This afternoon, NAM Vice-Chairman Doug Oberhelman, the CEO of Caterpillar, will testify before the House Ways & Means Trade Subcommittee on the pending Free Trade Agreement with Panama. As you can see in this advertisement that Caterpillar is running in a few Capitol Hill newspapers today, they strongly support quick passage of all three pending FTAs – adding in Colombia and Korea.
You might recall Will Marsh of Baker Hughes, Inc. testified on behalf of the NAM two weeks ago at a similar hearing on passage of the pending FTA with Colombia, and one expects a similar hearing on the FTA with Korea to be up at the Subcommittee in the near future.
It’s a powerful lineup for today’s hearing. The economic benefits for manufacturing in America that will accrue as a result of passage with our FTA with Panama may not be as large as we’ll see with Korea. But, we shipped $5.6 billion in U.S.-made manufactured goods to Panama last year. With the expansion of the Panama Canal – the largest public-works project on earth right now – there is going to be huge demand for manufactured goods of all kinds to support the construction work, the infrastructure, the workers, and the new facilities. By removing the average 8 percent duty our products face, the U.S.-Panama FTA will put our manufactured goods exports in a preferential position to fill that expanded demand.
Yesterday, it should be noted in passing, was the 77th anniversary of the passage of the “Reciprocal Trade Agreements Act” which passed Congress in 1934 by a vote of 274-111 (and 47 Members not voting). This act was the first to provide the President power to negotiate bilateral trade agreements with foreign nations. With it, Congress reversed decades of protectionist inclinations. In fact, the Act came just 4 years after the passage of the disastrous Smoot-Hawley Tariff Act of 1930, which raised U.S. tariffs to very protectionist levels — which in turn caused our trading partners to raise their tariffs and, most economists agree, prolonged and deepened the Great Depression. After the passage of the 1934 Trade Act, President Franklin Roosevelt called for a tariff-free Western Hemisphere that would unite fully half the globe in a closer trading relationship and would jump-start economic growth.
We’re not there yet – but passage of the Colombia, Korea, and Panama agreements as soon as possible would be another step on that road. With Peru, Chile, CAFTA, NAFTA and other FTAs that have been passed in recent years, America has a trade surplus in manufactured goods with our trade agreement partners. We need to pass all three pending agreements as soon as possible, and then look to new trade agreements to further boost our exports, increase U.S. employment and grow our economy.