 Gentlemen we're go ahead and continue grab some coffee come in and sit down. We want to get started. We've got a Very interesting program that we have this afternoon. I and by the way, I'm vamping for time right now as they say in the entertainment industry Stu Eisenstadt had a commitment that's going to keep him away until about 215 so if I do my normal bloviation we should have just roughly the right time between him arriving and the substance beginning And then I can get I can get away. Thanks for coming. My name is John. Hamry I'm delighted that all of you are here. This is kind of Steve Shroggie's maiden voyage here at CSIS for Steve Is the shoal shareholder here on international business and trade and we wanted to pick up this agenda This is this is probably the biggest question facing. I asked metaphorically You know if you were to go up to Congress right now and ask them do you think trade is the Problem causing our recession or the pathway out of it? I'm not sure what the answer would be, you know and probably yes But I hope too many people are going to think about it as being the cause and the prolonger of this recession Where in fact, I think we need to start thinking about it as a pathway out of this recession And we're going to try to have a conversation with you all today about that. We're very very fortunate to to have Bill Brock and Carly Hills and soon to arrive Stu Eisenstadt who are going to lead us through this conversation It the quality of a session like this of course is always is dependent on you I mean the questions that you're going to ask they're going to give you a Wonderful insightful set of comments, but it really does depend on you coming forward with your very good questions So Steve, let me turn to you to get this going for real. Thank you all for coming We look forward to hearing this session. It's gonna be great Thank you, Dr. Hammer I'm Steve Schragius. Dr. Hammer mentions the new Scholl chair in international business and one thing under Dr. Hammer's leadership as we confront this new really unprecedented global economic crisis It's going to require a lot of new thinking is we want to reach out to people You've been a bipartisan basis leading thinkers in the business community policymakers In the academic community to look at new ways of going forward and I think we couldn't ask for a more Visionary group of leaders that we have here today soon to be joined by Stuart Eisenstadt They're people that have really had strong results and made some of the path breaking advancements in the trade community That a little bit better Yeah, there we go and and it builds on a couple different efforts We're looking at launching at CSIS over the next couple of months one looking at the strategic implications of the financial crisis Which is obviously economic, but as you see protests from Iceland to China The new DNI director of national intelligence say it's our number one national security challenge It's clear this is going to have broader ramifications that we're going to have to take into account Second, how do we unite to build a stronger and smarter America both Between business and government which I think it's clearly been seen in terms of government having to act in unprecedented ways Over the last couple months But ultimately the private sector is going to have to fuel the growth out of this crisis and also paying down our debt And then finally and one of the key topics we're here to talk about today is as our trade and international systems come under more Strain than they've seen in over a half century How do we build new foundations both to weather this and future storms but build the new foundation for global prosperity and Security as people did in the wake of World War two and with that I really don't think we could have asked for a better panel here today It's it's more than to say they were present at the creation They were really driving and led and spearheaded the creation of some of our major international economic institutions that we have today And as we look it back on the things that they've done. I think it's truly striking I mean we've had a couple years where it's been very difficult to get progress on trade But you look at what senator Brock has done as USTR And I really credit him with the vision of holding this event months before the election was decided and we've seen the rise And protectionism seeing the threat of the growing economic crisis and also the need to come together across the partisan lines to chart a new Way forward on trade He's a distinguished senator led USTR as a father of the Uruguay around that created the WTO agreement And also some of the first u.s. Free trade agreements that were really groundbreaking And he's continued he was the secretary of labor which is a critical issue for trade going forward And then also he's continuing to work today on some really cutting-edge education issues that are critical to our competitiveness Second we've got ambassador Hills who is also a legend and a visionary leader on the trade issue She pushed forward the path breaking NAFTA agreement was awarded the highest award possible from the Mexican government to a non-citizen The Aztec Eagle and has been a legend in trade and business community sense But her accomplishments go far beyond that she was one of the first women's secretaries in the cabinet and a previous Administration and she's also been a path breaker. She like Bill Brock is a trustee of CSIS a co-chair of our international advisory board And we really look forward to her work on that and also some of the things She's done in a broad range of areas including sharing the National Commission on US China relationships And we're going to be joined shortly by Stuart Eisenstadt ambassador who you know unfortunately had to be away shortly But we'll be joining us in the next few minutes He's also got a very wide-ranging experience He worked in the senior levels of the Commerce Department in the State Department Deputy Secretary of the Treasury when the G20 was founded and really has spearheaded efforts across the Atlantic with the transatlantic Relationship and infusing things like the Helmsford agreement. So with that I'd like to turn it over to our panel to Senator Brock for his initial comments and and dive into these issues that we have facing us Thank you First, thank you very much for being here. I think This is probably the most challenging time that I can recall in the last 75 plus years Certainly in the last 45 years of engagement and politics and government We are beset by more challenges in combination then we've had certainly Certainly since the Great Depression and in a setting like this it It really is hard to keep your Site focused out on the positive side of things. It's it's awfully easy to get into a defensive posture and Hunker down to the point where you Let things get