Topic Category: Politics

The United States is falling behind many countries in terms of establishing trade agreements. As a result, U.S. companies increasingly are at a disadvantage with foreign competitors that have preferential access to attractive export markets.

For example, of the estimated 130 free trade agreements (FTAs) in force around the world today, only two include the United States. And, only 11% of world exports are covered by U.S. FTAs, compared with 33% for European Union FTAs and customs agreements. Trade Promotion Authority may provide the solution.

More Trade Agreements Are Negotiated Without U.S. Involvement

In recent years, numerous free trade agreements, bilateral investment treaties, and mutual recognition agreements have been negotiated and implemented around the world. Unfortunately, the United States is not party to them.

For example, Mexico has free trade agreements with at least 28 countries, almost all of which were signed since 1990. The European Union has negotiated free trade agreements with 27 countries, and has begun discussions with Brazil and others to establish new ones. Plus, South Africa, Brazil, Canada, China, and others also have begun to negotiate new agreements.

The U.S. Is at a Loss

The United States currently has in force two free trade agreements: one with Israel and one with Canada and Mexico under the North American Free Trade Agreement (NAFTA). The United States has completed negotiating, but has not received Congressional approval of a free trade agreement with Jordan, and is working on agreements with Singapore and Chile.

What is the impact on U.S. companies and their workers? As international competitors gain preferential access to lucrative markets, U.S. firms are put at a competitive disadvantage since their products are subject to trade barriers, which increase their landed prices and decrease their attractiveness.

Furthermore, since potential U.S. trade agreements are not in place, U.S. products, services, and investment are subject to unfavorable standards and regulations, and exclusion from investment protection and liberalization initiatives.

Trade Promotion Authority (TPA)

To the disadvantage of many U.S. exporters, importers, and investors, Trade Promotion Authority (formerly known as Fast Track negotiating authority) has not been renewed since 1994. As a result, the United States has not been able to successfully negotiate new trade accords and is losing out to countries that have.

TPA, which served Presidents Nixon, Ford, Carter, Reagan, Bush, and Clinton, was called for in President George W. Bush’s budget address to the nation on February 27, 2001.

How It Works - What It Does

TPA requires Congress to pass or reject trade agreements — without making any changes. Without it, foreign governments are reluctant to make agreements and concessions that could be changed later by Congress.

Since 1974, when TPA was first implemented, U.S. trade agreements have significantly opened foreign markets for U.S. exporters, resulting in tremendous growth in sales abroad. Under TPA, trade agreements such as the Tokyo Round, the Uruguay Round of the GATT, and NAFTA have eliminated numerous foreign barriers to U.S. trade and investment.

Unfortunately, for many U.S. exporters, importers, and investors, the absence of TPA has prevented the U.S. from keeping up with global competitors. For example, Canada and Chile forged a trade agreement that created freer access to each others’ markets. This has favored Canadian companies a great deal, but has put U.S. companies at a disadvantage.

The proposed Free Trade Agreement of the Americas (FTAA), which will extend NAFTA throughout Latin America, is unlikely to be completed without the Congressional ability to have an up or down vote.

What’s the Hold-Up?

Trade opponents claim that Trade Promotion Authority is an inherently undemocratic and secretive process. Trade proponents believe this to be untrue. Since no administration wants to submit a trade agreement to Congress that will be rejected, Members of Congress are routinely consulted during negotiations.

While trade agreements cannot be amended on the floor, Congress has ample opportunity to do so beforehand. And, as the final democratic check, Congress can simply reject the deal.

Adding Labor and Environmental Language to Trade Promotion Authority

In a move to obtain a majority of 218 votes in the House of Representatives on TPA this year, Members of Congress likely will add labor and environmental language to a forthcoming bill. This may be similar to the NAFTA labor and environment side agreements.

Many Members of Congress, however, feel this language should be advanced in other, non-trade legislation, while others wish to use trade as an incentive for developing countries to pay greater attention to these issues.

The Backlash Against Free Trade and Globalization

Trade opponents feel that past U.S. free trade agreements, as well as globalization, are not in the best interest of the U.S.

