The worsening U.S. economy has elicited a range of responses from lawmakers in recent weeks.
President-elect Barack Obama officially introduced his economic team on Monday, giving more indication that reinvigorating the nation's slumping economy will be his top priority once he is sworn into office. Lawmakers are still considering whether to provide assistance to the auto industry and may put together a new, massive stimulus package.
Meanwhile, President Bush over the weekend continued to press for more free trade--a cause heartily endorsed by the consumer electronics industry.
The chance for Congress to put the Colombia free trade agreement to an up-or-down vote expires with its lame-duck session. With just weeks left, groups like the Consumer Electronics Association--which represents companies like Apple, Microsoft, and Hitachi--are doing all they can to convince lawmakers that enabling free trade will stimulate the economy.
Gary Shapiro, CEO, Consumer Electronics Association
CEA President and CEO Gary Shapiro says that other countries will beat the United States to the punch if Congress does not ratify the agreement. Indeed, Colombia just recently signed free trade deals with Canada and China. Congress has refused to ratify the United States' agreement with Colombia, arranged in 2006, because of concerns over human rights practices in Colombia.
Shapiro spoke with CNET News recently about why free trade is critical for the U.S. economy, what the consumer electronics sector expects from an Obama administration, and how the industry will fare in today's floundering economy.
Q: Why is the CEA so interested in promoting free trade?
Shapiro: In the 21st century, trade is important to any country, and other countries seem to realize that. Now we need to.
The (Colombia) agreement is very important for a variety of reasons. American companies have given over $1.3 billion in tariffs to Colombia. Today, (Colombia) pays absolutely nothing.
It's also important from a big picture perspective. There's a battle being fought for the hearts and minds for Latin Americans, and politically, Colombia's one of our best friends in the region. The Colombian people and their leaders have done everything we've asked, so we want to reward the fact Colombia has been so helpful. We don't want to drive them into the arms of Castro and Chavez.
Electronics aren't the first goods that come to mind when thinking about trade with Colombia--how much does this trade agreement really impact the technology sector?
Shapiro: They clearly send us a lot of roses, and we in turn send them several pieces of fairly sophisticated equipment like John Deere machines. It's not that it's critical for the future of the tech industry, but if we can't pass the Colombia free trade agreement, there will be no others in the future. It is the death of free trade, and the rest of the world will pass us by.
From your perspective, why hasn't the Colombia free trade agreement been put to a vote in Congress?
Shapiro: Because Speaker Nancy Pelosi has not allowed it to be voted on. We suspect the unions have asked her to not vote on it. Unions, I suspect, never want to see a free trade agreement again.
This is bipartisan--it's supported without objection by both sides, but the opportunity to vote on it up or down expires with this Congress. It's not challenging in that we have yet to find anyone who disagrees with the trade deal. The only challenge is some Democrats don't want to buck the unions or Speaker Pelosi. We feel we have the votes there, other than Speaker Pelosi and a few others.
I would be surprised if Congress passes anything this year that would be signed by the president if it didn't have Colombia as a part of it. This is the last thing the administration wants to do before bowing out. They are so frustrated, as are Republicans and many Democrats.
How is the CEA working with Congress to move the Colombia agreement forward?
Shapiro: Congress is coming back in December, and our job is to make sure that in anything Congress passes, this is part of the deal. I cannot imagine a Detroit bailout package without this being part of it.
But if you're seeking to get a change, it has got to come from the Congress and the Colombians. The only thing we can do is put the pressure on them. We ran a series of ads last week in The Hill, Politico, and Roll Call, basically giving the message to pass the free trade agreement to get the economy going. They have pictures of U.S. workers saying this is the best economic stimulus you can give right now.
The tech industry is not going to Congress for a handout. We're not asking for anything but the ability to trade and the ability to innovate.
Do you think you'll be able to work with President-elect Obama to move the tech agenda forward?
Shapiro: Some of the things President-elect Obama has said--that we need to attract to the best and the brightest and invest in broadband deployment--we're optimistic because of that. He ran the most phenomenal digital campaign in history. He's used technology, and he sees the power of it. He is president in part because of consumer electronics, whether it was texting or reaching voters through some other technology. I'm sure he sees the value there, all the positive things technology can do, so I don't think there's that much education that's going to be required there.
It's clear his focus is on the economy. His team has already given hints from the people around him that they'll be looking at the Colombia trade agreement. There are a thousand question marks remaining, but he's indicated through his people he'd like to have it on the agenda for next year.
Congress has taken some major steps lately to shield American businesses from market forces--do you fear what that could mean for free trade?
Shapiro: Yes. I am concerned about the future competitiveness of the United States. I think we have the most competitive economy in the world, but we have a big challenge ahead of us in the next few years.
Future job growth is likely to come from the technology industry, and innovation requires the flexibility for companies to hire and fire. In the tech industry, unionization would be devastating, frankly.
So we are opposing the card check legislative proposal. It's the question of how workers can be intimidated into unionization when they don't want that.
(The Employee Free Choice Act, also called "card check" legislation, passed in the House of Representatives in 2007. The bill would allow workers to unionize by signing a card rather than through secret ballot. It stalled in the Senate last year.)
