To those of us who move freight across borders, the value of international trade agreements – which eliminate artificial barriers to trade such as tariffs, quotas and protective subsidies – may seem like a no-brainer. Of course, that’s because we have a front row seat to the benefits of these agreements and the enormous effect they have in increasing the flow of goods between trading partners – consumer goods as well as imported and exported components that keep factories humming here and abroad.
More than one in five U.S. jobs is tied to international trade and investment, according to the Business Roundtable, a group of CEOs of major U.S. corporations that promotes pro-business policy. And U.S. trade-related employment grew 6.5 times faster than total employment between 2004 and 2011.
Yet despite the obvious benefits to U.S. industry, U.S. workers and those of us who move cargo for a living, some legislators in Washington, D.C., seem ready to once again stand in the way of freer trade and its benefits to our economy. Specifically, President Obama is seeking so-called “fast-track” authority to enact agreements – such as the Trans-Pacific Partnership (TPP) and the Trans Atlantic Trade and Investment Partnership (TTIP) – and thereby further invigorate trade and increase our exports.
On the TPP in particular, which includes Mexico, Canada, Japan and other Asia-Pacific nations but not China, the U.S. had hoped to complete talks in 2013. Concerns over quotas, basic tariffs and agricultural issues have slowed the talks, while some House and Senate Democrats, especially those from states with a heavy union presence, have signaled that they are not going to let the president have fast-track authority to get the deals done.
Unfortunately, the only alternative to a fast-track process, which requires an up-or-down ratification by Congress, is to allow Congress to amend and rewrite trade agreements after all of its complex details have been negotiated with multiple other signatories. Essentially, this is a death knell for the treaty process and there is virtually no chance that without fast track, an agreement can be reached.
So this is a battle Obama needs to take on for the good of the country, much as President Clinton bucked many in his own party to get the North American Free Trade Agreement ratified by Congress nearly two decades ago.
The critics often point to the NAFTA agreement as what is wrong with trade and how trade agreements like it are a net loser for the U.S. You probably remember Ross Perot’s warnings of jobs being “sucked out” of the country.
While there is no question that some U.S. jobs ended up in Mexico, NAFTA proponents argue that these are jobs that would have ended up in Mexico anyway – with or without the agreement.
And if you look closely at what has happened since NAFTA’s ratification in 1994, you’ll find that trade among the three NAFTA nations – Mexico, Canada and the U.S. – has more than tripled from US$297 billion (217 billion euros) to US$930 billion (680 billion euros) over the past two decades. U.S. exports to Canada and Mexico under the agreement have increased by 258 percent in the two decades since NAFTA went into effect.
Behind all this growth is job creation in all three NAFTA countries.
Former U.S. trade representative Carla Hills points out that Mexico is now the U.S.’s second-largest single export market, purchasing more U.S. goods than the rest of Latin America combined, and more than France, Germany, the Netherlands and the UK combined. And lest you think NAFTA has benefited primarily large corporations, she notes that Mexicans are now purchasing more than 10 percent of the exports that come from small- and medium-size U.S. companies.
And what of critics’ assertions that free trade agreements contribute to downward pressure on U.S. wages and growing income inequality within the country, and a diminishing middle class?
With exports accounting for a quarter of our country’s economic growth in the 1990s and 15 percent in the last decade – and with freer trade helping raise our GDP by nearly 40 percent and adding 16 million jobs – I just don’t see how blocking more international trade is going to help Americans economically at any level.
I’ll conclude right where I started. Ninety-five percent of the world’s people, representing four-fifths of the world’s purchasing power, live outside the U.S. The only course of action that makes sense is to open new avenues of trade and commerce in as much of the world as we can.
Overall, freer trade has brought much more in the way of benefits to our economy and our way of life than any alternative. Our industries are ready and able to compete. Our freight forwarders, cargo handlers and shippers are ready to grow with increased volumes of trade. Let us hope that President Obama can find the political will and the support he needs to advance these important agreements.