Globalization is a process that involves the integration of national markets through international trade, foreign direct investment, and portfolio investment. Based on free-market capitalism and powered by advances in telecommunications, transportation, and finance, globalization has empowered companies and individuals to generate new wealth in ways undreamed of just a few years ago.

But globalization is also forcing difficult changes similar to those introduced by the industrial revolution — and not all Americans are able to adapt. As a result, the primary challenge of globalization is to exploit the greater upside while minimizing the lesser downside.

Globalization Benefits Developing Nations

According to the Harvard University report, Economic Convergence and Economic Policies, developing countries with open economies grew by 4.5% a year in the 1970s and 1980s, while those with closed economies grew by 0.7% a year. At this rate, open economies double in size every 16 years, while closed economies double every 100 years.

According to the Washington, DC-based Progressive Policy Institute report, Globalization, Poverty and Inequality, “No country has managed to lift itself out of poverty without integrating into the global economy.”

And who would know this better than former Mexican president Ernesto Zedillo, who said: “In every case where a poor nation has significantly overcome its poverty, this has been achieved while engaging in production for export markets and opening itself to the influx of foreign goods, investment and technology — that is, by participating in globalization.”

Opportunities and Challenges Ahead

Globalization can’t be slowed down since no one is at the controls. However, with TPA, the U.S. will be better positioned to seize trade opportunities.

Western New York's economy has not always kept pace with the rest of the state or nation. And, when the national economy slows, our region usually feels the consequences earlier, more severely and for a longer period of time.

To improve our local economy and shelter it from economic slowdowns, Congress needs to forge new trade agreements that further open foreign markets so our exporters can sell more goods and services abroad. This will create higher-paying jobs, strengthen local companies and farms, and improve our tax base, while sending export revenue to local restaurants, retail stores, etc.

U.S. exports account for almost one-third of real U.S. economic growth and a very large portion of our economic development. Consequently, the income of local workers and farmers and the growth prospects of New York-based businesses are pegged to international trade.

These are the key findings released on March 9 in a new Business Roundtable report, International Trade Benefits New York, which I authored. Other findings in the report:

International trade is a primary generator of business and job growth in the Buffalo-Niagara metro area.

The highest manufacturing employment sectors in the Buffalo-Niagara metro area also are among the state's top merchandise export industries, including electronics, fabricated metals, industrial machinery, transportation equipment (the auto industry) and food and food products. Consequently, as exports increase, employment in these sectors also will increase.

A staggering 71.5 percent of Buffalo-Niagara metro area exports were shipped to Canada and Mexico in 1998, much more than other metro areas.

The North American Free Trade Agreement has created a net increase in jobs in New York. Plus, from 1993 to 1998, Buffalo-Niagara merchandise exports to Canada and Mexico rose by 134.2 percent - significantly higher than the overall Buffalo-Niagara export growth rate.

Less than 2 percent of non-farm workers are at risk from imports, which offer consumers greater choices at attractive prices. Imports allow families to purchase more goods with more disposable income available for education, health care, home mortgages, etc. And lower-cost imported components help local producers to be more competitive worldwide.

The business community and political leaders agree that access to foreign markets is key to local economic growth. Erie County Executive Joel Giambra said: "Erie County companies and workers are very competitive internationally. If Congress can forge new trade agreements that bring down foreign barriers, our local businesses will be able to sell more goods and services abroad and create additional higher-paying jobs. In turn, this will generate greater economic growth for Erie County."

Rep. Thomas Reynolds, R-Clarence, said, "From family farms to high-tech start-ups to established businesses and manufacturers, increasing free and fair trade will keep our economy going and create jobs in our community."

Rep. Amo Houghton, R-Corning, noted, "Opening up markets to U.S. exports is critical to creating jobs in the Southern Tier."

Joe McMahon, president of Oxygen Generating Systems, said, "If the U.S. can negotiate new trade agreements that bring down foreign tariffs on our products, we'll be able to sell more abroad and create new jobs here in Western New York." And Francis Chen, president of Mentholatum International, remarked, "International trade certainly has helped us contribute to the growth and employment in the region."

