The Business Roundtable And Its Influence Upon The Essay, Research Paper

The Business Roundtable is one of the most powerful lobbying organizations within the United States to date. It is predominantly a Republican association with a focus on preserving economic interests of its member corporations, improving the standard of living, as little government interference as possible, and an overall stable and growing economy. The first step is to examine the creation of the Roundtable and why it was created in order to understand the role it has come to play. The next consideration is how the organization is structured, its effectiveness, and the methods employed in order to influence policy outcome. Finally, a study of the Business Roundtable s attempt at influencing the outcome of two pieces of legislation: the granting of Most Favored Nation status for China and the Fast Track legislation forwarded by Clinton. The former piece of legislation was passed while the latter was voted down. The attempt here is to see what effect the Business Roundtable, through the use of its International Trade and Investment Task Force, had in the outcome of each piece of legislation.The Business Roundtable is an association of chief executive officers from roughly 220 Fortune 500 corporations in the United States. The organization was established in 1972 through the merger of the March Group, Construction Users Anti-inflation Roundtable, and the Labor Law Study Committee. At the time, the business leaders concluded that it was necessary for the business sector to pursue an active and effective role in the formation of public policy. With this in mind, the Business Roundtable was formed to enable CEOs from different corporations to come together in a bipartisan manner to analyze specific issues affecting business and the economy and in turn present the government practical knowledge and positive suggestions for policy alternatives. In doing this, the Roundtable hoped the U.S. economy would become healthier and there would be less intrusion into the business sector by the government.The Roundtable still holds a similar objective, to promote policies that will lead to sustainable, non-inflationary, long-term growth in the U.S. economy. This objective is pursued out of the belief that it is only through such growth that American companies will be able to remain competitive around the world and thus improve the standard of living and provide jobs and technology for Americans. The principle strength of the Business Roundtable is the extent of the participation of the chief executive officers of it member companies. The basic belief of the members is that the interests of business closely parallel the interest of the American people. With this in mind, the Roundtable is very selective in the issues it pursues, usually only two per year. In pursuing certain issues the Business Roundtable divides into task forces with the chief executive officers directing research, supervising preparation of position papers, recommending policy, and lobbying Congress and the Administration. The Business Roundtable is an extremely elite organization whose members gain access by invitation only with the corporation itself as the member of the Roundtable and the CEO acting as the sole representative. One of the corporate CEOs is elected as the head of the Roundtable to a one-year term for up to two consecutive terms. There are also two to four co-chairs elected for the same terms. These officers, as well as chairs from each of the task forces, make up the Planning Committee. This committee is the executive committee and is responsible for strategy and guidance. The governing body of the Roundtable is the Policy Committee consisting of all the CEOs and is responsible for directing and monitoring membership, programs, issues, actions, and operation. The third tier of this pyramid is the eleven task forces of the Business Roundtable. Each of the task forces is headed by a CEO and has CEOs as its members. Every task force focuses on a specific issue or set of issues and conducts studies, develops policy recommendations, and lays out plans for action. Such plans of action include testifying before Congress, utilizing personal contacts with government leader, or a public relations campaign. The task forces are created or disbanded as issues arise and action is taken. There are currently eleven task forces: Construction Cost Effectiveness, Corporate Governance, Education, Environment, Federal Budget, Government Regulation, Health and Retirement, Human resources, Tort Policy, Taxation, and International Trade and Investment.At the bottom of the Roundtable s organizational structure is the supporting committee for each task force. Each supporting committee is primarily composed of staff supplied by the companies of each CEO. Secondary staff support comes from Washington representatives employed by the Roundtable itself. Occasionally, a task force will seek outside support and commission a study by professional experts in a field relating to the issue at hand.Because of the composition of the Business Roundtable, it has tremendous resources from which to draw upon. The primary source of funding comes from the member corporation contributions. Also, very little money has to be spent on staff due to the fact that each member provides its own. In fact, the Business Roundtable