Perspectives on Trade and Poverty Reduction

Transcription

1 Perspectives on Trade and Poverty Reduction A S U R V E Y O F P U B L I C O P I N I O N K E Y F I N D I N G S R E P O R T

2 The Economic Policy Program is an initiative of The German Marshall Fund of the United States (GMF) that promotes cooperation between the United States and Europe on domestic and international trade policies as vital instruments of global prosperity, especially for the poor and those affected by shifts in the world economy. The program supports transatlantic leadership at the critical nexus of trade, agriculture, and development. At the heart of the Economic Policy Program is our trade and development work, which leverages GMF s unique position as a nonpartisan, transatlantic public policy institution with access to opinion leaders and policymaking processes on both sides of the Atlantic and in key developing countries. In partnership with the William and Flora Hewlett Foundation and Rockefeller Foundation, among others, these activities seek to move forward, through research and dialogue, a pro-development trade agenda that fulfills the promise of the WTO s Doha Round and the UN s Millennium Development Goals. The German Marshall Fund is a nonpartisan American public policy and grantmaking institution dedicated to promoting greater cooperation and understanding between the United States and Europe. GMF does this by supporting individuals and institutions working on transatlantic issues, by convening leaders to discuss the most pressing transatlantic themes, and by examining ways in which transatlantic cooperation can address a variety of global policy challenges. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has six offices in Europe: Berlin, Bratislava, Paris, Brussels, Belgrade, and Ankara. GMF would like to acknowledge the generous support of the William and Flora Hewlett Foundation both for its core support of the Economic Policy Program and for its generous investment in this survey.

3 Table of Contents Key Findings 06 3 Section One: Open Markets 5 Section Two: Poverty and Development 11 Section Three: Foreign Policy 14 Section Four: Jobs and Competitiveness 19 Section Five: Migration 23 Conclusion 25 Methodology 26

4 Key Findings 06 Combined, the United States and Europe represent the largest source of trade, foreign direct investment (FDI), 1 and overseas development assistance worldwide. But developing countries like China are playing an increasingly important role in the global economy, posing new challenges and opportunities. American and European policymakers are struggling to adjust to massive industrial restructuring and technological changes that are transforming their economies. Many of the poorest countries in the world have been unable to integrate into the global economy most will remain sources of political and economic instability. Global interdependence has led to greater, though uneven, prosperity and new economic uncertainties. The twin challenges of addressing growth and jobs at home while pursing foreign policy goals like contributing to democracy, stability, and poverty alleviation overseas have become more difficult. Over the past year, concerns in both the United States and Europe over proposed foreign acquisitions have grown and, for a variety of reasons, governments have become more active in blocking FDI. The Doha Round of World Trade Organization talks was suspended in July 06, largely over agriculture. Progress on agriculture will be central to meeting the Round s intended goal of offering the poorest countries of the world development opportunities. This year also saw increased energy prices heighten concerns over import dependency and bring increased focus on alternative sources of energy, such as biofuels. Policymakers in the United States and Europe are looking at innovative ways to leverage aid and trade to support wider foreign policy goals like global stability, democracy, and prosperity. Increased apprehension over the impact of immigrant workers on domestic economies also led to fervent immigration debates on both sides of the Atlantic through the course of 06. It is in this global context that the German Marshall Fund of the United States conducted its third annual Perspectives on Trade and Poverty Reduction survey, in which many of these issues are examined. The survey is a yearly assessment of American and European public opinion on issues of global trade, economics, and development. Polling was conducted in the United States and six European countries: France, Germany, Italy, Poland, Slovakia, and the United Kingdom. Key findings of the survey include: 2 Despite majorities in nearly every country remaining dissatisfied with the economy, 41% of Americans and 27% of Europeans are satisfied with their economy compared to % and %, respectively, last year. Roughly half of American and European respondents (52%) have a favorable view of globalization compared to about 46% of them last year. Every country expressed more favorable views on globalization in Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy ( direct investor ) in an entity resident in an economy other than that of the investor ( direct investment enterprise ). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated. (Source: Organisation for Economic Co-operation and Development) 2 Unless otherwise noted, all Europe-wide percentages are weighted on the basis of size of the adult population in each country and refer to the combined responses of France, Germany, Italy, Poland, Slovakia, and the United Kingdom for 06. Europewide percentages for 05 include these countries minus Slovakia (please see the Methodology section for details). Key Findings Report 06

