The following is an article written by Mark Wallace of UPS.
The following is based on a speech given by Mark
Wallace, UPS senior vice president of global engineering and
sustainability, at the Global Supply Chain Summit in Washington,
DC.
The world is well along with what history
will show as a great rewiring. This rewiring is massively and
permanently changing global interconnections that have structured
the world as we know it.
But with this transformation, we must ask two big questions:
First, is trade policy up to the task of steering and leveraging
the power of a re-wired world? And second, do we have a sense of
urgency to make sure that it is?
The answer to the first question is: No, policy is lagging far
behind possibility. The answer to the second question is: We’re not
sure yet. But we may know soon.
America has much riding on the outcome. Because as we dither and
delay, the world is moving on. Just like every day in our business,
minutes count.
Emerging markets are investing in infrastructure and becoming
global competitors with incredible speed. Power has shifted from
seller to consumer, with empowered consumers demanding unlimited
choice, convenience and control.
For those in the supply chain business, this rewiring brings
both historic opportunity and historic challenge. Both center on
how to make the rewiring of the planet work to the advantage of
customers and consumers.
It’s easy to assume that technology can do the heavy lifting.
But technology alone is merely circuits and code.
The textbooks say Edison’s genius transformation was not the
light bulb. It was the electrical grid – a network that provided
the power to make the light bulb useful in illuminating homes and
businesses.
At UPS, we understand the power of networks. We’re a company
that operates on the strength of assets that ride on the back of
our integrated global network. Those assets – vehicles, aircraft,
facilities and people – are critical. But their real value is
demonstrated when they come together and form a network.
Our move to a networked world is reflected in the changing flow
of trade and in the changing nature of trade agreements.
The Power of Trade
The General Agreement on Tariffs and Trade and World Trade
Organization created rules for a global economy, where goods were
made in one place and sold in another. So the focus on tariffs and
other trade barriers made sense. But as the world has been rewired
around supply and value chains, trade agreements have become
broader, harder to negotiate and to understand.
There is plenty of ammunition for pro-trade disciples like
ourselves. In the first full year after a free-trade agreement is
reached, our business gets a 20 percent bump on average. What’s
more, for every 22 packages that cross a border as part of our
network, we create or maintain a job for a UPS employee.
We also know that trade has helped lift a billion people out of
poverty, that 38 million American jobs depend on trade and that
imports from foreign trading partners lower prices for
Americans.
Growth of trade also has coincided with historic progress –
building economies, combating hunger, empowering women, expanding
literacy and extending life.
All of this makes a compelling argument for the transformative
power of global trade. But just as real is the fact that the
blessings of trade have not been universally shared.
Income inequality is a fact. Stagnating wages are a fact. Jobs
lost to less expensive countries are a fact.
We can argue that there are co-conspirators, whether robotics or
recession. We can argue that trade drives exports and exports
create jobs.
But none of that compares to the reality of a lost job or the
fear that the loss is possible. For the vast majority, trade is
conceptual and complicated. Mortgage payments are not.
As the two sides of the trade argument clash, the debate is
currently the loudest around the agreement closest to the finish
line – the Trans-Pacific Partnership.
TPP is the largest and most far-reaching free-trade agreement in
history, connecting 800 million consumers in 12 nations across the
Americas and the Asia-Pacific region.
It was built for the needs of digital commerce – to ensure that
trade rules recognize the power, growth and special demands of
interconnected consumers.
It breaks up the loggerhead at customs. It evens the competition
for private service providers. It eliminates thousands of taxes in
the form of tariffs, making American businesses more competitive in
one of the world’s fastest-growing regions.
It acknowledges – with a full chapter – the importance of small
business. Opaque regulations, complex paperwork and slow delivery
of small shipments conspire to discourage small- and medium-size
enterprises from venturing across borders. TPP will open doors for
smaller players across all the member countries.
If we see the world as it is, if we want to compete in that
world seamlessly, effectively and with leverage, TPP must be
approved.
TPP is approaching the finish line, but there are still
obstacles in its path. As we near the finish, it’s critical that we
avoid two big mistakes.
One would be to assume the logic that free-trade advocates see
in the rightness of global trade will win the day.
The other potential mistake is to be afraid to step up to the
debate. We have to be visible. We have to be vocal. We have to
argue our case in every forum available to us.
The stakes are rising, the misinformation is growing and the
clock is ticking. It’s time to push TPP over the finish line.
Mark Wallace is UPS Senior Vice President of Global Engineering
and Sustainability.
Reprinted with permission of Longitudes, the UPS
blog devoted to the trends shaping the global economy.
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