Business Roundtable

July 2010

Executive Summary

U.S. trade continues to expand, and with it, U.S. employment. Today, more than 38 million U.S. jobs depend on trade. That means more than one in every five U.S. jobs is linked to exports and imports of goods and services.

• Services sector jobs figure prominently among these trade-dependent jobs. Moreover, contrary to popular belief, the net impact of trade on the number of U.S. manufacturing jobs is positive.
• Every U.S. state has realized net employment gains directly attributable to trade.
• As U.S. trade - both exports and imports - has grown over the past decade, caused in part by trade liberalizing international agreements, so has the number of U.S. jobs tied to trade. Indeed, trade-dependent jobs have grown at a faster pace than U.S. jobs generally.

Introduction

This report updates a path breaking study issued in 2007 by the Business Roundtable that offered a thorough examination of the impacts of trade on U.S. jobs. The earlier study and this update examine the impact on U.S. employment of both exports and imports of goods and services. It confirms that the net impact of trade on American jobs remains positive today. By implication, trade liberalization, which increases both exports and imports, results in net job creation rather than net job loss, as some assert.

The Importance of Trade to the United States

Trade has become an increasingly important part of the U.S. economy. Our exports and imports have grown consistently since the middle of the 20th Century and trade makes up an increasingly large portion of U.S. GDP. In 2008, total trade (exports plus imports) represented more than 30 percent of U.S. Gross Domestic Product. In 1947, at the launch of the General Agreement on Tariffs and Trade (the precursor to the World Trade Organization), it represented only 7.5 percent of U.S. GDP.

Export Trends

U.S. exports continue to grow. Over the last 13 years, total U.S. exports have increased at an average annual rate of 6.8 percent. In the last three years, since our last study, export growth has been especially strong, averaging 12.5 percent per year. The United States is a competitive exporter of industrial machinery, chemicals, aircraft, and semiconductors. Leading services exports include foreign travel/tourism, financial services, royalties and insurance.

Import Trends

U.S. imports have also been increasing over the last 13 years. Approximately half of U.S. merchandise imports are raw materials, capital goods and industrial products used by U.S. manufacturers to make goods in the United States. Thus, import demand is significantly impacted by growth in U.S. industrial production. The other half of U.S. merchandise imports is finished consumer goods. Key services imports include travel and transportation services - Americans traveling abroad for business or pleasure.

"Openness" of the U.S. Economy to Trade

Another important contribution to the growth in trade over the last 13 years is trade liberalization, which opened new markets for U.S. exports of both goods and services at the same time it opened the U.S. market to increased imports from other countries.

Gradual reductions in trade barriers began in 1994 between Mexico and the United States as part of the North American Free Trade Agreement (NAFTA).

Significant global liberalization began between the United States and members of the World Trade Organization as the Uruguay Round was implemented in 1995.

China joined the WTO in December 2001, starting the process of opening its market to U.S. exports of goods and services, and at the same time the United States began to gradually open its markets to Chinese exports of textiles and apparel, in particular.

Free trade agreements were implemented between the United States and Jordan (December 2001), Chile and Singapore (January 2004), Australia (January 2005), Morocco (January 2006), Central America (March 2006-January 2009), Bahrain (August 2006), Oman (January 2009), and Peru (February 2009). Each of these initiatives helped to increase U.S. exports as well as U.S. imports, and thus total U.S. trade.

For the full report, please view the PDF.