As the U.S. unemployment rate climbs toward 10 percent and the economy faces a lengthy and uncertain recovery process, Congress and the last two administrations have caved to political pressures by protecting domestic firms and jobs with taxpayer money. Throughout history, when times are tough, the government almost always feels the tug to embrace protectionism and limit global trade. But what is ironic about this need to achieve short-term gains is that it hurts our long-term interests.
When it comes to international trade, the detriments run sky high, and the government's failure to remove costly trade barriers and open new markets for U.S. goods and services is a ticking time bomb for many American companies, particularly small businesses.
For more than two years, Congress has let languish three trade agreements that the U.S. government has negotiated with South Korea, Colombia and Panama. By not passing these agreements, the U.S. government is not only missing out on an immediate economic stimulus to this country - possibly as many as 380,000 jobs - but it is also hurting our nation's global competitiveness.
Indeed, the World Economic Forum (WEF) reported recently that the United States has lost its place as the world's most competitive nation to Switzerland, while Canada, India, Brazil and China all experienced gains. International trade, WEF explained in its annual report, is a key component to measuring competitiveness:
"In today's highly interdependent world, recovery from the present downturn will require that countries increase the amount of goods that they purchase from each other, thus spurring demand. Further lowering barriers to trade would support this process."
While the U.S. government has been slow to put in motion this core economic principle that trade leads to growth, the European Union (E.U.) and Canada have fully embraced it as critical to their own recovery strategies - to the further detriment of U.S. competitiveness.
On October 15, the E.U. and South Korea signed one of the largest bilateral trade agreements ever negotiated. In 2008, two-way trade in goods between the two already totaled about $97.1 billion. Furthermore, the E.U.-Korea deal will immediately eliminate more than $2.3 billion in tariffs paid by European exporters and resolve market barriers in the telecommunications, financial and legal services industries.
The trade deal is just one measure of the European Union's continual efforts to strengthen its competitiveness. With a final signature received on November 3, all E.U. member states have now ratified the Lisbon Treaty, which will enter into force on December 1. This treaty will streamline decisions made in the E.U., including on trade issues, and will require consensus only from its governing body, rather than all 27 member states.
Meanwhile, Canada has signed a comprehensive trade deal with Colombia that is expected to receive speedy ratification by its House of Commons. Statistics Canada, the government's statistical research arm, reported this year that Canada's exports to Latin America grew nearly three times more than U.S. exports to the region. The Colombia trade agreement is expected to further boost growth.
As the E.U. and Canada forge ahead with trade agreements with Colombia, Panama and South Korea, it's U.S. consumers and exporters who are being hurt financially. Take Colombia as a powerful example of the lost opportunity. The third largest market in South America, Colombia's economy has experienced explosive growth, on average seven percent annually, over the past four years. The U.S. International Trade Commission reports that the U.S.-Colombia trade agreement would boost the U.S. GPD by $2.5 billion and save U.S. exporters as much as $2 million a day by eliminating existing tariffs.
The E.U. and Canada trade deals will help them succeed at increasing their global market share. Meanwhile, the U.S. government, by its simple failure to take action on trade, is slowly tightening the rope around the hands of American companies and their employees.
This inaction is all the more frustrating because President Obama and U.S. Trade Representative Ron Kirk have spoken positively on trade and pointed to its key role in reviving the economy and creating U.S. jobs. On September 14, speaking in New York, President Obama explained:
"A healthy economy in the 21st century also depends on our ability to buy and sell goods in markets across the globe. And make no mistake, this administration is committed to pursuing expanded trade and new trade agreements. It is absolutely essential to our economic future."
The president's words versus the government's dormancy on trade leaves me puzzled. At this critical junction in our economy, Americans need more than symbolism - they need government action. We are ready for the White House to translate promises into achievements. Oratory alone does not boost U.S. exports, lift the GDP and create jobs. Those policy successes will require President Obama and Ambassador Kirk to implement a trade policy that gets American back on track.
The first step would be for the U.S. Trade Representative to move forward on its trade agenda revealed earlier this year. For months, the trade office has told us they are "evaluating" the benefits and gathering public comments on the Colombia, Panama and South Korea. This evaluation period will supposedly enable the White House to establish "benchmarks" they say are needed before they can make a recommendation to Congress.
What the administration even means by "benchmarks" still remains nebulous, but the comments submitted on the pending agreements show a groundswell of public support. For the South Korean agreement, of the 342 public comments submitted, 296 were positive with more than 90 percent in favor of passage.
With each day that passes, American exporters are slowly bleeding to death as they wait for genuine leadership on trade to emerge from their government and a coherent trade policy, negotiated years ago with Colombia, Panama and South Korea, to be put in place.
If our elected officials are serious about enacting policies that will help the United States recover from this deep and painful recession, America must once again lead the charge to reduce export barriers around the world. Another stimulus package that will only add to the federal deficit will not suffice. Rather, history and simple economics have proven that trade works. Trade spurs innovation, creates good-paying domestic jobs, and boosts exports.
The Obama administration must stop trying to assuage party constituencies and instead demonstrate definitive leadership on an issue of utmost importance for America's future and global strength.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
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