Oct 24, 2016 - 4:00pm

5 Facts to Set the Record Straight in the Great Trade Debate


President and CEO, FedEx Freight

bloomberg_cargoship_port_oakland_1600px.jpg

A cargo ship is guided into the Port of Oakland.
A cargo ship is guided into the Port of Oakland.

In the aftermath of the Second World War, the U.S. took the lead in framing a global, rules-based trading system based on the principles of reciprocity, non-discrimination and openness. Successive rounds of tariff-cutting negotiations over half a century helped increase world trade from $58 billion in 1948 to $23 trillion today.

No country benefited more from this expansion of trade than the U.S. Overall, trade today supports 41 million U.S. jobs--more than 1 of every five in our nation--and has raised the income of the average American household by $13,600 per year.

No country has benefited more from the expansion of trade than the United States.

International trade plays a vital role in creating new opportunities for American businesses and growing our nation’s economy. At its core, international trade is a two-way street.  The U.S. exports goods and services--like aircraft equipment and agricultural crops, and we import products produced in other countries, such as oil, clothing and steel.

Exports create new markets for American made products and allow our businesses to reach the 95% of the world’s consumers living across our borders and over the oceans. 

Imports secure materials needed to create American products.  Imports also help American families stretch their budgets by providing more choices and lower prices. In short, both imports and exports help create a more vibrant and efficient economy for all of us.

Trade is a two-way street that should not be road blocked or will become a dead end. 

Trade is getting its fair share of attention this presidential campaign.  Trade agreements, including NAFTA and the Trans-Pacific Partnership, are often described passionately–but not necessarily accurately–these days in campaign rallies.

Given the amount of misinformation and just outright distortions about trade during this year’s political campaign, I’d like to set the record straight with some facts.

1. Trade is Good for—and Critical to—the American Economy

The U.S. is the world's largest economy.  Yet, 80% of the world’s purchasing power, 92% of its economic growth, and 95% of its consumers are all outside of the U.S.

The health of many sectors of the American economy depends on trade.  America’s farmers rely on foreign markets to remain financially strong.  One of every three acres on America’s farms are planted for export.  America’s manufacturers also depend on foreign markets, with an estimated 25% of all manufacturing jobs supported by exports

2. Trade Benefits Businesses of All Sizes

Big business is already global, but the rise of e-commerce and the fast, reliable transport services provided by FedEx and other firms has created opportunities for even the smallest of businesses to buy and sell across borders.

Today, about 98% of U.S. exporters are small- and medium-sized businesses (SMEs). 

SMEs that export tend to grow even faster and create more jobs than similar businesses that do not trade internationally.  FedEx released a national survey of over 1,000 small business leaders–and it showed that 65% of small businesses that trade said their revenue is increasing versus 46% of small businesses that do not trade.  Small businesses that trade also said they’re hiring more employees.

3. Market Access and Ecommerce Have Changed the World of Trade

Thanks to the internet and the growth of e-commerce, along with the global logistics services of FedEx, anyone can connect with customers across the world. 

Although SMEs represent the vast majority of businesses in this country, Commerce Department statistics show that only 1% of U.S. SMEs export, and the majority to only one or two countries.  E-commerce is the game changer for them–if the process is streamlined and made easier. 

Customs and trade rules often make it difficult for SMEs to sell and purchase products from overseas.  Our trade agreements and customs rules were not written with SMEs or consumers in mind, something that’s improving but not perfect.  We need to do more to modernize and update customs rules to really unleash the power of e-commerce.

4. Trade Agreements Help America Compete with Other Nations

The U.S. trade deficit is often cited by opponents as the principal reason why the U.S. should not enter into new trade agreements. 

In reality, trade agreements are the solution to trade deficits, not the problem.

The record of America’s trade agreement success is remarkable.  America’s 20 trade agreement partners in recent years have purchased nearly half of all U.S. exports, according to the Commerce Department.

Most people don’t know that the U.S. actually has a trade surplus with our 20 trade agreement partners not only in services, but in manufacturing, and agriculture.

In fact, on a per capita basis, these 20 countries buy 13 times as many made-in-the-USA goods and services as other countries.  It doesn’t take long to see the benefits of trade agreements.

5. American Workers and Businesses Need the Trans-Pacific Partnership

No other trade issue has received as much attention this election year than the Trans-Pacific Partnership (TPP), a trade agreement negotiated between the U.S. and 11 other countries along the Pacific Rim.  

TPP countries represent over 480 million potential customers for U.S. businesses.

The TPP will streamline trade, reduce barriers, and create new opportunities for small- and medium-sized companies.  It addresses issues critical to the digital economy--issues like e-commerce and electronic data flows.  It also improves customs clearance, making trade simpler and faster for all our customers.

And the TPP will eliminate 18,000 added tariffs assessed on American-made products.

If we don’t get the TPP done, the tens of thousands of tariffs on U.S. products will remain in place, making us less competitive by the day.

Importantly, the U.S. will be put at an increasing disadvantage as other countries negotiate agreements that exclude us.  Without active U.S. involvement in the world’s fast growing economic region, other nations will continue to move forward and create agreements that shut out our interests and paper over trade rules.

Some are Hurt By Trade But That's No Reason to Abandon It

No discussion about trade is insightful unless it acknowledges that while the vast majority of Americans benefit from international trade and investment, some are hurt.  They should be helped.

Business has a big role to play in this pursuit.  Companies are already making a major contribution by investing in training and development across the U.S. workforce.

But there’s more that can be done.  Government and business must work better together to ensure that displaced workers are retrained and can transition to the new jobs and careers that our economy is creating.

Ripping up trade deals won't do anything to help those that have been displaced by trade.

One thing is clear, ripping up trade deals, or saying you’ll dramatically raise tariffs on imports, or abandoning historic opportunities like the TPP will not grow our economy or do anything to help those that have been displaced by trade and by technology–which has had a far greater impact on jobs than trade.  If we were to go down that road, other countries will advance their own economic interests as America sits on the sidelines and watches.  America must lead on trade. If businesses leave a vacuum, others will fill it! It’s no different with trade.

Expanding trade opportunities for Americans has been a bipartisan pursuit since this country started.  I’m hopeful that it will continue to be--after the political dust settles following the election. 

I’m counting on it, and this country’s businesses, particularly small and medium sized ones, are counting on it, too.  

About the Author

About the Author

Photo of Michael L. Ducker, Vice Chairman of the Board of Directors, U.S. Chamber of Commerce
President and CEO, FedEx Freight

Michael L. Ducker is president and chief executive officer of FedEx Freight.