The Obama administration will employ several Detroit organizations — including crowdfunding pioneers Detroit Soup — in a foreign trade mission to North Africa next week.
Leading the mission to Tunisia on March 5 will be the U.S. State Department’s Charles Rivkin, the assistant secretary of state for economic and business affairs. He arrived in Detroit on Wednesday to pitch the White House’s key trade initiatives. The trip this week is Rivkin’s first to Detroit as a government representative.
Rivkin is meeting with Detroit Mayor Mike Duggan today to pitch the State Department’s overseas economic development capabilities, and this afternoon was scheduled to speak to roundtables at TechTown Detroit and the Detroit Creative Corridor Center with local businesses and organizations to discuss best practices for innovation and entrepreneurship.
Rivkin, a former U.S. ambassador to France, spoke Wednesday evening at the Detroit Marriott at the Renaissance Center to the Council of Ethnic Chambers of Commerce and the American Arab Chamber of Commerce about the importance of diaspora communities in global markets, trade and economic growth.
“The State Department has long recognized the importance of diaspora communities and ethnic populations; and we have worked to engage them in our foreign policies,” he told the chambers, according to prepared remarks.
“Diaspora entrepreneurs can play a key role in gearing investment, capital and entrepreneurial capacity toward their countries of origin, even when those markets are risky to other investors. They also provide much needed capital to home economies through various capital market instruments (such as diaspora bonds) or through the formation of diaspora angel networks.”
Rivkin said he opted to meet with smaller groups and businesses this week rather than the automakers or large manufacturers. “I wanted to meet a different sector of the economy in Detroit,” he said, adding that he meets regularly with large industries in Washington. D.C.
Rivkin’s trade mission next week includes what is billed as the “Detroit Delegation” for the Tunisia Investment and Entrepreneurship Conference in Tunis. That delegation is Detroit Soup, TechTown, Wayne State University, Loveland Technologies and the Detroit Creative Corridor Center.
The trip will include showing conference participants how Detroit Soup’s model works: People come together once a month to micro-crowdfund an idea. Participants pay $5 to share bowls of potluck soup — or whatever volunteers bring — and then listen to pitches from individuals about what they would like to accomplish in their community. At the end, the attendees vote on the winner. That project gets the kitty plus a matching grant from Detroit Soup.
Detroit Soup this year is celebrating five years of work: It has done 95 dinners and seen more than $85,000 doled out to 108 projects. It’s also raised $300,000 in grants that allows it to match the dollars raised at each soup, fund the organization and pay neighborhood leaders to host soups.
“To be able to go to Tunisia and export some of our knowledge to them, it builds a future trading partner with the United States. To do that, we’re utilizing Detroit,” he said. “Detroit Soup is going to use its unique model of crowdfunding to help people in other parts of the world be successful with their ventures.”
Rivkin’s mission to Detroit also includes championing President Barack Obama’s key trade initiatives to the chambers and roundtables, and local media.
There are two specific trade agreements that Rivkin said he and other administration officials have been called upon by the Obama administration to advocate domestically. The president referenced the agreements in his State of the Union address last month.
One is the Trans-Pacific Partnership (TPP), a sprawling free-trade agreement that’s been under negotiation — largely in secret, which worries many groups, according to The Washington Post — for more than a decade. It would eliminate tariffs and other trade barriers, and includes legal and regulatory provisions beyond traditional trade deals that are limited to regulating the goods themselves.
The other is the Transatlantic Trade and Investment Partnership (TTIP) with the 28-nation European Union.
Both are controversial, and backers say both will boost trade and create jobs domestically and overseas.
Most political and media attention has been on the TPP, which is a key element of the “pivot” the president announced in 2010 that shifted, in theory, American foreign policy attention from the Middle East and Europe to Asia — specifically to deal with the economic and military competition from China.
Some analysts have said that TPP is intended as a counterbalance to China’s emerging economic might. It doesn’t include Beijing. Instead, the nations involved in the TPP are Canada, Australia, Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. South Korea may join the initiative.
A Congressional Research Service report from January includes data, culled from 2013, that shows $852.7 billion in total U.S. imports from TPP nations versus $699 billion in total American exports to those same nations. That’s a $153.6 billion trade value deficit for the U.S.
The single-largest U.S. trade partner among the TPP nations is Canada at $332.6 billion in imports and $301.6 billion in exports. About $130 billion of that moves through the Detroit-Windsor corridor annually.
The $2.1 billion New International Trade Crossing, soon to be built across the Detroit River, is expected to bolster U.S.-Canadian trade, but that project is outside of Rivkin’s portfolio, so he did not address it.
