Featured In Issue: CLT.biz Insights 16.09.08
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Hyde Park Partners
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CLT Airport’s New Long-range Plan
First Draft of New Plan Released for Comments
We all know that the Charlotte Douglas International Airport (CLT Airport) is a huge boon to economic development in this region. This over-sized hub for American Airlines is the second largest in its network and its traffic is a major reason for it being the 6th busiest hub in the United States. From its gates, you can fly to visit or conduct business in nearly every U.S. market without changing planes. As such, it makes the Charlotte region a great location for doing business throughout the U.S. domestic economy.
Just two years ago, Norfolk Southern Railroad (NS) built a new NS Intermodal Center at the south end of CLT Airport between two of the runways with an initial capacity to manage over 200,000 shipping containers per year with options on additional land to handle another 400,000 containers each year.
While the two operations do not affect each other, they are important assets that can be enhanced to spur even more substantial investment in the greater Charlotte region.
CLT Airport and the NS Intermodal have been in the plans since 1996 when the first long-range plan was prepared. Previous CLT Airport Director Jerry Orr and urban planner Michael Gallis laid the groundwork for many of the changes that have been incorporated into the airport over the last 20 years.
Just this year, the State of North Carolina granted a fuel tax exemption for American Airlines and plans for an expanded passenger terminal have been completed and construction is on schedule. Serving over 40 million passengers each year requires an expansion of the main terminal to accommodate further growth. All this work was rewarded when American Airlines extended their contract of gates and the maintenance of the airport services for another 10 years.
Aside from expanding the number of gates from 93 to 169 gates over the next 20 years, American Airlines is interested in expanding its service for passengers and for air cargo. Their activity and the growth of the airport is also bringing a new state-of-the-art airport tower that will be built over the next five years and at least one 12,000-foot runway will be added.
In January of f2016, CLT Airport contracted for a new long-range plan with the approval of the Charlotte City Council. CLT Airport contracted with MXD Developers out of British Columbia to conduct this long-range planning study for $900,000. MXD has considerable airport planning experience having worked with the Denver International Airport as well as airports in Memphis, Atlanta, Halifax, Alberta and Edmonton in the U.S. and in Canada. They have also been instrumental to plans in South America, Australia and South Africa.
MXD was charged with developing a long-range plan that included all of the land within the CLT Airport and NS Intermodal operations and the surrounding 6,000 acres owned by the airport. See map.
MXD, with the guidance of CLT Airport officials met with as many airport stakeholders as they could to gain input about the wisest and best use of that area. They were anxious to learn all they could and to gain the ideas of that will further enhance the land use and maximize its value to the City of Charlotte and its citizens.
Following extensive meetings, they have drafted the first version of their report and are disseminating it for additional comments and recommendations. Stuart Hair, Director of Economic Affairs at CLT Airport, conducted the briefing to the Charlotte City Council on September 12th. “One of CLT’s principals is strategic growth: How do we grow appropriately?” said Stuart Hair, economic affairs manager at Charlotte Douglas. “This is about protecting our future of our core business (but) the economy can grow and diversify, and there is unique connectivity offered by transportation modes at and around the airport.”
Hair outlined four primary objectives of the long-range plan:
- to protect future growth and flexibility of CLT aeronautical operations through compatible-use development;
- maintain the airport’s competitiveness by growing non-aeronautical revenue;
- leverage CLT and the Norfolk Southern Intermodal Facility as economic engines to diversify the local economy;
- and grow and enhance employment opportunities for local and expanding businesses.
The plan identifies five catalyst
areas around CLT that are primed for development, all with different uses and targeted economic clusters.
- CLT – Front Door Office Village – A CLT Gateway District would sit at the entrance to the airport, primarily containing office development and on-site meeting and corporate event facilities.
- CLT Terminal Hotel – Another development area includes a hotel directly connected to the terminal as well as a retail and events plaza, which Cagle and Hair said would be attractive for passengers and CLT employees.
- CLT Retail Village and Events Plaza – Demand for retail and services would also naturally be driven by new office development to the CLT West region and to the Billy Graham corridor.
- CLT Fast Cycle Logistics – A fast-cycle logistics and e-commerce fulfillment hub would target specific tenants, particularly ones in advanced manufacturing — “machines and materials that make the machines and materials,” according to Hair.
- CLT temperature controlled logistics and distribution center – A second hub proposed for another area would focus on temperature-controlled logistics, a subset of the industrial sector that would be advantageously positioned near transportation modes in the immediate vicinity — the airport, rail and interstates.
Aviation-related tenants are expected to fill a majority of the office component. As CLT grows, so does the need for more employees to staff new divisions, all of which requires more square footage — even the airport’s current offices are running out of room. “We have 20,000 employees — they all need space,” said Brent Cagle, aviation director at Charlotte Douglas. “Some of our tenants are running out of space at the terminal.”
Remaining commercial space in the office development could target users that necessitate direct proximity to the airport. The airport seeks to partner with third-party development and brokerage firms to develop the buildings and lease office space, but the airport — and, by extension, the Federal Aviation Administration — would still own the land, likely striking concession agreements and ground leases with those seeking to develop around the airport.
“We would always retain ownership,” Cagle said. “It would also mean we could control the uses and that it doesn’t one day down the road become an issue for non-compatible uses.” Cagle added that the FAA generally expects individual airports to be “self-sustaining” and that leaders at those hubs should come up with ways to grow revenue and competitiveness in their individual market, one of the stated intentions of CLT’S AASDP.
Cagle and Hair also articulated that they would continue to collaborate with Lincoln Harris and Crescent Communities, who are spearheading a massive mixed-use project called River District in close proximity to the airport. That project will add millions of square feet of office space and thousands of residents when built out. They also intend to work with other brokers and developers on other projects.
This initial draft of the long-range plan will undergo scrutiny by the various stakeholders to ensure their ideas, thoughts and concerns will be considered and captured before the final plan is written and submitted for approval by the City Council sometime in November or December.
Pew Research Center
Contrary to Political Rhetoric, Immigration in Decline
Certainly one of the most championed issues of this year’s Presidential campaign has been illegal immigration, particularly from Mexico. However, like much of the rhetoric during the campaign, the question of illegal immigration has been largely devoid of facts.
While there are no reliable statistics for how many illegal immigrants cross the border with Mexico, experts use the number of apprehensions as a proxy. By that measure, the number of Mexicans apprehended at the border has dropped from more than 1.5 million in 2000 to just about 229,000 in 2014. Meanwhile, the number of non-Mexicans (mostly from Central American countries including El Salvador, Guatemala and Honduras) rose sharply and exceeded the number of Mexicans apprehended in 2014. A big part of this increase in non-Mexican immigration is accounted for by unaccompanied children.