5 Seventy-one percent of Americans are favorable toward international trade, a modest increase from 66% in 05. Europeans have also grown more favorable toward international trade with three out of four Europeans favoring it compared to 67% last year. Compared to other respondents, French and American respondents expressed the greatest opposition to freer trade. More than half of the French (55%) and nearly a third of the American (31%) respondents do not favor freer trade. In all other countries surveyed, 73% or more of respondents favor freer trade. More Europeans than Americans believe that there should be a limit on farm subsidies. About 59% of European respondents support limitations on farm subsidy payments compared to 49% of their American counterparts. Nearly a third of British and German and a quarter of French respondents oppose farm subsidies entirely. Seventy-two percent of Americans and 75% of Europeans have a favorable view of development assistance. Italian (94%) and French (83%) respondents showed the highest support, while Germans showed the lowest (58%). Sixty-five percent of Americans and 58% of Europeans believe that freer trade strengthens support for democracy in countries with weak political and economic institutions. Fifty-nine percent of both Americans and Europeans believe that the Chinese economy represents a threat because low-cost Chinese products compete with their countries products and their companies can relocate to China. Respondents in Slovakia and Poland are the most confident that FDI will lead to more jobs, with 79% and %, respectively, agreeing that it results in job creation. Sixty-six percent of German and 65% of British respondents said the same. Majorities in France (62%), Italy (61%), and the United States (57%) also indicated that FDI generates jobs in their countries. About 62% of Americans and 54% of Europeans believe immigrant workers contribute to the entrepreneurial base of their economies, and 52% and 55% of them, respectively, say immigrant workers support their advanced industries. 4 Perspectives on Trade and Poverty Reduction

6 Section One: Open Markets As in 05, in all countries surveyed except the United Kingdom, more people are dissatisfied with the economic situation than are satisfied. However, dissatisfaction with the economy decreased this year. American and European views on globalization, the WTO, and international trade have also become more favorable, and more people on both sides of the Atlantic believe they will personally benefit from freer trade. Most Americans and Europeans believe that freer trade lowers consumer prices, provides more product choices, leads to export opportunities, and adds to global stability. However, when asking about lowering barriers to trade or business risks resulting from freer trade, support for trade tended to decrease among some respondents. Americans and Europeans see improved economic outlook Respondents from every country except the United Kingdom indicated higher levels of satisfaction with their economies when compared to 05 (see chart 1). Forty-one percent of Americans and 27% of Europeans are satisfied with their economy compared to % and %, respectively, last year. Although there was a slight fall in British optimism on the economy, British respondents continue to be the most satisfied on the direction of their economy. However, many Europeans remain very dissatisfied with the way things are going with the economy. Notably, Italian (85%), French (78%), and Polish (72%) respondents expressed the highest levels of discontent with their economies. Globalization fears wane, but many remain ambivalent positive trend occurred in all countries surveyed. Roughly half of Americans and Europeans (52%) have a favorable view of globalization compared to about 46% last year. Every country expressed more favorable views on globalization, and in some cases the increase was notable: Poland (34% to 49%), Italy (51% to 61%), Germany (46% to 53%), the United Kingdom (47% to 53%), the United States (46% to 52%), and France (43% to 47%). Similarly, both Americans and Europeans expressed a minor rise in their views on the World Trade Organization (the WTO) with 52% of them jointly favoring it compared to 48% in 05. Polish and Italian respondents showed the biggest increase in levels of support for the WTO 34% to 47% and 59% to 68%, respectively. Thirteen percent of Americans and Europeans indicated that they don t know if they have a favorable or unfavorable opinion of globalization and, similarly, 19% said the same about the WTO. Support for international trade makes gains in Germany, Italy, and Poland In most countries, views on international trade have become more favorable compared to last year. Seventyone percent of Americans are favorable toward international trade, up from 66% in 05. Europeans have also grown more favorable toward international trade, with three out of four Europeans favoring it compared to 67% last year. German, Italian, and Polish respondents drove overall increased European support for international trade and revealed the sharpest increases in support for international trade (see chart 2). Fifty-five percent of Americans and 53% of Europeans now believe that they will personally benefit from freer trade compared to 49% and 44%, respectively, last year; this Key Findings Report 06 5

7 60 RESPONDENTS IN NEARLY EVERY COUNTRY EXPRESSED A MORE POSITIVE OUTLOOK ON THEIR ECONOMY, BUT OPTIMISM VARIES UK US Germany Europe Slovakia Poland France Italy NA Satisfied, 05 Satisfied, 06 Chart 1 Benefits of freer trade recognized by most Americans and Europeans Majorities of Americans and Europeans appreciate the benefits of freer trade. Seventy-eight percent of Americans and 82% of Europeans believe that freer trade enables their countries businesses to access new markets for national products, while 78% of Americans and 76% of Europeans believe that freer trade leads to lower prices and more product choices for consumers. Seventy-one percent of Americans and 72% of Europeans believe freer trade makes the world more stable by putting people from different countries in contact with each other. French and American respondents decidedly more concerned about opening markets More than other nationalities surveyed, respondents in France and the United States believe that trade barriers should be kept because they protect businesses, even if that means foregoing faster economic growth (see chart 3). They are less willing to expose their businesses to risk from freer trade and are more willing to accept slower growth that comes with keeping trade barriers. British, Italian, Polish, and Slovak respondents are divided on this question. But, compared to their American and French counterparts, more of them believe trade barriers should be lowered to ensure faster economic growth, even if that might put their businesses at risk. Just over half of German respondents wish to keep trade barriers to protect businesses, although a sizeable minority wishes to remove them to gain faster growth. Compared to other nationalities, French and American respondents expressed the greatest opposition to freer trade. (Note: this question asks not about international trade, but about moving toward freer trade that is making it easier to buy and sell products internationally by reducing tariffs and other barriers to trade. ) More than half of the French (55%) and nearly a third of the American (31%) respondents do not favor freer trade. In all other countries surveyed, 73% or more 6 Perspectives on Trade and Poverty Reduction

