National security achieved through trade in aerospace and defense
THE first presidential debate was a critical opportunity for the candidates to provide their visions for achieving prosperity and securing America. Embedded in the debate about trade was a common point of view shared by both candidates: America needs the right kind of fair-trade policies to stay ahead in the global marketplace amid an increasingly challenging global security environment.
Unfortunately for the U.S. aerospace and defense industry, we keep missing opportunities to level the playing field — or worse, creating obstacles to our success — against foreign competitors benefiting from significant government support in terms of subsidies, tax incentives, regulatory relief and aggressive advocacy.
Despite this marked disadvantage, our sales account for the largest manufacturing-sector trade surplus for our country. Aerospace and defense generated 9 percent of all U.S. exports in domestic goods. These overseas sales represent sustained growth of high-skill, high-wage American jobs and innovation at every level of the supply chain.
However, the U.S. share of global aerospace and defense trade has gained less than 2 percent since 2010. Several of our competitors are seizing market share at a much higher rate. If we continue to stand still in the face of increasing competition, we will inevitably cede our leadership in trade with serious consequences for our economy and national security.
Our next president and Congress can ensure that the United States leads — and wins — on trade and security. We need to restore robust, balanced and stable budgets for our nation’s defense, air-traffic infrastructure and space capabilities to preserve and grow our industrial base. We also need to have U.S.-export control and foreign military sales processes that are predictable, efficient and transparent. These reforms would ensure our allies and partners could contribute to our common security interests overseas even as their purchases lower our military’s acquisition and sustainment costs.
We’re also looking for a resolution to the U.S. case in the World Trade Organization (WTO) against European “launch aid” subsidies for large commercial aircraft. The recent WTO report indicated $22 billion in European subsidies caused tens of billions of dollars in lost American exports. As stated by U.S. Trade Representative Michael Froman, the report “reinforces the value of international trade rules that ensure U.S. companies and workers can compete and sell their world-class products and services on a level playing field.”
In addition, there are short-term, self-inflicted ways for us to stumble in the international marketplace. Current anti-trade rhetoric is jeopardizing the prospects for passage of the Trans-Pacific Partnership (TPP), a trade agreement among the United States and 11 partner nations representing the largest and fastest growing markets for our industries. Failure to pass TPP would be a major lost opportunity for the U.S. in a dynamic region whose countries need to be our close economic and security partners.
A final, ongoing setback is the obstruction of a quorum on the board of directors of the U.S. Export-Import Bank. The bank requires a quorum of three directors to review and approve export-financing transactions worth more than $10 million. As reported in The Washington Post and Politico, because only two of the five director positions are filled, the bank has a backlog of more than 30 deals worth a collective $20 billion that it’s unable to process.
Ideologically driven members of the U.S. House and Senate blocked a White House request to fix the quorum problem in the “continuing resolution” that passed last week despite overwhelming bipartisan support for the bank. These few members have sent the message to potential foreign customers that they should turn to our foreign competitors and their government’s export credit agencies instead.
Thousands of workers in the U.S. aerospace supply chain are paying the price, losing opportunities to provide parts and components for the initial financed sale of aircraft and satellites as well as substantial profit from the post-sale maintenance, repair and overhaul market.
It would be easy, but wrong, to dismiss these concerns given the current global competitiveness of the U.S. aerospace and defense industry. When we compete in a fair-trade environment, our products win and we sustain our lead in the global race for innovation and market share.
Whoever wins this election will need to work with the incoming Congress on growing our economy and ensuring our national security through trade in aerospace and defense. We must stop missing opportunities to level the playing field against our foreign competitors and start avoiding bad policies that make it harder for our industry to win in the global marketplace.