Everything we need to know, we learn in Kindergarten.
Take sharing, for example. Globalized sharing, selling, and trading have dramatically remade our world over the last 60 years. Our world may be increasingly hot and crowded, but it is also increasingly rich and developed. As Congress dithers over such things as “how to pay our past dues bills,” our country is missing the opportunity to pick low hanging fruit — and trade it. Despite the economic downturn and the enticing allure of fear and protectionism, the times have never been worse to wall ourselves in. The following areas of trade legislation, if passed, would create an immediate economic boost and help set us on the glide path to sustainable growth.
1. Fast Track Trade
Free trade stimulates efficient companies and sectors and puts additional pressure on the inefficient. The downside (i.e., cost pressures, market upheaval, etc.) can be offset by public/private efforts to move up the value chain and making direct investments in the training and education of our human capital.
Taking advantage of the upside begins with establishing trust through international agreements. The biggest obstacle to these international agreements is meeting the needs of disparate domestic interest groups. The hot-bed of this dysfunctional activity (“haggling, pork-barrelling, and log-rolling”) is the U.S. Congress. Effective fast track trade legislation, like the Trade Act of 1974, removes Congress and the battle for pork from the negotiating table.
The desired structure would give Congress the responsiblity to set trade policy goals and then provide an up or down vote for all negotiated agreements. In the middle, the executive branch would be given full latitude to hash out specifics. After the Trade Act of 1974, Congress took multiple steps to reestablish their ineffective relevance and the legislation fully expired in 1994. All other attempts since that date have been half-hearted. A Fast Track trade bill in 2012 could enable rapid ratification of meaningful agreements, such as a big transatlantic deal.
2. Open Our Borders … and Our Retail Stores
Our vacation trade is grossly under-utilized. The war on terror and the fear of a Mexican mass exodus (which, in reality, has dramatically slowed since 2007) have blocked large numbers of law-abiding shop-a-holics. High per capita spenders in high-demand countries like Brazil and China face long lines and logistical barriers for visa processing. Brazilians, for example, have to travel long distances across a country larger than the continental U.S. to reach one of only four consular offices.
A bill called the “Jobs Originated through Launching Travel Act” or JOLT was introduced in the Senate last year but died under committee review. Luckily for U.S. jobs, the Democrats' shellacking of Republicans in last November's Latino vote has paved the way for comprehensive immigration reform and the inclusion of tourism promoting provisions.
3. Free Cuba
The over 50-year embargo is counter-productive, immoral, and anachronistic. From a trade perspective, Cuba clearly has a lot to offer the U.S., such as black gold (oil), yank tanks, cigars, and doctors. Congressman José Serrano (D-N.Y.) has recently introduced two bills into the House of Representatives to deal with the Cuba issue. The first one, the Cuba Reconciliation Act (H.R. 124), seeks to eliminate the embargo. The second, the Baseball Diplomacy Act (H.R. 125), has a goal to create a draft system forthe second best in the world, Cubans, to enter our major leagues. Now is the time to stop treating Cuba like they have missiles pointed at Florida. These days, the only Cuban weapons pointed at Americans are wooden bats towards opposing pitchers.
4. Cap, Innovate, and Trade
President Obama made a strong commitment to tackling climate change in his second term inauguration address. Despite the science and despite the president’s passion, both Democrats and Republicans in Congress remain “cool” on addressing it during this session. Cap-and-trade is a viable solution for reducing carbon emissions by leveraging the market effects with very little direct drain on economic growth.
Our nation can also capitalize on the renewable energy market. In 2012, the World Bank Group approved a record $3.6 billion in financing for renewables. The U.S. on the other hand is lagging in energy research intensity, ranking tenth in the world since 2006. R&D is an investment in future competiveness and our place in this inevitably growing market will be determined by the level of our investment. The public sector has an important role to play in “long return” investments that create new markets or the infrastructure for innovation. An example of even a small step in that direction is the Clean Energy Technology Manufacturing and Export Assistance Act (H.R. 400) introduced in the House by Doris Matsu just last month.