Buffalo-Niagara ranks within the top quarter of fastest growing and largest merchandise export metro areas in the country. Gov. George E. Pataki noted: "New York has created a business-friendly environment by cutting taxes, controlling spending and eliminating red tape. This strategy puts New York companies in a very strong position to compete globally, as well as positioning New York State as an attractive location for international investment. Our aggressive economic agenda reinforces the Empire State as the center of global business marketplace."

Numerous Western New York businesses are succeeding internationally, but more needs to be done. For almost three decades, the U.S. service trade surplus has consistently reduced the trade deficit. In 1999 alone, it decreased the trade deficit by 25 percent. And since 1980, U.S. exports of services have grown 130 percent faster than exports of goods.

New York's private service-producing industries accounted for 75 percent of total gross state product in 1998, a larger percentage than any other state. And in the Buffalo Niagara metro area, 80 percent of non-farm workers are employed in the service sector.

To improve our local economy, companies need greater access to both foreign goods and service markets. To achieve this, we need Congress to forge new trade agreements that further open foreign markets.

Since 1974, when Trade Promotion Authority (previously called Fast Track authority) was first implemented, U.S. trade agreements have significantly opened foreign markets for U.S. and New York exporters, resulting in tremendous growth in sales abroad. In fact, U.S. exports rose by 690% between 1974 and 1999.

Trade Promotion Authority requires Congress to pass or reject trade agreements — without making any changes. Without it, foreign governments are reluctant to make agreements and concessions that could be changed later by Congress. Trade opponents, however, claim that Trade Promotion Authority is an inherently undemocratic and secretive process. This is untrue. Since no administration wants to submit a trade agreement to Congress that will be rejected, Members of Congress are routinely consulted during negotiations. While they cannot amend final agreements on the floor, they have ample opportunity to do so beforehand. And, as the final democratic check, Congress can simply reject the deal.

Under Trade Promotion Authority, trade agreements such as the Tokyo Round and the Uruguay Round of the GATT, and NAFTA have been implemented benefitting New York by substantially reducing foreign trade barriers. And, since its implementation in 1994 and despite a Mexican recession, NAFTA is fulfilling its promise.

To the disadvantage of New York, Trade Promotion Authority has not been renewed in several years. As a result, the United States has not been able to successfully negotiate new multilateral trade accords and is losing out to countries that have. For example, since Trade Promotion Authority has not been renewed, Canada and Chile forged a trade agreement that created freer access to each others’ markets. This has benefited the Canadian province of Ontario a great deal and has put New York companies and workers at a competitive disadvantage. Numerous other trade pacts, some involving European and Latin American countries, are in negotiations or have been finalized without U.S. involvement.

The proposed Free Trade Agreement of the Americas and other economic integration accords under consideration will not only open foreign markets to New York’s goods and services, they will also encourage the expansion of small business exports to developing countries whose economies are growing faster than developed economies. To take advantage of these opportunities, New York needs Congress to pass Trade Promotion Authority.

Trade Promotion Authority Assists Small Business

Often overlooked is the tremendous opportunity international trade represents to New York’s small and medium-size businesses. According to the U.S. Small Business Administration, one-third of the value of exports are attributable to small businesses. Their well-being is of great importance to New York’s economy. Firms with fewer than 100 employees account for the vast majority of the jobs created during the past five years. Like all businesses, they are actively seeking greater access to foreign markets.

According to data from the Exporter Data Base (a joint International Trade Administration-Census Bureau project), the number of U.S. firms exporting goods tripled from 1987 to 1997. Importantly, small and medium-sized enterprises (companies with fewer than 500 workers) accounted for over 97% of this growth in the exporter population.

Small and medium-sized enterprises continue to increase in number while generating a larger share of total U.S. exports. In 1997, small and medium-sized enterprises accounted for 96.5% of all U.S. exporters. This is up slightly from 1992. And these companies accounted for 30.6% of all U.S. exports in 1997, also slightly up. Very small companies (those with fewer than 20 employees) made up nearly two-thirds of all U.S. exporting firms in 1997.

