Why Trump and Clinton have trade all wrong

Author: Steven G. Zylstra is president & CEO of the Arizona Technology Council.

CEO: Trade deals are good for business and America, including 93,354 Arizonans with jobs directly tied to exports.

There’s a threat to our economic growth and we should all be concerned. Arizona’s business leaders already are.

Presidential candidates Hillary Clinton and Donald Trump are both bashing the international trade agreements critical to supporting continued economic growth of Arizona and America. Many of those pacts such the North American Free Trade Agreement (NAFTA) with Mexico and Canada have been successfully in place for years.

Trade means Arizona jobs and money

Trump has said an overhaul of the nation’s global agreements is needed to boost economic and jobs growth. That could come as a surprise to at least 93,354 Arizonans — the number of jobs supported by Arizona exports in 2014 — and others in the state whose salaries are supplemented by those directly involved in exporting.

Exports are critical to our economy.

  • 95 percent of the market for U.S. goods and services are outside the United States.
  • When it comes to sales for the technology industry, international markets are No. 1.
  • For Arizona, exports totaled $22.6 billion in 2015, according to the International Trade Administration of the U.S. Department of Commerce. The largest category was computer and electronic products, accounting for $5.6 billion. In addition, electrical equipment, appliances and components contributed $1.7 billion to the total.

How trade deals help business

To help make this happen, our nation has free trade agreements with 20 countries that accounted for $12.9 billion of Arizona’s exports in 2015. Having these deals in place has been crucial to resolving the kinds of issues that can arise in international trade, such as over intellectual property and data rights.

The concern by Clinton and Trump over existing agreements also carries over to international trade pacts under consideration. The Arizona Technology Council has taken a position on most of those pending agreements. We feel the best way to keep U.S. businesses competitive is to ensure they have access to markets in developed countries and the world’s fastest growing economies.

Trade deals can prevent protectionist non-tariff barriers that threaten market access for U.S. companies. Free trade agreements can especially provide commercial commitments and protections to our nation’s technology industry. Sharing these beliefs is the Arizona District Export Council comprised of international trade experts from across the state appointed by the U.S. Secretary of Commerce. I sit on its Trade Policy & Legislative Affairs Committee.

A related issue is the future of the Export-Import Bank. Trump has indicated he would shut down Ex-Im while Clinton fortunately understands its role in supporting U.S. global competitiveness. The Council had been strong supporters of Ex-Im’s reauthorization. While that came to fruition, a lot of it still hasn’t been implemented, so that has been caught up in the trade debate. Almost 9,000 companies, including almost 6,000 small businesses, have used the bank to finance export sales since 2007. Considering the value of U.S. exports, Ex-Im’s role in trade has proven to be crucial.

Careful about blaming international trade

When you trace the roots of the debate over trade, you can’t help but consider it to be populist. We live in a time when people who aren’t involved in international trade are unhappy about their place in the world and they want to find blame. It’s always easy to point the finger at big companies, big government or even other countries as sources of the problems that we have.

But if you look at the facts — which people don’t do when it’s an ideology at work or there is unnecessary zeal associated with it — the existing trade agreements have done well for Arizona and the United States. Had it not been for these pacts, a lot of the issues that are critical to sort out in trade would be left to chance. Remember, something businesses hate more than just about anything is uncertainty, particularly when dealing in other countries.

Isolationism shrinks new markets

The pending agreements provide templates for even more productive trade. Getting the most attention is the Trans-Pacific Partnership (TPP), which would open opportunities in Asia, the most important market in the world today.

Clinton has said she would oppose trade agreements like TPP unless they create good-paying American jobs and boost incomes. TPP holds that promise.

A lot of the tech sector has moved to the Pacific Rim and many multinational companies based in the United States do business in these other countries. Having the terms of an agreement sorted out by our government that protects, for example, intellectual property establishes the protocol for successfully trading with another country. The ground rules are established for fair and equitable trade between countries, helping further increase the economic benefits for the U.S.

Still, Trump has labeled TPP as “horrible.” Is his choice isolationism, which this country goes through from time to time?

History tells us that has never been good for our nation.

Trump and Clinton lag on trade

It’s no secret that Republicans traditionally have supported free trade and its related agreements while Democrats have not because their concern has been such deals end up sending U.S. jobs to other countries. This time, both candidates have indicated they would penalize manufacturers that move production abroad.

For companies that leave the country to lower their tax burdens, Clinton has called for each to pay an “exit tax.”  For those benefiting from “Make It in America” incentives, she would make them pledge not to move jobs offshore.

She and Trump are way behind the times since the real trend is actually favorable for the United States. The fact is, companies are moving back here. More IT and manufacturing jobs are returning than has been witnessed in a very long time because the cost of living is increasing in other nations as their middle-class segments are growing. The financial benefit that these other places once had related to labor is no longer overcoming the added costs of shipping goods around the world.

The candidates also have expressed their desire to renegotiate parts of NAFTA. In fact, Trump has said he would withdraw from the accord altogether if he is not satisfied with negotiations.

A change in NAFTA would be crippling to Arizona. Exports from Arizona to those countries with free trade agreements with the U.S. increased 67 percent since 2005, with the top trading partners being Mexico, Canada, South Korea, Israel, Australia, and Chile.We’re huge beneficiaries of NAFTA because of our proximity as a border state where trade comes through our port.

The U,S. should continue to honor NAFTA and the other agreements that are working well.

And we need to get TPP and other pending agreements executed so that businesses can get on with enhancing international trade. Clinton and Trump need to listen to those actually involved in exporting to learn the true merits these pacts offer.

Just at a time when trade relationships are reaching potential, putting on the brakes makes absolutely no sense. My fellow members of the Arizona District Export Council join me in asking you not to wait until election day to be heard. Contact representatives of the candidates now and let them know we should stay the course when it comes to opportunities for expanding international free trade.

Arizona cannot afford to sit on the sidelines and watch prosperity pass us by.

Steven G. Zylstra is president & CEO of the Arizona Technology Council.