ECAT is an organization of the heads of leading U.S. international business enterprises representing all major sectors of the American economy. Their annual worldwide sales exceed $1 trillion and they employ over 4 million persons.

Summary

• The united states needs a trade policy which enables U.S. exporters to compete on equal terms in the international marketplace with their major European, Asian and Canadian competitors. In this regard, moving forward on trade liberalization initiatives and their instruments, such as fast track, is of critical importance.

• Unfortunately, U.S. trade policy is being seriously undermined by a series of unilateral measures undertaken by the U.S. congress and the administration, actions which are not formally undertaken under the trade policy rubric but which, nonetheless, seriously undermine trade policy.

• Specifically, the adoption of a host of unilateral trade sanctions effectively militates against U.S. exporters' ability to compete in large, emerging markets, most notably China. Simultaneously, weakening commitment to export finance and support weakens U.S. companies' ability to compete with European and Japanese concerns, whose governments afford ever more generous financing support to their national exporters.

Testimony
Mr. Chairman, I want to thank you for this opportunity to testify before the Trade Subcommittee of the Ways and Means Committee of the House of Representatives. I am also honored to represent the emergency committee for American trade in today's hearing. While I fully support my colleagues' call for trade liberalization initiatives and their instruments such as fast track, in the interest of brevity, I shall confine my remarks to two particular topics -- unilateral U.S. trade sanctions and the financing of U.S. exports.

Before I continue, let me point up my awareness that the Ways and Means Committee is not the committee of formal jurisdiction in so far as either sanctions or export finance are concerned. This subcommittee and its senate counterpart are primary responsible for the setting of trade policy within the congress. But this brings me directly to my central two points. First, the growing recourse to unilateral trade sanctions has brought us to the point where they are having a serious deleterious impact on overall US trade policy. Second, the lack of legislative commitment to export financing seriously undermines our international competitiveness.

The national association of manufacturers, in its recent survey which I am submitting for the record, points out that between 1993 and 1996 the United States has enacted 61 U.S. laws and executive actions authorizing unilateral trade sanctions (a new sanction every 3 1/2 weeks). The Congress of the United States owes it to the national exporting community and its work force to ask what substantive effect these sanctions can have in a global economy where a buyer refused service in one country can almost always find a willing seller in another.

Let me offer a specific example from the experiences of the Westinghouse corporation. Our energy systems business unit, based in Monroeville, Pennsylvania, is widely regarded as one of the leaders, if not the leader, in the global nuclear power industry. Unfortunately, notwithstanding the quality of the product, demand for new nuclear plants in the U.S. is non-existent. This need not have posed a serious problem for our Monroeville work force. Like many companies which have had to confront major shifts in the American marketplace, our nuclear energy systems unit could have responded by displaying the type of flexibility which is said to be its hallmark, shifting from a domestic focus to one which concentrated on high growth areas overseas where demand for nuclear power is high, most notably China.

Unfortunately, legislation was passed in 1989 which effectively prevents US nuclear equipment manufacturers from selling their product in China. Without arguing the moral or ideological reasons for its passage, we must recognize that no other nation joined us in this prohibition. Consequently, the impact on China has been nil and the impact on our employment severe. China, denied the ability to purchase the superior US product which it wanted, has since 1989 purchased or contracted for approximately $8 billion of nuclear plants from France, $3 billion from Canada and $4 billion from the Russian Federation. Meanwhile, energy systems in Monroeville has been obliged, through lay-offs and early retirement, to dispense with the services of 3,500 members or one-third of its work force. Moreover, I would like to stress that these layoffs affected nuclear and mechanical engineers, marketing and sales professionals as well as heavy manufacturing jobs. In fact, we are quickly facing a dwindling supply of nuclear experts that very likely will affect this nation's ability to service our over 100 domestic reactors. This is a national security issue.

Mr. Chairman, I have no doubt that had those men and women been allowed to compete in the Chinese market alongside their European, Japanese and Canadian counterparts, they would all be working today. This legislation effectively deprived them of their well-paying jobs by exporting those jobs to France, Canada and Russia.

Moreover, the terrible irony, from a business perspective, is that those same members who initiate and support these ongoing trade restrictions will be making speeches from the floor this year decrying the escalating Sino-US trade deficit. If we want to turn our backs on the potential $4 billion per annum sales in nuclear plants, in addition to the billions lost in secondary services, we must accept a massive and growing trade deficit with china. This trade deficit is expected to reach unprecedented levels as long as we have a trade policy which is driven more by a desire to make gestures of little value than it is to underwrite the economic security of the men and women of this nation. Simply, it is hard enough to achieve market opening opportunities in tomorrow's largest economy without self-imposed closure through trade policy.

As far as export financing is concerned, I must say that I am amazed to hear some members of Congress decry it as so called "corporate welfare" and demand its termination. Are they unaware that the Japanese economy is in the doldrums, that the French and German unemployment rates are touching 12.5% and that there is no more dangerous competitor than a desperate one? Does anyone doubt that the governments of these nations will try to stop their unemployment rot by providing the most aggressive financing support for their exports into large emerging overseas markets?

And yet we hear members of congress call for us to abandon institutions such as the Export-Import Bank, the Overseas Private Investment Corporation and the Trade Development Agency as if to demonstrate some sort of moral probity to our trade rivals, all of whom are increasing the power of their export finance institutions at levels far exceeding our own.

Mr. Chairman, during this country's confrontation with the Soviet Union, I was never one of those to support unilateral disarmament on the presupposition that Moscow would do likewise. By the same token, we cannot support those who would have us abandon some of our most significant weapons in an increasingly cut-throat international trading environment. If we do, the consequences for major US exporters will be such that the phrase "trade policy" will have to it a remarkably irrelevant ring. I am painfully aware of the effects of these recent trade policy decisions. My corporation has had to significantly downsize as a direct result of these polices. More will follow with the elimination of our export finance agencies. I can assure you, Westinghouse will not be alone.

In closing, let me stress that I do not seek to lay responsibility for this nation's trade sanction and export financing woes at the door of this committee. To the contrary, under both Republican and Democratic leadership, this Committee has been strongly supportive of US trading interests. But, without a proper understanding of the impact of unilateral sanctions and the importance of export finance toward US exporters and their employees, you can be assured that there will be more CEOs like myself telling you similar tales of frustration and failure. The current trend has created a system that business does not comprehend. A comprehensive, commercially driven trade strategy is urgently needed in today's cut-throat international trading system. I come here today to request such a strategy and look to you as those who have the capability and understanding to fashion and implement that strategy.

Mr. Chairman, thank you for the opportunity to speak before this vitally important body.

---

Emergency Committee For American Trade
1211 Connecticut Ave., Washington, DC 20036
(202) 659-5147

  Return to Top

Home |  About Us |  Resources |  Press Releases |  Federal Activity & Legislation
State & Local Activity |  NFTC Lawsuit |  Contact Us |  Site Index