Fedex CEO: Us-led group is needed for free trade
Fred Smith calls for countering China’s approach
The U.S. needs to pair with likeminded countries on free trade to counter China’s state-driven approach to the economy, Fedex Chairman and CEO Fred Smith said Thursday.
“We’ve got to get a countervailing force that reembraces these multilateral open markets which created so much wealth,” Smith said during a panel hosted by the Center for Strategic and International Studies (CSIS) think tank.
The panel discussed recommendations released by the CSIS Trade Commission on Affirming American Leadership, of which Smith is co-chair, on how the U.S. can remain a global leader and prepare for the 2030 economy.
The commission says the U.S. needs to “convene a group of advanced market economies” to create trade rules suited for the modern world, with one of its initial priorities being to set “stronger rules against trade-distorting and unfair activity.” It flagged China’s uptick in stateled development and state-owned enterprises, along with the subsidization of its industrial and technology sectors.
“Many of Beijing’s policies are incompatible with existing international norms of fairness and mutuality,” the commission said in a statement. “China’s scale and weight in the global economy magnify the adverse impacts of its policies.”
China’s transition from a more open, market-based economy to a state-led economy around the time of the 2008 global recession upended world trade,
Smith said. The Fedex founder emphasized it’s not in either the U.S. or China’s best interest to make the other country an enemy, as many jobs rely on trade between the two countries.
“We don’t need to try to make an enemy of China. We just need to try and engage in market economics with those that want, and then (China) can do what they want to do,” he said. “We’ll trade where we can trade, and we’ll see which system in the end is more beneficial for humanity.”
This group convened by the U.S. could advance an agenda leading to changes at the World Trade Organization, of which China is a member, per the commission. While the WTO still has a key role in setting trade rules and resolving disputes, it says, the new group “is aimed at more rapidly modernizing the international regime and reinforcing the role of the market — not the state — in global trade.”
Healthy global trade key for Fedex
Fedex is often viewed as an economic bellwether, as its business relies heavily on the health and ease of trade between countries.
In late 2018, Fedex’s financial performance began to falter as the company warned of a global economic slowdown that the U.S. and China’s trade dispute contributed to. Tariffs placed on various Chinese products by the United States in 2018 violated international trade rules, the WTO ruled Tuesday.
Smith has long advocated for open international trade policies without barriers like tariffs. In 2019, he said Fedex
was “profoundly disappointed” when President Donald Trump’s administration decided to withdraw from the Trans-pacific Partnership, a massive trade deal that would have involved the U.S. and 11 other countries.
Fedex began operations in China in 1984. The company has about 9,500 employees there and operates 220 flights weekly in China at five airports. In 2019, the Chinese government launched an investigation into Fedex days after the company misrouted packages from Chinese technology company Huawei.
The U.S. also needs to look inward to maintain its global economic standing, per the commission. Programs to “reskill” and “reeducate” U.S. workers are needed with many close-contact jobs fading away during the COVID-19 pandemic, Smith said. “If you want people to be in STEM education, have the government pay for it or pay largely for it,” Smith said. “Have private philanthropy support education for the other fields, which may be appealing to a lot of people, but they don’t get to our key issue of global competitiveness and the ability then to repurpose oneself during the course of their life.”
The CSIS committee’s full statement can be read on the CSIS website, and a replay of the panel discussion featuring Smith can be viewed on CSIS’ Youtube channel.
Max Garland covers Fedex, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901529-2651 and on Twitter @Maxgarlandtypes.