Magazine article Business Credit

America's Jobs First

Magazine article Business Credit

America's Jobs First

Article excerpt

The free trade message is drowning in the U.S. Congress; the current global trade round is suffering and for the same reasons; and the image of corporate America is sagging badly and for related reasons.

The movement of U.S. operations, jobs and sourcing offshore has concentrated trade dislocations in many congressional districts, causing Congress to drift toward protectionism. This movement offshore, driven in part by short-term, price-driven business judgments, has also cast corporate America in an unfavorable light. These and similar business decisions, such as reincorporating offshore to avoid U.S. taxes ("corporate inversions"), have invited speculation and distrust as to corporate motives, even before recent revelations of corporate misreporting and fraud.

It's time for major U.S. corporations to rethink their political strategy on international trade-or face huge setbacks in Congress.

Let's start with small business. Why? For one thing, small businesses and their employees are the fabric of U.S. communities and form their political base. The 25 million U.S. small businesses employ more than half of the entire private workforce in the U.S. Most of these business owners and their employees vote. Although not all Members of Congress have a business background, every Member of Congress has vote counting experience.

Furthermore, small business has been an economic juggernaut for the U.S. economy. During the past decade, our small businesses have created three-fourths of all net new jobs, developed over half of our new technologies and innovations, generated over half of our private GDP, and provided the stable economic and social base essential to our towns and communities. These are among the reasons that Congress likes and supports small business. The impact of policies and laws on U.S. small business is never far from the minds of most Members of Congress, Democrat or Republican.

By contrast, consider the current political status of free trade. Although the Congress has consistently supported the free trade perspective in many key votes (and this author has supported every one of those), every close observer knows the same alarming truth about trade votes. They are getting tougher and tougher to win, especially in the House of Representatives. In 2000, the House approved Permanent Normal Trade Relations (PNTR) status for China by 40 votes. But that margin was close, even unpredictable, until the very last minute. Had there been negative news events involving China, a political incident or any number of unpredictable and maybe irrelevant factors, the vote easily could have shifted the other way.

Who's breathing easily as a result of the new trade law? An ardent free-trader, I voted for that bill, and every other significant trade bill since NAFTA. But it took a series of nail biting votes, protectionist trade-offs, and rare in-person lobbying by the President on the eve of the final House vote to finally win renewal of presidential trade promotion authority (TPA). And that's just the beginning. As the Wall Street Journal reported, the "fact that TPA was hard to get doesn't mean it's worth that much [because it] doesn't open a single market or cut a single tariff."

What's the problem? Why are Congressional free trade supporters losing ground, barely squeaking out victories essential to strengthening our trade policy and commercial prospects? Answers are urgently needed. judging the mood of Congress, free trade advocates cannot afford to let the next trade vote get any closer, or trade will be in the losing column.

The basic politics of trade has not changed. The theory of former Speaker of the House, Tip O'Neill, still describes the trade debate-all politics is local. When the China PNTR debate was pending, the business community did a relatively good job educating Congress about the positive impact of more trade with China. Much of that education involved contacts from local towns and cities to Members of Congress on how companies, plants, local operations and their employees would benefit from enhanced China trade. …

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