Remarks by Peter M. Robinson
President, United States Council For International Business
At BIAC’s Consultations With the OECD’s Ministerial Bureau
Paris, May 22, 2006
I am pleased to have this opportunity to offer BIAC’s perspectives on the important trade and investment issues facing OECD governments.
First, on trade, the international business community continues to support an ambitious, comprehensive, and balanced result in the Doha Round negotiations. As our statement makes clear, we see this Round as a once-in-a-lifetime opportunity to promote major trade liberalization that will benefit and create prosperity for both
developed and developing countries. For OECD companies, this Round is critical as their growth prospects depend on improved access to industrial markets around the world.
That said, we are disappointed at the snail-like pace of these negotiations. Deadlines for reaching agreements on negotiating modalities have come and gone with the perpetual promise, seldom fulfilled, of further progress sometime down the road. That approach is a recipe for failure.
Our statement underscores our strong-held view that time is running out. Procrastination and posturing must now give way to constructive consensus building. Dynamic political leadership on the part of OECD Ministers is now more important than ever.
I believe I can state with some certainty that the December 2006 deadline for concluding these negotiations is a real one. OECD governments should harbor no illusions that the U.S. Administration can readily obtain an extension of Trade Promotion Authority to accommodate these negotiations. Given the current mood in the U.S. Congress and the uncertainty about the shape of the new Congress after the mid-term elections in November, the likelihood of the President obtaining new trade negotiating authority is remote.
I believe it appropriate at this time to also address an argument that we in the business community hear all too often, namely, that world business has not vigorously supported this Round. That simply is not true. Just look at the number of Letters to the Editor and Op-ed pieces in the international press coupled with numerous policy statements issued by individual CEOs, national business groups, and international business associations, including BIAC, that have appeared in recent weeks. Witness also the strong business presence at the Seattle, Cancun, and Hong Kong Ministerials. The fact is we want an ambitious result and will continue to lobby vigorously with our governments to that end.
But business is not at the negotiating table. Trade negotiations are the sovereign responsibilities of governments, and it is they who must take the lead.
Second, on investment, the BIAC statement draws attention to the growing threat of investment protectionism, or more bluntly put, economic nationalism. In the U.S., last year’s bid by the Chinese National Oil Corporation to take over an American oil company followed by this year’s Dubai port affair have unleashed populist calls in the U.S. Congress and the media for stricter rules on the way the U.S. Government reviews foreign takeover or merger bids. While the U.S. Congress has yet to act definitively in this area, we can expect some tightening of the rules even as we in the business community work actively behind the scenes to keep the changes from impeding needed investment flows.
Investment protectionism is not limited to the U.S. Other OECD Governments are contemplating measures – or have taken them already – to block foreign investments.
BIAC calls on OECD Governments to push back against such protectionist threats and instead continue efforts to enhance investor’s rights through transparent, predictable, and non-discriminatory treatment of investment transactions across borders. Certainly, investment protectionism will do nothing to cure the massive external imbalances, which as the “Delivering Prosperity” paper notes, are the major challenges facing OECD economies.
In sum, on both the trade and investment fronts, we are at a crossroads. Our countries can move forward, as we so ardently hope—in order to create a better and more prosperous world for our children, or stand idly by and watch the steady erosion of the multilateral institutional framework that has served the world economy so well in the postwar years.
OECD Governments can – and must – do their utmost to promote continued trade liberalization through a successful conclusion of the Doha Round while resisting the siren call of investment protectionism. We recognize that such an approach carries a certain degree of political risk for many governments, but the policy alternatives are even starker.