There are 11.7 million reasons to lead on trade. That’s the estimated number of American jobs supported by exports in 2014, our fifth consecutive year of record-breaking exports. These record performances are truly a “Team USA” effort, driven by businesses of all sizes from all sectors across our economy. If any one group deserves special attention, it is our small businesses, which comprise 98 percent of all American exporters.
To recognize that outsized contribution, our agencies have released a report that illustrates how access to global markets is benefiting small businesses across our nation. Currently, around 300,000 small- and medium-sized businesses across the 50 states export to foreign destinations, supporting millions of American jobs. Impressive as they are, these figures only scratch the surface of what is possible. With 95 percent of the world’s customers living outside of U.S. borders, there is enormous potential for our businesses – and small businesses in particular – to grow their exports, hire more American workers, and expand their bottom lines.
Among the many small businesses thriving in global markets is Planson International, which exports information and communication technology from New Gloucester, Maine to over 80 countries. Since 2004, Planson’s annual exports have grown from $5 million to $35 million, and its staff has grown from 5 to 35 employees. As President Connie Justice told us, “We attribute Planson’s success almost exclusively to export sales.” Due to its reliance on local U.S. suppliers, more business for Planson overseas means even more business here at home.
Of course, it is impossible to capture the diversity of talent, innovation, and hard work that help American small businesses drive our economy with a single snapshot. However, small businesses usually share some important characteristics that many of these stories highlight. Accounting for almost all private sector employment growth in recent decades, small businesses are a major source of jobs for American workers. Furthermore, small businesses that export to foreign markets tend to grow faster, hire more, and pay higher wages than small businesses that serve purely domestic markets.
Small businesses also face a common set of challenges when competing in the global marketplace. High tariffs can reduce already small margins, making exporting more difficult. Weak intellectual property rules can jeopardize the hard work, investment, and personal risk that go into making new products. The complexities of customs procedures and the lack of transparency around regulations can be overwhelming to small businesses. While large businesses are not immune to these challenges, smaller firms do not always have the means to take on the extra costs and risks. As a result, the vast majority of American small businesses still do not export at all, and of the small portion that do export, most only export to one country.
President Obama is committed to addressing these barriers and giving American businesses of all sizes a fair shot in markets around the world. The Trans-Pacific Partnership (TPP), which the United States is negotiating with 11 other nations, includes the first chapter dedicated to addressing the challenges faced by many small businesses. Its completion would open markets that are home to the fastest-growing middle class in the world to ‘Made in America’ goods and services. That would be welcome news for small businesses like Planson, which faces tariffs of up to 30 percent in TPP markets.
When TPP is combined with the Transatlantic Trade and Investment Partnership, an ambitious deal the United States is negotiating with the European Union, American businesses and their workers will be at the center of a free trade zone that covers nearly two-thirds of the global economy. With that central position, America can become the world’s production platform of choice, the place everyone wants to set up shop in order to make things and sell them here and around the world.
But realizing these gains requires leadership. In recent years, countries across the Asia-Pacific have struck more than 200 trade deals, while American workers and businesses have largely missed out. We cannot afford to sit on the sidelines as others strike deals that put our businesses and workers at a competitive disadvantage and encourage a race to the bottom. By moving forward with standards that reflect our interests and values, including the highest labor and environmental protections, we can protect American jobs and catalyze a race to the top.
The first step in that leadership is passing bipartisan trade promotion legislation, which puts Congress in the driver’s seat to define U.S. negotiating objectives and priorities for trade agreements. TPA clarifies and strengthens public and Congressional oversight by requiring consultation and transparency throughout the negotiating process. Importantly, it also makes clear to our trading partners that the Administration and Congress are on the same page in negotiating high standards in our trade agreements. Not surprisingly, Congress has used trade promotion legislation to work with American presidents from both parties going back to FDR, including every president during the last four decades.
As this new report underscores, the world wants what America is selling. To unlock the opportunity that beckons beyond our borders, we must lead on trade.
Froman is the 17th USTR, serving since 2013. Pritzker is the 38th Secretary of Commerce, serving since 2013.