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U.S. Trade and Investment Policy: Report of a CFR-Sponsored Independent Task Force

Speakers: Andrew H. Card, Acting Dean, Bush School of Government and Public Services, Texas A&M University, Thomas A. Daschle, Senior Policy Adviser, DLA Piper US LLP, Edward Alden, Bernard L. Schwartz Senior Fellow, CFR, and Matthew J. Slaughter, Adjunct Senior Fellow for Business and Globalization, CFR
Presider: David Wessel, Economics Editor, Wall Street Journal
September 19, 2011, New York
Council on Foreign Relations

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ANYA SCHMEMANN (task force director, CFR): I'm Anya Schmemann. I'm director of the council's task force program, and it's my pleasure to welcome you here to this special event to release the report of the Independent Task Force on U.S. Trade and Investment Policy. This task force is chaired by Andrew Card and Thomas Daschle and is directed by two of CFR's senior fellows -- Edward Alden, Matthew Slaughter -- all of whom are on the panel this morning.

Let me just say a few quick words about CFR task forces before we turn to our discussion. Task forces are nonpartisan. They're independent of CFR. CFR takes no institutional positions on issues. Task force members are responsible for the content of their reports, and each member participates in his or her own capacity. Task force reports are consensus documents, meaning that members endorse the general thrust and judgments, though not necessarily every finding or recommendation. Task force members may submit additional and dissenting views, and you will find these at the end of the report.

Task force members are all listed on the back of the report, and several of them are here today. And we thank them for their contributions. And today we have Mac Dessler, John Varano (sp), Carmusuta Wonder (sp). Thank you for being here.

Many others, of course, were instrumental in this effort. And I'd like to say a special thank you to my deputy, Kristen Lewis (sp), and Matt and Ted's RA, Kate Pinuse (sp), in the back. Thank you very much. We'd also like to thank Google for their generous support of this project.

And I'm pleased now to turn things over to David Wessel who will help us guide this conversation and have an interesting discussion. Thank you very much.

DAVID WESSEL: Thank you very much. There's a couple chairs down here. It's kind of remarkable that you can put out a report that looks like this and get standing-room crowd only. (Laughter.)

I'm very pleased to be here today with Tom Daschle, who's the former Senate majority leader, and now at DLA Piper; Andy Card, who's the acting dean of the Bush School of Government and Public Service at Texas A&M and of course former chief of staff to President Bush; Ted Alden, who's at the Council on Foreign Relations and was the co-director of the task force; and Matt Slaughter from the -- Dartmouth's Tuck School, who was also a co-chair of the task force.

And what we're going to do this morning is, I'm going to ask some questions, particularly of Mr. Daschle and Mr. Card, for about half an hour and then we'll open it up to questions. I promise you that we will not spoil the report by telling you everything that's in it. So since they're giving away free copies, I think, feel free to read it.

Let me start with one big question, if I may, Mr. Card and Mr. Daschle. The report quite eloquently says this: The growth of global trade and investment has brought significant benefits to the United States and the rest of the world. Freer trade and investment, facilitated by rules the U.S. led in negotiating and implementing, have alleviated poverty, raised average standards of living and discouraged conflict.

Now it seems to me that there are an awful lot of Americans who are not convinced that global trade and investment has brought significant benefits to them. They think it's actually hurting them. So I'm curious, what do you say to them to convince them that this is really in their interest, not only in the interest of big U.S. multinationals?

Do you want to start, Senator?

THOMAS DASCHLE: Well, David, I guess I would start by simply saying that we have to ask what would happen had we not done these things? The world is going through a most transformational moment; it's changing dramatically. We're becoming far more integrated, far more interrelated. And we recognize that the real developing markets for the products that we produce and the services we provide are in the developing continents of Africa and Latin America and Asia. And so as we recognize this transformational moment, we also have to recognize that there are things we have to do to engage with the world in order to ensure that our economy stays strong.

We also in the report note that there are a lot of things we could do better. We could do a lot better with enforcement than we do today. We probably could do a lot better with regard to training our workers to cope with these transformational circumstances than we do today. So we recognize that there are many, many challenges out there. But the world is changing, and we need to adapt as the world changes to suit the workers and the needs of our country.

WESSEL: Mr. Card.

ANDREW CARD: Well, we find that multinational corporations actually have a disproportionately large growth factor when it comes to workers in the United States. So they've been adding jobs in the United States even as they've been expanding market opportunities around the world, and that's a good sign.

We've also been a magnet for direct investment. But that is a -- that is challenged right now with the world. And this report is not written to be the perfect answer. If you're looking for perfection, you should probably go to an academic institution. They'd give you perfection. This is --

WESSEL: Or a church. (Laughter.)

CARD: This is an effort to describe what we think is needed. And it is a practical recognition of the challenge on free trade between the old debate of what would perfect look like, and the new debate is: What about me?

And so this is a balance between the theoretical value of free trade and the practicality of: We need to do more for the American worker and to demonstrate that the ground rules are there. The United States is going to be your partner in making sure people play by the rules. And so this is an effort to recognize the political climate, as well as the economic climate, and the reality that the world has changed and we don't have -- we don't have permission to be the exclusive carriers of economic growth for the world, and we don't have permission to be isolationists. We are going to participate in the global economy, and we think this is a road map for more realistic participation, where pro-American interests are not going to conflict with the theoretical expectation of an open market.

WESSEL: Senator, as you know, the report argues that there are lots of ways in which trade and foreign investment in the United States and U.S. investment abroad are ultimately good for the United States. But my gut is that if you took a poll of the Democrats in Congress, you might have trouble getting a majority for that proposition. So what do you say to them? Why is this really in Americans' interests, and not just in corporate America's interest?

DASCHLE: Well, I think if you look at where we are softest today with regard to the economy, it's the expectation of how we're going to grow jobs. And one of the major takeaways of this report and our study over the last year has been that we really need a much more aggressive, proactive, pro-American investment policy. And that investment policy really has a couple of components. It's encouraging foreign investment into the United States, as we see already in many other parts of the world -- something we haven't done a very good job of encouraging. But it also means encouraging American investors and American manufacturers to also invest in America. And incenting and building the kind of partnerships to do that is really what will grow jobs in the long term.

