by Grant D. Aldonas
Secretary of Commerce for International Trade
Before the World Trade Institute of Pace University
May 24, 2001
Thank you for that warm introduction,
Executive Director of the World
Trade Institute of Pace University. I am delighted to join you here
in New York during "World Trade Week."
I understand that many of you represent
small- and medium-sized companies that want to expand your overseas
interests. I applaud that effort and want to assure you that we
will do everything we can at the Commerce Department to assist you.
partner organizations here today
share our understanding that we are already competitive in global
markets in goods and services. Recognizing that fact and responsibility
to it will likely be one of the key indications of who succeeds
in American business in the future. You are on the leading edge
of that revolution in the way we think about business opportunities
and new markets.
New York is a particularly apt place
to celebrate "World Trade Week." New York means trade. From the
grant of the original charter in 1621 of the Dutch West India Company
that led to the settlement of Manhattan, New York has always been
at the center of American trade and commerce.
In 1789, the first Customs House
under federal authority collected the first customs duty of $774.71
for cargo that included steel, salt and hardware from Italy. In
1871, the significance and prosperity of the New York's port was
reflected in the grandeur of the Custom House at Bowling Green -
both the original one built in 1787 (which was intended as the residence
for President Washington before the seat of government was moved
from New York) and the one re-built in 1907 in the same location,
where it remained until it moved to this location -
the World Trade Center -
Today, New York remains one of the
busiest ports in the world. New York sends exports of almost every
kind to nearly every country in the world and is the world's largest
financial marketplace. New York
is our third largest exporting state (behind California and Texas),
and New York City is our fourth largest exporting metro area (after
Seattle, San Jose and Detroit).
In his World Trade Week Proclamation,
President Bush noted, that "World Trade Week celebrates trade as
an economic and social engine for progress." Today, I'd like to
discuss the vision and spirit of our trade policy as they relate
to the quality of life for all Americans, and for our friends and
neighbors around the world.
The Case for Trade
International trade has provided
enormous benefits both at home and around the world. President Bush
believes, and I agree, that trade means considerably more than just
economic growth, higher-paying and more plentiful jobs, and a rising
standard of living in America. Trade is ultimately about freedom.
are in the midst of a debate that has gone on in this country since
its founding. Ever since a New Yorker by the name of Alexander Hamilton
penned the Report on Manufactures in 1795, the question has always
been whether free trade was in the best interests of all Americans.
Tariffs were a divisive issue in
the 1800s, when the Tariff of
1828 - also called the Tariff of Abomination - furthered a regional
split between north (which sought protection from foreign industrial
imports) and the south, fueling economic tensions that became a
factor leading to the Civil War. In 1896, William Jennings Bryan
decried the gold standard - the "Cross of Gold" - and attacked tariffs
- tariffs that Eastern manufacturers wanted to maintain. The Smoot-Hawley
Tariff of 1930 - the last tariff schedule enacted line-by-line by
the U.S. Congress - produced the highest tariffs overall in our
history, triggering retaliatory tariffs by our trading partners
and disrupting the flow of international trade. As former New York
Senator Daniel Patrick Moynihan has said, "any short list of events
that led to the Second World War would include the aftermath of
the Smoot-Hawley Tariff."
More recently, critics of free trade and open markets focused on
the advent of the North American Free Trade Agreement and the implementation
of the Uruguay Round of multilateral trade negotiations that created
the World Trade Organization. The critics argued that the NAFTA
and the Uruguay Round would lead to the destruction of American
manufacturing and the impoverishment of the American worker. They
maintained that trade would encourage a race to the bottom that
would erode America's environmental protections. They claimed that
these trade agreements would only benefit the powerful multinational
Well, what happened? Let's look at
the hard facts. Over the last decade, while the United States was
negotiating and implementing the NAFTA and the Uruguay Round, the
U.S. economy achieved the highest rate of sustained economic growth
we have seen in a generation. That produced the longest period of
uninterrupted economic growth in our nation's history. Inflation
fell to near zero; unemployment fell below 4 percent.
Did trade destroy America's manufacturing
base? U.S. industrial production was 48 percent higher in 2000 than
in 1990. Even America's steel industry, which faces incredible competitive
pressures, continues to produce record tonnage.
Did trade lead to the impoverishment
of the American worker? The U.S. economy has created 20 million
new jobs since the early 1990s. Since 1995, total U.S. private sector
productivity has increased 3 percent a year and real wages are up.
Exports supported some 12 million U.S. jobs this past year. Workers
in jobs supported by these exports receive wages 13 and 20 percent
higher than the national average. Estimates of the effect of trade
liberalization through the Uruguay Round and the NAFTA suggest that,
between higher incomes and lower prices, the average American family
of four benefitted to the tune of between $1300 and $2000 annually.
Did expanding international trade
opportunities lead to the erosion of environmental protections?
To the contrary, the U.S. environmental laws remain on the books
and we benefit from cleaner air and water. NAFTA, in fact, proved
to be a catalyst for environmental cooperation between the United
States and Mexico that did not exist previously.
Were big companies the only ones
to profit from trade liberalization? Given who is in this audience,
you may not be surprised that our data shows that 97 percent of
U.S. merchandise exporters are small- and medium-sized companies.
U.S. export trade has expanded even
faster than the U.S. economy. Exports increased from $57 billion
in 1970 to $1.1 trillion in 2000 - an increase of more than 10 percent
per year and a doubling of U.S. exports roughly every 7 years.
Trade has provided enormous benefits
worldwide. WTO figures indicate that tariffs on manufactured goods
averaged nearly 40 percent at the time the GATT was created in 1947
and had fallen to below 5 percent by the end of the Uruguay Round.
During that same time, trade increased 16 times. The OECD has estimated
that the Uruguay Round delivers annually the equivalent of a $200
billion tax cut to consumers throughout the world.
