Although many small business owners go about their daily routines never giving a second thought to foreign trade, it is actually a very important issue for the small business sector of the U.S. economy.
That is made apparent by two facts. First, small businesses are the biggest job creators in our country and, second, small and medium-sized businesses account for nearly 98 percent of all U.S. goods exporters. This is true even though only 24 percent of our small businesses are engaged in global commerce, according to a UPS survey.
Therefore, when the number of exporters increases, the number of jobs created gets a big boost as well.
There are some rather big political issues that are up in the air right now. The Obama administration is negotiating two free-trade deals, one with a large group of Pacific nations – the Trans-Pacific Partnership Free Trade Agreement (TPP) – and the other with the European Union – the Transatlantic Trade and Investment Partnership (TTIP). At the same time Congress is debating whether or not to reauthorize the Export-Import Bank.
The free-trade agreement negotiations have been lingering for years. TPP talks date back to 2005 and both agreements were to be finalized in 2014 or 2015. Due to the number of nations involved and thorny issues such as agriculture and intellectual property, it’s uncertain if either negotiations will be wrapped up this year.
These agreements will require majority approvals in both houses of Congress and will need bipartisan support. Some Democrats may oppose the agreements due to union pressures.
Moving beyond NAFTA
The North American Free Trade Agreement (NAFTA) greatly benefited small business exporters. Today the overwhelming majority of our small biz exports go to NAFTA nations. These agreements have the potential to create similar opportunities throughout the Pacific Rim as well as in Europe.
If there is any element of your business that can become involved in global commerce, it would be wise to start putting your strategy in place today. The UPS survey cited earlier and other statistics point out more important facts: 95 percent of all consumers live outside the U.S., small businesses that export are 20 percent more productive, and small biz exporters create 20 percent more jobs than their non-exporting counterparts.
Further, let your representatives in Washington, D.C., know that you would like to see trade restrictions eased by fast-tracking these agreements when they come to Congress. In the same way, get your local business and professional organizations on board with their vocal support.
For any business, new avenues of growth are the most precious commodity. With these important trade agreements pending, major opportunities can become realities.