TCS Daily


Technology Needs TPA

By Sonia Arrison - July 18, 2002 12:00 AM

Silicon Valley entrepreneurs are abuzz because there's finally hope that a bill to grant the President greater authority to negotiate international free-trade agreements might actually pass. Freer trade will stimulate the economy and help poorer countries, so it's shocking that "Trade Promotion Authority" has been so tough to deliver.

Also known as "fast track," Trade Promotion Authority (TPA) makes it easier for the President to negotiate trade deals with other countries because other countries know that once they negotiate a deal with the President, Congress can only vote yes or no on trade treaties without amending them. This obviously instills more confidence during the negotiating process, as countries know that they won't be asked to make more concessions.

Senator Charles E. Grassley (R-Iowa) summed this point up nicely when he recently said, "you can't have 535 people in Congress negotiating with other nations." This seems like a no-brainer, but the President hasn't had this power since 1994, for political reasons.

Connie Correll, Executive Vice President of the Silicon Valley-based TechNet, says a TPA bill (such as the current HR 3009) has been difficult to pass because it "has become a victim of politics." Correll, who represents many of the nation's top technology firms, laments that "there's been an effort to put other issues on the bill." Those issues include environmental and union concerns, but these arguments conceal underlying motivations such as protectionism and anti-globalization.

Environmental and union concerns can be examined each time the President brings a proposed agreement back to Congress for approval. If the agreement he negotiated does not adequately protect and support American interests, Congress has the power to vote against it and kill the deal. TPA itself doesn't create more free trade, it just makes it more likely that negotiations will happen. But negotiations can lead to trade agreements, which in turn will lead to greater economic prosperity.

Bill Maxwell, Hewlett Packard's manager of Multilateral Business Development, is adamant that "the reduction/elimination of tariffs on IT products would reduce costs and enhance HP's competitiveness." Translated from econ-speak, Maxwell's message is that if governments can lift barriers to trade, HP would be able create more jobs and opportunity for Americans.

That's why Auren Hoffman, a businessman and organizer of Silicon Valley's powerful Silicon Forum group of CEOs, says that the TPA is a "clear-cut issue for the Tech community." He also noted that "none of the Bay Area [House] Democrats voted for it." Indeed, there's an annoyed buzz on the issue coming from the Valley that one can expect to get louder as November's elections get closer.

Andrei Cherny is a former speechwriter for President Clinton. Recalling the fight over TPA back in 1997, he said "trade is the number one issue dividing Democrats." But trade with the international community should be a natural fit for Democrats who traditionally have sought to help those who are impoverished. In order to lift themselves out of poverty, poorer nations must have better access to rich-country markets - this means fewer tariffs, duties and market-distorting subsidies. If helping poor nations is a goal, the United States should focus on teaching them how to fish rather than simply giving them one. And trade always helps both parties.

The European Union knows this, which is why they have free trade or special customs agreements with 27 countries, 20 of which were completed in the last 10 years. America is falling behind when it comes to agreements that create jobs and stimulate the economy.

There are more than 130 bilateral/regional Free Trade Agreements (FTA) worldwide, but only three include the U.S. (NAFTA, U.S.-Israel FTA, U.S.-Jordan FTA). This is a major government failing. TechNet's Correll says the non-existence of TPA is causing the US to cede its leadership to other countries. She might be right.

Already, twelve million US jobs depend on exports, and those jobs pay 13-18 percent more than other jobs. But in 2001, US exports fell 6.3 percent and high tech exports dropped to $189 billion, down from $223 billion in 2000. Not exactly good news for America's many unemployed.

At a time when the economy is hurting and it seems "no one is spending," it is imperative that companies be allowed to look overseas for business. The first step towards that goal is TPA. Congress should put politics aside and let the President negotiate agreements that will help both American workers and the rest of the world. Silicon Valley is anxiously waiting, but the passage of TPA affects everyone.

Sonia Arrison is director of the Center for Technology Studies at the California-based Pacific Research Institute.
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