To create jobs, Washington must fight for US companies overseas

Using fair and unfair tactics, Chinese companies in emerging markets around the world eat US company lunches. If Washington doesn’t start campaigning for US businesses, their competitiveness – and millions of US jobs – will suffer. As President-elect Joe Biden’s administration sets its economic priorities to rebuild a troubled US economy, now is the time to modernize and revitalize US trade diplomacy.

China is aggressively helping its companies win business in emerging markets. It flatters and impresses VIP delegations, offers government bonds, dangles development aid and ties its far-reaching infrastructure projects to the use of Chinese companies. Worse still, China flatters, bribes, and in some cases secretly associates with foreign officials willing to steal business opportunities granted to US firms.

I saw this firsthand when advising US firms operating in emerging markets. In one case, Beijing secretly offered to compensate an African government for costs and damage in order to oust a US company from a project in favor of a Chinese state-owned company. As a result, US firms often face Beijing indirectly to win or hold a deal.

Although Washington is committed to US companies, the system is broken. For starters, the United States is playing small ball. As the White House top Africa official in the administration of former US President Barack Obama, I had to fight a bureaucratic death throes to send two more officers from the Commerce Department to Africa. China’s presence in the region is now numerically larger than ours forty to onewhich means that Beijing has more information and often control over how tenders and transactions are organized.

In addition, the United States treats business agencies with myopia like political footballs. For example, the US Export Import Bank (EXIM) had been trapped in political limbo for years, awaiting renewed approval from Congress. In 2018, EXIM presented a poor $ 3 billion in export finance compared to nearly $ 130 billion provided by its Chinese counterpart. US President Donald J. Trump had proposed eliminate of Overseas Private Investment Corporation (OPIC) before turning around in 2018 when he signed a non-partisan bill creating the US Development Finance Corporation.

This is dangerous. When US economic power was unrivaled, Washington could perhaps afford to view trade diplomacy as inadequate. But today, 80 percent the world’s purchasing power lies outside of the United States. Before COVID-19 turns the economy inside out, 41 million American jobs depended on international trade, including the majority of US manufacturing jobs. In short, the future of US economic growth – and tens of millions of jobs – depends on US companies being able to compete overseas.

To expect US companies to keep up with China’s resources and withstand its tactics without the full support of the US government is a farce. Positioning small and medium-sized US companies against the Chinese state is not a fair fight, especially in emerging countries, which are generally characterized by higher political risks, weaker institutions and relatively higher corruption rates. In such volatile terrain, US companies face unsustainable risk as Beijing and other powers maneuver behind the scenes to advance their respective business interests.

Washington needs a new approach – one that gives US companies a fair chance without taking over China’s style of state control or offering domestic companies a hand. Consistent political support and resources for trade diplomacy would be a critical start. But nothing will work without changing the institutional culture of US economic agencies and embassies. This includes incentives and rewards for diplomats who fight for US companies. Promotions should require the support of US commercial goals, achievements should be highlighted, and merit prizes should be increased with cash bonuses. All of this does not mean neglecting reputational risk when supporting businesses. Rather, it means screening US firms that seek help (as is the case now) and, after screening, consistently and forcefully take to the mat for them (which is not always the case now).

High quality, honest US companies face enough uncertainty in emerging markets; Their government’s support should be something they can count on. Some high-profile ambassadors support hard-earned US companies, but good companies shouldn’t switch between banquets and famine just because a particular message prioritizes commercial advocacy or not. And that doesn’t just fall outside the embassy door; Senior officials in Washington also need to make this a priority in their meetings, travel, and phone calls.

It is time to recognize that promoting US firms is critical to US economic competitiveness and national security. Otherwise, China and other countries will have a tremendous and unfair lead in emerging economies and displace US companies at the expense of American jobs.

Grant T. Harris is CEO of Connect Frontier LLC and advises companies on strategy and political risks in emerging markets. He teaches business in emerging markets at the Kellogg School of Management, Northwestern, and the Haas School of Business, UC Berkeley. From 2011 to 2015 he was Senior Director for Africa at the White House. Follow him on Twitter.

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Image: REUTERS / Aly Song / File Photo

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