U.S. Trade Representative Robert Zoellick is defending free trade as a catalyst for growth, amid criticism from those who blame free trade for the loss of jobs overseas, a concern that is becoming a major issue in the U.S. presidential race. Mr. Zoellick appeared before a congressional committee Tuesday.
Mr. Zoellick said if the United States closes its markets, others will close theirs to America. The issue is of growing concern, as companies transfer jobs from the United States to countries such as China and India, where labor is cheaper.
Mr. Zoellick told the Senate Finance Committee the solution is faster growth in the world economy, to spur greater foreign sales of U.S. products.
Mr. Zoellick is pushing to boost trade on two fronts: He is working to revitalize the global trade talks that were launched in 2001, but stalled last year; and he is pressing Congress to approve recently negotiated free trade accords with Australia, Morocco and Central America.
Mr. Zoellick defended globalization, saying the United States has been a beneficiary of free capital flows and open markets. "What is a challenge for us, and this is the exact thing that is happening right now, is that a more flexible system [like that] causes more upheaval for people. And that causes anxiety, and that's why some of the things we've talked about on the trade adjustment side are going to be important, if you're going to keep an open economy," he said.
Mr. Zoellick said the United States is doing well economically and will soon create a greater numbers of new jobs. He credited high recent U.S. growth on rising worker productivity, openness to innovation, and open markets.
Asked what he is doing to persuade China to allow an appreciation of its currency, Mr. Zoellick said the Chinese agree in principle that the yuan's value should be determined by market forces. "The question they're trying to figure out is exactly how to do it, without it creating a crisis in their banking system. Because, if you've got open capital flows, and you've got a weak banking system - and they've got a very weak banking system - you could unleash a problem that, frankly, means China is not buying anything from anybody," he said.
The U.S. official, who is just back from China, said Washington is pushing China to expand trade and crack down on the piracy of intellectual property. Mr. Zoellick said, even though the United States has a huge trade deficit with China, U.S. exports to China are growing rapidly.
He said that U.S. exports overall accounted for 25 percent of U.S. economic growth over the past decade.