May 21 2003

HEARING ON NATIONAL EXPORT STRATEGY

STATEMENT OF SEN. RICHARD SHELBY

“I’d like to begin this morning’s hearing on the U.S. National Export Strategy and the role of the Trade Promotion Coordinating Committee by quoting from Title 12, Section 635i of the United States Code, which regulates the U.S. Export-Import Bank:”

“The Congress finds that tied aid and partially untied aid credits offered by other countries are a predatory method of financing exports because of their market-distorting effects . . .”

“This and additional like findings are immediately followed by this mandate:”

“The Bank shall establish a tied aid credit program under which grants shall be made from funds available in the Tied Aid Credit Fund established under subsection (c) of this section . . . “

”The seeming incongruity present in the law illuminates the continuing challenge of achieving the elimination of trade barriers that has been a fundamental U.S. foreign and economic policy goal since at least the 1934 Trade Act, a goal that increased in importance in the wake of the devastation of World War Two. Despite our evolution into the age of globalization, however, the goal remains elusive. I am reminded of the situation involving the American commercial shipbuilding industry. When President Reagan unilaterally terminated domestic shipbuilding subsidies, it was anticipated that the rest of the world would follow the U.S. lead and act likewise. The result, we soon learned, was the exact opposite. Foreign shipbuilding subsidies continued and the American commercial shipbuilding industry was seriously and possibly irreparably weakened by its inability to compete for a diminishing market on a demonstratively uneven playing field.”

“The lesson is clear. The United States has a vital role to play in supporting American business by ensuring a level playing field in international trade. That is the responsibility, as is evident by the size of today’s panel, of a number of U.S. Government agencies, chief among them the Office of the U.S. Trade Representative, through its role in negotiating agreements, and the Department of Commerce. Our purpose here today, however, is to focus on the role of the government in helping American business to export its products, both goods and services, through financial and technical assistance, through education, and through the provision of business-essential information on foreign markets.”

“While we have come a long way under the World Trade Organization and through a growing number of bilateral trade agreements – indeed, the President recently signed the U.S.-Singapore Free Trade Agreement, and I anticipate similar treatment of the Chile agreement – in reducing tariffs and some nontariff barriers to free trade, the job is far from complete.”

“The Trade Promotion Coordinating Committee was created – and codified in law due in no small part to the efforts of my colleague, the Ranking Member – with the seemingly incongruous mission illustrated earlier by my reference to the statutory language establishing the Tied Aid Credit Fund. It exists to offer export support at the same time we retain as a goal the elimination, on a global basis, of the kinds of export support activities common among major industrialized countries. Now, financial and technical assistance is only part of what TPCC does. It also plays a very important role in helping American companies identify opportunities, and helps educate them on how to maneuver the winding roads involved in international commerce. There is no denying, though, that the export financing mission of some of the agencies represented here today exist at least in part because of our inability to date to eliminate export subsidies on a global level.”

“We have had successes, though. The Japanese agreement to end its policy of tying aid to the initial design and engineering stage of major capital projects, for example, stands out as significant progress given that country’s historical use of tied aid. But much more work remains to be done. In fact, in the twelve years since the OECD agreement restricting tied aid, we have seen not only a continuation of this, but the emergence of new methods designed to circumvent the intent of negotiations aimed at trade-distorting practices.”

“By way of example, we have, as the TPCC’s new export strategy report points out, the task of dealing with the phenomenon of “market windows,” the use of ostensibly private institutions that are closely linked to the government or are, in fact, little more than front companies for the government in question to finance deals.”

“These are all issues to be discussed, and I hope the witnesses will address them during today’s proceedings. In all, the TPCC has to be considered a success. As much as some of us would like to see business free to compete in the international arena without undue government involvement, the reality remains far different. The hands of American business cannot be tied while its foreign competitors exploit the benefits available courtesy of their respective governments. As important, the responsibility of the TPCC to coordinate the export-related efforts of as many as 20 government agencies so as to be a more efficient tool for business should not be overlooked. It is a daunting task, but one on which the coordinating committee has made significant progress. The agencies are working much more closely together than ever before, and are orienting their efforts toward the needs of business much more efficiently than ever before.”