What causes trade deficits?
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Reliable, predictable, and stable supply chains are essential to U.S. global competitiveness and continued economic growth. However, a single break or inefficiency in the chain can lead to increased costs and delays for companies and lower quality goods for consumers. Recognizing the importance of global supply chains to conducting business, the U.S. Chamber of Commerce will host its Fifth Annual Global Supply Chain Summit: Building Tomorrow’s Networks Today on May 17. The summit is dedicated to advancing some of the most pressing issues of today and new ones on the horizon.
A major topic of discussion will be the recent ratification of the World Trade Organization’s Trade Facilitation Agreement (TFA). The TFA is specifically designed to reduce red tape, eliminate outdated regulation, and modernize border processes around the globe. The goal is to create greater efficiency in cross-border trade, which will go a long way in improving access to international trade for small- and medium-size businesses. The agreement is expected to reduce the costs of trading goods worldwide by approximately 15%.
A more efficient border today creates opportunities for U.S. exports tomorrow. Once the TFA is fully implemented, the agreement will have a positive impact on nearly every industry. Consider this: Speeding up the border process creates market opportunities for farmers to get their perishable foods across global borders before they spoil. Greater border efficiency will mean less spoilage, lower costs, and greater food selection for consumers around the globe. A recent report by Chicago Council on Global Affairs Senior Fellow Andrea Durkin highlights that agribusinesses and the agriculture community must take advantage of the TFA.
The report’s premise is that global demand and opportunity will occur outside the U.S. For instance, the African food and agriculture market is expected to reach $1 trillion by 2030. Asia constitutes more than 40% of total U.S. agricultural exports. And emerging markets already make up 20% of U.S. agriculture exports and that continues to grow. Demand for high-value agricultural and food products is increasing fastest in the lower-middle-income and low-income countries at approximately 17%. While growth of these markets is staggering, they will not reach their full potential unless cross border supply chain issues are addressed.
The TFA creates countless opportunities for U.S. companies, particularly the agricultural community, so the U.S. must ensure it is implemented appropriately. This is truly a win-win situation for both international development and U.S. economic opportunity. So let’s get it done.