We're going to hear a lot of debate over the next several months about how we grow jobs. We think there is a significant trade component having to do with investment related directly to job growth in this country that we need to focus on if we're going to get this job done right.

WESSEL: Mr. Card, as you know and you mentioned, the report picks up on the fact that not all workers benefit from trade, and that -- and it suggests that there are government policies that could be used to share the benefits of trade more broadly. The report, for instance, calls for this thing called wage insurance, which is a way of compensating workers who may lose a high-wage job because they're one of the losers from trade.

Yet in the -- in the exceptions to the report at the back, in the commentary, both Trent Lott and Bill Thomas object to that. So what do you say to Republicans like Bill Thomas and Trent Lott, or the Republicans on the Hill now who are uneasy about extending the Trade Adjustment Assistance program? Why is -- is that really important? Are they right?

CARD: I think they're right in the global context of spending. And I think that with regard to the United States, they are saying: Put that in the same priority of consideration that everything else will be in when this deficit reduction commission meets to say: How do you spend money?

I actually think there are benefits from free trade, and if the benefits can be shared with people who will be dislocated, it's not bad. But I'm not just for spending, spending, spending. I'm doing it in the context of the overall federal discipline that has to come in spending.

I don't disagree with their angst; I did disagree with their reservation, because I think we put together a plan that was practical from a political point of view as well. And so I think there is some recognition that there are going to be adjustments that will be needed to address people who are on the cusp of angst because they're in a free-trade jeopardized position in a job.

And so that's what I favor. And I did talk with both Senator Lott and former chairman of Ways and Means Bill Thomas. I completely understand their angst, but when it's discussed in the context of overall spending, I think we can find a way to show that if benefits are going to be real from free trade, then some of those benefits should mitigate the concerns of the workers who are displaced.

DASCHLE: I think the two words that Andy emphasized here are so critical, and that is "political practicality." The political practicality in today's world, David, dictates that we understand the importance of trade adjustment assistance if we are in favor of a robust trade policy. They go hand-in-glove; you can't have one without the other.

WESSEL: I should say that Matt and Ted are not required to remain silent. (Laughter.) But they're -- we agreed that they're going to mostly help out in the Q&A. I just didn't want you to think that they were assigned to just nod every time. (Laughter.)

MR. : I'm encouraging Matt to kick me every once in a while. (Laughter.)

WESSEL: So compared to a decade ago, when the Council on Foreign Relations did a report on trade, one thing that's clearly different is the role of China. And so what does -- what do -- what does the report have to tell us about what we have to fear from China, what we have to gain from China? And most importantly, what role does our government -- should our government play in making sure that China plays by the trade rules that we play by?

MR. : Well, first of all, the reality of China's growth is evident to us all, and so are some of the problems in China. I would like to see, and I support the administration's effort to have them be more responsible about how their currency is traded around the world, or what level it has in dictating the value back to China.

I also am very concerned about intellectual property. I also think it's a reality that self-initiation by the U.S. government has not been very present where there have been violations. And we've counted on corporations and businesses to come forward with their concerns, and they are increasingly reluctant to raise a level of concern to the federal government. And I think the federal government should be more active, or more proactive, in calling attention to violations of trade and where the rules aren't being respected. So this report also calls for our government to be self-initiating when it comes to some of the violations of trade.

WESSEL: But why would some big company that feels that China is disadvantaging it by breaking the rules not be willing to stand up for itself?

DASCHLE: Retaliation. I mean, I think they're concerned a lot about retaliation and the effect that --

WESSEL: By the Chinese government?

DASCHLE: By the Chinese government. But to your question, David -- and I think it's a -- it's a very appropriate and important question -- I -- if I had to categorize the report, it would be in four ways. There are four major takeaways, and all of them apply to China. The first is that we ought to have a much more proactive trade policy. We ought to be focused on those countries that really could produce some real results -- and China, India, Brazil are three good examples. So clearly, as we target where we can do the most good with trade, China is a major factor.

The second is investment policy. We ought to have an investment policy that recognizes the importance of bilateral relationships and encouraging more investment. China is one of those major players where we could make a big difference.

The third is enforcement. We've got to do a lot better job with enforcement. And what better country to demonstrate we could do a better job with enforcement, as Andy said, than China?

And then finally, the Trade Adjustment Assistance, the need to recognize that we've got to help our workers -- that especially relates to China because we're being hurt in some ways by the bilateral relationship we've got today. So all four takeaways apply in a very significant and consequential way to China.

WESSEL: So in the report, you talk about as one of your recommendations a national investment initiative to coordinate investment, of policies to create more high-wage, high-productivity jobs in the United States. What does that mean in reality? What is -- what is it that we're not doing to encourage investment here?

CARD: Well, first of all, it means that all of our investments in the United States should have an eye towards competitiveness. How are we going to remain competitive with the rest of the world as it has become increasingly competitive to us? So we need to have more investment in our infrastructure. We need to have more investment in education. This is a recognition that the United States alone is not going to be the engine that drives all economic activity around the world. And we've got to be more competitive, and we're asking for an investment in our infrastructure and our education so that we will be very competitive with a world that is increasingly competitive against us.

MR. : Can I add one thing, David?

WESSEL: Please.

MR. : I just -- you know, we saw in the report that the national investment initiative would be complementary to the administration's National Export Initiative, that a lot of what this report is about is attracting investment in the United States that's related to export markets. And the United States just has never done this in a systematic way. Most countries have national-level investment promotion efforts where they're looking overseas to bring in companies, to get them invested in the United States, to retain the investment here. We don't do that at a national level in any really serious way; we mostly do it at the state level.

We talk here about tax policy, about the way in which -- in which our corporate tax system really is an outlier, discourages investment in the United States. And we talk a lot, as Senator Daschle mentioned, about China and developing countries. So I think, you know, that this is -- the goal here is to have something that's complementary to the National Export Initiative, to say trade and investment are intimately linked. And as we're promoting exports, we need to be promoting foreign investment and, more broadly -- (inaudible) -- investment in the United States.

