Business groups, lawmakers back plan to start talks on a services industry trade deal

Businesses and lawmakers are backing a plan by U.S. trade officials to negotiate a new international services agreement they say would dismantle barriers, expand exports worldwide and create jobs.

U.S. Trade Representative Ron Kirk notified Congress on Tuesday that the Obama administration will enter into talks with 20 trading partners as an avenue toward increasing exports and jobs in sectors such as banking, express delivery, information technology, insurance and telecommunications.

"If business services achieved the same export potential as manufactured goods globally, U.S. exports could increase by as much as $800 billion," Kirk said in a statement.   

"To begin to realize this potential, we need to surmount a range of barriers that lock out, constrain or disrupt the international supply of services."

Talks are expected to begin this year in Geneva, Switzerland.  

“International services markets remain heavily restricted and U.S. service suppliers face a wide range of barriers to doing business in overseas markets," said Michael Ducker, chief operating officer and president of International for FedEx Express.

"A new agreement to liberalize services trade would be a much-needed boost to our economic recovery, particularly at a time when growth opportunities are scarce."

In a letter to lawmakers, Kirk highlighted a recent study by the Peterson Institute for International Economics estimating that while the United States is the world’s largest services trader, tradable services are still five times less likely to be exported than manufactured products.

Every $1 billion in U.S. services exports supports an estimated 4,200 U.S. jobs. The U.S. had a $178.5 billion surplus in 2011, according to USTR. 

"Global markets present tremendous growth opportunities for IBM, and services are the largest component of IBM’s business," said Christopher Padilla, vice president, governmental programs at IBM. 

"The United States stands to gain significantly from a new trade agreement that eliminates services trade barriers around the world."

U.S. services exports surpassed $600 billion last year, according to the U.S. Chamber of Commerce, which announced its support for an agreement. 

A services agreement “will be an economic boost for the U.S. and the world economy,” said Myron Brilliant, the Chamber’s senior vice president for international affairs. 

"This is a chance to tackle emerging trade barriers in areas such as the digital economy, while strengthening the global rules-based trading system," he said.

Business Roundtable (BRT), a group of the nation's top chief executives, also put its weight behind the plan "to negotiate an ambitious agreement that opens up growing international markets for the range of services provided by U.S. companies," said Doug Oberhelman, chairman and chief executive of Caterpillar and chairman of BRT’s international engagement committee.

An International Services Agreement (ISA) "would help to maximize U.S. economic growth and job creation," he said.

The National Foreign Trade Council (NFTC) applauded the administration's effort for making an agreement a top priority this year because with services industries accounting for four out of five jobs and about 70 percent of economic growth, "expanding services trade through an ISA is central to U.S. economic growth," said NFTC President Bill Reinsch.

Democrats and Republicans in both chambers expressed their support for the plan. 

House Ways and Means Chairman Dave Camp (R-Mich.) along with panel Trade Subcommittee Chairman Devin Nunes (R-Calif.), endorsed the trade push.

“The ISA is a critical trade priority for me because it holds great promise for job creation in all sectors of the U.S. economy, including manufacturing and agriculture, as well as services, and can help rebuild momentum for a global agenda of trade liberalization," Camp said.  

The top Democrat on the Ways and Means panel, Rep. Sander Levin (D-Mich.), argued that the talks would allow U.S. trade officials to make headway in ensuring reciprocal market access abroad for service suppliers after a failure during the Doha, Qatar, round of trade talks.

"It can help to establish new rules to address critical emerging issues, such as the trade-distorting actions of state-owned enterprises," Levin said.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and panel ranking member Orrin Hatch (R-Utah) also backed the deal arguing that the barriers to expansion need to be addressed.

"As the global economy evolves, services exports like tourism and transportation must be an important part of our trade agenda to create jobs and strengthen our economy here at home," Baucus said.