TESTIMONY OF RICHARD J. SWIFT CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF FOSTER WHEELER CORPORATION

TESTIMONY OF RICHARD J. SWIFT CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
OF FOSTER WHEELER CORPORATION

ON BEHALF OF THE NATIONAL FOREIGN TRADE COUNCIL, INC.
BEFORE THE SUBCOMMITTEE ON INTERNATIONAL TRADE COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
MARCH 4, 1999

Mr. Chairman and distinguished members of the Subcommittee, I am Richard J. Swift, Chairman, President and Chief Executive Officer of Foster Wheeler Corporation. Foster Wheeler is a U.S.-based engineering, construction and manufacturing company specializing in the process and power industries. I am appearing today on behalf of the National Foreign Trade Council (NFTC), a broad-based organization of more than 550 U.S. companies having substantial international operations and interests. At the beginning of this year, I became the Chairman of the NFTC.
I appreciate the opportunity to testify today on U.S. trade policy and the trade agenda. I would like to begin by applauding the historic leadership role of the Ways and Means Committee in forging a bipartisan, pro-trade agenda for our nation. Such an agenda has never been more important.
I would like to focus my remarks on three issues:
1) the fundamental importance of trade to the U.S. economy and the need for American leadership in fostering global growth;
2) the need to support American exporters, workers, farmers, and consumers through passage of a bipartisan pro-trade bill; and
3) the critical importance this year of a successful World Trade Organization (WTO) Ministerial Conference which launches new multilateral trade negotiations.
1. Importance of Trade to the U.S. Economy and Need for American Leadership in Fostering Global Growth
As the world's largest trader and most open, major market economy, the United States has benefitted enormously from expanding global trade and investment. In fundamental respects, our nation's economic strength at home has been due to our vibrant trade and investment with other countries and to remaining open and unafraid of global competition. The result has been the longest domestic economic expansion since World War II.
The facts speak for themselves. More than one-third of America's economic growth during the 1990's was from exports. Trade now accounts for close to 25 percent of our GDP. Millions of workers depend on trade for stable, well-paying jobs. It's been said many times, but it bears repeating -- only 4 percent of the world's population lives in the United States. American businesses, workers, farmers and consumers must continue to engage actively in global trade if our economy and standard of living are to grow and remain healthy.
Like many NFTC members, Foster Wheeler depends on expanding trade and investment for a majority of its overall revenue. More than 60% of Foster-Wheeler's revenues are from our international activities. When Foster Wheeler grows globally, our domestic activities also thrive. These activities include millions of dollars in purchases from American small and medium business suppliers, who are often unaware that they are invisible exporters.
Let me give you one example. Two years ago, Foster Wheeler signed a contract to supply six steam generators for the Yancheng electric power project in China - the largest single boiler contract in Chinese history. The project is keeping at least 200 people employed at our Dansville, New York, facility. It's also generating millions of dollars in orders for suppliers of all kinds of products in 26 states. By the time it's complete, Yancheng will bring in $310 million in orders for American goods and services - orders that are already supporting hundreds of jobs across the country.
Yancheng isn't just a success story for Foster Wheeler. It's a success story for American trade policy. We can win such contracts because our government supports an open, rules-based global trading system. Those American jobs are possible because Congress supports normal trade relations with China. Suppliers all across the country are receiving those orders today due to continued congressional reauthorization of the Export-Import Bank, which provided critical financing.