MR. : Foreign investment meaning drawing more foreign companies to invest in the United States.

MR. : That's right.

MR. : And basically making them feel welcome.

MR. : And to -- when U.S.-based multinationals expand abroad, to try to have a set of policies in place in the United States to allow that expansion abroad to connect with jobs built in America as well. So it's thinking about all global-engaged companies in America, trying to allow them, whatever their mode of interacting with the U.S. and the global economy to have their ability to tap into dynamic growth markets like China and others, to translate back into jobs and rising incomes here.

WESSEL: You talk in the report with approval of the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, as being kind of better salesmen for their export industries than American presidents have been. And I wanted to ask you a little bit about that. So in Europe, the governments are much closer to businesses, and the relationship between government and business is different here. And most of the time, the rhetoric of business in America is, stay out of my business and I'll stay out of yours.

So do you imagine that the -- should the president of the United States, whether it's a Republican or Democrat, be spending more time beating on the Chinese to buy Boeing jets or beating on the Germans to buy Microsoft software? Is that what you think ought to happen?

DASCHLE: I don't know that I would say beating on them -- (laughter) -- is necessarily the right verb I'd use, but I do think creating a greater and a closer and a more successful partnership as we look at international competitiveness is something we should do. I think it's a good thing.

I also think we've got to do a better job of linking jobs with this whole effort. You know, that's what I think we've failed to do, is we haven't really made the case about how jobs can be affected and how we can build a jobs agenda around doing a better job of selling ourselves to the world. That partly is what this is all about, recognizing there's a huge amount of rhetoric that has to be considered as we make our case, that hasn't been addressed very effectively in past years.

WESSEL: Mr. Card, I remember that presidents of the United States -- they don't not push for U.S. exports, but it's kind of done with a bit of awkwardness, like we ought not to be too mercenary about this because we're the United States of America. Is that a problem or is that actually a good thing? I'm not sure.

CARD: I don't think it's a problem. Presidents of the United States have been unabashedly championing, I'm going to say, U.S. corporations who have competed against foreign corportions. It's when they're competing against other U.S. corporations that they don't get engaged, but they just want the playing field to be as level as possible and they want the rule of trade to be respected on all sides.

And I think that's what we're asking the federal government to do here, is to be proactive in making sure that the rules that are there are the rules that are enforced. And we're not going to count on our corporations all of the time to be the ones to say, hey, they're breaking the rules here. We have our own ability to see whether or not the rules are being broken, and we should step up and blow the whistle and call attention to it.

But yes, we want a pro-America trade policy, and that's what this is saying. It's -- I don't think it's inconsistent with the fact that the United States is the best example of a free-market system and we want to spread free market systems around the world, but we're going to do it recognizing that our free-market system is great because it does have the rule of law and there is enforcement. And we're going to make sure that spreads across every border in the world.

WESSEL: Now, the way that America taxes corporations is, of course, quite controversial at the moment. We're the only country in the world that tries to tax everybody's profits no matter where they are in the world, while other countries generally try and tax only the profits earned in their country. And there's a great consensus now in Congress and the president that we ought to have tax reform, as long as we don't try and define what it is they're talking about. (Chuckles.)

You talk a little bit about taxes in the report, but I wondered if either of you could talk about how do we think about corporate tax reform in the context of a trade and investment agenda.

DASCHLE: Well, first of all, I think there is a recognition that tax policy has a huge influence on our success in international trade and competitiveness. And so we've got to look at it from that perspective. We've created a whole array of incentives to do different things, but the bottom line is we still have a very high tax rate as it relates to other parts of the world in business. And so, recognizing that and creating a greater equilibrium, a fairer and a more competitive tax climate is something I think both Democrats and Republicans, this administration and Congress, in spite of all the polarization you see about taxes, seem to agree.

CARD: Well, I feel very strongly that you cannot have a trade debate without talking about taxes. And this report acknowledges that reality. And we heard from a number of business leaders -- in fact, from every business leader we spoke to -- that the tax policies have a greater impact on some of the trade policies than the theory of trade.

And we'd like to call to the attention of Congress, as they take a look at tax policy, to pay attention to what's happening in the global competitiveness. How does it impact our ability to compete overseas and to keep jobs at home or attract new jobs and more investment here?

But we put some pretty controversial suggestions in here with regard to the tax debate that Congress will have to have. It's not in the context of a trade bill. It's in the context of a tax bill that'll have to be written, but we don't want a tax bill written without paying attention to the ramifications on international trade.

WESSEL: Now, you talk also in the bill a little bit about the process of getting trade legislation through Congress. Once upon a time, to make it better, we set up a process that the president would propose and Congress couldn't amend, and it would all happen in 30 days. But 30 days seems to stretch to 300 days, and 3,000 days on these little trade agreements, some of which are with countries that are about the size of Providence, Rhode Island.

So how would you propose to make the trade legislation process different, if you would?

DASCHLE: Well, first of all, I guess we -- as Andy said, this is not -- if we tried to write a perfect document, you'd probably write a perfect way with which to deal with trade legislation in the Congress. That isn't going to happen. I think it's probably --

WESSEL: Nobody thinks Congress is perfect. You don't have to -- (laughter) -- don't worry about it.

CARD: They do, yeah.

MR. : I used to.

CARD: That's the problem. (Laughter.)

DASCHLE: But I don't think -- I think we come with the realization that TPA, trade promotion authority, legislative avenues are not something that are very realistic today. So we have to look at ways with which to address these agreements outside that context.

Making the case that, on a bilateral basis, with countries as important as Brazil and India and China, that, on that basis alone, we ought to be able to find consensus on some of the most important priorities and aspects relating to trade with those countries. We're not going to create a framework within which all these things can be done.

As Andy said I think before the program started, there's no one-size-fits-all approach to trade policy as we go forward, and we have to recognize that today.

CARD: Trade promotion authority would be great in a perfect world. The reality is Congress is not likely to approve trade promotion authority. And even if they did, there would probably be strings on it that might mean that it wasn't really trade promotion authority.

