Apr 05, 2016 - 7:00am

Why Wisconsin Won’t Back Down from Trade


Senior Vice President for International Policy

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Photo credit: Luke Sharrett/Bloomberg

“There are a lot of ways Washington can screw up Wisconsin’s economy,” writes Kurt Bauer, president and CEO of Wisconsin Manufacturers & Commerce, in the Milwaukee Journal Sentinel, ahead of Tuesday’s presidential primaries. One, he writes, is trade protectionism:

Republican presidential front-runner Donald Trump and Democrat/Socialist contender Bernie Sanders have both said they want to wall off the U.S. economy from the rest of the world.

Trump and Sanders claim that protectionism will save American jobs, but the data shows the exact opposite is true. For example, 95% of the world’s consumers live outside the U.S. By 2050, only 4.1% of the world’s population will live in North America. Most of the planet’s population and middle class wealth will expand in Asia, which is why exports are so critical for a manufacturing and agricultural state such as Wisconsin that makes, grows and processes things.

If the U.S. rejects international free trade agreements then Wisconsin products will be cut off from the world’s most lucrative markets and good-paying jobs will be lost.

As the head of the state’s largest business and manufacturing organization, Bauer knows what he’s talking about. His column provides a useful correction to the notion that manufacturing-dependent states such as Wisconsin have been hurt by trade. On the contrary, trade has been a boon to the Badger State.

Not only does trade support more than 800,000 jobs in Wisconsin, it has fueled the recovery. The Badger State’s exports of goods and services top $30 billion, and their growth has been dynamic since the recession. This is especially true of trade with Canada and Mexico, which were again Wisconsin’s top export markets last year, purchasing 46% percent of the state’s merchandise exports.

Nor is trade just a game for the state’s big businesses. Nearly 90% of the state’s exporters are small and medium-sized companies (that is, 7,600 of them).

The very trade agreements some of the candidates are slamming have proven indispensable to states such as Wisconsin. Fully 56% of the state’s merchandise exports last year were shipped to the 20 countries with which the United States has entered into trade agreements. By opening these markets to U.S. goods and services, trade pacts have made Wisconsin manufacturers more competitive.

Manufacturing is the chief engine of Wisconsin’s exports. Machinery, computers and electronics, transportation equipment, chemicals, and processed foods are — in that order — the chief manufacturing sectors that drive Wisconsin’s exports. In 2014, nearly 8,000 manufacturing firms across the Badger State exported $22 billion in manufactured goods.

What does that mean in terms of factory workers’ take home pay? Average annual compensation for Wisconsin’s 470,000 manufacturing workers is about $66,000, so it’s worth noting that exports are bringing in more than $46,000 per worker — enough to pay about two-thirds of their wages.

The state’s farmers and ranchers depend on trade as well. Wisconsin agriculture benefits from $3.2 billion in exports each year, led by dairy, soybeans, feed and fodder, corn, and beef.

In this context, what do Wisconsin’s factories and farms — which are among the most productive in the world — most need if they are to create more jobs? It’s clear what they don’t need: As Bauer writes, they certainly don’t need one-size-fits-all regulations such as the so-called Clean Power Plan, which is especially burdensome to states such as Wisconsin that depend on coal. They don’t need the highest corporate taxes in the world.

What they do need is more customers, and that means better access to 95 percent of the world’s customers who live outside our borders.

About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.