Amb. Michael Froman: If We Don't Write the Rules of the Global Economy, Others Will
Nov 6, 2015 by Amb. Michael Froman, U.S. Trade Representative
America is at a crossroads in the world economy. If we don't take the lead in writing the economic rules of the road through trade agreements like the Trans-Pacific Partnership (TPP), other countries will.
The United States economy continues to gain strength and create new jobs and opportunities for the American middle class, while acting as a driver of the global economy.
This is an extraordinary achievement. Just seven years ago, the American economy was devastated by the worst financial crisis since the Great Depression. Countless families lost everything, and American companies were driven out of business left and right. The next several years were extremely difficult, but the resilience of the American people, aided by proactive economic policymaking, won through and brought recovery.
Made-in-America exports have been a major part of the story, contributing a full third of our economic growth from mid-2009 to 2014 as we fought our way back. In fact, we're in the midst of the longest streak of consistent monthly job creation in United States history, with more than 13 million private sector jobs created since March of 2010. The number of new businesses and new factories has been climbing again, too — a reversal of sharp declines during the crisis.
But there is much more that should be done to expand economic opportunity for all Americans.
Selling American exports overseas is one of the most powerful ways to do that, which is why President Obama has put a new, 21st century trade policy at the core of his Middle Class Economics strategy.
And when it comes to increasing American exports, the United States is on the cusp of a monumental bipartisan achievement for American workers and businesses: the Trans-Pacific Partnership, or TPP. TPP is a groundbreaking new trade agreement between the U.S. and 11 other countries in the Asia-Pacific region which will open countless doors of economic opportunity for Made-in-America exports — supporting high-paying jobs across our country and securing the United States a competitive edge in a critical region of the world.
For the last five straight years, as the Obama Administration has worked to boost exports, American workers, farmers and businesses have broken all previous U.S. export records. Last year, these exports supported 11.7 million American jobs — jobs that pay up to 18 percent more on average than jobs that aren't related to exports. And nearly 97 percent of the U.S. companies that sell those exports are small and medium-sized businesses, an engine of job creation.
Our government must show economic leadership in the world by acting to help American exporters keep breaking those records and supporting the high-quality jobs we need. We must also attract more investment and the jobs that come with it to the United States. That's where TPP comes into play.
Thanks to a hard-won breakthrough at the TPP negotiating table last month, yesterday we released the full, final text of the agreement for review by the public, stakeholders, and Members of Congress. And it's very important for our country's economy and our values that we seize this opportunity to get trade done right.
The global economy is evolving rapidly, and our future prosperity will largely hinge on American trade negotiators gaining new access to international markets, as well as shaping the rules of trade in a way that builds on America's competitive strengths.
Globalization has brought the world closer together, but the economic rules of the road are still being written — and our rivals, like China, are not just trying to get better access than the United States to growing markets, but to beat us in writing those rules of the road. China's version of these rules won't reflect our economic interests — and they certainly won't reflect our values, such as strong requirements to protect workers' rights, intellectual property, a free and open internet, and the environment.
This proves there is an urgent need for the United States to show engaged leadership and to bring home new trade agreements like the TPP that invigorate our economy.
Underscoring that urgency is a simple fact: the U.S. economy is more open to international competition than most other countries. For example, the average applied American tariff, which is a tax imposed on imports to the United States, is only 1.4 percent. The average world tariff, however, is over twice that high. And in some TPP countries, American-manufactured goods can face tariffs of up to 100 percent, while American agriculture exports can be hit with tariffs as high at 700 percent.
To level the playing field, bold steps to bring down those high foreign taxes on American-made products are a must.
TPP does this, and much more. First, the agreement cuts over 18,000 tariffs on Made-in-America exports – bringing most of them to zero – while delivering first-of-their kind benefits to help small businesses export.
On top of that, the TPP establishes unprecedented rules that promote internet-based commerce and protect digital freedom in the global marketplace.
TPP will also help attract investment to the United States. When international companies are thinking about where to build their next factory, they know that here in America we already have a skilled workforce, affordable access to energy, a strong rule of law and a huge market. Think about what happens when, in addition to those strengths, they'll be able to export to all 11 other TPP countries duty-free.
Moreover, the TPP will cause the largest expansion of fully enforceable labor rights in history, which will elevate standards of living for workers in developing countries while enabling American workers to compete on a more level playing field.
The United States stands at a crossroads in the global economy where, as more developing countries realize their potential and come into their own, more American jobs depend on selling overseas what we make, grow and do at home. In 15 years, there are projected to be to over 3 billion middle class consumers in Asia. Those consumers will want to buy American exports. Cutting-edge trade agreements, like the TPP, are how we reach them.
We have the best innovators, the hardest workers and the will to win. We owe it to ourselves, and to the next generation, to shape globalization to our advantage and level the economic playing field for our people. That's what the TPP will accomplish.
(Top image: Ambassador Froman tours Concord Supply Company, a San Antonio small business that manufactures and exports industrial materials. Courtesy of David Teran)
Ambassador Michael Froman is the U.S. Trade Representative.
All views expressed are those of the author.
TAGS:Perspectivesustrtppu-s-trade-representativemichaelfromanustradetrans-pacific-partnershipasiachinatrade-promotion-authoritytpaeconomyAmb. Michael Froman
Subscribe to our GE Brief
Please enter a valid email address !
Thanks for signing up !
Nancy McLernon: Trade Agreements Will Unleash Global Investment in America
Fracking's Water Habit Needs Swift Attention
brain-research
Exploring the Brain's Potential — Interview with Jon Sigurdsson of Össur
How to Unlock African Entrepreneurship — Interview with Dr. Frannie Léautier of Mkoba Private Equity Fund
Stephen Ezell: ITA Expansion Agreement a Victory for Global Innovation Economy
Robert Glennon: Why a Higher Price for Water Makes Sense