So this is an acknowledgement of the reality of the political climate today. I fought for trade promotion authority when I worked in government. I advocated it when I was working in the private sector. And, yes, I lobbied Congress to pass trade promotion authority, and I thought it was a great tool for a president to have. It's just not likely to be given now.

And the one thing about this report is it suggests that there should be strategic considerations with regard to trade. So we are suggesting take a look at the unique challenges of China or Brazil or India and deal with them. And it used to be that you would take your cookie cutter out and poke it into the world and, bingo, it showed Colombia -- a perfect example. We don't have a cookie cutter anymore. We have to deal market to market, reality to reality, and that is also in the context of the political response that Congress gives.

DASCHLE: And we've done that before, and we've had examples where we've been able to do this. And I think we have to go back and find what worked in the past outside of TPA and use those principles and experiences again.

CARD: But I would love Congress to give TPA to the president of the United States. I think it's an appropriate response to Article II's responsibility. I don't think Congress is going to do it though.

ALDEN: Just to add one thing and to be clear on the debate we had in the group. I think, you know, there was -- there was broad agreement that, in the best of all possible worlds, trade promotion authority for the president makes sense. It's a good thing. What we wanted to avoid was a big ideological battle over, you know, in theory, does the U.S. want to go forward with more trade agreements. And that -- you know, that makes both sides hardened in their positions.

Really what we're saying is, you know, go out there and present to the Congress specific deals that the administration can bring home. I mean, the administration is probably going to need TPA in the context of this Trans-Pacific Partnership that's being negotiated. But if you can go to members of Congress --

WESSEL: Explain what TPA is. I'm worried that we've gotten --

ALDEN: Well, it's -- you know, it allows for a fast-track procedure through Congress so the bills can't be amended essentially so that you don't get into the game of Congress amending trade deals after they're negotiated. I mean, to some extent, we've ended up there anyway with Korea and Panama and Colombia, but --

CARD: And we would like Congress to pass the --

ALDEN: Pass the agreements -- negotiate. But I think it's easier if you've got tangible -- if you've got, you know, tangible agreements that you present to the members of Congress and say, here is what your grant of trade promotion authority for this agreement is going to mean, and try to build up confidence in that way.

WESSEL: Let me turn now to what you think that CEOs of big companies ought to do and say. You know, in the '90s, big companies -- multinationals created about two jobs overseas for every job they created here. In the 2000s, they didn't. They actually increased their employment overseas by about 2.4 million and decreased their workforces in the U.S. by 2.9 million.

What is the responsibility of the CEOs of the hundred largest multinational companies in terms of talking to the government, talking to the people about trade? And what should they bring to the table?

CARD: I think they should -- they should bring to the table, we have to be competitive in the world; help us be competitive in the world. And, yes, our government should say, what are you going to do for us. And I think they have some suggestions.

Sometimes, the rules of the game don't allow them to add as much value to the United States as they would like to, but the competitive challenges require them to make sacrifices at home for their shareholders' return on investment.

So I think it is a challenge. We heard -- I mean, Jim Owens is the best example. He is out there --

WESSEL: The former CEO of Caterpillar.

CARD: He is out there working very, very, very -- and has been working -- very hard not only to provide jobs in America but to meet the challenges that consumers have around the globe. And he's done it well.

But he said we were tying his hands frequently. Sometimes, it was our tax code. Sometimes, it was a lack of infrastructure in the United States that allowed him to be competitive. But he found a way to do it. And so we listened to him. We listened to the practical challenges that he had to face as he was competing around the world and his very, very sincere desire to add value here at home.

DASCHLE: I think CEOs have the same responsibility that public office holders have, which is to do what this report calls for, and that is put the attention and the focus where the American people really want to hear they think it should be, and that's on jobs.

What are CEOs doing to do a better job than we've done in recent years on creating jobs here at home? What are policymakers doing? How can they work together? What incentives, what kind of infrastructure do we need to ensure that it is profitable and it is rewarding for businesses to create those jobs right here at home? That's really what we've got to do is emphasize what it's going to take to build those jobs here because the perception is all we're doing is building those -- creating those jobs abroad. We've got to bring them home, but we've got to make sure people believe that it's a real priority and it's the highest element of our agenda when it comes to trade.

WESSEL: Matt, do you want to weigh in?

SLAUGHTER: I would just echo who Tom and Andy said. Part of what I think the CEOs can do most importantly is inform and educate because they're the ones that are seeing, every week, every quarter, how fast the changes are in the global economy, how the opportunities are growing in these BRIC and beyond countries but how challenging the business dynamic is for how to grow in those markets and, hopefully, in a way that connects with jobs and opportunities here in the United States.

I think international tax is a great example. If you go back to the '80s and '90s and relative to many other countries, the United States corporate tax code was pretty similar to that of a lot of other countries. But the changes in dozens and dozens of countries in recent years to simplify their tax codes has made the U.S. more and more of an outlier.

So whether it's on tax or protection of intellectual property, they're seeing things in real time that can guide the focus of policymakers here, I think, on this effort to grow more jobs linked to the global economy.

MR. : Let me ask you one economic professor question as long as we have you here. There's a striking quote in this report from its predecessor, a 2001 report that was written by a task force chaired by Bob Rubin, the former treasury secretary, and Ken Duberstein, the former Republican White House staffer, which was ironically or interestingly, directed by a little-known bureaucrat named Tim Geithner at the time.

And in that report -- this is just 10 years ago -- the CFR wrote: The gains from trade are broadly shared. Throughout the last decade, as the U.S. has become significantly more open, U.S. employment and wages have increased.

Now, that's not a statement you could make in 2011. What changed, Matt?

SLAUGHTER: So we don't fully know. The academic in me says we're still working on trying to understand that, but it's clear that the amazing amount of technology innovation and the different dimensions on which the economies of the world have become more global and more interconnected has something to do with the fact that job growth has been a lot slower in America and the fact that -- and particularly that wage growth has been basically non-existent for the large majority of American workers.

