As seems to be the practice when discussing US exports, the government actions that hurt exports and created overwhelming imports are not mentioned. Over the last 35 years mismanagement of trade agreements with specific countries and the World Trade Organization sent thousands of US based manufacturing opportunities overseas along with the fruits of American innovation. Once again our elected government representatives failed to protect Americans as they gave away US manufacturing sectors, one by one, to astute countries. Those countries wisely helped their own industries make good use of the gifts. The foreign factories are now built and running, selling us the results of our innovations that are now made in their factories. The receiving countries helped their industries make good use of the transferred technology by ignoring US reciprocal trade treatment.
In the review of the program with Reuters the Secretary of Commerce made statements showing that they do understand the problem.
"Free trade only works in a system of rules where all parties live up to their obligations," Locke said in the prepared text of a speech he gave detailing Obama's National Export Initiative, or NEI.
"The United States is committed to a rules-based trading system where the American people and the Congress can feel confident that when we sign an agreement that gives foreign countries the privilege of free and fair access to our domestic market, we are treated the same."
"The approach that we're taking is trying to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways."
It is good to see that we now have a goal and understand the problem. But this is only the start. It is in solving the problem that the challenge lies.
The US got here by blindly accepting the advice of economic specialists who claimed we need not worry about the loss of manufacturing jobs in existing industries because even more new jobs would be created in advanced industries by"innovation.” They failed to understand the effect of the large capital outflows that went to construction of plants in foreign countries and the strong inspirational link between innovation and the technology of manufacturing. It turned out that by shipping manufacturing sectors overseas we were also shipping our innovation infrastructure along with a large portion of the business of our parts suppliers.
So what to do? In 2008 total exports were $1.826 trillion dollars against imports of $2.522 trillion for a resulting annual deficit of $696 billion. Doubling exports with reasonable restraints on new imports would certainly make a dent in the problem. But what more are we going to export? What needs to happen to allow us to recover our previous positions? Excluding devaluation of the dollar there are three other areas to work on:
1 Supercharge our innovation engine
America has been the hands down world leader in product innovation. Innovation has been the driver for our economic leadership. We are still leaders in innovation both through our established companies and from breakthroughs by startup small companies. Apple, Microsoft, Google, Genentech, Dell, are just a few examples of American companies that were either starting up or not existent just 35 years ago. Startups offer specialized expertise, ideas, and the willingness to work unreasonable hours for the idea. We must not let the associated American jobs from these sources slip away. Government should work closely with small and larger manufacturers to develop innovation friendly policies. Special financial incentives for investments in startups that encourage US manufacturing combined with associated basic research are already in place in many sectors but should be greatly expanded.
China, Japan, Mexico, Canada, and Germany are the countries which supply over two thirds of our deficit. They have to be approached with the information that we will not continue the current imbalances. They must become more favorable trading partners for US goods to avoid direct action by the US.
The World Trade Organization is a special case in which we need revisions of many elements which are unfavorable to US trade.
3 Capture a favorable trade balance in emerging markets
We have had almost 40 years of destructive behavior from both political parties that fell upon the American citizen. Even now our government is heavily lobbied by former federal officials representing foreign interests. We have a hard row to hoe. One thing for sure, it won’t be fixed by band aid rhetoric and a congress heavily lobbied and influenced by foreign interests. Like our other problems it will only be corrected through citizen anger and very hard work. We desperately need a sincere American- centric cooperative effort by our government and industry. Neither has the ability to succeed alone. The government has the responsibility of setting policies and negotiating agreements that have reasonable economics for manufacturers to produce in the US. The manufacturers have the responsibility to respond intelligently and with appreciation of the advantages of being an American company.