Today’s Federal Register contains the Department of Transportation’s proposal for re-opening cross-border trucking with Mexico (Pilot Program on NAFTA Long-Haul Trucking Provisions). Once this plan is finalized, the retaliatory tariffs on $2.5 billion worth of U.S. manufactured goods and agricultural products will be cut in half. Those tariffs will be suspended completely once the first Mexican carrier is certified under the agreement.

This is a very welcome development and one that is overdue. For two years American manufacturers of a wide range of products have been paying 15-25 percent more than our competitors in Mexico, losing market share to manufacturers in China, Brazil, Canada, Japan, and other countries. These tariffs were put in place because the United States would not uphold its commitments made under North American Free Trade Agreement. The agreement published today will rectify this.

The National Association of Manufacturers has led efforts to repeal the ban on cross-border trucking for more than two years. The loss of exports to our second largest trading partner as a result of the tariff retaliation by Mexico forced manufacturers in America to cut production and lay off workers. Some may never recover their market share losses in Mexico.

This trade dispute did not need to happen. We are very pleased to see the end in sight as represented by today’s Federal Register notice. We urge the Obama Administration to sign the agreement after the 30-day comment period and move expeditiously to certify the Mexican carriers, and end the tariff retaliation.

Doug Goudie is director, international trade policy, for the NAM.

The U.S. Colombia Trade Agreement Action Plan announced today on outstanding issues in the U.S.-Colombia free trade agreement is very good news. The agreement has languished without approval since 2007, allowing other trade partners time to swoop in, sign their own deals, and capture market share from U.S. manufacturers, service providers and farmers. Colombia is the second largest market for the United States in South America and is an enormous potential market for U.S. manufactured goods exports.

Manufactured goods exports are one of the true bright spots in our economic growth and the Obama Administration should do everything it can to promote, expand and encourage more manufacturing exports. One of the easiest, fastest and cheapest ways to do that is to push through the three pending free trade agreements we have with Colombia, Korea and Panama. Today’s announcement of a deal presumably puts the U.S.-Colombia agreement on track for Congressional consideration – and there are plenty of yes votes on both sides of the aisle for all three agreements – before July 1^st, which is the day the Canada-Colombia FTA is implemented.

U.S. businesses have nothing to fear from this trade agreement. It will not have a deleterious impact on manufacturing in America – rather, given that many U.S. companies rely on imports from Colombia as the basis for their business, the FTA will benefit them. More than 90 percent of Colombian exports are one of five things: oil, fruits, flowers, coffee and precious stones/metals – basically, all the things you need for a great date!

Colombia offers U.S. manufacturers a growing opportunity for exports in a stable and expanding market.  Over the last 15 years, Colombia’s GDP has grown at an average rate of 8.5 percent, according to the IMF. Small and medium manufacturers will strongly benefit from the U.S.-Colombia Agreement: more than 10,000 small and medium companies export manufactured goods to Colombia, representing 85 percent of total U.S. exporters.

In 2010, the U.S. exported more than $11 billion worth of manufactured goods to Colombia. Manufactured goods are 85 percent of total U.S. merchandise exports to Colombia.  Last year, we had a $7 billion trade surplus in manufactured goods with Colombia. U.S. manufactured goods exports to Colombia have grown by 130 percent over the past five years. Due to preferences programs, more than 90 percent of Colombia’s exports to the U.S. enter our market duty free – they face no tariffs on their goods.  U.S. manufactured goods face an average tariff of 14 percent in Colombia.  This agreement will lower these tariffs to zero, in most cases immediately. It’s a one-way agreement that benefits American exports and American jobs.

The NAM is pleased that President Obama, USTR Kirk and their trade team have engaged in such intense discussions with the Santos Administration, and we are thrilled to see such quick resolution of the outstanding issues. Let us hope that transmission of the agreement to Congress will be equally as rapid, and just as successful.

Doug Goudie is director of international trade policy at the National Association of Manufacturers.

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 77^th 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.

Tomorrow morning the House Ways & Means Trade Subcommittee will hold a hearing on the Pending Free Trade Agreement (FTA) with Colombia, the first in a series of hearings to examine each of the three pending FTAs (the others are with Panama and Korea). William Marsh of Baker Hughes Incorporated, a NAM Member, will be testifying at the hearing.

Colombia is an important Western Hemisphere destination for U.S. manufactured goods exports. In 2010, the U.S. exported over $11 billion worth of manufactured goods to Colombia. Manufactured goods account for 85 percent of total U.S. merchandise exports to Colombia.