That's a -- that's a deep reality of the global economic system. It doesn't depend on which party is controlling which part of our government. That's a deep set of forces that are at play. And again, what's new in our report is saying this is an economic reality that we can build off of, hopefully, with a more innovative set of policies to try to allow more job growth and more income growth linked to the opportunities abroad because it's just not coming as automatically as it did in the past.

CARD: I would say there's also a recognition of reality in that government-owned entities around the world are increasingly challenging our corporate structure to be competitive. And so how do we deal with that? Our rules really weren't written with an expectation that government-owned entities would be the major competitors in some markets. And so that's where we're saying the U.S. should be more proactive and -- as they -- the U.S. government should be more proactive at looking to see whether or not the rules are being followed and that the playing field is as level as possible when you're out there competing to meet the demands of consumers around the world and provide jobs back at home.

DASCHLE: And that's why I think the American people expect the American government to be a lot more aggressive when it comes to enforcement than we've been in the last 10 years. If there is one word that I think concerns them the most, it's that. It's enforcement. Why don't you go more -- be more aggressive than -- and be more successful in taking on the lack of competitive fairness as you look at some of these markets because of state-owned enterprise especially.

WESSEL: OK.

We're going to turn to questions now. I had thought we could skip the usual Washington warning to turn off your cellphones, and we did pretty good for the first 29 minutes. (Chuckles.) (Laughter.) I want to remind you that this is on the record, so if you speak, you will be on the record. And there's a C-SPAN camera there. Please wait for the microphone and use it. Please say who you are. And remember that questions end with a question mark.

So who's got the mic? Do you want to start it, right here in the front?

QUESTIONER: Sure. Hi, good morning. Paula Stern.

Thank you.

My question goes to both of y'all -- thank you so much for your presentation -- with regard to China and with regard to the issues of enforcement of our trade laws and our obligations and those of China under the WTO and specifically with regard to the green tech arena, which is so important, particularly to this administration's initiatives. We have been treated to Keith Bradsher's article about Volt, the GM and Ford seeing differently how to deal with China with regard to the requirements, I guess you would say, of the government of China regarding tech transfer as a condition of those two automotive industries investing in China and enjoying the Chinese market.

You suggested, Mr. Card, that when two different U.S. corporations may not see eye to eye on a particular policy, it makes it very difficult for the president, the administration to come forward actively with China. What would you suggest be done with regard to China given the retaliation concerns that some corporations have? Is it -- the onus now on the U.S. government, and how does it resolve it when you get two different industries, particularly in the automotive area that's so important, differently?

WESSEL: You know something about cars, Mr. Card. (Laughter.)

CARD: Well, first of all, I feel the United States should help all of our intellectual property be protected in the world. And so we should be proactive in helping to protect the intellectual property that America has discovered and implemented. I also respect that sometimes there are corporate interests that don't mind sharing their intellectual property. And that is a business decision made company by company or corporation by corporation. I don't think there should be a blanket rule that says no intellectual property can ever be transferred to any other entity. That's a corporate decision. That's not a government decision.

The government decision says we have an intellectual property law, and we're going to respect it, and we're going to make sure that people around the world respect it and comply with it. So that would be the difference. So when it comes to GM and Ford and how they might negotiate over intellectual property with a market, to me that's for them to decide rather than for us to impose, but we should protect the overall intellectual property rights that exist for American companies.

MR. : David, can I add one very small thing?

WESSEL: Yes, sure -- (inaudible).

MR. : I mean, there are in the trade rules -- you know, there are in the trade rules provisions that discourage performance requirements, that discourage countries from saying you have to do X in our market in order to sell your product here. So there are rules there that the United States government can use to discourage things that may work against the development of these technologies in the United States. So that gets back to the question of enforcing the rules as they're written.

I mean, I absolutely agree with Secretary Card, you can't have a blanket prohibition, but there are rules that are in place to discourage this sort of thing.

WESSEL: Sir.

QUESTIONER: Thank you. Steve Charnovitz at George Washington University Law School. I didn't hear anything this morning about Buy American, and I didn't see it in the quick look at the report. I did see a dissenting view at the end of the report endorsing Buy American. So here's my question.

Last week the president sent up a jobs bill with Section 4, its centerpiece, demanding Buy American for public works. Is that something that the task force discussed? And why was it left out of the report if it was discussed?

WESSEL (?): So -- I think it's mentioned, isn't it?

MR. : Briefly.

WESSEL (?): Briefly. (Laughter.)

MR. : From my view as a task force member, which is the complexity of the global economy makes Buy America-type provisions more and more difficult to even conceive of and measure. And I also think that they're narrow-sighted in terms of the broad goal of trying to build millions and millions of jobs linked to the global economy through trade and investment.

Other companies -- other countries pay attention when our country tries to impose those performance requirements, and the reality is, the dynamic growth opportunities that our American workers need to try to tap into are more and more outside of U.S. borders. So I think those policies don't work well and they invite a lot of retaliation.

DASCHLE: But I would put it in a little different context, actually, because we really do put a lot of emphasis on what we call the pro-American approach. And there's a difference between pro-American and buy-American, in my view, and that pro-American has a much broader array of approaches that will allow us to have a greater expectation of some result, whether it's dealing with countries that can really make a difference in our trading relationships -- China, Brazil, India -- whether it's investment policy, whether it's enforcement or trade adjustment assistance. All of those things are a pro-American approach that go way beyond just the buy-America, more narrow focus that I think doesn't really lend itself to the kind of environment we're facing today.

WESSEL: OK, you want to -- we'll take one on this side. And there's a gentleman on the aisle. Can you give him the mic? Go ahead, sir.

QUESTIONER: Good morning. My name is Shagivnoy (ph) from embassy of Afghanistan. You mentioned about the investment initiative. What -- do you recommend any incentives for both domestic and foreign investors in the United States? Thank you. My question goes to both of you.

DASCHLE: I'm not sure I understood the question.

WESSEL: He wants to know do we offer -- do you recommend offering incentives to -- you know, tax and other incentives to get people to invest here. Correct?