Meanwhile, under President Obama, the number of deportations has risen sharply, to a record of more than 435,000 in 2013. Between 2009 and 2014, more than 2.4 million illegal residents were deported. Donald Trump will approve of the fact that more than 40 percent of those deported were convicted criminals. Read more…
BCBSNC Health Care Challenges
Blue Cross Blue Shield of North Carolina is In
Blue Cross and Blue Shield, North Carolina’s largest health insurer, has announced that it will continue offering individual coverage under the Affordable Care Act in all 100 counties of the state in 2017. Until recently, Blue Cross Blue Shield had questioned their participation in the ACA Exchange. Having lost $405 million in the previous two years, BCBS was unsure about continuing its involvement with the ACA Exchange.
Their announcement ensures that all North Carolina residents will have ACA access for at least one more year as the federal exchange enters its fourth year of public enrollment. Previously, two major insurers – Aetna and United Healthcare – announced that they would not offer ACA plans in North Carolina and many other states in 2017. Cigna is the only other carrier offering coverage under the ACA Exchange, but it will only offer plans in five counties in the Raleigh Durham region.
The pricing and other details of Blue Cross insurance plans will not be released until October. The company is seeking an 18.8 percent average rate increase for 2017 plans from the N.C. Department of Insurance, after being granted a 32.5 percent average rate increase for this year’s plans.
Open enrollment for 2017 will begin on Nov. 1, and will end Jan. 31. Customers who want health insurance by Jan. 1 will need to be enrolled by Dec. 15
Blue Cross Will Continue Its Participation in ACA Exchange
Brad Wilson, President and CEO of BCBSNC, outlined the insurer’s options in a presentation before the Hood Hargett Breakfast Club on September 9, 2016. He also offered his recommendations for changes to the ACA so that it might continue more successfully.
Here are some of his comments, edited for brevity and clarity as necessary:
Brad Wilson, President and CEO of Blue Cross Blue Shield North Carolina on Health Care Challenges:
It’s already been said that this is an important and timely topic, health care. It has been for a long time and is going to continue to be very much a part of our state and national conversation holding into the future, and I’m not talking about characterizing it in political terms.
Let me ask you to do this first—set aside whatever particular political energy that you may have around health care for just a few minutes. I’m going to share some information with you that’s data, reality about the ACA and also about the transformation that’s taking place in health care, so that as you listen to the conversation through the political whims and in particular at this time of year as we move through the campaign season, hopefully you will be centered and grounded in reality, as we all enjoy lots and lots of acrimony and spend from every corner.
This is the second time that I’ve had the opportunity to be with you and so thanks for inviting me again. The first was 5 years ago, back in 2011. I had been in this role about a year at that time and we talked about how quickly health care was changing, how we were transforming our system into one that pays for quality rather than for procedures—items, the more you do, the more you get paid.
We talked about what was driving health care costs even higher back in 2011 and we also talked about why consumers, patients, customers, consumers, all of us individually need to be at the center of health care. That is a multi-dimensional responsibility—education of ourselves about reality, full engagement in taking better care of ourselves, and of course being informed and engaged with our wonderful partners. We need help and to be compliant patients when we in fact become a patient. It’s not a question of whether or not we are going to be a patient, it is just a question of when we will be a patient.
Now let me set the term right here at the beginning. As I talk about health care costs I am not talking about your health insurance premium. That is one component part of health care costs, but those terms are not synonymous. When I talk about health care costs, I’m talking about what is being paid for the goods and services that are being delivered when we need them that when you add them up then becomes translates into a health insurance premium. We have to begin to think about it and understand that and so one is related to the other.
There is a cause and effect relationship there that we cannot separate, so as you think about the health insurance part think about health insurance this way. Really your health insurance premium is the average cost of what is being paid for goods and services when you need to access them, plus taxes that we pay, plus administrative costs of running our company. You take those 3 ingredients and then you spread that cost across a group of people, a pool of people, a well-defined group of people, and you come up with a premium.
Now my actuarial friends would say, “Oh, it’s a lot more complicated than that,” and it is, but it works. If you don’t like your health insurance premium, that’s okay, but you have to understand that it does reflect those 3 ingredients.
Let’s explore just a little bit more about 2011 and how far we have come. We talked about something that in 2011 was not yet implemented. It was the law, but it was just sitting there, and that was the Affordable Care Act. The ACA has now been implemented. In 2014, it went wide and the consequences of the ACA, now in 2016, are beginning to be well understood—both the good and the bad—and there’s both ingredients in the story.
You can see that the topics that we talked about with each other back in 2011 are still the same topics that we’re discussing today and that’s why we are going to talk about them again—and we all need to understand that we all have skin in this game. Doctors, hospitals, insurers, employers, government—all working together—that’s what it’s going to take. That is the formula to improve upon and make things better whatever the things are that you care the most about. It is going to require more different and better collaboration.
Let’s start with the ACA, the law to expand coverage. The law did expand coverage to nearly everyone who chooses to or chose to purchase it and it has helped accelerate the reshaping of our system, but the consequences of that have not worked out exactly like we had planned. Indeed, more people are covered. More people have insurance today than they did before the ACA was enacted and that’s a good thing. But conversely costs are much higher.
Costs (remember the definition of costs?) are much higher, and they continue to climb even more, and quite frankly there is no end in sight according to the Congressional Budget Office. If the trend continues, by 2020, 20 percent of the GDP will be spent on health care. That’s $1 of every $5 in your pocket that will be dedicated to health care somehow, someway.
Why should you care about the ACA? I’m confident that in a crowd this size that many of you have your insurance through your employer or through some other mechanism that’s not the ACA and I’m pretty confident that many of you may have your coverage through the ACA or you know someone or you have a family member who now has coverage through the ACA purchasing it through the exchange. Well the reason that we should all care about it is that the employer group market and the ACA market, two different market places, are in inextricably linked. You cannot separate the two.
We are not going to make the progress that we need to make in health care in improving all of health care, every aspect of health care, until we improve the ACA. Getting ACA right and that means making it affordable for consumers and sustainable for insurers and providers is on our minds every day at our company and I know that it is on the minds of all our provider partners around the state and it needs to be on your radar too.
