By John Manzella
In the years ahead, U.S. economic growth is projected to remain modest at best. Consequently, for many upstate New York firms interested in higher returns, international expansion is essential.
Plus, markets outside the United States represent 73 percent of global purchasing power, 87 percent of economic growth and 95 percent of world consumers, reports the U.S. Chamber of Commerce. And on average, U.S. companies that export employ twice as many workers, produce twice as much output and generally offer better health insurance and pensions than non-exporting companies, says the Peterson Institute of International Economics, a Washington, D.C., think tank.
In addition, the Business Roundtable, an association of chief executive officers of leading U.S. companies, estimates that trade accounts for nearly one in every five jobs.
Today, the average U.S. import tariff is 1.5 percent, reports the U.S. trade representative. However, the average foreign country tariff is nearly 6 percent, says the World Economic Forum. New trade agreements that reduce foreign barriers will help U.S. companies export to a greater extent, contribute to overall economic strength and create more jobs. But there is a problem: the United States is way behind.
The United States currently has only 14 free trade agreements with 20 partners. Unfortunately, there are approximately 400 free trade agreements around the world without U.S. participation. This puts our firms at a competitive disadvantage.
The United States maintains a manufacturing trade surplus with its free trade agreement partners. This demonstrates that when trade barriers are reduced or eliminated, American firms can successfully compete anywhere.
To level the playing field, Congress needs to pass new agreements like the recently completed Trans-Pacific Partnership (TPP) that includes 12 Pacific-bordering nations and represents approximately 40 percent of global economic output and one-third of trade.
According to one study, TPP is anticipated to boost U.S. income by $330 billion by 2025.
Since only five percent of small or medium-size enterprises export, there’s a significant potential for growth. And small businesses account for almost two-thirds of America’s net new jobs, says Ed Gerwin, senior fellow at the Progressive Policy Institute.
To succeed in today’s hyper-competitive global environment, more companies – both small and large – are adapting to the new economic realities and pursuing markets abroad. For the benefit of our companies, employees and communities, global engagement is one of the best ways to create new jobs and achieve higher economic growth right here in upstate New York.
John Manzella is CEO of the World Trade Center Buffalo Niagara.