Bolstering Economic Growth through Trade Agreements

International trade has long been an important component of a strong American economy. Access to overseas markets helps to support economic growth, create jobs, and maintain a dynamic and competitive economy. Trade agreements do more than simply reduce burdensome tariffs. They also secure important commitments for the U.S. services sector, a sector that accounts for nearly 70 percent of U.S. GDP. These agreements help to eliminate market access barriers, ensure non-discriminatory treatment, and limit restrictions on investment.

The Obama Administration is pursuing an ambitious trade agenda on many fronts. The Trans-Pacific Partnership (TPP) and International Services Agreement (ISA) are ongoing, and the first round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) will begin in July. Today’s confirmation hearing for Michael Froman to lead the Office of the United States Trade Representative is a key first step in determining the direction of U.S. trade relations.

If confirmed by the Senate, Mr. Froman must ensure the U.S. maintains its position as a leader in advocating for open trade and investment policies and establishing consistent and high global standards. Crucial to Mr. Froman’s success must be the removal of market access barriers and national treatment rules that prevent the full participation of global financial services firms in key markets. In addition, successful agreements will secure both conventional market access commitments and as well as a reduction in regulatory burdens and conflicts.

The TPP and TTIP represent tremendous but different opportunities to strengthen the U.S. economy. With Japan’s recent accession to TPP talks, the agreement includes economies that account for nearly 40 percent of global GDP. As the U.S. makes a strategic pivot to Asia-Pacific, the agreement offers an opportunity to secure important market access commitments for the financial services industry and secure the ability of American business to compete in many developing and developed nations.

The TTIP also offers enormous opportunities for the financial services industry. The benefits of a TTIP stem primarily from reducing and eliminating unnecessary regulatory burdens. The agreement offers an opportunity for regulators to develop a framework between the US and EU that promotes consistent, high-quality regulatory standards and complements work at international standard-setting bodies. It also offers an opportunity to address fragmented and unnecessary regulatory obstacles that will negatively impact the ability of market users and participants to raise capital, manage risk and, most importantly, create jobs and economic growth.

New trade agreements must meet the reality of today’s global markets by removing conventional market access barriers and improving regulatory coordination. The TPP and TTIP provide a unique chance to establish high standards for trade in financial services, facilitate trade, encourage economic growth, and reduce costs for investors, issuers, and consumers. And, in the case of TTIP, we have the opportunity to strengthen regulatory coordination, align our approaches to financial sector reform, and address unnecessary divergences between the US and EU regulatory regimes. Given the nature of increasing economic globalization, the U.S. must position itself to have the greatest worldwide access to financial markets in order to sustain recovery and remain ahead.

Partnering with countries in the Asia-Pacific region and Europe will enhance important strategic and economic relationships that bring jobs and economic growth to our communities. However, agreements that fail to reduce market access barriers or reduce regulatory burdens represent enormous missed opportunities for jump starting American growth. If concluded, the TPP, TTIP and ISA can establish high standards for future trade agreements both with the U.S. and in other developing markets.

David Strongin – Managing Director, Cross-Border Policy and Advocacy, SIFMA