The President's Travel Abroad Creates Jobs at Home
PRESIDENT Bush's foreign travel schedule, including his current trip to Asia, is the best tool to jump-start the United States economy. Ron Brown, chairman of the Democratic National Committee, misses the boat when he says, "Working Americans in Rome, Iowa; Rome, Missouri; and Rome, Ohio, need a stay-at-home president ready to lead this country out of recession."
The quote shows that some political leaders are still 40 years behind in their economic thinking. In 1951, Harry Truman could be a stay-at-home president because the national economy was fueled by domestic demand. But in 1991, one out of three Americans works in a job created by foreign trade. The livelihood of 40 million working Americans - the combined populations of the six New England states, the eight Rocky Mountain states, and New Jersey and New York - requires that today's president travel to Rom e, Italy, to create jobs for Rome, Ohio.
US foreign trade is drastically underdeveloped. Though the US is one of the biggest traders in the world in absolute dollar terms, that is only because its economy is the largest in the world. A true measure of a country's integration into the world economy is its foreign trade as a percentage of GNP. On this ratio, the US ranks dead last among the industrialized nations in the Organization of Economic Cooperation and Development (OECD).
In fact, the US ranks 117th out of 126 nations in its relative integration into the world economy. Even tiny countries without the US's diplomatic resources have reaped great benefit from world markets. The truth is that we rely too much on a large domestic economy to provide growth. We are in a recession partly because we do not have a broad and growing base of foreign customers to whom we sell our products.
The president is working to increase the US's sales abroad. He knows that every $1 billion increase in exports creates 20,000 American jobs. And so he uses his international trips to break open foreign markets, increase trade, and attack the recession and unemployment.
By looking at just three of the president's overseas trips in the last 18 months, we can see the benefits his travels bring.
* Japan: Over the course of several meetings with former Prime Minister Kaifu, the two leaders opened Japanese markets in satellites, telecommunications, wood products, and semiconductors. In the first two years of Mr. Bush's administration, US exports to Japan grew 29 percent.
* European Community: When Bush sat across the table from EC President Jacques Delors in The Hague Nov. 9, the stalled GATT talks suddenly revived. A final GATT agreement - now much more likely - could increase US GNP by as much as $1.1 trillion over the next 10 years. That translates into a $16,700 real income gain for every family of four. That's worth a day of the president's time.
* Mexico: In Mexico City, June 11, 1990, Bush and President Salinas of Mexico pledged to pursue a free trade agreement. Increasingly liberalized Mexican trade policies since 1986 have already created about 260,000 American jobs, according to Commerce Department statistics. The free trade agreement promises to create a volume of jobs that will dwarf this five-year number.
With the cold war over, the executive branch is finally becoming an advocate for US business - in much the same way that foreign governments have sponsored their businesses for years. Bush is the most important link in a strategy that has included outgoing Commerce Secretary Robert Mosbacher's leading trade missions of CEOs to Latin America, and Vice President Dan Quayle's making a pitch for AT&T in its effort to win a $2 billion contract in Indonesia from Japan's NEC.
Where should the president now focus his efforts at increasing international trade? Asia - exactly that region in which he is traveling right now.
The 28 nations that comprise South Asia, the Asian planned economies, and the Asian Pacific Rim (nations like India, Pakistan, China, Japan, Taiwan, and Korea) represent a $5 trillion economy - about as large as the US economy itself. US business now has a piddling 2.5 percent of this significant market.
The president would poorly allocate his time if he tried to tweak an extra half a percentage point of domestic demand when instead he can broker trade agreements that open up what is essentially virgin territory for US firms.
The future will only accentuate Asia's importance. In the 1980s, the US economy grew at a 3 percent rate - only the 50th largest growth rate in the world. China grew 250 percent faster; Asian Pacific countries and South Asian nations grew at about double the US rate; Japan came in a third faster.
There is much left for Bush to do. Nations rarely open their markets unless there is high-level pressure placed on them to do so.
The experience of Toys * Us in Japan proves the point. After two years of herculean effort, the American toy merchandiser is finally breaking into the Japanese market. But it never could have done so without pressure from the highest levels of the US government on Japanese leaders. This pressure modified a retail-distribution law that restricted the cut-price business strategy Toys * Us has pursued with great success the world over. It is work like this that Bush is getting done on his overseas trips. An d it is work like this that needs to be pursued in coming months.
The answer to the recession is increased exports. Presidential attention to our foreign trading partners and tough presidential bargaining for US rights is necessary. It's a relief that Bush is back on Air Force One.
