Moreover, based on their data through October, that surplus has already reached a record $40 billion.  If that rate continues for November and December, the U.S. manufactured goods trade surplus with FTA partners will be $46 billion in 2011 – double the 2010 surplus of $23.4 billion.

The manufactured goods surplus with NAFTA is running at a $12 billion annual rate, and with CAFTA at a $3 billion annual rate. 

The record with FTA partners is in sharp contrast to U.S. manufactured goods trade with countries that do not have FTAs with us.  Based on January-October data, it looks like U.S. manufactured goods trade with non-FTA partners will register a deficit of close to $500 billion in 2011. 

The facts are clear -  we need more FTAs to let our manufactured goods into more foreign markets – and we need them as fast as we can get them.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

 The general public, unfortunately, seems unaware that the United States is already a very open market, while American manufacturers frequently face much higher barriers trying to sell abroad. So FTAs don’t open our market so much as they open foreign markets. 

How open are we? The Commerce Department trade figures through October 2011 released last week show that so far this year, the average U.S. import duty (tax on imports) on foreign manufactured goods brought to the United States was only 1.6 percent – $23.8 billion of import duties on $1,467.4 billion of imports. 

Moreover, half of those import duties, $12 billion, were assessed on imports of only two sectors that accounted for only seven percent of U.S. imports of manufactured goods – apparel and leather products.

The average import duty for the 93 percent of the rest of U.S. manufactured goods imports was less than one percent – 0.9 percent, to be more precise. Far from being a barrier, that is barely a speed bump. Is the American public aware of this? I think not. In fact, I think it would be eye-opening for pollsters to ask the public just what they would guess our import duties are.

But when American manufacturers try to sell abroad, they encounter significant import barriers. For example, right now, the average import duty manufacturers in America have to pay to sell their products in Colombia (which imports $35 billion of manufactured goods a year) is effectively 15 percent. That’s a real barrier. 

When the U.S.-Colombia FTA goes into effect next year, Colombia’s duties on products made in the U.S. will go to zero. That’s what I call leveling the playing field. Far from opening up our market – which is already wide open in most industries – FTAs open our trading partners’ markets and level the playing field for us so our manufacturers export more and generate more jobs. That’s why we need more of these agreements. 

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

Despite the fact that the WTO found that every single grant of aid to launch Airbus aircraft was a WTO-illegal subsidy, which includes every aircraft model Airbus produces or has produced, the EU proposes to keep granting those subsidies.

An EU spokesman went so far in a press quote as to say that the new Airbus A350 under development is “… outside the (WTO) Airbus case…” 

WTO dispute settlement rulings are not a historical exercise only looking at the past, but are the guidelines for WTO-consistent behavior in the future.  It is unacceptable that the EU would continue to engage in the same WTO-illegal action of the past, even while it grudgingly faces the necessity of compensating the United States for its commercially-harmful past action.

The NAM agrees fully with the USTR that the United States cannot and will not accept anything less than an end to this subsidized financing.  We urge the full and effective pursuit of all avenues in the WTO to bring about this result.

The WTO could not have said more clearly that government subsidies have no place in the commercial aerospace industry.  This must be a market in which there is a level playing field that is fair and open, free of government intervention.

The WTO’s ruling goes beyond the European subsidization.  It is a precedent that all other WTO members must follow.  Other WTO member nations with commercial aircraft production, or that aspire to such production, must follow the rules.  If the EU does not comply, or is not compelled to comply, there is no way others will follow the rules. 

Moreover, the Airbus case is the largest ever adjudicated by the WTO.  If the European Union, as one of the two largest economic entities in the WTO, fails to comply and fails to stop the subsidization that has been found illegal, the message to smaller countries would be crystal clear – they don’t have to comply either.  If this were to happen it would be the end of the WTO and the global rules-based trading system.  

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

Overall exports of goods and services through October were 15.5 percent larger than in January-October 2010. Manufactured goods exports, however, were up by a lesser amount – a 12.7 percent increase over the year earlier period.  While that is still a good growth rate, it is below the path needed to double in five years.

