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Susan C. Schwab
Ambassador Susan C. Schwab
United States Trade Representative

November 6, 2007

Susan C. Schwab
Good afternoon, this is an exciting time in trade policy. There are few issues as important to our nation’s economic health and security. And yet, there are few issues as misunderstood. I hope today’s discussion sheds some light on both aspects of trade.

FIRAS, from CALIFORNIA writes:
How will this free trade agreement benefit America the most? Why are only these countries listed on the free trade agreement? Keep up the good work

Susan C. Schwab
Thank you! The pending agreements will give American farmers, manufacturers, workers, and service providers access to growing markets. For years we have imported nearly all products from Peru, Colombia, and Panama duty-free. Finally, our producers will have the same access to their markets.

When you consider that the population of the three Latin American countries is over 76 million people and Korea has another 48 million, it is easy to see that these are pretty significant commercial opportunities. In fact, the U.S. International Trade Commission estimates that the Korea agreement will add from $10.1 to $11.9 billion per year to our GDP through enhanced trade in goods alone - not to mention the enhanced export opportunities the FTA will afford U.S. service providers, or savings it stands to provide to U.S. consumers.

In addition to these compelling commercial considerations, these agreements will strengthen strategic alliances with critical allies.

The United States had free trade agreements in force with 3 countries before the Bush Administration, and now we have agreements in place with 14 countries. Only three were in place when we came into office. That is unprecedented number of Free Trade Agreements (FTAs). Under President Bush’s leadership, America has been hard at work opening markets for the products and services Americans produce so well. We are always looking for new opportunities. However, not all countries are ready for the comprehensive approach we take to the FTAs. These agreements must truly level the playing field. They are complex and significant undertakings and they have to be done right.

Debbie, from Texas writes:
Question 1. What do say to those that say NAFTA is the cause of the invasion of mexican nationals crossing our borders illegally leaving behind their families to seek employment?

Question 2. And what do you say to the millions Americans that lost their outsource jobs to cheap(er) labor?

Question 3. Because of the skyrocket home closures, do you agree just maybe that free trade is not a good idea at this time for our Country?

Susan C. Schwab
Debbie, I’m glad you asked these questions because there are a lot of misperceptions out there about trade. NAFTA has actually resulted in economic opportunities on both sides of the border. In the dozen years since NAFTA, U.S. economic growth has been higher and unemployment is lower than in the dozen years before NAFTA. Even our manufacturing output has gone up. Economic change is a permanent part of modern economic life and the transformation can cause dislocations. However, immigration from Mexico as a policy issue pre-date NAFTA but you can pretty certain that without NAFTA and the opportunities it has created on both sides of the border, the illegal immigration picture would have looked worse. You simply need to be careful not to blame trade for other things going on in the economy. In fact, the best estimates we have is that trade accounts for two, maybe three percent of annual job losses. The vast majority of dislocations results from increases in productivity, changes in consumer preferences, competition among U.S. companies here at home, and even the weather. When trade does result in job losses, however, we must assist the communities and individuals involved. President Bush has emphasized this with support for a better Trade Adjustment Assistance program. But we should not be trying to help those adversely affected by trade in ways that hurts the vast majority of Americans who benefit from trade.

What we have to remember is that the economy grew at an annualized rate of 3.9 percent this year third quarter, with export expansion accounting for almost half of that growth. Unemployment is also at a low 4.7 percent. Overall, we have created over 8 million jobs in the last four years. We have seen that exports have made an important contribution to this economic growth. With the problems in the housing market and gas prices on the rise again, restricting one source of our growth would be precisely the wrong thing to do at this time.

John, from TX writes:
Lately it seems like Free Trade means giving away our industries, jobs and trade secrets away for free to our competitors. Why can't we have "Fair Trade" where we get something back of equal value? Now it just serves as a way for our industries to export environemntal problems and workers rights abuses to other countries in the name of corporate profits. Of course we'd like to open up US markets to developing countries so they can become self-sufficient but our trade with China and oil-producing countries seems to be in the long-term self-destructive, especially since we don't produce anything anymore that people can't get elsewhere cheaper. Now places like Dubai and China own us like a colony where they get to exploit our resources.

