What I have experienced as an entrepreneur is that generally American businesses have been reluctant to ship offshore. They found it safe to conduct business on our shores and compete with demographics they know and understand. This has been particularly true over the last 25 years, especially with U.S. retailers forcing their suppliers to absorb part of their costs, causing further reduction of the supplier’s margins.
As a result of a trade policy that makes it exceedingly difficult for businesses—especially small businesses—to find new markets overseas and compete with domestic companies in other countries, many U.S. companies are reluctant to get into the export game. This represents lost potential: More than 70 percent of the world’s purchasing power and nearly 95 percent of its consumers are located outside of the U.S.
The 21st-century global economy will create further competition for those U.S. companies who play it safe and stay within our borders. We need to stop making excuses why we can’t export and find ways to do so. Otherwise we will lose our global leadership and, more importantly, lose our competitive advantage. Gone are the days when each country had its own, isolated economy. There is one economy now—the global economy—and numerous submarkets.
I have found a huge demand for apparel and luxury items designed and manufactured in the U.S. around the world, especially in Europe, Asia and Africa. Young, growing companies that have niche businesses have been very successful in doing the reverse spin—initially gaining market traction and power branding in foreign markets, which has created further demand in the U.S
The importance of the Trans-Pacific Partnership to our exporters is to create a level playing field by reducing their barriers of entry to these markets and give them intellectual-property protection as well. This particular deal will allow a counter effect to China’s economic stronghold, where the U.S., Japan, Australia and the other countries included in the pact can put into place their own guidelines for Pacific commerce. Basically there are 18,000 tariffs employed against U.S. exported goods that would finally be lifted due to these countries moving forward with this deal. Simply put, an increase in the ability to make sales abroad creates new jobs in many facets of industry and, in some cases, higher-paying jobs. Also, small- and medium-sized businesses have the potential to benefit from this trade agreement because previously they did not have the scale and resources that larger companies do to manage the challenges associated with entering new markets.
The big companies are using their clout, which small and medium companies don’t have, to influence the TPP. For example, U.S. pharmaceutical companies are pushing against having their patent licenses lessened from the current 12-year standing. However, because of other countries entering into this pact, there are compromises on all sides and for the betterment of all. Pharmaceuticals did finally concede to having their patents released at a five-to-eight-year mark in order to create generic drugs sooner and create an avenue for more-cost-effective healthcare for all countries involved. This is all more evidence how nations are coming together to benefit a greater future in commerce.
Throughout the debate over TPP, I have heard the opposition quoting all these unverified statistics saying how many millions of jobs have been lost to free-trade agreements. This fear mongering has to stop. While no agreement is perfect, it’s imperative that we have a strong agreement that protects the open flow of goods, workers and the environment. After recently returning from a White House briefing, I felt assured our negotiators were tackling those specific issues and creating a level playing field with the Trans-Pacific Partnership agreement. One specific item that I raised was the importance of having a yarn-forward restriction covered in the agreement in order to create a more level playing field for the apparel industry.
It’s about time for us to wake up and realize we need to expand our sales offshore and continue our global leadership. This is not a Republican or Democratic issue or union vs. business matter; this is about our strength and values as Americans. Let’s not make it a special-interest issue.
Kenneth L. Wengrod is the president and cofounder of FTC Commercial Corp. in Los Angeles.