If you don’t know much about what it is we are talking about this morning, here’s a homework assignment. You really need to pay more attention to every aspect of health and health care. Now as I’ve already said, the ACA has had profound impact both positively and negatively on the health care eco-system. First let’s remind ourselves of some of the positives and I’ve already mentioned that more people are insured today than before, but what does that mean for North Carolina? What that means is there is about half a million—500,000 to 600,000 North Carolinians who got coverage today under the ACA that didn’t have it previously. Those folks are not eligible for Medicaid so that’s a separate conversation that we can have at some other point in time, but that’s a good result. Think about all of the money that brings into the medical economy of our state now that those folks are insured and more importantly think about the care that these folks need, want and deserve so they are getting their needs tended to.
Now one of the aspects we lean into at Blue Cross is trying to educate all consumers, but particularly this consumer group about how the ACA works, the options that they have. Many, many, many of these customers for the first time in their lives have insurance and they really don’t understand how it works or how to use it. Our competitors have done and are doing the same and there was much optimism about 100s of 1,000s of people having health care coverage. Unfortunately, the headlines today are different. Let me give you 3 real headlines from around the country. “Enrollment in Affordable Care Act insurance exchanges are half the initial forecast so while we should celebrate 5 to 600,000 the end there is at least another 5 to 600,000 who for whatever particular reason have not signed up.” Another headline, “Obama Care exchanges are in trouble. What can be done?” And the last one, “Aetna to pull out of most of Obama Care exchanges.” A recent event here in North Carolina that I’ll mention in just a second.
It’s clear that something is wrong. Something is not working right or we would have these headlines. The ACA is drawing customers who need a lot of expensive medical services, but it’s not drawing enough younger, healthier, customers to pay into the insurance pool to balance that book out. That’s a simple fact. That is what the data shows. The math is pretty simple. Insurers like us are paying out more than they are taking in. All of you are business people. You don’t have to get an MBA to understand that if you are not taking in enough to pay for what’s going out that that is an unsustainable business model. What happens when that is the reality? Premiums go up. When premiums go up that forces more of the younger, more of the healthier customer to drop coverage. They don’t need it. Not going to use it. Going to live forever. Can’t afford it. All of the things that we’ve heard so they drop out and then guess what happens? Premiums go up even more. The premiums must move higher to make up for the customers dropping because it’s too expensive. That’s what’s called the death spiral and that’s what we staring, we are staring that in the face right now in North Carolina and across the country in terms of the ACA.
Now let me bring it back home here, here in North Carolina. Here’s some details about our experience with the ACA. Over the last 2 years we have lost $405 million on this piece of business. We have 3.9 million customers. I’m going to round up for simplicity. Out of those 3.9 million customers, we have 450,000 ACA customers and those 450,000 have generated $405 million loss. Compare that with Aetna who reported losses of $430 million in 2 years. Aetna is a national company. We only do business in North Carolina. Aetna is 7-1/2 times the size of Blue Cross Blue Shield in North Carolina and they are pulling out. Even though their losses are simply comparable to ours across the country and United has already announced that they will live. That was back in the spring. 2 big names of competitors have already announced they are out here. Now to me that says a lot about how serious this issue is for North Carolina.
With our for-profit competitors leaving the ACA market it leaves just us. Blue Cross Blue Shield of North Carolina and perhaps 1 other carrier (Cigna) who has filed rates to be in 5 counties. Those 5 counties are essentially Wade County and the counties continuous to Wade. Not here. That is my point to this group. If they stay in there will be 2 there and if we stay in, there will be 2 options in the marketplace, Blue Cross in all 100 counties and a competitor in 5. That is not a formula to make this work as good as it could to the people of our state and I’ve already told you the need is great. 600,000 people have coverage here in our state under the ACA. That places us 4th in the country for ACA enrollment and we are not the 4th largest state in the country. We are behind California, Florida and Texas and then there is North Carolina.
These customers for the most part are working North Carolinians who rely on Federal subsidy to get coverage. In fact, across the whole population about 70% of all those folks rely on Federal subsidy in order to be able to purchase the insurance fees and many of them have chronic conditions and acute need for medical services so as we think about it at Blue Cross and I hope you will too. Behind all the numbers, 600,000, 700,000 more than [inaudible 00:15:01] these are real people, individuals, your neighbors. I was telling a group the other day, I was driving to work, first day of school and you are seeing everybody standing out at the curb taking pictures, first day of school and I wondered all the way to work, I wonder if they are covered by the ACA and what are they going to do if we can’t stay in? This is serious business folks. I also remember that a gentleman in Asheville who spoke to the Citizen-Times up there and said this about his situation, his wife’s ACA plan jumped from $511 a month to $853 in just 2 years. What am I going to do because even with the government subsidy that it is making it unaffordable?
Think about this comment. He also closed by saying, “What options are we going to have if Blue Cross pulls out?” The answer is none. The ACA effectively will not exist in our state. Now I’m not saying this to bring how important Blue Cross Blue Shield North Carolina is. I am telling you this because if there is not an ACA program in this state, there will be 600 to 700,000 people who have insurance today who will not have it tomorrow. I think that’s a big deal if you just stop right there, but think about it 1 more step. They’re going to continue to need and demand services that all of our wonderful provider partners across this state and they are not going to be able to pay for it and that means our provider partners will move that from 1 side of their ledger to the other and it will again show up as uncompensated care.
Uncompensated care is paid for somehow, someway. Nothing is free so it will show up in insurance premiums ultimately because they are then forces when they negotiate and have conversations with us about what we are going to pay them. They want us to pay more so that they can pay for that man’s uncompensated care. That’s the way it works. That’s why you should be concerned about whether or not there is an ACA program here in North Carolina.
Now, we have 2 or 3 more weeks before we will make a decision on whether we are going to be in or out. That decision has not been made and we are hard at work trying to figure out how to answer that questions yes, but let me be clear, we have not yet made that decision so stay tuned. We have a strong commitment to North Carolina. We are going to do everything we can to stay in all 100 counties, but we have a responsibility to the 3.85 million people who are not on the ACA to remain a viable, healthy, financially stable and solid company that we are today.
Let me give you a quick word about health care transformation and then I’m going to open it up to you for questions if we have time. I hope somebody’s got their eye on the clock. The ACA has everybody’s attention right now. We’ve spent a good while here talking about it this morning, but let me be clear. There’s lots of transformation because of and outside of the ACA taking place across our nation and in North Carolina. In fact, North Carolina is looked to as one of the leaders in health care transformation. Even if there was no ACA, we need to be shifting away from our outdated system where doctors and hospitals are rewarded for doing more tests and more procedures. In fact, some experts believe that our traditional method for paying or paid by procedure is the single biggest driver of medical costs and so the fundamental model had to change. The fact is skyrocketing health care costs are forcing us to act even if we didn’t have the ACA and we are all working very, very hard to try to search for better ways to provide value in health care and 1 thing that we have to do is put the consumer more at the center of health care.
