By Michael R. Czinkota and Charles J. Skuba
In January of 2010 State of the Union address, President Obama set the goal of doubling U.S. exports over the next five years, supporting two million new American jobs through trade with international partners. At the terminus of that timeline, our analysis indicates the completion of less than half the goal with exports of goods and services at approximately $2,350 billion in 2014, compared to $1,571 billion in 2009.
Although he did not hit the numbers, we credit President Obama for an ambitious trade agenda, including completion of previously negotiated free trade agreements with South Korea, Colombia and Panama, and the pursuit of new trade agreements like the Trans Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP), and Trade in Services Agreement (TISA).
But why the failure in export growth? In 2009, total global trade decreased by 12%, while U.S. exports decreased by 14%. At the time it seemed reasonable to project stronger growth from 2010 forward. U.S. exports did grow at a robust annual rate of nearly 17% that year and 14% in 2011. Growth of only 4% in 2012 and 2.9% in both 2013 and 2014, however, did not help, since doubling exports requires annual growth of more than 15%.
President Obama’s export goal hinged on the strength of U.S. production, but even the best products require customer spending to generate sales. Europe has experienced disappointing economic growth while major emerging markets like China, India, and Brazil, all sharply declined. A strong U.S. dollar makes American products more expensive, further affecting demand.
One encouraging note is the transition of President Obama from a relatively protectionist U.S. Senator, in favor of trade barriers and subsidies for domestic industries, to a strong advocate of trade agreements.
Where are we now and where do we go from here? Jobs supported by exports now represent 13% of the U.S. economy, up from only 5% in 1990. Yet, the U.S. is still behind on a global scale. Exports represent half of Germany’s economy, 30% of Canada’s, and one quarter of China’s. These key trading partners export more than twice the value per capita than the United States.
U.S. free trade agreements play an important role in lowering trade barriers, boosting exports, and creating jobs. In 2014 the 20 countries with which the United States has a free trade agreement received almost half of U.S. exports and exports to those countries grew by almost twice the overall rate. Free trade agreements level the playing field for global competition. The TPP does that and includes labor and environmental provisions crafted to the highest standards in the world in the strategically important Pacific Basin.
Opponents of free trade agreements often claim that previous accords like NAFTA sent American manufacturing jobs abroad. We disagree. A global economy imposes competitive pressures and requirements on all industries. American manufacturing and services companies cannot escape from the competitive realities of globalization but they can benefit from free trade agreements.
Our outlook for 2015 trade policy and politics: the Administration and Republican majorities on Capitol Hill must and will collaborate on international trade. President Obama has asked for bipartisan support for Trade Promotion Authority (TPA), allowing Congress to vote yeah or nay on trade bills, but not on individual provisions. This will allow U.S. trade negotiators to deliver meaningful industry and regional commitments. TPA is a crucial negotiating tool which the Republican Leadership supports.
There should also be strong domestic support for free trade agreements like TPP and TTIP, which can restore and perhaps even kick start further global progress in the World Trade Organization.
For both Republicans and Democrats, the key trade policy objective of increasing jobs requires policy assessments of the jobs affected by new laws, regulations, and executive orders. It also means linkages between investment and job outcomes, and specific rewards for employment success and help for those hurt by trade. A successful economy requires new measures in technology oriented education availability, and greater global partnerships in science, technology, research and development.
It is time for Congress and the Administration to develop and share credit for progress in international trade. Past failures and shortcomings demonstrate the need for collaboration in achieving trade agreements that deliver significant economic results. 2015 offers an excellent opportunity for the President and Congress to achieve a new beginning. The United States and the world will benefit from such joint leadership.
Michael Czinkota (email@example.com) researches international marketing issues at Georgetown University He served in trade policy positions in the Administrations of Presidents Reagan and G.H.W. Bush. Charles Skuba (firstname.lastname@example.org) teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.
BY WALL STREET JOURNAL, NOVEMBER 10 2014, 19:22
The (politically bruised) leader of the world’s largest economy and the head of the global financial counsellor honed their message of co-ordination at a White House meeting last week ahead of the Asia-Pacific Economic Co-operation forum in Beijing and a meeting of the Group of 20 largest economies in Brisbane.
The Obama administration and the IMF are worried Europe, Japan, China and other major emerging markets aren’t doing enough to spur growth.
Just as the US economy shows signs of gathering steam, they’re concerned that dimming overseas demand and a strong dollar will put the brakes on American growth.
The eurozone faces rising risks of a third recession in five years. China is trying to balance a slowdown with the need to overhaul its economy.
Japan’s central bank is being forced to goose growth with more easy-money policies because other government efforts aren’t enough to juice inflation and revive prospects.
