Trade Explainer
Apr 27, 2016 - 11:00am

Why We’re Advocating for More Global Trade

Former Executive Director, Communications & Strategy

Okay, what’s the issue?

One of the most prevalent and divisive topics in today’s political discourse is international trade. While polls show that most Americans perceive trade as an opportunity rather than a threat, there’s a heated debate brewing over whether the movement of goods, services and capital across our borders is a net positive or net negative for America, what role it has on our economy, and whether we should be trying to expand or curb the business we conduct with other countries.

What’s the argument against trade?

There’s a growing faction of policymakers and political candidates pushing back against the expansion of international trade and investment. Some critics point to studies suggesting that trade with China, in particular, has led to lost jobs in some industries. Others blame imports and trade deficits for our nation’s economic woes. Playing off these concerns, some political candidates have argued that the United States should wall itself off from global markets by enacting tariffs and erecting other barriers to siphon off the flow of goods into and out of our country.

Alright, what’s the argument for trade?

While the aforementioned concerns are understandable and in many cases legitimate, the conclusion that many have drawn – that our country should rein in global trade and pull back on new free trade agreements – is shortsighted and self-defeating. On the whole, international trade represents one of the most powerful opportunities America’s small, mid-sized and large businesses have to find new customers. In fact, 95 percent of the world’s consumers live outside our borders, representing nearly limitless expansion opportunities for U.S. businesses and entrepreneurs.

Of course, more customers means more demand, and more demand requires more workers. So when American companies break into new markets and find new buyers in other countries, they tend to create new, good-paying jobs back home. How many new jobs? Well, global trade currently supports 41 million American jobs, including 6.2 million manufacturing jobs that are directly tied to exports of Made-in-the-USA goods, which represents more than half of the 12.3 million Americans employed in manufacturing.

In addition, it’s important to note that those manufacturing jobs linked to trade tend to have wages that are considerably higher than those positions not tied to U.S. exports.

Does this hold true for the new agreements I keep hearing about?

Absolutely. Let’s start with the Trans-Pacific Partnership, or TPP. Currently under review in Congress, the deal would help American businesses more easily access customers in 11 countries that collectively represent a staggering 40 percent of global GDP and are home to hundreds of millions of middle-class residents. One recent study forecasted that the deal would raise real incomes in the U.S. by $131 billion and increase American exports by $357 billion per year.

Wait a minute, how does one deal do all that?

For starters, TPP would eliminate job-killing tariffs and other trade barriers that too often deny a level playing field to American exporters trying to break into growing markets in the Pacific region. The deal would eliminate tariffs on more than 18,000 products made in the USA, and it features 4,000 pages of tax cuts for American exporters. Without the deal, U.S. companies will be left on the outside looking in on major expansion opportunities.

Okay, but TPP isn’t the only deal in the works, right?

Correct. U.S. leaders also are working with our partners in Europe on what’s known as the Transatlantic Trade and Investment Partnership, or TTIP. While it’s not quite as far along, TTIP holds similar promise in that it could help more American businesses access more customers overseas, grow the American economy, and accelerate job creation back here in the United States.

So more trade means more jobs – is that it?

That’s a big part of the story, but that’s not trade’s only benefit. For U.S. consumers, more trade means more access to the affordable goods we depend on every day. After all, no one country – not even the U.S. – can efficiently produce all of the products and services its citizens need; thus, no country can have a prosperous economy and a high standard of living without trade.

Sounds like a win-win for everybody.

On the whole, yes. However, it’s important to acknowledge that while trade benefits our country and our economy by creating many more winners than losers, it does create some losers, especially in the near term. That’s because with any exchange of goods and services between two nations, there are bound to be some jobs lost. So while it’s important to bear in mind that the benefits of the TPP are more than 100 times the costs, according to a recent study, we must do everything we can to help those hurt by the deal.

How do we help them?

We can start by improving our job retraining programs, which will help ensure that workers who lose their jobs have every opportunity to learn the skills necessary to land one of the even better jobs created by new trade deals. Right now, our workforce training programs and our education system are deeply flawed, leaving too many people without jobs and jobs without people. U.S. business leaders and government leaders have to work together to address this challenge.

So what’s the bottom line on trade?

Trade is tricky, and trade has its challenges. However, we cannot lose sight of the overwhelmingly positive benefits our country will see if we keep expanding our reach around the world. At its core, trade plays to our country’s strengths. Our innovation, our competitiveness, and our entrepreneurialism cannot be fully unleashed if they are bottled up inside our borders.

As long as we continue to negotiate agreements that are consistent with our values of innovation, hard work and fairness, trade will continue to be a big win for America.

About the Author

About the Author

Former Executive Director, Communications & Strategy

J.D. Harrison is the former Executive Director for Strategic Communications at the U.S. Chamber of Commerce.