Let’s ask this question. We won’t completely answer it this morning, but let me give you some examples. Why does health care cost so much? Why does it keep going up? It’s not just 1 or 2 factors. It is complex and it’s multi-dimensional, but here are a couple of suggestions that I want to have you considering when answering that question. Pay by procedure instead of paying for outcomes is inefficient and rewards the wrong thing. A lack of price and quality transparency and information would allow consumer to make better choices. We were talking about yesterday with 2 or 3 conversations on this subject. You can find out more about how to buy your large screen TV than you can about how to get your knee replaced. A little something wrong with that and availability of data, transparency and price and quality is a part of that.
We’re working on this. We’ve developed tools and sources to help consumer help understand the value of the proposition. This is not about looking for the cheapest. It’s about looking for where the most value is on the goods and services that they pay. Unhealthy lifestyles, everybody groans. We’ve heard that before, but it is true. If you look at chronic conditions across the board: heart disease, diabetes, obesity, those 3 things account for about 3 quarters of medical spending. If we all took better care of ourselves, health care would come down and a lot of this is certainly preventable through better lifestyle habits.
The skyrocketing costs of prescription drugs. Now that’s been in the news a lot lately and it’s going to stay in the news. Particularly specialty drugs. These are the drugs that are for rare and chronic conditions or have to be administered in a specific way and frankly they are breaking the bank in health care costs. Let me give you an example that was in the Raleigh News Observer this morning. Humira and Embrel, those 2 drugs alone, you see a lot of television advertisements for them so even if you’re not taking it you probably know a lot about it. That represents 1% of the scrips in America, but those 2 drugs represent 10% of the entire pharmacy cost in America. The price of those 2 drugs have doubled in recent years.
Now, it is a valid question to ask one. I am not criticizing the efficacy of those drugs. I’m simply giving you data points that while we celebrate the wonderful and positive impacts of pharmaceuticals and I like my drugs as much as you like yours. The ones that I have to take, but we have to have a serious conversation about the cost. Why? Because our specialty drug spending at Blue Cross last year alone jumped 34%. Remember your health insurance premium? When the pharmacy costs jump 34% in 1 year, yes it will put pressure on the health insurance premium and the pharmacy cost is more than any other single category of spending in our company and in companies like ours across the country and unfortunately there is no end in sight. You probably heard about the EpiPen which is the most recent poster child for price escalation when consumption has not increased commensurate with that.
Optimistically there is a better way. Measures which value best care where high quality and good patient outcomes and effect management of costs are being rewarded. We are moving in that direction. I was in a conversation with a great provider partner yesterday in this community. That was said and we agreed that we are not moving fast enough. It’s hard work, but the pace of that change needs to pick up, but we continue to see an evolution in the cost and quality equation around our state and we are encouraged that one of these days while we are all continuing to consume and grow older that we can get to the place where the transformation will catch up with they need and last but not least, I’ll go back to where I started. We’ve got to figure out a way to make the ACA sustainable otherwise the cost burden that’s associated with the ACA is on that list of things that are driving up the cost to both individuals, patients, tax payers and to our provider partners.
As I get ready to conclude, let me leave you with 4 points that I always get asked this question so I’ll answer it now before you ask me. If you were king, what would you do to improve the ACA tomorrow? Now what that means is, number 1 you need to be king. We don’t have one of those. Secondly, what could you do that wouldn’t involve Congress because a lot of the fundamental changes will require and needs an act of Congress. This is what I would do. Stronger enforcement of the individual mandates that requires coverage. Mandate has been too weak. Last night I had a question, why doesn’t health insurance work like automobile insurance? Well, you are required by law to have automobile insurance. Even with that mandate 10% of the folks in North Carolina ride around without any kind of automobile insurance. Well, 90% do so the pool is a lot bigger and when that happens, when there are more participants that makes more things possible in terms of price.
I will also say that tighter control of special enrollment periods during the year. Those need to shrink. Right now there’s far too many opportunities for people to jump in and jump out. That destabilizes the whole market and it runs costs up. I would say you have normal enrollment period, October 1 to December 31. Get in or you’re out until the next year with certain limited exceptions like certain life circumstances: you have a baby, you get a divorce, somebody dies. There’s lots of examples in the commercial space about how that works and works well.
Shorter grace period for paying premiums. In the ACA you get 90 days to catch up on your premium if you don’t pay. What that has caused is a behavior where folks pay through the end of September, stop paying October, November, December, continue to consume services and the reward for that is you get sign up again January 1st. There are no consequences to not paying except for the fact that for the first 30 days if there are claims and the premium doesn’t come in, Blue Cross Blue Shield of North Carolina pays for those claims. The remaining 60 days, we don’t pay the claims and our provider partners have to pick up that tab and finally, fully fund the Federal program that stabilize the health insurance market. That’s the 3 R program that I won’t bore you with, but that would certainly be very, very helpful as we stabilize the market.
Let me simply say in concluding that situation can and should and will change. With these and other adjustments the ACA will become sustainable in my opinion and begin to work as intended to give millions of Americans a better option than remain uninsured. In the meantime, what can you do? What can we do together as a business and community and health care leaders here in Charlotte? You need to raise your voice. You need to educate yourself and you need to advocate for making health care more affordable. You can remain committed to offering competitive health benefits to your employees if that’s a business that you are in and I would urge you to consider offering incentives to those employees to change their lifestyle so that they will be healthier and by the way, a healthier employee is a more productive employee. I think if you do these things it will help accelerate the transformation and we look forward to working together with all of you to make these things happen. That’s the only way transformation and change occurs is when people of good will work hard together to solve a common problem. I look forward to your ideas on how to do just that.
What is the TPP?
What is it all about?
Why you need to know about the TPP!
In the midst of our Presidential campaign, I thought it might be helpful to put forward some facts about the TPP. Both Donald Trump and Hillary Clinton have expressed their doubts about the TPP. Their comments have certainly created a negative and false impression about the TPP. However, the TPP is a negotiated trade agreement that has been developed under President Obama. He wants this agreement in place as one of his legacy accomplishments. As such, he is doing all he can to pass it before congress before he leaves office. It is expected to be taken up by Congress during the lame duck session before the next President takes office.
Before you jump to your own conclusion about the TPP, it might be valuable to gather the facts about the TPP.
First, what is the TPP?