MR. : Yeah. I mean, we did not call for that. We don't look at specific targeted incentives. We were talking more generally about setting up an environment that is attractive to foreign investors (and domestic investors ?).

CARD: We want to make sure that we have a very attractive environment to bring in foreign investment and return some of the profits that have come in the multinational or multicorporate challenges -- that we want more money to come back home because our tax laws look better. So in the context of the tax debate, we'd like them to consider the global implications of taxes, not just the parochial interest of taxes.

WESSEL: Sir?

QUESTIONER: Thank you. I'm Steven Cantor with the U.S. Council for International Business, and this question is to Matt and others, about the national investment initiative. I don't think there's a governor who doesn't love inward investment. They have a parade. They celebrate. They throw money at them. They do all sorts of subsidies. But our inward investment is somebody else's outward investment. And when Mercedes Benz puts a plant in Alabama or Hundai does something in Tennessee, those workers get upset.

So we have to establish some linkages between outward investment and inward investment. The president's investment policy said nothing about outward investment and the linkages. So if you could say some more about that, how we focus and bring together the linkages of inward and outward.

And also in the context of TPP, these fast-growing markets where our competitors, Mr. Card, as you noted, are state-owned enterprises, should we really be pressing for serious disciplines on state-owned enterprises to have a level playing field?

SLAUGHTER: So. great question. A couple of thoughts. One is, distinctions between inward and outward investment get more and more blurry as global business gets more and more interconnected. So with ongoing rise of outward M&A transactions from a lot of the brick-and-beyond countries, kind of who's -- the ownership changes more and more. So I think those -- thinking about those distinctions as clean and permanent is not helpful.

And on your second thought is, historically there's some academic research today that shows expansion abroad by U.S.-based multinational companies tends to support more activity back in the United States in terms of more job creation, more capital investment, and importantly a lot of outward FDI pulls exports into those foreign markets.

Now the challenge, and I think a lot of the things of our report is trying to think about what constellation of policies we can have in America to allow that complementarity to continue in the future, and that speaks to things that we've been discussing like enforcement requirements in those foreign countries, protection of intellectual property.

ALDEN: Can I just respond quickly to the issue on state-owned enterprises. I think you're faced with a dilemma. The United States could, I suppose, say, well, we're competing with these heavily subsidized enterprises, we're competing with enterprises that get all sorts of tax breaks and other advantages that our corporations don't have. We can match that. All right, we can try to match that subsidy. Well, that's not going to happen in the current year. It's kind of -- it's a very difficult thing to do.

Far better to negotiate rules, be they in the context of trade agreements like the TPP, through the OECD, perhaps through the WTO, that begin to establish some common rules for what level of government intervention is permissible. Difficult negotiation. I'm not pretending for a minute that that's easier.

But we faced a lot of the same issues with Japan in the 1980s and 1990s, different in some ways but similar in other ways, so we've confronted this before. And I just don't think -- and the members of the task force didn't think -- that the United States can close its eyes to this problem because it's a big and growing competitive challenge for our primary goal, which is to see productive activity located in the United States. I mean, corporations will -- you know, will move and will locate elsewhere if the incentives require them to do that, and so we have to be able as a country to challenge that and to continue to make the United States a good location for people to invest in great jobs.

SLAUGHTER: But if I may, I just want to stress I think it's important people don't think, oh, that means no expansion abroad of any kind, whether it's by U.S.-domiciled corporations or the U.S. affiliates of foreign corporations. They're going to have those connections. The trick is then to try to think about the set of policies that support their ability to tap into fast growth abroad, to mean more jobs and economic activity here. That's the policy challenge.

WESSEL: Ma'am?

QUESTIONER: Susan Lund from the McKinsey Global Institute. My question is about infrastructure investment. The U.S. needs all sorts of infrastructure investment, creates jobs. We need it in ports, in airports, clean tech, transportation. At the same time we have foreign investors who are interested in helping fund U.S. infrastructure investment. However, in the past we've had a little bit of a skittish attitude about foreigners investing in things like ports or airports or our energy sector.

So I have several questions for you. One is, do you think it's appropriate and a good idea to try to attract foreign investment in infrastructure?; two, if you do, do you see any sort of signs that U.S. attitudes toward such investment is changing? And if not, is there anything concrete that can be done to help facilitate this type of investment?

DASCHLE: Well, I personally think that it's a very important part of our infrastructure developmental investment policy that we ought to be encouraging. And I'm hopeful that we're going to begin to see a greater and more proactive approach on the part of government officials in that regard.

It seems to me it all comes down once again to this whole notion of jobs, and a recognition that because of the tremendous inter-reliance and interdependence that we have today that those jobs are very real, and that if that is the only way with which we're going to be able to see a really robust infrastructure development policy in this country, it seems to me that that's just a logical extension of what we've already seen in the past. So I would love to see much more of it. I think you probably at the end of the day will see more of it.

WESSEL: But there seems to be resistance to -- whether it was Dubai Ports or a German company buying a phone company, all that stuff. How do you talk people out of that fear, that if the foreigners buy our infrastructure, we'll lose control of our destiny?

DASCHLE: Well, I think that's the word, is control. You know, to what extent can we create a framework within which control is still ours? I mean, that's really going to be the most important question. We want investment. We just simply don't want to turn over the entire infrastructure management and portfolio to a foreign investor. So control is key, and I think -- but along with control is the recognition that we can manage these things well, that we can do them with that understanding, and the realization that good jobs, permanent jobs are going to be a part of this investment.

SLAUGHTER: I would echo, Senator. I think we have a long-standing process in the United States to ensure the national security concerns are legitimate from these inward transactions on infrastructure are met. But in terms of how you change public opinion, again, I think the narrative of jobs is really critical here. This is one of the things globalization has done in the past generation is around the world there's a lot of global best practice companies now that operate in the infrastructure space. There's a lot of countries around the world that have built out their ability to fund and build and maintain infrastructure projects by relying on these companies.

The more we can rely on those in America in an era of tight fiscal environment, the better we're going to be able to build out an infrastructure that's going to help support job creation in lots of industries in America in the future hopefully.

