On Tuesday, July 27, 1999, Western New York Congressmen John LaFalce, Jack Quinn and Tom Reynolds, as well as the majority of their peers, voted to extend Normal Trade Relations (NTR) to China. We applaud this action for several reasons. Most importantly, because it is highly beneficial to Western New York companies and workers.

By granting China NTR, China’s products continue to be allowed to enter the United States at the same normal duty rates we offer other countries (all but Afghanistan, Cuba, Laos, North Korea, Serbia/Montenegro, and Vietnam).

In return, U.S. products continue to be allowed competitive access to the Chinese market at a time when exports are fueling Western New York’s economic growth. This is key, since in June 1999, the Buffalo-Niagara Falls metropolitan area registered an unemployment rate 18 percent higher than the national average.

Furthermore, export-related production has become a primary source of new jobs in New York's manufacturing sector, and now accounts for almost one-third of real U.S. economic growth. Its importance is increasing at the same time when China, with one of the world’s largest economies, represents one of the United States’ fastest growing export markets.

Compared to other U.S. states, New York is the third largest merchandise exporter to the world. And New York exports to China, which now includes Hong Kong, are larger than New York’s exports to Germany or France.

To determine just how important exports are to our local economy, one simply needs to review the local area employment picture. For example, as of June this year, the Buffalo-Niagara Falls metropolitan area employed more workers in the transportation equipment industry than any other manufacturing sector. Not surprisingly, transportation equipment is New York’s second highest export to China. And other major employers, which include the industrial machinery, food product, chemical, fabricated metal, electronic, and scientific instrument sectors, also are among New York’s top exports to China.

When looking at exports from a national perspective, their benefit is obvious. For example, in 1998, U.S. exports of goods and services worldwide reached $931 billion, increasing almost 140 percent since 1990. This supported approximately 12 million American jobs. And high-technology industry jobs --which tend to be big export winners -- when supported directly by exports, pay 34 percent more than the average national wage. In general, jobs supported directly by exports pay 20 percent more, and workers in jobs supported both directly and indirectly by exports are paid 13 percent more.

Additionally, according to the report, Why Exports Matter: More!, published by the Institute for International Economics and The Manufacturing Institute, “in U.S. plants that export, worker productivity is higher, jobs are compensated better and technologies are adopted more aggressively than among non-exporters.” The report contends that since the late 1980s, plants and firms that have sustained an export commitment, or that have initiated exports, experienced almost 20 percent faster employment growth than those that never exported or stopped exporting. In fact, the report states that communities that hosted exporters benefited from a stable, growing, high-performance workforce and tax base.

These benefits don’t only apply to large companies. Export participation by small and medium-size companies is significantly higher than at any time in the past. And, according to the U.S. Small Business Administration, small businesses provide virtually all net new jobs, represent 99.7 percent of all employees, and provide 55 percent of innovations. The international success of small businesses has numerous implications for Western New York.

The United States, which accounts for only 4 percent of the world’s population, needs to sell to the other 96 percent. Passing NTR legislation helps us to achieve this. And although trade is not a panacea, it is one of the best tools we have to influence foreign government policies with which we don't always agree.

Thus, denying China NTR would have lead to deteriorated U.S.-Chinese relations, fostering an environment of alienation and suspicion. This also means that any future U.S.-Chinese cooperation on sensitive issues, such as human rights, environmental and intellectual property protection, nuclear proliferation, and China’s currency stability would have been unlikely.

Today, U.S.-Chinese relations are even more important as a result of heightened tensions between Pakistan and India. As those two countries attempt to flex their military muscle and display their new nuclear capabilities, China and the U.S. need to cooperate more than ever before in order to counterbalance the increasing probability of a military miscalculation.

This article appeared in The Buffalo News, August 1999.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, emerging risks, competitive strategies and the latest economic trends. He also is founder of the ManzellaReport.com and Chief Strategy Officer of Ignition Life Solutions. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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