8 GERMAN, ITALIAN, AND POLISH RESPONDENTS ARE DRIVING INCREASED EUROPEAN SUPPORT FOR INTERNATIONAL TRADE 90 age of population more favorable toward international trade compared to last year Germany Italy UK Europe US Poland France Slovakia NA Favorable, 05 Favorable, 06 Chart 2 AMERICAN AND FRENCH RESPONDENTS ARE MORE WILLING TO KEEP TRADE BARRIERS WHEN BUSINESSES ARE AT RISK EVEN IF IT MEANS FOREGOING FASTER ECONOMIC GROWTH FROM TRADE LIBERALIZATION France US Germany UK Italy Poland Slovakia Trade barriers should be kept because they protect your country's businesses even if it might result in slower economic growth Trade barriers should be removed as this will ensure faster economic growth even if this results in some risks for your country's businesses Chart 3 Key Findings Report 06 7

9 ONLY BRITISH, POLISH, AND SLOVAK RESPONDENTS EXPRESS MORE SUPPORT FOR TRADE WHEN IT INVOLVES LOWERING TARIFFS AND OTHER TRADE BARRIERS UK Poland Slovakia France US Italy Germany Favor freer trade Favor international trade Chart 4 respondents favor freer trade. Respondents in France and the United States also expressed the greatest concerns over trade-related job losses: 59% of American and 58% of French respondents agree that freer trade costs more jobs than it creates. They, along with those in the United Kingdom, are the most anxious about environmental and labor standards putting them at a disadvantage when engaging in freer trade: 63% of American and 69% of French respondents agree on this point. They also showed strong reservations toward foreign direct investment and, along with the German respondents, expressed the greatest concerns over job losses from FDI (see below). U.K., Poland, and Slovakia are the top free traders When comparing views on international trade with views on freer trade, we see some changing perspectives (see chart 4). The distinction between these two concepts is that freer trade is defined as more trade liberalization, while international trade refers to global commerce as it currently exists. Some insights emerge when looking at the differences in attitudes toward international trade and freer trade. For instance, British, Polish, and Slovak respondents support for trade actually rose when it involves lowering tariffs and other barriers to trade. German and Italian respondents were most enthusiastic about international trade compared to other countries, but when asked about lowering tariffs, support wanes. Americans show solid support for international trade roughly in line with overall European levels of support. But, Americans along with their French counterparts expressed lower levels of support for opening their markets further to global trade. While the gap between support for international trade and freer trade in the United States is modest, it is significantly wider in France. Perspectives on Trade and Poverty Reduction

10 American and European Views on Agriculture In July 06, the Doha Round of World Trade Organization talks was suspended, largely because of a failure of countries to agree on agriculture issues. Combined, the United States and Europe account for 67% of worldwide domestic farm support. Large subsidies and steep tariffs make agriculture one of the most distorted sectors in the global trade system. About 75% of the world s poor live in rural areas, most depend on farming for their incomes, and all face these high barriers to competing in the global economy. Agriculture is where trade and development most clearly intersect. Europeans more concerned over impact of trade on food quality and variety When asked about how freer trade impacts food quality and variety, Americans and those from continental Western Europe express quite different views (see chart 5). More than half of Western continental Europeans believe that freer trade reduces food quality and variety because small and specialized producers are unable to compete with large multinational companies. French, German, and Italian respondents are most concerned about the potentially negative impact of freer trade on their food systems. Polish and Slovak respondents are roughly divided on this issue, while the Americans and British are the only countries where more respondents believe that freer trade has a positive rather than a negative impact on food quality and variety. Many of the respondents from the same European countries that are worried about food quality and variety are also worried about the prospect of food import dependency: Italy (58%), Slovakia and France (57%), Germany (55%), and Poland (52%). Again, both American and British respondents were somewhat less worried about food security issues, with the British divided on this question and Americans having just over half (54%) who were not worried about food import dependency. More Europeans than Americans support farm subsidy limits More Europeans than Americans believe that there should be a limit on farm subsidies (see chart 6). French, Italian, German, and British respondents, more than any other nationalities, oppose or wish to limit subsidy payments. Nearly a third of British and German and a quarter of French respondents oppose farm subsidies entirely. Along with Polish and Slovak respondents, Americans were the strongest supporters of unlimited farm subsidy payments, with one in five Americans indicating that no such restrictions should be placed on how much an individual farm may receive in subsidy. However, 23% of Americans do oppose farm subsidies outright. No consensus on trade in biofuels On the one hand, supporting domestic farmers by limiting biofuel imports means accepting higher consumer prices, but on the other hand, opening domestic markets can benefit consumers by lowering prices. When faced with this tradeoff, Americans and Europeans are equally divided, with no majority favoring either a free market or domestic protection approach to trade in biofuels. Forty-five percent of Americans and 44% of Europeans believe that the government should limit imports of biofuels to help domestic farmers, even if this means higher prices for consumers. Fortysix percent of Americans and 47% of Europeans believe that the government should allow unlimited imports of biofuels because this will lead to lower prices for consumers, even if it puts domestic farmers at a disadvantage. Key Findings Report 06 9