I would like to turn briefly to the positive role of imports and keeping the trade deficit in perspective. A primary cause of our rising trade deficit is because the U.S. economy is much stronger than many other major economies, which have been in severe recession, stagnation or a slower growth mode. The Asian financial crisis and the subsequent serious downturn in these and other key markets led to a decline in our exports last year. At the same time, the strength of the U.S. economy has kept U.S. demand for imports at a high level. This is what is driving our rising trade deficit. It is notable, however, that the deficit is still much smaller as a percentage of GDP than it was the last time our nation's trade deficit (goods and services) peaked in 1987 -- 1.98 % versus 3.27%.
While recognizing that certain sectors of our economy have been hit hard by slower growth overseas and stronger imports, imports play a positive role in the U.S. economy. They provide consumer freedom of choice, fill a market demand that may not be available domestically, and are often incorporated as components into American-made final products. Imports also provide a healthy dose of competition. In fact, the competitiveness fostered by our openness to imports is one of the fundamental reasons our economy is as strong as it is today. Finally, the United States, like other countries, has trade laws to deal with injurious imports.
American economic leadership in bolstering global economic growth and U.S. exports can help stem the rising U.S. trade deficit. This means stabilizing economies in turmoil in Asia and Latin America, keeping markets open, further liberalizing trade and investment, and making sure American exporters and workers have the necessary tools from our government to compete globally on a level playing field. These tools include establishing predictable and effective trade rules, negotiating market-opening trade agreements, halting the use of counterproductive unilateral economic sanctions, and providing competitive export and investment financing.
There are also important indirect benefits from global economic engagement. Expanding trade and investment supports broader national objectives. It stimulates economic growth and development, which provides countries with the means to address other important objectives besides alleviation of poverty and basic economic survival. It improves workers lives. For example, affiliates of American companies abroad provide higher average wages and better benefits such as health care and housing. It improves the environment by incorporating higher environmental standards in new plants, by exporting environmentally advanced technologies, and by eliminating harmful subsidies, particularly in the agricultural sector. And finally, America's trade expansion, as well as trading regimes such as the WTO, spread core American values such as respect for the rule-of-law, openness, transparency and regulatory due process. Trade deserves much greater credit as a positive force for building better civil societies.
2. The Need for a Positive, Bipartisan Pro-Trade Package
For decades, America has been the world's most powerful and articulate advocate of an open, rules-based trading system. Today, however, many have begun to doubt America's commitment to open trade. Uncertainties about U.S. trade policy threaten to undermine many of the opportunities expanded trade could create for American business and workers. For example, the Administration's trade negotiating authority has lapsed. Our relationship with our fourth-largest trading partner, China, continues to be the subject of acrimonious debate every year. Far too often, America imposes unilateral trade sanctions in disputes with foreign countries, even our friends. Reauthorization and funding for vital agencies that promote U.S. exports is uncertain. Even American participation in organizations like the International Monetary Fund (IMF), the World Bank and the WTO itself cannot be taken for granted.
It is time to get back to the positive role of trade, and demonstrate the leadership necessary to implement a forward-looking trade agenda. Congress has a vital role to play. Congressional passage of a broad pro-trade bill would help to clarify and renew America's commitment to expanding trade and fostering global growth. Such a package could strengthen the hand of our negotiators and the competitiveness of our businesses and workers in the international marketplace.
The bill should contain these key elements:

