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Guest Editorial: USA TRADE – Why July Matters!

As my son boarded a cruise ship for the first time, he immediately expressed an interest in visiting the bridge and watching the Captain steer the vessel at sea. We made an appointment to do so and, much to our dismay, as the wheel house was entered we noticed that there was no steering wheel and no Captain. Several officers in crisp white uniforms were sitting at desks, staring at computers. Not one person was looking out the window and no one was holding on to a big wheel that would presumably be attached to an even bigger rudder.

We were told that these cruise ships run by computer today, with less need for human supervision. Needless to say, I had trouble sleeping that night.

Sometimes, what we think differs from reality. This always leads me to the question : who is really driving the ship?

During his 1992 campaign, President Clinton issued sage advice when he used the Fleetwood Mac song as his theme, “Don’t Stop Thinking about Tomorrow.”

He indicated that the job of our generation was: “…to persuade people that democracy and free markets can give all people the opportunity to live out their dreams.”

President Clinton was thinking and talking about trade. He firmly believed that free trade would help our country boost exports and grow the economy. President Clinton stood his ground, broke ranks with many of his supporters, alienated some labor unions and fought for what he believed was right.

Once again, in July 2013, the subject remains the same: it’s about  the economy, stupid.

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Trade can elevate our Gross Domestic Product (GDP) and that’s exactly what we need right now.

Don’t stop, thinking about tomorrow,

Don’t stop, it’ll soon be here.

President Clinton had a mission and a plan. He didn’t waiver; he didn’t equivocate.

Does the Obama administration have a trade plan?

We are now in the month of judgment – July 2013 has arrived.

We have a success story, and yet there are three significant trade issues that are up in the air and they are all related to the month of July.

SUCCESS

In June, the Senate, with a vote of 93-4, approved Michael Froman to be the new United States Trade Representative (USTR). By all accounts, Mr. Froman is an excellent choice for the job, and a signal from the Obama administration that they are taking trade seriously. Educated at Princeton, Oxford and Harvard, Mr. Froman was previously Senior Economic Advisor in the White House.

Also in June, Penny Pritzker was approved by the Senate in a nearly unanimous voteto be our Secretary of Commerce.

With Mr. Froman and Ms. Pritzker on board, we now have a better chance for success in terms of improvements in our domestic and international trade policies.

Prior to their appointments, Yogi Berra (the Yankee all-star) could have been musing about the trade plans of the Obama administration when he said:

“You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”

There are THREE significant TRADE ISSUES for JULY

For those of us that deal with trade on a daily basis, exactly what the Obama administration has accomplished in the world of trade, and exactly where are they were headed, has long been a mystery.

To be sure, free trade agreements with Korea, Columbia and Panama were passed under the current umbrella, but these were originally Bush initiatives, and the Obama administration actually held them up to (so they say) make them better and stronger. The Trans-Pacific Partnership (TPP) was also started as a Bush initiative and the Obama administration has been pushing that one quite hard with little result to date.

Can Mike Froman change the temperature on TPP?

#1 – Think about this:the eighteenth round of the Trans-Pacific Partnership (TPP) talks is scheduled to start on July 15 in Malaysia. To date, nobody outside the negotiating room really knows what has been accomplished (except maybe Edward Snowden and the NSA).

Almost everything about the TPP talks is secretive. Countries keep getting added to the equation. The talks seem to be in disarray. The conclusion seems to be nowhere in sight.

Some people have commented that TPP might actually stand for  “Try to Pretend There is Progress.”

#2 – There is also the European TTIP (Trans-Atlantic Trade and Investment Partnership) scheduled to start on July 8th in Washington, DC. This could be an absolutely huge trade deal and a major benefit to the US and to Europe. However, the Europeans remain tentative about the talks. They worry about losing their individual culture and being overrun by McDonalds and Burger King. They are also upset by the recent revelations of the US spying scandals.

TPP and TTIP taken together could be the single most brilliant trade move ever made. The potential of these agreements would clearly put the United States in the center of world commerce, covering a commanding percentage of Global GDP and a majority of all world trade and even possibly eliminating the need for the WTO (World Trade Association).

#3 – The GSP (Generalized System of Preferences) will expire on July 30th. Failure to renew will force extreme pain on the import community in the US, as well as domestic manufacturers who rely on GSP raw material for their US made products.Some in the halls of Congress have said that Congress may be too busy with their current schedule to renew GSP.

Too busy?  They must be delusional.

If there is failure to renew GSP (which is now likely), then look for a bigger trade package after the August congressional recess. In this legislative move, Congress will take up the issue of the TPA (Trade Promotion Authority). Specifically, this legislation will allow the Obama administration to fast track trade legislation.

TPA has actually been expired since July 2007. The Authority permits the President to negotiate international trade agreements and then Congress can approve the agreements (or not) without amendment or filibuster. All who are involved believe that this is a faster way to help move a trade agenda.

Why are all these trade issues important?

Simply put, we MUST grow the economy.There are those who say that a GDP of at least 3.5 percent is needed to maintain growth and be competitive for the future.

More international trade is truly the way to stimulate the economy.

Trade is the much needed medicine to cure our economic malaise and needs to be given out at exactly the right time. That time is now!

The USA Average GDP growth rate over the last 66 years is 3.23 percent.

 

Where the USA is now:

GDP in 2010 was 3.0 percent.

GDP in 2011 was 1.7 percent.

GDP in 2012 was 2.1 percent

The above statistics clearly indicate why all these potential trade deals are so important;we simply have to get the GDP moving forward or it will be extremely difficult  to show economic improvement  as a nation.

If we fail to grow, we will never solve the unemployment issue or be able to cover the cost all the social programs that are provided by our government.

It is impossible to solve our national problems by just cutting cost without adding revenue. Any capable business person knows that this is a recipe for disaster. The Clinton administration understood why trade was such a serious issue and they took aggressive action.

At the 2000 Democratic National Convention, as he was preparing to leave office, President Clinton ended his speech by saying:

“Remember, keep putting people first.

Keep building those bridges.

And don’t stop thinking about tomorrow.”

Immediately after the last sentence, a song filled the room:

Don’t stop, thinking about tomorrow,

Don’t stop, it’ll soon be here,

It’ll be better than before,

Yesterday’s gone, yesterday’s gone.

The Time to Trade is Now.

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RickHelfenbein

Rick Helfenbein is President of TellaS Ltd (Luen Thai USA) and Vice Chairman of the American Apparel and Footwear Association. He is a strong advocate of a robust US Trade Agenda and often lectures on the subject of supply chain and international trade at prestigious universities around the country. He participates annually in the Consortium for Operational Excellence in Retailing at Harvard University and the Wharton School of Business.