11 FRENCH, GERMAN, AND ITALIAN RESPONDENTS HAVE THE GRAVEST CONCERNS OVER FOOD QUALITY AND VARIETY WHEN TRADING IN AGRICULTURE PRODUCTS France Germany Italy Europe Slovakia Poland US UK Freer trade reduces food quality and variety as small and specialist producers cannot compete with large multinational companies Freer trade increases food quality and variety as producers from all over the world can sell their goods internationally Chart MOST EUROPEANS BELIEVE THAT THERE SHOULD BE A LIMIT ON AGRICULTURE SUBSIDY PAYMENTS AND NEARLY A QUARTER OF THEM OPPOSE FARM SUBSIDIES ENTIRELY Don t know/refused There should not be a limit on how much subsidy an individual farm may receive I am not in favor of subsidy payments being made to farms There should be a limit of, say, "X" a year on the amount an individual farm may receive* 0 France Germany Italy Europe UK US Poland Slovakia * X = US: $2,000/Europe: 0,000 Euros/UK: 0,000 Pounds Chart 6 Perspectives on Trade and Poverty Reduction

12 Section Two: Poverty and Development Four out of every five development assistance dollars come from either the United States or Europe. The United States and the European Union account for about two fifths of global trade. But, what are American and European views on aid to and trade with poor countries? What are the leading motivations for giving aid? How do Americans and Europeans feel about helping poor countries trade? Are they seen as new trade partners or new competitors in the global economy? Support for development assistance remains firm, but German support fades Again this year, a solid majority of Americans and Europeans have a favorable view of development assistance. British, Polish, and American respondents expressed higher levels of support for aid but still trail their Italian and French counterparts, who are again the leading supporters of development assistance this year (see chart 7). Uniquely, those in Germany expressed lower levels of support for aid 40% oppose it. Germans also showed the highest opposition to poor countries setting their own priorities when spending aid funds, with about 45% opposing this. Agreement that alleviating poverty and illness are most important reasons for giving aid When asking about the most important priorities for giving aid to poor countries, Americans and Europeans place strong emphasis on alleviating poverty and tackling health issues like HIV/AIDS (see chart 8). Half or more of Americans and Europeans indicated that these ITALIANS AND FRENCH EXPRESS THE STRONGEST LEVELS OF SUPPORT FOR DEVELOPMENT ASSISTANCE, WHILE GERMANS SHOW LESS SUPPORT COMPARED TO Italy France UK Europe Poland US Slovakia Germany NA Favorable, 05 Favorable, 06 Chart 7 Key Findings Report 06 11

13 AMERICANS AND EUROPEANS AGREE THAT ALLEVIATING POVERTY AND ILLNESS ARE THE MOST IMPORTANT REASONS FOR GIVING AID Alleviating poverty Fighting health problems like AIDS Encouraging democracy 38 Helping poor countries trade Helping with natural disaster relief Preventing breeding grounds for terrorism Contributing to global stability Gaining political allies Europe United States Chart 8 were important reasons for giving aid to poor countries. Americans and Europeans assigned an equal level of importance to aid that helps with disaster relief with roughly one in three acknowledging the importance of this kind of aid. When asking about encouraging democracy, preventing breeding grounds for terrorism, and contributing to global stability as important reasons for giving aid, American and European support ranged from 27% to 38%. Differences in aid priorities reveal differing global outlooks between Americans and Europeans Americans are a little less focused on poverty alleviation, health issues, democracy promotion, and helping poor countries trade; instead, they favor aid priorities that support geopolitical goals. Poverty alleviation and health gained the most traction among American and European aid priorities, but Europeans assigned somewhat higher levels of importance to these issues than did Americans. Only % of Americans support aid that promotes democracy, while 38% of Europeans said the same. Only 18% of Americans support aid that helps poor countries trade compared to 34% of Europeans. All European countries showed more support for trade-facilitation aid: Italy (41%), the United Kingdom (38%), Slovakia (33%), France (32%), Germany (%), and Poland (28%). Compared to Europeans, Americans place more stress on issues like terrorism, global stability, and gaining allies as top reasons for giving development assistance. 12 Perspectives on Trade and Poverty Reduction