worse or maybe make them get worse People too often talk about the smooth holly tariff of the 1930s and how that exacerbated and deepened the Great depression Today we're more sophisticated We have devices that impede trade without calling them protectionists We are we use all kinds of tools whether they be subsidies or or non-tariff barriers or various sorts the the problem is that In a world where Without almost any exception Countries are if not in free fall certainly facing significant declines in their GDP of this first time I can recall Where there's been a worldwide decline in GDP? the the pressures are enormous on people in politics to To do some things they probably know they shouldn't be doing But you've got a hundred thousand people protesting in the UK It's not just a few people protesting in Iceland or Ireland Sarkozy in France others Are finding it very difficult If not impossible to resist the pressure to buy American to buy French or buy whatever and I think the thing that I'd like to at least draw your attention to right now is how hard it is to get people to think about Taking a more affirmative direction when they are personally battered The challenge of trade is as we were talking earlier is that pain is very personal Benefits are very subjective. They may affect the country at large but pain is something you feel in your family or your business or your job and Somehow we've got to change the conversation away from that That negative approach and think more broadly if I may I just would give you one example Carl and I have over the the last several years talked about whether or not trade adjustment assistance is the appropriate response to to people that are affected by by an employment I'm not sure it matters very much why you're out of work whether it's technology or changing market patterns or outsourcing or Ensourcing you ought to work and yet by talking about Trade adjustment assistance as if trade were the issue We get people to think that in fact that is the problem So we have this wonderful Tennessee, which is a rife in American politics You know the old rule if you if you got a problem find somebody to blame and be sure they can't vote your district That's the way that we think about trade too often and the country now is that one of these wonderful points where despite our enormous challenges we have the opportunity to think anew about Whether or not we have put the grand bargain together between those of us who believe that our Economics of viable depends upon a global economy that is vibrant And in which we can participate fully without barriers in any in any direction Between those of us who believe that and those of us who think the most important a task of any governor's the human development of its people We're not doing very much of the latter Our educational system is falling from 1st to 29th in the world the people have passed us In terms of the performance of our kids Our workforce most of the people are going to be working 20 years an hour and are working today And we're doing precious little to take the opportunity almost the negative opportunity of 4 million new New additional people out of work to provide them with a very different Level of not just unemployment compensation But of of education and training to raise a skill set of this country back to where we where we were Not too many years ago number one in terms of quality and education level of our workforce We're still the most productive people in history of the world But we're riding on past investment not just the GI Bill and the National Defense Education Act, but a very good higher education system and Community college system that's carried us Further than some time we deserve I raise that issue because I Do think if we're going to have a conversation about trade it's got to be broader Than just the the absolute Conversation about whether or not we don't like barriers in China or Brazil or some other country I think we've got to make this conversation one of what do we do? What do we do as a people to restore this country to its paramount role in Having the most educated the most skilled the most productive workforce in the world What do we do to give those individuals who have those talents and That entrepreneurial instinct that willingness to work to give them the opportunity that a globally advanced world with rules That allow for the free and full exchange of goods and services Give them the opportunity that that kind of world affords. I think from my perspective That a new president facing an extraordinary challenge at home has an opportunity To pull this country together and focus us on a much more positive direction if we can start presenting a Global trade as an area of opportunity Instead of a threat If we can position it as one that demands of us an Improvement of the skill base of the people of this country As well as a removal of barriers overseas and a set of rules that allows to engage in in free and full trade If we do those things if we have an administration and a Congress willing to to take those initiatives It may be the single most important step we could take to recover from our present economic malaise I think that's worthy of some serious conversation. Thank you Well, you hear the answers Well as Bill said we live in challenging times According to the IMF world growth has ground to a virtual halt this year It is the IMF has slashed its projections made only two months ago from For the advanced economies including our own That they will all contract and they've and the IMF has cut the Forecast for global trade for this year four hundred and eighty basis points Expecting trade to be a negative two point eight percent Marking the second largest drop in 60 years And according to our Labor Department more than four million Americans are out of work in January of 2009 as compared to January of 2008 and the losses have infected just about every sector Nor are the emerging markets spared Most economists for example predict that China's growth will fall to five To maybe six percent this year a big drop from its double-digit growth over the past three decades Now six percent sounds pretty high to the American ear But China's leaders believe that their country needs to grow at eight percent to maintain domestic stability and the shrinkage the shrinkage of global demand and The evaporation of trade finance has resulted in the closure of thousands of assembly plants and factories in China Urban unemployment there now tops 18 million in addition 20 million Chinese Migrant workers have been laid off and more than a million college students cannot find work Now some say Here in this country that until we fix the economic crisis. We can't talk about trade But first of all I was asked to talk about the future of the trading system and to mention China in passing But more importantly, I think