As the United States continues to recover from the recession and to create jobs, we must look beyond our borders to help power our economy. To create and sustain good jobs for the middle class, we must expand our exports, a sector in which America still ranks last among the world’s top economies. And to grow our exports, we must look to the rapidly expanding markets of the Asia-Pacific.
While we once thought of Asia as the Far East, on the West Coast, we understand our Asia-Pacific trading partners are our Near West. The United States is beginning to recognize and fully embrace our role as an Asian-Pacific nation.
By 2020, leading Asia-Pacific economies will take in $10 trillion in imported goods annually, and even more when services are included. That vast market is equivalent to two-thirds of the size of America’s entire economy in 2010 and will be driven by an increasingly urban middle class that will grow by more than 1 billion by 2020.
It is time for the United States to undertake a sustained effort to reverse a disturbing long-term trend — the decline in the United States’ overall share of Asia-Pacific trade.
From 2000 to 2010, the value of American goods exported to leading Asia-Pacific economies grew significantly, to $359 billion. But our share of regional trade did not. According to a new analysis by Third Way, the U.S. share of imports into these economies during the decade actually plummeted by 43 percent — from 14.3 percent in 2000 to 8.2 percent in 2010.
If this trend continues, America will miss a huge opportunity to use Asian growth to grow our economy. By reversing this trend, the United States could add hundreds of billions of dollars in new exports each year, supporting millions of new American jobs.
Why has America’s slice of Asia-Pacific trade been shrinking? There are a variety of causes, including the strength of trade among the region’s countries, led by China’s rapid export growth. But perhaps the biggest reason is the array of unfair and illegal barriers — from high tariffs and discriminatory standards to unfairly subsidized foreign competition — that block America’s competitive exports to the region.
For the past decade, Asia-Pacific economies have been forging a host of new trade deals that reduce or eliminate barriers to each other’s exports. In 2000, the region had four major trade arrangements. Today, there are 39, with many more on the way, including a possible deal among China, Japan and South Korea.
The United States has largely been on the outside looking in. As a result, our exporters continue to face serious impediments to trade, and Asia’s trade rules often ignore issues that are particularly important to the United States, from protection of intellectual property to labor and the environment.
Fortunately, America is beginning to get back in the race for trade deals in the Asia-Pacific and to fight for a bigger share of the region’s trade.
America’s comprehensive trade deal with South Korea is opening up that country’s trillion-dollar economy to a wide array of American manufactures, farm goods and services, and it could help recapture our historical share of that key market.
We are busy negotiating a Trans- Pacific Partnership trade agreement with 10 Pacific Rim countries that, together, make up the fourth-largest market for American exports. And the TPP’s American-influenced template for trade has spurred the interest of other Asia-Pacific countries, including Japan, and should give the United States and its partners needed leverage in the contest with China and others, who have different ideas about the need for strong and fair trade rules for the region.
Seizing a greater share of Asia-Pacific trade will also require other sustained efforts, including tough enforcement against economically significant trade barriers and smart investments to ensure that America has boots on the ground in the region to promote our exports and enforce our rights.
This will be hard work and will require extensive collaboration among the administration, Congress and other stakeholders. But the payoff would be huge. Getting back to a 14.3 percent share of leading Asia-Pacific markets would — in 2020 alone — yield almost $600 billion more in U.S. exports and more than 3 million additional jobs.
The recent G-20 economic meetings in Mexico were all about global economic growth — how to encourage it, find it and sustain it. America has a golden opportunity to seize Asia-Pacific growth but only if we stay committed to breaking down trade barriers and setting rules that give American manufacturers a fair chance to compete in the region.
Rep. Rick Larsen (D-Wash.) is a member of the Armed Services and Transportation and Infrastructure committees. Ed Gerwin is senior fellow for trade at Third Way.