14 MOST AMERICANS AND EUROPEANS FAVOR DEVELOPMENT ASSISTANCE AND PROMOTING INTERNATIONAL TRADE WITH POOR COUNTRIES, HOWEVER THEY DIFFER ON WHETHER POOR COUNTRIES BENEFIT FROM FREER TRADE Do you have a favorable opinion of providing development assistance to poor countries? Do you have a favorable opinion of promoting international trade with poor countries? Do you think that people in poor countries will benefit from freer international trade? Europe United States Chart 9 Aid for trade seen as creating trading partners, not competitors A majority of Americans and Europeans are keen on promoting international trade with poor countries, a level of approval that is close to the level of transatlantic support for development assistance (see chart 9). More Americans and Europeans believe aid for trade will help their own economies than believe that it will hurt their economies (see chart ). However, as mentioned above, Americans are more focused on geopolitical implications of aid and are less keen on helping poor countries trade. When asked if people in poor countries benefit from freer trade, Europeans are more skeptical than Americans (see chart 9) MOST AMERICANS AND EUROPEANS ARE CONFIDENT THAT AID FOR TRADE WILL HELP RATHER THAN HURT THEIR OWN ECONOMIES US Europe Providing aid that helps poor countries trade will help our country s businesses as more people in these countries are able to buy our products Providing aid that helps poor countries trade will hurt our country s businesses because these countries will become competitors in the global economy Chart Key Findings Report 06 13

15 Section Three: Foreign Policy On both sides of the Atlantic, policymakers face an increasingly complex array of foreign policy challenges. Many are exploring ways to more effectively leverage aid and trade to support wider foreign policy objectives, like global stability, prosperity, and democracy. In recent years many countries in Europe and the United States have begun to reassess the national interest implications of foreign direct investment. Questions over reliable energy supplies and national security have led to heightened concerns over import dependency, which are influencing the wider foreign policy agenda both in the United States and in Europe. Democracy a key determinant of aid support A key factor influencing the favorability of aid to poor countries is whether or not the recipient country is a democracy (see chart 11). Americans and Europeans are more receptive to providing development assistance to democracies and less so for non-democracies. Compared to last year, support for aid to democracies rose for both Americans and Europeans with nearly 90% viewing this kind of aid favorably. Support for aid to poor countries with non-democratic forms of government albeit lower than support for aid to democracies has gained traction in the United States. 3 WHETHER THE AID RECIPIENT COUNTRY IS A DEMOCRACY OR NOT IS AN IMPORTANT FACTOR IN DETERMINING SUPPORT FOR DEVELOPMENT ASSISTANCE American support for development assistance to European support for development assistance to Poor countries with democratic governments Poor countries Poor countries with nondemocratic governments Favorable, 06 Favorable, 05 Chart 11 3 Although only 58% of German respondents support development assistance to poor countries, 88% of them support it when the recipient country is a democracy. 14 Perspectives on Trade and Poverty Reduction

16 Americans and Europeans generally agree on criteria for setting levels of aid Americans and Europeans agree equally that the level of aid to poor countries should be linked to the efforts these countries make to fight poverty, combat terrorism, and open their markets to international trade. Although the most important reasons for giving aid in some cases differ between Americans and Europeans, they tend to agree that certain policies by recipient countries should be assessed to determine levels of aid; both expressed roughly the same levels of support for aid amounts being tied to recipient country efforts to fight poverty (almost 90%), fight terrorism (73%), and open markets to trade (almost %). Seventy percent of Americans agree that level of aid should be linked to democracypromotion efforts compared to 80% of Europeans who feel the same. Europeans relatively stronger support for aid levels being linked to democracy-promotion efforts is driven by three countries: Italy (86%), France (84%), and Germany (84%). Positive link between freer trade and democratic institutions is wellrecognized on both sides of the Atlantic A substantial number of Americans and Europeans believe that freer trade bolsters support for democratic institutions in countries with weak political and economic institutions (see chart 12). Only the French respondents dissented from this view. Sizable numbers of Poles and Slovaks indicated don t know responses, but of those that answered this question, more believe that freer trade strengthens support for democratic institutions than those who believe it weakens them. Overall, more Americans than Europeans see a positive link between freer trade and democracy. However, German and British respondents are about as confident as their American counterparts that trade liberalization supports democratic institutions. A MAJORITY OF AMERICANS AND EUROPEANS BELIEVE THAT FREER TRADE BOLSTERS DEMOCRACY Germany UK US Italy Europe Poland Slovakia France Freer trade strengthens support for democratic institutions in developing countries Freer trade weakens support for democratic institutions in developing countries Chart 12 Key Findings Report 06 15

17 Confidence in the global benefits of freer trade remains high, but erodes in U.S., U.K., Germany, and Poland A majority of Americans and Europeans believe that freer trade makes the world more stable by putting people from different countries in contact with each other (71% and 72%, respectively). However, this year respondents in four out of six countries expressed less support for the view that freer trade adds to global stability: the United Kingdom (90% to 79%), Poland (82% to 76%), Germany (83% to 74%), and the United States (79% to 71%). French views remained roughly constant, with fifty-eight percent agreeing that freer trade makes the world more stable. Italian respondents are more confident 75% believe freer trade contributes to global stability compared to just half of the population last year. When asking whether freer trade helps to increase prosperity at home and abroad, there is a similar downward trend between 05 and 06. British (90% to 77%), American (79% to 68%), Polish (74% to 61%), and German (73% to 59%) respondents revealed lower levels of agreement with the idea that freer trade supports prosperity at home and abroad. Again, Italy was the exception, showing a notable rise (45% to %) in the belief that freer trade leads to greater prosperity. France and U.S. show strong reservations toward FDI Majorities in France (61%) and the United States (55%) have a favorable opinion of foreign direct investment (FDI). Sixty-two percent of French and 57% of American respondents agree that FDI helps create jobs. However, more than a third of the French (36%) AMERICANS AND EUROPEANS ARE MOST CONCERNED ABOUT OIL AND GAS IMPORT DEPENDENCY Oil and gas? Cars and other manufactured goods? Food? Computers, electronics and other high technology goods? Clothing and textiles? United States Europe Chart Perspectives on Trade and Poverty Reduction

