Imports Work for America

Over the past few years, Washington has focused anew on the importance of boosting American exports. This makes a lot of sense: cash-strapped consumers, regulation-burdened businesses, and a deficit-ridden government lack the resources to kick-start vigorous growth anytime soon.

Exports serve as a terrific engine for growth: Outside our borders are markets that represent 80 percent of the world’s purchasing power, 92 percent of its economic growth, and 95 percent of its consumers. The opportunities are immense.

But exports are just half of the trade equation. That’s why the U.S. Chamber has joined with other associations and think tanks to launch “Imports Work for America Week,” which starts today.

While boosting exports is vital, this is a great chance to highlight that imports are also important to American jobs, prosperity, and competitiveness, not to mention global development.

U.S. Jobs: It turns out that millions of Americans work in sectors that are dominated by imports. For example, while imports account for 98 percent of the apparel and 99 percent of the footwear sold in the U.S., these industries directly employ more than four million workers right here at home, according to the American Apparel and Footwear Association.

These workers are designers, logistics experts, retail associates, manufacturers, sourcing managers, merchandisers, marketing professionals, and more. The median salary for these workers is $70,000 annually.

At times, confusion arises because goods are labeled with their country of final assembly, even when most of their value added is “made in America.” All kinds of technology products, for instance, register as imports in U.S. trade statistics because they are assembled in Asia, but U.S. innovators often realize three-quarters or more of the value from each unit sold, according to a growing array of studies. In short, there are lots of American jobs behind those imports.

American Families: By stimulating competition in the marketplace and boosting productivity, imports raise American families’ purchasing power and help them stretch their budgets. They literally make us richer.

In “The Payoff to America from Global Integration,” the Peterson Institute for International Economics estimated that half a century of trade liberalization has boosted the average American household’s annual income by about $10,000.

Similarly, by lowering U.S. tariffs and cutting the cost of imported consumer goods, the trade agreements of the 1990s — principally the Uruguay Round and North American Free Trade Agreement (NAFTA) — save the average American family over $1,500 every year, according to the Office of the U.S. Trade Representative.

The next time you visit the grocery store, think about this: one quarter of all U.S. food imports are considered “non-competitive” by USDA. These are products such as coffee, chocolate, and tropical fruits that U.S. farmers produce only in limited geographical areas.

Imports also make our lives better in ways that are hard to quantify. Who doesn’t enjoy a cup of hot coffee or Earl Gray on a winter morning? Fresh grapes in the winter? Or an inexpensive bottle of imported crushed grapes — wine from, say, Chile?

U.S. Manufacturing: U.S. factories depend on imports. In fact, U.S. producers buy more imports— 62 percent of the $2.1 trillion in U.S. goods imports in 2011 — than U.S. consumers do when imports of raw materials, intermediate goods, and capital goods are taken into account. Globally, intermediate goods represent 56 percent of merchandise imports, according to research prepared for a recent G20 meeting by the World Trade Organization and the Organization for Economic Cooperation and Development.

Keeping the cost of these inputs low is critical to the competitiveness of U.S. industry. Just as some consumer goods aren’t produced domestically, some industrial raw materials aren’t available from domestic sources at reasonable cost due to geology, climate, or other circumstances.

 

In addition, just under half of all imports are “intra-firm,” meaning a U.S. parent corporation is importing from an overseas affiliate or a foreign-headquartered firm is shipping goods to its U.S. affiliate. This illustrates how global supply chains are just that: global. In just-in-time manufacturing, imports can generate new efficiencies and giving U.S. factories a competitive advantage.

 

Global Development: The past half century has seen an unprecedented rise in prosperity around the globe. According to the World Bank, the number of people living in extreme poverty in the developing world fell from nearly 2 billion in 1981 to an estimated 1.2 billion today — a decline from 52 percent to about 20 percent today. This may be the biggest news story of the past half century — and the most underreported.

 

One key driver of this seminal improvement in living standards has been a wave of reforms making it far easier for people in most countries to trade across borders. Often, imports into the U.S. and other developed countries have played a major role.

 

For example, when Colombian roses are sold across the U.S. this Mother’s Day, this commerce sustains 170,000 good Colombian jobs — but we can take pride that it also supports 225,000 American jobs in the U.S. logistics, transportation, and retailing sectors.

 

Those trade flows are booming, but countries of the developing world are also trading more among themselves in what’s called South-South trade. Two-way commerce is thus becoming an even more powerful engine for economic development.

So how can we better ensure that imports work for America going forward? The U.S. Chamber has long argued that trading away U.S. import barriers to secure better access to foreign markets is a terrific deal. The U.S. should vigorously pursue such trade agreements.

Further, the Chamber strongly supports the Miscellaneous Tariff Bill, which provides relief from tariffs levied on imported materials or intermediate products that are not produced domestically or where there is no domestic opposition. By eliminating these “tariffs nobody wants,” the MTB lowers costs and helps U.S. manufacturers maintain their competitive edge.

In addition, the Chamber has endorsed the Affordable Footwear Act (AFA), which suspends for five years U.S. tariffs on inexpensive footwear that is not manufactured in the U.S. Such footwear is often subject to very high tariffs, which represent a hidden, regressive tax on low-income Americans.

Similarly, the Chamber supports the U.S. Optimal Use of Trade to Develop Outerwear and Outdoor Recreation (OUTDOOR) Act, which eliminates tariffs on recreational performance outerwear for which there is no commercially viable production in the U.S.

Finally, trade preference programs such as the Africa Growth and Opportunity Act (and its about-to-expire “third country fabric” provisions) show the value of imports as an engine of development. Congress should extend this legislation.

In the end, imports are important because trade is a two-way street — with benefits on both sides.

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