Small and medium manufacturers will strongly benefit from the U.S.-Colombia Agreement as over 10,000 small and medium sized companies export manufactured goods to Colombia, representing 85 percent of total U.S. exporters.

U.S. manufactured goods exports to Colombia have grown by 130% over the past five years. Last year we had a $7 billion trade surplus in manufactured goods with Colombia. Manufacturers are looking forward to the hearing tomorrow to discuss with members of the subcommittee of the tremendous economic benefits  of passing this agreement as soon as possible. Every day we are losing market share and manufacturers can no longer afford for additional delays.

U.S. Trade Representative Kirk testified on the President’s 2011 Trade Agenda at the Senate Finance Committee this morning. As expected, the focus was squarely on lack of progress on the Colombia and Panama free trade agreements. Unfortunately, despite an advance request by the Chairman and Ranking Member for a specific timetable on concluding the two agreements, Ambassador Kirk did not provide much of a road map on how the U.S. will proceed in addressing what the Administration feels are outstanding issues in both agreements.

U.S. Trade Representative Ron Kirk

When he appeared in front of the House Ways and Means Committee last month, Kirk promised the Administration wants to move the Korea trade agreement (KORUS) as soon as possible, and it would intensify efforts to resolve outstanding issues in the Colombia and Panama agreements so they could be moved as quickly as possible to Congress for approval –- by the end of 2011 if possible. At the time, we argued that all three agreements need to move as quickly as possible. We still absolutely believe this is the way things should proceed. The agreements with Colombia, Korea and Panama have languished since 2007, while our competitors in Europe and Asia continue to move aggressively to open those markets and gain preferential access for their manufactured goods exports.

The Chairman and Ranking Member of the Senate Finance Committee made it very clear they feel the same way. Chairman Max Baucus (D-MT) was crystal clear: “The time is long past to ratify the Colombia agreement,” said, continuing, “None of these agreements will pass unless they are all packaged together this year.” Ranking Member Orrin Hatch (R-UT) told Ambassador Kirk that he was tired of unfulfilled promises on Colombia and Panama. “It is the Administration’s inaction that speaks volumes – and these promises we’ve heard are inadequate,” the Senator said. Sen. Hatch pulled no punches in saying that he will view any attempt to move the KORUS FTA without action on Colombia and Panama in a very negative light. (continue reading…)

President Obama released his 2011 Trade Agenda on Tuesday. It seems a bit more forward in promising action on trade than in previous years, which is good. America has effectively been in a time-out on trade for the last four years, and our industrial competitors around the world have been using that to their distinct advantage. The European Union, Korea, Canada, Australia and other nations have been in a flurry of bilateral and regional trade agreement negotiations that will provide their exports with preferential treatment at the expense of our own.

The President’s 2011 agenda sets forth a number of highly laudable goals, including passage of the U.S.-Korea Free Trade Agreement (FTA), continued support for the National Export Initiative (NEI) goal of doubling U.S. exports in five years, concluding a balanced and ambitious agreement to the World Trade Organization (WTO) Doha Round, finishing negotiations on the Trans-Pacific Partnership (TPP), and bringing Russia into the WTO. He also promises engagement with Colombia and Panama to resolve outstanding issues so they can be sent to Congress for approval. President Obama also calls for strong enforcement of our trade laws, strong protection of our intellectual property, commits to continuing America’s core strengths in innovation and competitiveness.

The agenda is certainly one that manufacturers can endorse. Two-thirds of U.S. exports are manufactured goods.

It’s one thing to set goals, and another to deliver them. On the pending FTAs, the National Association of Manufacturers wants all three pending agreements submitted to Congress and acted upon as quickly as possible. Passing the three pending FTAs is the fastest way to aid our national goal of doubling exports. The Korean deal is huge for manufacturers. The strides Colombia has made over the last decade are nothing short of astounding, and the commitments it has already lived up to in addressing labor issues have been exemplary. Panama has met all demands made upon it. There is strong bipartisan support in Congress for all three agreements, and it is quite possible we could celebrate Flag Day by opening three new markets worth $13 billion annually in increased U.S. exports. By the Administration’s math, that’s more than 60,000 new jobs that could be created.

