May 10, 2019
The Darla Moore School of Business recently held the International Strategy in an Era of Trade Uncertainty forum for business and industry leaders to address international trade trends.
The forum, hosted by the Folks Center for International Business at the Moore School, focused on recent shifts in the global trading sphere and the subsequent impact on U.S. trade policy and practices. The forum was open to USC students, faculty and staff as well as the general public.
South Carolina was chosen as the location for this forum because of the importance of international business and trade in the state, said Gerry McDermott, a professor of international business at the Moore School who served as the forum’s moderator. South Carolina has one of the highest per capita incomes of foreign direct investment and one of the highest export rates in the United States, making international trade and investment a primary driver of state economic growth for the past 25 years.
Co-sponsored by the U.S. Chamber of Commerce and the South Carolina Chamber of Commerce, the event featured a presentation by John Murphy, U.S. Chamber of Commerce senior vice president for international policy.
Joining Murphy on a panel for the forum were Wendy Cutler, vice president and managing director for the Asia Society Policy Institute; Jim Barber, chief operating officer for UPS; and George Jurch III, general counsel for Global Expert Teams and the Americas Region for Continental.
The panelists agreed the level of uncertainty in the international trade arena creates many challenges for countries to stay competitive not only in trade but also technologically.
“The terms of trade are changing, and it can be unsettling at times,” Barber said. “The new realities are that this is going to bring forth things like security, intellectual property, rules of law.”
Many companies’ lack of flexibility is also a concern with ever-changing technologies and varying trade agreements, Jurch said.
“I can’t get computer chips in the United States; they’re all from Asia,” Jurch said. “I can’t get circuit boards. For automotive circuit boards, you have to have a higher grade. If a chip fails in a vehicle, it’s a bigger problem than in an iPhone. The flexibility, to turn the switch off in one place [and immediately begin creating new ones elsewhere], that flexibility is not there.”
In today’s trade climate, the United States is no longer the leader in international trade negotiations, said Cutler, who worked for the Office of the U.S. Trade Representative for close to 30 years.
“Best evidence is the TPP, the Trans-Pacific Partnership, where the U.S. worked with 11 other countries in Asia Pacific. The U.S. played the leadership role and tried to bring the others up to our standards, but Trump pulled out three days into his term,” she said. “Other countries don’t get it; it brought enormous benefits to the U.S. They decided to bring it into effect without the U.S.”
Cutler said Japan filled the void by taking on the leadership role in the TPP, renaming it the Comprehensive and Progressive Trans-Pacific Partnership.
“Our [U.S.] companies and farmers are already feeling hurt from the deal,” Cutler said. “We don’t gain the preferential tariff treatment that deal brings.”
To stay competitive among all of the uncertainty in international trading, the panelists said filling the void like in the TPP deal, diversifying trading partners, forging ahead technologically, properly training the workforce and reducing dependence on trade or spreading their risk are crucial for countries who want to compete.
“Keys from a competition standpoint is workforce development,” Jurch said. “Frankly [the U.S.] is struggling. We need to have the right skill set and workforce available from a manufacturing standpoint.”
Barber emphasized innovation is critical.
“The U.S. needs to remember how we got to grow to greatness today – [intellectual property], innovation, the capital model. It needs to be refreshed,” Barber said. “Education plays a big piece of that. Intellectual property protection needs negotiating.
“Technology is changing so much. [UPS] built a rather sizable facility south of Atlanta [preparing] 150,000 packages an hour. Used to have 1,500 employees. Automation has taken the heart of it, and we’re now doing it with half the employees. We talk about that a lot, how human beings have to transform themselves, and we have to transform them. Innovation and education — if you find that — companies win.”
While many companies look to China and other Asian countries as their competitors, Murphy said you can’t rule out Europe.
Europe is “by far the world’s largest exporter of digitally enabled services. Europe is the other great modern advanced economy,” he said. “They’ve got a great education system, a lot of assets in their corner. India is worth watching as well. It gets in its own way often; they have a rapidly growing tax sector, major provider services but are going backwards in some of their policies. I still like [the United States’] odds in this competition.”
As the panelists shared their expertise on trade trends, they also advised students on how to be successful despite constant and rapid changes in trade and technology. The panelists emphasized that students need to become agile problem solvers and critical thinkers, practice adaptability and resiliency, develop excellent writing skills, strengthen their teamwork abilities and learn multiple languages.