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Archey Waxes Philosophical On Trade
by William New
After years of leadership in the technology industry (and teaching a graduate-level course), AeA President Bill Archey has developed a slightly philosophical view on trade. Interest in trade policy, he said in an interview, is inversely related to economic health.
"We're going through that period of looking to trade policy because we're heading into trouble," he said. That would explain the fact that there is "a lot less indifference about [presidential trade-negotiating authority] now among the high-tech industry. There's a lot of visceralness. There's a great deal more passion now."
"The Latin Americans and Europeans are cutting deals," Archey added. "Great opportunities remain for U.S. firms abroad."
Archey also believes a company's home base is not as important as what it does in America. Siemens, for instance, is a German company but employs 50,000 workers in the United States.
He further observed that trade policy changed in the 1990s, as the high-tech industry came to the fore, because the old ways did not apply to the faster pace of the information age. "The old method of industrial policy tends not to work in high tech," he said. "This is very unusual. The pace of change in the past [20 years] has been faster than any other time in the world."
Archey also said not to take the trade balance with any country "too much to heart." Instead, follow the investment flows because "they tell you more" about an economy. For instance, the United States still has a trade deficit with Japan, but more U.S. companies are investing in Korea. And many Japanese products are being made in other countries, such as China, he noted.
The "semi-privatization of trade policy" is a cornerstone of Archey's philosophy. To explain the concept, he reflects on his history at AeA. When he joined the electronics trade group seven years ago, he said, companies were always calling him about trade problems with Japan. "Well, I haven't had a call about that in 18 months."
The reason is that U.S. companies overcame their difficulties trading with Japan by forming strategic partnerships with Japanese companies. "That is more effective" than government-to-government trade policymaking, he said.
Yet Archey predicted that officials would revert to classical trade policy in which governments intervene to open markets through firm agreements.
Trade-negotiating authority is still necessary, as are the trade deals that will follow, he argued. And for Congress to grant that authority, he said a compromise on the inclusion of labor and environmental language in trade agreements is necessary.
But the words "protectionist" and "fair trade" should be dropped from the lexicon of the debate, he said. Instead, parties should refer to "enhancing market access for U.S. firms," which will generate U.S. jobs.
WTO Negotiators Avoid Talks On E-Commerce
In last week's World Trade Organization meeting of the Services Council, officials did not discuss whether e-commerce should be considered a service despite a mandate from the General Council (the ambassadors to the WTO) to do so.
A WTO source said the issue of e-commerce was raised, as mandated, at the opening session. Participants agreed that it is an issue for broader negotiation and therefore could not be dealt with in the services group. In later discussions on specific services sectors, such as telecommunications, financial services and transportation, no country raised the issue, either.
"It doesn't look like a major preoccupation of members," the WTO source said. But because e-commerce is likely to be a source of a "deliverable" for the November WTO ministerial in Doha, Qatar, "It will happen, it just hasn't happened yet," the source said.
E-commerce is back on the General Council agenda at a Geneva meeting on Wednesday. The council also will convene in Geneva on July 30-31 to look at the prospects for a new round of multilateral trade talks in Doha. E-commerce may be mentioned at the Geneva meeting.
Where Culture And The Free Market Clash
Despite skirting the e-commerce issue, services negotiators in their meeting last week did address communications services, which include telecommunications. Audiovisual services received the most attention.
Brazil's representatives tabled a proposal that called for anti-dumping disciplines for audiovisual services. The disciplines would allow governments to take action against foreign companies that sell their products or services at or below cost.
The Brazilian proposal charged that "audiovisual products are often placed at 'dumping' levels in foreign markets [because] most of the cost of production has already been recouped in the home market." The dumping has the effect of "crowding out" domestic production via electronic means, theaters and cable television, Brazilian officials said.
Brazil's proposal aims to strike a balance between opening the audiovisual market to more trade and protecting nations' cultures.
Negotiators also discussed easing the movement of professionals across borders. They considered a proposal from India to create a special passport, under the General Agreement on Trade in Services, for short-term jobs across borders. Norwegian officials suggested a seminar on the issue because of a lack of coherence -- the different views that trade ministers and immigration officials have of professionals traveling to other countries, for instance.
The Way Out Of Poverty
In preparing for the Group of Eight (G8) industrialized nations' meeting in Genoa, Italy, this week, President Bush spoke at the World Bank. His appearance at the World Bank was symbolic of the G8 nations' focus this year on poverty and developing countries.
In his speech, Bush mentioned the effect of technology on poverty reduction. "Vast regions and nations from Chile to Thailand are escaping the bonds of poverty and oppression by embracing markets and trade and new technologies," he said.
India Weighs E-Commerce Tax
The Indian government is considering modifying its legislation on income taxes in order to tax companies that do e-commerce in India without having a presence in the country. Currently, a firm must be located in India for the nation to tax transactions. Applying the tax more broadly could bring the government $10 billion, Hindustantimes.com reported.
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