18 and American (38%) respondents have an unfavorable opinion of FDI, the highest levels of opposition recorded along with the Italian respondents (34%). They, along with % of German respondents, are also the most concerned about job losses from FDI, with about one in three French and American respondents indicating that foreign investments result in job losses. This is consistent with their more skeptical view on freer trade. Oil and gas leading sources of foreign import dependency fears Given concerns over high energy prices, political instability in the Middle East, and growing uncertainty over the future of energy supplies from Russia, Americans and Europeans are most concerned about oil and gas import dependency than about other kinds of imports like food, textiles, manufacturing, and high-tech goods (see chart 13). After oil and gas, Americans are most worried about import dependency in the manufacturing and high-tech sectors, while Europeans are more worried about import dependency in the food and textile sectors. Only 52% of Polish and 47% of Slovak respondents are worried about foreign dependency on oil and gas imports compared to 81% for all respondents. France and Italy most apprehensive about clothing and textile import dependency Americans and Europeans reveal similar levels of anxiety over import dependency in the clothing and textile sectors. The WTO Agreement on Textiles and Clothing ended on January 1, 05. As a result, U.S. and European textile imports from China and Southeast Asia rose rapidly. France and Italy are among Europe s largest clothing and textile producers and more than any other respondents they are worried about import dependency in this sector, with half of Italian and 61% of French respondents concerned. China considered more a threat than an opportunity Fifty-nine percent of both Americans and Europeans believe that the Chinese economy represents a threat because low-cost Chinese products compete with their countries products and their companies can relocate to China (see chart 14). Respondents from several European countries expressed even higher levels of apprehension over the impact of China on their economies two from Western Europe (France and Italy) and two from Eastern European (Poland and Slovakia). However, German and British respondents are less worried, with 43% and 48%, respectively, seeing China more as an opportunity (through exports, low-cost imports, and making foreign investments in China, for example) than a threat. The United Kingdom was the only country where more people viewed China as an opportunity than those who viewed it as a threat. Key Findings Report 06 17

19 ASIDE FROM THE UNITED KINGDOM, MOST AMERICANS AND EUROPEANS FEEL THREATENED BY CHINA France Poland Italy Slovakia Europe US Germany UK The Chinese economy represents a threat because low-cost Chinese products compete with our country s products and our country s companies can relocate to China The Chinese economy represents an opportunity because we can sell more of our country s products in China, purchase low cost Chinese goods, and our country s companies can invest in China Chart Perspectives on Trade and Poverty Reduction

20 Section Four: Jobs and Competitiveness There is much discussion in the United States and Europe about how governments can generate jobs and support economic growth. Americans and Europeans tend to agree on how helpful certain education, technology, tax, regulation, trade, and investment policies will be in improving competitiveness. Most Americans and Europeans believe FDI creates jobs. While majorities of Americans and Europeans believe that education and job training is critical to competing in the global economy, not all governments are viewed as doing this well when helping workers displaced by trade. American and French respondents show concern over impact of open markets on jobs Most Americans and Europeans believe that FDI creates jobs. Among those surveyed, Slovak and Polish respondents are the most confident that FDI will lead to more jobs, with 79% and %, respectively, agreeing that it results in job creation. Sixty-six percent and 65%, respectively, of German and British respondents said the same. Majorities in France (62%), Italy (61%), and the United States (57%) also indicated that FDI generates jobs in their countries. But, American and French respondents are among the most concerned about the negative impact of trade and FDI on jobs (see chart 15). United States and Europe mostly favor pro-growth policies, but acknowledge skills gap When thinking about how to compete in the global economy, Americans and Europeans prioritize a number of policies similarly: investing in education, job training, and new technologies, reducing taxes and regulation for businesses, encouraging FDI, lowering barriers to trade, and making it easier to hire and fire workers ranked sequentially in terms of how these policies are perceived in helping to spur growth (see chart 16). There is a notable gap between views on developing new skills and new technologies, on the one hand, and views on tax, regulation, trade, investment, and labor policies on the other. A majority of Americans and Europeans recognize the potential competitive gains from lowering taxes and regulation on businesses, lowering barriers to trade, and encouraging foreign investment. American and French respondents differ from other countries on tools for competing in global economy Compared to other respondents, American and French respondents expressed more apprehension over opening their markets to trade and investment. But, when asking about trade liberalization and attracting FDI in order to compete in the global economy, they part ways. American support for open trade and investment aimed at helping the U.S. economy compete was roughly in line with European views on these policies. Sixty-four percent of Americans and 63% of Europeans believe that further lowering barriers to trade will help their economies compete, while 72% of Americans and 68% of Europeans believe that encouraging FDI will do the same. Among all respondents, French respondents showed the least support for lowering barriers to trade (52%) and encouraging FDI (62%) to help their economy grow. Key Findings Report 06 19

