Title: Vermont Commission on International Trade and State Sovereignty
1Vermont Commission on International Trade and
State Sovereignty
- Overview of International Trade
- And Its Impact on Vermont
- Vermont Legislative Council
- October 30, 2007
2What is International Trade and What Are
International Trade Agreements?
- International Trade is the exchange of goods and
services across international boundaries or
territories. - International Trade between countries
traditionally was conducted according to
agreements between two countries. Such
agreements are referred to as bilateral
agreements. -
3What is International Trade and What Are
International Trade Agreements?
- Beginning in 1944 at Bretton Woods, trade began
to be considered in a global manner and global
economic institutions were created to help
regulate its conduct. - Some of these organizations include
- The World Bank
- The International Monetary Fund (IMF), and
- The Global Agreement on Tariffs and Trade
4Evolution of the International Trading System
- In the U.S. --
- In 1974, fast-track authority was established,
streamlining Congressional consideration of trade
bills. - In 1979, the Office of the U.S. Trade
Representative (USTR) was created by Executive
Order.
5Evolution of the International Trading System
- In the U.S. --
- The USTR is part of the Executive Office of
President and is not subject to Freedom of
Information Act requests. - USTR formally consults with states through the
Inter-Governmental Policy Advisory Committee
(IGPAC) and State Points of Contact (SPOCs).
6Evolution of the International Trading System
- In 1994, the Uruguay Round global trade
discussions were completed and the World Trade
Organization (WTO) was created. - The WTO now has 149 members.
7Evolution of the International Trading System
- WTO agreements include
- Goods
- Services
- Government procurement
- Agriculture
- Intellectual property rights
- A binding dispute resolution system
- More than a dozen separate agreements
8Evolution of the International Trading System
- Since the Uruguay Round
- North American Free Trade Agreement (NAFTA)
- U.S. Singapore Free Trade Agreement
- U.S. Chile Free Trade Agreement
- U.S. Australia Free Trade Agreement
- Central American Free Trade Agreement (CAFTA)
9Why Should Vermont Care About International
Trade?The Opportunities
- Vermont had 3.8 billion of exports in 2006.
- Vermonts exports of merchandise increased 51
between 2002 and 2006. - Vermont exported to 148 foreign destinations in
2006. - Vermonts largest market by far was NAFTA member
Canada, which received 1.7 billion (44) of
Vermonts merchandize export total.
10Why Should Vermont Care About International
Trade?The Opportunities
- Among manufactured products, the states leading
export category is computers and electronic
products, which accounted for 3.0 billion (78)
of Vermonts total merchandise exports in 2006. - Other top manufactured exports in 2006 were
machinery manufactures (136 million),
transportation equipment (126 million), and
fabricated metal products.
11Why Should Vermont Care About International
Trade?The Opportunities
- Export-supported jobs linked to manufacturing
account for an estimated 7.4 of Vermont's total
private-sector employment. - In 2003, over one-fifth (22.9) of all
manufacturing workers in Vermont depended on
exports for their jobs. - 828 companies exported goods from Vermont
locations in 2005. Of those, 712 (86) were
small and medium sized enterprises with fewer
than 500 employees.
12Why Should Vermont Care About International
Trade?The Opportunities
- Trade with the worldboth exports and imports of
goods and servicescreates jobs in Vermont. - According to the U.S. Business Roundtable, trade
supports 77,886 jobs in Vermont. - 18.7 of jobs in Vermont are supported by trade,
up from 10.5 in 1992. Thus, trade supports
nearly one-fifth of Vermont jobs.
13Why Should Vermont Care About International
Trade?The Opportunities
- Foreign-owned companies employ more than 10,800
workers, nearly 4 of all Vermont employees. - U.S.-Canada trade supports 12,000 jobs in
Vermont.
14Why Should Vermont Care About International
Trade?The Opportunities
- Note Export-related employment data shown do not
include manufacturing and non-manufacturing jobs
involved in the export of non-manufactured goods,
such as farm products, minerals, and services
sold to foreign buyers. The complete 2003 export
related employment series is available on the
ITAs Export Related Jobs website. Additional
information on methodology used in the 2003
export-related employment series can be found in
the U.S. Census Bureaus publication Exports from
Manufacturing Establishments 2003.
15Why should Vermont care About International
Trade?The Opportunities
- International trade is a growing part of the
economy - States that track the U.S.s negotiating strategy
may get the jump on new economic opportunities - Jobs in export sectors are generally higher-wage
- Trade diplomacy is important for non-economic
reasons
16Why should Vermont Care About International
Trade?The Concerns
- Foreign competition can negatively impact wages,
and cost jobs at home. - Labor Organizations argue that Vermont has lost
close to 9,000 jobs due to trade and Free Trade
Agreements.
17Why should Vermont Care About International
Trade?The Concerns
- The Vermont Department of Labor reports that
1,600 people have received Trade Adjustment
Assistance. - Trade Adjustment Assistance is available to
workers who lose their jobs to Free Trade
Agreements between the United States and other
countries.
18Why should Vermont Care About International
Trade?The Concerns
- International trade agreements can impact state
legal authority - The federal government can sue states to preempt
state laws by citing international trade
commitments - Some agreements provide expanded legal protection
for foreign investors
19Why should Vermont Care About International
Trade?The Concerns
- Provisions in several Free Trade Agreements may
- impact the ability of states to regulate
- Pharmaceuticals
- Gambling
- The Environment and Land Use
- Professional regulation and licensing
- Utilities
- Tobacco and
- Procurement standards.
20Why should Vermont Care About International
Trade?The Concerns
- Many Free Trade Agreements also include clauses,
known as Investment Clauses, which allow
countries or corporations within countries to
bring expropriation claims (similar to a takings
claim) against the United States based on state
law. - These expropriations claims and the limits that
Free Trade Agreements may place on state
sovereignty and state authority to regulate will
be discussed at future public hearings addressing
the environment, health care, and agriculture.
21Additional Information and Terms Used in Trade
Agreements
- GATT General Agreement on Tariffs Trade
Goods - Requires equal treatment for all foreign
suppliers (national treatment and most favored
nation) and bans limits on market access - Technical regulations may not be more
trade-restrictive than necessary to fulfill a
legitimate objective - GATS General Agreement on Trade in Services
- Contains similar rules () relating to
committed services - No more burdensome than necessary to ensure
quality of service (domestic regulation) - Â
- GPA Government Procurement Agreement
- Contains similar rules () relating to
procurement in committed sectors - Technical specifications (broadly defined) may
not be adopted with the effect of creating
unnecessary obstacles to international trade - The one agreement where the USTR has sought
states consent
22Additional Information and Terms Used in Trade
Agreements
- FTAs Multilateral free trade agreements
- NAFTA, CAFTA, proposed Free Trade Agreement of
the Americas (FTAA) - BITs Bilateral investment treaties
- Over 1,800 BITs signed between 1959 and 1999
- NAFTAs investor protection provisions (Chapter
11) are patterned after the BITs - Text of agreements http//www.wto.org/english/do
cs_e/legal_e/gatt47.pdf
23Additional Information and Terms Used in Trade
Agreements
- National treatment/Most favored nation
- Bans discrimination in the provision of goods and
services - Market access
- Prohibits quantitative limitations
- Domestic regulation
- Requires laws to be no more burdensome than
necessary (in flux) - Minimum treatment (for investors)
- Requires treatment consistent with international
law - Expropriation (for investors)
- Requires compensation for loss of value