Services exports are also below the 15 percent path, being up 10.6 percent over the year-earlier period, barely into double digit growth. The manufacturing and services export figures are troublesome, as these two sectors account for over 80 percent of overall U.S. exports of goods and services.

The overall export growth rate is being sustained by agricultural exports, up 24 percent, and mineral fuels exports, up 62 percent.  It is doubtful whether the 15 percent overall figure can be sustained into the future unless the growth rates for the huge manufactured goods and services sectors pick up.

Manufactured goods imports through October grew at exactly the same rate as exports – 12.7 percent.  However, since imports are significantly larger than exports, an identical growth rate produces a larger dollar growth figure for imports than for exports.  Year-to-date growth was $382 billion for exports, $339 billion for imports, and $43 billion for the trade deficit.

A slowing pattern is evident in both manufactured exports and imports.  On a seasonally adjusted basis, October manufactured goods exports were $95.3 billion, down 2.9 percent from September, and almost exactly the same dollar amount as in March 2011.

October manufactured goods imports were $131 billion, down one percent from September, and the same dollar amount as in January 2011. The slow growth in economies both at home and in major markets abroad is evident in these figures.

U.S. Free Trade Agreement (FTA) partners continued to be, as they have been for almost four years, the source of a manufactured goods surplus for the United States.  The latest available figures for 2011 indicate that American manufacturers are on track to register a $40 billion surplus in trade with FTA partners this year – in sharp contrast to the deficit with the rest of the world.

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

Manufacturer’s shipments through September stood at $4,008.4 billion, 11.8 percent higher than the comparable figure for 2010.  Separating these data into exports and shipments for the domestic market shows that exports grew 16.3 percent while shipments for the domestic market grew 10.4 percent.  Exports accounted for 31 percent of the growth of manufacturer’s shipments – almost one-third.

Imports of manufactured goods grew 14.9 percent.  While this was less than the growth rate for exports, it was faster than the growth of the domestic market.  Consequently, the import share of the domestic market rose to 29.3 percent, up from 28.5 percent for the comparable period of 2010.

The above data show that international trade continues to increase in importance relative to the domestic market.  The faster growth of exports than imports is encouraging; but since the value of imports is considerably larger than exports, this means that exports will have to grow even more rapidly relative to imports if the manufactured goods trade deficit is to decrease.

As has been the case for four years now, U.S. manufactured goods trade with U.S. Free Trade Agreement (FTA) partners continued to be in surplus.  Through September, that surplus was $34.6 billion according to the Commerce Department.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

Manufactured goods exports in September were $100 billion — 15 percent larger than in September 2010, exactly the growth rate needed to double in five years – the Administration’s export goal.  Manufactured goods imports in September were $140 billion — up 9.5 percent, considerably more slowly than exports. 

But because of the larger size of imports, the slower growth rate of imports generated about the same dollar increase as exports – so the manufactured goods trade deficit for September remained unchanged from a year ago, at $40 billion.

The important sector of capital goods, accounting for over 40 percent of manufactured goods exports, showed a warning flag. September capital goods exports were up 11 percent over the year-earlier period, a significantly slower growth rate than for overall manufactured goods. The slow economic growth of major U.S. customers, particularly in Europe, is holding back demand for machinery and other capital goods. In fact, 19 of the 32 capital goods categories showed export declines in September compared to last month.

On the import side, consumer goods imports registered much lower growth than in earlier periods, with September consumer goods imports up only 3.6 percent over September last year – reflecting the slow growth in U.S. consumer purchases.

The latest Commerce Department data for free trade agreement (FTA) partners shows they continue to be the brightest part of manufactured goods trade. The manufactured goods trade balance with FTA partners so far this year is on track to register a record surplus of $40 billion or more for 2011, compared to the huge deficit with countries that have not opened their markets to U.S. exports through free trade agreements.

