Free Trade Agreements: Vital for American Businesses
August 2, 2016In a panel discussion during the recent Global South Metro Exchange, coordinated by the Upstate SC Alliance to unite leaders from Atlanta, Charlotte and Charleston in conversations about global competitiveness, private industry representatives from businesses large and small emphasized the importance of free trade agreements to commercial successes.
“We’re competing against everyone, from everywhere, every day, forever,” relayed Dontai Smalls, Vice President of Global Public Affairs with UPS. “Just let that settle on you for a moment – that’s the state of our globally competitive economy. So while fear can determine the political perspective of what we’re going to look like, other countries aren’t waiting. They are negotiating their agreements with other markets.”
Smalls said that every time a free trade agreement has been negotiated, UPS has seen a 20 percent increase in export volumes – and every 22 packages that cross borders are tied to one job.
“Having the ability to reduce airfare and reduce regulatory barriers for customers, particularly the small to medium size enterprises, is critically important,” Smalls added. “Understand that 95 percent of the world’s population lives outside our borders, so if you want to grow and you want to develop, you have to get access to that market. Also, 80 percent of the world’s purchasing power is also outside of our borders.”
Small Business Perspective
Cherod Webber, president and CEO of Innovative Global Supply, said trade agreements are crucial for his four-person business that distributes nutritional and health care products to overseas markets.
“We don’t have operating budgets like UPS and BMW, so markets with non-tariff barriers can be prohibitive for us,” Webber said. He pointed out that a U.S. agreement with Jordan allows for a single registration instead of up to $10,000 to register each IGS product, making the country a hub for Middle East distribution, moving products then into Iraq and the United Arab Emirates.
Webber said the United States was behind the curve in entering the free trade arena, and it’s resulted in Chinese competitors dominating markets in Sub-Saharan Africa, leaving consumers with no alternatives.
“The key here is that U.S. products and services are the gold standard, and wherever I travel, we still have the gold standard, but we have to give people the opportunity to tap into our products and services, and free trade agreements really level the playing field, and I’m speaking from the perspective of a small business,” Webber said.
An Automotive Take
For major Upstate employer BMW Manufacturing Co., access to foreign markets is essential.
“The intent when our plant was established was that this would be a global plant, we would not just produce for North America,” said Max Metcalf, Manager of Government and Community Relations. “The objective was to export a portion of what we produced, but I’m not sure that anyone anticipated that 70 percent of the models that we are making are exported.”
The Transatlantic Trade and Investment Partnership (TTIP) harmonizes auto safety regulations between the United States and the European Union for significant cost savings, Metcalf added. Its passage would result in a 187 percent increase in exports from the state of South Carolina and would create another 10,000 jobs.
“Somehow trade bashing for politicians has become akin to kissing babies, but we’ve got to get them to talk realities,” said Dontai Smalls, Vice President of Global Public Affairs with UPS. “Trade is happening, getting products from Point A to Point B is happening now. But it’s happening at higher costs, and products are moving slower due to customs.”
Smalls cited several benefits of the Trans Pacific Partnership (TPP) including:
- Transparency in legal requirements, written in English
- An online portal for information about markets
- Expedited movement of goods through customs between member countries
- Agreement review on behalf of small- and medium- sized businesses to ensure the agreement is being enforced and is working effectively
Metcalf added that the trade agreements will enhance the free of components, materials and products within a company, such as from one BMW plant to another.
So How Do We Educate the Community at Large?
For UPS, the answer is teaching each employee how their job relates to exports and trade, as well as being honest about areas of the economy that do not benefit from trade.
Painting the whole picture, so that trade does not become a scapegoat for other factors that affect the workforce, is also key.
“We started this country as an agrarian society, and technology and innovations happened, so instead of having 40 or 50 people taking care of acres, now you have a tractor that can do that job, and that has nothing to do with trade, that’s technology,” Smalls said. “You’ve got to be honest and educate people about all of the changes in the ecosystem.”