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  June 26th, 2017 | Written by

Why Trade Agreements are Like Facebook

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  • US participation in global trade supports more than one in five domestic jobs.
  • Prior to the Great Recession, jobs dependent on trade were increasing at a rate of 22.7 percent.
  • The network effect of trade is at play in virtually every sector of the economy.

1.2 billion people log on to Facebook every day. Over 85 percent of Facebook users live outside the United States and Canada. In 2015, Facebook commissioned a report by Deloitte to assess the global economic impact of all this activity on its platform. Based on its primary uses – by marketers to grow their business and add jobs, as a platform for app development, and as a catalyst for connectivity – Deloitte calculated that Facebook enabled $227 billion of economic impact and 4.5 million jobs globally in 2014. Their accounting does not even include Facebook’s direct economic impact as a company worth $381 billion or as an employer of over 17,000 people.

The benefits of Facebook are best understood as billions of voluntary interactions and connections its users make with one another every day. You share a post, or you friend someone; someone likes something you’ve shared, or reaches out to friend you.

Trade agreements operate the same way. They don’t dictate the terms of commercial activity. They don’t tell businesses whom to friend or like. What they do, however, is to create a platform for this activity to take place. In the same way that Facebook sets terms of agreement for how people participate (no offensive posts) and a common language (e.g., emojis), trade agreements set the rules of the road for how two or more countries will interact with each other in commerce. For example, parties to a trade agreement commit to not discriminate against the products of the other party.

By removing obstacles to commercial transactions, trade agreements are meant to serve as a platform for strengthening our links with other dynamic economies in the world. Leveraging these agreements, American businesses of all sizes can better connect with buyers and sellers around the world.

The Network Effect
Another reason why so many people use Facebook is because it creates vast networks among disparate groups of people and allows information to spread efficiently and rapidly. The production of goods and services in today’s global economy takes place in the same networked way.

Products with a Made in… label from one country are actually the result of efforts by people in different roles across the globe — products are designed in one country, their materials are procured in another, their components may be made and assembled somewhere else. Modern manufacturing is a complex process with value added in stages.

Jobs in logistics, information and communications, customer service, and backbone professional services like financing and marketing facilitate this process. The information and communication technologies that enable us to connect through Facebook at such a low cost and high efficiency, also enable us to diffuse production tasks efficiently throughout the global economy.

From Social Network to Job Network
If trade agreements are a platform enabling billions of transactions, companies participating in the global economy are creating networks of jobs. Let’s take the example of another corporate giant just down the road from Facebook. In our Essential, “A Deficit of Good Data,” we focus on the physical production of an Apple iPad, which takes a global journey from its start in Cupertino, California to its finish back through US ports.

Apple sources components and contracts manufacturing from suppliers in nearly thirty countries and thirty-one US states. 3M in Decatur, Alabama, provides touchscreen solutions and Skyworks in Woburn, Massachusetts, specializes in products to improve wireless connectivity. The company keeps the majority of its coveted professional jobs in-house, including product design, software development, product management and marketing.

Apple’s job network extends far beyond Cupertino to the Mac Geniuses in its stores who help us set up our computers, and the nearly 28,000 customer support specialists who help us use the warranty to replace the phones our teenagers broke. While Apple directly employed 66,000 people in the United States in 2014, it also supported as many as 334,000 jobs at other companies through its spending and growth, many of which are solid, middle-class jobs like the construction managers building and renovating Apple stores. Yet another 627,000 jobs exist in the iOS app economy where US-based developers have earned more than $8 billion from sales worldwide. That’s a grand total of 1,027,000 jobs that Apple says were created or supported by the “iOS ecosystem” just in the United States, yet those US jobs are intricately tied to production, marketing, and sales of Apple products all around the world.

US Jobs in the Apple Economy
American participation in global trade already supports more than one in five US jobs, jobs that would not exist but for trade. Prior to the Great Recession, jobs dependent on trade were increasing at a rate of 22.7 percent compared with 6.8 percent for employment generally.

The network effect of trade is at play in virtually every sector of the economy. Many of the jobs that the US Department of Labor forecasts will be added to the US economy over the next five years, from retail to healthcare services to software development, thrive in part from our strong position in the global trade network.

This is why Latin American countries and countries in the dynamic Asia Pacific region are working to expand the connectivity of their workers through trade agreements like the Pacific Alliance and the Regional Comprehensive Economic Partnership. It’s why the United Kingdom will actively reconstruct its network of trade agreements post-Brexit. Rather than focus overly on specific provisions in trade agreements, we should take a giant step back and appreciate the network of global trade agreements for their primary function: to serve as the Facebook of the global economy.

Andrea Durkin is the editor-in-chief of TradeVistas, an adjunct fellow with CSIS, and a non-resident senior fellow at the Chicago Council on Global Affairs.

This article originally appeared on Used with permission.