This New Era of International Trade
How exciting, to be living in a time of incredible technological advancements and developments everywhere we turn! The Fourth Industrial Revolution is marked by emerging technology breakthroughs in many fields, including robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, The Internet of Things (IoT), 3D printing and autonomous vehicles. It is a key source of growth and opportunity in the global economy. USA technology has always been the indisputable leader in this. But, maybe not this time. Competitive tensions are deepening as other countries realize the leader in advanced technology will also ensure their future prosperity. It’s hard for us to imagine, but global competition to lead this market is fierce. And, perhaps for the first time, in our lifetimes, we will need to compete to be the frontrunner in this race; and insure our future economic growth.
Most Wisconsin business execs report the domestic economy along with their domestic sales have picked up. It would be so easy to just retreat to familiar domestic business. But everywhere we turn, the news of the day is somehow, global business. Everywhere we turn, we’re being drawn in, or impacted by the global economy. Even on our daily commute, we are now dodging 1,000 dump trucks a day running gravel loads from Waukesha County to the FoxConn construction site in Racine. FoxConn in our midst, will become a Wisconsin classroom for doing business with the 67% of the world population that will be in Asia/Pacific by 2050. Germany’s Haribo gummy bears, and Sweden’s IKEA furniture; all remind us Wisconsin plays globally. Today 96% of the consumers are outside the USA. 97 out of 100 people added to the population in the next decade will live in developing countries needing Wisconsin products. By 2050; 81% of the world population will be in Africa and Asia/Pacific; with only 4% living in North America. We can either choose to ignore and retreat from this to our now flourishing domestic business; or we can proactively move forward. My Wisconsin will rise to this challenge, as we always have. It’s our way.
Right now, it’s difficult to keep up with the “tweet du jour” that seems to change all the rules daily, regardless of your politics. Let’s understand and consider what’s changing and going on here to give you confidence to move forward strategically, productively, and globally in what feels like uncertainly in trade. What’s clear is America cannot have a growing economy with increasing wages and jobs; unless we continue to reach beyond our borders selling Wisconsin manufactured products, agricultural products, and services to the 96% of the world’s population outside the US.
In this new Fourth Industrial Revolution of technology breakthroughs, we need to reevaluate how we have historically done trade; to assure Americans are competing on a level international playing field. It’s a new technology innovation age where the flow of information and data; is likely more important than physical goods. Our existing trade rules may no longer be effective. When our current trade agreements were penned, there was no concern about protecting intellectual property, innovation, or fair-trading practices with technology transfer. While we want to trust and believe in free and open trading; we need to assure American companies are fairly protected. Many countries are competing to be the top player in this new technology revolution. It’s good to know some Wisconsin “eyes” have our back in this. US Senator Ron Johnson Chairs the Committee of Homeland Security and Governmental Affairs that provides oversight on trade policies being implemented by the Administration; and Waukesha County Executive Paul Farrow was recently appointed to the Intergovernmental Policy Advisory Committee (IGPAC) that advises US Trade Representative Robert Lighthizer on policy impacts to Wisconsin’s state and local governments. In both cases as they review, modernize, and renew trade agreements; the bottom line premise has been “do no economic harm” keeping the importance of Wisconsin’s industries and jobs chief of mind. The goal is to assure laws, policies, practices and actions by other countries do not inhibit US exports, deprive US citizens of fair remuneration for their innovations, divert jobs, or undermine American manufacturing, services, and innovation. Since dominance in this new technology economy has both economic and national security ramifications; ambitions may be backed by government-directed investment and regulatory policies to undermine the global trading system.
The World Trade Organization (WTO), chartered in 1995; is an intergovernmental organization that regulates international trade. Their role is to ensure global trade agreements are consistently and faithfully enforced. Strong market competition, anchored in rules-based frameworks; is critical for continued progress on innovation and technology. A new economy revision is needed here as well to ensure countries and firms have a level-playing field to compete based on knowledge and ingenuity; not on artificial advantages created by foreign governments. With this new technology revolution, it’s critical the rules are new & strengthened, directly enforceable; with dispute resolution that can be done swiftly and effectively.
Good government relations and solid free trade agreements fit together. Effective, current, enforceable free trade agreements are good for American business. Today, the US has free trade agreements with just 20 countries. They represent 6% of the world’s population; yet they purchase almost 50% of all US exports. Canada and Mexico under NAFTA, are our largest trading partners. There are nearly 300 bilateral or regional trade agreements in force around the global today. American exporters are often at a disadvantage in key foreign markets; paying tariffs to export our goods; and often competing against countries within free trade agreements.
And the US Export-Import Bank (EXIM), which is not really a “bank” at all; but the official export credit agency of the US Federal government needs to be fully restored. 95% of their work is primarily with small to medium manufacturers. It does not compete with commercial lenders; but provides financing for transactions that would otherwise not occur when commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal. It’s turns a profit annually! And, other countries have their version of EXIM, so our exporters need it to compete effectively globally.
Which brings me back to the “tweet du jour” and the trade tariffs and more. I’ve always been a big picture person. While keeping up with the latest tariff change is difficult in your business; I think we’ve seen tariffs being used as negotiating leverage to get our trade agreements revised to best serve US manufacturers. The US economy is integrally entwined with our trading partners; making it highly impossible to move towards a protectionist country. Day-to-day, it does create angst and uncertainty when tariffs are imposed or changed. My gut says a bigger strategy is in play here, one that I may not fully understand. So rather than react moment-by-moment; I’d suggest we stay tuned for the bigger picture to unfold. We have seen an improved economy, a reduction in regulatory burden; creating a more competitive landscape for business. I would expect the outcomes on tariffs will be similar; and our Wisconsin contingent in DC will be working to push the negotiations to conclusion and ratification. Trade wars appear to be a tactic, not an end game.
In conclusion, global is imperative. International trade in this new era of technological advancements is critical. It’s all around us; and Wisconsin has everything to support the manufacturer in strategically expanding exports, building our economy, and growing family-supporting jobs. Wave at those dump trucks when you see them! It’s good for business!
Roxanne Baumann 6/18/18