On the WTO Doha Round, the Administration has been correct in refusing to settle for the anemic texts on the table – they do not open high-value markets in advanced developing nations. The NAM is in close alignment with this position. Without significant concessions by Brazil, China, India and others, the Doha Round will result in virtually no new benefits for manufacturing in America. We continue to urge Ambassador Kirk and his team to drive this point home to the recalcitrant negotiators in those nations – if they can make commitments equal with their economic size, the entire world will reap the benefits.

The President’s annual Trade Policy Agenda, like the annual Budget, is a chance for the Administration to put forth its philosophical views on how it plans to engage in market liberalization and economic growth. There is much here that, if it can be delivered – and quickly – would create jobs and increase our domestic economic development. The key question is not what the Administration wants to do, it’s how fast the President is willing to do it.

Mexican President Felipe Calderon is in town this week for a brief visit. Mexico is building toward its Presidential elections in July 2012, and the U.S.-Mexico relationship is always an issue in the election there as well as here. We don’t expect the lingering inability of the Obama Administration to resolve the NAFTA cross-border trucking dispute to be top of President Calderon’s list, but it will be up for discussion.

To recap, briefly: In the North American Free Trade Agreement, the United States signed on to allow cross-border trucking. As long as they meet U.S. safety and driver standards, Mexican and Canadian trucks under NAFTA should be able to cross the U.S. border, drop cargo and return home with cargo. They can’t engage in domestic deliveries. U.S. trucks are supposed to have the same rights. However, while this is in place between U.S. and Canada, implementation has been blocked for years between the U.S. and Mexico. Mexico won a NAFTA dispute settlement years ago, but declined to impose the retaliatory tariffs allowed by that process.

Until two years ago, that is, when Congress ended a pilot program for cross-border trucking and President Obama signed off on it. As a result of this, Mexico imposed retaliatory tariffs on billions of dollars worth of U.S. manufactured and agricultural exports. It has been nearly two years since this happened, and the Obama Administration has only very recently (January 2011) issued a “Concept Document” that lays out a foundation for discussions on re-establishing cross-border trucking. Little more has happened since that document was released, however, other than some “technical discussions.”

The Mexican government has indicated it is discussing the issue in good faith and that their U.S. counterparts are working hard. This is good news. However, the tariffs remain in place, harming American manufacturers who cannot ship their products to one of their largest markets without a massive markup that prices them out of the market. Many of these exporters are small & medium manufacturers – more than 90 percent of U.S. exporters to Mexico are SMMs. And waiting in the wings is a rotation of products on the retaliation list. We haven’t seen that list, but last time it was rotated, it put the bulls-eye on some major U.S. agricultural products, including pork and apples. Our bet is the next time it rotates, it’s going to focus squarely on manufactured goods instead. There’s not a lot of time left before we see this happen. We urge Secretary LaHood and his interagency team to buckle down and finish up their discussions. Tens of thousands of American jobs are at stake.

The European Parliament approved the EU-Korea trade agreement today, with 465 votes in favor, 128 against and 19 abstentions. The agreement will take effect on July 1, 2011, immediately removing the vast majority of Korea’s tariffs on manufactured goods (which average 8 percent) imported from European Union countries. You can read all about it here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=680

This approval is a notable development, because it is the first time that the European Parliament exercised co-decision powers on trade agreements. Prior to the Lisbon Treaty, approval of trade agreements rested entirely within the Council. Now, the European Parliament must approve all trade agreements signed by the EU – putting them much closer to the U.S. model, where Congress must approve our trade agreements. Many speculated that this agreement might face a closer vote for approval in the EU Parliament. Still, 76 percent voted to approve –- a percentage far higher than most agreements receive in the U.S. Congress. The European Parliament obviously knows what manufacturers in America know: Removing foreign trade barriers is a boon for exports, jobs and economic growth.

The majority of the U.S. Congress knows this too, and wants to approve the three pending trade agreements we have with Korea, Colombia and Panama. Of course, before our Congress can approve trade agreements, they need the President to send them up. Our pending agreements have been awaiting Congressional approval since 2007. The President has indicated he will quickly transmit the U.S.-Korea FTA to Congress with an eye toward seeking approval in a matter of weeks – but that leaves Colombia and Panama languishing.

Together, the U.S. International Trade Commission (ITC) estimates the three agreements are worth more than $13 billion in new U.S. exports. The majority of those exports will be manufactured goods. Tens of thousands of American jobs will be created and sustained as a result of these trade agreements. They remove tariff and non-tariff barriers, open markets for our goods, give our manufactured products preferential treatment. The longer we hesitate, the more our competitors win our market share as they approve their own trade agreements. The time to move on trade is now.

