During 2015, the U.S. Congress managed to squeak out some major trade legislation with leftovers to clean up, such as the Trans-Pacific Partnership. The new year is shaping up to be an oddball with uncertainty coming from the U.S. presidential election because of the emergence of “outsider” candidates and the Federal Reserve poised to increase interest rates. The U.S. is not the only country facing public policy challenges as we look to the European Central Bank for guidance on using quantitative easing to stimulate the economy and China seeks to stabilize its financial system while making much-needed reforms.
Given the need for major policy choices in large economies, none of which are currently drivers of global growth, the business community has no choice but to “wait and see” how these issues are resolved before committing resources for investment.
For the trade community specifically, both the TPP and the Trade Facilitation Agreement could be catalysts to promote global trade. Again, these trade agreements are contingent upon policymakers getting their acts together to enact the TPP and adopt the TFA — not easy in a normal year and something that could prove to be unattainable when politicians fear for their jobs in the face of public anger.
The real dilemma is how long the business community can wait for policymakers to provide the predictability necessary to make investment decisions for long-term growth. All major business decisions are driven by one overall goal — the potential return on that investment. The alternative is what we have now, which leaves companies simply growing profit margins by containing costs.
The key for the trade community in 2016 is to tell policymakers, not only in the U.S. but around the world, that we need clear signals to stop hiring lobbyists to deal with complex new legislation and regulations and direct that capital to access new markets, expand capacity, and hire new employees.