Why Expanded Trade Will Support an Economic Recovery | Commentary

Posted September 19, 2014 at 4:14pm

The U.S. economy is enjoying a slow but steady rebound, with better than 4 percent growth over the second quarter of 2014. Consumers’ spending is healthy, their expectations are at their peak for the year and the private sector has created more jobs over the last several months. But the government can further strengthen job creation and bolster the recovery by improving U.S. trade, especially by increasing exports.

Superior technology is one of America’s greatest competitive advantages. To compete in the global marketplace, our manufacturers must be able to effectively supply the world with their products. The Consumer Electronics Association’s latest U.S. Consumer Electronics Sales and Forecasts report estimates total industry revenues will reach $211.3 billion by the end of 2014, a record high. Highly anticipated emerging product categories — 3D printers, health and fitness devices, smart watches, Ultra HD television displays and smart thermostats — will help drive worldwide demand even further, but only if the companies that make these products have international access.

Congress has sat on proposals to increase protections for manufacturers and consumers, including better prevention of counterfeit products crossing our borders. The bipartisan Customs Reauthorization Bill would help federal agencies fight counterfeit products and better prevent them from flooding the U.S., improve trade and intellectual property rights enforcement, ensure import safety standards, and renew the trade promotion authority of the president. But congressional gridlock has, so far, stymied the effort. Since its introduction, the Customs Reauthorization Bill has received only one hearing, and none in the last 15 months.

U.S. tech manufacturers who rely on exporting products look to Congress to implement trade policies such as free trade agreements to help them compete abroad. As Ray Kimber — founder, owner and president of Kimber Kable in Utah – recently told the Senate Finance Committee, “FTAs increase confidence and certainty for U.S. industry doing business in … partner countries. In 2012, America’s free trade agreement partners purchased 12.8 times more goods per capita from the United States than did other countries.” He added that rules-based environments established through FTAs give U.S. companies the certainty of knowing that their innovations will be protected.

According to the Department of Commerce, the U.S. exported $2.3 trillion of goods and services in 2013, the fourth straight year of record exports. Several trade agreements that have the potential to boost these numbers even further are being negotiated. But to get the agreement passed through Congress swiftly, the president will need TPA, which limits the congressional approval process for trade legislation to trade votes only — no unrelated provisions can be added.

Congress has given the president trade promotion authority, but it expired in 2007. Without TPA, foreign officials may perceive the president or U.S. trade representative as lacking any power to see a deal through — and, in this case, perception is reality. If the president can’t ensure timely congressional reviews of trade deals, any sitting U.S. president doesn’t have the clout needed to negotiate with other countries. Since passage of the Colombia, Panama and Korea free trade agreements in 2011, no other FTAs have been concluded by the administration or passed by Congress; by comparison, during that time other countries told the World Trade Organization they had entered more than 40 agreements.

One huge obstacle to the approval of trade deals involves unnecessary and anti-innovation proposals designed to placate the content lobby. For example, these agreements include intermediary liability language — the same kind that Congress rejected in the SOPA and PIPA battles — along with proposals to increase the existing international copyright term. These provisions should be jettisoned, not allowed to bog down otherwise beneficial trade agreements.

At the beginning of this year, Sen. Orrin G. Hatch, R-Utah., and former Sen. Max Baucus, D-Mont., (now the U.S. ambassador to China, where trade issues are paramount) introduced the Bipartisan Congressional Trade Priorities Act of 2014, which would renew the TPA and enable Congress to reject deals that go against U.S. laws. While the bill received a mixed reaction, it is clear that a common-sense, bipartisan and pro-innovation approach to untangling the current knot of trade negotiations is needed. This approach makes sense as it is common-sense, bipartisan and pro-innovation and will help untangle the aging knot of trade negotiations.

Our economic recovery is still too fragile to take for granted. By allowing U.S. companies to innovate and remain competitive in the global marketplace, free trade agreements can ensure continued economic growth and provide a bulwark against future downturns.

Gary Shapiro is president and CEO of the Consumer Electronics Association.