This is my final blog, as I am retiring from the NAM as of 5pm today. I want to thank everyone for viewing the blog posts I have done over the years, and I hope you have found them useful.
I wanted to conclude by ending on good news, but also issuing a caution. The good news is that once again, for the month of April 2012, manufacturers continued to run a trade surplus with our Free Trade Agreement – FTA – partners (including Korea). The Commerce Department’s data showed a $14 billion surplus for the year to date (January-April) – that is an annual rate of $42 billion. This year marks the fifth year in a row of a manufactured goods surplus with FTA partners, cumulating to nearly $100 billion.
Our FTA partners account for a little under 13 percent of global GDP outside the United States. Yet they account for over half of our manufactured goods exports. But note that leaves about 87 percent of the global GDP outside the United States as countries not yet having an FTA with the United States – countries that maintain trade barriers to our exports that could disappear if we had FTAs with them. During the five-year period when we were running a manufactured goods surplus with FTA partners, with these other countries we ran an amazing $2.1 trillion cumulated manufactured goods deficit.
Since the United States has lower tariffs and trade barriers than just about every other country, the fact is that virtually every FTA we can negotiate is a plus for the United States – lowering the other country’s barriers much more than ours.
Our competitors realize that – particularly the European Union (EU); and that is my cautionary note. The EU is working overtime, at flank speed, to open up global markets for its exporters, and that puts us at a disadvantage.
I was struck by the news in just one day, June 26th, in which three separate EU press release headlines said, “Joint Statement on the Outcome of the EU-India Trade Ministerial” noting negotiations toward their FTA are making good progress; “EU Signs Comprehensive trade agreement with Colombia and Peru,” and “EU and Vietnam launch negotiations for a comprehensive Free Trade Agreement.” Wow. And that’s in one day.
We have got to pick up the pace. The world is a more competitive place than it was even a year ago. We need to conclude a robust Trans-Pacific Partnership that can grow to a Free Trade Area of the Asia-Pacific, but we also need to initiate Trans-Atlantic Partnership negotiations to open up the huge Transatlantic marketplace that accounts for half the world’s GDP. The sooner we start that one, the better. And then we also need to work to open up more of the large developing markets – particularly Brazil and India.
I have enjoyed working with my associates over the years to advance the trade prospects for America’s manufacturers, and I look forward to seeing the further progress that I know will come.
Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.