itself only has eighteen staff members on its payroll. Additional funding can be obtained from the member companies if an extremely important and heated issue arises. The Business Roundtable is one of the nation s most effective lobbying organizations due to its extremely deep pockets and elite membership. In addition to the elite membership, these corporations also employ roughly 10 million people. The Roundtable also does not have to contribute heavily to candidates because each of the member corporations also has a Political Action Committee (PAC) which in total has contributed $92 million in the past eleven years. During the 1996 election-cycle the organization only contributed $1250. In trying to influence policy outcome the Business Roundtable employs a variety of methods such as award programs, coalition forming, congressional testimony, films and videos, legislative and regulatory monitoring, lobbying, media outreach, research, and influencing public opinion. As an example of the ability of the Roundtable to utilize its resources to influence policy outcomes, in 1997 the organization began the first installment of a three-year plan including a multimillion-dollar advertising blitz. This first step is designed to target twelve districts, budgeting $65,500-$83,500 per district from April through December in order to influence policy outcome. In examining the use of the methods available to the Business Roundtable, particularly on two pieces of legislation, it is easy to see the power, mobility, and effectiveness of this organization. The Roundtable employs task forces to specialize in certain policy areas and increase the chances of influencing policy outcome. One such task force is the International Trade and Investment Task Force. This task force is responsible for developing positions on trade and investment issues to enhance the competitiveness of U.S. business in international markets. It is also beholden to implementing trade education programs to increase general awareness and understanding of the importance of trade to U.S. economic growth. This task force dealt with the piece of legislation which will be considered here. This piece of legislation, introduced on June 3, 1998, involved granting China the Most Favored Nation status. On July 22, 1998, the legislation was eventually accepted by the House. The goal here is to examine the steps pursued to renew the Most Favored Nation status for China and see what influence the Business Roundtable had in the outcome.In 1934, the United States extended Most Favored Nation (MFN) status to all of its trading partners as a matter of law and thus making it the norm in international trade. MFN is the ordinary tariff treatment the United States extends to virtually all nations. However, while nearly all countries are granted MFN status, not all of them are granted it unconditionally. The Trade Act of 1974, including the Jackson-Vanik amendment requires that the extension of MFN status to non-market economy countries be renewed annually. China is one of the few countries which still have to have their MFN status renewed annually. President Carter first granted MFN status to China in 1980 under the Trade Act and every President since has renewed it every year.The Business Roundtable is one of the biggest proponents of renewing MFN status for China year in and year out. In their statement concerning renewal the Roundtable says:The Business Roundtable believes it is critical that the United States continue to advance its national interests by supporting a stable, constructive bilateral relationship with China. Renewal of MFN is essential to achieving this objective. Extending to China the same normal tariff treatment the United States gives to virtually all but a handful of its trading partners will help further integrate China into the international community and promote U.S. interests throughout Asia. According to the Roundtable granting MFN to China maintains the operations of U.S. companies which in turn contributes to the expansion of economic, political, and social reform. MFN also creates an environment which encourages China to become a responsible member of the international community. Granting this status is also a key to the U.S. global commercial strategy which also sustains the hundreds of thousands of jobs created by U.S. exports. The final key point that the Roundtable makes is that the continued granting of MFN to China will help continue access into the growing economy which is expecting to invest $750 billion over the next decade for new infrastructure projects. Other main arguments that the Business Roundtable puts forth help to convince of the necessity of granting MFN status to China. First of all, by revoking China s MFN status the U.S. would nearly eliminate any possibility of cooperation on many issues such as human rights, market access, freedom of religion, and many other areas where some amount of progress has been made. By continuing to grant this status to China since 1980, U.S. exports have over tripled (accounting for nearly $14 billion) and made China our fourth largest trading partner. Revoking MFN status would also lead to an tariff increase on imports from 6% to nearly 44% would cost American consumers roughly half a billion dollars for certain goods. The debate on whether or not to grant China MFN status officially began on June 3, 1998 when President Clinton released his message to the Congress transmitting a Waiver on Most Favored Nation Status for China which stated:

