Better Trade Policies

 Credit  Tom Driggers

the situation

Our current trade policies leave much to be desired. However, there are practical ways to address this issue and there are counterproductive (or even destructive) ways to address this issue. 

America does not need to retreat from international trade. We need to set down new standards and enforce them. The United States has far more leverage over the system of international trade than any other nation. That allows us to dictate the rules and norms which must be adhered to. If other countries want access to the most lucrative consumer market in the world (America), then they must play by our rules. We can accomplish this mission and by doing so, create a new system of international trade which is fair and just.


HERE'S WHAT WE'RE DOING ABOUT IT

 

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policy solutions

EXPAND THE ROLE OF THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS):

This committee is tasked with investigating potential dangers in certain foreign investments. For example, if a Chinese state owned enterprise wanted to buy a major US defense contractor, that would be a big problem for the United States military and our national security. So even if such a bizarre situation were to arise, CFIUS would prevent the deal from going through.

 Credit  Sheila Sund

In the majority of cases, the US is very welcoming to foreign investment and rightly so. This is critical to the health of our economy. But there are more than a few instances where foreign investment can create a conflict of interest in terms of national security. Many of these instances result from the investments of state owned enterprises. To meet current threats, the role of CFIUS must be updated in the following ways:

-The role of CFIUS must be expanded to include soft power targets like news outlets and movie studios which can influence public opinion.

-CFIUS should also safeguard against state owned enterprises gaining market dominance in important technologies and products. Such market dominance can be used as leverage by the foreign government against the United States.

-CFIUS should also evaluate foreign dealings (particularly with state owned enterprises) on a “national interest” level, as many Chinese firms are purchasing US tech companies just to take the technology and develop it in China. This does not benefit the United States.

-CFIUS must work with the Department of Defense to identify all critical technologies that should not be available to foreign investment at any level.

-Due to the increasing threat to our infrastructure from foreign cyberattacks and sabotage, the Secretary of Transportation should be added to the members of CFIUS.

INCREASE THE NUMBER OF SMALL BUSINESSES IN THE EXPORT-IMPORT BANK'S PORTFOLIO:

Routine reauthorizations of the Export-Import Bank should not be controversial or an opportunity for political bickering. Nations throughout Asia and Europe are pouring money into their export banks to make their industries more competitive. America cannot unilaterally disarm in the midst of this struggle for market dominance.  

In addition to the large firms that work with the Export-Import Bank, the bank has also made it a priority to assist small businesses as well as businesses owned and operated by veterans, women and minorities. It should also be known that the Export-Import Bank turns an annual profit worth hundreds of millions of dollars which is given to the Treasury. The bank does not lose money by handing out “corporate welfare”. The bank makes money which goes back to the Treasury. It is not government waste. It provides a valuable service and does so while turning a profit which is given back to the public.  

Also, their growing work with small businesses is vital to increasing exports. Small businesses typically do not get export loans from commercial banks. When a small business owner asks their commercial bank for export financing to cover an order in a foreign country, they are often turned away. These banks are wary of foreign buyers and are unlikely to help most small businesses expand to overseas markets. This is also where the Export-Import Bank provides a necessary service by helping these small companies get the financing they need to expand their customer base overseas.