U.S. Trade Representative Ron Kirk is testifying before the House Ways & Means Committee on the Obama Administration’s trade agenda this morning. I am sitting in the hearing, and there is good news and bad news.

Good news: We are extremely pleased to hear Ambassador Kirk indicate the timeline for Congressional consideration of the Korea Free Trade Agreement (FTA) is “weeks.” (Ambassador Kirk’s opening statement.) The European Union’s FTA with Korea (to be approved next month) threatens U. S. manufacturing exports to Korea, and swift completion of our agreement is necessary to keep our competitive balance. 

Bad news: No real new thoughts on how to move our languishing agreements with Colombia and Panama.  Amb. Kirk did say the Administration will “immediately intensify our engagement to resolve the outstanding issues with Colombia and Panama so that Congress can consider them this year.”

We did that with Korea on autos, and it resulted in real improvements to that agreement. The National Association of Manufacturers supported the supplemental agreement.

But it took six months, and addressed a real problem of specific market access. With Colombia and Panama, the issues are not specific. In fact, we would argue they aren’t even real issues. We would argue that the enforceable labor provisions included in our agreements as a result of the May 10 2007 bipartisan agreement addressed these concerns.

Efforts have also been made by Colombia and Panama in recent years. Colombia was removed from the International Labor Organization’s watch list this year. In short, this Administration has had two years to provide an actionable list of concerns. As Rep. Sam Johnson (R-TX) has just noted, these agreements were signed in 2007, and it is now 2011.

Chairman Camp (R-MI) has just asked Ambassador Kirk to elucidate the outstanding issues in Colombia, noting the agreement was signed in 2007. “We need to address underlying concerns on labor rights” was the response.

“We need specifics and an action plan, we need benchmarks” responded the Chairman.

We couldn’t agree more. What I am fairly certain about is that our competitors in Europe, Canada, Korea and MERCOSUR have a pretty specific list of manufactured products they’ll be shipping to Colombia and Panama as they take advantage of THEIR trade agreements.

American workers benefit from our nation’s exports. Exports create jobs in American factories. Agreements with Colombia and Panama will lead to billions in increased U. S. exports. We need all 3 agreements. And we need them now. In fact, we needed them in 2007.

It was a busy and very positive day for a forward-looking trade policy in Congress, to be sure. Over in the House, Chairman Dave Camp (R-MI) called a hearing of the full Ways and Means Committee to examine the importance of passing the pending free trade agreements with Colombia, Korea and Panama, and their impact on job creation and economic growth. The National Association of Manufacturers was represented by Roy Paulson, president of safety equipment manufacturer Paulson Manufacturing, based in Temecula, Calif. Paulson exports to more than 80 countries, including the three with pending FTAs, and he was plain, direct and straightforward in telling the Committee that his exports to those nations will increase once their tariffs are removed with passage of the FTAs. (Prepared testimony.)

The same theme was echoed by all the witnesses at the hearing – themes well familiar to anyone who’s spent time reading this blog. The United States, with very low tariff rates, is open to the world. Many of the fastest-growing markets for our exports have high barriers. Trade agreements remove those barriers, drive U.S. exports and create jobs and economic growth here in America. If we chose to sit on the sidelines, as we have for the past four years, our competitors in Europe, Latin America and Asia will seize these markets with trade agreements of their own. Instead of preferential access for our manufactured goods exports, we will be confirmed as the suppliers of  higher priced goods. Market share will dwindle. Instead of increasing production at home for consumption abroad, we’ll be cutting production and losing markets. That’s a recipe for job losses and economic contraction.

As Cong. Peter Roskam (R-IL) noted at the close of the hearing (relying on notes): “The time to say we’re thinking about these agreements is over. The time to act on them and reap the benefits has arrived.” It is, in fact, well overdue, as anyone who exports to Colombia, Korea or Panama knows. We could have had these barriers down in 2007, well ahead of the competing FTAs our competitors are now rushing to complete. The President and Congress need to move quickly on all three agreements in the first half of 2011. The votes are there, as Trade Subcommittee Chairman Kevin Brady (R-TX) noted at the start of the hearing.

Leaving the House, we move to a bipartisan effort on trade in the Senate, where Rob Portman (R-OH) — who was President Bush’s Trade Representative — and Joe Lieberman (I-CT) introduced a bill today that would move all three agreements AND provide President Obama with Trade Promotion Authority (TPA). (Lieberman and Portman issued a joint news release. (continue reading…)