Accepting USCIB award, Harold McGraw III calls for a trade policy of “inclusion”

At USCIB’s December 4 annual award dinner in New York, Harold McGraw III, chairman, president and chief executive officer of The McGraw-Hill Companies, called on fellow business executives to promote a substantive dialogue with the new Congress right away on international trade policy.

“I hope we will immediately engage the new Congress,” stated Mr. McGraw.  “Historically, free trade has been a bipartisan issue, and it must continue to be.”

USCIB Chairman William G. Parrett, CEO of Deloitte, presented Mr. McGraw with USCIB’s 2006 International Leadership Award at the gala dinner at the Hudson Theatre.  He praised Mr. McGraw as “a tireless advocate for the ideals that define our organization: openness, free trade and American leadership.”

Also speaking at the gala dinner was Congressman Charles B. Rangel of New York, slated to become chairman of the House Ways and Means Committee when Democrats regained control of Congress in January.  Mr. Rangel said that Democrats would seek to forge bipartisan compromises on issues like taxes and trade, and he welcomed dialogue with business on these and other issues.

“We know that we were not overwhelmingly embraced by the electorate,” he said.  “They’re just giving us a chance.  We need to avoid the type of language that would lock us into confrontation.  Where I am most optimistic is in the area of trade.”

On the extension of the president’s trade negotiating authority, which is set to expire next year, Mr. Rangel said Democrats wanted to ensure that Congress is fully consulted on all trade agreements under negotiation, and that aggressive trade measures are used where trading partners fail to live up to their commitments.

“We want to make certain that the U.S. Trade Representative realizes that this is a two-way track, that we can’t have countries pirating our intellectual property rights, and not even spank them on the wrist,” he said.  “We want to take them to the World Trade Organization as often as they find it so easy to take us.”

Mr. McGraw, who has served since 1998 as chief executive of The McGraw-Hill Companies, a leading global information services provider, said international trade “rests on quintessentially American values of openness, fairness, competition, and an especially important value: inclusion.  It helps the world’s poorest people, lifting hundreds of millions out of poverty through the creation of better jobs, improved living standards and increased opportunity.”

Mr. McGraw, chairman of Business Roundtable as well as the Emergency Committee for American Trade, said business should urge Congress to enact permanent normal trade status for Vietnam and pass bilateral and multilateral trade agreements to open markets abroad.  In addition, he said Congress should reauthorize President Bush’s trade authority, and he called for the WTO’s Doha Round talks to be “re-energized” and completed in the first quarter of 2007.

He said the need for dialogue and understanding on trade was essential.  “We can help citizens and government leaders throughout our great country understand that trade agreements open markets for goods and services that benefit American workers, families and farmers, promote stability and security, and reduce barriers that make American companies less competitive in the global economy,” he stated.

Each year since 1980, USCIB has honored a senior business executive for significant policy leadership in improving the global competitive framework for American business.  Recent recipients of the International Leadership Award include Lee R. Raymond of ExxonMobil, Jean-René Fourtou of Vivendi Universal, Charles O. Holliday, Jr. of DuPont and George David of United Technologies.

More on USCIB’s 2006 Annual Award Dinner

USCIB Interview:

Bjørn Lomborg

The “Skeptical Environmentalist” Wants Governments to Prioritize

“If we can’t do everything, what do we do first?”  This is the simple question being put to governments by Bjørn Lomborg.  In his 2001 book, “The Skeptical Environmentalist,” the Danish business professor and former Greenpeace activist cast a questioning eye on the presumed gravity of such environmental challenges as climate change.  Two years ago, he convened a number of leading economists, including several Nobel Prize winners, to rank the costs and benefits of tackling a range of global problems.  During a recent visit to New York for a similar exercise with the UN representatives of some two dozen countries, Dr. Lomborg spoke with USCIB.

USCIB:  Give us a quick overview of the Copenhagen Consensus.

LOMBORG:  It is really just a very simple idea.  If you can’t do it all well, what do you want to do first?  We did a short version of the Copenhagen Consensus book, called “How to Spend 50 Billion Dollars to Make the World a Better Place,” to get people to think about, if you only had a marginal amount, how you would make the world a slightly better place.  That seems to be an obvious question that nobody’s ever really bothered answering.

USCIB:  What was the reaction when you first proposed this project?

LOMBORG:  Everybody said, “Great idea, never going to happen.”  Simply because it means not just putting things on top, but also not putting things up top, right?  And that’s where it gets hard, even for Nobel laureates.  You know, you have natural scientists telling us there are all these problems.  There are also all these [proposed] solutions, so what they’re doing is they’re presenting a huge menu of choices for politicians and democracies – all the rest of us – but essentially you get a menu without prices and sizes.