Small and medium-sized company exports are not limited to the United States’ three largest destinations, which include Canada, Japan, and Mexico. In 1997, small and medium-sized enterprises were responsible for 38% of total U.S. goods exported to the combined China and Hong Kong markets. This is up from a 33% share in 1992.

In addition to eliminating trade barriers, trade agreements also offer a number of conditions that are particularly important in helping small and medium-size businesses take advantage of growing foreign markets. For example, trade agreements eliminate much of the red tape, such as licensing requirements and other restrictions, that has effectively kept small businesses out of foreign markets. Large corporations often can devote the time and resources to figuring out ways to work around non-tariff barriers. Small businesses usually can’t afford to do that. By eliminating non-tariff barriers, bilateral and multilateral agreements give small firms market access similar to that enjoyed by large companies.

Furthermore, one way large corporations have avoided trade barriers is by establishing facilities in foreign markets. Here again, small firms have been at a disadvantage. Generally, they do not have the resources to establish facilities abroad. But, with the elimination of trade barriers, a company will not have to locate abroad to sell abroad. This helps small and medium-size businesses gain access to overseas markets from a base in New York, creating jobs here in the state.

Why Exports Matter: More!, concludes that export commitment by small American firms has surged over the past decade. And it is this commitment to export, rather than the volume or share of exports in overall sales, that is responsible for higher performance. Furthermore, small firms are not disadvantaged relative to large firms in realizing the gains from exporting, the report says. This is key since small businesses now provide virtually all net new U.S. jobs, represent 99.7% of all employees, and provide 55% of innovations.

If the President is granted Trade Promotion Authority, new resulting trade agreements will help small businesses to export more goods and services. This will undoubtedly benefit New York companies and workers.

Fresh analysis reveals that international trade has been a vital factor in the economic growth that has occurred in New York. And now, due to global trends, international trade is even more important to the future well-being of the state.

In addition to being a primary generator of business and job growth in the Buffalo-Niagara, Rochester, Syracuse, New York City, and Long Island regions, international trade also affords consumers greater disposable income, improving their standard of living.

But due to a massive dissemination of misinformation, many believe that international trade has contributed to New York’s economic difficulties. In turn, this has led to the belief that erecting trade barriers is a panacea for a variety of economic problems. Nothing could be further from the truth. For example:

• U.S. exports account for almost one-third of real U.S. economic growth — and a very large portion of New York’s economic development. Consequently, the income of local workers and farmers, and the growth prospects of an increasing number of New York-based businesses are pegged to globalization.
• Every year for almost three decades the U.S. service sector has enjoyed a significant trade surplus. And since 1980, U.S. exports of services have grown 130% faster than exports of goods.
• New York is the third largest merchandise exporting state in the United States. And, if state service export data were available and added, total exports would be considerably higher.
• In 1998, private service-producing industries in New York accounted for 75% of the total gross state product, a larger percentage than any other state.
• Not surprisingly, the highest employment sectors in most of New York’s metro areas are also among the state’s top merchandise export industries.
• Imports offer American consumers greater choices at attractive prices and help keep inflation down, one of the most important factors in raising our standard of living. Plus, due to lower-cost imported inputs, such as components and materials, U.S. producers are much more competitive worldwide.
• International trade sometimes causes employment to increase in some sectors while decrease in others. But exaggerated fears of massive job losses due to imports are misplaced. Contrary to public belief, less than 2% of non-farm workers are at risk from imports.
• What distinguishes the fastest growing developing countries from the slowest is their openness to trade. In the 1970s and 1980s, developing countries with open economies grew by 4.5% annually, while those with closed economies grew by 0.7% a year. At this rate, open economies double in size every 16 years, while closed economies double every 100 years.
• From 1993, the year prior to NAFTA’s implementation, through 1999, New York State’s merchandise exports to NAFTA partners increased by 52%. In comparison, New York State’s merchandise exports to the world increased by 6.4%. NAFTA has generated a significant net increase in jobs in the United States and in New York State.
• To the disadvantage of New York, Trade Promotion Authority (formerly known as Fast Track Authority) has not been renewed in several years. As a result, the United States has not been able to successfully negotiate new multilateral trade accords and is losing out to countries that have.

