Confessions of a Free-Trade Lobbyist



Bill Lane

Business leaders politely clap as the president puts exports at risk. Yet they know ‘Fortress America’ would be a disaster.

Time to come clean. During my 40-year career at Caterpillar , I don’t recall ever being in a management meeting where the sole objective was creating American jobs. No boss ever said, “Your annual review will only measure the number of U.S. workers added.”

Mind you, I’ve been in countless meetings where the objective was increasing sales, reducing costs, improving quality, promoting safety or encouraging diversity. There were meetings that focused on embracing innovation or attracting and retaining the best employees. Some meetings were on hiring veterans. Others were about opening foreign markets while trying to keep the U.S. market open. And many were about customers and how our success was linked to theirs.

Given the new “America First” doctrine, it may be foolish to admit now that much attention was on global opportunities and concerns, rather than solely those in the U.S. We found that success required treating all global employees, customers and stakeholders with respect.

I don’t think my experience was unique, but I’m starting to wonder. For the past month there has been a steady stream of business leaders from some of the most successful U.S.-based multinational companies visiting the White House. Even though many have more employees and customers outside the U.S. than inside, few admit it. There has been nary a word about global markets, international supply chains or the value of all employees including those in Mexico, China, Brazil, India and Africa. Nor has there been thoughtful discussion about the difference between short-term narrow interests versus long-term enlightened ones.

After a lecture about President Trump’s “Build It Here, Sell It Here, Buy It Here” doctrine, business leaders seem either to avoid eye contact or nod in agreement by highlighting previously announced U.S. hiring plans. Some go further by volunteering to abandon workers at one of their low-cost foreign factories. To be fair, some do try to redirect the conversation by low-talking about how tax cuts, better infrastructure and fewer regulations would improve U.S. competitiveness for all. But those comments rarely get amplified by the press.

Why the charade? Why so little push-back? Is it to curry favor from the president, or is it being polite? Didn’t these business executives attend the same kinds of management meetings I did? Perhaps it is because they fear their stock taking a plunge after a one-way war emanates from the president? Surely they recognize the dangers associated with Mr. Trump’s “Fortress America” economic plan.

Or is it something else, namely that they have seen this movie before? Argentina, Brazil, Venezuela, much of Africa, and even China have all at times embraced import-substitution policies. Many still do.

While not preferable, executives know they can still make money in such a protectionist environment, at least for a while. To make it work, one needs to secure big subsidies, keep investments at a minimum, and above all get the government to reduce or—better yet—eliminate competition. That’s because the key to import substitution for business is higher prices. Much higher prices! Mr. Trump clearly knows this because he wants whopping 35% to 45% import duties. The fear is that if consumers aren’t willing to pay the premium that protectionism provides, the whole system collapses. People fix up used cars instead of buying new ones. The same goes for other durable goods.

While some Americans say they are willing to pay more for the benefits of protectionism—more jobs sewing clothes and assembling machinery and electronics—their enthusiasm may wane when the negatives on the export side of the ledger kick in. First to be hit would be American farmers and ranchers, who often export a third of their harvest and herds. Then it cascades down. Smaller crops mean fewer tractors, which mean less steel and so on. Then the folks who make big-ticket export items like jets and bulldozers are targeted for retaliation.

Surprisingly, even though business executives know how this movie ends—and it’s badly—they remain in the balcony if not center stage. The question is when are they going to jeer? Mr. Trump ceded much of the Asia-Pacific export market by pulling out of the Trans-Pacific Partnership, and the reaction from business was muted. Now the target is America’s two largest export markets, Canada and Mexico. That puts a third of all U.S. exports at risk, and the president still receives polite golf claps. What’s next, jerry-rigging trade statistics to exaggerate the trade imbalance, or maybe giving China unfettered access to Africa by terminating the Africa Growth And Opportunity Act? Or exiting from the multilateral institutions—the United Nations, World Trade Organization, World Bank and International Monetary Fund? Even then I’m not sure the business community would yell fire.

Recently some CEOs publicly opposed the travel ban from seven Muslim countries because it affected employees and customers. That’s a start. Recent pro-trade, pro-immigration comments from Cargill CEO David MacLennan and the courageous 84 Lumber Super Bowl ad are good next steps.

Now it’s time for corporate America collectively to speak out. Remember, it is OK to support those of President Trump’s economic polices that make sense and could significantly improve U.S. competitiveness while opposing others that would do lasting damage by jettisoning America’s allies, friends and trading partners.

It’s not an all-or-nothing proposition. But it is time for business to stop cowering and start publicly defending its international presence by forcefully speaking out against protectionism and isolationism.

If it doesn’t, the topic of future business meetings will be about how to game protectionism, manage decline, and blame others for lower standards of living—particularly since those meetings will certainly not be about job creation.

This article originally appeared in the Wall Street Journal on February 23, 2017.