Brett Healy: Expanded trade can benefit Wisconsin's economy

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Brett Healy
Thursday, April 10, 2014

International trade is critical to our state's economic health. But few Wisconsinites concern themselves with what politicians could do to expand international trade opportunities.

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

Wisconsin is selling more products worldwide than ever before. All this commerce boosts our state's economy. 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 grow our economy deserve support. That's why Wisconsin's leaders should work to renew Trade Promotion Authority (TPA).

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.

Every president since Franklin D. Roosevelt 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.

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 gross domestic product. On a per capita basis, these countries purchased almost 18 times more Wisconsin exports than countries without trade agreements.

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

Consider Wisconsin's dairy industry. It 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 such as 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.

The Commerce Department estimates that for every $1 billion of increased U.S. exports, we see 5,600 more jobs here at home. Additionally, one in five Wisconsin jobs depends on international trade, supporting almost 750,000 jobs here.

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

Democrats and Republicans should agree 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 delay.

Brett Healy is president of the John K. MacIver Institute for Public Policy, 44 E. Mifflin Street, Suite 201, Madison, WI 53703. Contact him by email at info@maciverinstitute.com.

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