Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Treasury Secretary Geitner Talks International Trade – Sort Of

In prepared remarks for a speech on April 22nd at the Economic Club of Washington, Secretary Geitner made comments covered in the general press as touting international trade, but more notable for what he did not say about international trade.  His first point was: "[T]he world economy is going through the most severe crisis in generations.  We each face somewhat different challenges and thus are not all in the same boat.  But we are all in the same storm."  "...[I]t is a global crisis... in the sense that the damage has spread widely. It is global in the sense that the challenges we see in the United States today are common to many countries around the world."  "Only 17 of the 182 economies followed by the [International Monetary Fund] are expected to grow faster this year than they did last year. Some 71--including 30 of the world's 34 advanced economies--are expected to shrink. The collapse of world trade [ ] will likely be the worst since the end of World War II."  "The rest of the world needs the U.S. economy and financial system to recover in order for it to revive. We remain at the center of global economic activity with financial and trade ties to every region of the globe."  "Just as importantly, we need the rest of the world to recover if we are to prosper again here at home. Before the crisis, U.S. exports were among our economy's fastest-growing sectors, accounting for more than 6 million American jobs, or about 5% of total private sector employment in the U.S.  Now, they are one of its fastest-shrinking."  "...[T]he community of nations must work together--and that work has already begun--to revive economies around the world and to lay the groundwork for a new, more stable and more sustainable pattern of growth in the future."  "This crisis is abrupt correction of financial excesses that has overwhelmed economies' and markets' self-correcting mechanisms, and so can only be ended by extraordinary policy responses."

Geitner went on to identify what he calls the"three critical imperatives of the crisis:

First, it requires very strong actions to increase demand through fiscal actions--investments and tax incentives--alongside the actions undertaken by central banks to reduce interest rates.

Second, it requires a sustained effort to repair the financial system, so that we get credit flowing again to those who can use it most effectively. 

Third, it requires the mobilization of financial resources to help directly address the challenges facing emerging and developing economies. "

Geitner then pointed out that other steps need to be taken to "support trade and to mobilize resources for emerging markets and developing economies." He continued by talking about the monies being infused into the world economy by the G-20 members, along with funds being raised by the IMF up to $100 billion, which are expected to lead to a New Arrangement to Borrow, an IMF effort intended as a back-up mechanism to provide the Fund with supplementary lending resources.

Having mentioned trade, those of us engaged in international trade anticipated he would discuss more than economic viability and long term planning to minimize future crises and reform the financial regulatory system in tandem with the world. Alas, that did not happen. While the topics he did discuss are unquestionably critical to the long term financial health of the U.S. and the rest of the world, not one word was said about international trade except that U.S. exports must recover. Admittedly Mr. Geitner's history and experience are with the financial markets, but surely someone on his staff knows enough about international trade for a sentence or two to be included mentioning lowering trade barriers and opening markets across the globe. For those of us of a certain age, we recall the original "Roller Ball" movie and its premise that governments no longer exist; geographic regions of the world are run by companies/industries. While that scenario still seems light years away, it nonetheless remains important to the overall health of the world economy for trading to increase between nations. It is indeed regrettable the opportunity to make this point was lost by Mr. Geitner. Perhaps it was simply a function of his understandable focus on purely economic issues. Hopefully that lost opportunity will not happen again.

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