Trade statistics provided by Rivkin’s staff show that in 2013 the Detroit-Warren-Dearborn region reported almost $54 billion in merchandise exports, which supported an estimated 289,000 jobs in the state. The greater majority of these exporters were at companies with fewer than 500 employees.
Eliminating trade barriers will boost overseas trade by small and medium-size Michigan companies, he said, or allow those size firms to begin trade that wasn’t possible before because they lacked the capability to deal with the complexities of trade.
“If we start making it easier to sell our products on a level playing field around the world, you’re going to see exports from some of these companies,” he said. “It’s good for labor, it’s great for the local economy and it’s great for the United States.”
Michigan exports over the past decade to nations with free-trade agreements have grown 53 percent, Rivkin said, and would grow even more with Pacific and European trade agreements.
“(The trade deals are) going to be transformative, I think, for the economy,” he said.
For the TPP and TTIP to work, Congress must authorize implementing fast-track legislation known as trade promotion authority (TPA), which allows a president to enter into reciprocal trade agreements governing tariff and nontariff barriers.
The last TPA expired in 2007 and Obama has requested it be reauthorized. However, such legislation hasn’t been introduced.
The TPA represents an unusual reversal of current Washington politics: Some influential Republicans in Congress are interested in getting new free trade deals done, while the president’s own party has voiced opposition.
Last year, the new Senator majority leader, Kentucky Republican Mitch McConnell, publicly said he wanted to see new free trade agreements, and the Libertarian-leaning Sen. Rand Paul, also of Kentucky, has endorsed the TPP. GOP support stems from the belief that American power is bolstered by increased foreign trade.
Fueling opposition to the trade agreements is a provision that would allow foreign corporations operating within the U.S. to appeal key American legal or regulatory rulings to an international tribunal, according to a 2012 Huffington Post analysis of TPP documents leaked by transparency advocates.
“That international tribunal would be granted the power to overrule American law and impose trade sanctions on the United States for failing to abide by its rulings,” the Huffington Post wrote.
American corporations would continue to be subject to domestic laws and regulations on the environment, banking and other issues, the site said.
The proposed agreement has alarmed progressive Democrats (and some Republicans) along with conservative sovereignty advocates who insist the U.S. is surrendering some of its autonomy under TPP. Organized labor also is critical, saying past free-trade agreements have failed in the promises and cost U.S. manufacturing countless jobs.
“These agreements have been a death sentence for hundreds of thousands of American workers in industries that range from autos to agriculture. We simply cannot afford to keep repeating the mistakes of the past,” Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, said in a 2013 speech at the National Press Club.
Advocating for the TPP and its enabling legislation is the Trade Benefits America Coalition, which includes the Business Roundtable and U.S. Chamber of Commerce.
“The TPP will also provide Michigan with an opportunity to open new markets for its goods and services in countries that are not current U.S. FTA partners,” the coalition notes at TradeBenefitsAmerica.org, its advocacy site.
Five TPP nations do not have free-trade deals with the U.S. and could be opened to additional Michigan goods, including cars and trucks: Brunei, Japan, Malaysia, New Zealand and Vietnam, according to the coalition.
Michigan backers listed include Novi-based ITC Holdings Corp., Benton Harbor-based Whirlpool Corp. and Ada-based Amway.
Foreign automakers are behind the initiative, but the Detroit 3 are not listed.
Negotiations among the TPP nations are not public, but leaked documents have shown that sticking points include Japan’s reluctance to import American-made vehicles and U.S. pressure for better intellectual property rights protections.
“The negotiating dynamic itself is complex. For example, decisions on key market access issues on auto, dairy, sugar and textiles and apparel may depend on the outcome of rules negotiations involving intellectual property rights or state-owned enterprises, among other issues,” according to the Congressional Research Service report.
The Transatlantic Trade and Investment Partnership, which economically would be about the same size as the Asian trade deal, has drawn criticism and protests in Europe. The idea was hatched in 2011 and negotiations among the member nations began in 2013. Like the TPP, it would eliminate tariffs and tackle a massive amount of regulatory and legal entanglements.
One European concern is that U.S. multinational corporations would be able to undermine publicly-funded health services.
Rivkin was a fundraiser for John Kerry’s 2004 campaign and was Obama’s financial co-chairman for California in 2008. He served as U.S. ambassador to France in 2009-13, and took his current job in February 2014. Rivkin now works for Kerry, who became Secretary of State in February 2013.
Rivkin is former president and CEO of the Los Angeles-based The Jim Henson Co., and in 2000 he orchestrated the Henson family’s deal to sell the company to Germany’s EM.TV & Merchandising Co. (now Constantin Medien AG) for $680 million.
After that, he was CEO of L.A.-based animation studio Wild Brain Inc., which produces the popular children’s show “Yo Gabba Gabba!”