In order for New York State to prosper in the 21st century, and seize the benefits presented by globalization, it’s imperative that local companies begin or expand exporting efforts. And, it’s essential that elected officials establish policies designed to encourage exports, while passing trade legislation that further opens foreign markets.

Our Goal Is Clear

New York State has significantly benefited from international trade. However, as we enter this new and more competitive era of globalization, international trade is becoming even more important to the well-being of local companies and their workers. In order to improve the standard of living for all New Yorkers, more local companies must enter the global economy and penetrate new markets. In turn, this will help them to grow, increase productivity, and create high-wage jobs.

According to data from the Exporter Data Base, growth of the exporter population has accelerated. From 1992 to 1997, the number of U.S. exporters surged by 86% — but much more needs to be done.

Elected officials need to establish policies designed to encourage local companies to expand internationally, while passing trade legislation that further opening foreign markets.

What is the single most important act that our government can perform this year to assure the continuation of the record economic prosperity we've enjoyed throughout most of the past decade and into the new century?

You might say tweak the prime rate or cut taxes. However, there is one thing upon which we can all agree to further open the world's largest markets to American goods and services. This is an effort vital to our economic and national interests.

Congress can help achieve this important objective by passing Permanent Normal Trade Relations (PNTR) status with China. This would complete a process that started with the negotiation and signing of a landmark market access agreement with China last November.

The pact gave China the U.S. "thumbs-up" to join the World Trade Organization (WTO). However, for us to realize the benefits of this historic accord, Congress must pass PNTR legislation. WTO rules specify that member nations must grant each other PNTR status.

This deal is a win/win for the United States and New York State. And today, China, including Hong Kong, is New York State’s sixth largest export destination — bigger than Germany or France. Greater access to the Chinese market will result in increased exports and revenues for Western New York, a place where economic growth has not always kept pace with the rest of the nation.

The Buffalo-Niagara Falls metropolitan area employs more workers in the transportation equipment industry than any other manufacturing sector. Not surprisingly, transportation equipment is New York’s second highest export to China. And other major employers, which include the industrial machinery, food product, chemical, fabricated metal, electronic, and scientific instrument sectors, also are among New York’s top exports to China.

If Western New York is to catch up and enjoy the levels of growth achieved nationally, we must look beyond our borders to a greater extent. And, since 96 percent of the world’s customers live outside the United States, we need to focus on exports to maintain and create jobs here.

China already has access to our markets; supporting PNTR will not change U.S. tariff rates. It will, however, open the door to China's marketplace. With a population of more than 1.3 billion, we cannot afford to be locked out. The agreement will provide enormous opportunities for our goods. For example, the agreement will:

• Cut average tariffs from 24% to 9% by 2005;
• Further cut tariffs on U.S. priority to 7% by 2003;
• Eliminate tariffs on high-technology goods by 2005;
• Cut average agricultural tariffs by half; and
• Remove China's distribution monopoly, allowing U.S. firms to freely distribute their goods in China.

If our Members of Congress fail to vote in favor of PNTR, we will hand over this opportunity to our European, Japanese and other competitors.

But this agreement involves more than just trade; it is an exchange of ideas, beliefs, and values that changes and enriches all who participate. For a quarter-century, U.S. trade has helped change China for the better by supporting economic freedom, human rights, access to information, higher living standards, and the rule of law for the Chinese people.

Successfully integrating China into the global economy also would advance security in the Asia-Pacific region. In fact, Taiwanese president elect Chen Shui-bian said he hopes to see China join the World Trade Organization.

On behalf of Western New York companies, workers, and farmers, I urge Congress to expeditiously approve PNTR with China. Through exports, we can help grow our local economy. In turn, this will create higher-paying jobs locally so our children can live, work, and raise their families in Western New York.

Economic growth and prosperity in much of Africa and the Caribbean have not kept pace with the rest of the world. Recognizing this fact, the United States recently passed legislation that could improve the situation — and benefit your business.

United States Trade Representative Charlene Barshefsky pinpoints the value of reducing trade barriers. She has noted that since 1960, as world tariffs have decreased, global trade has increased 15 times, world production has increased five times, and world income per person has doubled. In turn, world standards of living and trade opportunities have increased considerably.

