The United States and its trading partners around the world would be making a huge mistake if they responded to the current dark economic times by adopting protectionist measures to restrict free trade, the chairman and CEO of UPS said yesterday.
"The need to support global trade grows more urgent by the day," said Scott Davis, UPS's Chief Executive.
"Global trade is one of the most important tools we have to help lift us out of the financial crisis. No argument against free trade can justify the negative impact to economic and human development."
Addressing the US Chamber of Commerce here, Davis said perception and reality often are at odds in the global trade debate and that promoting trade's distinct and measurable advantages should be the job of every trade proponent.
"Proponents of free trade find themselves with an increasing challenge these days," said Davis. "The facts are clearly on the side of trade, but popular perception clearly is not… [so] we simply must do a better job telling the story."
That starts with challenging long-standing arguments surrounding the impact of global trade on US jobs. While there is a growing perception, especially in the United States, that globalisation and free trade are siphoning jobs to other countries, Davis said government statistics indicate otherwise.
The Bureau of Labour Statistics has found that in the case of layoffs of 50 or more people between 1996 and 2004, fewer than three per cent were attributable to import competition or overseas relocation. And according to the US Treasury Department, as many as 57 million Americans now work for companies engaged in global commerce. That translates to two out of every five US non-farm jobs being linked to exports and imports of goods and services.
The even bigger "myth", Davis said, is the notion that nothing is manufactured domestically anymore. The reality? In 2008, the United States remained the world's leading manufacturer, representing nearly one-quarter of all global manufacturing output.
The US also retained its title as the world's largest exporter of goods and services, with exports reaching $1.8 trillion (Dh6.6trn).
Additionally, Davis noted that global trade can actually create US jobs, citing UPS's own experience.
"In my own company, trade is clearly creating American jobs," he said.
"Each time we add 40 new international packages in the United States – in other words, 40 packages imported or exported by our customers – we create another new US job somewhere in our system."
Davis added that global trade has resulted in a "better, safer, more hopeful and more prosperous world", crediting it with lifting millions out of poverty.
Multiple studies show a direct connection between the degree of economic freedom and the pace of economic growth, he said, adding: "Many countries in Eastern Europe, Asia and Latin America are prosperous and stable societies in large measure because of their determination to be players in a free and open global economy.
"Will we have the foresight and courage to build on history's most powerful force for economic gain and human betterment?" Davis asked.
"Or will we allow the financial crisis to cloud our judgment and threaten one of the most important tools we have to pull us out of this downward spiral?"