January 24, 2011
thought leaders | The DC Velocity Q & A

A trade expert's take on what's brewing in Washington

A trade expert's take on what's brewing in Washington

In the contentious world of trade policymaking, says Washington lobbyist Peter Friedmann, nothing goes down without a fight. That includes the president's push to bolster exports and promote trade.

By Toby Gooley

It's no surprise that Peter A. Friedmann's e-mail address is "OurManInDC." That handily sums up the role he plays on behalf of industry associations, individual companies, and local government agencies that depend on transportation and international trade.

Friedmann, who holds a law degree from the University of Washington, is well-known in transportation and trade circles as someone who understands both private industry and government—and is adept at getting the two to communicate with each other.

Even before he finished law school, Friedmann knew he wanted to get involved in policy rather than work in a traditional law practice. That's exactly what he did, signing on as legislative counsel to U.S. Senator Bob Packwood of Oregon in 1979 and serving as senior counsel to the U.S. Senate Committee on Commerce, Science & Transportation from 1980 to 1986. While working with the Senate, he helped to write and implement such influential laws as the Ocean Shipping Act of 1984, several Foreign Trade Zone amendments, and legislation for the Harbor Maintenance Fee and Trust Fund.

Friedmann now heads FBB Federal Relations, the government-relations arm of Portland, Ore.-based law firm Lindsay Hart Neil + Weigler. In that capacity, he represents the interests of individual companies, local governments, port authorities, and transportation- and trade-focused associations like the Coalition of New England Companies for Trade (CONECT).

Friedmann recently spoke with DC Velocity Managing Editor Toby Gooley about the issues currently on the table in Washington, why trade policy is an inherently touchy subject, and an unusual event he staged to help his clients get their message across to an elected official.

Peter Friedmann Q: Which organizations do you represent, and what responsibilities do you carry out on their behalf?
A: We represent many exporters and importers, both as individual companies and as members of some of the coalitions we've created. CONECT is one of them. Another is the Agriculture Transportation Coalition, which is very active in the ocean shipping arena. Then there are other association clients that are quite active in international trade, such as the Pacific Coast Council of Customs Brokers and Freight Forwarders and the Northern Border Customs Brokers Association. We also represent Indian tribes. And we help port authorities, transit agencies, state and local governments, and Indian tribes get funding for infrastructure, ranging from wastewater plants to ferry boats and roads.

We become the vehicle to communicate their interests to members of Congress. We organize visits like the upcoming CONECT mission to Washington € and we help them draft their comments to make sure they're heard. We provide advice on developments we believe are coming long before they hit the pages of the press. So we provide a crystal ball and a "heads up" alert.

Q: Why is it important for companies engaged in international trade to know what's happening in Washington?
A: So many issues that the federal government deals with can have a direct impact on the livelihoods of individuals and the businesses for which they work. It's often hard to keep track of what Congress and the executive branch are doing and when agencies like Customs promulgate new rules. Some rules are obscure, while others find their way onto the front page of The Wall Street Journal or The New York Times.

How Congress and the executive branch act on those issues directly affects many companies. They want to know about potential threats to their businesses as early as possible. For example, if Congress or the International Trade Commission imposes retaliatory and punitive duties on certain products from China, it could put an importer out of business. The sooner that importer knows what's being considered, the sooner it can plan for that possibility, such as adjusting sourcing. It can also get engaged by trying to impact, through lobbying, the decisions that Congress and federal agencies make.

Q: Congress and the White House have been preoccupied with the economy, various financial crises, and war in Iraq and Afghanistan. Is anyone in Washington paying attention to international trade right now, and if so, what are their top priorities?
A: I think there's a recognition by the White House and by many in Congress that the way out of this recession is through exports. The president announced an export initiative whose goal is to double the volume of U.S. exports within five years. That's what he says; whether he is in fact pursuing policies that will make that happen is still unclear. But the early signs are encouraging.

The president is making an effort to push passage of a U.S.-South Korea free trade agreement. Many members of Congress, including most of his own party, may oppose it due to alliances with organized labor. But with the president taking a principled stand in favor of it and if he's willing to invest the kind of political capital that [former president] Clinton invested to get NAFTA through, that agreement would lead to a huge expansion of U.S. exports. We're talking $11 billion of U.S. exports. If we do sign the agreement, we'll gain an opportunity not only to expand exports but also to keep pace with the European Union, South America, and everyone else who wants to trade with South Korea. Conversely, if all of them are signing FTAs and we do not, we not only lose new opportunities for exports but also risk losing our current sales to South Korea to the EU and South America.

