• WisBusiness

Friday, October 26, 2012

Tom Still: In the long run, healthy trade relationships bolster national security


By Tom Still
It's hard to find a Mitt Romney or Barack Obama mask for Halloween that's not made in China.

I discovered that the other day while costume shopping. It was an ironic reminder of the gap between the reality of trade and the election-year rhetoric surrounding it.

While candidates for public office often talk about cracking down on one trade partner or another – often for reasons that seem justified – no one wants to see a trade war erupt if one side or the other pushes too hard. The alignment between American interests and those of its major trading partners, from China to the European Union and beyond, is much closer than most voters might suspect.

That's critical not only for economic impact – exports, imports and foreign direct investment – but for reasons linked to cultural, educational and political exchanges. Collectively, trade and related ties can combine to make real conflicts and wars much less likely. Wisconsin provides some tangible and recent examples.

Exports and foreign direct investment are integral to the Wisconsin economy. Total merchandise exports from the state grew by 11 percent in 2011, from $19.8 billion to $22 billion, with key export categories including machinery, computer and electronic products, food products, transportation equipment and chemicals. Such exports are vital to tens of thousands of jobs in Wisconsin – and a door to other exchanges involving investors, researchers and others.

China is among the state's top five trade partners, a rank that has grown steadily in the past 10 years. That surge has led to initiatives such as last month's visit to Wisconsin by a group of private Chinese investors, organized through the Wisconsin Economic Development Corp., the opening of a UW-Madison Innovation Office in Shanghai, and a dairy science alliance between UW-River Falls and China Agricultural University in Beijing.

That's in addition to hundreds if not thousands of daily contacts between private companies in Wisconsin and their business partners in China, where Wisconsin exports totaled nearly $1.4 billion in 2011. That compares to $320 million in 2001.

China has been a political target because it manipulates the value of its currency to aid its economy, and it is often cited as a source of "economic espionage," meaning pilfering of intellectual property produced by others. Resolving those issues may depend as much on building mutual interests – which China desperately needs – as outright confrontation.

Germany is another leading trade partner, ranking fourth on Wisconsin's export list. In the past month or so, two delegations from Germany have visited the state to deepen economic, cultural and political ties. That has included visits from Wisconsin's sister state of Hessen and, last week, Saxony-Anhalt.

The visit from Saxony-Anhalt was led by Birgitta Wolff, minister of economics and science, who wanted researchers and business leaders from her former East German state to better understand how Wisconsin researchers transfer their discoveries to the marketplace.

Their visit included stops at University Research Park in Madison, UW-Madison, the Medical College of Wisconsin, the BloodCenter of Wisconsin and UW-Milwaukee, as well as meetings with five emerging companies.

Obviously, Germany is a longtime ally and no major tensions exist between that democratic nation and the United States. At the same time, two generations worth of trade and other exchanges since World War II have helped to build a lasting peace and reunify Germany.

In former East German states such as Saxony-Anhalt, the transition from the old Communist economy to a market-based economy has reached the point that interest in entrepreneurship and innovation is finally growing.

Healthy trade relationships can be political stabilizers in a world that already has more than enough flashpoints. While political campaigns can compel candidates in either major party to talk tough on enforcing trade laws, the reality is that fewer barriers and more transparency yield long-term economic results while enhancing U.S. security.

Nations that avoid trade wars can usually avoid shooting wars. That's true no matter which Halloween mask you'll be wearing this election year.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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