What is still more important, in
human terms, is that trade helps lift countries out of poverty.
According to the OECD, developing countries with more open markets
achieved twice the rate of economic growth of those that kept their
In short, the economic case for free
trade is unassailable.
Case for Free Trade
As President Bush has said, however,
free trade is about more than just material well-being; it's a moral
imperative. The genius of the free enterprise system is that it
relies on and encourages human freedom. Free men and women conducting
their business in free markets can pursue their own economic destinies
and go as far as their drive, dreams, talents and initiative take
them. In the end, that requires freedom of opportunity and freedom
of choice politically as economically.
President Bush has said that free
trade helps create the habits of liberty that profoundly effect
a man or woman's view of themselves and their society. With freedom
comes the responsibility to account for one's own actions and the
obligation to demand from governments policies that unleash human
potential. Freedom is not served when governments erect barriers
to individuals' success, whether those barriers are political, social
In the United States, we have come
to trust the relationship between economic development and human
freedom. Government's role is to create the environment in which
our people can succeed on their own merit - to give them the freedom
to use their God-given talents to develop a sense of pride and hope.
This encourages them to build better futures for their families,
their communities and themselves.
I hope it is not lost on any of us
that we fought a revolution over high British tariffs and other
restraints on our freedom to trade internationally. That's precisely
why New Yorkers, on April 22, 1774, followed their friends to the
north in Boston, and held a tea party of sorts in New York harbor.
As Secretary Evans noted in his speech to the U.S. Chamber of Commerce's
Global Summit on Tuesday, individual rights are inextricably linked
to economic freedom. When we
trade, when we press for open markets, when we call for a level-playing
field, it is ultimately in the interest of all Americans and our
friends abroad. That is because the freedom we cherish politically
is also the key to our economic future. Freedom is our most important
With that let me turn to the President's
trade agenda and the role I expect the Commerce Department to play
in that effort. President Bush recently observed that, "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 our trade and the economic opportunities that it creates
for all Americans.
One key element of our strategy is
the renewal of the President's Trade Promotion Authority. Trade
Promotion Authority provides is a mechanism to ensure that the Congress
and the President have agreed on our goals and how they will work
together to achieve them - in other words, a vehicle to rebuild
the political consensus necessary for our negotiators to reassert
American leadership in the trade arena.
We need to move, and we need to move
now. Our inaction hurts American businesses, workers, and farmers
as they find themselves shut out of the many preferential trade
and investment agreements negotiated by our trading partners.
When the President laid out his international
trade legislative agenda on May 11, he identified the specific trade
negotiating objectives he intends to pursue in order to advance
America's interests. That agenda can be summarized simply. Our goal
is to eliminate all barriers to the free flow of American goods,
services, investment and ideas. That basic principle applies with
equal force whether we are talking about soybeans, aircraft, financial
services, energy, or software.
What governments do when they establish
barriers to trade is mislead their people. They provide a false
incentive to invest capital, raw materials, and, most importantly,
a person's future in areas that will only be sustained as long as
the government maintains those same barriers to free and fair competition.
A new American trade agenda must start from that perspective.
Given the current political debate, I would be remiss if I didn't
address the topic of trade, labor and the environment. I firmly
believe that the real nexus between trade, labor and the environment
is that trade contributes to rising standards of living, and rising
standards of living are the key to achieving higher labor and environmental
standards. Recent studies have confirmed that fact. There is a positive
link between rising per capita income, to which trade contributes,
and improved labor and environmental performance.
That is why we must ensure that,
whatever steps we take with respect to trade and labor and trade
and the environment, we do not undercut the most important driving
force behind improving both labor and environmental standards -
trade and economic growth.
Our Case to the American People
Let me close by asking you a favor. Together, we have some challenging
work ahead of us. That is true of the work we have to do abroad
in opening new markets. It also is true of the work we have to do
here at home in setting the stage for further trade liberalization
by the renewal of Trade Promotion Authority.
I want to ask you to join me in that
effort. I have come here today to ask you to help the President
make his case to the American people. Frankly, we have not done
enough to explain the tremendous benefits we enjoy in this country
thanks to our presence in the world marketplace. We have decades
of results confirming the universal rewards of expanding trade and
commerce, yet it is clear that many Americans do not share your
understanding that expanding trade opportunities is in their best
We have to do a much better job of
getting that message across. We have to explain that future generations
will enjoy a better life economically, politically and in every
other way by expanding our presence in the global marketplace.
The President has put forward his
trade agenda. He intends to work closely with Congress and with
all of you to get America off the sidelines and back into the game.
If we want both to expand the economic opportunities for our children,
their children and all to come, and if we want to ensure that our
values continue to take root abroad, we must press ahead.
The Chairmen of the House Ways and
Means and Senate Finance Committees have indicated that they will
markup Trade Promotion Authority before the end of the summer, and
we will hope to see a final - and successful - vote before the end
of the year. I am confident that we can get there with your help.
In his farewell remarks given on
the last day of the 106th Congress, former Senator Moynihan,
then the Ranking Member of the Finance Committee, noted, "the clearest
achievement of this Congress has been in the field of foreign trade,"
and he underscored that it was with great difficulty and at most
partial success did he and Chairman Bill Roth "make the connection
between world trade and world peace" as part of the debates on trade
with China and other trade bills.
Senator Moynihan's point was that
the link between open markets and a peaceful world would have been
obvious 50 years ago, when participants in the Bretton Woods conference
in 1944 strove to design international institutions - the World
Bank, the International Monetary Fund and an international trade
organization - in support of a lasting peace. That is a connection
we should all bear in mind when we reflect on the economic and moral
imperatives for trade today.
Thank you again for inviting me to
speak with you. I look forward to your questions.