There is news that House and Senate negotiators have agreed to move Trade Promotion Authority, known as "fast track," by early next year. Those of us who fret about the economy can take great comfort in that report. In terms of good news, it is on a par with the recent budget deal that promises an end to the seemingly endless fiscal crisis tying Congress up in knots.
Simply stated, fast track says that when the Obama Administration - or any administration - negotiates a trade deal, Congress can only vote it up or down, but cannot tinker with it. Once you invite 435 legislators to fiddle around with trade language, it's a dead letter. No other country would negotiate with us in good faith if we permitted that to happen.
Fast track may provide a boost to the 12 country Asia-Pacific Partnership agreement the administration is committed to. Trade negotiations are always volatile for all parties. The nations we are negotiating with will be more likely to reach accord knowing that Congress is likely to ratify the final package.
The importance of trade to our economy cannot be overstated. The link between trade and economic growth is clear and unmistakable. Trade deals open new markets to exporters across the economic landscape. More trade stimulates more investment and R&D. It has been estimated that every additional $1 billion in exports supports creates another 20,000 jobs. Though that is a rough estimate that depends on the industry in question, there is no question that a rising tide of international commerce fosters job creation. Trade is especially vital to mature economies like our own; 95 percent of consumers are not here.
The bad news is that recent trends reflect a growing resistance to international trade. Advances in technology makes it possible for more companies to remain within their national borders. Indeed, advances in technology are making it possible for a growing number of U.S. manufacturing companies to bring production back to our country. And weak economic growth such as characterizes most of the world today inevitably fosters pressure for protectionism. To this I would add that huge state-owned enterprises like those in Russia, China and Brazil are inward looking and inherently averse to free trade.
The data confirms this unwholesome trend. Cross-border investment inflows fell by 18 percent in 2012, and it is expected they will show a similar decline this year. Last year, G-20 countries passed 23 percent more protectionist measures than they did in 200, and smaller nations also are reporting more protectionist measures.
The fact is - free trade has always been a hard sell because every nation fears increased competition and the benefits are difficult to quantify. We are living in an era of free trade mainly because the United States has fought for it. To its credit, the Obama Administration recognizes the importance of this legacy and is committed to its continuance. Early Congressional approval of fast track will augur well for the future of a growing global economy.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. December 2013