AMBASSADOR RICHARD HOLWILL
Both major party presidential candidates recognize the fact that the United States has a foreign trade problem. Unfortunately, neither understands that the problem is not imports. Rather, it is the fact that U.S. exports face a structural bias.
In an assessment of international trade statistics, the Davos’ based World Economic Forum (WEF) wrote: “The United States continues to be penalized by poor access to foreign markets with the seventh highest average faced tariffs in the world.” In other words, out of 136 countries surveyed by the WEF, exporters from 128 other countries face lower tariffs than do exporters from the United States.[i]
These statistics are buried in the small print on page 308 of a 342-page report published in 2016. Although almost a decade old, the numbers have not changed because the underlying problem has never been addressed. In fact, it has worsened. The structural problem is evident in a report by the World Trade Organization, which authorizes regional and bilateral trade agreements under specific rules generally relating to transparency and notifications.
In 2016, about 260 such agreements were in force. The WTO’s latest publication shows that 371 such agreements are in force today and another 238 have been notified as under negotiation. The United States is party to 14 regional trade agreements and one bilateral agreement.[ii] In other words, we are excluded from 357 so called “free-trade agreements.”
There is nothing “free” about these agreements. They are instead “preferential trade agreements.” The U.S. trade problem then is not with the trade agreements that we do have. It is that we have too few such agreements. The result of our trepidation with regard to free-trade agreements, we have excluded ourselves from networks of Preferential Trade.
This is not to say that I oppose “free trade.” Rather I accept it as a utopian ideal – the “perfect” that may never be realized. The term, however, has unfortunate connotations in today’s world. When a politician speaks of a free trade agreement (FTA), most listeners ask themselves “what are we giving up in these negotiations?”.
If we are to move up from 129th place among countries engaged in international trade, we must change the way we think and speak about trade agreements. We must start with a recognition that the perfect is the enemy of the good. The goal of trade negotiation then is not free trade but to improve our dismal export profile. Simply put, 128th place is not good enough.
In speaking about trade agreements, we must avoid words that trigger a negative reaction, words that suggest that we must “give up” something. We stand to gain a lot by aggressively and strategically seeking market access, primarily in those markets to which we can sell both agricultural commodities and manufactured goods.
Academics may hate the term. Nonetheless, we need the next administration to forge agreements that insert the United States into those networks of preferential trade.
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[i] https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements#:~:text=The%20United%20States%20is%20party,Trade%20Agreement%20with%20one%20country
[ii] https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements#:~:text=The%20United%20States%20is%20party,Trade%20Agreement%20with%20one%20country
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