International trade is a primary generator of business growth in the U.S. And millions of higher-paying, higher-skilled jobs are dependent on it. Importantly, companies that export grow faster and fail less often than companies that don’t. What’s more, their workers and communities are better off.

Unfortunately, many Members of Congress have made trade the scapegoat of virtually all America’s economic problems. Although their intentions are good, their trade policy recommendations, if implemented, would be disastrous.

If anti-trade policymakers had their way, they would raise import barriers in an attempt to isolate producers from foreign competition. In response, foreign countries would retaliate by keeping U.S. products out. This would have an enormously negative impact on U.S. industry. In addition, America would lose more jobs than it would gain.

If we did the exact opposite—and eliminated all barriers to trade—we would generate a net increase in jobs! According to the U.S. International Trade Commission, if all U.S. trade barriers had been eliminated in 1999, more jobs would have been gained than lost—a number representing only one one-hundreth of 1 percent of the labor force. Plus, total output would have increased by $60 billion.

Furthermore, if U.S. tariffs were raised, imported consumer products would become much more expensive, hurting U.S. families. In turn, less disposable income would be available for education, health care, rent or mortgages. And factories that incorporate foreign components in their producbarrts would have to raise prices or absorb the difference.

New technologies and innovation, which have significantly boosted productivity, are primarily responsible for the loss of manufacturing jobs—not trade. As a result, fewer workers can produce much more than ever before. Surprising to many, U.S. manufacturing production has rapidly increased, not decreased, over the last 50 years, according to the Federal Reserve.

Consider this: would we have wanted to stop rising productivity in the U.S. agricultural industry that caused the number of farm jobs to fall from 9.5 million in 1940 to 2.2 million today? Currently, U.S. agricultural output can virtually feed the world. America did not “lose” 7.3 million farm jobs: they shifted to emerging industries. As a result, we became more efficient and prosperous.

Would we want to go back and save buggy maker jobs at the expense of auto workers, dump ATMs because they eliminated bank teller positions or destroy voice mail because it replaced receptionists?

Since 1970, the U.S. economy generated 60 million net new jobs. What’s more, the Department of Labor projects a net increase of another 21.3 million from 2002 through 2012, with 96 percent in the service sector.

How well do service jobs pay? Over the last decade, the U.S. service industry has become highly sophisticated. In turn, average hourly earnings for service production workers have already caught up to those in manufacturing, according to the Bureau of Labor Statistics.

In an attempt to remedy several U.S. economic problems, many Members of Congress apply old-era solutions to today’s challenges. This is part of the problem.

Today, technological advances, the fall of Communism and globalization are shaping a new world. In response, we can elect representatives who recognize this and take actions to improve the country’s competitiveness or chose policymakers who hope the world of yesterday returns.

Trade is not the cause of American economic ills. It’s one of our bright spots on our economic horizon.

This article appeared in Impact Analysis, May-June 2005.
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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, and the latest economic trends. He's also founder of both the ManzellaReport.com and Manzella Trade Communications, Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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