Open World Markets to American Products and Services
International trade continues to generate tremendous aggregate gains for the U.S. economy, American workers, and American households. The United States is the world’s largest economy and the world’s third largest exporter. Exports account for more than 14 percent of our nation’s gross domestic product and more than 11 million American jobs. In 2013, every billion dollars of U.S. exports supported 5,590 jobs. More than ever, America’s prosperity and security depends on active engagement with the global economy.
For 60 years, the United States has advocated expanding global trade – and for good reason. Academic research has repeatedly demonstrated that countries that have more open economies and engage in international trade enjoy higher growth rates and faster reductions in poverty than more closed economies. Each year, our nation’s GDP is an estimated $1 trillion greater as a result of decades of trade and investment liberalization.
The Forum is particularly supportive of open markets for international trade in order to ensure that U.S. financial services firms are able to compete on a level playing field. Greater participation in foreign markets by U.S. services providers – including financial services – will not only boost services exports and employment but, by fueling the growth of overseas economies, will also help expand overseas markets for other American products and services. Additionally, the Forum supports the Congressional renewal of the President’s Trade Promotion Authority (TPA), which is critical toward ensuring that the United States continues to negotiate further trade agreements.
The Forum strongly supports continuing negotiations of the Trans-Pacific Partnership (TPP) and the U.S.-EU Transatlantic Trade and Investment Partnership (TTIP), which was announced by President Obama during the 2013 State of the Union address. If achieved, TTIP would be the most ambitious trade agreement since the founding of the WTO – encompassing 28 nations, half of global output, and a third of all trade.
The Forum is also strongly of the view that financial services must be included in TTIP. Excluding a sector as central and important as financial services from talks encompassing every other aspect of the economy undermines the credibility of any eventual agreement. Second, the TTIP framework would provide a formal and high-level context within which to address cross-border financial regulatory inconsistencies as regulators continue to draft and finalize post-crisis regulatory rules. A comprehensive TTIP encompassing all industry sectors will not only preserve America’s leadership position, but will facilitate access to capital, support job creation, and promote continued economic growth here in the U.S. and Europe.
Keep America Attractive to and Open to Foreign Investment
U.S. economic growth and job creation has long benefited from foreign direct investment. U.S. subsidiaries of foreign-based companies account for 6.3 percent of U.S. private sector GDP and employ more than 5.6 million Americans throughout all 50 states – roughly one out of every 20 jobs. Foreign companies also account for about 10 percent of U.S. private investment and 16 percent of U.S. private research and development spending.
Open, stable, and predictable markets are a prerequisite for attracting global capital. While the United States has been the favored destination for foreign investment, it is prudent to be mindful that markets in Europe and Asia are increasingly competitive. The introduction of a single currency in Europe has eliminated currency conversion costs and exchange rate risk, making Europe more attractive. And the growth of the Chinese and Indian economies has already attracted enormous amounts of investment capital.
Finally, global capital is increasingly mobile and sensitive to changes in the political, economic, and regulatory climate. Poorly considered economic, trade, tax, or regulatory policies can negatively impact the willingness of foreign investors and companies to invest in the United States, which could result in higher interest rates, lower equity prices, and slower economic growth.