Nov 05, 2014 - 8:30am

Time to Trade Up for Growth and Jobs


Executive Vice President and Head of International Affairs, U.S. Chamber of Commerce

With the election behind us, it’s time for Washington to get to work on a growth-driving, job-creating trade agenda. More than 95% of the world’s customers live outside the United States, so the possibilities presented by international commerce are huge.

Trade has already been a lifeline for our economy. Exports have risen by more than 50% over the past five years, and one-third of the American jobs created in this period are in industries that depend on trade, according to a recent study.

But the playing field isn’t always level. Too often, tariffs and other barriers shut U.S. goods and services out of foreign markets. That’s why we need new trade agreements to cut away the tariffs and other barriers that tilt the playing field against us.

Examine the Record

The record of America’s trade agreements is outstanding. Today, our 20 free-trade agreement (FTA) partners represent just 10% of the world economy, but they buy nearly half our exports.

In fact, America’s 20 FTA partners purchased 12 times more U.S. exports per capita than other countries in 2012. We even have a trade surplus with these countries.

What about jobs? Several years ago, the U.S. Chamber commissioned a study to assess whether these FTAs have benefitted American workers. It found the expansion in trade spurred by U.S. FTAs supports more than 5 million American jobs.

These are good jobs: Manufacturing workers whose jobs depend on exports earn 18% more on average than those that don’t, according to the U.S. Department of Commerce.

FTAs sweep away trade barriers that are especially tough on small and medium-sized companies, which account for 98% of all U.S. exporters. Big companies can often devise workarounds for foreign trade barriers; small exporters, not so much.

Opening Overseas Markets

How can America seize more of these benefits? The good news is that the United States is taking part in two major negotiations, which promise to give U.S. exporters “unfettered access to nearly two-thirds of the global economy,” according to U.S. Trade Representative Michael Froman.

The first, the Trans-Pacific Partnership (TPP), involves 11 other Asia-Pacific countries from Japan and Canada to Australia and Malaysia. Its appeal is simple: Two billion Asians joined the middle class in the past 20 years, and another 1.2 billion will do so by 2020. That’s a lot of potential customers.

Further, the International Monetary Fund estimates the world economy will grow by $22 trillion over the next five years, and nearly half of that growth will be in Asia. The TPP will help U.S. companies tap these booming markets.

In fact, a study by the Peterson Institute for International Economics found the TPP could boost U.S. exports by an annual $124 billion and create 700,000 new American jobs.

In the second big negotiation, the Transatlantic Trade and Investment Partnership (TTIP), the United States is pursuing a similarly ambitious trade pact with the European Union, which is already the largest market for U.S. business.

U.S.-EU trade reaches $1 trillion annually and employs 15 million Americans and Europeans. Even so, eliminating today’s relatively modest trade barriers would bring big benefits.

According to another study, the TTIP would boost U.S. exports to the EU by $300 billion annually and increase the purchasing power of the typical American family by nearly $900. Europeans would secure similar benefits.

TPA Opens the Door

However, to make these or any other growth-driving trade agreements a reality, Congress must first approve Trade Promotion Authority (TPA). The Constitution gives Congress authority to regulate international trade, but it gives the president authority to negotiate with foreign governments.

TPA builds on this constitutional partnership by directing Congress to set negotiating objectives and requiring the executive branch to consult extensively with Congress during negotiations. In other words, TPA is based on the notion that the White House and Congress should work together on trade.

We can’t stand still on trade. If we fail to renew TPA, U.S. workers and companies will be left at a sharp disadvantage. To reject TPA is to accept closed overseas markets and a playing field tilted against American workers and companies.

With the 2014 elections behind us, the Chamber hopes that lawmakers can work together to approve TPA. For the sake of growth and jobs—for American workers, farmers, and companies—let’s roll up our sleeves and embrace a robust international trade agenda.

About the Author

About the Author

Executive Vice President and Head of International Affairs, U.S. Chamber of Commerce

Myron Brilliant, executive vice president and head of International Affairs the U.S. Chamber of Commerce, drives the global business strategy of the organization.