It's a matter of freedom of employee privacy. The private vote has been a part of American society for 200 years. That's how people vote.
How will the consumer electronics sector hold up in the current economic climate?
Shapiro: Better than most, but not as good as we would like. Technology products are more of a necessity. They used to be a luxury, but now people need products to do a whole set of things that are considered essential in their lives.
In economic downturns, to the extent that people lose their jobs, they want to start a home office to start a new business. With this increasing emphasis on teleworking, people will be investing in personal technology.
Consumer electronics products hold up very nicely in terms of providing value per hour of use. Any of our products are a fraction of the cost of competing ways of spending money. We're not as important as food, but we're not the boat industry. We're somewhere in between the fun luxury and the absolute necessity.
What other technology-related legislative priorities do you see on the horizon for the next Congress?
Shapiro: For 2009, I think there should be a reduction of the corporate tax rate because it's the highest in the world. We'd like to see a national recycling standard. There are states and localities passing piecemeal laws on how to recycle electronics, but we need a national standard.
I would like to see fast track authority given to the president for trade agreements. Otherwise, you might as well abolish the Office of the U.S. Trade Representative. It's impossible to negotiate an agreement if someone else is going to go back and change it. That authority expired in August, so no trade agreements are being negotiated now because no one will negotiate with us.
DENVER--Technology companies are here at the Democratic convention this week to highlight more than just their new products--they're pushing an agenda as well.
The Consumer Electronics Association, a lobbying firm that represents 2,200 technology companies such as Microsoft, Sony, and Hitachi, brought its 28-state "America Wins with Trade" bus tour to Denver this week to convince Democrats that free trade benefits the tech industry, as well as consumers. Groups with opposing views are taking a high profile at the convention, however, and the conflicting interests in the party are apparent from its mixed messages on trade.
Interested in getting Democratic leadership to revive stalled trade agreements with Colombia, Panama, and Korea, the CEA unveiled poll numbers Monday indicating that Democrats are becoming more accepting of free trade: 62 percent of Democrats said they benefit from free trade, and 69 percent said it was a "good thing" that trade and global manufacturing have reduced the costs of consumer electronics sold in the United States.
The poll was conducted by Zogby International from August 12 to August 14 and has a margin of error of 1.7 percent. It surveyed 3,440 people, including more than 1,200 Democrats. Corresponding poll numbers on Republican perceptions about free trade will be released next week during the Republican convention.
"There's a saying that no two countries that support the golden arches have ever been at war," said Kathy Gornick, president of Thiel Audio, which is represented by the CEA.
Gornick's business, which designs and builds high-performance loudspeakers, would benefit from lifted non-tariff trade barriers in countries with large middle-class populations like South Korea. She said the efficiencies created by free trade would, counter to common belief, create new jobs.
"Admittedly we are shifting in the kinds of jobs, but generally they are higher paying jobs," she said. "The biggest reason jobs go away is not because of free trade but advances in technology that change the way we do things."
It's a message that should resonate with politicians: The consumer price index (CPI) for imported electronic machinery and TV and sound equipment has dropped by 11 percent since 2000, even as the overall CPI has increased by 28 percent.
"The expansion of trade and global supply chains has undoubtedly played a role" in dropping prices, said Dan Griswold, director of the Center for Trade Policy Studies at the Cato Institute in Washington, D.C.
It is, in fact, a message that the Democrats' new leadership could very well embrace. "There is no doubt that globalization has brought significant benefits to American consumers," Barack Obama wrote in his memoir, The Audacity of Hope. "It's lowered prices on goods once considered luxuries, from big-screen TVs to peaches in winter, and increased the purchasing power of low-income Americans."
The technology platform provided on Obama's Web site says that "Barack Obama supports a trade policy that ensures our goods and services are treated fairly in foreign markets. At the same time, trade policy must stay consistent with our commitment to demand improved labor and environmental practices worldwide."
The interests of the CEA are directly at odds with those of the major unions that heavily support the Democratic Party. Leo Gerard, international president of the United Steelworkers, has had a ubiquitous presence at the convention, urging state delegates to support Obama because he would protect American jobs from "rotten trade deals." He spoke to bloggers on Tuesday in the Big Tent about "some misguided Democrats" who support free trade deals, "leading to a trade deficit."
The convention proceedings on Tuesday night included remarks from no less than five union members, including John Sweeney, president of the AFL-CIO. His union earlier in the year committed $53.4 million for pro-Democrat campaigns in battleground states--part of an unprecedented $200 million effort from various labor groups.
Meanwhile, Congress has given no indication it will approve any of the three trade deals in question.
"From what I understand from CEA interactions in Denver, the interesting takeaway is the number of policy makers who say they agree on trade, but report how difficult the political environment is," said Tom Galvin, a partner for 463 Communications, a consulting firm assisting the CEA in its efforts. "Hopefully, once the political season is over we'll see a less charged environment and the trade agreements can be considered at that time."
Gornick of Thiel Audio demurred to say whether she favored an Obama or McCain presidency.
"Traditionally Democrats would be less open to free trade, but these days it's very hard to predict what a political party is going to do," Gornick said. "I wish Ron Paul were running."
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