I hereby transmit the document referred to in subsection 402(d)(1) of the Trade Act of 1974, as amended, with respect to the continuation of a waiver of application of subsections(a) and (b) of section 402 of the Act to the People s Republic of China. This document constitutes my recommendation to continue in effect this waiver for a further 12-month period and includes my determination that continuation of the waiver currently in effect for the People s Republic of China will substantially promote the objectives of the section of 402 of the Act, and my reasons for such determinations. According to the provisions of this act, the President is required to submit a recommendation by no later than June 3 and the status remains in effect from July 3 until July 2 the following year. However, the waiver authority will remain in effect unless it is disapproved by Congress within 60 calendar days after its expiration. At 10:30 a.m. the following day, Chairman of the Subcommittee on Trade of the Committee on Ways and Means, Congressman Philip Crane, announced that a committee meeting would be held on June 17, 1998. The purpose of the meeting would be to consider the overall effects of either revoking or renewing MFN status for China. The Business Roundtable did not even wait for the announcing of a committee meeting to come out in support of the President s initiative. Later that day, Joseph Gorman, Chairman and CEO of TRW INC. and Chairman of the Business Roundtable International Trade and Investment Task Force, issued a statement supporting Clinton and his initiative. In this he stated:The 200 Chief Executive Officers of the Business Roundtable applaud and support President Clinton s decision today to renew Most Favored Nation trading status China. We strongly urge the Congress to support renewal of MFN. Our nation and its businesses are part of a global in which China plays an undeniably important role. Extending MFN trading status to China offers American companies, services, products, workers, and farmers greater access to this all-important market. Even more importantly, providing MFN to China assures the U.S. of the opportunity to positively impact China s development of responsible economic, cultural, and security relationships. In fact, the Business Roundtable was joined almost immediately by supporters and opponents voicing their opinions surrounding the MFN debate.The day after Clinton s initiative was announced, political coalitions began to form. The President received letters in support of Most Favored Nation status from the Chamber of Commerce, the Business Roundtable, and three senior Republicans House Speaker Newt Gingrich, Ways and Means Chairman Bill Archer, and Rep. Philip Crane.On the day before the first committee meetings were to be held, the Business Round table began a trade education campaign which it called Go Trade: Compete to Win. This campaign was initiated through its International Trade and Investment Task Force with the goal of invigorating congressional support of pro-trade legislation. The campaign included grassroots activities such as media outreach on trade issues, education outreach with local high schools, meetings with members of Congress and local and state officials, and partnerships with local business and trade groups. Contact with the members of Congress, according to the mission statement, is based upon what position the member holds, how important trade is to the members district, and what degree of influence a member possesses.On June 17, the first of the committee meetings was held and testimony from witnesses were heard. Out of the eleven witnesses that were heard, five were either direct member of the Business Roundtable or were groups affiliated with the Roundtable. The first of the witnesses was Robert Kapp, President of the U.S.-China Business Council. Many of the members of the U.S.-China Business Council also belong to the Roundtable. The next witnesses were a member of the American Farm Bureau and a member of the Chamber of Commerce, which are not directly affiliated with the Roundtable but had formed a coalition for this issue. Other witness to appear before the committee were Richard Holwill of the Amway corporation, Clark Johnson of Pier 1 Imports, and Ernest Micek of Cargill, Incorporated. These last witnesses are all members of the Roundtable but did not appear in front of the committee in its name. This goes to show the power and the diversity of resources that the Roundtable has to utilize. The strategy employed by the Business Roundtable was not a complete frontal assault by the Roundtable. Instead it decided to use certain members to support MFN in the name of the Roundtable while sending other members to try to gain support as part of another organization or on its own as one of the nation s largest companies.The first point that was brought up was the antiquity of the Jackson-Vanick Amendment. Kapp stated that the annual renewal became outdated with the end of the Cold War. The Amendment was implemented primarily because of the Jewish emigration policies implemented by the USSR He argued that because the USSR no longer existed there was no further need for this Amendment and thus no need for annual renewal for MFN