USCIB:  How do you deal with the interconnected nature of some problems?  For example, the relationship between climate change and communicable diseases, or between employment and access to health care?

LOMBORG:  What we are trying to do is to marginally change the world.  On the margin, it’s fairly likely that there will be a lot of consequences if you, for instance, improve education.  It might also have a big impact on how people are going to deal with HIV/AIDS.  If you do something about climate change it may have some consequences for malaria down the road.  So those are the consequences, but it’s very likely that some of the things you do will have much better payoffs than others.  So you should include everything in your cost-benefit analysis.

USCIB:  What has been the reaction at the United Nations and other international organizations?  Are they receptive to this type of dialogue?

LOMBORG:  Everybody thinks it’s [pause] interesting.  I think they get fidgety because it also says some things should not be done first, and, you know, everybody likes saying everything should be done first.  When I went around to the first batch of ambassadors, I presented them with 40 things and said, “What you have to do is to rank these 1 through 40.”  And, you know, they looked over the sheet and said, “But I want all of these to be my first priority.”  That’s what this is about, so there’s that sort of love/hate relationship with it.

USCIB:  Have you had an impact?

LOMBORG:  Yes.  It changed the way the Danish development agency is being run – a lot more [aid] is given to top priorities.  Some people from the National Security Council told me that part of the reason why President Bush gave $1.2 billion to malaria was because of the high placement on Copenhagen Consensus.  But I think much more it has an implicit impact, simply because people will start having this conversation when they’re debating these things and saying, “Why are we talking about this?  This was number 16.  Why aren’t we talking about number 3?”

USCIB:  How are you going to apply the Copenhagen Consensus formula to other organizations or priorities?

LOMBORG:  We’re doing a Copenhagen Consensus for Latin America next year with the Inter-American Development Bank.  We’re also working with Ann Veneman of UNICEF to think about different countries.  The Dutch and Danish development agencies are interested in trying individual country exercises for countries like Ghana, Rwanda, Zambia, maybe Vietnam.  We were called up by people in Azerbaijan.  They had read the book, “How to Spend $50 Billion.”  In 2004 their state budget was $1.5 billion.  But they’ve just finished a pipeline, and because of the increasing oil prices they expect over the next five years to get another $50 billion.  So we’re actually going to do a Copenhagen Consensus exercise with real money for Azerbaijan.

USCIB:  That brings up a fundamental question: how do you ensure the capacity of governments to disperse aid?  What do you do about corruption?

LOMBORG:  Two things.  We’re not about saying, “Wouldn’t it be great if the world worked this way?”  We’re simply saying, “What works?”  One of our challenges was good governance and corruption.  Obviously, it would be great to get rid of it, but we just don’t have any good solutions to this, or at least none of our experts could come up any.  So if we don’t know how to deal with this, maybe we should fix some things that we do know how to fix.  We do know how to fix HIV/AIDS, it’s a condom.  We do know how to fix malaria, it’s a mosquito net.  That’s fairly easy, and it’s also hard to get corrupt with it, because you can only afford so many condoms, right?

USCIB:  The media has focused on the fact that your economists placed climate change way down on the list of priorities.  Do you find yourself running into resistance from environmentalists?

LOMBORG:  Yes.  I think there is a certain annoyance about that.  Apart from terrorism, the big issue in the world today is climate.  So that garners a lot more interest than malnutrition, even though more than half the world’s population suffers from [the latter].  But that may be a wrong way of prioritizing.  It’s not about saying, “This problem is big.”  Because that doesn’t help very much if it doesn’t have a solution.

USCIB:  So are you saying the environment isn’t important?

LOMBORG:  Not at all, just that the proposed global solutions on climate leave a lot to be desired.  At the national level in the United States, we’ve been talking to the EPA and Council of Environmental Quality about trying to raise money to do a Copenhagen Consensus for the U.S. environment.  Imagine you had an extra $10 billion.  Clearly, you can’t solve everything, but you could do a lot of good.  Do you want more clean water, or more clean air, or more forests, or less carbon dioxide in the air?  The EPA and these agencies would come up with $600 000, and we need to come up with another $500,000 from other sources.

USCIB:  How about expanding international trade, which you rank as the number-three priority?

LOMBORG:  I would like for more people to write to their Congressperson and say, “You should do something about the Doha Round.”  But we recently gathered 80 young people from all over the world, mostly from natural sciences.  They made their own priority list.  They listened to all these same experts, they quizzed them.  The surprising thing was that the lists looked very similar.  They actually came out with diseases and malnutrition on top, and climate change at the bottom.  But one of the major differences was free trade, which the youth put much further down.  I think that just simply points to the fact that this is a huge educational task.