CARD: As we're pushing for other markets to be open for business, America wants to be open for business, and this report says that. So we're looking to say, yes, we'd like to have your investment here. We do pay attention to governance and we do have a process in place to make sure our national security interests are respected and complied with, but we're open for business. We're open for investment and we want that investment to come because that means jobs.

WESSEL: In back.

QUESTIONER: Dan Bob, with Sasakawa Peace Foundation. I had a question about trade promotion authority with respect to TPP. In the report, you talk about -- well, it's not terribly clear to me exactly what you're suggesting on trade promotion authority and I wonder if you could address how specifically TPA could be granted to TPP because TPP is moving forward.

WESSEL: All right. Let's do a little ABC's here. (Laughter.) TPA is a Trade Promotion Authority, which allows the president to negotiate agreement and supposedly get it through Congress on an up-or-down vote quickly, and TPP is the Trans-Pacific Partnership, which involves a -- help me here -- Japan --

ALDEN: No, Japan is not part of it. It's the United States and a number of Southeast Asian countries, so, you know, Vietnam and Malaysia and others. And the idea is to have the building blocks of a broader regional trade agreement. And the U.S. is intensively involved in these negotiations right now. The hope is for some major progress by the APEC meeting, which is in Hawaii in November.

WESSEL: So does someone want to speak to the TPA and the TPP?

ALDEN (?): Can I take that one?

CARD: I'd mention one thing. The TPP is being negotiated as though -- by USTR as though it has TPA.

SLAUGHTER: It is, yeah. Yeah. No, I mean, I actually think we were pretty clear in the report. I think the big distinction is we didn't say, OK, Obama administration, go out next week and ask for a broad grant of fast-track trade promotion authority so you can go out and do a whole bunch of deals because our fear is that then becomes another ideological battle over whether trade is good for the United States, and we've had too many of those.

So what we've said is, go out and ask in the context of specific deals. And I think the Trans-Pacific Partnership is a very good example, where the administration when it gets to the right stage will be able to go to Congress and say, look, we've got this deal that we can bring home. Here are the advantages that it will bring to the United States. We think you, the Congress, should grant us this vehicle to bring this deal home. And I just think that's where we are politically right now.

WESSEL: So it's really a sequencing question.

SLAUGHTER: It's a sequencing.

WESSEL: Work out the principles of the deal and then go to Congress and get the negotiating authority, rather than ask for the famous blank check.

SLAUGHTER: Yes, I think that's where we are in this. Or you know, you wouldn't necessarily have to be this far along. I mean, you know, the United States can go to Congress and say, we want to do an agreement with India like the European Union is currently negotiating. This is a big market for us, these would be the broad parameters of the deal. Give us the authority to go do that. So that you're talking specifics rather than generality.

WESSEL: In the back.

QUESTIONER: Bill Lane with Caterpillar. My boss formerly was Jim Owens. Current one, Doug Oberhelman, and I have to say both remarkable leaders. And I was sort of taken by Andy's comments because while it's absolutely true over the last 10, last 20 years we've increased U.S. employment pretty dramatically, we've increased non-U.S. employment equally as dramatically.

But in 36 years at Caterpillar, I have never been in a meeting where executives got together and said the goal is to increase jobs. The goal is to increase sales, to reduce costs, to improve quality, to be safe, to promote diversity, but never once have business folks gotten together and said, I don't care about profits. I care about creating jobs. But if you do the other objectives properly, you do create jobs.

Most of this discussion has been about jobs. Do we make a mistake by leading with jobs rather than leading on what it takes to have a competitive economy, and pointing out that jobs will follow?

DASCHLE: I don't think it's either-or, frankly. What I think we've got to do is to say how is it that we get to jobs because I think jobs are uppermost in the minds of -- you know, I don't think most Americans are necessarily as concerned about how much profit Caterpillar makes as how much ultimately it means in jobs as a result of the profit that you do make. And so putting them in that context, it seems to me, just recognizes the political reality today. Until we can convince the vast majority of American people that a proactive, pro-American trade policy actually does mean better jobs and more jobs, I don't think we're ever going to get to first base on a trade policy today.

So that's really what it is. It's not necessarily say anything differently than what those CEOs talk about in that room, but it's putting it in the context of a message that the American people will hear and resonate.

CARD: I view it as the context under which the trade debate takes place today is in the context of jobs and what does it mean for America. And that's why this is a pro-America plan. And yes, we want every corporation in America to be competitive around the world, so we're looking for a very competitive environment around the world. But we're also asking is that pro-competitive environment going to complement America's interest in creating jobs? And we think there is a balance.

And we're not suggesting that any CEO should say my first job is to create jobs. I think their first job is to be competitive with the world and jobs will come. So that's why when we met with the CEOs of a number of companies, they talked about what it would mean to be competitive. And they want to be competitive in the United States. They want to be competitive as a global corporation. But they also want to be competitive in the United States against or with or in complement. So I think that's what the context was.

We had a wonderful group of taskforce members, and I see Carmen (sp) seated down here. She's cheering us on, and we had a very, very healthy debate over a jobs priority or a competitive priority and we said it's going to be a pro-America priority that includes competitiveness and we hope will have a complement to the creation of jobs in America and stability in the job markets.

SLAUGHTER: And I would just add that the task force was great. We had a lot of rich conversations about what that competitiveness means for the ability of America to grow jobs. And I think the report strikes the right balance of saying trade and investment policies to link competitive U.S. companies to the global economy is a piece of that, but boy, that's intimately related, though, to a broader set of public policy challenges like infrastructure, like corporate tax, like our educational system, our immigration system.

And, you know, we acknowledge that in the task force report and try to get people to think about hearing those policy conversations and issues in a different light now and to link it with our ability to grow those jobs.

WESSEL: Now was that responsive to what you --

QUESTIONER: Yeah. No I think it was very good.

WESSEL: The man on the aisle here, and then we'll do the one here. You get him first and then we'll go in the back.