that I would argue that tool of that trade is one of the tools That could help extricate us from our current global crisis Now it's not a silver bullet But increasing market opportunities That will generate some growth Which in turn will boost some confidence? I believe will help and over the past year Increases in our net exports have accounted for 100% of US growth Also our trade agreements have helped to create commercial alliances to support critical economic and foreign policy objectives Finally other countries are not standing still They're making alliances and we need to be sure that our economic interests are not disadvantaged Now we have three completed bilateral trade agreements Panama, Colombia and South Korea. They're pending before Congress and they would give our producers and our workers a break By reducing tariffs and expanding market opportunities that would make our products less costly in their markets And that is particularly important for small and medium-sized businesses that constitute 97% of American exporters and account for roughly a third of our exports These small and medium-sized businesses are the backbone of job creation in the United States And our country needs to have regular high level dialogues with China Few Americans appreciate that China is the largest holder of our securities But in context of trade it is also the largest market for our exports and our fastest growing export market Since 2000 our sales to China have increased 300% a growth 10 times faster And then the growth of our exports to our next largest trading partners Virtually every state in the union has seen a triple digit growth in its exports to China Over the past two years our ability to resolve economic issues with China has been enhanced By bringing together senior-level Cabinet officials of both governments on a regular basis under the process known as the strategic economic dialogue Whatever it's called in the future. I hope that the new administration will put in place promptly The means to exchange views regularly with China's leaders on a wide range of economic challenges And we need to bring the Doha development round a multilateral trade negotiation involving 153 Countries to a successful conclusion These negotiations have been on life support for months Yet economists have calculated that the offers already on the table so often called meager Would give a boost of a hundred and twenty billion dollars annually to both developing and Develop nations and we should seize on every opportunity to enhance economic growth Also a failure Of the doha round would put at risk our credibility In a rules-based Multilateral regime That we work so hard to create As the largest economy in the world we gain enormous economic benefits from an open base true an open market trade system And the regime also advances global stability Which assists us through its support of transparency rule of law And respect for property And by providing a means to resolve trade issues when we have differences with any number of trading partners Global demand may be depressed but with supply lines globalized more than ever before The adverse effects of restricting trade across borders Is greatly magnified and that is why the prime minister of canada our largest trading partner reacted so strongly To the bi-american provisions in our stimulus bill And when you stop to think about it it really makes no sense to When our aim is to maximize american jobs to refuse to buy competitively Price steel and iron and other components for a project when doing so would enable us to build more projects and provide more jobs And it is particularly senseless where we know that to encourage Protectionism will cause an echo effect other governments will follow suit And it doesn't make our discrimination any less offensive to trading partners for us to say well We won't discriminate against those few countries that are signatories as are we To the wto procurement code which prohibits discrimination In government procurement Many large economies Are not signatories to that agreement and hence are subject To our discrimination including fellow members of the g20 that met here on november 15th Like brazil china indonesia and india with whom we pledge directly That we would keep our markets open and it's ironic that in the past our government Including several members of our congress have proposed that the wto members adopt stronger rules with to limit The kind of state aid to domestic enterprises and to that end have sought more aggressive enforcement of Of our trade agreements Currently wto rules prohibit export subsidies and import substitution And we have frequently invoked those rules against others, but now we're in the Dock and brazil has announced that it is considering whether to bring a wto case Against us and it would not be surprising to see other countries join in The g20 heads of state will meet in london on april 2nd And their objective is to discuss actions that leaders of the world's largest economies could take together to respond effectively To the ongoing global economic and financial crisis A strong unanimous statement on an agreed course of action that mapped a path toward recovery Followed by concrete action Demonstrating a real commitment would give sagging global confidence a real boost And completing the doha round would constitute just the right concrete action in my view Thank you Why don't we start with a few questions while we wait for ambassador eyes instead to arrive You both mentioned the the risk of protectionism and the buy america clause and the g20 as you know when it met last year Made a very big point about saying that there should be no new protectionist measures that was really more honored in the breach Than then the adherence to that call Given the buy america provisions the the call for british jobs for british workers and this new type of protectionism that we're seeing Percolate around what is the risk of kind of the downward spiral that some people have noted that we saw in the 1930s And what should we do about it? Are there things that g20 can do the wto or others can do to be more robust into preventing that kind of cycle from taking hold President's new secretary of education As the superintendent of chicago And he has described as has the president Their new approach to education that called the race to the top I love that expression It says something pretty important the problem with the g20 in my judgment is that It's awfully easy to get together and make some really nice feel good statements Without any substance behind them I think we saw everybody make some well intended statements In the previous session And then proceed to violate them all in logical response to domestic pressure The The conversation that carl and I had earlier When we talked about the buy america provision was responded