USTR Schwab Addresses Trade in Electronics

January 8, 2008. Susan Schwab, head of the Office of the U.S. Trade Representative (OUSTR), gave a speech [PDF] in Las Vegas, Nevada, on January 7, 2008, at the annual Consumer Electronics Show (CES) in which she advocated free trade and explained why it is important to the consumer electronics sector.

She stated in the prepared text of her speech that "ninety five percent of the world's consumers live outside the United States. We need to pry open growing markets so U.S. consumer electronic products and services are available to these billions of consumers. We need to promote free trade, not cower from it."

Gary Shapiro, head of the Consumer Electronics Association (CEA), gave a speech on January 8 in which he too advocated free trade. He said that the successes of the consumer electronics industry and the U.S. economy "are not guaranteed -- they stem from one source -- a vibrant free market that encourages trade in innovative goods and services. Innovation can be slowed, products can be priced out of reach, competition can be choked and services can be restricted".

Susan SchwabSchwab (at right) elaborated on the agenda of the OUSTR. "Topping our priority list is to secure Congressional approval of the pending Free Trade Agreements with Colombia, Panama, and Korea, and keeping our multilateral efforts in the Doha Development Round and the Information Technology Agreement on track."

She added that "the FTAs we negotiate include provisions preventing discriminatory treatment of digital products delivered over the internet such as software, games, videos, music. We have this for physical products in the WTO, but not for products delivered electronically."

"Embedded in our FTAs as well is our commitment to not only open foreign markets for telecommunication services, but also to ensure that access to networks is reasonable and non-discriminatory and governed by transparent rules and rule-making procedures", said Schwab.

The OUSTR has negotiated a FTA with Korea, but the Congress has yet to approve it. Schwab said that this FTA "is our most commercially significant agreement in at least 15 years."

"South Korea is one of the world’s largest markets for high-tech goods from the United States. Only five countries are larger export destinations for American tech products than South Korea." She noted that the U.S. "exports more to South Korea than to the United Kingdom or France."

She argued that "It would be unconscionable for Congress to let this languish."

See, story titled "US and Korea Announce FTA" in TLJ Daily E-Mail Alert No. 1,559, April 2, 2007. See also, text of the agreement, and particularly, sections regarding telecommunications [17 pages in PDF], electronic commerce [4 pages in PDF], intellectual property rights [35 pages in PDF].

Schwab also addressed the long running World Trade Organization (WTO) Doha round negotiations. She said that "we are working with U.S. industry and several WTO Members to promote a sectoral initiative in the Doha negotiations to eliminate tariffs on electronics and electrical products. For those of you from Europe and other sources and markets, for your products, we would like to see governments step to promote the sectoral initiative. We are also developing an initiative to address non-tariff barriers -- such as regulatory and standards policies in many countries."

Finally, she addressed the Information Technology Agreement. She said that it has been an "unqualified success in promoting trade, jobs, and investment in the information technology sector".

However, she added that "the United States and other ITA participants continue to have serious concerns about recent actions by Europe that would no longer guarantee duty-free treatment on key ITA covered products, many of which are presented here at the CES. Technology convergence should not be an excuse to raise tariffs. In fact, as noted, we want to expand and build on the ITA through a sectoral agreement in the Doha round."

Shapiro articulated an ominous warning. He said "never before have I been as concerned that some in our country might hurt our leadership of the digital revolution".

"Storm clouds are gathering. After decades of bipartisan support for free trade, we hear thunderous voices in the media, in Congress and even presidential candidates advocating protectionism as a solution to American woes. We see isolationism gaining favor from those who want a wall around this nation. This is a dangerous and disturbing trend. If followed, it will lead to economic disaster. Free trade is critical to our industry and our technology leadership."

He also preached the gospel of technology, trade, and competition. He said that "our technologies along with free trade share something else in this increasingly divided world. They are blind to religion, blind to sexual orientation, blind to race, national origin and ethnicity and they allow the disabled to succeed alongside those who are not disabled. Trade and technology are remedies for that which divides us. They shatter our differences. They unite us. They offer a shared experience. For those that are less fortunate, free trade and its twin, competition, bring lower prices and increase access to the world of entertainment, education and information."

This trinity, said Shapiro, creates "opportunities for entrepreneurs", rewards "hard work and innovation", creates "new outlets for creativity", and raises "the living standards for global citizens".

Shapiro advocated approval of FTAs and extension of Presidents' trade promotion authority, under which the President, through the OUSTR, negotiates FTAs which the Congress can approve or reject, but not amend. He also urged CEA members to contact their representatives in Congress.

He concluded, "We can be isolationists with a weak economy, and the nation that used to lead the world in democracy, freedom, innovation and trade. Or we can be the bright beacon for those willing to take risks, work hard, innovate and compete."