Trade: Renew the Drive to Open Markets

From opening markets to enforcing standards, business wants trade to be a top priority for the next Administration

By Pete Engardio and Steve LeVine

Shipping containers at a depot in Newark, N.J. Allan Tannenbaum/Polaris

What Business Wants

Few issues have become as toxic in Washington as free trade. After the collapse of the Doha Round of global trade talks in 2003, the Bush Administration struck a string of bilateral deals with individual nations. But even those stopped after Congress derailed free trade pacts with Colombia and South Korea.

Business would like to see trade restored to the top of the U.S. agenda—whether the aim is to gain better access to foreign markets or to ensure that existing rules are enforced. Boeing (BA) Chief Executive Officer W. James McNerney Jr. notes that exports have accounted for 12% of U.S. gross domestic product last year. "The vast majority of the world's consumers live outside the U.S.," McNerney says. "It is essential to our future growth and prosperity that we stay engaged globally."

A big question is whether Washington should put higher priority on opening new markets or on enforcing rules. Some executives would like to see renewed U.S. diplomacy to lower import barriers abroad. "Anything we can do to help increase U.S. exports would create jobs here in the U.S.," says Jim Goodnight, chief executive officer of Cary (N.C.) software maker SAS. Goodnight doesn't understand why Congress blocked a proposed pact with Colombia. (Charges that Colombia's government has tolerated anti-union violence stymied the pact.) "Colombia is going to take down all of the tariffs they have against us," says Goodnight. "For the life of me, I don't see how anyone can argue that it's bad for the U.S."

With Congress unlikely to move soon on new trade deals, however, other executives think the next Administration should focus on fighting harder to protect American industry's interests abroad. U.S. policy has been especially ineffective when it comes to high-technology industries, which account for a major share of American exports, argues Reed E. Hundt, an Intel (INTC) director and former Federal Communications Commission chairman. Until the late '90s, the U.S. had been a net exporter of high-tech goods for 50 years, Hundt notes. Now it runs huge deficits with China. "Why is it that we don't have a serious high-tech export policy?" he asks. At the very least, the U.S. should press China and other nations more aggressively to stop rampant piracy, says Hundt, who also advises President-elect Obama.

Manufacturers want the next Administration to more aggressively pursue sanctions against nations that keep their export prices artificially low with unfair subsidies and by manipulating their currencies. "Trade in a global economy is based on freedom from trade-distorting practices," says Daniel R. DiMicco, CEO of Charlotte (N.C.) steelmaker Nucor (NUE).

Other executives say Washington could boost American competitiveness by granting tax breaks to domestic manufacturers and by hiking tariffs on Asian-produced goods in industries where there is a large U.S. production base. "When labor costs are much higher here, it is important that the government incentivize companies that manufacture in the U.S.," says Shawn Neville, CEO of Boathouse Sports, a 200-employee maker of custom sports apparel in Philadelphia.