QUESTIONER: Ted Kassinger with O'Melveny & Meyers. You've listed a number of policies that you think should be part of the conversation. One you haven't mentioned but has been prominent over the last decade or more in the trade policy debate is environmental issues, and using trade agreements and bilateral investment treaties to in effect export U.S. values in that area. We've seen the U.S. recently lost another WTO case in the canned tuna labeling issue. The Obama administration recently initiated a labor rights case under the Guatemala agreement.

What does the task force have to say about the proper role of integrating environmental policies with trade promotion and investment policies?

DASCHLE: Well, that's something that I raised probably more than I should. (Laughter.) But I did raise it several times, and I must say it was something that I think the committee -- the task force generally found to be supportive of. I mean, it comes down really to the question again of enforcement. How do we do a better job of insisting that we level the playing field with regard to many of the challenges we face with practices in other parts of the world, especially in the developing world today, and making it as high a priority as it should be. And taking a more proactive approach to enforcement is something that I think the task force wholeheartedly endorses.

SLAUGHTER: Let me just add, I think, you know, the approach that the United States has taken to environmental labor issues has sort of been built up over the last two decades, going back to the side agreements to NAFTA negotiated under the Clinton administration. And I think really as a task force, we just accepted that as part of the landscape right now and we didn't want to re-fight those battles. We were reasonably comfortable with where U.S. policy was on those issues. We saw these other matters that we've been talking about up here as really more pressing at the moment, as what ought to be the priorities.

WESSEL: In the back, with the red tie. Then we'll come back over here.

QUESTIONER: Thank you. Andy Olson with Sandler, Travis & Rosenberg. I wanted to follow up on enforcement. Everyone supports more enforcement, but it got me thinking as you were talking, WTO cases are complicated, they're difficult for the U.S. to actually bring one. It often requires getting consensus in the U.S. business community because there are differences of opinion as to whether or not to bring one, and how.

And as -- I was starting to think as more small and medium-sized enterprises are either indirectly or even directly exposed to the global economy -- and I'm thinking here of companies that I've spoken to who've said, you know, my intellectual property rights were stolen by, you know, a company in a particular, you know, foreign country. Do we need more tools in our toolbox? I mean, how do we address their needs? Again, because doing it at that WTO level can be lengthy, complicated, expensive.

CARD: I think we've got plenty of tools in the toolbox. We want to see them used. And I think you'll always have a debate whether or not we should have more tools. We had the debate over are the tools being used. And so we were saying the world has changed, and we want the United States to be more proactive about a pro-American trade agreement. That would be proactive in making sure that the rules that are there are followed.

Yes, we can have debates over other rules and other tools, but this was not a desire to find other tools to use. It was really an encouragement to use the tools that you already have, and invite the government to be more proactive in seeing whether or not unfair trade practices are a reality in a country rather than waiting for a complaint from a corporation or from workers.

WESSEL: Do any of the people who were on the task force want to weigh in here at all? Do you want to add anything? (No response.) They did a great job. OK. (Laughter.)

Time for one more question. The woman in the back.

CARD: Andy Stern is starting to get up. That's not a good sign. (Laughter.)

QUESTIONER: Hilda Ochoa, Strategic Investment Group. I'm going to talk about another tool in the box that no one seems to have thought about that might unclog one of the major arteries of growth the U.S. economy has, which is the construction and real estate sector. That sector, when it was booming, was contributing to easily 16 (percent) to 20 percent of GDP. It was contributing to employment, to aggregate demand, and to linkages with the rest of the world. And that artery of growth is clogged. There is a huge derailment in that.

The mortgage sector, which was the one fueling that growth, of course, is stalled, is stopped, and it should have been stopped because it became abusive in its practices. So the tool in the box that no one seemed to have considered is to equalize the after-tax treatment of rent payments to mortgage payments. So why not think of something that will immediately unclog the real estate sector by allowing renters to deduct rent payment off their income tax, which I think will do a lot to begin occupying a lot of empty houses and mobilizing the real estate, and generating trade and generating openness to free trade?

WESSEL: OK. I can assure you that -- that I'm sure was not in the report. (Laughter.) Does someone want to --

SLAUGHTER: No, it was not. But it connects with the previous comment about small and medium-sized enterprises. I think -- I'll point out one of the many studies our task force relied on was a very good report done by the U.S. International Trade Commission earlier this year, looking at enforcement of intellectual property of U.S.-based companies in China.

And they surveyed several thousand U.S. companies, large multinationals, but small, medium-sized enterprises, and they tallied up an estimate of the lost revenue through foreign affiliate sales through exports and then tried to come back and calculate how many jobs lost in America that meant relative to a world with strong IP protection in China.

And the number they came up with was 2.1 million U.S. jobs, but it wasn't just in the large, globally engaged corporations. It's in small-and medium-sized enterprises, and the knock-on effect that has for things like residential real estate. So the point is I think one of the themes of our report is trying to think about the benefits of globalization can help America, not just immediately for the large global corporations, but for small-and medium-sized enterprises, and even for things that you think of as traditionally being non-tradable.

And I think the more American workers and their families see those kinds of connections -- because they're smart; they see these -- the more hopefully there will be broader support in America for being able to build those kinds of jobs.

DASCHLE: But I think totally outside of the trade context your question raises really one of the primary dilemmas that most members of Congress and the administration face today, and that is, number one, how do you pay for a provision like that. And number two, where does it fall in this overall challenge either to simplify the tax code and eliminate a lot of the tax provisions to create this more competitive corporate climate that we've been talking about, and how do you do that given the array of provisions that exist today and the need to begin to find ways in which to simplify it? So those dilemmas are going to play themselves out of the next several weeks and months.

CARD: For example, the value-added tax is deductible in the context of international trade. The United States does not have a deductible value-added tax, so that is a competitive disadvantage, for example. So the tax debate is a very, very important debate to have in the context of international trade, and our invitation to Congress is that when they debate taxes, they shouldn't ignore its impact on competitiveness in the global economy.

WESSEL: With that, I want to close the meeting to a close and thank all of you for your good questions and your attention and for staying to the end, including you, Andy Stern. (Applause.)

.STX

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