Banning LNG Exports Will Hurt Jobs and Economy

By January 15, 2013Trade

The National Association of Manufacturers (NAM) supports open and expanded trade and opposes efforts to limit manufacturers’ ability to expand exports overseas. Exports have been and continue to be a critical source of growth and opportunity for manufacturers throughout the United States, and liquefied natural gas (LNG) exports are no exception.  A series of recent studies by energy research firm IHS CERA show that natural gas development has already led to the creation of more than 1 million jobs, and continued development of unconventional energy resources could create millions more.

Proposals that seek to limit LNG or coal or any other product would have far-reaching negative effects on the United States and should be rejected. Such restrictions limit economic opportunities and stifle job growth rather than provide a source of increased economic growth.

Export growth has created and saved manufacturing jobs over the past few years, which were tough economically for the United States. Export growth is vital not just for businesses across-the-board that directly export, but also for the many manufacturers in the supply chain. 

From the President’s first State of the Union address, doubling U.S. exports has been a top goal, supported by both businesses and workers and both Republicans and Democrats. From its origins, the United States has been built on exports. In fact, Article I, Section 9 of the U.S. Constitution provides quite explicitly that “no Tax or Duty shall be laid on Articles exported from any State,” evincing a strong disinclination to limit exports of any product. 

Internationally, the United States and its G-20 partners have repeatedly expressed their deep concern about rising protectionism, including, in particular, export restrictions, which began to proliferate globally as the world economy declined in 2008.

The United States has been at the forefront of challenging other countries’ export prohibitions, starting with China’s restrictions on raw material exports and more recently China’s restraints on rare earth exports. Such restraints have severely negative effects on a wide array of manufacturers in the United States by limiting their access to key inputs in their production. The World Trade Organization (WTO) generally prohibits the use of export bans and quantitative restraints—basic rules to which the United States also agreed when it joined the WTO. 

The United States’ ability to challenge other countries’ existing export restraints on agricultural, forestry, mineral and ferrous scrap products—just to name a few—will be virtually nonexistent if the United States begins imposing its own export restrictions. Even worse, as the world’s largest economy and largest trading country, U.S. actions are often replicated by our trading partners to our own dismay. If the United States were to go down the path of export restrictions, even more countries would quickly follow suit and could easily limit U.S. access to other key natural resources or inputs that are not readily available in the United States.

This type of race to the bottom will only damage our nation’s manufacturing base to the detriment of jobs and growth. Ninety-five percent of the world’s consumers are outside the United States, and exporting has been a vital part of America’s heritage and must be a cornerstone of its future. To reach the goal of doubling exports by 2014, the United States must not restrict any company’s ability to expand its market for any commodity.

Linda Dempsey is vice president of international economic affairs, National Association of Manufacturers.

Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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