U.S. Trade and Investment Policy and Investment U.S. Trade The Council on Foreign Relations sponsors Independent Task Forces to assess issues of current and critical importance to U.S. foreign policy and provide policymakers with con- crete judgments and recommendations. Diverse in backgrounds and perspectives, Task Force members aim to reach a meaningful consensus on policy through private and non- partisan deliberations. Once launched, Task Forces are independent of CFR and solely re- sponsible for the content of their reports. Task Force members are asked to join a consensus signifying that they endorse “the general policy thrust and judgments reached by the group, WKRXJKQRWQHFHVVDULO\HYHU\ÀQGLQJDQGUHFRPPHQGDWLRQµ(DFK7DVN)RUFHPHPEHUDOVR KDVWKHRSWLRQRISXWWLQJIRUZDUGDQDGGLWLRQDORUDGLVVHQWLQJYLHZ0HPEHUV·DIÀOLDWLRQV DUHOLVWHGIRULGHQWLÀFDWLRQSXUSRVHVRQO\DQGGRQRWLPSO\LQVWLWXWLRQDOHQGRUVHPHQW7DVN Force observers participate in discussions, but are not asked to join the consensus. Task Force Members Edward Alden James W. Owens Council on Foreign Relations Caterpillar, Inc. Nancy Birdsall William F. Owens Center for Global Development University of Denver James J. Blanchard Pamela S. Passman DLA Piper LLP Microsoft Corporation Andrew H. Card Matthew J. Slaughter Texas A&M University, Fleischman-Hillard Council on Foreign Relations; Thomas A. Daschle Dartmouth University DLA Piper LLP Andrew L. Stern I.M. (Mac) Destler Georgetown University University of Maryland William M. Thomas Harold E. Ford, Jr. American Enterprise Institute for Public Morgan Stanley Policy Research Leo Gerard* Laura D’Andrea Tyson United Steelworkers University of California Berkeley Independent Task Force Report No. 67 Daniel R. Glickman John K. Veroneau Aspen Institute Congressional Program; Covington and Burling LLP Independent Task Force Report No. 67 Report Force Task Independent Andrew H. Card and Thomas A. Daschle, Chairs Bipartisan Policy Center Carmencita N. Whonder Brownstein Hyatt Farber Schreck LLP Robert E. Litan Edward Alden and Matthew J. Slaughter, Project Directors Ewing Marion Kauffman Foundation Alan W. Wolff Dewey & LeBoeuf LLP Trent Lott Patton Boggs LLP *Mr. Gerard participated as a member of the Task Force, but did not endorse the general thrust of the Kevin G. Nealer final report. The Scowcroft Group U.S. Trade and www.cfr.org Investment Policy U.S. Trade and Investment Policy Independent Task Force Report No. 67 Andrew H. Card and Thomas A. Daschle, Chairs Edward Alden and Matthew J. Slaughter, Project Directors U.S. Trade and Investment Policy The Council on Foreign Relations (CFR) is an independent, nonpartisan membership organization, think tank, and publisher dedicated to being a resource for its members, government officials, business execu- tives, journalists, educators and students, civic and religious leaders, and other interested citizens in order to help them better understand the world and the foreign policy choices facing the United States and other countries. 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The Council on Foreign Relations takes no institutional positions on policy issues and has no affiliation with the U.S. government. All views expressed in its publications and on its website are the sole responsibil- ity of the author or authors. The Council on Foreign Relations sponsors Independent Task Forces to assess issues of current and critical importance to U.S. foreign policy and provide policymakers with concrete judgments and recommenda- tions. Diverse in backgrounds and perspectives, Task Force members aim to reach a meaningful consensus on policy through private and nonpartisan deliberations. Once launched, Task Forces are independent of CFR and solely responsible for the content of their reports. Task Force members are asked to join a consen- sus signifying that they endorse ‘‘the general policy thrust and judgments reached by the group, though not necessarily every finding and recommendation.’’ Each Task Force member also has the option of putting forward an additional or dissenting view. Members’ affiliations are listed for identification purposes only and do not imply institutional endorsement. Task Force observers participate in discussions, but are not asked to join the consensus. For further information about CFR or this Task Force, please write to the Council on Foreign Relations, 58 East 68th Street, New York, NY 10065, or call the Communications office at 212.434.9888. Visit CFR’s website at www.cfr.org. Copyright © 2011 by the Council on Foreign Relations®, Inc. All rights reserved. Printed in the United States of America. This report may not be reproduced in whole or in part, in any form beyond the reproduction permitted by Sections 107 and 108 of the U.S. Copyright Law Act (17 U.S.C. Sections 107 and 108) and excerpts by reviewers for the public press, without express written permission from the Council on Foreign Relations. For information, write to the Publications Office, Council on Foreign Relations, 58 East 68th Street, New York, NY 10065. This report is printed on paper that is FSC® certified by Rainforest Alliance, which promotes environmen- tally responsible, socially beneficial, and economically viable management of the world’s forests. Task Force Members Task Force members are asked to join a consensus signifying that they endorse “the general policy thrust and judgments reached by the group, though not necessarily every finding and recommendation.” They par- ticipate in the Task Force in their individual, not institutional, capacities. Edward Alden Leo W. Gerard† Council on Foreign Relations United Steelworkers Nancy Birdsall* Daniel R. Glickman Center for Global Development Aspen Institute Congressional Program; Bipartisan Policy Center James J. Blanchard DLA Piper LLP Robert E. Litan Ewing Marion Kauffman Andrew H. Card Foundation; Brookings Institution Bush School of Government and Public Service, Trent Lott* Texas A&M University Patton Boggs LLP Thomas A. Daschle Kevin G. Nealer DLA Piper LLP The Scowcroft Group I. M. (Mac) Destler James W. Owens* University of Maryland; Caterpillar Inc. Peterson Institute for William F. Owens International Economics University of Denver Harold E. Ford Jr. Pamela S. Passman Morgan Stanley; Microsoft Corporation New York University *The individual has endorsed the report and signed an additional or dissenting view. †Gerard participated as a member of the Task Force but did not endorse the general thrust of the final report. He submitted a dissenting view. v vi Task Force Members Matthew J. Slaughter John K. Veroneau* Council on Foreign Relations; Covington and Burling LLP Dartmouth College Carmencita N. Whonder Andrew L. Stern* Brownstein Hyatt Farber Schreck Georgetown University LLP William M. Thomas* Alan Wm. Wolff* American Enterprise Institute for Dewey & LeBoeuf LLP Public Policy Research Laura D’Andrea Tyson* University of California, Berkeley Contents Foreword ix Acknowledgments xi Acronyms xiii Task Force Report 1 Executive Summary 3 Introduction 6 Goals of U.S. Trade Policy 14 Current U.S. Policy 18 Trade, the U.S. Economy, and Public Opinion 22 Revitalizing Trade Negotiations 30 Attracting and Retaining Investment 39 Bolstering Trade Enforcement 45 Promoting U.S. Trade Competitiveness 55 Encouraging Development Through Trade 58 Comprehensive Adjustment Assistance for Workers 61 Reviving Trade Negotiating Authority 63 Recommendations 66 Conclusion 86 Additional and Dissenting Views 87 Endnotes 943 Task Force Members 1010 Foreword Ten years have passed since the Council on Foreign Relations (CFR) last convened an Independent Task Force to address U.S. trade policy. Over the course of the decade, as Americans witnessed dramatic turns of global economic fortune and stagnant or declining wages and bene- fits at home, their traditional wariness of international trade has cooled to near antipathy. This trend is a cause for real concern, because global trade has in fact brought enormous economic benefit to the United States and the rest of the world. In the coming decades, the booming markets in Asia, Latin America, and Africa will be among the world’s most important economic engines, and exporting to them will be crucial to creating the high-wage jobs America needs. Moreover, trade has been and remains a major strategic instrument of American foreign policy. It binds together countries in a broad and deep economic network that constitutes a bulwark against conflict; it is also a fundamental mechanism of development that contributes to growth and