People are also paying attention to China's currency. As long as China maintains its currency below what the free market suggests it should be, China's exports will be cheaper relative to U.S.-made products. That's good for U.S. consumers of imports from China but bad for our agricultural and manufacturing sectors. That's one reason why legislators in both the House and the Senate are sponsoring legislation designed to force China to allow its currency to rise against the U.S. dollar or risk retaliatory anti-dumping duties against Chinese products.

Q: Why is international trade such a contentious subject?
A: The complexity of all trade policy issues lies in the fact that there are winners and losers every time. There is no clear black and white; there are lots of grays. For example, it sounds like a good idea to increase the value of the Chinese yuan—a lower dollar would create more opportunities for our exports to China and other countries as our products become more affordable relative to the Chinese products. But many U.S.-manufactured goods include Chinese-made components. If those components become more expensive, so will the finished U.S.-assembled products. If our consumers can't afford to pay for higher-cost goods sourced in China, then declining sales will lead to job losses in the retail and logistics supply chain serving those imports. That's the two-edged sword of trade issues.

Even a question like whether the Generalized System of Preferences should be renewed [has two sides]. If it isn't renewed, it will create great dislocation for anyone who imports things like baskets from Indonesia or ceramics from Guatemala. It could impact a lot of things we take for granted, like the coffee mug you're holding. If that mug comes under GSP and GSP is not renewed, would it be manufactured here in the United States, or would it just become more expensive to import?

The point is, while it may be apparent to some of us that more trade is good for the economy, efforts to promote trade will be opposed by many entrenched labor interests and some domestic manufacturers. That's what makes this legislative stew we keep stirring so interesting.

Q: A number of countries (including the United States) and at least one intergovernmental body—the World Customs Organization (WCO)—have developed their own cargo security programs. Will these security regimes eventually be harmonized?
A: We are already getting close to harmonized security standards. For example, we have the "24-hour rule," under which cargo manifest information has to be submitted to U.S. Customs 24 hours prior to the loading of a vessel at the foreign port. The European Union has implemented its own 24-hour rule, which took effect Jan. 1 of this year. ... Canada has a similar rule but had exempted products from the United States crossing the Canadian border. Now, they are ending that exemption. China has a very similar rule that is actually quite onerous and has not yet been fully implemented. And there's an effort at the WCO to create a single database so that export data submitted by an exporter becomes the import data for the customs agency overseas.

The real issue with all these security measures, in my view, is whether we're creating an industry devoted to providing security without continuously and vigorously assessing the impact of those security measures on commerce and on our lives generally. Every time we undertake a new security measure, not only are we adding a dollar cost but we're also adding costs through additional delays and reduced efficiency of trade processes. These costs become in themselves barriers to international trade.

You've heard of the military-industrial complex? I fear we are in a "security-industrial complex" now. The need for security must be balanced against trade facilitation, the capacity of taxpayers to pay for it, our way of life, and our civil liberties.

Q: You have many notable achievements on your résumé. Can you point to one you're particularly proud of?
A: To win some victories for small business really makes me happy. We have to be creative to make that happen, though.

For example, we did an event for a member of the Senate, a very powerful chair of an important committee. We organized a group of that member's constituents, all small businesses. Some employed only two or three people; the largest employed maybe 50. These folks were importers and customs brokers concerned about possible retaliatory duties against certain imports from Vietnam and China. How could they get across the message that this would hurt their businesses?

We held a meeting on the floor of a warehouse in the senator's home state. We put picnic tables out on the floor, with equipment working and people doing their jobs, forklift drivers whizzing around and the noise of container doors opening up. The senator saw how many people were employed in this import business, and it gave him a better perspective on the needs of small business and the benefits of trade—which was much more effective than a visit from suit-wearing Washington lobbyists bearing campaign contributions.

That's what I really like to do: help small businesses cut through the noise of the federal bureaucracy and fundraisers. There's a little bit of a sense of David taking on Goliath—even though on occasion we also work with Goliath.

About the Author

Toby Gooley
Senior Editor
Before joining DC VELOCITY and its sister publication, CSCMP's Supply Chain Quarterly, where she serves as Editor, Toby Gooley spent 20 years at Logistics Management covering international trade and transportation as Senior Editor and Managing Editor. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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