For a country whose influence straddles the world, the United States can sometimes seem a little timid. Look no further than our trade policy, where Congress has yet to pass Trade Promotion Authority (TPA), which sets clear guidelines for negotiating trade deals with other countries.
In his State of the Union Address, President Obama called for a renewed focus on opening global markets to American manufactured goods, services and agricultural products. This was a call to get off the bench and back into the game on international trade, and we are an attractive player. Recent economic developments in the United States, including robust job growth and the shale energy revolution, allow us to go on offense, and help set the terms of trade to the benefit of all Americans.
In America, trade directly supports one out of every five jobs. U.S. manufacturers that export pay on average 18 percent more than non-exporting companies. Meanwhile, more than 80 percent of the world’s purchasing power lies outside the United States. Our future prosperity depends on the extent to which we can develop relationships with those markets.
The world is not standing still. Last month, businesses from around the world gathered in Miami to look at how they can get the most out of a recent global agreement to slash red tape at borders. The International Chamber of Commerce estimates that agreement could add an extra $1 trillion to the global economy annually. That’s real money. But we will leave our share on the table if we don’t get Trade Promotion Authority.
Of course, trade is both imports and exports. Imports help U.S. businesses compete by keeping costs low, allowing American families to save at the register, and providing vital component parts for U.S. manufacturing.
Gone are the days when a finished product rolls off the assembly line, made solely with inputs from its country of origin. A recent study of the iPhone (of which Apple shipped an astonishing 74.5 million units in the last quarter of 2014) concluded that, while most iPhones were shipped from China, that country’s workers added less a tenth of the phone’s value. In contrast workers in the U.S, where much of the design, marketing and some key component manufacturing took place, contributed more than two-thirds of the iPhone’s value. This captures how 21st-century “global value chains” operate.
Ongoing U.S. trade negotiations, with 11 Asia-Pacific nations and with the European Union, are opportunities for America to strengthen its place in the global marketplace. Taken together, these trade pacts have the potential to expand U.S. exports significantly and show America’s global leadership. Coupled with strong domestic growth and lower energy costs, these trade deals could make our country the preferred location for global investment, innovation and jobs long into the future.
Trade Promotion Authority (TPA) is the key to getting trade agreements done in America. TPA is often characterized as power given to the President, but in fact TPA is a power Congress gave itself in 1974. TPA gives elected officials the authority to define our trade objectives, formally consult with trade negotiators, and ensure that issues such as labor rights, environmental protection and product safety are adequately addressed.
TPA is also often referred to as “fast track”, which is a misnomer when you consider TPP has been in negotiation since 2005 – in ongoing consultation with Congress and an array of businesses, unions, NGO’s, and other groups. That’s not fast by any measure. To suggest that TPA somehow allows a trade deal to get rammed down Congress’ throat is misleading at best.
America is on the path toward real, sustainable economic growth. But to secure the promise of the 21st century, we need to follow through on an ambitious trade agenda and not be timid about it. We need to get back on offense and Trade Promotion Authority enables us to do just that.
Robinson is president and CEO of the United States Council for International Business, a business association based in New York. Bacchus, who served in the House from 1991 to 1995, chairs the global practice group at Greenberg Traurig.