Emerging markets are facing dwindling growth outlooks, failing to live up to vows to restructure their economies. And the economic and political crises in Ukraine and the Middle East, which threaten to turn into much more dangerous regional conflagrations, are fuelling investor anxieties.
That leaves the US doing the heavy lifting for the global economy.
Mr Obama and Ms Lagarde are on the same page on many of the policy problems and solutions.
“They discussed the global economic recovery and the IMF’s role with regard to US national security priorities, including financial support for Ukraine and countries in the Middle East and North Africa,” a White House official said.
The official said the two also conferred on emergency financing for Liberia, Sierra Leone and Guinea, the three countries worst-hit by the deadly Ebola outbreak. The IMF has said the beleaguered and impoverished nations will need more international aid to fight the epidemic.
The US and the IMF back more stimulus by the European Central Bank to spur eurozone growth.
Both are advocating governments around the world spend more on infrastructure as a way to inject more cash into their economies.
They’ve both criticised regional powerhouse Germany for not doing enough to spark eurozone growth. They’re fretful Tokyo isn’t going to deliver on a promised economic restructuring, setting the stage for a potential eruption of Japan’s Mt Fuji of debt.
The Obama administration and the IMF are concerned that major economic overhauls in countries such as Brazil, India and China aren’t moving ahead fast enough to ensure global consumption can fuel the world’s economy.
And they are also likely to back a push for greater financial oversight, shifting focus from the traditional banking sector to the largely unregulated financial sectors where economists worry new crises could be developing.
The IMF’s top financial official, José Viñals, warned last week that shocks, such as from another European recession, the Ukrainian crisis or unexpected US rate hikes, could trigger major market sell-offs.
“The need for action is now,” Mr Viñals said.
Monetary policy can’t be the only game in town, he said.
“It needs to be better supported by … fiscal policies, structural policies and financial policies.”
In trying to win over his peers on a decisive growth strategy, Mr Obama will face a political headwind: he has lost some clout in the realm of economic diplomacy in his administration’s failure to secure congressional approval for governance changes at the IMF.
The five-year-old deal would restructure the emergency lender by giving emerging markets greater power at the fund, more in line with their burgeoning economic heft in the world.
Feeling disenfranchised, key emerging markets are crafting strategies to bypass Washington and its leverage at the fund, including replicating the IMF’s emergency-lender role with new cash reserve pools.
“The US failure to get supporting legislation for IMF quota reform is a huge black eye,” said Fred Bergsten, senior fellow and founding director of the Peterson Institute for International Economics.
By highlighting “the IMF’s role with regard to US national security priorities,” the White House is likely signalling that Mr Obama will redouble efforts at home to get the governance changes through Congress.
It’s still an open question, however, whether the new Republican majority will help or hinder the president’s plans.
BY JEREMY QUITTNER for http://www.inc.com/
Their goal will be to help foster a culture of entrepreneurship, innovation, and the creation of startups at home and abroad.
“America’s entrepreneurial spirit has always been a key driver of our economic growth and success,” Pritzker said in a statement today. “Through this group, we will take what we know about transforming innovative ideas into thriving companies and share that knowledge around the country and the world.”
Here’s a list of the entrepreneurs who will serve as advisors:
Rich Barton, co-founder and executive chairman of Zillow
Tory Burch, CEO, Tory Burch
Steve Case, chairman and CEO, Revolution Capital
Helen Greiner, founder and CEO, CyPhy Works; CoFounder, iRobot Corporation
Reid Hoffman, co-founder and executive chairman, LinkedIn
Quincy Jones, CEO, Quincy Jones Productions
Salman Khan, founder and executive director, Khan Academy
Daphne Koller, co-founder and president, Coursera
Hamdi Ulukaya, founder and CEO, Chobani
Nina Vaca, CEO, Pinnacle Technical Resources (an Inc. 500 company)
Alexa von Tobel, founder and CEO, LearnVest
“There’s no way to overstate the importance of entrepreneurship, especially as business continues to break through borders and language,” Pinnacle Technical Resources CEO Nina Vaca said in a statement. “This initiative proves that the dream of starting a business is a viable one, to domestic and international would-be entrepreneurs.”
The U.S. Department of State and the U.S. Agency for International Development are partners in the new group.
The bilateral meeting between President Obama and Russian President Vladimir Putin initially scheduled in Moscow in September, before the Group of 20 summit, has been canceled. The cancellation was in retaliation to Russia granting NSA leaker Edward Snowden a year’s asylum in the country last week.
With the Group of 20 summit scheduled in St. Petersburg in September, it remains unclear whether US-Russia relations will have been resolved by then.
What are your thoughts on the matter? Will this disagreement negatively affect the G-20 summit on trade relations? Post your thoughts in the comment section below!