Tags: trade | NAFTA | TPP | economy

Attacking Trade Attacks Our Economy

Attacking Trade Attacks Our Economy

(Dreamstime)

By    |   Tuesday, 06 September 2016 07:27 AM

We have two presidential candidates being less than presidential. They have expressed nothing but contempt for American trade policies. Ignoring our proud history of global trade leadership is based on a lack of knowledge, biased attitudes about engaging the rest of the world, and in the case of Hillary Clinton, ongoing pressure from trade unions that continue to incorrectly equate trade with job loss.

To put trade in perspective, the Office of the United States Trade Representative notes that although constituting less than 5 percent of the world's population, Americans generate and earn more than 20 percent of the world's total income. America is the world's largest economy and leading global trader.

The process of opening world markets and expanding trade, initiated in the United States in 1934 and consistently pursued since the end of the Second World War, has played an important role in the development of American prosperity.

According to the Peterson Institute for International Economics, American real incomes are 9 percent higher than they would otherwise have been as a result of trade liberalizing efforts since the Second World War. In terms of the U.S. economy in 2013, that 9 percent represents $1.5 trillion in additional American income.

So why would anyone attack trade?

It may surprise people that half of all imports are machinery and raw materials so that US manufacturers can create products to sell domestically and to export. That means American manufacturers are contributing to our economy and more importantly, creating good paying jobs.

Dan Ikenson from the Cato Institute was recently a guest on my Made in America radio show, where he sought to educate trade haters hung up on the fact that the United States has run annual trade deficits for 41 straight years.

But during those 41 straight years of trade deficits, the size of the U.S. economy tripled in real terms, real manufacturing value added quadrupled, and the number of jobs in the economy almost doubled, outpacing growth in the civilian workforce. He suggested that perhaps these trends would have been more favorable had the United States run 41 straight years of trade surpluses, but that is highly doubtful.

His most compelling defense of trade is that the dollars that go abroad to purchase foreign goods and services (imports) and foreign assets (outward investment) are matched almost perfectly by dollars coming back to the United States to purchase U.S. goods and services (exports) and U.S. assets (inward investment).

Any trade deficit (net outflow of dollars) is matched by an investment surplus (net inflow of dollars). That investment inflow undergirds U.S. investment, production, and job creation.

What is most troubling about the trade attacks are that they are based on sense of protectionism. But as we have learned, protectionism was a contributing factor to the Great Depression. It was a bad idea then, it’s a bad idea today.

In the middle of the firestorm is the 1994 North American Free Trade Agreement with Mexico and Canada. Attacking these free trade agreements is ludicrous when you know the facts.

For over 30 out of the 50 States, Canada or Mexico rank as the first or second largest export market. U.S. trade with Canada and Mexico support over 140,000 small and medium-sized businesses, resulting in NAFTA being responsible for more than three million American jobs.

U.S. trade with our NAFTA partners has unlocked opportunity for millions of Americans by generating Made-in-America jobs and exports.

Since NAFTA was ratified, trade with Canada has risen by 111 percent, while our trade with Mexico has risen a whopping 378 percent.

As our two largest export markets, both Canada and Mexico buy more Made-in-America goods and services than any other countries in the world. Since NAFTA’s implementation, U.S. states like Illinois, Ohio, Michigan, and many others have seen a surge in exports across North American borders.

We simply cannot afford to pull back from our robust global trade success. Even if some trade agreements need refinement, trade is a critical source of our nation’ wealth and job creation.

As Benjamin Franklin once wrote: “No nation was ever ruined by trade, even seemingly the most disadvantageous.”

 

Neal Asbury is chief executive of The Legacy Companies. To read more of his work, CLICK HERE NOW.

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NealAsbury
We have two presidential candidates being less than presidential. They have expressed nothing but contempt for American trade policies.
trade, NAFTA, TPP, economy
707
2016-27-06
Tuesday, 06 September 2016 07:27 AM
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