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Needed: An aggressive strategy for exports
Professor Matthew Slaughter of Dartmouth's Tuck School of Business has a provocative op-ed in today's Wall Street Journal, "Exports Sagging? Try Some Free Trade,"
In his 2010 State of the Union address, President Obama introduced the [National Export Initiative] goal of doubling U.S. exports in five years. Such an achievement would help stabilize the post-crisis global economy. It would also help unemployed workers in the U.S., where the total number of private-sector jobs remains the same as it was 12 years ago. Exporting companies compared with non-exporters tend to generate about twice as many sales, to be about 10%-15% more productive per worker and thus to pay about 10%-15% more in salaries. ...
Amid slow economic growth abroad and little movement in the American dollar, the key to spurring U.S. exports is aggressive policy liberalization. Yet how many new U.S. free-trade agreements were negotiated and ratified during President Obama's first term? Zero. How many new agreements look likely to be negotiated and ratified in 2013? Zero. For America to achieve the president's National Export Initiative goal, these zeros must soon be replaced with bold new trade agreements.
However, new trade agreements cannot be mercantilist, Slaughter argues, instead opening U.S. borders to foreign exports as well as foreign borders to U.S. exports. "Exports 'made in America increasingly hinge on creative new ways to make goods and services used in global supply networks," he writes.
That final point is explored in detail in a new paper that Slaughter wrote for Business Roundtable and the United States Council for International Buisness, "American Companies and Global Supply Networks: Driving U.S. Economic Growth and Jobs by Connecting with the World." U.S. companies that operate in the global economy -- not only exporting, but investing abroad to meet foreign demand -- support domestic growth and job creation, the study argues. From Bloomberg's report:
Slaughter found that after signing up customers overseas, many companies, especially small businesses, add employees to meet the demand.
“Global engagement of companies helps create jobs not just in their own companies, but others that they do business with, through their supply chains,” Slaughter said.
The typical company doing business outside the U.S. buys goods and services from more than 6,000 small businesses, with those purchases valued at more than $3 billion. Today, 26.1 percent of those U.S. companies are classified by the U.S. government as small businesses, the study said.
Exactly. Any renewed push for expanded trade should recognize the value of ALL the activities U.S.-based businesses conduct in the global marketplace. That's the pathway toward renewed growth.