What is responsible for the decrease in global tariff barriers? The answer: the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT).

The WTO was formed in 1995 with 81 member countries, a total that has grown to 135, with 36 observer nations. The latest country to join, Estonia, was admitted in November 1999. About two-thirds of the members are developing countries.

GATT, established in 1947 in Geneva, Switzerland with 23 member countries, was designed to reduce or eliminate tariffs and, in some cases, non-tariff barriers among the contracting parties. GATT was responsible for reducing the international tariff average from 40 percent in 1947 to five percent in 1990.

The November 1999 WTO Ministerial Conference in Seattle was expected to initiate a new round of trade talks designed to identify sectors where parties could further pursue tariff reductions. Yet, due to widespread and highly publicized rioting, few meetings were held.

Sleepless in Seattle

Many demonstrators claimed that the WTO does not consider working conditions nor the environment. They charged, further, that it is not a democratic institution. WTO supporters acknowledged that improvements can be made. Additionally, they pointed out that in order to generate wealth, a prerequisite for raising living standards, each country must participate in the global economy.

According to the WTO, all its agreements are adopted by consensus. No agreement is binding on any nation unless that country first agrees to it, according to its own legislative process. And, WTO rules do not prevent countries from adopting and enforcing their own environmental and health standards.

The GATT-WTO Difference

GATT was a formal international agreement that specified the rules for conducting international trade. It led to an international organization created to support the agreement. GATT was ad hoc and provisional, never ratified in contracting parties’ parliaments.

On the other hand, the WTO and its agreements are permanent, and the body is comprised of full-fledged members. Whereas GATT dealt with trade in goods, the WTO covers services and intellectual property as well. Importantly, the WTO dispute settlement system is faster than its predecessor’s and more automatic than the old GATT system. Additionally, its rulings cannot be blocked.

Congressional Action

This spring or summer, the United States Congress is expected to vote on a very controversial issue. As surprising as it may seem to some, however, the vote is not over admitting China to the WTO. The issue, instead, deals with granting China Permanent Normal Trade Relations (PNTR) status.

On November 15, 1999, the United States and China signed a bilateral trade agreement that unofficially gave the thumbs-up to China’s WTO membership. Formal admission will occur after all remaining WTO members complete their individual agreements with China.

Under the WTO, members must grant each other PNTR status. To achieve this under current United States law, Congress must either amend or repeal Title IV of the Trade Act of 1974, known as the Jackson-Vanik amendment.

What’s at Stake?

Should Congress fail to grant China PNTR status, that country could invoke Article 13 of the WTO Agreement and elect not to apply multilateral WTO agreements to the United States. Such an outcome would deny the United States preferential market access to China, handing global competitors a significant advantage.

If Congress grants China PNTR status, the more likely scenario, the United States stands to gain unprecedented access to China’s markets for such leading American exports as high-technology products, capital goods, services, and agricultural crops.

China will reduce its average industrial tariff from 35 percent to 10 percent, while eliminating a multitude of non-tariff barriers that essentially prevent United States’ companies from significantly increasing exports there. In fact, the Congressional Research Service estimates that United States exports could almost double.

In reaching its 1999 accord with the United States, China made virtually all the concessions. And, as a member of the WTO, China must comply with the rules or be subject to trade sanctions under the organization’s dispute settlement procedures.

Will China’s Exports Threaten U. S. Manufacturers?

Most Chinese exports to the United States consist of inexpensive consumer products which are no longer manufactured in significant quantities in the United States. These include low-cost apparel, footwear, radios, televisions, toys, sporting goods, and consumer electronics.

Assembly of these items began shifting away from the United States in the 1960s. First came Japan, followed by Korea and Taiwan. Starting in the 1980s, Southern China entered the picture. As a result, China’s emergence as a consumer-goods assembler has come primarily at the expense of other developing countries, not the United States.

While apparel imports are likely to increase, that rise will take place irrespective of China’s joining the WTO. After 2005, imported apparel from India, Pakistan, and other developing countries will enjoy unrestricted access to the United States’ market. Preventing China from joining the WTO, therefore, will not protect the United States’ textile industry.

