Michaud ignores dominance of the nation’s service sector

I was concerned to read Rep. Michael Michaud’s (D-Maine) op-ed, “Trans-Pacific Partnership could prove to be key step in right direction,” in which he criticizes U.S. trade agreements, links them with job losses in the manufacturing sector generally and the paper industry in Maine particularly, and says that he doesn’t “buy the argument that the U.S. should shift to an overwhelmingly service-based economy.”

That argument is moot; the United States is already — and has been for decades — an overwhelmingly service-based economy. So are all other developed, high-income countries. Four-fifths of the American workforce is employed in services, and the sector generates nearly 80 percent of our economic output. (In Rep. Michaud’s own district, 78 percent of the workforce is employed in services, according to the Census Bureau.) Despite the downturn in global trade, U.S. private services exports last year stood at $480 billion, with a $150 billion trade surplus. The U.S. is by far the world’s largest exporter of services, and is extremely competitive in this sector.

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U.S. free trade agreements have opened services markets; U.S. services exports to both Mexico and Canada have doubled in the past decade; services exports to Chile and Singapore are up 68 percent and 61 percent, respectively, since those agreements took effect in 2004; since the enactment of the U.S.-Australia free trade agreement, services exports to that country are up by 57 percent. U.S. trade agreements ensure market access and non-discriminatory treatment for U.S. service providers, while providing often badly-needed regulatory transparency.

Despite these successes, U.S. service providers still face myriad trade barriers in many other key markets. If these barriers can be addressed, whether through bilateral, regional or multilateral avenues, we can substantially increase U.S. services exports. This in turn would go a long way toward meeting the administration’s goal of doubling overall U.S. exports in five years.

The administration has correctly recognized the central role that exports will have to play in our economic recovery. To support that goal, we need open markets, which can best be obtained through robust trade agreements, including the pending agreements with Colombia, Korea and Panama.

Washington

Bahrain emerging as finance capital

From Adel Al Safar, president, American Chamber of Commerce in Bahrain

When one thinks of the Middle East and its financial center, the first city that usually comes to mind is Dubai. Well, times have changed. There’s a new place that is picking up steam and quietly becoming the new financial capital of the Middle East: the country of Bahrain.

Bahrain, which CNBC recently chose as its Middle East hub, has an open and democratic society and has maintained the freest economy in the Arab world for the last 15 years. Bahrain was the first country in the Gulf region to start male and female education, to engage in an economic diversification strategy that favored non-oil industry sectors, to establish a banking sector, to introduce democratic reforms, to embark on privatization programs, to sign a free trade agreement with the U.S., and to co-found the Gulf Cooperation Council Common Market.

Bahrain’s economy is well diversified, with its financial sector contributing 26 percent of the 2007 GDP, while manufacturing and oil and gas contributed 16 percent and 14 percent, respectively. The country also has the most liberal tax policy in the region, with no corporate or personal income tax, no tax on capital gains, no withholding tax and no restriction on repatriation of capital, profits or dividends.

By promoting and fostering a pro-business, pro-growth, stable and secure business environment, Bahrain has become the place to do business in the Middle East.  What country in the Middle East has the most skilled workforce? Bahrain. The country provides a uniquely integrated society of nationals and expatriates, and offers an affordable, safe, high quality of life for families.

There are many family-owned businesses that present excellent business and trade opportunities and that have fostered the right climate to attract foreign investment. Also, by having one of the most forward-thinking leaderships in the region, Plus, the low-cost operations for American companies and access to Asian companies help make foreign investment in Bahrain that much more attractive.

By investing and developing a business in Bahrain, one can receive market access to Gulf economies and maintain a central location between the East and the West.

Washington

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