Trade Liberalization (APCAC Position Paper - June 2005)

The Issue

Global trade liberalization is important for the U.S. economy and for U.S. businesses. Trade liberalization opens markets, reduces barriers and increases trade. Increasing international trade can help stimulate the U.S. economy and provide jobs and opportunities for American businesses in the United States and abroad. It also helps to create a more competitive environment leading to higher productivity and lower costs, which benefits everyone.

In addition to the WTO and the Doha Development Agenda’s multi-lateral approach to trade liberalization, a number of regional and bi-lateral trade agreements have developed over the past several years in response to strengthening geographic area ties and strong ally partnerships. The United States is currently pursuing bilateral and regional trade agreements with countries in Asia-Pacific and other regions of the world.

In Asia-Pacific, the U.S. has a trade initiative with member countries of the Association of Southeast Asian Nations (ASEAN) under the Enterprise for ASEAN Initiative (EAI). In addition, the U.S. has already signed free trade agreements (FTAs) with Singapore and Australia and is currently negotiating a free trade agreement with Thailand. Trade and Investment Framework Agreement(s) are under discussion with Indonesia, Malaysia and the Philippines. A Bilateral Trade Agreement was signed with Vietnam and normal trade relations were announced with Laos in 2004.

In recent years, economies across the Asia-Pacific region themselves have been making strides to further liberalize regional trade, including negotiating trade agreements. It is important that the United States continue to engage in liberalizing trade with the Asia Pacific region in order to maintain, and enhance our current trading activities. Failure to do so could result in the United States losing its current position as a preferred trading partner. For example, recently ASEAN nations have reduced tariffs for trade within ASEAN through the ASEAN Free Trade Area (AFTA) and they are in negotiations for an ASEAN-China FTA and a ASEAN-Japan CEPA. Thailand has negotiated or is negotiating trade agreements with twelve countries including China, Japan, Australia and Peru.

Position

• APCAC supports the WTO and the Doha Development Agenda as the global trading framework and urges governments to make real and substantial commitments in supporting the WTO and Doha Development agenda.

• We encourage governments to use criteria consistent with WTO rules when establishing licensing, accreditation, labeling standards and other potential non-tariff barriers to ensure consistency across regions and the world.

• APCAC supports Vietnam’s accession to the WTO based on terms that are conducive to American business interests, especially in the area of market access for US goods/services, greater transparency in changes to the Vietnamese legal framework and government tendering, and better enforcement of intellectual property rights, land use rights and customs duties/procedures.

• APCAC supports the negotiation and establishment of comprehensive FTAs, that, besides dealing with trade in goods, also cover covers investment, intellectual property, trade in services, government procurement and competition.

• To help allay the high costs inherent in the drafting of trade agreements, APCAC encourages the adoption and use of a standardized approach, format, and verbiage in the composition of Free Trade Agreements

• We support the Central-American Free Trade Agreement and other U.S. free trade agreements currently under negotiations including those with Thailand and Oman.

• APCAC encourages open discussions with other Asia Pacific countries to establish TIFAs, FTAs and stronger trading partnerships.

Rational

The United States is the world’s greatest trading nation, exporting more than one trillion dollars in goods and services in 2004. In the last 20 years, trade has grown to account for one-quarter of the U.S. economy. Exports have helped contribute to the overall prosperity of the U.S. economy and have contributed to an increase in the real per capital income of Americans. Trade supports millions of jobs in the United States. More than 12 million jobs are supported by exports, an increase of almost 40% since 1990. These jobs pay 10-15% higher than the average wage. Exporters are not just the big multinationals; sixty-five percent of all U.S. exporters are businesses with fewer than 20 employees.

Over the last several decades, the U.S. has continued to lose its competitive edge globally as lower-cost markets open up and other economies push into the global markets. Also proliferations of trade agreements between other nations, many of which are not comprehensive, are to the detriment of U.S. exports and investors. Only in the last several years has the U.S. joined the rest of the world in pursuing trade agreements and helping to support U.S. exporters and U.S. investors around the world. Close to two hundred trade agreements have been established worldwide with the U.S. being partner to only twelve. As other countries strengthen their trading relations, the U.S. will lose valuable markets and exports unless we participate in these liberalization.

The U.S. market is one of the freest in the world. Our tariffs are among the lowest in the world and due to a strong transparent and regulatory system, non-tariff barriers are also low. Other nations can freely trade and invest in the U.S. But foreign markets are often closed to U.S. service providers and investors through high tariffs, substantial non-tariff barriers and discriminatory policies.

The establishment of comprehensive FTAs has led, and will lead, to global integration and economic activity between the United States and its trading partners in the Asia Pacific region and worldwide.