Expanded Trade Can Benefit Wisconsin’s Economy

April 14, 2014

by Brett Healy
President, The John K. MacIver Institute for Public Policy

International trade is critical to our state’s economic health. But few Wisconsinites give trade policy a second thought or concern themselves with what politicians could do to expand international trade opportunities.

Free and unfettered trade helps Wisconsin companies grow and prosper. Wisconsin dairy farmers are earning some of the highest prices ever for their milk thanks, in part, to dairy exports increasing 18 percent nationally compared to last year.

From agricultural equipment to dairy products and medical instruments, Wisconsin is selling more products worldwide than ever before. All this commerce boosts employment and increases our state’s economy and makes life better for all Wisconsinites.

In fact, the Badger State shipped about $24 billion worth of goods to 210 countries in 2012, accounting for nearly 9 percent of state GDP.

Trade agreements that will significantly increase U.S. exports and grow our economy deserve support. That’s why Wisconsin’s leaders should work to renew Trade Promotion Authority (TPA).

Negotiating a trade agreement is not an easy process. As a result, Congress has historically granted the President this authority.

Under TPA, Congress sets the goals for trade agreements and requires the President to consult with it during negotiations. Congress must then hold an up-or-down vote on the final trade agreement.

TPA has historically been a non-partisan issue. Every President since FDR has held the power to negotiate trade deals, but this authority expired in 2007. Without TPA, America’s trade partners have been reluctant to sign off on deals that could later be changed.

By breaking down unfair trade barriers, TPA creates new opportunities for U.S. companies to sell more of their goods to new customers around the world. Last year, America’s 20 free-trade agreement partners bought nearly half of all American exports, even though they represent just 10 percent of global GDP. On a per capita basis, these countries purchased almost 18 times more Wisconsin exports than countries without trade agreements.

Despite the obvious advantages, TPA faces significant opposition from protectionists afraid of the changes expanding trade would bring. But with 80 percent of the world’s purchasing power, 92 percent of its economic growth, and 95 percent of its consumers living outside the United States, opponents must realize that Wisconsin cannot hope to survive by selling all of its goods and services within the state, the Midwest, or even the nation.

Free trade will help Wisconsin businesses find new markets for Wisconsin goods.

Consider Wisconsin’s dairy industry. A mainstay of our economy, the dairy industry has transformed itself into a global player, capturing a sizable share of the growing dairy market.

Rising incomes in populous, developing countries have fueled demand for higher quality foods – like Wisconsin milk and cheese. Within the past year, Wisconsin has seen a 41 percent increase in dairy exports.

China is now Wisconsin’s second most valuable agricultural export market and its third largest overall export market. Dairy exports to the Middle East – which imports nearly 90 percent of its food – are also soaring.

As demand grows for American goods and services abroad, American exporters will grow, innovate, and hire here at home. The Commerce Department estimates that for every $1 billion of increased U.S. exports, we see an increase of about 5,600 jobs here at home.

More international trade will impact Wisconsin’s employment numbers, too. More than one in five Wisconsin jobs depend on international trade, supporting almost 750,000 jobs here.

But if TPA is not renewed soon, the United States – and Wisconsin – will fall farther behind our international competitors.

Both Democrats and Republicans should agree that free international trade is vital to the success of Wisconsin’s businesses, the health of our local economy, and the financial future of every Wisconsinite. Let’s hope Congress renews TPA for President Obama without further delay.