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Lighthizer Must Revive American Trade Momentum

Lighthizer Must Revive American Trade Momentum
Olivier Le Queinec/DreamsTime

By    |   Tuesday, 06 June 2017 04:08 PM

Trade has taken a backseat in the Trump agenda as the country awaited Congress to finally confirm veteran trade lawyer Robert Lighthizer as U.S. Trade Representative. 

The lag has slowed down important negotiations and the ability to revitalize American trade, which is vital to our economy and job creation.

As a reminder, the U.S. Trade Representative (USTR) has primary responsibility for developing and coordinating the implementation of U.S. trade policy. Under the Trade Expansion Act of 1962, Congress established an interagency trade policy mechanism to assist with the implementation of these responsibilities. USTR executes its institutional interagency role through two processes, the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC) - both chaired by USTR.

We have been stuck in neutral until we have someone who can negotiate or renegotiate trade agreements.  The priority for the Trump administration is taking a hard look at the North American Free Trade Agreement (NAFTA).

As an exporter, I realize that NAFTA may not be perfect, but you have to understand that NAFTA created the world’s largest free trade area of 450 million people, according to the CIA World Factbook 2016.  They note that NAFTA is “an economic powerhouse of $22.47 trillion, as measured by gross domestic product. That's because it links the economies of the United States ($18.5 trillion), Canada ($1.67 trillion), and Mexico ($2.3 trillion). That trade area is greater than the economic output of the 28 countries in the entire European Union.”

From 1993-2015, trade between the three members quadrupled, from $297 billion to $1.14 trillion. That has boosted economic growth, profits, and jobs for all three countries. It also lowered prices for consumers. This is a tremendous success by any measure.

It would be a huge mistake to walk away from this trade agreement or cause Mexico or Canada to walk away from it.

We must also continue our trade negotiations with China; and with good reason. 

The American trade deficit with China, hit nearly $350 billion in 2016.  The upshot is that American goods cost too much to Chinese consumers, while Chinese imports carry prices cheaper than American-made goods.

According to the Economic Policy Institute, due to the trade deficit with China 3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).

What’s more, the growing trade deficit with China has cost jobs in all 50 states and the District of Columbia, and in every congressional district in the United States.

We must address this growing problem by engaging China in tough trade negotiations.

The New York Times notes during the most recent trade negotiations with China, United States beef producers and financial firms will get more access to Chinese markets in exchange for chicken imports and a potential opening for Chinese banks.

This may sound good, but China gave up very little.

Yet, we have to give high marks to the Trump administration for at least trying to hold China accountable for their trade practices, instead of wringing our hands and believing that we have to accept the raising trade imbalance.

I was heartened by a USA Today story that reported that “President Trump’s top trade adviser on Monday defended the administration’s approach to global economics and its commitment to ‘free, fair and reciprocal’ trade agreements that he says are paramount to national security.” I could not agree more.

Keep in mind that half of all U.S. imports are used as raw materials, components and sub-assemblies for American manufacturers.  Any rise in tariffs or interruptions in trade flows will impact American manufacturing costs, causing higher prices for exports and for American consumers.

Quoting Peter Navarro, director of the White House National Trade Council,  USA Today writes: “ Pro-trade globalists have argued that automation, not free trade, is chiefly to blame for the exodus of American manufacturing jobs. Navarro said he didn’t buy the argument. Citing Germany, whose factories rely heavily on robots, Navarro said the country’s manufacturing sector employs 20% of workers in Germany compared with 8% in the United States.  Strong manufacturing in the industrial base is the very bedrock of American national security.”

That’s it in a nutshell. It’s time to start looking at a robust U.S. trade strategy as a key component of our national security. When our economy gets stronger, America gets stronger by boosting manufacturing and creating jobs.

Neal Asbury is chief executive of The Legacy Companies.

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Trade has taken a backseat in the Trump agenda as the country awaited Congress to finally confirm veteran trade lawyer Robert Lighthizer as US Trade Representative.
Lighthizer, American, Trade, US, Representative
Tuesday, 06 June 2017 04:08 PM
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