Exports Fuel the Economy
Sep 26, 2008
Worried about a recession? So are a lot of Americans. Each day seems to bring bad economic news, as financial firms fumble, unemployment numbers hit a five-year high, the cost of food keeps rising, and gas prices continue to frustrate everybody but Middle Eastern oil sheikhs.
Thank goodness for exports--because without the ability to sell American-made products abroad, we really would be in a recession right now.
Technically, a recession occurs when our economy has suffered two or more quarters of negative growth. In the second quarter of this year, the rate of growth was 3.3 percent. Record levels of exports made this modest gain possible because they rose by more than 13 percent.
“International trade has saved the day,” writes C. Fred Bergsten of the Peterson Institute. “We would have been in recession throughout this period had we relied wholly on internal economic forces.”
Let me drive home the point: Protectionism doesn’t work. If the United States had sealed its borders to the goods and services that now routinely cross them, our economy would be shrinking rather than expanding. We would be trapped in an honest-to-goodness recession.
It makes sense to sell what we make and grow to people in other countries who want those products. After all, more than 95 percent of the planet’s population lives elsewhere. That’s a huge market, and one we scarcely can afford to ignore. What’s more, the jobs attached to exports tend to pay more than those that aren’t.
In the U.S. beef industry--the area I work in--exports have surpassed imports for the first time since an isolated case of mad-cow disease turned up in the United States five years ago. Our sales to Mexico, Canada, Japan, Taiwan, and South Korea are surging in both volume and value. This trend is healthy for me and my associates.
I’m far from alone. The booming export economy isn’t limited to beef or even to agriculture. Foreign sales of some manufactured goods are so strong that producers can’t locate enough shipping containers to move them overseas.
Over the next few months, there’s no telling what will happen to our economy. Perhaps it will rebound. Or maybe our challenges will grow more severe. One thing is certain: Our public officials should do everything in their power to keep America from falling into a real recession.
The solution is obvious: We should play to our strong suit and fight for even more exports. One of the best ways to secure them is to sign trade agreements that lower tariffs and other artificial barriers. Congress should approve languishing trade deals with Colombia, Panama, and South Korea and it should encourage the negotiation of even more. Renewal of Trade Promotion Authority is critical. In fact, TPA should be made permanent.
This approach will benefit Americans in two ways. First, it will open foreign markets to more of our goods and services. That means more exports. When market access is fair, Americans can compete with anybody in the world.
Second, it will allow us to take advantage of a unique opportunity right now. Although the value of the dollar has increased recently, it remains weak compared to where it was just a few years ago. This means that for customers abroad, U.S. exports are more affordable than ever.
So now is an ideal time to increase our market share in foreign countries. When the value of the dollar recovers, as it almost certainly will, these buyers will have developed loyalties to our goods and services. They’ll come to appreciate the quality of American products and will keep on purchasing them.
This is the battle I’m fighting right now in Asia, where U.S. beef is trying to re-establish itself following an ill-conceived moratorium. We’re doing well against our competitors in Australia and New Zealand, but we need to do even better. A lot of the responsibility for this falls on the shoulders of producers like me, as it should. But only Washington can initiate the government-to-government contacts that lead to lower tariffs and level playing fields.
We’re not in recession now because of exports, and we need to make sure that exports continue to fuel our economy, no matter what the future holds for it.
Carol Keiser owns and manages cattle feeding operations in Kansas, Nebraska and Western Illinois. Mrs. Keiser is a Truth About Trade & Technology board member. (www.truthabouttrade.org)