Continued uncertainty surrounding international trade agreements is needlessly hindering a U.S. economy that is otherwise strong, particularly in areas such as Georgia that are most deeply connected to global commerce. The state’s role in international trade is in plain sight across the state – a logistics epicenter – from UPS’s headquarters and operations to the growing traffic at the Port of Savannah to the sophisticated network of rails and roads – all of which helps provide quality jobs and tax revenue in the Peach State.
Yet much of things hangs in the balance as leaders in Washington, D.C. wrestle with a handful of difficult issues related to the very trade patterns that undergird the Georgia economy. From potentially exiting the North American Free Trade Agreement (NAFTA) to levying tariffs – which are really taxes – on a host of Chinese products, bedrock industries to Georgia – agriculture, automobiles, manufacturing, parcel logistics and the private freight railroads I represent – continue to sound the alarm bell.
On the heels of economic-stimulating tax reform and amid record-low unemployment nationally, now is the time to end this unforced error in thinking that trade is a net negative. Georgia’s businesses and consumers should signal to their leaders in Washington, D.C. that a trade war is not only counterproductive, but a direct threat to the well-being of Americans. We should all echo the words of UPS CEO David Abney, who notes, “while trade has made for an easy scapegoat, the reality is that cross-border commerce has played an unheralded role in producing the inclusive global prosperity we’ve enjoyed during the past 60 years.”
Negotiators from Canada, Mexico and the U.S. can brighten an otherwise dim outlook on trade should they come to agreement on a modernized NAFTA next month, as they now say is a real possibility. Abandoning the pact was never a wise idea, as it is simply too important and we all are all too used to the free flow of goods across borders without burdensome tariffs.
This is true for privately owned freight railroads such as CSX Transportation and Norfolk Southern in Georgia, which provide high-paying jobs while also serving as a critical transportation for pivotal industries. Industry data show that at least 42 percent of rail carloads and intermodal units and roughly 50,000 U.S. jobs are directly associated with international trade – much of which occurs in North America. Just last month, state transportation officials broke ground on a $127 million rail project that will double on-dock rail capacity at the Georgia ports, which continue to set growth records.
More broadly, economists estimate that more than 41 million U.S. jobs today depend on trade. NAFTA alone has boosted the U.S. economy by $127 billion annually. And since NAFTA took effect, trade between the Canada, Mexico and the U.S. has nearly quadrupled, reaching $1.3 trillion in 2014.
Automobile manufacturers – such as the Kia plant in West Point that is directly served by freight rail – as well as the agriculture sector, exist in today’s economy precisely because of this trade agreement. In 2016, 13 automakers manufactured 12.2 million vehicles in the U.S. – one million more than before NAFTA – while these companies have also launched 15 new plants – particularly in the Southeast U.S. – leading to 50,000 direct and 350,000 indirect auto jobs.
Meanwhile, agriculture – which totals more than 1.3 million workers in Georgia alone – exported nearly $43 billion in goods in 2016, accounting for more than a third of all U.S. agriculture exports. Roughly a quarter of Georgia agricultural products go to Canada and Mexico. And a sizable portion of these go through the Savannah port, and the success and ability to employ workers at that port hinges in large part on the sustained movement of goods.
Yet according to the American Action Forum, a NAFTA exit would impact $1 trillion in North American trade and expose businesses to $15.5 billion new tariffs. The analysis shows that this would cost consumers at least $7 billion collectively per year – money that could otherwise be spent or invested.
We should be discussing how to open up more markets for our businesses, not narrowing or closing existing ones. Rhetoric surrounding trade should be corrected when it is wrong, namely that trade deals such as NAFTA have outright eliminated jobs or sectors. Technology, not trade, has changed the U.S. economy most over time.
It is time to embrace trade and put aside misleading statements surrounding its place in the economy. From finalizing NAFTA to developing a comprehensive plan on trade with Asian nations – particularly China – there is progress to be made. Moving in the right direction will help provide much needed certainty.
Edward R. Hamberger is president and CEO of the Association of American Railroads.