to by Some of those in the in the staff of some of the congressional committee by saying That the one change that were made that was made before final passage was that We had a unanimous agreement from all parties that nothing in that provision would violate our president agreements I haven't seen that language. So I I take the individuals at his word, but I do think that If the congress is willing To live by president agreements, it would be a a very nice new day We seem to find a way to to get around them too often The same is true of countries and It seems to me that the g20 which is a relatively new institution Could become really important if a couple things happen first I don't think we ought to have any more meetings unless the product of those meetings is a specific plan with Specific components. We will take these steps to achieve these purposes And i'm not sure that they have to be in the field of trade so much as they have to do in in the sense of Of working in collective enterprise to restore The global growth you can't talk like that without talking about trade But it maybe is is a bit of a broader conversation Secondly, I do think I heard Carlos say earlier That she thought china was ready for a serious conversation in this regard. I I I very strongly agree with that And maybe we should be talking to china and japan about Taking a much more active either bilateral or trilateral approach To rallying the world to a more constructive approach That to me would would put some real flesh into the g20 It would provide the leadership that that does not seem to be there yet Certainly on the part of europe and All for people something to get I think excited about Well, I've already said that I thought that The g20 should have a plan And one step there where they could move forward would be doha But I agree with bill that it could be much broader The important thing is to have a strategy And then unlike November 15th meeting To have a real step forward an action Something people can say they did that I happen to believe in the g20 I've worked with 153 in the broader trader agenda and every nation Has an axe to grind in commercial activity These g20 are the big economies. We've got brazil and latin america china in northeast asia India in south asia Indonesia the largest muslim country in the world besides europe and japan and russia Which needs to be brought along And it may take some bilateral discussions before the g20 meeting Where we talk about what is it that you need We're all in a very dire economic circumstance It wouldn't behoove us to listen to what are the concerns of each one of these Or at least a good segment and develop a partnership as to what plan Could they swallow? What step could they take? It could make a difference But we are now so heavily globalized that unless we move together We're going not to be able to conquer the problems that are to have infected both our financial systems And our economic systems Ambassador hill as you mentioned some of the developing world indonesia and other places and before the financial crisis There's a great deal of concern. There was just exploding Unemployment rates and population bases across the middle east across most of the developing world apart sub-saharan africa And with the global economic crisis hitting these nations especially hard What do you think the impacts are going to be in terms of the ability of the united states and other nations to come together To address those threats whether through aid or through expanding trade and how important do you see that in the days ahead? I think that we have to move on all fronts trade development assistance and A broader opening of our markets on education Trade for example when you talk about poor countries poor countries in africa Bangladesh in Northern south africa above india Indonesia Pakistan a majority of those people make their living off the soil Our restrictions on trade and agricultural goods Are five times higher than trade and manufactured goods Today bangladesh a poor country Is suffering mightily Pays us five times more in tariffs for a fraction Of trade that then does france The tax on their exports to us are slightly above 15 percent The tax on france is slightly below one percent We should fix that Doha would fix that But we could also do some things with the g20 on this subject And besides trade we need to support our international organizations Japan has just given a hundred million dollars to the imf the world bank is moving forward to help with development But the g20 could address this topic We're in a very dangerous time Where people are apt to if they were without job without food and watching their families suffer We'll take actions that will not be positive to the united states So we need to have a global plan And we need our global colleagues to be part of that plan And that's why we need to reach out Bilaterally and regionally as well as globally We're nearing a critical time with the new administration coming in the president's tomorrow night is going to give his first state of the union style speech We've got a new u.s. Trade representative who will probably go to a hearing next week So a lot of people are still looking to the administration to see what direction it's going to take on trade at this early stage As the president and the new us tr come into office What is the one critical piece of advice you would give to them? And what is the one key message you would stress that they need to give in their public statements coming up? When bill buckley was running for mayor of new york they asked him what he would do if he won if he won he said i'd demand a recount New times when the new president must feel a little bit like that with all the stuff that's on his platter You've got a president that is probably the most able Articulate effective political leader certainly in the last Quarter of a century if not more He has a unique ability to rally people To motivate them to restore a sense of purpose and hope That is very special And i think i hope everyone else will pray that Those talents are brought to bear quickly and consistently through The next years of his time If you look at the challenges in front of him The administration has been very clear That they are economic the danger In that is that we tend To think that these are domestic challenges That uh, we're the only people suffering. We're the only people losing jobs. We're the only people losing income We're the only people whose 401s Are going down in value Um, and that leads us To think Internally about what we have to do I I would not for a moment argue against a stimulus package I would certainly argue against the composition of that package As it came from the congress, but But the need for us to take some effective and aggressive action Is patently obvious But once you've done that Then you've