Today we are pleased to bring you the presentation by William A. Reinsch, President of the National Foreign Trade Council and former Under Secretary for Export Administration in the U.S. Department of Commerce at the recent MEPC Capitol Hill forum. We thank the MEPC for allowing us to share it with you. The last presentation from the forum, the panel question and answer segment,
will be provided tomorrow.
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[For information on the next forum in the MEPC Capitol Hill Conference Series -- "Is There a Responsible Exit from the Strategic Ambush in Iraq? (April 21) -- contact MEPC/Maria Arruda (202) 296-6767 or e-mail:
[email protected] ]
How Can the U.S. Re-Open for Business to the Arab World?
MEPC Capitol Hill Forum
William A. Reinsch
President of the National Foreign Trade Council
Introduction by Ambassador Chas Freeman: We have in fact four excellent panelists. Monty Graham is a senior fellow at the Institute for International Economics here in Washington, and also an adjunct professor at Columbia. Jim Lewis, he's here at CSIS. And again, Jim, thank you for this use of the facilities. And his specialty really is precisely the one that we are talking about - the balance between homeland security issues and economics, which is a growing field, I imagine. And I look forward to his remarks. Don De Marino probably needs no introduction to people knowledgeable about the Middle East. Don has been involved over many years with business in this part of the world, and is currently chairman of the National U.S.-Arab Chamber of Commerce. And Bill Reinsch, finally, who I very much welcome here, is the president of the National Foreign Trade Council, which is the voice of the business community on many of these issues, that is, political skullduggery and malevolent interference with business are what Bill fights everyday. With these few words, I'd like to ask Monty to come up and lead off..
[Dr. Graham's presentation: Click
here; Dr. Lewis' presentation: Click
here; Mr. Don De Marino's presentation: Click
here ]
Mr. William A. Reinsch: Well, thank you for having me. I had a rant prepared, but the other panelists have preempted me -- (laughter) -- have already taken the rant points away, so I'm going to try to be a little bit more positive. I would simply say, to pick up on Don's last point, which I think is particularly well taken, the long-term consequences of this I think are on our ability to both attract top talent here to make people want to come here, which has commercial consequences as well, and through that to improve mutual understanding.
In this same room - actually on the other side of that wall - I did a conference on visa policy last year, and the Jordanian ambassador was here talking about this, and he put it sort of succinctly when he said Jordan sends a lot of its medical students here to come to medical school in the United States, and they all graduate here. They become doctors, they go back to Jordan to practice, and they buy GE medical equipment. And the point was an important one. They not only form relationships here, which stay with them throughout their lives, they form commercial biases here, and to the extent that we turn that off -- and we're really doing that. We're tarnishing the golden door that
Emma Lazarus talked about. There are long-term economic consequences of this.
The thing that is particularly distressing right now I think is the point that Jim made about the street, if you will. For a long time, a lot of people in the Middle East could say, well, the American people are benign and friendly; it's the U.S. government that's pursuing the wrong policy, whatever the policy was of the moment. It's harder and harder for people to say that now in the Middle East in the wake of an episode like the DP World because it really is -- that one really was from the ground up and bottom up. And you can say, I think correctly, that there were politicians in both parties capitalizing on it, both parties trying to out-tough each other in the Congress. I'm a lot more relaxed about Senator Clinton than Chas. is, but I think that clearly you've got an expression from the public that is hard to refute.
Anyway, that said, let's be positive for a few minutes about what we can do to get ourselves back on the track, and I'm not going to talk about foreign policy -- that's a much more extensive and controversial debate. I'm going to talk about business and economic trade policy where I think there are some steps to take in the short term that might help repair some of the damage.
The first thing of course is that we should stop being stupid and not do the strange things that we've been doing. And in that regard I refer you to all the things that [Don De Marino] talked about. The second thing we should do is to ensure that the CFIUS process remains apolitical -- and not do the serious damage that is possible.
Looking more specifically at the region - because those two things, of course, transcend the Middle East specifically. One of the other things that we can do, which my organization has been particularly supportive of -- hence the commercial -- is to redouble our efforts to create a MEFTA, a
Middle East Free Trade
Area. It can bring economic growth and jobs to the entire region, which in turn, we believe, will help promote peace and stability. This is a long-term task. Even when the president announced it he said it was 10 years -- and my guess is he was optimistic -- but there are some specific, concrete steps we can take right now that will keep things moving in a good direction. One of the most immediate, of course, is we can conclude - pass the
U.S.-Oman FTA implementing legislation. It had a rocky hearing two days ago - that's not I-R-A-Q, but R-O-C-K-Y hearing the other day, but I think we can overcome that and get that done along with the Bahraini and Moroccan agreements.
We can repair our relationship with the UAE by maintaining momentum to conclude that FTA negotiation. The teams are going to meet in Abu Dhabi at the end of this month. There is a feeling now that both sides understand each other's positions better on most issues and are engaged to creatively find mutually agreeable solutions. Ironically, I'm inclined to think that the DP World case will make it more likely that we will have a successful conclusion to this negotiation that not, frankly because both sides are afraid to fail. If they do, the DP World case is going to be blamed and nobody wants to have that happen.
So I'm marginally more optimistic. That is also kind of ironic because of all of the various FTAs that we've been involved with in the Middle East, there actually are issues with the UAE. There are legitimate economic and trade issues with the UAE that deserve negotiation and make this negotiation a little bit more complicated than the Bahraini or Omani or even Moroccan negotiations. But we will persevere. We will also focus on educating the Congress on the importance of the economic relationship with the UAE. Over 500 U.S. companies are regionally headquartered there. We actually have a trade surplus with the UAE. There aren't very many countries we can say that about, and I think it's one that we want to nurture.