status for China.The American Farm Bureau also argued in favor of renewing MFN status for China. The first point raised here was that nearly one-third of agricultural production is dependent upon export markets with China representing the sixth largest market for American agriculture. It was further argued that by revoking MFN, tariffs could increase to over 45% and a rapidly growing market would be turned over to competitors.Richard Holwill of the Amway Corporation gave evidence of the necessity of maintaining MFN status. He stated that in 1997, U.S. exports equaled $12.8 billion supporting hundreds of thousands of jobs. According to theses statistics, these jobs tended to pay an 10% to 15% higher than most other domestic jobs. He went further stating that renewed trade relations had alone created tens of thousands of new jobs in the past few years. One of his final points was that over the next decade, China planned on investing $750 billion in infrastructure development. These investments would create an extremely valuable and prosperous market that the U.S. should not lose.As other witnesses came forward many of the same points were raised in favor of maintaining normal relations with China. It is important to note a couple final points. First, it was stated that from 1979 to 1997, China s real GDP grew at an average rate of 9.9% and that it is projected to grow at an average rate of 7% a year over the next two decades. This means that China s economy would double in size in 10 years. Other points that were raised were concerned with the improvements that could be made in establishing a free market and promoting democratization by renewing normal trade relations.The fact that so many Business Roundtable members and affiliates groups were called to testify before the House Ways and Means Subcommittee on Trade again attests to the potential influence the group holds. This case shows the legitimacy and respect bestowed upon the Roundtable due to the information the group provides. It also shows how this one group can influence policy outcome through testimony on important issues such as this where five out of the eleven witnesses were affiliated with the Roundtable.Another possible method which the Business Roundtable can employ in order to persuade policymakers was illustrated on June 24, 1998. On this day the Roundtable held a gathering consisting of top state officials and Roundtable members which was addressed by Al Gore. The purpose of this gathering was three-fold. The first purpose was to create an appearance of unity in support of granting MFN to China. The second purpose was that of a fundraiser in order to garner more money for lobbying efforts. The final purpose was to once again attempt to influence other policymakers to support Clinton s initiative.On June 26, 1998, The House Ways and Means Committee voted to once again renew Most Favored Nation status to China for yet another year. With this vote completed it was then sent to the full House to be voted on the following month. Those that voted in favor of this initiative all seemed to reiterate much of what the witnesses that testified before the committee presented to it. This once again seems to show the nature of the influence that the Roundtable holds. It is easy to assume that the outcome of this vote was influenced by the Roundtable seeing as a large proportion of the witnesses were affiliated with the group.The events of June 27, 1998, can be used to further demonstrate the capabilities of the Business Roundtable. Just one day after the House Ways and Means Committee completed it vote on granting MFN to China, members from the Business Roundtable, known as the “Gang of Six,” went forward with multimillion-dollar advertising blitz. This “small” group which consists of the American International Group Inc., the Boeing Co., General Electric Co., General Motors Corp., International Business Machines Corp., and Motorola Inc. began a $2 million advertising campaign which lasted up until the House vote . This advertising blitz was followed up by an open letter to Congress from former Presidents Bush, Carter, and Ford, as well as two dozen top policy makers, and 119 of the Roundtables CEO s. If a maneuver such as this does not carry some sort of political clout than nothing can.The vote on whether or not to renew MFN to China finally came before the House on July 22, 1998. The final tally was 169-264 in favor of renewing MFN to China. This vote, according to the Business Roundtable, is the key to a continued constructive engagement with China which will advance critical U.S. national security, foreign policy, and economic interests. Overall, this vote represents a complete success for the Business Roundtable in its attempt to influence policy outcome.By examining the methods employed by the Business Roundtable it becomes extremely clear that this group could single-handedly determine the outcome of certain pieces of legislation. The MFN example illustrates this so well because just about every method of possible influence was used by the Roundtable. The use of grassroots campaigns, media blitzes, witness testimony, membership pressure, use of elites, among many others shows that this group can really do it all. With as much power and influence as this one group has, it is no wonder that many people believe that big business dominates American politics.