Testimony by Secretary of Commerce Donald L. Evans

Before the Senate Finance Committee on Trade Promotion Authority

June 21, 2001

Washington, DC

[As Prepared For Delivery]

Mr. Chairman, Senator Grassley and members of the Committee, thank you for inviting me here today to testify on Trade Promotion Authority and on the imperative of maintaining America's leadership role in the global marketplace. I'd like to make a brief opening statement and submit my written testimony for the record.

Let me begin by emphasizing the economic case for continuing to open markets. America has always been a trading state, and, in purely economic terms, it's in our nation's best interest to pursue free and open markets. We remain the world's preeminent exporter of goods, services and investment. We also benefit from the stimulus of foreign competition and the investments that others make in our country. Trade liberalization has been a key factor in the longest period of sustained economic growth in our nation's history.

It is important to recognize that U.S. exports accounted for nearly one-quarter of the economic growth we experienced during the past decade.

Despite that track record, the critics of open markets argued that further trade liberalization would destroy U.S. manufacturing, diminish the earning power of the American worker, ignite a race-to-the-bottom that would undermine our labor and environmental standards, and yield benefits only for larger multinational corporations.

Well, what has happened as trade increased around the world these past 10 years? Let's look at the hard facts.

Since 1995, following the implementation of the NAFTA and the Uruguay Round, total U.S. private sector productivity has increased three percent a year. U.S. industrial production was 48 percent higher in 2000 than in 1990. More than 20 million new jobs have been created in the United States since the early 1990s. And our goods and services exports have grown even faster than the U.S. economy, increasing more than 7 percent a year since 1992.

We estimate that some 12 million U.S. jobs are now supported by exports. One in every five manufacturing jobs is supported by exports. And these jobs are good jobs, paying up to 18 percent more than the national average.

Furthermore, there has been no race-to-the-bottom. Our labor and environmental laws have been reinforced, not undercut, during the past decade.

Finally, trade has extended its benefits throughout our economy, not just to large multinational corporations. Most American workers are employed by small and medium sized enterprises [SMEs]. It is these businesses – which account for nearly 98 percent of the growth in the exporter population – that would be among the major beneficiaries of future negotiations that reduce foreign barriers to U.S. exports. America's farmers will also benefit greatly. One in three U.S. farm acres is planted for export and 25 percent of gross farm income comes from exports.

Trade is an engine of economic growth, job creation, national competitiveness and innovation, and this results in a higher standard of living for all.

But trade is not just about economics. As President Bush said, it's a moral imperative. Free and open trade is a foundation for democracy, social freedom, social responsibility and political stability. It's about human freedom and a higher quality of life for all.

One key element in making progress toward that goal is rebuilding a consensus in support of opening markets. The vehicle to do that is Congress' grant of Trade Promotion Authority. Let me emphasize that, regardless of your perspective on what should go into a trade agreement, it serves no one's interest to prevent the President from taking the U.S. seat at the negotiating table. As the President recently observed, "Free trade agreements are being negotiated all over the world, and we're not party to them." There are more than 130 preferential trade agreements in the world today, and the United States belongs to only two.

We have to get off the sidelines and back into the game. The President intends to press forward bilaterally, regionally and multilaterally to expand trade and the accompanying economic opportunities it creates for the American people.

It's often said that we don't need Trade Promotion Authority until an agreement is concluded and Congress has to vote on its implementation. The reality is that negotiations in the WTO on services and agriculture began in 2000, and proposals are on the table. Trading partners now are asking when we will have Trade Promotion Authority. Some will use the absence of TPA as an excuse to avoid new talks. We shouldn't give them that excuse.

For some of our Latin American and Caribbean trading partners, TPA is viewed as a litmus test of our commitment to a Free Trade Area of the Americas. They don't want to have to negotiate twice, once with the Administration and once with Congress.

Yet, there are still those who argue that numerous agreements have been negotiated since the TPA expired in 1994, so there is no need to act now. The fact is that apart from the Jordan FTA, none have involved reciprocal market opening measures whereby we give and get access overseas.

This administration is well aware of the fundamental role Congress plays in setting our trade policies under the Constitution. In fact, what Trade Promotion Authority really provides is a vehicle to ensure that Congress and the President work together, cooperate and have agreed on negotiating objectives.

Our intent is to work closely with Congress, not only for the passage of Trade Promotion Authority, but to rebuild the political consensus necessary for our negotiators to engage with their counterparts at the bargaining table. Congress is an indispensable partner in this enterprise and I'm here to assure you that we can work together in a partnership based on mutual trust, respect and certainty.

Mr. Chairman, securing TPA is essential to successfully implement the President's trade agenda, a bipartisan plan that will benefit all Americans. It includes first, eliminating tariffs and other barriers that impede U.S. exports of goods, services, investment and ideas. Second, his agenda will bring a special focus to areas like agriculture that would have the most profound benefits for American exporters and for global well being. Third, it will keep electronic commerce free from trade barriers. And, fourth his agenda will preserve our ability to combat unfair trade practices that limit economic opportunity.

Finally, let me speak to the connection between trade and labor and the environment. The President and I believe that the most significant impact that trade can make on labor and the environment is through rising standards of living, greater freedom and greater social responsibility for all citizens. This will lead to demands for improved labor and environmental standards.

Clearly, free trade and the need to promote its advantages through passage of TPA are important to the American people and to all mankind. But our ability to promote economic growth and freedom through trade will depend on how well we communicate the benefits of trade in every home, on every factory floor, on every farm, and up and down every Main Street in this great nation.

I'm looking forward to working with this Committee and all the members of Congress to build the same type of bipartisan coalition on trade and Trade Promotion Authority that brought tax relief to the American people.

Thank you.