The Taiwan Issue

An agreement for China’s entry most likely would pave the way for Taiwan to join the WTO. When a working body was formed in 1992 to assess Taiwan, some WTO members felt that the Chinese and Taiwanese applications should be considered together. Recent developments in the China-WTO negotiations may open the door for Taiwan’s admission.

American business supports workable relations on the part of the United States with Taiwan and China, since most major American companies do business in both countries. A WTO package that admits China and Taiwan would improve American access to both markets and be a win-win proposition for American companies.

On Tuesday, July 27, 1999, Western New York Congressmen John LaFalce, Jack Quinn and Tom Reynolds, as well as the majority of their peers, voted to extend Normal Trade Relations (NTR) to China. We applaud this action for several reasons. Most importantly, because it is highly beneficial to Western New York companies and workers.

By granting China NTR, China’s products continue to be allowed to enter the United States at the same normal duty rates we offer other countries (all but Afghanistan, Cuba, Laos, North Korea, Serbia/Montenegro, and Vietnam).

In return, U.S. products continue to be allowed competitive access to the Chinese market at a time when exports are fueling Western New York’s economic growth. This is key, since in June 1999, the Buffalo-Niagara Falls metropolitan area registered an unemployment rate 18 percent higher than the national average.

Furthermore, export-related production has become a primary source of new jobs in New York's manufacturing sector, and now accounts for almost one-third of real U.S. economic growth. Its importance is increasing at the same time when China, with one of the world’s largest economies, represents one of the United States’ fastest growing export markets.

Compared to other U.S. states, New York is the third largest merchandise exporter to the world. And New York exports to China, which now includes Hong Kong, are larger than New York’s exports to Germany or France.

To determine just how important exports are to our local economy, one simply needs to review the local area employment picture. For example, as of June this year, the Buffalo-Niagara Falls metropolitan area employed more workers in the transportation equipment industry than any other manufacturing sector. Not surprisingly, transportation equipment is New York’s second highest export to China. And other major employers, which include the industrial machinery, food product, chemical, fabricated metal, electronic, and scientific instrument sectors, also are among New York’s top exports to China.

When looking at exports from a national perspective, their benefit is obvious. For example, in 1998, U.S. exports of goods and services worldwide reached $931 billion, increasing almost 140 percent since 1990. This supported approximately 12 million American jobs. And high-technology industry jobs --which tend to be big export winners -- when supported directly by exports, pay 34 percent more than the average national wage. In general, jobs supported directly by exports pay 20 percent more, and workers in jobs supported both directly and indirectly by exports are paid 13 percent more.

Additionally, according to the report, Why Exports Matter: More!, published by the Institute for International Economics and The Manufacturing Institute, “in U.S. plants that export, worker productivity is higher, jobs are compensated better and technologies are adopted more aggressively than among non-exporters.” The report contends that since the late 1980s, plants and firms that have sustained an export commitment, or that have initiated exports, experienced almost 20 percent faster employment growth than those that never exported or stopped exporting. In fact, the report states that communities that hosted exporters benefited from a stable, growing, high-performance workforce and tax base.

These benefits don’t only apply to large companies. Export participation by small and medium-size companies is significantly higher than at any time in the past. And, according to the U.S. Small Business Administration, small businesses provide virtually all net new jobs, represent 99.7 percent of all employees, and provide 55 percent of innovations. The international success of small businesses has numerous implications for Western New York.

The United States, which accounts for only 4 percent of the world’s population, needs to sell to the other 96 percent. Passing NTR legislation helps us to achieve this. And although trade is not a panacea, it is one of the best tools we have to influence foreign government policies with which we don't always agree.

Thus, denying China NTR would have lead to deteriorated U.S.-Chinese relations, fostering an environment of alienation and suspicion. This also means that any future U.S.-Chinese cooperation on sensitive issues, such as human rights, environmental and intellectual property protection, nuclear proliferation, and China’s currency stability would have been unlikely.

Today, U.S.-Chinese relations are even more important as a result of heightened tensions between Pakistan and India. As those two countries attempt to flex their military muscle and display their new nuclear capabilities, China and the U.S. need to cooperate more than ever before in order to counterbalance the increasing probability of a military miscalculation.