The Trans-Pacific Partnership (TPP) is the largest regional trade accord in history. It will establish new terms for trade and business investment among the United States and 11 other Pacific Rim nations — an important collection of countries with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global G.D.P. and one-third of world trade. Countries participating in the TPP include:
- United States
- New Zealand
The TPP is the product of years of negotiations that culminated last year with the endorsement of the 12 nations’ trade chiefs. This partnership agreement may be a significant accomplishment for President Obama, who has pushed for a foreign policy “pivot” to the Pacific rim. It seeks to bind Pacific nations closer through lower tariffs while also serving as a buttress against China’s growing regional influence.
Why is it important to be done now?
This agreement is important for the establishment of global leadership and the rules for trade. . The rules of the road are up for grabs in Pacific arena. If this group does not pass this agreement and write those rules, competitors will set weak rules of the road, threatening American jobs and workers while undermining U.S. leadership in Asia.
The pact is seen as an avenue to address a number of troubling issues that have become stumbling blocks as global trade has skyrocketed, including e-commerce, financial services and cross-border internet communications. The United States is eager to establish formal trade agreements with five of the nations involved — Japan, Malaysia, Brunei, New Zealand and Vietnam. It should be noted that the TPP addressed many of the outstanding issues with NAFTA as the U.S., Canada and Mexico are major participants in this agreement.
The Trans-Pacific Partnership is hailed as an “open architecture” document written to ease adoption by additional Asian nations, and to provide a potential template to other initiatives underway, like the Transatlantic Trade and Investment Partnership, between the U.S. and Europe.
Where are the divisions around the TPP?
According to the New York Times, “Supporters say that it would be a boon for all the nations involved, that it would “unlock opportunities” and “address vital 21st-century issues within the global economy.” Opponents in the United States see the pact as mostly a giveaway to business, encouraging further export of manufacturing jobs to low-wage nations while limiting competition and encouraging higher prices for pharmaceuticals and other high-value products by spreading American standards for patent protections to other countries. A provision allowing multinational corporations to challenge regulations and court rulings before special tribunals is drawing intense opposition.”
Where is China?
China is uncomfortable with the TPP. It sees this pact as opening the doors to competition as the United States tries to tighten its relationship with neighboring Asian countries. There was some suggestion that China might want to participate as some point, but that has yet to be accomplished. At the same time, China seems more focused on their own trade agreements in the region that are part of its Silk Road initiative in Central Asia. There is speculation that the TPP’s “open architecture” will eventually allow for China to join along with other important economic powers like South Korea.
Most recently, President Obama has reached out to Ohio Governor John Kasich in support of the TPP. That could signal a bipartisan effort to ratify this agreement before the end of 2016. Stay tuned.
Energizing Africa Through Partnerships:
HUGE New Business Opportunities for the Carolina Businesses
Jim Rogers is and always has been more than just a big thinker. He helped to grow Duke Energy into the largest regulated utility in the United States. Since stepping down as CEO of Duke at the end of 2013, Rogers has been focused on another one of the biggest challenges on the globe—how to bring energy to the roughly 1 in 5 people in the world without electricity.
In fact, just last year, he completed a book entitled Lighting the World. In it, he states, “I’ve come to see that access to electricity is a basic human right that’s denied to over 1.2 billion people around the world. As the former CEO and Chairman of Duke Energy, I know that there’s plenty of clean, sustainable energy for everyone who wants it. No one needs to live in the dark.
“Most people are shocked to hear that nearly one in five people on Earth still don’t have electricity. Even as cell phones become ubiquitous, villagers in sub-Saharan Africa and parts of India must walk miles to charge them. But new technologies now offer scalable, sustainable solutions that I believe can usher in a new era of light, and lift millions out of poverty, enable equal rights for women, and jump-start economic development. They also represent a unique, transforming opportunity for the West to solve its own energy crisis.”
Jim Rogers has just turned a problem into an opportunity!
An important conference in October 2016, Energizing Africa Through Partnerships, being hosted by E4 Carolinas and a number of key sponsors, is purposed to meet the needs of the 1.2 billion people in sub-Saharan Africa by connecting those opportunities with businesses in Charlotte and the Carolinas.
His Excellency, Girma Birru, Ambassador of Ethiopia to the United States and former Ethiopian Energy Minister, as well as Rogers, University Fellow, Duke University Rubenstein Fellows Academy, and former Chairman and CEO of Duke Energy, are the keynote speakers at the conference.
On October 4th through 6th, American businesses will have the opportunity to meet with U.S. and African energy policy officials and executives experienced in the Africa-Carolinas energy trade. They will be meeting in Charlotte to learn about opportunities and develop partnerships to pursue a considerable range of projects. A predecessor conference held in 2014 in Charlotte drew nearly 200 and since then trade has grown. To learn more:
Read more about the program and speakers: http://www.powerafricasummit.com/
The NAFTA Debate
NAFTA Debate: What’s the real scoop?
Geopolitical Futures brings into focus some of the most salient features and presents a succinct analysis of the current NAFTA debate:
The 2016 U.S. presidential campaign has brought renewed focus directly upon the North American Free Trade Agreement (NAFTA) between the U.S., Canada and Mexico and the debate has evolved from how it reduces jobs in the U.S. to what extent it should be changed to protect U.S. jobs going forward. NAFTA currently serves as the framework that dictates how the U.S., the world’s largest economy, carries out trade with two of its top three trading partners.
NAFTA took effect in 1994, over 22 years ago, so you would think its results should be obvious. However, the lack of decisive evidence is due to the fact that both sides of the debate provide numbers to support their arguments that are “at best estimates given the complexities of the economy and shortfalls in modeling.” At any rate, it should not be surprising that its provisions may need at least a few tweaks.
There is no definitive evidence illustrating NAFTA’s impact on the U.S. job market, though the debate over whether the agreement has helped or hurt the U.S. economy has been around since its implementation in the early 1990s. The lack of decisive evidence is due to the fact that both sides of the debate provide numbers to support their arguments that are, at best, estimates given the complexities of the economy and shortfalls in modeling.
The 2016 U.S. presidential campaign has brought renewed focus on the agreement and evolved
the debate from whether it hurts jobs to what extent it should be changed to protect U.S. jobs. The
Mexican government has already responded, saying it would be open to possible renegotiations
and has presented some preliminary ideas on what that may entail. NAFTA’s geopolitical relevance goes beyond domestic U.S. politics in that the agreement’s future will also impact two growing global trends: the nation-state reasserting itself and the exporters’ crisis.