21 AMERICAN AND FRENCH RESPONDENTS ARE MOST CONCERNED ABOUT THE NEGATIVE IMPACT OF TRADE AND FDI ON JOBS Do you agree or disagree that freer trade costs more jobs than it creates (% agree)? Do foreign investments in your country result in job creation or losses (% Job losses)? US 59 France 35 France 58 US 32 Germany 51 Germany Slovakia Italy 28 Italy 48 UK 24 UK 44 Poland 19 Poland 39 Slovakia 12 Chart AMERICANS AND EUROPEANS BY AND LARGE HOLD SIMILAR VIEWS ON HOW GOVERNMENTS CAN HELP THEM COMPETE Investing in education and job training Investing in new technologies Reducing taxes and regulation for businesses 79 Encouraging foreign investment in your country Further lowering barriers to international trade Making it easier for companies to hire and fire workers United States Europe Chart 16 Perspectives on Trade and Poverty Reduction

22 Europeans more keen to deregulate businesses, but both less enthusiastic about looser labor policy While % of Americans see lower taxes and regulation on businesses as helpful to competitiveness, respondents in all European countries gave more support to these kinds of initiatives: Italy (84%), Poland (83%), Slovakia and the United Kingdom (79%), France (76%), and Germany (74%). Compared to other policies, both Americans and Europeans show relatively lower levels of support for making it easier for businesses to hire and fire workers to increase competitiveness. More American (53%) and Polish (47%) respondents believe more labor market flexibility would be helpful than those who do not (39% and 34% respectively). Sixty-two percent in Germany more than any other nationality are more favorable toward labor market reforms aimed at supporting economic growth. However, most French (64%), Italian (60%), and Slovak (51%) respondents do not see these labor market reforms as helpful to their competitiveness. In U.S., France, Germany, respondents believe companies should help tradedisplaced workers When asked about who should have the primary responsibility for helping workers who lose their job as a result of trade, for example, through retraining programs or financial assistance, half or more of Polish, Italian, and British respondents indicated that the government should be responsible (see chart 17). However, in France, Germany, and the United States, more people believe that the company that lays off the worker should be responsible. Only American respondents (17%) MOST AMERICAN, FRENCH, AND GERMAN RESPONDENTS BELIEVE THAT COMPANIES SHOULD BE PRIMARILY RESPONSIBLE FOR HELPING WORKERS IMPACTED BY TRADE The government The company that lays off the workers Poland Italy UK Slovakia France Germany US (Europe) Trade Unions or labor organizations; (US) Labor unions and labor organizations. Workers themselves Don t know/refuse/ Other Charities and NGOs Chart 17 Key Findings Report 06 21

23 WHILE ALL COUNTRIES STRONGLY SUPPORT PUBLIC INVESTMENTS IN EDUCATION AND JOB RETRAINING, ONLY SOME SEE THEIR GOVERNMENTS DOING THIS WELL Italy France Slovakia Germany UK US Poland Good job Bad job Chart 18 indicated any notable acceptance of workers themselves being primarily responsible. Very few Americans and Europeans perceive unions and labor organizations as bearing primary responsibility for helping these workers adjust. Italian, French, and Slovak respondents perceive governments as meeting education and retraining expectations Although public investments in education and job training are highly valued, not all governments are seen as doing this well. While most Americans see their government doing this badly, Europeans are divided on how well their governments are helping workers adjust to new competition from freer trade. A majority of French and Slovak respondents see their governments as doing a good job with helping them adjust to new competition resulting from trade agreements, and 87% of their Italian counterparts feel the same (see chart 18). However, only a third in Germany see their government as doing a good job in assisting workers adjust to new trade competition, and most see their government as doing a bad job. Similarly, most British, American, and Polish respondents believe their government is doing a bad job of helping workers with education and retraining to adapt to new economic conditions. 22 Perspectives on Trade and Poverty Reduction