The failure of Congress to pass Fast Track legislation earlier this month is a blow to growth of Western New York.

Since 1974, U.S. trade agreements, which have been made possible through the use of Fast Track negotiating authority, have opened foreign markets allowing our companies to sell their goods and services worldwide. And over this same time period, U.S. exports have increased more than 600%.

Why are exports important to the United States? During the past decade, U.S. exports of goods and services accounted for one-third of U.S. economic growth. In 1996, they reached $850 billion. This sustained 12 million U.S. jobs that pay 10 to 15% more than the average wage. Furthermore, companies that export expand their employment base approximately 20% faster than others, and are 10% less likely to fail.

Why are exports so important to Western New York? Western New York recovered more slowly from the 1992 recession than the national average, but is now performing relatively well. In 1996, the unemployment rate of the Buffalo-Niagara Falls metropolitan area, the center of Western New York's economic activity, was slightly lower than the national average, and during the first eight months of this year, the two nearly matched. In 1995, the per capita personal income for the Buffalo-Niagara Falls metropolitan area was slightly higher than the national rate and ranked 109th out of more than 300 metropolitan areas. To ensure regional growth, our companies need greater access to foreign markets.

The prosperity of both our region and New York State, the third largest exporter among all U.S. states, is closely tied to exports. To our benefit, the highest employment sectors in the Buffalo-Niagara Falls area are among the top state export industries.

For example, our local transportation industry employs 14,500 workers, making it the largest manufacturing sector in Western New York. This industry is also highly competitive internationally, and as such, is New York's fourth largest export industry. As local transportation equipment exports increase, regional employment and revenues will rise, benefiting our workers and companies.

Industrial machinery and equipment, our third largest sector, employs 9,200 Western New Yorkers, and is our second largest export. Producers of food and kindred products, chemicals, electronic equipment, paper, and scientific instruments are among Western New York's top 10 highest employment sectors and New York State's top nine export industries. The growth of these industries is vital to our region's growth. As a result, we need to further open foreign markets to our products.

How have trade agreements advanced exports? Since 1992, trade agreements such as the Tokyo Round and the Uruguay Round of the GATT, and the North American Free Trade Agreement (NAFTA), as well as 200 other lesser-known trade agreements have benefited Western New York by substantially reducing foreign trade barriers.

Only three years after its passage and despite a Mexican recession, NAFTA is fulfilling its promise. U.S. trade relations with Canada and Mexico are better, prices on consumer goods are lower, the region is more competitive with fast-expanding trade blocs in Europe and Asia, and trade and investment throughout North America has increased.

In fact, from 1993 to 1996, U.S. exports to Mexico increased 36.5%, despite a 3.3% contraction in Mexican domestic demand, while exports to Canada and Mexico created 311,000 new jobs. What's more, in the first four months of 1997, U.S. exports to Mexico virtually equaled U.S. exports to Japan — an economy 12 times larger than Mexico's.

Why is the Congressional passage of Fast Track trade authority so important? Fast Track requires Congress to pass or reject a trade agreement, but prevents any changes. Without it, foreign governments are reluctant to make agreements and concessions that could be changed later.

To our disadvantage, Fast Track has not been renewed in three years. During this time, Canada and Chile forged a trade agreement that created freer access to each others' markets. This has hurt U.S. companies and workers, especially in the telecommunications and fresh fruit sectors. And that's not all. Numerous other trade accords, involving European and Latin American countries, have forged trading relationships at our expense.

If passed, how will Fast Track authority be used? If President Clinton is granted Fast Track negotiating authority by Congress, he is expected to forge new trade agreements with Latin American and Asian countries, whose economies are growing three times faster than ours. Overall, the focus of the President's efforts will be to lower or eliminate stiffer foreign tariffs.

The United States accounts for only 4% of the world's population. In order for both our country and Western New York to increase its standard of living and remain globally competitive, we need to sell to the other 96%. Fast Track is essential in helping us accomplish this. When it soon comes up for a vote, Fast Track should be renewed by Congress and supported by Western New York.