got to turn from the positive from the negative to the positive This is a wonderfully appropriate time For the president united states to say whether it's tomorrow night or in the immediate future That one out of five jobs in america is affected by trade If we are going to recover from this malaise, we can't do it alone. We've got to have markets overseas We've got to remove some barriers that exist to our products We've got to live in a world of rules in which people are honest enough to abide by those rules We've got to take a new rule in a much more american role Of leading the world to restore Our jobs and our hope To do that you cannot talk about domestic recovery You've got to talk about global recovery That means global trade. You've got to start positioning things like the doha round As an opportunity to give the workers of this country a chance To get their jobs back to compete to grow and to get the incomes that uh, That we've come to expect in this country If i had one message That he could focus on it would be to turn this this crisis into a serious talk about How exciting it can be If we take a more positive role and create a world system I would focus on it on the doha round That would allow us to regenerate growth and restore our preeminence That's right. I was just about what you'd like to weigh in. We're addressing the question of what would be your one piece of advice to the president And what public message would you urge him to say but we're welcome to provide your opening statement as well I'm sorry for the delay I want to start with the the proposition that we are really in a very new paradigm We have for one thing the the first truly global recession in our lifetimes In which europe japan And united states all the three Engines of growth in a developed world are in a Uh, simultaneous recession something we have not seen So the question of which of the three large countries or entities can pull the world out Of a global recession Is very much in question second This will be the first time In certainly modern history In which all the growth that will occur In 2009 will be outside The developed world Will be in the emerging markets 100 of the growth such as it will occur at all Will be in emerging markets in the developing in the developing world There will be a global Recession in which growth according to the IMF will be For the first time again in memory In negative territory, but to the extent that there is any positive growth It will be outside the three Major developed entities That being the case There has to be a global response To a global problem The ferocity of the Recession worldwide has caught virtually everyone by surprise if we were here Only a couple of months ago. We would hear the developing countries in emerging markets Talked bravely about how they had decoupled their growth from that of the united states And that the trade between and among developed countries Was strong enough regional trade was strong enough so that while they would have some impact they would be buffeted By the recession which which in effect started here and then spread to europe and in japan And we now know that that is not the case I was in singapore and melasia a couple of months ago. Singapore had At that time cut its growth estimates from about seven to three and a half percent and in Discussions last week with people from singapore. They're now expecting a decline of minus four percent and maybe more For this year maybe even as much as minus ten percent Taiwan had the worst quarter their Exports went down 48 percent in the fourth quarter and they're looking at a significant recession Now certainly china and india are going to keep their head above water, but their growth rates Again will be significantly Compromised meaning that we really are in a global World we are in a globalized Environment in which all of us have to work together So that being the case what then can we do? And the time for this will certainly be in following up what I think was a good initiative by president bush and calling for the g20 The summit in mid november There'll be a real question first of all of whether the g20 meeting which will follow up in april in london Is simply a one-time event and whether the g20 will then go On to the shelves of history or whether it will replace the g7 Which we've had in different forms going back to the 1970s My guess is that we'll have both. I think the g7 has a role to play To try to get some consensus among the Industrial world industrial democracies going into the g20, but the g20 is here to stay because the world has changed And we simply cannot avoid Having a seat at the table and a major equal seat at the table for the key emerging markets That presents however Also challenges on their part It's one thing to have a seat at the table It's one thing for them to want and deserve Greater voting rights in the imf and the world bank to have A g20 it's another thing for them to be Stakeholders and fulfill the responsibilities with go which go with that If I look back at at least two negotiations in which I've had some role The kioto protocols where I led the u.s delegation In which the developing countries took the position that this was all the industrial democracies problem And they were going to take no commitments which remains in essence their position still to today And the impasse that we had through this summer in the doha round Where india and china Essentially refused one could argue that the u.s might have gone further, but still they were certainly key Components and not agreeing We have to make sure that as we create this g20 as a permanent entity that it becomes something more than a mini un general assembly that it becomes A vehicle for actually making decisions that the dialogue the interaction Between the g20 countries With the different perspectives that we have by giving emerging countries an equal seat at the table Can actually lead to something other than division and impasse and finger pointing. I hope that it will I believe we have no choice, but that it will now in terms of our immediate agenda What can we hope to come out of the g20 first? an agreement on A coordinated fiscal and monetary stimulus Second each country of course doing it in ways that are best for itself Second to deal with the global imbalances that means that the u.s has to save more And china and other emerging markets spend more domestically Third to have a forum and I believe that the framework that was set up in mid november In the communique is the beginning of that not one global regulator Which no country will agree to certainly not the united states But rather the notion of a college Of regulators that meets on a regular basis it changes information about risks in their financial system Looks at ways to harmonize And synthesize regulation And looks at ways to avoid What I would