1. The future of NAFTA is now in question. It is as much an economic question as it is a political one in the U.S.
2. The initial expectations regarding NAFTA’s impact on the U.S. job market do not align with modern assessments.
3. The complexities of the U.S. economy and international trade make it extremely difficult to show direct causality between NAFTA and the U.S. job market.
4. Potential renegotiations of NAFTA may involve adding modern elements to the treaty, exiting the treaty and having other trade agreements supersede NAFTA.
U.S. presidential candidates Donald Trump and Hillary Clinton have raised the possibility of renegotiating the North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico. While campaign speeches should often be considered political white noise, the core issues being addressed sometimes have geopolitical significance. The future of NAFTA is one of these core issues. It currently serves as the framework that dictates how the U.S., the world’s largest economy, carries out trade with two of its top three trading partners. It also encompasses the three major economies of the Western Hemisphere, distinct for its stability while much of Eurasia is in crisis.
NAFTA’s impact on U.S. employment is the main point of contention inspiring calls for a renegotiation or even an end to the agreement. This debate over the cost of more open trade to U.S. jobs is nothing new. The balance between the benefits of trade and accompanying adjustments in the U.S. job market has been a divisive issue in U.S. domestic policy for decades. In a 1962 message to Congress, President John F. Kennedy noted: “The burden of economic adjustment should be borne in part by the federal government…. [T]here is an obligation to render assistance to those who suffer as a result of national trade policy.”
Controversy over whether NAFTA, which was implemented in 1994, has helped or harmed the U.S. economy dates back to the early 1990s when the agreement was first being negotiated. In the U.S. Congressional debate over NAFTA, the question of employment featured prominently. Of the 141 statements against NAFTA in the House of Representatives and Senate, 112 asserted that NAFTA would destroy jobs. Meanwhile, 199 of the 219 pro-NAFTA statements argued it would create jobs. And the debate has continued ever since.
However, we appear to be at the start of a shift in the debate. It is no longer about whether it hurts jobs but rather to what extent it should be changed to protect U.S. jobs. Trump has said, if elected, he plans to immediately renegotiate NAFTA so that it is more beneficial for U.S. workers. If such a deal cannot be reached; Trump says he will submit notice of the United States’ intent to withdraw from the agreement. Clinton has publicly said she would like to renegotiate NAFTA to give American workers a level playing field, though she does not foresee ending NAFTA. Rather, she has stated that there have been benefits to free trade, corporations share the blame for lost jobs and globalization is here to stay. Neither candidate has specified which aspects of NAFTA he or she wants to renegotiate. In any case, this issue will continue to be relevant beyond the election.
Impact on Jobs: Initial Expectations
To better understand the current debate over whether NAFTA has been a success or failure, we need to first look back at the initial expectations for its impact on the job market. Many studies were conducted prior to the signing of NAFTA to help determine its potential impact. A comprehensive review of 10 pre-NAFTA impact studies on U.S. jobs was published by the Organisation for Economic Co-operation and Development. Seven used variants of a Computable General Equilibrium model, a class of economic modeling that uses available data to project how an economy might react to changes in policy, technology or other factors. The others used different macroeconomic modeling methods.
Four of the studies determined that NAFTA would have a negligible to little effect on employment. Two concluded in general terms that “gains outweighed losses.” Another two estimated that jobs would increase by 40,800 to 61,000 in one study and 175,000 in the second. The latter estimate (from a study by Gary Hufbauer and Jeffrey Schott) was derived from the forecast that U.S. exports to Mexico would increase by $16.7 billion, imports from Mexico would increase by $7.7 billion and the U.S. trade balance would improve by $9 billion.
Only one study predicted there would be a net job loss, which it put at 1.26 million over a 10-year period. The 10th study concluded that there would be a 225,000 to 264,000 increase or 400,000 to 900,000 decrease in jobs depending on the level of foreign direct investment in Mexico. On the whole, at the time the agreement was signed, these 10 studies expected NAFTA to have a negligible to mild effect (in either direction) on U.S. employment.
Fears over job losses due to NAFTA persisted among those opposed to the agreement; those in favor recognized there would be some job market adjustment period. In response to these fears and with the goal of getting the agreement passed, the Bill Clinton administration and Congress agreed to legislation creating a NAFTA Trade Adjustment Assistance Program (NAFTA-TAA). This program was very similar to other trade adjustment assistance programs that the U.S. had been carrying out since the 1960s. The NAFTA-TAA was designed to provide assistance to all workers who could show that they lost their jobs or that their hours of work and wages were reduced as a result of trade with, or a shift in production to, Canada or Mexico. Since this program was implemented in 1994, 845,000 applicants have benefited from its services, which include job training and help finding a new job.
The Argument Against NAFTA
The arguments on both sides of the debate are important because their assertions would come into play in the event of a renegotiation. The main argument cited by those who believe NAFTA has harmed U.S. employment is that a growing trade deficit means more companies or facilities will be moved or closed. One major consequence of this is a rise in the number of dislocated workers. According to the U.S. Census Bureau, the U.S. trade deficit with Mexico has increased since NAFTA was enacted. The U.S. had a trade surplus of $1.66 billion with Mexico in 1993, the last year before NAFTA’s implementation. This has turned into a $60.66 billion trade deficit in 2015.
There are multiple estimates of the number of jobs lost because of NAFTA. The Economic Policy Institute (EPI) published a study saying that from 1994 to 2004, 1 million jobs that would otherwise have been created were lost due to NAFTA. The statement is based on EPI estimates that during this time 2 million job opportunities were lost while only 1 million export jobs were created by the agreement. In addition, the U.S. Department of Labor reported that 5 million manufacturing jobs have been lost since NAFTA was implemented. A report by think tank Public Citizen estimates that one in four of these job losses was NAFTA-related. While the Department of Labor’s number is reliable, the department tracks employment on a broad scale. Therefore, the think tank’s calculation of how many of these jobs were lost due to NAFTA is only an estimate.
Trade policy experts employ variations of the same methodology to estimate the number of jobs lost due to an increase in the trade deficit. The models can be designed using sector-specific data. Also, nearly all assume a baseline scenario of full employment. One major issue with these models – as well as the impact studies cited above – is that they do not factor in macroeconomic forces that also affect trade, employment and growth in a given time period.
For example, they would not have accounted for the balance of payments crisis in Mexico that occurred the same year that NAFTA was enacted. One consequence of this crisis was that the value of the Mexican peso relative to the American dollar declined by 60 percent, a factor that greatly affected the price of Mexican goods. A weaker peso makes Mexican exports cheaper and more attractive to foreign consumers. A fluctuation of this nature dramatically impacts the macroeconomy, trade flows and deficits but is not always predicted and incorporated into models.
