We Need To Lead Public Opinion On Trade, Not Follow It

By December 14, 2010Trade

It was troubling to see U.S. Trade Representative Ron Kirk’s comments in The Dallas Morning News today on pending trade agreements. According to the article, “Trade pacts could boost Texas, but other states wary,” Ambassador Kirk does not want to rush all of the pending agreements to Congress because of American public opinion on trade and the unemployment rate in the United States.

These comments are alarming as trade agreements not only help create jobs but they also contribute to economic growth. While it may be true many people are misinformed or unaware about the benefits of trade, that’s a reason to explain the facts, not to delay. America continues to stand on the sidelines while our competitors reach trade agreements with each other.

The U.S. Department of Commerce’s data show that the U.S. trade agreement partners have never been a major factor in our U.S. trade deficit and have actually given us a trade surplus for the last three years in manufactured goods.

Further, trade agreements reduce foreign barriers or the cost of doing business for U.S. companies. As a result, these companies are able to hire more employees and make more investments. The United States is already a wide open market, with very few barriers, while others are not. When a foreign country is willing to enter into a trade agreement with us, we are the winner: Our barriers to their imports fall only a little, while their barriers to our exports fall a lot.

The article correctly reports how important the growth of exports to our trade partners has been for Texas. But then it follows with this erroneous claim: “But what’s good for Texas is not necessarily good for states like Michigan, Wisconsin and North Carolina, which have lost millions of manufacturing jobs because of America’s great appetite for imports.”

To set the record straight, two-thirds of Michigan’s manufactured goods exports go to U.S. trade agreement partners that have eliminated barriers to our exports, and over the last five years Michigan employment related to manufactured goods exports grew 26 percent. In comparison, other private employment in the state fell by 10 percent.

The story is similar for North Carolina, where more than 40 percent of its exports go to U.S. trade agreement partners, and employment related to manufactured goods exports grew 24 percent while other private sector employment grew only 5 percent. And Wisconsin? Half of its manufactured goods exports go to trade agreement partners, and employment related to manufactured goods exports grew 51 percent while other private employment fell 3 percent. State after state tells the same story.

Rather than hesitancy about moving forward with the pending trade agreements including Colombia and Panama as well as Korea, the Administration should move full speed ahead at educating the public with the truth about trade agreements and should hurry the agreements to Congress.

Ambassador Kirk, Commerce Secretary Locke and others need to trumpet the facts about export and trade agreements –- not find reasons to hold back. For example, U.S. manufacturers face an effective 15 percent import tax when they sell to Colombia – a penalty that increases in importance with every new trade agreement Colombia negotiates with another country.

We are losing exports and jobs every day we delay. So far this year alone, American manufacturers have paid over $1.3 billion of needless import barrier taxes to sell to Colombia – that’s over $4 million every day! And that’s just Colombia – we face a lot of barriers in other countries where we haven’t even started negotiating.

Frank Vargo is the National Association of Manufacturers’ vice president for international economic affairs.

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