call regulatory arbitrage in which the u.s takes very tough positions on regulation tough Tough positions because we didn't take them when we should have Some years ago, but other countries feel that this is a great opportunity for them to to to remain lax in terms of regulation Hoping to get banks and financial institutions to relocate to Countries with lax regulations that really has to be avoided at all costs And then what brings us here immediately today is the is the trade and protectionist argument I know that Carla and bill have made very effectively But if we look at what happened at the first g20 summit where there were great Ringing declarations that each of the major countries would avoid protectionist measures And then At what actually has happened With the french president taking the remarkable position that is a condition of getting Aid pujo and other french automakers need to to retrench and move their facilities from other eu member states back to france we look at the Demonstrations in the uk of British jobs for british money and then the buy america provisions, which were happily Modified by the intervention of the obama administration, so they have to be consistent with wto standards, but still On the books and send a potentially very negative signal We have a lot of work to do and we have to make sure That in london that these Steps away from the declarations in mid november are called to attention and retracted and second as Carla and and the senator have indicated We really make a push to get the go doha around on that. That would be a tremendously positive signal That we're not going down The road of the 1930s that we are going to take what is really at this point Relatively low-hanging fruit. We know we have to probably go through the indian elections in may But there is no reason why we can't reach an agreement We're very close They have to do more once we do that get the agricultural piece the developing countries need to do more for The so-called nama industrial tariffs more on services But this would be an enormous way one way to think of it is A multi hundred billions of dollars of free tax cuts without any Increase in the deficit of any country in the world That's really what it is. It is a free tax cut a free stimulus For the entire world and that would be an enormously positive thing To go along with the other items that we've mentioned So, you know trade has a major role to play as as both the ambassador and and the senator said The g20 is is going to be perhaps the last opportunity to make that case because if we can't make it then with all the Key countries in the room. It's not going to be made for the next couple of years And we're going to slide into a very very serious situation Can I just add one thought I I couldn't possibly agree more the thing that scares me to death Is How urgent The problem is And the need for us to be prepared to do something traumatic and do it very quickly You're trying to operate within a fragile political system not only here but in other countries particularly china and governments are going to be asked to Put their neck on the line There's some pretty tough decisions But I I I can't possibly emphasize enough Stu's point about This particular forthcoming meeting I think the the opportunity is is is huge for us to take a very strong lead and to make an enormous difference I think missing that opportunity would be would be very frightening in terms of its consequences for For our recovery And to do that We've got to do some of the things that I think our secretary of state has been doing for the last few days in asia I frankly like very much the fact that she Was engaged in what she was calling a listening tour You can't have a conversation if you don't listen. There are a very few number of partners That will be in that g20 meeting We could have With whom we could have or with which we could have a a very quiet conversation What do you really need What do we really need to put a much more positive Product out of the g20 session that we'd like to open up some questions from the audience I'm not an I'm not an economist. So my question is making really sort of dumb. I'm a social anthropologist by training I look at I look at what the pain issue is about work And that if you talk about trade and don't get the think about what are the jobs that people have to have in order to Create whatever it is. You're going to be trading and I keep wondering what we're supposed to say Well, you read in the newspaper that we have all the surplus of cars and nobody wants to buy these cars They're too big to sell anywhere else I mean each one of these The devil is in the detail and and if you if you Paint it with this big Brush and you don't think about each one of these piece of cards. I don't know how you get to something That's actually going to work. I mean, it's what are we selling china? Are they buying washing machines from us? We're buying TV from them. I I mean, I can't quite figure out What this What it is they want to buy do we make it cheap enough that they want to buy I mean I And you have to explain it so the rest of us understand it better because just saying I think that actually scares people because for me it's really about jobs For them and for us In order to have money to buy more stuff and if we're saving Producing I mean, I can you sort of pull this together something makes sense for me. I'm sorry With five percent of the world's people We make 20 percent of the world's output We need to find markets beyond our borders to sell our goods And that creates jobs I know you're not an economist But you make a very good point about how to make The discussion about trade meaningful to the american people The peterson institute for international economics has done a study That demonstrates that by opening markets since world war two That we have increased our wealth in america by one trillion dollars a year Which works out to be about 9500 dollars per average american family That means if the mean income in the united states today is 44 thousand dollars It would have been roughly ten thousand dollars lower Had we kept our markets closed So we have an economic benefit And the benefit that comes from efficiency When we opened our markets north to canada and we opened our markets south to mexico Our auto industry benefited It bought windshield wipers from mexico And certain devices from canada And the actual product crossed the border eight times before it was completed But it was more efficient less costly and presumably a better product And there are many many industries you ask what do we trade to china? It's a myth that we trade junk to china we trade machinery computers our top five Exports to china are sophisticated goods They need them and and what we need to get is balance Um, yes, we our economic picture has been poor in recent times