Harold McGraw III
Both the World Trade Organization and Global Trade Alert recently issued reports detailing the alarming trend of creeping protectionism that threatens to slow the global economic recovery and hinder national competitiveness.
Trade is vital to economies throughout the world, and the U.S. economy in particular. In 2008, exports of goods and services generated about $1.84 trillion, or 13 percent, of U.S. GDP, according to the Commerce Department. By some calculations, ten percent of all U.S. jobs and 20 percent of our manufacturing jobs depend on exports. And trade-related jobs typically pay 13 to 18 percent more than the average U.S. wage.
In addition, the claims of international trade’s adverse impact on the U.S. economy are frequently exaggerated. A recent study by the Federal Reserve showed that import competition is only responsible for about 2.5 percent of job losses - most layoffs in America’s highly dynamic economy stem from technology, domestic competition, and changes in consumer choices. Even during the current economic slowdown, the resilience of our exports has been one of the few bright spots in our economy.
While economic progress through expanded trade and investment can trigger some dislocations, those impacts should be addressed not through protectionism, but rather through the expanded Trade Adjustment Assistance program that was enacted as part of the Recovery Act. Dislocated workers as well as those just entering the workforce must have access to education and training to acquire the skills they need to secure high-paying jobs of the 21st century.
Clearly, trade can be a driver of economic growth for the United States. Some 95 percent of the world’s consumers and 80 percent of global purchasing power lie beyond our borders, and we are seeing increased commercial opportunities in emerging and developing economies. And while the United States and EU still constitute 54 percent of the global economy, the dynamic economies of Asia have the strongest growth trajectories.
At my company, we’ve seen firsthand how important international engagement is to American jobs. Growing global demand for our college-level engineering and computer science instructional materials have led to growth in our staff in Dubuque, Iowa. And McGraw-Hill Construction’s ability to provide actionable information on major building projects in Korea, China, the Middle East and elsewhere has provided growth opportunities for our U.S.-based employees.
As important as international integration is to the United States, the trade patterns of recent years cannot continue unaltered. Ensuring strong intellectual-property protections, enforceable government procurement and transparency provisions, and a level playing field in terms of tariffs and subsidies is critical if we are going to further the interests of all Americans.
To the Obama Administration’s credit, they have prioritized trade enforcement and strengthening support for American workers. But we need to do more.
America’s international economic policy for the 21st century should eliminate foreign barriers and open major markets throughout the world. We must finalize pending agreements with Colombia, Panama and Korea. We must create a new agreement with our Asia-Pacific trading partners and eliminate barriers for our world-class products and services. And completion of an ambitious Doha Agenda would go a long way toward promoting new trade flows that are vital to global economic growth.
President Obama has pressed an ambitious agenda for reviving the U.S. economy, but it comes with a hefty price tag. Liberalizing global trade is an opportunity to generate the economic growth that will help to finance these initiatives. For our workers and industries to succeed at home and in the international economy for generations to come, we must move forward quickly to open the world’s markets to America’s goods and services.
The author is Chairman, President and Chief Executive Officer, The McGraw-Hill Companies and Chairman, Emergency Committee for American Trade.