24 Section Five: Migration Immigrants represent a large and growing share of the labor force in most developed countries. In receiving countries, there are concerns over the negative impact on wages and social costs. Policymakers in developed countries also recognize the need to address labor shortages resulting from aging populations, and many see the advantages in recruiting global talent to remain competitive. Immigrant remittances flow back to home countries, helping to cover critical social costs like health and education but also contributing to investments in businesses. Immigration seen as threat to unskilled workers and public finances Americans and Europeans perceive unskilled-worker wages to be more threatened by immigration than skilled-worker wages. This is true for all countries, but the extent to which countries believe that there is such an impact on worker wages overall varies (see chart 19). Half or more of Polish, German, and American respondents agree that immigration negatively impacts both unskilled- and skilled-worker wages. Fifty-four percent of Italian and 39% of French respondents believe that unskilled-worker wages are threatened by immigration, but only 32% and 27% from those respective countries believe this is true for skilled workers. About half of Americans (52%) and 68% of Europeans believe that immigrant workers are often unemployed and a burden on social services. In every European country, respondents showed more concern over these social costs than Americans. FOR ALL COUNTRIES, IMMIGRATION THREATENS UNSKILLED-WORKER WAGES MORE THAN IT DOES SKILLED-WORKER WAGES Poland Germany US Slovakia Europe UK Italy France Unskilled workers Skilled workers Chart 19 Key Findings Report 06 23

25 A MAJORITY OF AMERICANS AND EUROPEANS RECOGNIZE THE ENTREPRENEURIAL AND ECONOMIC BENEFITS OF IMMIGRATION US UK Italy Germany Europe France 53 Poland Slovakia Immigrant workers create new businesses that add value to the economy Immigrant workers contribute to the success of industries like science, medicine, and technology Chart Most Americans and Europeans recognize entrepreneurial and wider economic benefits of immigration Most Americans and Europeans believe that immigrant workers create new businesses that add value to the economy and contribute to the success of industries like science, medicine, and technology (chart ). British respondents are the most convinced that immigrant workers enhance their economies in these ways. More than other nationalities, British and German respondents believe that immigrant workers support their advanced industries, while those in the U.S. and U.K. are the most convinced that they add to their country s entrepreneurial base. 24 Perspectives on Trade and Poverty Reduction

26 Conclusion As the world grows more economically interdependent, the dual challenges of encouraging growth and creating jobs at home while also addressing foreign policy goals like supporting global stability, democracy, and reducing poverty abroad have come into sharp relief. Both Americans and Europeans show a variety of views on key economic issues in this year s Perspectives on Trade and Poverty Reduction survey, which will help to inform ongoing policy discussions aimed at bridging domestic and global priorities. Most Americans and Europeans are dissatisfied with the direction of their economies, although nearly all countries showed lower levels of dissatisfaction this year. On average, Americans and Europeans have more favorable views on globalization, the WTO, and international trade. However, when asked about their views on freer trade (lowering tariffs and other trade barriers) and risks to business that may result from such policies, most Americans and Europeans surveyed are more cautious about trade. American and French respondents expressed strong concerns over trade-related job losses and were among the most apprehensive about FDI. More Americans and Europeans view China as an economic threat than an opportunity. For the past two years, Americans and Europeans have shown robust support for development assistance, and democracy continues to play a critical role in influencing this support. Majorities of respondents from the United States and Europe believe that freer trade supports democracy in states that have weak political and economic institutions. The belief that FDI creates jobs is relatively high, with sympathetic majorities on both sides of the Atlantic. However, compared to Europeans, fewer Americans appreciate the employment benefits of FDI. Europeans more than Americans view pro-business tax and regulation policies as helping their countries compete in the global economy. Both Americans and Europeans are less supportive of labor market reforms compared to other policies aimed at increasing competitiveness. Most Americans and Europeans take the view that immigrant workers create new businesses that add value to the economy and contribute to the success of industries like science, medicine, and technology. But, they also perceive unskilled-worker wages to be more threatened by immigration than skilled-worker wages. About half of Americans and a majority of Europeans believe that immigrant workers are often unemployed and a burden on social services. Key Findings Report 06 25

27 Methodology This year s Perspectives on Trade and Poverty Reduction survey consists of seven countries: France, Germany, Italy, Poland, Slovakia, the United Kingdom, and the United States. These countries represent a significant share of global economic and aid activity. Surveyed countries account for a third of exports and imports, 40% of foreign direct investment inflows and outflows, and 60% of overseas development assistance worldwide. They are also a representative sample of overall transatlantic trade, FDI, and aid flows. TNS Opinion was commissioned to conduct the survey in a total of seven countries (France, Germany, Italy, Poland, Slovakia, the United Kingdom and the United States). Computer Assisted Telephone Interviews was used in all countries except in Poland and Slovakia where interviews were conducted face-to-face due to the lower phone penetration rates. In all countries a random sample of approximately 1,000 men and women, 18 years of age and older, were interviewed. Interviews were conducted between 5 September 06 and 25 September 06. For results based on the total national sample in each of the seven countries surveyed, one can say with 95% confidence that the margin of error attributable to sampling and other random effects is plus or minus 3.1 percentage points and for results based on the total European sample, the margin of error is plus or minus 1.3 percentage points. The average response rate for the seven countries surveyed was %. SURVEY COUNTRIES SHARES OF TRADE, FDI, AND AID Trade (Exports plus Imports) Rest of World 66% Foreign Direct Investment (Inflows and Outflows) Rest of World 60% Survey 34% Survey 40% Overseas Development Assistance Rest of World 40% Survey 60% Source: WTO, UNCTAD, OECD Chart Perspectives on Trade and Poverty Reduction