International Trade – The States Are Economic Stakeholders
The views expressed in this blog post are those of a subject matter expert and do not necessarily reflect model policies maintained by the American Legislative Exchange Council.
It is so widely accepted that citizens of countries embracing international trade fare better economically than citizens of countries that do not, it’s considered established fact. Open economies grow faster than closed economies. The World Bank has reported that per capita real income grew more than three times faster for developing countries that lowered trade barriers (5.0% per year) than other developing countries (1.4% per year) in the 1990s.  Think tanks from the Heritage Foundation to the Brookings Institution agree that freedom of international commerce in trade and services promotes economic development.
By reducing poverty, international trade also addresses some national security concerns. According the OECD, trade openness can be tangibly measured in terms of economic growth, productivity, a higher standard of living, further innovation, stronger institutions and infrastructure, and even the promotion of peace.
So what does international trade mean for the individual states here in America? States like Utah, Georgia and California recognize that international commerce means jobs for their citizens – more than one in five jobs in each of these three states is supported by international trade . Almost 95% of world consumers live outside of the United States,  and trade openness makes it possible for U.S. companies to reach markets in the rest of the world by reducing tariffs and removing non-tariff barriers more prevalent in emerging markets.
I prefer the phrase “trade openness” because “free trade” may be misunderstood as somehow getting something for nothing. Of course, international trade, just like domestic commerce, must be fair. In other words, traders must follow the rules and not engage in unfair trade or anticompetitive practices. In that way, “free trade” is a misnomer.
Trade openness actually expands markets, and, conversely, closed borders lead to economic stagnation, a lesson learned in history by the Tariff Act of 1930, also known as Smoot-Hawley, which raised U.S. tariffs to record highs. According to Ben Bernanke, “[e]conomists still agree that Smoot-Hawley and the ensuing tariff wars were highly counterproductive and contributed to the depth and length of the global Depression.”
Today, the U.S. is engaged in several major market access trade negotiations, most notably the Trans-Pacific Partnership and the Trans-Atlantic Trade & Investment Partnership. The U.S. is also involved in a plurilateral effort by 23 World Trade Organization (WTO) members accounting for 70 percent of world trade in services to negotiate the Trade in Services Agreement (TISA), which aims at opening up markets and improving rules in areas such as licensing, financial services, telecom, e-commerce, maritime transport and professionals moving abroad temporarily to provide services.
Recently, the WTO concluded a Trade Facilitation Agreement, which cuts red tape at borders and even addresses a common form of corruption – bribery of Customs officials. This part trade/part aid agreement provides a blueprint for customs modernization for the developing world, of which many countries are considered emerging markets where the greatest opportunities are said to lie, and even provides for capacity building and donor assistance or money to improve customs processing by automating systems and implementing modern procedures thereby facilitating legitimate trade. The transparency and predictability inherent in these reforms can take some of the risk out of doing business abroad encouraging small and medium sized enterprises to enter global markets.
The bottom line is that U.S. exports create jobs in the U.S. According to Miriam Sapiro, a visiting fellow in Global Economy and Development at Brookings and former deputy U.S. Trade Representative, “[d]uring the past five years, increased exports have been responsible for one-third of U.S. economic growth” supporting “over 11 million jobs, 1.5 million of which have been created since 2010.” According to Ambassador Sapiro, “U.S. workers are playing a key role in expanding global value chains, which take advantage of advances in U.S. technology and energy independence.” Simply put, open markets and international trade creates jobs by expanding markets.”
It is for this very reason that reducing tariffs and market access is so important to each and every state of the union. It is now time for the Administration and Congress to work together to renew Trade Promotion Authority (TPA) necessary for Congressional approval of free trade agreements like the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership.
Now is the time to tell Washington to do its work because it means jobs for your state.
Evelyn Suarez founded The Suarez Firm in 2014 to assist businesses seeking to take advantage of opportunities in emerging markets. She is an international trade attorney who focuses on import and export compliance and regulation as well as on anti-corruption and trade policy issues and who has years of experience in the private sector and in international trade agencies. Ms. Suarez serves on various Boards, including Virginia Maritime Association and Women in International Trade and was named a “Super Lawyer” in International Trade law in 2013 by Washington, D.C. Super Lawyers magazine.
 OECD Post “Why Open Markets Matter” at http://www.oecd.org/trade/whyopenmarketsmatter.htm.
 Monetary Policy and the Global Economy, Ben S. Bernanke.
 Brookings Now, “Why Trade Matters,” http://www.brookings.edu/~/media/research/files/papers/2014/09/why%20trade%20matters/trade%20global%20views_final.pdf