International trade is a critical component of economic growth and the creation of jobs and wealth. Imports and exports both support domestic jobs and allow U.S. firms to access critical inputs at competitive prices. The export job opportunities and the increases in efficiency that go along with expanded trade have allowed the United States to maintain the world’s highest standard of living and leadership in innovation.
Between 1990 and 2000, the Gross Domestic Product of the United States grew from $5.8 to $9.8 trillion – an increase of nearly 70 percent. At the same time, exports grew from $393 billion to $780 billion. This period of extraordinary expansion in trade also saw an increase in employment in the U.S. from 109 million to 132 million non-farm jobs. It is estimated that the export growth in the 1990s supported 12 million of these 23 million additional domestic jobs. In the high-tech sector alone, exports reached $180 billion in 2003, supporting an estimated 1.4 million jobs in the United States. Given the fact that 95 percent of the world’s customers and 70 percent of the world’s economic product lie outside the United States, it’s clear that American firms must compete and succeed in the world marketplace in order for American workers to succeed.
Furthermore, the jobs created as trade expands have tended to be high-paying jobs. Export-related jobs pay on the average, 18 percent more than jobs unrelated to exports or trade. Further, the expansion in trade in recent years has been accompanied by the expansion of employment in higher-paying positions. Between 1983 and 2002, higher-paying managerial and professional jobs expanded from 23 percent to 31 percent of total employment.
Additionally, the elimination of tariffs on the import of goods also contributes to enhanced efficiency and an improved standard of living. One University of Michigan study found that lowering trade barriers on all products and services by one-third could boost the U.S. economy by $177 billion, raising living standards for the average family by $2,500 annually.
History has also shown that protectionist policies tend to reduce the competitiveness of protected firms. A classic example is the U.S. auto industry, whose products fell behind those of foreign competitors through the 1970s, until the elimination of protective tariffs forced American firms to follow the example of more efficient foreign companies. Over time, U.S.-made automobiles became better and more price-competitive. Now America’s auto firms are again among the world leaders, and foreign firms have invested extensively in the United States both to produce for this market, and to take advantage of a skilled workforce, and an environment conducive to the manufacture of high-quality cars, trucks and vans.
Open trade and investment have helped raise millions of people out of poverty. Over the last decade, the countries that have experienced the greatest reductions in poverty, such as in East Asia, are those countries that have liberalized their economies and opened themselves to trade. According to the World Bank, per capita incomes grew 5.1% in developing countries with high trade and investment flows, while more isolated countries experienced income declines of 1.1%. American companies lead by example when trading and investing overseas. In many developing countries, U.S.-owned factories pay higher wages and adhere to stricter environmental and worker safety standards than locally-owned factories. Countries that have opened themselves to the international economy have also pursued political reform. In contrast, isolating countries from trade does little to promote economic or political development.
The Electronic Industries Alliance has long supported the elimination of barriers to trade in goods and services. EIA was one of the primary supporters of the Information Technology Agreement (ITA) of 1997, which eliminated tariffs on a broad range of technology products. EIA also worked for the admission of China to the World Trade Organization, and for the adoption of Permanent Normal Trade Relations with China. More recently, EIA and its members have lobbied for a number of bilateral and multilateral free trade agreements and for a successful conclusion to the Doha Development Agenda of the World Trade Organization.