Strong support for advancing global trade liberalization, trade expansion and effective trade rules through comprehensive WTO trade negotiations, and other important bilateral and regional trade initiatives. Such action will serve as a powerful engine of growth domestically and globally.

Renewal of traditional trade negotiating authority on a multi-year basis to provide America's trade negotiators the tools they need to get the job done from a position of strength and allow major new trade negotiations, including WTO, Free Trade Area of the Americas (FTAA) and Asia Pacific Economic Cooperation (APEC) trade talks, to proceed in a serious and meaningful manner. We recognize that there will be little progress on this matter until we address the environmental and labor issues that have been raised. We are prepared to sit down with the members of this Committee, the Administration, and others to engage in a meaningful dialogue that will move the process forward. I don't expect that we will agree on all the issues, but we have a mutual interest in resolving this impasse so that we can advance our national interests in the global economy.

Common sense sanctions reform to put in place a process for thoughtful and rational cost/benefit analysis prior to the imposition of unilateral economic sanctions, and lifting current sanctions that are counterproductive and harmful to American exports and jobs. The NFTC strongly endorses the legislation that will be introduced as soon as next week by the distinguished Chairman of this Subcommittee, Congressmen Crane, along with Congressmen Dooley and Manzullo.

Essential trade tools for American exporters and workers to compete on a level playing field. These should include multi-year reauthorizations for the Overseas Private Investment Corporation and the Export-Import Bank, as well as the programs of the Trade and Development Agency and the Commerce Department's Advocacy Center. These organizations provide tremendous economic return on a very small investment, and the services they provide are crucial to keeping America competitive against foreign government-supported exports in overseas markets.

Reform of Cold War era trade statutes, such as the Jackson-Vanik amendment to Title IV of the Trade Act of 1974, by granting multi-year Normal Trade Relations (NTR) status to China, Vietnam and other covered countries, promoting their accession to the WTO in a commercially meaningful manner, and granting permanent NTR to them upon such accession.
Reauthorization and reform of the Export Administration Act in a manner which recognizes current commercial realities of dual-use technology in the global marketplace, and which places greater emphasis on viable multilateral solutions.

Renewal and reform of the Trade Adjustment Assistance program to help dislocated workers obtain new skills and jobs, greater technical assistance to bolster International Labor Organization (ILO) initiatives, and support for effective implementation of the June 1998 ILO Declaration on Fundamental Principles and Rights at Work.

Preferential trade programs for less developed countries, including extension of the Generalized System of Preferences, the Africa Growth and Opportunity Act, Caribbean Parity legislation, and renewal of the Andean Trade Preferences Act.
The NFTC and its members stand ready to work with the Committee and other groups in developing such a pro-trade agenda in a bipartisan manner.
3. The Critical Importance of a Successful WTO Ministerial and New WTO Round
Finally, I'd like to turn to one of the most important issues on our nation's trade agenda this year -- the WTO Ministerial Conference and the launching of new WTO trade talks. The NFTC believes a successful WTO Ministerial is vitally important and that our government should be bold and farsighted in leading the way for comprehensive new WTO negotiations to advance global trade liberalization and strengthen existing WTO agreements.
The NFTC submitted detailed comments to the United States Trade Representative last October on its recommendations for the scope and content of future WTO trade talks, and has submitted recent comments on upcoming WTO negotiations on government procurement issues. These comments are attached to this statement and we request that they be made part of the record.
The NFTC supports the Administration's efforts to reach agreement by the time of the ministerial meeting, in a few key areas as a down payment for launching a more comprehensive, accelerated round of WTO negotiations. So-called deliverables should include a WTO agreement on the early voluntary sectoral liberalization initiative launched by APEC countries, an agreement on transparency in government procurement, conclusion of the second round of Information Technology Agreement negotiations, and a continued moratorium on tariffs on e-commerce. The NFTC supports a new WTO Round that further opens and expands trade for American businesses, workers, and farmers. This should include mandated built-in negotiations on services and agriculture, industrial tariff reductions, improvements to existing WTO agreements and rules, and certain institutional changes to ensure the WTO is equipped for the 21st century.
As members of the subcommittee are well aware, the WTO and its predecessor, the General Agreement on Tariffs and Trade (GATT), form the core foundation of an open and expanding multilateral trading system. It is rules-based, market-opening, and provides for effective dispute settlement. It has been key to fostering global growth and prosperity for over five decades. The Uruguay Round alone -- the last round of multilateral trade talks which concluded in 1994 -- represented the largest global tax cut in history and forged unprecedented agreements in areas such as agriculture, services, intellectual property and dispute settlement.
The upcoming WTO Ministerial in Seattle offers us a rare opportunity to demonstrate united American leadership on trade by showcasing its benefits, and by galvanizing support for comprehensive WTO market-opening negotiations and improvements to existing WTO agreements. Such action -- setting the example and leading the way for further multilateral progress on trade -- is one of the most important steps we can take to restore global growth and prosperity. Part of setting the example includes upholding existing WTO obligations. The NFTC urges all WTO members to agree to a standstill against new trade barriers.
Historically, the United States has led the rest of the world in advancing multilateral trade liberalization. As the world's economic superpower, we must again step up to the plate. The NFTC is working with other major business groups, some of which are represented here today, helping the business community do its part to assure a successful WTO Ministerial.
Mr. Chairman, thank you for the opportunity to share the NFTC's views on the U.S. trade policy agenda.

Return to Top