Susan C. Schwab
As I noted earlier, the four trade agreements before the Congress open new markets for U.S. exports that already have virtually unlimited access to our market. Free trade must be fair trade and the benefits of trade must be broadly shared. These principles help shape our country’s trade policy. The free trade agreements have concluded now have enforceable provisions to safeguard labor rights and environmental protections. Instead of the U.S. exporting bad practices, U.S. companies operating closer to emerging export markets often bring with them high standards that are emulated in other countries. It is hard to see how workers or the environment in developing countries will be any better off without these trade agreements. The FTAs are the best leverage we have to raise standards.

Similarly, our trade relationship with China has allowed us to encourage China’s adoption of market-oriented economic reforms. The U.S. worked closely to bring China into the rules-based trading system and China has changed literally thousands of laws to meet its World Trade Organization obligations. We still have a long way to go and we continue to use all the tools we have to ensure China plays by the rules – including bringing legal cases before the WTO, four of which are currently pending. What we cannot do is deny American families and business the goods and services they need. Closing our market to trade and investment from other countries will only impede job creation. Foreign direct investment employs some five million Americans directly and exports expand opportunities to create additional, well-paying jobs. We need to keep goods and capital flowing both ways for fair and mutual benefit.

I would add, however, that the United States has the world’s largest production of manufactured products and, further that U.S. production of manufactures over the last 10 years (1996-2006) has grown (38.5%) slightly fast than the overall U.S. economic (37.1%.). Overall job loss in manufacturing reflects to a significant degree the high rates of worker productivity growth achieved in that sector in recent years.

Kim, from Kentucky writes:
Hi Susan, What exactly is a trade agreement supposed to accomplish and why were these countries chosen? Thank You

Susan C. Schwab
Here is why trade is so important economically. For the American economy to grow - for us to be able to create good jobs - we need to open new markets. The best way to do that is with free trade agreements.

Congress is set to vote on a free trade agreement with Peru this week. Agreements with Colombia, Panama, and Korea are right behind Peru. The United States has long been open to the goods and services from these countries. Now we have a chance to open their markets to our goods and services.

These four countries have stated their eagerness to forge deeper and stronger trade ties with us. Our response must be to grasp their extended hands. We know there are leaders around the world who do not share our values of economic and political freedom. We will accomplish a lot by establishing stronger relationships with countries that share our vision and in providing their people an alternative path to economic development and political stability.

hernan, from Lima - Peru writes:
Dear Ambassador Susan C. Schwab: In the trade agrement between the United States and Peru, I would like to know what improvement will bring this trade agreement to peruvian workers and american workers, because in your country you have higher salaries than Peru. And in your country you have an equal opportunity employer way of recruiting employees and worker in most companies, very different of my country Peru.

Thank You very much for your sincerity.

Susan C. Schwab
Dear Mr. Herrera, the U.S. Peru Trade Promotion Agreement will lock in Peru’s preferential access to the U.S. market on a permanent basis. This will create a more consistent, predictable economic relationship than conditional trade preferences, and will generate new trade and investment flows. More than that, the agreement will encourage more transparency in Peru’s legal and commercial systems, stronger protections for intellectual property rights, and better access to American services. This will help Peru continue to modernize and grow its economy. Together, these changes will help Peru attract more foreign direct investment, create quality jobs and make it easier for Peru’s own entrepreneurs to operate successfully.

Cliff, from Brimfield, Ohio writes:
Ambassador Schwab: You always read about the trade with China, But just how much trade do we do with Peru, Colombia(only thing you hear about them is drugs) Panama and South Korea? Thank You

Susan C. Schwab
There is detailed information on the USTR website,, but here are some basic facts. Our two-way trade with Peru has doubled in the last three years to $8.8 billion. Two-way trade with Colombia has reached $16 billion and $3 billion with Panama. Korea is our seventh largest goods trading partner with two-way trade totaling $78 billion a year. Together, these four countries represent 124 million potential consumers for our exports of food, manufactured products, and services.

