Thank you, Chairman Burton, for scheduling this timely hearing on "Creating Jobs: Economic Opportunities in Europe and Eurasia.
May I start by noting that since our last hearing, you have announced your retirement from Congress, and that this is a loss for the House of Representatives and your constituents in Indiana. Things will probably be a little quieter around here, but I sense that you are at ease with your decision and that you are looking forward to spending more time with your loved ones. Who knows, maybe even an extra golf game or two?
It has been a pleasure working with you Dan, and I look forward to our remaining work together, including the hearing at hand today.
The central question before us today is: "How can we leverage our commercial relationship with Europe to create jobs in America?" Trade and investments plays an important role in US job creation efforts and
our biggest and most successful commercial relationship is with Europe. In fact, this is the largest and most integrated economic relationship between any two areas in the world.
President Obama has committed his Administration to doubling US exports during his first term, and according to recent numbers we are within striking distance of that goal. Exports are currently growing at an annual pace of about 16 percent, and this increase has been one of the central drivers of the economic recovery, accounting for about half the nation's economic growth since the recession ended.
The Administration has bolstered both domestic and global demand and pushed through three long-stalled free trade agreements with Panama, Columbia and South Korea last year.
Commerce is a major instrument of foreign policy, and I applaud Secretary Clinton for laying out a bold vision for "Economic Statecraft" in her speech on that topic in October last year. Free trade and international investment are cornerstones of our nation's prosperity, significant generators of jobs in
America and great assets for both US workers and companies. But trade also stimulates openness, transparency, efficiency and accountability. Trade strengthens innovation and drives reform on a global scale, and binds us together with other nations to ultimately reduce the potential for conflict.
However, according to a recent report on "US Trade and Investment Policy' by the Council on Foreign Relations, in recent years, public opinion towards the benefits of international trade has declined significantly in the United States. I hope that our panel might address ways for us to change this
Congress must do its part to address the low hanging fruit that can facilitate trade, exports and investment and create jobs and growth in the transatlantic space. This agenda includes:
* Granting Permanent Normal Trade Relations to Russia and Moldova: Russia will accede to the World Trade Organization this summer, while Moldova has been a member since 2001. Congress has simply been asleep at the switch when it comes to giving US companies the same benefits
available to other WTO members. For more than a decade, the United States has been non-compliant with WTO rules because we have failed to repeal the Jackson-Vanik amendment for Moldova, and I fear that we are about to commit the same mistake for Russia. If Congress is truly
serious about creating jobs, growth, and export opportunities, this is the obvious place to start.
* Bringing Poland and other European countries into the Visa Waiver Program: Poland is one of our strongest allies, and has emerged as one of the most dynamic economies in Europe. We should take advantage of this dynamism by expanding the opportunities for US-Polish business relations and tourism. US citizens can easily travel to Poland for up to 90 days without obtaining a visa, but we have not extended the same privileges to Polish citizens. Bringing Poland into the Visa Waiver Program would strengthen both our economy and national security, and Congress should act without delay to pass the necessary legislation.
* Update Export Control legislation: Congress must pass updated legislation in order to sustain our cutting edge technology sectors and create new, high quality jobs. The current export control statute is an anachronistic relic that fails to recognize the reality of hi-tech products and components that are freely traded on global markets. US developers and manufacturers are being excluded from these markets for no apparent reason.
* Congress should fulfill its advisory role to the Transatlantic Economic Council: When the Transatlantic Economic Council - the "TEC' for short - was created in 2007, Congress was given an advisory role in the TEC's work. This role was assigned to the Transatlantic Legislators Dialogue (TLD), which brings Members of Congress and the European Parliament together to resolve regulatory issues at the legislative level. I think the TLD's work could provide valuable input to the High Level Working Group on Jobs and Growth, and I suggest we find a way to integrate Congress and EU Parliament input into this process.
The executive branch also has responsibilities to facilitate the Jobs and Growth agenda:
* Eliminate or reduce remaining tariffs on both sides of the Atlantic: It is true that in our trade relationship with the Europe, many of the obvious measures have already been taken, but there is always room for improvement. For instance, despite low tariffs on both sides, a complete reduction -- a "Transatlantic Zero Agreement" -- would boost GDP and increase the competitiveness of both American and European firms, especially because one third of transatlantic trade is between branches of the same firm. A 2010 study on the consequences of a transatlantic zero tariff agreement estimated significant gains to both US and EU exports, and the potential gains of up to $82 billion for US GDP. This boost to trade and investments would actually be higher than the gains from many of our free trade agreements.
* Work together with our European partners to establish international regulatory rules and standards: The rules for the 21st century international economy have not yet been written, so it is incumbent on the United States and Europe to establish global standards together. If the United States and Europe can agree on standards, this will reduce costs and make trade much easier between American and European countries. Transatlantic standards would reduce risks for global consumers, unlike the scenario if others prevail. Other areas of potential cooperation include dealing with the rise of state capitalism and state owned enterprises, regulating global extractive
industries, and developing sectoral standards such as electric car batteries.
I know that Chairman Burton and I agree on the importance of expanding US trade with Russia. On December 16th of last year, Russia received an invitation to join the World Trade Organization, which will significantly enhance our opportunities to export goods and services to the booming Russian market.
However, if US businesses are to have the same benefits of Russia's WTO membership as all other WTO member countries, Congress must extend permanent normal trade relations to Russia and repeal Cold War era legislation that has become redundant. Doing so will empower the reformers and innovators that represent the future of Russian society, and in fact the leading Russian opposition figures have recently called on Congress to repeal the Jackson-Vanik amendment for precisely that reason.
In addition to the opportunities that lie before us with the European Union and Russia, Congress should focus greater attention to opportunities for expanded trade with Turkey, the Caucasus and Central Asia.
These emerging markets represent great opportunities for expanded US exports and investments. I hope that our panelists will address ways to move forward with these relationships.
I also would like to ask our witnesses to discuss opportunities to increase transatlantic trade in services. I am a co-Chair and founder of the Congressional Services Caucus, and I believe that there are immense
possibilities for increased trade in service sectors such as the airline industry, telecom, health care and capital markets that would provide a significant economic boost to the transatlantic economy.
Globalization and the IT revolution has not only reduced the costs of services but also expanded the scope of services that are considered tradable in the first place. Dr. Hamilton has called services the "sleeping giant" of the transatlantic economy in several of his previous publications, and studies show that a reduction in services tariffs could yield very significant gains for both sides of the Atlantic.
Again, thank you for holding this hearing. I look forward to hearing our witnesses lay out their visions for how we can adopt trade and investment policies that maximize the benefits to the American people and US foreign policy from global economic engagement.