Another thing we can do is initiate FTA negotiations with Egypt. A viable MEFTA is not possible without a high-quality FTA with Egypt. We need to take into account the economic reforms that Minister Rashid and his team have instituted over the past year, and realize that holding an FTA and further economic reform hostage to a variety of political issues, which are legitimate, is nevertheless, I think, likely to backfire. Everything we do with Egypt seems to be two steps forward, one step backward. Some years it's one step forward, two steps backward, but we need to push harder, I think, to get to closure there. With TPA [Trade Promotion Authority] expiration a year, 14 months from now, we need to get busy if we're going to get this one done.
Third -- or fourth, whatever number I'm on - we can work closely and constructively with Saudi Arabia to implement its WTO accession commitments and to further engage it in economic liberalization. It takes some time to filter -- for reforms to filter down in a bureaucracy. We're seeing that with the Saudi commitments. I think U.S. engagement is needed more than ever to assure that Saudi WTO commitments on issues such as insurance, telecommunications, the Israeli boycott, certifications and standards issues are all met. We should explore entering into talks on a bilateral investment treaty a bit, which is easier to achieve than an FTA and would serve as a model for investment issues with other Gulf countries, investment being the big issue there. We should invigorate the TIFA, Trade and Investment Framework Agreement, consultations on a regular basis to keep focus on further reform and liberalization. We should also focus on educating the Congress on the importance and diversity of the U.S.-Saudi economic relationship, which is, as you all know, extensive obviously with oil but also in some other areas as well.
Next we should continue basic trade reform work in the region. You can see from the chart that we've got a long way to go with a lot of other countries. We need to work on WTO accession for those countries that are not members, such as Yemen, Algeria and Lebanon. We need to increase capacity building in areas such as harmonizing customs border procedures, increasing capabilities in IP enforcement, technical assistance in upgrading trade laws, tax systems, reducing bureaucracy and red tape. We want to not only integrate Middle Eastern countries into the global trading system, but to increase trade within the region. One of the projects that we're going to be undertaking going forward is trying to develop some numbers that estimate what the potential gains are for intraregional as well as transoceanic trade were a MEFTA to come into being.
We need to resolve the remaining issues concerning Libya's status as a terrorist-supporting nation. This is one of the few relationships -- bilateral relationships with the United States in the region that's gotten better rather than worse. We need to continue that trend. There is one more step to take on the terrorist-supporting list. This has been lingering for more than two years, I guess, and it's time to bring that to a conclusion.
Finally, we need to take steps that have already been recommended on the visa access front to reverse the growing isolation of the United States from Middle Eastern students and businessmen. We have a substantial reservoir of goodwill, I think, in the region still, due to the many government officials, rulers - such as King Abdullah of Jordan and the crown prince of Bahrain, as well as many others who have been educated here and have spent substantial amounts of time here. You cannot underestimate the value of those kinds of relationships. If we start to lose that by turning away the people that are the next generation of leaders and the next generation of businessmen, we're going to pay a price for a very long time.
One of the things my organization has spent probably more time than anything else, at least in terms of my time on in the last three years, is visa policy. Improvement is idiosyncratic, might be the best word -- some countries better than others. We continue to have serious problems. We're doing a survey right now to try to determine how serious those problems are in relation to a year or two ago and see if can get some guidance as to what in particular can be done to try to improve that. So there is a lot to be done but I wouldn't want this panel to end with saying everything is gloomy. There are in fact some specific steps we can take in the short term which will help at least improve, enhance and expand the economic relationship, but I think from that other things can grow.
Thank you.
Ambassador Freeman: Thank you, Bill - very useful list of proposed -- if not remedies -- at least measures to mitigate the situation and perhaps over time turn it around. I'm very grateful for that. I think the key issue here, as you implied throughout, is U.S. market share. It's not the direction of a particular number with respect to imports or exports but whether we remain - whether we continue to have the weight in the region that we have had, and perhaps begin to rebuild a bit from the losses we've seen in recent years.
William A. Reinsch
President, National Foreign Trade Council
Bill Reinsch currently serves as President of the National Foreign Trade Council. The NFTC, founded in 1914, is the oldest and largest business association dedicated solely to trade policy, export finance, international tax, and human resource issues. The organization represents 300 companies through its offices in New York and Washington, D.C. As president, Reinsch oversees NFTC�s efforts in favor of open markets, in support of Eximbank and OPIC, against unilateral sanctions and in support of sound international tax policy, among many other international trade and tax issues of concern to U.S. business. Concurrently, Mr. Reinsch also serves as a member of the U.S.-China Security Review Commission.
Prior to joining the NFTC, Reinsch served as the Under Secretary for Export Administration in the U.S. Department of Commerce. In that position he administered and enforced the export control policies and anti-boycott laws of the U.S. government and monitored the condition of the nation�s defense industrial base. Prior to taking this position, Mr. Reinsch spent twenty years on Capitol Hill from 1973 to 1993, most of them as senior Legislative Assistant to the late Senator John Heinz and subsequently to Senator John D. Rockefeller IV. He received a B.A. in International Relations from The Johns Hopkins University and an M.A. degree from The Johns Hopkins School of Advanced International Studies. He lives in Bethesda, Maryland, with his wife and two sons.
Source: National Foreign Trade Council
