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Vermont Commission on International Trade and State Sovereignty

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Vermont exported to 148 foreign destinations in 2006. Vermont's largest market by far was NAFTA member Canada, which received $1.7 ... – PowerPoint PPT presentation

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Title: Vermont Commission on International Trade and State Sovereignty


1
Vermont Commission on International Trade and
State Sovereignty
  • Overview of International Trade
  • And Its Impact on Vermont
  • Vermont Legislative Council
  • October 30, 2007

2
What 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.

3
What 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

4
Evolution 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.

5
Evolution 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).

6
Evolution 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.

7
Evolution 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

8
Evolution 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)

9
Why 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.

10
Why 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.

11
Why 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.

12
Why 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.

13
Why 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.

14
Why 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.

15
Why 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

16
Why 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.

17
Why 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.

18
Why 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

19
Why 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.

20
Why 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.

21
Additional 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)
  •  
  • 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

22
Additional 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

23
Additional 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
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