Lastly, there is the commonly circulated figure that 845,000 jobs have been lost as a result of NAFTA. Even former Democratic presidential contender Bernie Sanders cited this. This number is based off the number of people who received NAFTA-TAA services benefits from the U.S. government. The number does not indicate in any way how many of these workers acquired a new job through TAA. Groups like EPI and labor group AFL-CIO argue that the program is insufficient because displaced workers earn on average 11 percent to 13 percent less than they did at their previous jobs. It is also commonly noted that new jobs do not always spring up in the same location as the old jobs and relocation becomes an obstacle.
The Argument in Favor of NAFTA
Those who support NAFTA argue that the benefits of free trade are long term. Preferential trade brings in lower cost imports to a market. Consumers will likely purchase these lower priced goods rather than domestically produced equivalents. This may create some short-term job losses for the importing country. However, in the long term, preferential trade is supposed to encourage specialization, economies of scale and more export-oriented jobs.
Advocates for NAFTA offer both conceptual reasoning and statistical evidence to support their view. The conceptual arguments look at what the job market would be like if NAFTA had not been implemented. The Council on Foreign Relations points out that many economists argue manufacturing in the United States was under stress before NAFTA. It asserts that job losses in the manufacturing sector should be viewed as part of a structural shift in the U.S. economy toward light manufacturing and high-end services rather than jobs lost to cheaper imports.
A 2014 report by the Wharton School of the University of Pennsylvania argues that “without NAFTA, many jobs that were lost over this period probably would have gone to China or elsewhere.” It also argues that job losses due to cheaper imports cannot be blamed on NAFTA because the U.S. trade deficit was and still is bigger with China than Mexico.
Like those opposed to NAFTA, those in favor have published various reports trying to illustrate their view with numbers. They say that NAFTA has not had a large, negative impact on the U.S. job market. Supporters of the agreement accept that some jobs will be lost. As a result, many of their numbers aim to illustrate that the job loss is negligible and leads to better economic conditions and job creation in other sectors, particularly those that are focused on exporting.
The Peterson Institute for International Economics (PIIE) published a report in 2008 that said about 16.5 million people quit or lost their jobs each year in the U.S., which has a total civilian labor force of roughly 140 million. At the same time, more than 18 million Americans acquire new jobs each year. The report also stated that, while the government recognizes that NAFTA results in a gross loss of 100,000 jobs annually, the figure is a mere 0.06 percent of the regular annual turnover in the U.S. job market. An economic study commissioned by the U.S. Chamber of Commerce found that trade with Canada and Mexico supports approximately 14 million U.S. jobs, of which nearly 5 million are supported by the increased trade generated by NAFTA. Like the anti-NAFTA group, the numbers come from modeling and estimates.
Pro-NAFTA groups often cite a 2015 U.S. Congressional Research Service report that says economists estimate that 40 percent of U.S. imports from Mexico and 25 percent of U.S. imports from Canada contain components that originate in the U.S. This figure is notably higher than the average of 4 percent for imports from China. The argument is that imported products can help sustain U.S. jobs because they contain material that was made in the U.S. Lastly, there is emphasis on the fact that export-related jobs pay 7 percent to 15 percent more than jobs that focus on the domestic market. Those in favor of free trade foresee import-related jobs switching over to specialized export jobs as market production shifts to acknowledge competitive advantages and economies of scale.
As is commonly the case with contentious issues, critics and advocates of NAFTA have their respective leading experts who are associated with institutions that support a particular position. Gary Hufbauer and Jeffrey Schott are both affiliated with PIIE, which has published numerous reports in support of NAFTA. Meanwhile, Robert Scott at EPI is almost always the source of the latest information on NAFTA’s negative impact on the U.S. job market. About a quarter of EPI’s funding comes from union groups while about 44 percent of PIIE’s funding comes from major corporations. Given that rising nationalism in the United States is coinciding with an election year, those with political agendas and interests are pushing their agendas and framing the debate in favor of their interests. In the case of NAFTA, the debate will be centered on jobs.
In the U.S.’ advanced, complex economy, it is very difficult to isolate one particular element that contributes to the larger picture and make sweeping conclusions. It is also impossible to know with certainty the course of an alternative history—in other words, what the U.S. economy and job market would have looked like today if NAFTA had never been implemented. There will always be reports on such issues that seek to buttress both sides. In the end, the public perception of free trade will determine the future of NAFTA. Presently, there is a strong anti-free trade sentiment in the U.S. A Pew survey showed 55 percent of those polled were against free trade agreements because they are bad for jobs. There was little to no recognition of the fact that exports generate jobs as well.
While the evidence is inconclusive, there is growing public pressure through the U.S. presidential campaigns to renegotiate NAFTA to protect U.S. jobs. There are several avenues through which this can take place but no specific information at this time of what concrete changes in NAFTA would look like. A renegotiation of the actual treaty would require participation from Canada and Mexico, who could bring their own proposals. On a purely domestic front, the government could seek to make changes to the NAFTA-TAA to better support workers, though adjustments to this domestic legislation have not yet figured prominently into the presidential campaigns.
Equally important is the fact that the U.S. may not be alone in wanting to renegotiate the agreement. On July 25, Mexico’s Secretary of Foreign Relations Claudia Ruiz Massieu said that Mexico would be open to modernizing NAFTA should the U.S. and Canada bring forth the idea. Mexico’s Secretary of Economy Ildefonso Guajardo Villarreal said that NAFTA could be updated through the implementation of the pending Trans-Pacific Partnership.
Bear in mind that NAFTA originally started as a free trade agreement between the U.S. and Canada. When the trilateral group formed, the new agreement superseded the previous bilateral agreement. Mexico’s former Secretary of Trade Jaime Serra Puche said that NAFTA should first incorporate new measures like e-commerce and anti-corruption measures not included in the original treaty before thinking about changing the existing treaty. Puche served as Mexico’s principal negotiator in the original NAFTA negotiations. The Canadian government has yet to state its stance on whether it would be willing to renegotiate NAFTA.
All this matters because NAFTA’s geopolitical relevance goes beyond domestic U.S. politics, as the agreement now intersects two major geopolitical trends underway. First, we have been tracking the rise of nationalism, especially in the United States and Europe. We see the nation-state reasserting itself as the primary vehicle of political life. Multinational institutions like the European Union and multilateral trade treaties are being challenged because some believe they are not in the national interest. Additionally, the world is currently in the midst of an exporter crisis that will have an impact on export sales. NAFTA members have access to both the Atlantic and Pacific oceans, which gives them an advantage in global trade. For these reasons, the future of NAFTA—and its potential renegotiation—matters both on a geopolitical level and for U.S. domestic politics.
