At the Democratic National Convention, President Bill Clinton reminded America that sound economic policy is often a matter of straightforward arithmetic.
One area where the economic equation can add up nicely for the United States is increased export trade, especially expanded exports of “Made in America” products to the rapidly growing markets of the Asia-Pacific region.
Let’s look at some numbers.
The Asia-Pacific region is experiencing explosive economic growth as it becomes more urban and affluent. Asia is now home to fully half of the globe’s urban population. India alone has more middle-class people than America has people, while China’s economy adds 159 new millionaires every day.
By 2020, the Asia-Pacific region will add an astounding 1.2 billion new middle-class consumers to the global economy. From Beijing to Bangkok, these new buyers will want foreign brands and modern services and will splurge on Western foods and foreign travel. And the region will face growing demands for expanded access to health care, a cleaner environment, new housing and better schooling.
All of this will add up to record imports. Third Way projects that in 2020 alone, major Asia-Pacific economies will import almost $10 trillion in goods and hundreds of billions more in services. That’s an astonishing number: more than two times (in constant dollars) the region’s imports of goods in 2010 and more than four times Europe’s current goods imports from the world.
Tapping into the burgeoning buying power of Asia’s consumers and businesses presents an extraordinary opportunity for American’s still-recovering economy. As detailed in a new Third Way report, American workers, farms, manufacturing plants and service companies are exceptionally well-positioned to seize a greater share of the vast prospects in Asia.
Asia will spend trillions on upgraded infrastructure over the next decade, including new roads and ports, improved power and water systems, and expanded housing. American companies are global leaders in supplying the heavy machinery, power systems and construction services that Asia’s massive infrastructure boom will require.
By 2020, Asia’s demand for food will double, to nearly $3 trillion, and Asian diets will increasingly include meats, dairy and prepared foods. America is a global force in farming and food production. One out of every three acres on U.S. farms already feeds foreign consumers.
By 2030, the Asia-Pacific will need more than 11,000 new aircraft to meet the region’s expanding travel needs. Boeing, with suppliers in virtually every state, is aggressively pursuing this $1.5 trillion sales opportunity.
In these and many other sectors, America makes what Asia wants. But, because of widespread trade barriers, Asia can’t always buy what America has to sell.
Sky-high duties keep American cars off Asia’s roads. Unscientific food standards prevent American foods from reaching Asia’s tables. Investment restrictions and unfair qualification rules keep American companies from serving regional customers. And serious failures to protect intellectual property block opportunities for a wide range of innovative U.S. products.
These and many other trade barriers subtract significantly from U.S. sales to Asia and are a key reason America’s share of major markets in the region fell by more than 40 percent from 2000 to 2010.
America can reverse this trend and potentially boost our exports by hundreds of billions of dollars. These increased exports could very likely support millions of good-paying American jobs and would provide an important boost to other efforts to assist our domestic workforce. To achieve these ends, we’ll need to aggressively use global trade rules to win an equal shot for U.S. exports.
This will require that we continue stepped-up efforts to bring trade cases against Asian trade barriers that violate global rules. And it will mean advancing tough, comprehensive trade deals to pry open Asia-Pacific markets while better positioning our domestic workforce, as well as our farmers, manufacturers and service companies of all sizes, to seize abundant opportunities in Asia.
That’s the goal for the Trans-Pacific Partnership trade agreement that the United States is negotiating with key Asia-Pacific trading partners.
For decades, American consumers drove the rapid expansion of Asia’s
export-oriented economies. Now, Asia is poised to play an enlarged role as a buyer in the global economy, as its consumers and businesses become huge importers and add significantly to world demand.
The United States needs to use trade rules to assure that Asia’s buyers can “buy American.” If we can do this, growing tallies of exports to Asia will make the economic arithmetic add up for America, leading to a stronger economy and a more prosperous middle class here at home.
Rep. Adam Smith (D-Wash.) is ranking member of the Armed Services Committee. Ed Gerwin is senior fellow for trade at Third Way.