Hard Choices

by Hillary Rodham Clinton

  “We must start with the most urgent task before us: realigning our economies in the wake of the global financial crisis,” I said. “This means pursuing a more balanced strategy for global economic growth.” Developed nations like the United States would need to build more at home and sell more abroad (which would create jobs and jump-start our recovery and help increase growth in the rest of the world), while rapidly developing countries in Asia and elsewhere that had accumulated large savings would need to buy more—and strengthen and update their financial and trade policies to ensure a more level economic playing field and greater stability in global markets.

  I acknowledged the challenges faced by developing economies that still had to lift hundreds of millions of people out of poverty. China often argued that this imperative outweighed any obligation to play by established international rules for business, labor, and human rights practices. But I countered that China and other emerging economies had benefited greatly from the international system the United States had helped create, including their membership in the World Trade Organization, and now they needed to take their share of responsibility for upholding it. Besides, that was actually the best way to ensure continued growth and prosperity and to help even more people climb out of poverty and into the middle class in developed and developing countries alike.

  After all, Malaysian manufacturers wanted access to markets overseas as much as American manufacturers did. Indian firms wanted fair treatment when they invested abroad, just as we did. Chinese artists wanted to protect their creations from piracy. Every society seeking to develop a strong research and technology sector needed intellectual property protections because, without them, innovation would entail higher risk and bring fewer rewards. And I explicitly rejected the idea that there could be one set of rules for the major industrialized economies like the United States and another for emerging markets like China. “Enough of the world’s commerce takes place with developing nations that leaving them out of the rules-based system would render the system unworkable,” I said. “And ultimately, that would impoverish everyone.”

  Unfortunately, much of the attention that day was not on trade but on a drama unfolding thousands of miles away, back in Washington, one that threatened to undermine my argument and the world’s confidence in American economic leadership.

  In mid-May 2011, the U.S. government had reached its debt ceiling, and the President and Congress had only a limited time to raise it or risk defaulting on America’s debts, which would have catastrophic consequences for us and the global economy. Despite the high stakes, this was a difficult issue for many to understand. To many Americans, it sounded like Congress was debating whether to give itself permission to spend a lot of money and rack up new debts. But that wasn’t it at all. The real question was whether Congress would vote to pay debts it had already run up in spending bills it had already passed into law. The vast majority of countries don’t require an extra step like this, so it was also hard for people around the world to comprehend what was happening.

  Some in Congress were actually arguing that, for the first time in history, we should refuse to pay our debts and let our country default, despite all the consequences for the global economy and for America’s credibility and leadership. From every continent, foreign leaders were expressing grave concerns. China, which had invested more than a trillion dollars in U.S. government securities, was particularly nervous. The state-owned newspaper Xinhua reflected the prevailing attitude when it wrote: “Given the United States’ status as the world’s largest economy and the issuer of the dominant international reserve currency, such political brinksmanship in Washington is dangerously irresponsible.” When this scenario played out a second time, in 2013, the Chinese went further. They started talking about a “de-Americanized world” and suggested it was time to look for a different reserve currency besides the dollar. Of course, because China owned so much of our debt, they were in a strong position to make that outcome more likely.

  When I arrived in Hong Kong, the crisis had reached a fever pitch. I awoke to the headline “US Debt Talks Down to Wire as Parties Battle” in the local English-language newspaper. At the Hong Kong Government House, Chief Executive Donald Tsang greeted me with his customary smile and bow tie but asked the questions that were on everyone’s mind in Asia and around the world: What is going on in Washington? Could they still trust the U.S. economy? I heard the same questions at a reception with business leaders before my speech.

  The answer I gave was, of course, yes. I said that I was confident a deal would be reached. Privately I crossed my fingers and hoped it was true.

  The entire experience was a reminder of how closely the rest of the world watches how we make decisions at home and how central America’s economic strength and political resolve are to our global leadership. The full faith and credit of the United States should never be in doubt, and the Secretary of State shouldn’t have to publicly reassure people in other nations that we’ll pay our debts. Period.

  My toughest sell, however, was still ahead. I drove across the bridge into China’s Shenzhen Province, to meet with my Chinese counterpart, State Councilor Dai Bingguo. The Chinese were following our political dysfunction with a mix of bewilderment, concern, and anticipation. Of course, they didn’t want anything truly awful to happen because they understood how interdependent our economies had become. But the more paralyzed the United States looked, the better China would look to the world. The Chinese could say to potential partners, You can’t count on the Americans, but you can always count on us. Dai seemed to enjoy dwelling on America’s fiscal woes, adopting a somewhat sardonic tone about our political gridlock. I wasn’t having any of it. “We could spend the next six hours talking about China’s domestic challenges,” I countered. I left my meeting with Dai even more convinced that America had to avoid these self-inflicted wounds and get our own house in order.

