PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Global Trade Viewed as Opportunity by Large U.S. Majority

By at 20 March, 2018, 10:10 pm

by Raymond J. Keating-

During a time when the benefits of free trade are coming under fire in political circles, it’s encouraging to see high levels of American adults holding a positive view on foreign trade.

Gallup reported earlier this month that 70 percent of U.S. adults hold a positive view on foreign trade – specifically, that foreign trade is more about opportunity than about being a threat. Interestingly, that’s similar to the 72 percent level registered last year. Previously, the high had been only 58 percent.

Source: Gallup

The Gallup analysis noted, as expected, that views on foreign trade tend to reflect the state of the U.S. economy. When the economy is doing better, the public tends to hold more positive views on trade. During poor economies, Americans tend to be warier on foreign trade (the worst take on trade, according to Gallup’s result, came during the last recession in 2008).

For good measure, it’s refreshing to see that current views reveal no real difference among political parties. Among those identifying as Democrats and independents, 71 percent viewed trade favorably, as did 68 percent of Republicans. Bipartisan support for an economic positive is most welcome.

Mistaken Assumptions About Imports

It also must be noted, however, that the Gallup poll’s question on trade feeds a false narrative. The question is phrased as follows: “Do you see foreign trade more as – an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?”

In reality, imports are not “a threat to the economy.” Why would more choices, increased opportunities, and lower prices for small businesses, larger companies, workers and consumers be threats? Unfortunately, this view of imports prevails in many circles, including among too many in the political arena.

In reality, whenever individuals and businesses trade, it is by definition mutually beneficial, and value is created. Furthermore, expanding imports correspond with expanding domestic production. That is, when the U.S. economy is growing, it’s natural that imports of both consumer and capital goods commensurately increase. Also, imports aid the economy by boosting competition, which drives domestic businesses to be more innovative and to improve productivity.

In the end, consumers wind up with increased choices and lower prices. And in turn, those lower prices free up resources for saving, investing and making other purchases.

Trade and Small Business

Finally, it must be noted that small businesses and their employees are deeply involved in foreign trade in terms of both exports and imports. Just looking at employer firms directly involved in trade, consider that

● 76.2 percent of U.S. exporters have fewer than 20 employees, and 86.7 percent fewer than 50 workers;

● while 75.2 percent of importers have fewer than 20 workers, and 85.5 percent fewer than 50 workers.

U.S. Must Lead on Free Trade

All of this speaks to the benefits of reducing governmental barriers to trade via free trade accords. For most of the post-World War II era, the U.S. had led the globe in the general direction of lower barriers, expanded opportunities and greater growth through trade. That became far less the case during the Obama administration, as the U.S. for much of that time stayed on the trade sidelines, and now the Trump administration seems focused on working against free trade.

Any agenda taking us down a protectionist path on trade needs to be quickly reversed. Reclaiming the mantle of leadership on free trade will expand opportunity for U.S. entrepreneurs, businesses, workers and consumers, as well as for those in nations with which we have free trade agreements.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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