Each day in Minnesota and all across the nation, billions of dollars worth of products begin their journey to be sold overseas. American farmers, manufacturers, and businesses rely on exports to strengthen and grow both their bottom line, as well as our economy’s.
Free and fair trade agreements help spur economic growth; improve efficiency and innovation; create better, higher-paying jobs for hard-working Americans; and increase the availability of lower-priced products here in the United States.
Furthermore, the role of free trade as an expression of liberty and opportunity for all individuals signifies the very principles our country was founded upon. Yet, the free trade agreements with Panama, South Korea and Colombia negotiated under the Bush Administration remain little more than words on paper. Despite having been carefully negotiated over a period of two and half years, these agreements have become bogged down by partisan divides. In the meantime, with an average tariff of 53% imposed on U.S. agricultural products by South Korea last year, for example, there is little wonder the United States International Trade Commission estimates U.S. sales of agricultural products could increase by as much as $3.8 billion once the U.S.–South Korea agreement is fully implemented.
And while Congressional leaders seem content to leave these agreements on the back burner, America’s fragile industries are left hanging in the balance. The impact of depressed exports is fully evident to those who make their livelihood from them. In fact, Minnesota’s manufacturing exports experienced a 19% decline during the first quarter of 2009, mirroring a similar decrease nationwide. And our agricultural sector, especially our ailing pork and dairy producers, certainly needs no reminder of the importance of expanded export channels to the survival of their farms.
Unfortunately, the closest we get to good news on trade these days is that the trade deficit, which reached $840 billion last year, may at least be plateau-ing. However, while the deficit seems to have steadied, at least temporarily, it is more the result of a sharper reduction in imports than of a steep rise in exports. Regardless, as one economist recently summarized, “the trade picture from the United States is cloudy right now.”
In part this is due to Washington’s complete inability to exercise fiscal responsibility. As reported yesterday in the Christian Science Monitor:
Since 2002, as China’s exports ramped up, the US trade gap has surged into what some economists see as a danger zone – a size greater than 5 percent of America’s gross domestic product. That’s way beyond where it was in the 1980s and ‘90s
One cause for the trade gap is US financial habits. High federal budget deficits and consumer debt mean that America is forcing itself to borrow overseas – and in effect that means imports must outrun exports. The danger is that other nations will become wary of lending so much, and a messy collapse of the dollar or a spike in US interest rates could result.
The Monitor continued:
Beyond the gigantic trade deficit, some economists worry most that the overseas migration of America’s manufacturing base is reaching a crisis level.
The US is now running trade deficits in advanced-technology products such as computers – a trend that began in 2002. In a few years, Chinese firms expect to export cars to the US. Even America’s longstanding leadership in aerospace and semiconductors is at risk, says economist Charles McMillion of MGB Information Services, in a new report for the US-China Economic and Security Review Commission.
Americans faced worries about economic decline before, a quarter-century ago. One big difference today: US government debt has ballooned, is on pace to keep growing, and is held in large part by foreign governments and investors.
“The US then was the world’s banker, and now we’re the world’s debtor,” Mr. McMillion says.
A degree of debt is not a problem, but many economists see current trends as unsustainable.
Looking to the future, I believe Americans deserve opportunities to sustain their productivity, access new customers, and grow their markets overseas. From the small rural farmer to the urban industrial manufacturer, free and fair trade accommodates expansion of production, while ensuring consumers have access to high-quality, competitively priced goods and services. Congress needs to reset its priorities, spending less money at home and spending more time on approving strong trade agreements with our overseas partners.
The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.