Read more: https://geopoliticalfutures.com/the-nafta-debate/?format=pdf
About Geopolitical Futures
Geopolitical Futures is a publication dedicated to predicting the future course of the international system. In doing so, Geopolitical Futures challenges two assumptions. First, that political leaders decide what they will do and individual actions can’t be predicted. Second, that there is no methodology for predicting non-quantitative events.
The fact is that political leaders’ decisions are not individual decisions made independent of external factors or domestic circumstances. Leaders come to conclusions based on the various pressures that are placed on them by the international system, as well as by internal political considerations. Having been shaped by their struggle to attain power, they follow a rational course of action when in power and, therefore, their decisions are predictable.
The second assumption, that non-quantitative forecasting is impossible, is untrue. Human beings make successful decisions daily based on non-quantitative models. The models are informal. Geopolitical Futures uses a formal methodology known as “Geopolitics,” along with other methods, to model how the international system is working and will evolve over time.
We Are a Nation of Immigrants!
Political Rhetoric Overlooks U.S. History
There certainly have been a lot of careless remarks about immigrants over the past few months by political candidates and their surrogates. The history of immigration is actually quite substantial and it covers immigrants from many different nations.
It all started with immigration from the United Kingdom, followed by those coming from Ireland, Germany, Italy, Russia, Hungary, Canada, Mexico, Philippines, Cuba, China, India, Vietnam, the Middle East, Central America, South America, Norway, Sweden, Switzerland, the Baltics and many others.
Immigration was estimated at 128,000 from 1820 to 1829, growing to nearly 3.7 million by 1900, 8.2 million by 1910, 6.3 million by 1920, and 4.3 million by 1930, only 700,000 and 800,00 during the Great Depression years, back up to 2.5 million by 1960, 3.2 million by 1970, 4.2 million by 1980, 6.2 million by 1990, 9.8 million by 2000, and 10.3 million by 2020.
Altogether, from 1820 to 2013, 79 million people obtained lawful permanent resident status in the United States. This interactive map visualizes all of them based on their prior country of residence. The brightness of a country corresponds to its total migration to the U.S. at the given time. Use the controls at the bottom to stop / resume the animation or to move back and forth in time.
Time Lapsed Immigration Map from 1820 – 2013
Two Centuries of U.S. Immigration (1 dot = 10,000 people)
Over time, the sources of immigration trace a clear path across the world. Through most of the 1800s, immigration came predominantly from Western Europe (Ireland, Germany, the U.K.). Toward the end of the century, countries further east in Europe (Italy, Russia, Hungary) took over as the largest source of migration. Beginning in the early 1900s, most immigrants arrived from the Americas (Canada, Mexico). And the last few decades have seen a rise in migration from Asia. The same trends are clear looking at the history of New York City’s foreign born population.
Here are the largest immigration “waves” charted over time, showing the progression.
While it may seem that immigration over the last few decades has been higher than ever before, the picture looks very different when viewed relative to the size of the U.S. population.
Here is the same chart, with the immigration shown as a percentage of the U.S. population.
What is particularly interesting about immigration to the U.S. is that each wave coming in from a particular country has a story behind it—usually escaping persecution (e.g. Jews escaping Russia after the May Laws were enacted, the Cuban Revolution) or major economic troubles (e.g. the Irish Potato Famine, the collapse of southern Italy after the Italian Unification).
There are plenty of dark spots on United States’ history, but the role it has played as a sanctuary for troubled people across the world is a history to be proud of.
If you would like to read more about what caused each of these groups to come to the U.S., this graphic summarizes some of the major events.
Foreign Direct Investment Growing in the Carolinas
Despite the fact that a strong U.S. dollar that makes investing here more expensive for many other currencies, foreign buyers have been gobbling up U.S. properties, investing more than $32 billion during the first half of 2016, according to a released recently by commercial real estate services firm Newmark Grubb Knight Frank.
But the spend is at a slower pace than last year for the Queen City. Is Charlotte capturing its fair share?
Charlotte lags in foreign investment, according to the study. More than half of the foreign investment made between January and June went to six U.S. markets: New York City (28%); San Francisco (8.3%); Chicago (6.9%); Los Angeles (5.9%); San Diego (3.9%) and Washington, D.C. (3.9%). Atlanta landed 1.3% of foreign investment while spending in Charlotte is lumped in with the 22.6% going to “other cities.”
At the same time, South Carolina has benefited more from foreign direct investment insourced jobs than any other state.
“I think there’s a bit of a nostalgia sometimes for the jobs the state used to rely on,” said University of South Carolina economics professor William Hauk, describing the state as hammered a few decades ago by losses to the textile industry. “But many haven’t noticed that lots of new jobs are benefiting the state.”
While South Carolina has suffered the loss of blue-collar jobs in recent years like the rest of the country, it has benefited more than almost any other state from foreign investment. U.S. subsidiaries of global companies are writing paychecks for 8 percent of South Carolina’s workforce in the private sector—the highest in the country—and providing 127,300 jobs according to data from the U.S. Bureau of Economic Analysis.
In the past five years, South Carolina’s employment via foreign direct investment has gone up by 13.4 percent, with over half of those jobs being in the manufacturing sector.
“I think we can absolutely go too far in being protectionist,” says University of South Carolina economics professor William Hauk, “because it’s so easy to see jobs that are lost to Mexico and China and harder to see the jobs that are gained and insourced to South Carolina through foreign companies like Volvo or Continental Tire.”
In 2014 alone, 1,233 international firms from 42 countries invested $5.1 billion in the Palmetto State. German automaker BMW announced a billion-dollar investment in its Upstate plant in March, and Volvo selected South Carolina for its first American factory last year, investing $500 million in a facility in Berkeley County that will create 2,500 jobs.
Similarly, international trade is crucial to South Carolina’s economy, supporting one in five jobs in the state in 2013.
The crucial investment by BMW in 1994 in South Carolina has resulted in over 9,000 jobs at their facility in Greer. Following them to the U.S. is their vendor/supplier network, which now numbers over 1,000 businesses choosing the Carolinas as they seek to expand their business activity in the U.S. economy.
The following is a report developed by Professor Dan Hamilton, Executive Director of the Johns Hopkins University Center for Transatlantic Relations, about the opportunities emanating from the Transatlantic Trade and Investment Partnership between the United States and the European Union under negotiation.