee’s letter on Trade Promotion Authority or TPA for short.

It’s the authority granted by Congress to the President that allows for the trade agreements to be implemented without amendment.

Without this, our trading partners will be unwilling to negotiate with us out of fear that any agreement could be reopened by Congress.

TPA legislation sets out the guidelines for U.S. trade negotiations and mandates extensive consultations between the executive and legislative branches prior to conclusion and negotiation.

Since it was most recently enacted in 2002 the United States has entered into trade agreements with ten partner countries.

The agreements have contributed greatly to the expansion of U.S. exports. For example, U.S. exports to Chile have grown 150% since the implementation of the U.S.-Chile FTA in 2004.

Overall, the growth of U.S. exports to FTA partners in 2006 was 26% double the growth to all other countries.

These numbers demonstrate the importance of TPA for expanding market access for U.S. exporters.

U.S. exports in turn are directly linked to higher paying American jobs.

With TPA set to expire on June 30, 2007 it is time to for the administration to work in partnership with Congress to renew the important tool for U.S. trade policy.

Our main economic competitors, as was mentioned, will continue to negotiate trade agreements regardless of the U.S. trade agenda. These competitors could gain an advantage over U.S. manufacturers, farmers, and service providers if the United States is not similarly engaged in key markets.

Export growth is particularly important for U.S. manufacturing as approximately 5.1 million manufacturing jobs are dependent on exports.

TPA is also necessary for continued U.S. leadership in the global economy.

TPA renewal would promote progress in the WTO Doha round -- another priority for President’s Export Council members.

It is in the U.S.’ interest to see the WTO negotiations move forward.

Economic liberalization is a major factor in economic development and stability of developing countries.

Mr. Chairman, the President’s Export Council strongly supports the renewal of Trade Promotion Authority in order to allow for the continued negotiation of trade agreements that open U.S. markets that open markets for U.S. exporters.

Thank you for your attention and I submit the subcommittee’s letter for discussion and adoption.

J.W. Marriott, Jr.: Thank you very much, Warren.

A copy of the letter has been sent to council members, and for the members of the public, a copy is posted online.

Are there any comments, questions?

Jim Morgan: This is Jim.

J.W. Marriott, Jr.: Hi, Jim.

Jim Morgan: Warren, I think that’s really a nice job and I would encourage us to forward it as is. I think you just did a great job on it and it’s really critical to get support for trade promotion for our country and for our competitive position in the world.

J.W. Marriott, Jr.: Okay, thank you.

Any other comments?

Man: Yes.

((Crosstalk))

Man: I’d echo (Jim)’s comments. I think it’s a great job and is critically important.

J.W. Marriott: I agree.

Anyone else?

Juan Carlos Iturregui: I do have one, Mr. Chairman, Juan Carlos here.

Warren Staley: Yeah.

Juan Carlos Iturregui: On the CAFTA paragraph here on all these new trade agreements, I would suggest that we actually in one line or one number say or state how many new jobs, high value-added jobs have been created in the U.S.

Susan Schwab: Yes.

Juan Carlos Iturregui: In addition to the five million, you know, manufacturing jobs that are dependent on trade.

And then the last paragraph, we talk about the, you know, non-tariff barriers that restrict the flow of trade, we should - investment. It’s semantics but I think it’s important.

J.W. Marriott, Jr.: Are you okay with this, Warren?

Warren Staley: Yes, yes.

J.W. Marriott, Jr.: Okay.

Warren Staley: It’s a good idea.

J.W. Marriott, Jr.: Good. I think those are good ideas.

Man: Yeah, I do too.

J.W. Marriott: Anyone else?

Prakash Puram: Hi. I have…

((Crosstalk))

Prakash Puram: …a question, this is Prakash Puram.

J.W. Marriott, Jr.: Okay.

Prakash Puram: Ambassador Schwab just told us that the - that every president since 1974 has had TPA and we - when we say 2002, officially this is the right date TPA in its present form, but are we minimizing the importance of how long it’s been in effect and can we in fact say some form or the other TPA has been in existence since 1974 or ’88 or should we leave it to be precise? In its current form it was enacted in 2002.

Susan Schwab: The way you formulate it is entirely up to you. The thing that we would hope to avoid is the eight-year gap that existed during the Clinton administration…

Prakash Puram: Correct.

Susan Schwab: The beginning of the Bush administration because during that time obviously we lost a lot of opportunities - missed a lot of opportunities in the trade arena.

Prakash Puram: Right.

J.W. Marriott, Jr.: So let’s just leave it out, let’s not get in this.

I think the letter’s complete and I think the question - suggestions that were put forward are very good.

Any other suggestions?

John Chen: Yeah, this is John Chen. I don’t know whether I missed this or not, but early on Secretary Gutierrez has listed or at least identified the (RO) export. And many of those are tied to our trade agreement partners, the TPA partners or FTA partners. Is that point worth mentioning?

Warren Staley: I’m not sure what the point is.

J.W. Marriott, Jr.: I didn’t understand either, John.

John Chen: The point was, you know, if I understand correctly, with FTA which was the fast track program which was - or the free trade agreement program which was the - which has encouraged a lot of exports and thought that the basic weapon or process to allow these FTAs to be negotiated are entirely right on this fact that we have the TPA or is that not a true fact, those two are not linked?

Warren Staley: I think the comment that Sue Schwab mentioned that the FTAs - exports to FTA countries have grown by 6% and total exports have grown by 13%, is that…

John Chen: Yeah, but I mean I have seen some statistic about that and I thought that was a very powerful set of data, so to speak and - to encourage trade and it’s very fast track trade.

Susan Schwab: And you’re right, without - I mean, without Trade Promotion Authority there would be no free - no future free trade agreements.

John Chen: Right, that’s what I thought. But anyway, I’ll submit that for Warren’s committee to look at maybe.

Man: Great.

J.W. Marriott: I think that’s a good suggestion. Why don’t we just put one line in there that says that there won’t be any more trade agreements without free trade approval?

Woman: TPA.

J.W. Marriott, Jr.: Right, without TPA. Is that all right?

Woman: Yes.

Man: Yes.

J.W. Marriott, Jr.: Okay.