We have spent more Through our equity in our homes where we have refinance And we have spent money we ought not to have spent And now we have to bring it back But if we close down our markets We will hurt not only ourselves But those countries beyond our borders as we become less efficient And create fewer jobs so Trade is an indispensable element to economic growth through efficiency And that's what we need today And the stroke trade puts very few people out of jobs But it is perceived to have been to the contrary You know, we've had two years Of campaigning against globalization trade and to some extent china in in in point in point of fact It is not correct that trade creates jobs It creates efficiency and entrepreneurship and Moving up the value chain That's what trade creates wealth More growth And some people are hurt whether it's by trade or technology You know, it's a myth that we have lost our manufacturing Yes, we've lost manufacturing jobs, but we're still the world's number one manufacturer We manufacture more than china How many people knew this in this in this audience? I'll bet you there 25 or 30 that did not know that fact The thing is that we're producing more manufactured goods With technology so we do it with fewer workers That makes us more efficient I'm all for just as the senator said To try to train people to move up the value chain If we were still making buggies and buggy whips We would not be sitting in this beautiful auditorium So moving up the value chain is vital as an economic proposition But we can't hold on to the past and do that So some people yes are hurt and the question how best to deal with Both having the general economy rise and take care of the pain That is inflicted upon a fewer number And that's where retraining wage assistance portable health care come into play And I hardly endorse the trade adjustment assistant although I agree with bill It should have been called worker adjustment or make america competitive And that program also has a retraining provision Let me make two points Oh, I'm sorry You're going to get hammered by three of us up here That all of us all of us share your concern and and and are willing to to say we ought to have more social anthropologists in the economic profession Because there's a logic to that Two or three points one For every job that's lost to imports nine are lost to changing market circumstance changing technology So if you want to blame the future, you got problem If you want to blame progress, you got a problem We just simply have to prepare our people to meet that challenge, which means education and training It means taking care of people who are unemployed not just the kids in school that people are unemployed secondly Stu used a phrase that I thought was terrific. He talked about trade being a free stimulus It is free. It doesn't cost us We've got more deficits than the lord ever thought could be put on this earth Well, maybe not the lord, but the rest of us And uh We really have got a problem trying to work our way through this economic thicket. It's going to be very long and very hard To to come back from that we are going to need more personal savings in this country We've been spending our way rich we've been borrowing money from china to borrow their goods It can't be any dumber than that But uh, we've had a pretty good object lesson. So what do we do? We are going to have to rethink our personal habits Our corporate habits our collective as a country have it And and find a way to open the doors for us to grow our way out of the problem That's where world trade offers an opportunity that almost nothing else does Lastly back to yourself social anthropologist Since we started building this world trading system We've given a billion people in the world the opportunity to come out of poverty a billion people have come out of poverty Because of of the economic opportunity that that exists I can't think of a greater compliment To the people that we're trying to create this construct Voting from the marshal plan in forward Than to say what a difference we had made I'd like to say uh, you obviously touched your own nerve but I I I really believe that we are In danger of losing the consensus in this country and in the world For free and open trade We are because the losses of Jobs for trade which are real although not as nearly substantial as indicated are much more visible Than the gains for trade but Let me just add without re-emphasizing points that carlin bill have already made very effectively number one When we enter into trade agreements Whether it's bilateral trade agreements regional trade agreements or the doha around multi now We are already starting from a position where our markets are much more open To the countries with whom we're negotiating than their markets are to us So in many cases almost all cases. It's a no-brainer. We're opening their markets To our products because our markets through a very variety of preferential agreements and so forth We're already much more open to theirs If anything, it's it's leveling the playing field second Every economic study has shown that export created jobs Pay anywhere from 25 to 30 percent more than average Manufacturing jobs not just average Jobs that these are high paying jobs so that the greed of which people are being paid for exports You get very high paying jobs third Carl you mentioned this at lunch the very substantial percentage Of the companies who export are small and medium-sized companies Not just the big giants They're creating a tremendous number of jobs as well And last is the point that uh that bill made We have a stake in global stability And by creating a middle class In these countries through open markets Through opening their markets for us and vice versa We create not only more stability in those countries less opportunity for terrorism We create middle-class consumers who will buy our products So I mean we we just have sat back and let the field be occupied by those who make the other argument We do need to do more we might have to have a much more expansive Adjustment process we have to do more on retraining We have to make sure that communities and others who are unemployed as a result of trade are taken care of But we also have to make the case Particularly that our market is already open what we're trying to do in these agreements is open other markets to our products And even the playing field From business times I'm not sure that there is a need to reconcile because I think the trade does create jobs and open markets are Good for global stability and for job creation. It's not an either or situation In fact, that's the trap that we've gotten ourselves into the believe believing that somehow more trade Looses jobs rather than creates them. It simply doesn't and that this is a leg Of global recovery. You have to have fiscal stimulus