New Free Trade Pact Will Boost Economy: FedEx Exec


A new round of talks aimed at tearing down trade barriers and boosting economic growth with key partners in the Asia-Pacific Rim wrapped up this week in San Diego, California.

It's essential work for a treaty that will expand connections with those rapidly growing economies as well as cut through costly, bureaucratic red tape.

Recognizing the benefits for the U.S. economy, the U.S. Government has aggressively pursued the Trans-Pacific Partnership trade talks and hopefully later this year the 11 countries at the table will sign a new treaty.

Clinching a deal quickly will provide a boost of confidence to the seesawing global economy, establish the building blocks for future Asia-Pacific trade expansion, create more jobs, and speed access to lucrative markets for American goods and services.

The potential for this treaty is great because it would include the rapidly evolving 21st century world of technology and e-commerce, simplify and improve the global supply chain, address concerns about state-supported enterprises, and allow for periodic review and assessment as the global economy evolves over the coming decades.

Michael L. Ducker
AFP | Stringer | Getty Images
Michael L. Ducker

A new free trade treaty would be a welcome development to counter a recentWorld Trade Organizationreport that found 124 new barriers to trade had been erected just since October 2011, including tariffs, import licenses and customs controls.

That is the wrong direction for the global economy that has been whipsawed back and forth and badly needs stabilizing with concrete policies and direction.

In a sign of just how attractive such a pact is for fostering trade and growth, our neighbors Canada and Mexico have been eager to participate and last month they were both invited to join the talks.

Our three economies are already closely intertwined with goods manufactured and assembled seamlessly throughout North America. Having them as part of a new free trade deal with the Asia-Pacific region will improve our collective standing as a competitive force for exporting our goods.

Today, the manufacturing process is no longer under one factory roof in a single city let alone one country. It has been dispersed around the world creating a global assembly line and, as a result, opening the door to all kinds of opportunities for companies big and small competing to provide the best components. Lowering trade barriers ensures that those parts are not held up in the global supply chain.

FedEx is a critical part of that assembly line, with more than 16,000 employees in the Asia-Pacific region alone who operate some 400 flights and nearly 4,000 delivery vehicles each week. We make sure those electronic components, automotive parts or other goods arrive in a timely fashion wherever they are needed.

Each time we lower trade barriers, that helps companies like FedEx expand operations and services and—most importantly—that leads to new, good-paying jobs which are essential when millions of Americans are still unemployed today.

For every $1 billion in goods we export, that translates into more than 6,000 additional jobs here at home and $1 billion of services exports supports 4,500 jobs, according to the U.S. Trade Representative.

And keep in mind that, as the U.S. economy looks to regain a solid footing, forecasters expect the Asia-Pacific Rim region to grow about 6.5 percent in 2013, lucrative markets for exports.

One of the most important features of the TPP is its strengthened focus on supply chains, which includes improved customs provisions and enhanced protections for U.S. transportation companies competing in foreign markets.

The TPP should use the recently approved free trade pacts with Colombia, Panama and South Korea as the baseline and then seek to go even further to enhance supply chain efficiency.

Separate customs procedures for expedited shipments and higher thresholds for duty-free treatment at the border are two examples of policies that can save millions of dollars in bureaucratic red tape, free up scarce border resources and improve efficiency.

Another major element of the trade negotiations that has drawn attention is the issue of state-owned enterprises, which may benefit from various forms of government support and give them an unfair advantage over competitors that do not receive such backing.

The TPP will impose certain disciplines on state-owned enterprises so that companies from the treaty member countries can compete on a level playing field.

The final element of the TPP that warrants our support is the fact that it will be a living document that is open to expansion to other countries—a rarity among trade pacts. Already major economies are at the table but there’s potential to add more countries. For example, Japan, the No. 2 world economy, is among the countries which could be subsequently added.

The Trans-Pacific Partnership represents more than 40 percent of global trade. This agreement is our best chance to further streamline and expand these critical trade lanes. We need to keep the level of ambition as high as possible and use this opportunity to upgrade and modernize the rules of trade to match the 21st Century business environment.

We are close to the finish line after San Diego. Let’s do the hard work now to push this agreement across the goal line so that we can help our economy fire on all cylinders again.


Michael L. Ducker is COO and President, International, FedEx Express. The opinions expressed here are his own.