Thanks in part to trade initiatives in the 1990s, which were aimed at encouraging people to move into the licit, formal economy, drug trafficking and the violence associated with it in Latin America have been greatly reduced. Members of Congress who have visited Colombia with Administration officials in recent months have discovered a different country than the one that had dominated their perceptions. Medellin for example, once known for its high level of violence, is now a city where families are thriving in peace. The leaders and the people of Peru and Colombia have courageously made great strides in establishing peace and stability and are looking to the United States to support those efforts with deeper and stronger trade relationships.

Tarik, from springfield,IL writes:
Why is free trade good for America? Why is our current trade defict not a worry for this administration? We import more than we export so free trade benefits everyone else more than us. Why is that a good strategy?

Susan C. Schwab
From an economic standpoint, trade is good for the economy in two ways.

One, imports allow families to more easily purchase what they want and need, whether it is shoes for the kids or the latest high-tech gadget. Imports also allow businesses to obtain the parts and inputs they need at prices to allow them to stay competitive in the international marketplace. Competition also requires Americans to be more efficient, to become productive, and to concentrate in areas where we have competitive advantages over most other countries. More and more, our advantage is in the high-skill, high-wage jobs of cutting-edge industries and services. This free-trade formula has worked to create an economic system that is the envy of most of the world.

Two, trade benefits America because it allows us to send the food we grow, the products we make, and the services we provide to the rest of the world. Ninety five percent of the world’s consumers live outside our borders. To stay prosperous we need to reach them. We cannot build a sustainable economic future by only buying and selling from each other at home. Recently, for example, trade has contributed significantly to our economic growth, with exports generating some 40 percent of our GDP growth in the past four quarters.

The best way to bring down the trade deficit is to expand exports not to restrict imports. And, in fact this year U.S. exports have increased so much faster than imports that our trade deficit has actually been declining. If we want more balance in our trade relationships, our trading partners must grow faster and purchase more of what we produce. Most countries recognize that the path to economic growth is to embrace the market principles that have worked so well for us. As other countries prosper from commerce, we should see ever expanding opportunities for the United States. One final thought about trade deficits is that we have often enjoyed trade surpluses, but mainly during recessions! The trade deficit, while large, is also a sign of our prosperity, strong consumer demand, and a high standard of living.

Matt, from University of Miami writes:
Madam Ambassador, Thank you for serving President Bush and our country, we all appreciate your efforts. How do you usually respond to people out there who stand against free trade and don't see how crucial it is to support such agreements?

Thank you for taking my question, and God Bless America.

Susan C. Schwab
By speaking the truth. Trade is easy to demagogue. That is because its occasional negative effects, though small overall, are often concentrated while its broad benefits are spread so widely in the economy. Trade gets the blame for all economic ills and is the source of all of our economic anxiety. Today’s pace of economic change can be unsettling and critics of trade often pander to people’s fear rather than stirring their hopes. All we can do is to explain that trade helped create prosperity at home and stoked development overseas and warn of the perils of retrenching economically. The President has used high-level platforms, such as the United Nations, to emphasize how important trade is to the promotion of freedom and economic opportunity around the world. Along with my administration colleagues, I devote a lot of time to meeting with stakeholders from agriculture, industry, services, and other groups to lay out the compelling facts about the benefits of trade. We give speeches, author articles, and opinion pieces in the news media. Supporters of trade need to engage in the debate as well and not be complacent as skepticism about trade continues to be on the rise. We also spend a lot of time talking to members of Congress from both major political parties, listening to their concerns, and responding to their suggestions to make the global trading system work better for all. Yes, we do need to help the limited number of individuals and communities that are impacted by trade – but we need to do so in ways that does not jeopardize the significant gains that trade produces for the vast majority of Americans.

Susan C. Schwab
It has been a pleasure to explain how trade benefits our economy and enhances our strategic and security interests. We are fortunate that more and more countries are eager to use trade to boost their peace, freedom, and prosperity. We should welcome every chance to deepen and strengthen our commercial ties with them. Thank you.