Categories
Select Country
Follow Us
Perspectives

Nancy McLernon: Trade Agreements Will Unleash Global Investment in America

The TTIP and TPP will attract more foreign investment to our shores, bringing high-paying jobs with it.

 

America’s economy and much of its workforce depend on trade with and investment from European and Pacific Rim countries. The Transatlantic Trade and Investment Partnership (TTIP) with the E.U. and the Trans-Pacific Partnership (TPP) with 11 countries across the Asia-Pacific — will promote U.S. economic growth by opening new markets for U.S. made goods.

Yet beyond just boosting trade, successfully negotiated TTIP and TPP will also have the power to unleash global investment in America. With nearly 90 percent of current foreign direct investment (FDI) in the United States already coming from our European and Pacific partners, these trade agreements will help strengthen U.S. competitiveness by increasing the investment from companies within these countries. The two trade pacts hold the potential to create more than a million new high-quality jobs for Americans, according to a first-of-its-kind study by the Organization for International Investment (OFII) that provides a quantitative look at how TTIP and TPP will encourage global investment and job creation in all 50 states.

Bipartisan Trade Promotion Authority (TPA) will provide structure that is badly needed for finalizing TTIP and TPP.  More than any others, these agreements will secure America’s position as the global economic power, strengthen ties with our key partners, attract global investors to America and create jobs in communities across the country.  TPA legislation will hold trade negotiators more accountable, make the negations more transparent and provide Congress with the ability to better oversee the process. Once an agreement is reached, it will also allow Congress to consider the measure efficiently.

Why does America need foreign investment? Global firms operating in the United States employ 5.8 million Americans. These insourcing companies pay their workers 33 percent higher wages than the national average.  Global investment is particularly beneficial for workers in the manufacturing sector, supporting 18 percent of U.S. workers in that industry. This investment supplies capital, creates employment opportunities for U.S. workers and supports other U.S. companies through the purchase of goods and services.

While the United States is the world’s largest recipient of FDI on a cumulative basis, its share of worldwide FDI has decreased precipitously in the past decade. In 2000, the United States received 37 percent of worldwide FDI stock.  By 2013, that percentage had fallen to only 19 percent. Preliminary figures for 2014 show the lowest level of global investment flow into the United States in more than a decade.

Once the two trade agreements are fully implemented, the United States will receive an estimated increase of $173 billion in global investment, according to our report, which was based on an analysis by Ernst & Young. Insourcing companies are estimated to increase their direct employment of U.S. workers by 400,000 in response to TTIP and TPP. More than a million additional workers would be employed by U.S. suppliers to these insourcing companies and businesses that expand in response to the increased spending of workers at both the insourcing companies and their U.S. suppliers.

Manufacturing employment would see an uptick of 147,000 jobs at global firms across the country. The next three sectors with the largest direct employment impacts are professional and business services (44,500 jobs), the retail industry (42,000 jobs) and the leisure and hospitality industry (36,500 jobs).

Twitter PSA1

By increasing America’s economic competitiveness through successfully negotiated trade deals, the United States will become a more attractive place to do business and will be better positioned to once again increase its share of global investment.

The United States is poised to enter the second half of this decade as the premier destination for global investment.  If Congress acts swiftly in approving TPA, it can unleash global investment in America, which will lead to more high-quality jobs for workers across the country.

(Top image: Courtesy of Thinkstock)

 

Nancy McLernon is President and CEO of the Organization for International Investment (OFII), a non-profit business association in Washington, D.C. representing the U.S. operations of many of the world’s leading global companies, which insource millions of American jobs. OFII works to ensure the United States remains the top location for global investment.

 

 

 

Subscribe to our GE Brief