Step away from the anti-trade rhetoric in Washington and into the shoes of state and local leaders. One reality becomes clear: Too much is at stake for the United States to go it alone on trade.
Local leaders see the evidence every day, because substantial parts of their workforces and economies depend on international trade and investment, the very thing it appears President Donald Trump is about to step away from.
A recent gathering of governors was a testament to that as they traveled to Washington for their national winter meeting. Once there, they met with leaders from individual Australian states. Teams from abroad have come before, but this time was different. This was the most senior Australian political and business delegation ever to visit the United States. They travelled 10,000 miles and accompanied Prime Minister Malcolm Turnbull, who was scheduled to deliver the keynote speech.
Turnbull called for deepening U.S.-Australian ties in energy, advanced manufacturing, civil and military aircraft, and more. He reminded us that we can accomplish more together than on our own.
The feeling was mutual. “Governors are ready to elevate this important partnership,” declared Nevada Gov. Brian Sandoval, the chair of the National Governors Association. The governors subscribe to these guiding principles because they see first-hand the benefits of living by them, just as they see the costs of stepping away.
Dig into state-level data and it’s not hard to see why states are keen to keep it this way. Substantial shares of all state workforces are tied to trade and investment.
Political Cartoons on the Economy
On foreign direct investment, the largest states attract the largest sums. But the states with the largest shares of total private industry employment by foreign-owned companies are a diverse group: New Jersey (8.1 percent), South Carolina (8.0 percent) and New Hampshire (7.7 percent), followed by Kentucky, Indiana, Hawaii, Connecticut and Delaware (each more than 7 percent).
Every state has a story. Take Texas. Foreign-owned companies employ 544,800 Texas workers, 5.5 percent of the state’s private workforce. The importance of trade agreements and cooperation is also evident: 62 percent of the state’s exports go to various U.S. free trade agreement partners, and since 2006, Texas exports to these partners have grown by 60 percent.
Trump’s frustration and alarm over Chinese trade policies is understandable. But it is not sufficient cause to withdraw the United States from current and other promising trade talks that could open up new market opportunities for U.S. businesses. Instead, Trump needs to find a way to deal with China that will work for everyone, and that means uniting with like-minded allies who are just as frustrated.
The Trans-Pacific Partnership offers a way to deal with the problem. The agreement includes strong new rules on state-owned enterprises and effectively establishes a new rulebook that would limit China’s ability to continue with their offensive behavior.
Recent remarks by the president and his treasury secretary indicate that rejoining the TPP may be a possibility, which is good, because it’s Trump’s ticket to deal with China effectively. In contrast, unilateral solutions like import taxes, which are clearly within the president’s authority, slow down growth and end up doing more harm than good here at home. Even worse, as history shows, import taxes will not change China’s behavior.
State and local leaders are our eyes and ears on the ground, and their message is clear: Workers and businesses in their communities rely on the free flow of trade and investment across borders. Our allies are saving a seat for us at the TPP table. Trump just needs to accept the ticket and then use it wisely.