Transcript Vermont Commission on International Trade and State

Vermont Commission on
International Trade and State
Sovereignty
Overview of International Trade
And Its Impact on Vermont
Vermont Legislative Council
October 30, 2007
What is International Trade and What Are
International Trade Agreements?
•
International Trade is the exchange of goods and
services across international boundaries or territories.
•
International Trade between countries traditionally was
conducted according to agreements between two
countries. Such agreements are referred to as bilateral
agreements.
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What is International Trade and What Are
International Trade Agreements?
•
Beginning in 1944 at Bretton Woods, trade began to
be considered in a global manner and global
economic institutions were created to help regulate
its conduct.
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Some of these organizations include:
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The World Bank
The International Monetary Fund (IMF), and
 The
Global Agreement on Tariffs and Trade
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Evolution of the International Trading System
In the U.S. -•
In 1974, “fast-track” authority was established,
streamlining Congressional consideration of
trade bills.
•
In 1979, the Office of the U.S. Trade
Representative (USTR) was created by
Executive Order.
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Evolution of the International Trading System
In the U.S. -•
The USTR is part of the Executive Office of
President and is not subject to Freedom of
Information Act requests.
•
USTR formally consults with states through the
Inter-Governmental Policy Advisory Committee
(IGPAC) and State Points of Contact (SPOCs).
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Evolution of the International Trading System
•
In 1994, the “Uruguay Round” global trade
discussions were completed and the World Trade
Organization (WTO) was created.
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The WTO now has 149 members.
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Evolution of the International Trading System
•
WTO agreements include:
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Goods
Services
Government procurement
Agriculture
Intellectual property rights
A binding dispute resolution system
More than a dozen separate agreements
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Evolution of the International Trading System
Since the Uruguay Round…
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North American Free Trade Agreement (NAFTA)
U.S. – Singapore Free Trade Agreement

U.S. – Chile Free Trade Agreement

U.S. – Australia Free Trade Agreement

Central American Free Trade Agreement
(CAFTA)

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Why Should Vermont Care About
International Trade?
The Opportunities
•Vermont had $3.8 billion of exports in 2006.
•Vermont’s exports of merchandise increased 51%
between 2002 and 2006.
•Vermont exported to 148 foreign destinations in 2006.
•Vermont’s largest market by far was NAFTA member
Canada, which received $1.7 billion (44%) of
Vermont’s merchandize export total.
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Why Should Vermont Care About
International Trade?
The Opportunities
• Among manufactured products, the state’s leading
export category is computers and electronic products,
which accounted for $3.0 billion (78%) of Vermont’s
total merchandise exports in 2006.
• Other top manufactured exports in 2006 were
machinery manufactures ($136 million), transportation
equipment ($126 million), and fabricated metal
products.
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Why Should Vermont Care About
International Trade?
The Opportunities
• Export-supported jobs linked to manufacturing account
for an estimated 7.4% of Vermont's total private-sector
employment.
• In 2003, over one-fifth (22.9%) of all manufacturing
workers in Vermont depended on exports for their jobs.
• 828 companies exported goods from Vermont locations
in 2005. Of those, 712 (86%) were small and medium
sized enterprises with fewer than 500 employees.
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Why Should Vermont Care About
International Trade?
The Opportunities
• Trade with the world—both exports and imports of
goods and services—creates jobs in Vermont.
• According to the U.S. Business Roundtable, trade
supports 77,886 jobs in Vermont.
• 18.7% of jobs in Vermont are supported by trade, up
from 10.5% in 1992. Thus, trade supports nearly onefifth of Vermont jobs.
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Why Should Vermont Care About
International Trade?
The Opportunities
• Foreign-owned companies employ more than 10,800
workers, nearly 4% of all Vermont employees.
• U.S.-Canada trade supports 12,000 jobs in Vermont.
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Why Should Vermont Care About
International Trade?
The Opportunities
• Note: Export-related employment data shown do not include
manufacturing and non-manufacturing jobs involved in the
export of non-manufactured goods, such as farm products,
minerals, and services sold to foreign buyers. The complete
2003 export related employment series is available on the
ITA’s Export Related Jobs website. Additional information on
methodology used in the 2003 export-related employment
series can be found in the U.S. Census Bureau’s publication
Exports from Manufacturing Establishments: 2003.
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Why should Vermont care About
International Trade?
The Opportunities
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International trade is a growing part of the economy
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States that track the U.S.’s negotiating strategy may get
the jump on new economic opportunities
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Jobs in export sectors are generally higher-wage
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Trade diplomacy is important for non-economic
reasons
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Why should Vermont Care About
International Trade?
The Concerns
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Foreign competition can negatively impact wages, and
cost jobs at home.
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Labor Organizations argue that Vermont has lost close
to 9,000 jobs due to trade and Free Trade Agreements.
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Why should Vermont Care About
International Trade?
The Concerns
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The Vermont Department of Labor reports that 1,600
people have received Trade Adjustment Assistance.
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Trade Adjustment Assistance is available to workers
who lose their jobs to Free Trade Agreements between
the United States and other countries.
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Why should Vermont Care About
International Trade?
The Concerns
International trade agreements can impact state
legal authority
The federal government can sue states to preempt
state laws by citing international trade
commitments
Some agreements provide expanded legal
protection for foreign investors
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Why should Vermont Care About
International Trade?
The Concerns
Provisions in several Free Trade Agreements may
impact the ability of states to regulate:
 Pharmaceuticals;
 Gambling;
 The Environment and Land Use;
 Professional regulation and licensing;
 Utilities;
 Tobacco; and
 Procurement standards.
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Why should Vermont Care About
International Trade?
The Concerns
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Many Free Trade Agreements also include clauses,
known as Investment Clauses, which allow countries
or corporations within countries to bring
expropriation claims (similar to a takings claim)
against the United States based on state law.
These expropriations claims and the limits that Free
Trade Agreements may place on state sovereignty and
state authority to regulate will be discussed at future
public hearings addressing the environment, health
care, and agriculture.
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Additional Information and Terms Used
in Trade Agreements
GATT = General Agreement on Tariffs & Trade [Goods]
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Requires equal treatment for all foreign suppliers (national treatment and most
favored nation) and bans limits on market access*
Technical regulations may “not be more trade-restrictive than necessary to fulfill
a legitimate objective”
GATS = General Agreement on Trade in Services
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Contains similar rules (*) relating to “committed” services
“No more burdensome than necessary” to ensure quality of service (“domestic
regulation”)
GPA = Government Procurement Agreement
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Contains similar rules (*) relating to procurement in “committed” sectors
Technical specifications (broadly defined) may not be adopted “with the effect
of creating unnecessary obstacles to international trade”
The one agreement where the USTR has sought states’ “consent”
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Additional Information and Terms Used
in Trade Agreements
FTAs = Multilateral free trade agreements

NAFTA, CAFTA, proposed Free Trade Agreement of the Americas
(FTAA)
BITs = Bilateral investment treaties
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Over 1,800 BITs signed between 1959 and 1999
NAFTA’s investor protection provisions (“Chapter 11”) are patterned
after the BITs
Text of agreements: http://www.wto.org/english/docs_e/legal_e/gatt47.pdf
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Additional Information and Terms Used
in Trade Agreements
National treatment/Most favored nation
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Bans discrimination in the provision of goods and services
Market access
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Prohibits quantitative limitations
Domestic regulation
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Requires laws to be “no more burdensome than necessary” (in flux)
Minimum treatment (for investors)
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Requires treatment consistent with international law
Expropriation (for investors)
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Requires compensation for loss of value
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