Free Trade Agreements: Good for US Manufacturers

By July 27, 2006Trade

Our boss applauded passage of the Oman Free Trade Agreement last week, but sadly, it passed only narrowly and with only 22 Democrats voting in favor. This is unfortunate for any number of reasons, but most of all because the issue of free trade agreements (FTA’s) has become so politicized, with the truth being burned in the fiery rhetoric. Recall that 100 Democrats or so voted for NAFTA, meaning that pro-trade Democrats are a dying — or at least shrinking — breed. This is bad for American manufacturers. Why?

According to this fact sheet from the office of the US Trade Representative, the benefits of trade agreements — contrary to Dobbsian tenets — are many. They open markets to US-made goods by lowering barriers to entry. Some facts, if we dare:

— 90% of our manufacturing trade deficit is with countries where we have no FTA;

— The countries with which we have an FTA represent only 14% of world GDP (excluding the US, of course) but account for fully 52% of U.S.exports;

— U.S. exports to Singapore have risen by over $4 billion (24.6%) since implementation of the U.S.-Singapore FTA in 2004;

— US exports to Chile rose by over 90% in two years after passage of the Chilean FTA;

— Imports by Australia of U.S. goods rose by $1.6 billion to $15.8 billion in the first year after implementation of the U.S.-Australia FTA.

Facts, as we like to say, are stubborn things. If Lou Dobbs ever gets off of his immigration jihad, somebody oughta tell him. We will continue to press for more FTA, so we can open markets for our members, the best manufacturers in the world.

Join the discussion One Comment

  • Joe Dragon says:


    NAFTA? Pile of junk that never worked. Let me quote: “Our job projections reflect a judgment that, with NAFTA, U.S. exports to Mexico will continue to outstrip Mexican exports to the United States, leading to a U.S. trade surplus with Mexico of about $7 to $9 billion annually by 1995.” The authors further predicted the U.S. trade surplus with Mexico would rise to $9 billion to $12 billion a year between 2000 and 2010. And what happened? Charles McMillan of MGB Services, using Commerce Department data through 2005, has tallied the results. A year after NAFTA passed, the U.S. trade surplus had vanished. From 1995 through 1998, we ran $20 billion trade deficits with Mexico. From 1999 through 2005, the U.S. trade deficit with Mexico grew every year, from $27 billion in 1999 to last year’s $54 billion. Where Hufbauer and Schott had predicted $100-plus billion in trade surpluses with Mexico from 1994 to today, NAFTA delivered some $400 billion in cumulative U.S. trade deficits. A $500 billion mistake by the crack Hufbauer-Schott team. Now you wonder why some of us have the nerve to question our trade policies?