You have to deal with the toxic assets on the books of banks all over the world You got to have monetary stimulus, but you also have to have open markets so that we create jobs It's an essential leg of a globalized situation Of a globalized recession It just it you'd have a two-legged stool Without having trade as a component of an economic recovery package The truth is that this is a very different world than it was a year ago He's not running in a primary. He's governing a country And the world is a very different world than it was then economically and politically My guess is that there are going to be a number of adjustments from some of the statements made last year to the To the real world that exists today My guess is he's already started to make those adjustments and I give him credit for that. I think we should Thank you The implicit in your question is that countries believe that exports are good and imports are bad And that's a that's a falsehood The fact of the matter is that we could become more efficient by importing the products that we make less effectively Even if we make them better than all the rest if we spend our time addressing the The components that we make better than anyone else We will have a final product that is superb So we want to keep the markets open both to exports and imports and india would benefit immeasurably If india were to reduce its tariffs by 50 it would generate jobs. That's not my saying so But that's what the confederacy of uh of indian industry has done by study And india has the highest tariffs across the board In asia and that hurts its growth in its economy I just like to say also that in terms of uh, we we oftentimes don't focus on consumers Consumers are the beneficiary of open trade. It saves dollars from your pocket That can be invested saved or spent on other things By having goods that freely flow at the lowest possible tariff levels, but it's got to be mutual and this goes back to the Point I was making at the beginning There's no question, but the china and india have very large Poverty populations, but they're also at a stage of development where we might not Be able to insist whether it's on global warming or andoha that they take Exactly the same tariff cuts as we do But they have an obligation to do more than they've done And it will benefit their people As well, it'll make their industries more efficient and it will make their and your Uh consumers have additional money to spend for other things if they can get access to the most efficient products I think we have time for one last question. How about all the way in the back? My name is frank weeby. I am an economist and I appreciate you Presenting the case as you have. Um, I'm a little more concerned about the politics and the process going forward if our message is Accurately, but uh, but it'll be perceived negatively that other countries have to do more That's one that doesn't sound like it's uh, like it has a lot of prospects for success I'm simply wondering if there's anything more that the u.s. Can do to assume a leadership position Are there any things we can do for example, you know laterally changing our agriculture policy The things that would be seen by the world as has really taken the leadership in opening markets Uh and stimulating growth I'm sympathetic to that but but the practical world that we live in Is that the congress is under a lot of pressure right now? And they're going to say I want some pretty quick pro quo We have An insane system of barriers to small and poor countries To their product that are in no way a threat to american well-being We we could do that You know laterally to everybody's mutual advantage carla talked about that earlier But the truth is if you're going to talk about larger things Indian tariffs, which are extraordinarily high and And we think unwise anyway The great thing about a something like a bilateral trade agreement much less the doha around Is it opens the door for the give and take? That allows for A whole range of things to be put on the table where we really do make significant progress and stew is precisely on point when he says We've got far fewer barriers than almost any other country. We are already open By taking it to doha and and letting the president take that as an economic boost argument I think is is probably the the most politically logical way for us to proceed now Well, you are an economist and You know if we were to take these steps unilaterally We would enhance our economy But I do think that you're on to a point That we should broaden the message We could talk about the fact that our market is disproportionately open But other countries want access to the largest market the largest economy In the world and so there is a benefit We could talk about the economic benefits because we can quantify what we have gained in the past from opening markets And I think americans would respond to the humanitarian aspects opening markets and bringing countries like bangladesh in Actually alleviates poverty And has a humanitarian impact But also I think americans would would be responsive to the security implication that stew has mentioned You know when you give a country Like uh indonesia, which has very high unemployment the opportunities to create jobs and sell products throughout the global trading regime Those people have hope and are less likely To engage in Activity that would not only endanger the global stability About our own safety and security here in the united states So we've got a really good song to sing for trade The problem is we haven't been singing it I'd say two things the first is You talk about unilateral actions or statements one would be a very ringing declaration even tonight That protectionism has no place in this world and is counterproductive to A global recovery and that as president He will take no steps that will add barriers to trade and will urge others to do likewise and that would be very important second Is to say that he's going to instruct his new trade representative To reach an agreement on doha that this is an important initiative We were very close. There was a question of how you'd define For purposes of uh india and china a so-called surge in imports that would allow them to raise barriers And that the president would say that he's going to instruct his trade Negotiator to do everything possible To reach a compromise on on that issue So long as we can make sure that there are reductions For our uh industrial and service Industries, I think those two steps would be a very important Direction and leadership by the us Okay, I you know I could sit here and listen to these two all day Uh, it's a great to learn the feet of the master and miss miss or miss But uh, you've been terrific. We're uh over our time already. Thank you for being here. We'll see you hopefully next time. Thank you very much