Thriving in a Global Economy: The Truth about U.S. Manufacturing and Trade

Reports of the death of U.S. manufacturing have been greatly exaggerated. Since the depth of the manufacturing recession in 2002, the sector as a whole has experienced robust and sustained output, revenue, and profit growth. The year 2006 was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector. And despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world's most prolific manufacturer--producing two and a half times more output than those vaunted Chinese factories in 2006. Yet, the rhetoric on Capitol Hill and on the presidential campaign trail about a declining manufacturing sector is reaching a fevered pitch. Policymakers point repeatedly to the loss of 3 million manufacturing jobs as evidence of impending doom, even though those acute losses occurred between 2000 and 2003, and job decline in manufacturing has leveled off to historic averages. In the first six months of the 110th Congress, more than a dozen antagonistic or protectionist trade-related bills have been introduced, which rely on the presumed precariousness of U.S. manufacturing as justification for the legislation. Justification for those bills is predicated on the belief that manufacturing is in decline and that the failure of U.S. trade policy to address unfair competition is to blame. But those premises are wrong. The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade

While Doha Sleeps: Securing Economic Growth through Trade Facilitation

Improving the international trading system does not require new, comprehensive multilateral agreements. Countries can derive large gains from the trading system by engaging in reforms often referred to as trade facilitation. In broad terms, trade facilitation includes reforms aimed at improving the chain of administrative and physical procedures involved in the transport of goods and services across international borders. Countries with inadequate trade infrastructure, burdensome administrative processes, or limited competition in trade logistics services are less capable of benefiting from the opportunities of expanding global trade. Companies interested in investing, buying, or selling in local markets are less likely to bother if there are too many frictions related to document processing or cargo inspection at customs, antiquated port facilities, logistics bottlenecks, or limited reliability of freight or trade-financing services. According to recent studies from the World Bank and other international economic institutions, trade facilitation reforms could do more to increase global trade flows than further reductions in tariff rates. For many developing countries -- particularly those that receive preferential tariff treatment from rich countries -- reducing transportation and logistics-related costs through trade facilitation reforms would be much more beneficial than further tariff cuts. But trade facilitation does not only offer promise to developing countries. All countries can benefit by removing sources of friction in their supply chains. The post-9/11 focus on minimizing the risk of terrorists exploiting porous international supply chains to sneak weapons of mass destruction into U.S. cities -- obviously a vital objective -- could hamper the capacity of Americanbased companies to attract investment and compete for markets. Likewise, U.S. prohibitions against foreign competition in transportation services and the political antipathy toward foreign investment in U.S. port operations raise the costs of doing business and increase the scope for trade facilitation in the United States

Audaciously Hopeful: How President Obama Can Help Restore the Pro-Trade Consensus

There is reason for grave concern about the direction of U.S. trade policy. The bipartisan, pro-trade consensus that served U.S. economic and diplomatic interests so well for so long collapsed during the final two years of the Bush administration. Trade skeptics have increased their ranks in the new Congress, a majority of Americans perceive trade as threatening, and grim economic news has made the political climate inhospitable to arguments in support of trade. But restoring the pro-trade consensus must be a priority of the Obama administration. If the United States indulges misplaced fears, restrains economic freedoms, and attempts to retreat from the global economy, the country will suffer slower economic growth and have greater difficulty facing future economic and foreign policy challenges. America's trade skepticism is largely the product of a top-down process. Perceptions have been shaped overwhelmingly by relentless political rhetoric that relies on three myths. Congress and the media have spoken for years about the decline of U.S. manufacturing as though it were fact, when the overwhelming evidence points to a sector that, until the onset of the current recession, was robust and setting performance records. Both lament the U.S. trade deficit without attempting to convey or even understand its causes, meaning, or implications. And both attribute these alleged failures of policy to lax enforcement of existing trade agreements. President Obama should reexamine these premises. He will find that they are long on fallacy and short on fact. Meanwhile, the president will find it necessary to rein in the congressional leadership's increasingly provocative approach to trade policy if he is to have success repairing America's foreign policy credibility. The determination of the president to arrest and reverse America's misguided and metastasizing aversion to trade could dramatically improve prospects for restoring the pro-trade consensus