General Electric Co Chief Executive Jeff Immelt warned the Trump administration on Thursday to avoid protectionist policies while calling on it to level the playing field for American companies with tax reform, revived export financing and improved trade agreements. In a speech at Georgetown University, Immelt said American companies and policymakers should “try harder” to compete in the global economy and win. Public sentiment toward globalization and free trade has permanently changed because of their associations with outsourcing that has held down wages, China’s rise as an export power and job losses, so a new definition was needed, he said.
“Because of these factors, we are not going back to a pure free trade world,” Immelt said. “But is protectionism the answer? I guarantee you … we have the most to lose through protectionism.” The Trump administration has taken steps toward increasing trade barriers around some industries, launching national security reviews that could restrict steel and aluminum imports. It also has pulled out of a 12-country Pacific Rim trade deal and vowed to renegotiate the 23-year-old North American Free Trade Agreement in order to help reduce the U.S. trade deficits with Mexico and Canada.
Immelt said that if U.S. leaders think Americans want to live without the benefits of global economic integration, “they’re in for a rude awakening. We need to fight for new technologies not old ones.” Instead of withdrawing from trade deals, Immelt said the United States should work to modernize and improve them, and NAFTA represented a prime opportunity. “We will not grow if we don’t trade with people,” he said.
Immelt also called for the government to level the playing field with tax reform, and said the Trump administration’s tax proposals would achieve much of this, including through a territorial tax system with lower rates. He also put in a plug for a border adjustment tax that would favor U.S. exporters. “All of our global competitors have some form of a border adjustment,” he said. “Isn’t it worth a debate?”
Immelt also called for the full revival of the U.S. Export-Import Bank as a way to better compete with China, Germany and other countries that offer government-backed export lending. EXIM has been unable to approve financing deals over $10 million – excluding Boeing aircraft and GE power turbines – due to the lingering effects of a long fight in Congress to close the trade bank.