Global Trade Game Played by a Few Top Firms

0 Comments | Insight on the News, Oct 22, 2001 | by John Elvin

Of around 25 million companies in the United States, only about 230,000 are involved in the export of goods. And of those, an expert on U.S. trade tells Insight, only 7,700 produce three-quarters of all exports. There's very little room taken up by mom-and-pop businesses in those figures. Large companies with more than 500 employees generate more than 70 percent of U.S. exports, according to Alan Tonelson, a research fellow with the U.S. Business and Industry Council (USBIC) and author of The Race to the Bottom, a book on U.S. participation in world trade.

Using statistics supplied by the Small Business Administration and other sources, Tonelson tells Insight that the top 500 U.S. exporting companies produce 62 percent of total exports. "American exports are generated by a relatively small number of large, multinational companies," Tonelson says.

"It's a falsehood accepted by many so-called experts" that trade liberalization in recent years has produced widely dispersed benefits in the U.S. business world, Tonelson adds. New trade policies and agreements may have helped produce some reduction in the price of consumer goods for Americans, he says, but at the same time, "workers' purchasing power has gone nowhere since the 1960s."

Some small and medium-sized companies participate in exports by providing parts to the larger companies, he acknowledged, "but much of that business is probably lost to overseas contractors" in today's multinational business environment. To get the small and medium companies back into the export field, he said, the United States needs a major overhaul of its trade policies.

"The U.S. government doesn't know how to draft agreements that don't send jobs overseas," Tonelson said. The USBIC wants a "pause" in further trade negotiations until that situation is remedied. The group also wants the United States out of the World Trade Organization (WTO) because membership, he said, exposes our businesses to predatory or unfair trade practices.

The WTO "is like the United Nations with no Security Council," he said. "There is no special role for the larger countries" in rule-making, so "we have the same vote as, say, Liberia." Obviously, that's a ridiculous situation for a business power such as the United States to be in.

The USBIC also endorses an end to various sorts of trade subsidies and bailouts on the part of the federal government and letting market forces rule instead. Another of the USBIC's central proposals is that countries wanting to invest in this country -- "and there are lots of them," Tonelson noted -- should have to manufacture 80 to 90 percent of their product here and they should have to "put Americans in top management positions," he said.