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

Of the 25 largest markets for U.S. exports of manufactured goods, so far this year the title of fastest-growing goes to Chile, where U.S. exports of manufactured goods are up 41.9 percent through August, two and a half times as fast as the 16 percent increase in U.S. exports to the world. Exports to Chile have been spurred particularly by a 70 percent increase in exports of construction equipment and a 46 percent increase in exports of motor vehicles.

Hong Kong and Israel are the second and third fastest-growing markets, with U.S. exports of manufactured goods to both economies up more than 30 percent so far this year.

Four of the top ten fastest-growing major markets are free-trade partners: Chile, Israel, Australia, and Mexico. Soon-to-be free trade partner Colombia also made the top 10, with U.S. manufactured goods exports up 18.8 percent.

Where’s China?  Didn’t make the top 10.  With U.S. manufactured goods exports to China up 12.8 percent through August, China ranked 14^th out of the top 25 markets, between #13 United Kingdom and #15 Italy.

In terms of the dollar growth of exports, Canada is in first place, with U.S manufactured goods exports up $21 billion. Mexico is second, with U.S. manufactured goods exports up $20 billion.  China is third, with $5.3 billion growth, followed by Hong Kong, up $5.1 billion and the Netherlands, up $5.0 billion.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

Third Way has just made understanding the facts easier.  They have come out with a terrific “infographic,” titled “Black is the New Red,”  that nails down the point that oil imports drive trade deficits: trade deals don’t.

Third Way’s graphic makes this point in an outstanding and instantly recognizable way. Everyone should look at it.  It reinforces what pro-trade agreement advocates know, and should be a real eye-opener for those who oppose trade deals because they think they are bad for American manufacturing and jobs.

Thanks, Third Way!

Also, it is important to know that the Commerce Department has begun posting the trade statistics with FTAs on their website www.trade.gov/fta .  Click on Trade Tables, at the left of the page.  The lower left hand part of page two of the trade tables shows clearly that we have a manufactured goods trade surplus with our current FTA partners.  As Third way points out, the overall balance with FTA partners is in deficit because of all the oil we get from NAFTA.

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

Earlier today the NAM sent a letter to Senators urging their support:

The NAM views extension of GSP as important to advancing our nation’s manufacturing competitiveness and international leadership. It is also a vital step in the process of advancing the trade policy we believe is necessary to open markets for America’s manufacturers and to create jobs in the United States. The program, which expired on December 31, 2010, helps keep U.S. manufacturers and their suppliers competitive. The vast majority of U.S. imports using GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods in the United States for domestic consumption or for export.

Passage of the GSP bill will allow Congress to move forward with action on Trade Adjustment Assistance and on the free trade agreements once President Obama sends them to Capitol Hill, which we urge him to do as soon as possible.

The longer we wait to pass the agreements the more market share we lose to our competitors overseas. The facts are clear that these agreements will create jobs and provide a much needed boost to our economic recovery. Manufacturers need action now, we can no longer afford to wait.

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

Manufactured goods, by far the largest U.S. export category, lagged behind, up 11 percent over July 2010.  Services exports also lagged, up 10 percent over last July.  Both of these vital categories of U.S. export have fallen below the 15 percent annual rate of growth path necessary for doubling in five years.

Capital goods exports, which comprise nearly half of manufactured goods exports, rose only 9 percent over last July. 

The slowing rates of growth for these important exports indicate that renewed attention is needed to spur U.S. export growth.  Importantly, greater access to foreign markets is needed, beginning with the need to pass and implement the three pending bilateral trade agreements with Colombia, Korea, and Panama.

The importance of bilateral agreements is evident in the Commerce Department’s figures www.trade.gov/fta  that show a large and rising U.S. trade surplus in manufactured goods.  That surplus has cumulated to over $20 billion for the first half of this year.

That surplus contrasts with the large manufactured goods deficit with the rest of the world.  For the first seven months of this year, the total manufactured goods deficit was $255 billion, up from $214 billion for the comparable period of 2010.

The U.S. deficit in petroleum and products was $194 billion for the first seven months of the year, compared to $157 for the first seven months of 2010.  This figure continues to underscores the urgency of taking additional steps to develop additional domestic sources of energy. 

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