UPS CEO says U.S. can't afford 'Economic Isolationism'

Sept. 29, 2004
Decrying elevation of the issue of free trade into a political football, the chairman and CEO of UPS has called on small and large business alike to better

Decrying elevation of the issue of free trade into a political football, the chairman and CEO of UPS has called on small and large business alike to better explain to Americans the benefits of globalization and the disastrous effects of “economic isolationism.”

“We believe there is no greater agent working for global peace and stability than the force of increased trade between nations,” says Mike Eskew, who recently addressed an audience of the U.S. Chamber of Commerce. “No one better expressed this idea than former Secretary of State Cordell Hull, who said, ‘When trade crosses borders, armies don’t.’

“But we’re losing the battle here in the U.S. and abroad,” Eskew continues. “The small, but vocal, anti-globalization movement has pushed its message forward with great force and tenacity in recent years. And here in Washington, in the midst of national elections, we’re seeing global trade cast as a hot button political issue.

“And that’s a shame, really. Instead, it should be heralded as one of the greatest success stories of our country and our era.”

Eskew, the chairman of the U.S.-China Business Council and a member of the President’s Export Council and the Business Roundtable, eagerly admits that UPS has “a unique vantage point on the world” as an enabler of commerce. But that corporate bias doesn’t change the fact that globalization not only is good, but essential, he states.

While people worry about outsourcing, layoffs, terrorism and change in general – and there are concerns there that must be addressed – “a retreat toward economic isolationism would be disastrous for American business, American workers and for the American economy,” the CEO declares.

Consider, for example, who’s doing the exporting these days.

Some 97% of all U.S. exporters are small businesses and their ranks have tripled since 1992, Eskew notes. The value of their exports has increased over 300% since 1995. These exporting small businesses are at least 20% more productive than their non-exporting counterparts; they’ve experienced 20% greater job growth, and they pay wages and benefits that are at least 15% higher.

“But we can recite trade facts until we’re blue in the face,” Eskew continues, “facts like many, many more jobs have been lost to ‘countries’ called ‘productivity’ and ‘technology’ than to India and China. Facts like lower costs create more goods attainable by more people, improving lifestyles and creating better economic opportunities.”
The facts mean nothing, he says, if the American public doesn’t understand it can’t retreat inside America; that all business today is global.

In many ways, he says, today’s environment is very similar to what happened in the United States 25 years ago, when most Americans were afraid the U.S. was going to lose all of its good jobs and economic clout to Japan. Those fears never materialized because “American business did what we’ve historically done best – we innovated.”

Eskew cites research showing that between 1980 and 1998, the U.S. replaced 44 million antiquated jobs with 73 million new jobs. The bulk of those jobs required knowledge of technology, producing a net effect of 29 million new higher-paying, higher-skilled jobs.

To reassure the American public and manage the changes afoot, business must step up to challenges in five specific areas, Eskew says. The U.S. education system needs to reflect the demands of a global economy, which increasingly values technology, engineering, materials research and manufacturing sciences. At the same time, global trade literacy must be made a priority in U.S. schools, from elementary school on up. Training and career development programs must be expanded for those workers whose jobs are displaced.

“We have a deep responsibility to help those who have been displaced by globalization receive the training they need to re-enter the workforce with skills that are aligned with the realities of the global economy,” he adds.

Business also must continue its rich tradition of innovation while encouraging local and federal governments to maintain regulatory, tax and financial policies that promote growth, investment and risk. And finally, American business needs to understand the threat posed by anti-Americanism abroad and the importance of “corporate diplomacy.”

“We can work to turn the tide back around by making sure we’re running not just socially responsible businesses, but that we’re making and keeping commitments to our international customers, employees and communities. Our actions and our beliefs are not only shaping the perceptions of our companies abroad, but they are forming impressions about our nation and the ideals for which it stands.

“Isolationism is not an option.”