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March 19, 2014

Texas Is Top State for International Trade, but It Could Be Even Better

  Austin American-Statesman

For 11 years running, Texas has been the top state exporter in the country.

But stalled trade talks in Washington could put that success story at risk.

The International Trade Association claims that Texas exports grew 5.7 percent from 2012 to 2013, to nearly $280 billion, a record high. And the Business Roundtable notes that exports accounted for 18.8 percent of the state’s gross domestic product in 2011.

According to the U.S. Department of Commerce, three of the state’s metropolitan areas were among the 25 top exporters in 2012: Houston-Sugar Land-Baytown was first; Dallas-Fort Worth-Arlington ranked eighth; and San Antonio-New Braunfels snagged the last spot in the top 25. International trade is clearly vital to Texas’ economy.

Eighty percent of the world’s purchasing power — and 95 percent of the human population — reside outside the United States. If Texas businesses want to continue their export success story in an increasingly integrated and globalized business environment, Texas companies need stable access to foreign customers.

Congress can take a very specific step to help in this effort. For decades, Congress has given American presidents from both parties broad authority to negotiate new trade agreements, known as Trade Promotion Authority, or TPA.

Trade negotiations have a lot of moving parts. Each country gives a little and takes a little, with the final agreement being a delicate balance that encompasses numerous trade-offs. Making even minor changes, which members of Congress usually try to do, can disrupt the balance and shatter the agreement.

Under TPA, Congress still retains the ultimate power to accept or reject trade agreements negotiated by the president, but it can’t nit-pick the agreements with countless changes and amendments sometimes meant to placate a Congress member’s constituents or, in some cases, to simply kill the bill.

The president’s team negotiates a trade agreement and Congress gets an up or down vote quickly, preserving the various trade-offs in the agreement. As a result, TPA provides our negotiating partners with a basic level of confidence that whatever agreement they hammer out will be final if accepted by Congress.

But the last TPA lapsed in 2007. Congress has yet to renew it, even though TPA has proven extremely beneficial since it was first granted to President Franklin Roosevelt. 

The Republican leadership in the U.S. House of Representatives is ready and willing to vote to give President Barack Obama the trade promotion authority he’s asked for. But Senate Majority Leader Harry Reid has said a TPA bill is dead in the Senate, even though in times past he has spoken positively of the benefits of trade.

On several recent occasions, Reid has chided House Speaker John Boehner to bring up a particular bill and just let House members vote on it — which Boehner has done. That would be good advice for Harry Reid.

Other countries are aggressively moving to pass free-trade agreements and developing trading partnerships around the world. The United States is falling behind, costing jobs and economic growth.

Global commerce supports more than 38 million jobs in the United States, including nearly 3 million in Texas. A staggering 1 in 5 local positions comes from international trade.

Ninety-three percent of exporters in Texas are small- and medium-size businesses. Agriculture, technology, finance, warehousing, construction, consumer services — all these local industries rely on robust trade channels to grow. And the positions resulting from that growth tend to pay better than the average job. Indeed, employees at export-based plants earn on average about 18 percent more than employees at plants exclusively focused on the domestic market.

But trade is a two-way street. According to the Business Roundtable, nearly 20,000 Texas companies imported products in 2010. Imported materials provide less costly inputs for their manufacturing processes.

New international trade agreements would lower tariffs and establish substantially more robust commercial channels with countries whose markets offer new opportunities for Texas companies, farmers and workers. And a TPA could further expand the state’s international customer base, generating new revenues and jobs all across Texas.


 

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