In 1862, President Lincoln signed into law the Pacific Railway Act, which authorized the construction of the first transcontinental railroad. By the end of the 19th Century, railroad track mileage in the U.S. had more than quadrupled, enabling the free flow of goods from place to place and creating unprecedented economic opportunities across the land.  

Free trade across international borders is the railroad system of our time, spurring innovation and commerce in today’s global economy. Free trade is particularly critical for the semiconductor designers, manufacturers, and suppliers we represent, which together support more than 1 million American jobs. These companies, ranging in size from major corporations to small businesses, create the components, equipment and materials that enable virtually all electronics.  They rely on a global ecosystem of suppliers, technology providers, services, R&D, and customers, so access to international markets is vital. 

ADVERTISEMENT
Congress can promote free trade and drive economic growth by approving a legislative initiative called Trade Promotion Authority (TPA). TPA has paved the way for free trade for decades, giving life to nearly every U.S. free trade agreement in existence, but it expired in 2007. With several important free trade agreements currently under negotiation, Congress should swiftly re-enact TPA.

The Constitution grants the president the authority to negotiate free trade agreements, and Congress is responsible for approving them. TPA streamlines this process by empowering the president to reach final agreements – consistent with negotiating objectives laid out by Congress – and by ensuring that any final agreement is not subject to amendment during congressional review. As a result, our trading partners are more likely to negotiate freely with the assurance that final agreements will receive expedited congressional review.  

Free trade is critical to the American economy and to the U.S. semiconductor industry, which designs and manufactures the chips that enable nearly all electronics. In 2014, U.S. semiconductor company sales totaled $173 billion, representing over half the global market, and 82 percent of those sales were to customers outside the United States. Additionally, the U.S. semiconductor industry directly employs nearly 250,000 people in high-skilled, high-wage jobs in America. Since most of the U.S. semiconductor industry’s customers are abroad, free trade is critical to creating and supporting these U.S. jobs. 

The benefits of free trade extend far beyond the semiconductor industry. Semiconductor companies rely enormously on small- and medium-sized businesses that supply critical equipment and materials needed to make semiconductors. U.S.-based companies produce more than $15 billion of semiconductor manufacturing equipment annually, 80 percent of which is exported overseas. As semiconductor companies grow and develop through free trade, so too do these suppliers, and the benefits ripple throughout the economy.  

Important trade agreements the United States is currently pursuing include the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). These agreements would result in billions of dollars in global trade of semiconductor products.  Without TPA, these agreements may never see the light of day. 

Like the railroads of the 19th Century, free trade is critical to spurring U.S. economic growth and job creation in today’s global economy. Trade agreements that open markets, protect intellectual property, and remove roadblocks to e-commerce are essential to the continued success of the semiconductor industry and our economy. TPA paves the way for free trade, and Congress should re-enact it.

 

Neuffer is president & CEO of the Semiconductor Industry Association, the voice of the U.S. semiconductor industry in Washington, D.C.  McGuirk is president & CEO of the Semiconductor Equipment and Materials International (SEMI), the global industry association serving the manufacturing supply chain for the micro- and nano-electronics industries.