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May 15, 2018

While U.S. debates free trade, other nations move forward

By: Andrew Lenderman   Comments: 0

John Murphy, the senior vice president for international policy at the U.S. Chamber of Commerce, gives the lunch keynote, “Tariffs, Trade, and Trump: A Trade Policy Update from Washington,” at the 2018 AWB Spring Meeting at the Davenport Grand Hotel in Spokane on May 15, 2018. (Photo: Brian Mittge/AWB)

SPOKANE -- While America debates tariffs and trade policy, other countries are moving ahead and signing deals that help get their goods to international markets and money flowing to their manufacturers and producers.

Chile has trade agreements with 60 countries. The European Union has 58, and Mexico has 50. In contrast, the United States has 20.

“When it comes to trade, when you stand still you risk falling behind,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce.

Murphy was the keynote speaker at the opening lunch for AWB’s Spring Meeting Tuesday in Spokane.

His remarks covered updates on the North American Free Trade Agreement negotiations, the Trans- Pacific Partnership, tariffs and ongoing talks with China.

Trade offers both opportunities and challenges, Murphy said. About 41 million American jobs depend on trade. Ninety-eight percent of companies that export goods are small and medium sized businesses, like many AWB members. And about half of the country’s 12 million manufacturing jobs depend on trade.

The numbers are huge for Washington, too.

Washington exported about $77 billion in 2017, everything from airplanes and cherries to $2.2 billion in wheat from the Palouse region.

Washington is the third-largest goods exporting state, and 40 percent of all jobs are tied to trade.

However, the playing field is not even.

U.S. markets are largely open to imports, Murphy said, but tariffs in developing countries are much higher.

“This is like going into a basketball game down by a dozen points from the tip off,” he said.

Trade agreements are part of the solution and can level the field and be mutually beneficial for all involved, he said. The countries with trade agreements with the U.S. represent just 6 percent of the world’s population, but they buy about half of all of U.S. exports.

“They turn even small economies into big markets for American exports,” Murphy said of free trade agreements.

American manufacturing and the fewer factory jobs were a major theme in the 2016 presidential campaign, and it’s an issue that continues to be debated today.

Although manufacturing output has increased dramatically since the 1950s, the number of jobs peaked at 19.5 million in 1979, and there are about 12 million today.

“The reality is that we’re seeing a productivity revolution,” Murphy said, driven by technology.

But these job losses would have been even greater without free trade, Murphy said.

“Exports have provided a huge impetus to American manufacturers,” he said.

Murphy also discussed NAFTA and referenced the ongoing efforts to modernize the 22-year-old agreement. It’s unclear if negotiators will meet this Thursday’s deadline to finalize negotiations.

NAFTA supports 14 million American jobs, and Canada and Mexico are “indispensable” and the largest export markets for the U.S. by far, he said.

Recent criticism of NAFTA in the nation’s capital has gotten people’s attention. Senators, governors, agriculture and business leaders have jumped in to push back and voice their support for the agreement.

“NAFTA oddly has never been so popular on Capitol Hill,” he said.

Murphy also highlighted polling that shows Americans support trade more than they have in the past, with some voters showing an 80 percent approval rate.

Eleven countries in the Trans Pacific Partnership are moving forward without the United States. Canada, Mexico and Japan are updating agreements with the European Union.

“What you see is all these countries reaching new trade pacts among themselves,” he said. “The world won’t stand still.”

The Export-Import Bank, another important issue for U.S. exporters and a major policy goal for AWB, has been operating without a quorum since being reauthorized. This has severely limited the size of loans it can offer to U.S. exporting companies.

When asked about the bank, Murphy said the U.S. Chamber continues to push for solutions, but it’s not clear when there could be a new nominee for a board chairman.

“We’re not giving up, but we don’t have a solution yet,” he said.