Manufacturers are appalled by European Union (EU) action purporting to be in compliance with a World Trade Organization (WTO) finding that the European subsidies for the launch of Airbus aircraft are illegal and must cease. 

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. (continue reading…)

While overall U.S. exports of goods and services are still on track to double in five years, the Commerce Department trade figures released today show that both manufacturing and services exports have dropped below the 15 percent annual growth path needed to double in five years. 

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. (continue reading…)

The Commerce Department’s data for manufacturer’s shipments and manufactured goods trade for the first three quarters of 2011 show that both exports and imports of manufactured goods outpaced the growth of the domestic market for manufactured goods.

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.

Exports of manufactured goods continued to dominate total U.S. exports in September, per the Commerce Department trade data released today.  Manufactured goods accounted for 80 percent of goods exports and nearly 60 percent of overall exports of goods and services in September.

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.

No, Not China!  Chile!

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.

The NAM has been making the point for some time now that manufactured goods trade with current Free Trade Agreement (FTA) partners is in surplus.  Our manufactured goods trade deficit is with countries that DON’T have FTAs with us.  It is amazing how many people have fallen for the myth that trade agreements are bad for us without bothering to seek the facts.

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.  

This evening the Senate will hold a cloture vote on the Generalized System of Preferences bill and the NAM has been urging all Senators to vote in favor of this bill which moves us another stop closer to passing the job creating free trade agreements with Colombia, South Korea and Panama. The GSP bill passed the house by voice vote on September 7^th and has always enjoyed bipartisan support.

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.

Commerce Department trade data released today show that overall U.S. exports of goods and services in July were up 15 percent over July 2010, still on track for doubling in five years.  However, this was due to a 30 percent increase in exports of industrial supplies and raw materials and a 22 percent increase in agricultural exports.

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.

The Commerce Department, on its excellent website on Free Trade Agreements (FTAs), now lists exports, imports, and trade balances with our FTA partners.  Their FTA trade tables show that, contrary to anti-trade allegations, the United States has a manufactured goods trade surplus with our FTA partners.

The FTA trade tables show both total trade and trade in manufactured goods.  While total trade with FTA partners is in deficit, manufactured goods (shown on page two of the FTA Trade Tables) are in surplus.  Oil imports from NAFTA are the reason why total trade is in deficit – but oil imports don’t affect U.S. jobs negatively.  The United States needs more oil from friendly sources right next door, and NAFTA is our largest supplier of oil.

When anti-trade elements attack FTAs as costing U.S. manufacturing jobs, they are implying that the United States has a large and growing deficit in manufactured goods trade with FTAs.  This alleged deficit implies that imports from FTA partners grew faster than exports, hurting job opportunities.

But that is absolutely false, as the International Trade Administration’s FTA Trade Tables show.  The truth is that when it comes to manufactured goods, the United States has had a trade surplus with FTA partners for several years: $27 billion in 2009, $23 billion in 2010, and $21 billion for the first half of this year – implying a $42 billion annual rate of surplus for 2011.

The data show that manufactured goods exports to FTA partners have been growing faster than imports from them, which makes sense since our trade agreements have cut their trade barriers to us much more than we have cut our trade barriers to them.

The FTA Trade Tables show that we have a manufactured goods surplus with NAFTA so far this year amounting to $4.1 billion – a $8.2 billion annual rate; and a manufactured goods surplus with CAFTA of $2 billion – a $4 billion annual rate. (continue reading…)

The Canada-Colombia free trade agreement went into effect today. Canadian exports are now duty-free in Colombia.  Since the effective duty on manufactured imports into Colombia is 15 percent, that gives Canadian manufacturers an attractive advantage.

This adds further to the imperative of passing and implementing the U.S. – Colombia trade agreement.  Distributors, wholesalers, and retailers in Colombia may be willing to bear a 15 percent disadvantage in importing U.S. goods for a short time; but if they see that time difference persisting, many of them will consider shifting to Canadian suppliers wherever Canadian and American products compete with each other.

Passage of the U.S. – Colombia trade agreement by Congress does not mean the agreement goes into effect the next day.  Some months are needed after passage to ensure that both governments have done what they said they would do, that customs officials have their procedures and systems in place, and that necessary regulations have been published. So every day of legislative delay pushes implementation of the U.S. – Colombian agreement one more day into the future – adding to the risk of losing U.S. business.

Also, every day the pending trade agreements with Colombia, Korea, and Panama languish, American workers lose another $8 million in wages and benefits.  That adds up.  As of the afternoon of August 15, 2011, their cumulative loss was a staggering $12 billion.

Opponents of trade agreements are badly mistaken in thinking they hurt our trade. Over the past three years, American manufacturers have enjoyed a cumulative surplus of over $70 billion with our existing trade agreement partners.  During that same time, however, manufacturers faced a cumulative deficit of $1.3 trillion with countries that have not entered into trade agreements with us.

It is time to open more markets to American goods and services, starting with quick action by Congress to pass the three pending agreements.