  Despite the ongoing drama in Washington, I used my speech in Hong Kong to put down a marker about the importance of following globally accepted economic rules of the road. But we needed to do more than talk. In his 2012 State of the Union address, President Obama declared, “I will not stand by when our competitors don’t play by the rules.” The administration was already bringing trade enforcement cases against China at nearly twice the rate of the Bush Administration. Now there would be a special new Trade Enforcement Unit to go after unfair trading practices wherever they damage our interests and the operation of free markets. And when other nations provided unfair financing for their exports, the United States would offer matching support to our firms.

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  A lot of good American jobs depend on a level playing field with rules that are clear, fair, and followed. On average, every $1 billion of goods we export supports between 5,000 and 5,400 jobs, and those jobs pay between 13 and 18 percent more than non-export-related jobs. In 2010 President Obama set a target of doubling America’s exports over five years. The administration worked hard to improve and ratify trade agreements with South Korea, Colombia, and Panama that were negotiated under President Bush, and also launched new trade talks with many of the nations of the Pacific Rim, as well as with the EU.

  I made export promotion a personal mission. During my travels I often made a pitch for an American business or product, like GE in Algeria. For example, in October 2009, I visited the Boeing Design Center in Moscow because Boeing had been trying to secure a contract for new planes with the Russians. I made the case that Boeing’s jets set the global gold standard, and, after I left, our embassy kept at it. In 2010, the Russians agreed to buy fifty 737s, for almost $4 billion, which translated into thousands of American jobs. And our efforts weren’t just on behalf of big companies like Boeing or GE—we also advocated for small and medium-sized businesses across our country trying to go global.

  We got creative with initiatives like Direct Line, which allowed our Ambassadors to host phone calls or video chats with American business
es eager to break into new markets. The U.S. Ambassador to Spain hosted a call with thirty companies to discuss the protection of intellectual property rights, for instance, while our Ambassador to Chile hosted one on renewable energy opportunities there.

  The State Department worked with the Commerce Department as well as state and local officials on a program called SelectUSA, which President Obama launched in June 2011, to attract more foreign direct investment into our country, which already supported more than 5 million American jobs, including 2 million in manufacturing. The early results were encouraging. In October 2013, President Obama highlighted 220 new jobs at an Austrian company’s auto-parts plant in Cartersville, Georgia, and a $600 million investment in Wichita, Kansas, by the Canadian company Bombardier.

  One little-noticed but quite effective tool was State’s aviation diplomacy. During my four years, our experts negotiated fifteen Open Skies Agreements with nations all over the world, bringing the total number to more than a hundred. These agreements opened new routes to U.S. air carriers. According to independent estimates, the direct connection between Memphis and Amsterdam had a $120 million annual impact on Tennessee’s economy and supported more than 2,200 local jobs. And when American Airlines started flying direct to Madrid, it had a $100 million annual impact on the Dallas–Fort Worth economy.

  Since 2009, U.S. exports have increased by 50 percent, which means they’ve grown four times as fast as the economy as a whole. All these sales overseas have contributed about $700 billion to our total economic output and are responsible for as much as a third of our economic growth, supporting an estimated 1.6 million private-sector jobs. Though millions of Americans are still out of work, these are meaningful results.

  Lowering barriers to access for American companies was a big part of our efforts. So was raising standards in foreign markets on key issues like labor rights, environmental protection, the behavior of state-owned enterprises, and intellectual property. Companies in the United States already met these standards, but those of many other countries didn’t. We needed to level the playing field and improve a lot of lives around the world along the way. For too long we’d seen companies closing factories and leaving the United States because they could do business more cheaply in foreign countries where they didn’t have to pay workers a living wage or abide by U.S. rules on pollution. Using diplomacy and trade negotiations to raise standards abroad could help change that calculus.

  I felt particularly passionate about improving working conditions around the world. Over the years I met workers, many of them women and even children, who labored under atrocious conditions. The most heartbreaking were victims of human trafficking and forced labor that amounts to modern-day slavery.

  One day in July 2012, I met with a number of women workers and activists in Siem Reap, Cambodia, along with a local representative of an organization called the Solidarity Center, which is funded in part by the AFL-CIO to improve labor rights around the world. The Cambodian women told me about the many challenges they faced. Too many employers used various forms of coercion to force workers to stay on the job for long hours, sometimes under unsafe conditions. Many children were still forced to tend fields, bake bricks, and beg in the street. Children from rural villages were being trafficked to cities for sexual exploitation, often by foreign men who might pay thousands of dollars for virgin girls or to engage in other forms of child sex tourism. Too many police at every level were poorly trained, if at all, to address these problems or to protect survivors, and too many public officials looked the other way or, worse, profited from the trade in human beings.

  When I was in Siem Reap in 2010, I visited a shelter and recovery center for survivors of human trafficking run by a courageous woman named Somaly Mam. Trafficked into a brothel as a little girl, she was raped and abused repeatedly before finally escaping. In 1996, she started a movement to rescue other trafficked girls and support them as they rebuilt their lives as she had. By 2010 her organization, funded in part by the State Department, operated three shelters across Cambodia that provided safety and caring, along with rehabilitation and vocational training, to reintegrate survivors into society.

  The girls I met were shockingly young to be survivors of such terrible crimes, but I saw how the love and nurturing they were receiving had put light back in their eyes. Some eagerly showed me around, while others, who were shyer, cautiously watched to see what the fuss was about.

  The crime of human trafficking is not limited to Cambodia, or Southeast Asia. Nearly 30 million people around the world are in modern-day slavery of one form or another, trapped in prostitution or laboring in fields or factories or on fishing boats. The United States is not immune. In 2010 six “recruiters” were indicted in Hawaii in the largest human trafficking case ever charged in U.S. history. They had coerced four hundred Thai workers into farm labor by confiscating their passports and threatening to have them deported if they complained.

  As Secretary I appointed Lou CdeBaca, a decorated former federal prosecutor, to ramp up our global antitrafficking efforts and to produce reports on enforcement of antitrafficking laws in 177 countries. I also asked Lou to take a look at our own country, something the Department had never done before, because I thought it was important to hold ourselves to the same high standards we expected from others. By law, the findings of those reports triggered sanctions on countries failing to make progress, so they became a powerful diplomatic tool to encourage concrete action.

  In addition to trafficking, I was also concerned about the unscrupulous, even criminal employers, aided and abetted by governments, who exploited their workers, adults and children alike. That’s one of the reasons I strongly support the right of workers to organize unions. After decades of struggle, workers in America formed unions strong enough to protect their rights and secure such advances as the eight-hour day and the minimum wage, achievements that helped create and sustain the American middle class.

  In many countries around the world, unions are still suppressed and workers have few, if any, rights. This is bad for them and it’s bad for American workers too, because it creates unfair competition that drives down wages for everyone. Contrary to what some governments and employers might think, research shows that respecting workers’ rights leads to positive long-term economic outcomes, including higher levels of foreign direct investment. Bringing more workers into the formal economy and giving them fair protections has positive ripple effects for society. Inequality declines while mobility increases. Taxes are paid. Countries and communities are stronger and better able to meet the expectations and aspirations of their people. The flipside is also true: Denying workers their rights costs societies dearly in lost productivity, innovation, and growth. It undermines the rule of law and plants the seeds of instability. And it’s bad for us when foreign workers are too poor to buy U.S. products.

  Back in 1999, I explored some of these questions in a speech at the Sorbonne in Paris called “Globalization into the Next Millennium.” Would greater economic interdependence lead to greater growth, stability, and innovation for people around the world? Or would it merely lead to a “race to the bottom” of the economic ladder for billions of people? Would it help to expand opportunities for all citizens, or reward only those of us already lucky enough to have the skills to navigate the Information Age? I suggested that it was time to tackle “runaway global capitalism’s worst effects” and “put a human face on the global economy, giving workers everywhere a stake in its success, equipping them to reap its rewards,” while providing “social safety nets for the most vulnerable.” A decade later the urgency of these concerns had only heightened.

  The State Department had long had a bureau dedicated to democracy, human rights, and labor, although the last part sometimes was neglected. I wanted to change that, and so did my Assistant Secretary, Michael Posner, a human rights activist who had helped found the Fair Labor Association in the 1990s. Under Mike’s leadership, the United States stepped up its support for tra
ining programs and workshops on international labor standards for union organizers, employers, and government officials. We sponsored exchanges so that labor academics from around the world could learn from one another, helped police and prosecutors go after human trafficking and forced labor, launched new diplomatic dialogues with labor ministries, and signed agreements with key countries like Vietnam and China to provide technical assistance on a range of labor issues, from mine safety to social security.

  In a town hall meeting in Dhaka, Bangladesh, in May 2012, a labor activist asked me what Bangladeshis could do to improve rights and conditions for workers, especially in their country’s booming garment industry. “We face all kinds of obstructions with the police, goons, thugs, and false allegations in court,” she said. “And, in fact, one of our leaders, Aminul Islam, was very brutally murdered.”

  This was an issue I had raised forcefully with the Bangladeshi government because I thought that the case of the murdered trade union leader was a real test for the country’s justice system and the rule of law. In responding to the question, I also turned to the broader question of labor rights in a developing economy: