As the San Francisco Giants walked onto the field at Kauffman Stadium in Kansas City last night, they knew it had been 35 years since a team had won game seven of the World Series on the road. Yet, the Giant players were confident that their chances of winning were based on their performance and talents – not because the umpires on the field were biased toward the home team and provided special advantages to or favor the home team. (continue reading…)
As the United States and EU meet this week in Brussels to continue the Transatlantic Trade and Partnership (T-TIP) talks, U.S. and EU officials are not engaged in any formal discussion on the biggest economic driver of the transatlantic partnership – cross-border investment. Cross-border investment tops $4 trillion between the United States and the EU, making it the largest investment partnership in the world.
The EU had asked to put T-TIP investment talks on hold while it reviews the input it had requested and received from its investment public consultation, which closed on July 13.
On July 7, the NAM submitted detailed comments regarding the investment provisions in the T-TIP, Investment emphasizing that:
- Investment is a critical driver of economic growth and jobs in both the United States and EU, and in third countries around the world.
- The United States and EU have an important opportunity to set high standards for the protection of property and investment through the T-TIP that reflect our own core principles and help influence investment instruments being negotiated around the world.
- The investment treaties and experience of EU member states and the United States has been highly positive, reinforcing basic rule of law standards with our international partners.
- While a lot of critiques have been made, the facts are very clear. U.S. and EU investment instruments are not a threat to good government; in fact, they promote it and promote growth and jobs as well.
The United States and EU members states have long negotiated provisions recognizing core principles of their own legal systems – the protection of private property, fairness, non-discrimination and an independent and neutral venue for the resolution of disputes. The NAM and many organizations representing businesses that create millions of jobs on both sides of the Atlantic are strongly urging the EU and the United States to include high-standard investment access and protections, backed up by investor-state dispute settlement, in the final T-TIP.
While the U.S.-EU investment relationship is vibrant, that relationship will benefit from common rules and disciplines, similar to the way that the extensive trade in goods and services will also benefit from trade-agreement provisions. Including a strong investment chapter will create greater confidence and opportunities between the United States and EU, and also set an important example of the type of standards that the EU and its stakeholders hope to achieve with major economies around the world.
As negotiators begin planning the next T-TIP round, the NAM is expecting investment to be back on the table so that the United States and EU can realize the ambitious T-TIP that they began just a year ago.
Today, the Senate Committee on Foreign Relations held a hearing on ‘Russia and Developments in Ukraine.’ During the hearing, Senators from both sides of the aisle expressed concern over the escalating situation in Ukraine. Manufacturers agree, and we remain deeply concerned over the ongoing tensions between Russia and Ukraine. We continue to support the Administration’s efforts to pursue multilateral approaches that will effectively resolve this crisis. Just as in the international economic arena, countries must abide by and not flout longstanding and widely agreed international norms.
The NAM disagrees strongly, however, with those that propose that the United States go it alone and impose unilateral economic sanctions that would cut off U.S. commercial engagement with industry sectors in Russia. As recognized by Assistant Secretary of State Victoria Nuland and Assistant Secretary of the Treasury Daniel Glaser and Senators from both sides of the aisle at today’s hearing, unilateral sanctions are far less effective because foreign companies can quickly backfill. As a result unilateral sanctions result in highly negative costs to American industry and the American economy.
Time and again, U.S. unilateral economic sanctions have been shown to impose little, if any, cost on the targeted country, while disproportionately harming U.S. industry and workers. These negative commercial effects usually continue for years, if not decades. For these reasons, the NAM has long opposed unilateral sanctions and continues to do so today. While some Senators talked about the urgency of action, action that does not increase stability in the region or promote a resolution of this conflict is not action worth taking.
As the United States continues its work, we all must also recognize that our international partners have an obligation to step up and work jointly with the United States to develop the type of multilateral approach that will be effective. The longstanding bipartisan and business consensus for multilateral approaches calibrated to resolve this crisis must remain strong.
The NAM is deeply concerned about the rising tensions between Russia and Ukraine and supports the Administration’s efforts to pursue multilateral approaches that will effectively resolve this growing crisis. Just as in the international economic arena, countries must abide by and not flout longstanding and widely agreed international norms.
At the same time, the NAM remains concerned that we continue to hear active discussions that the United States may go it alone and impose unilateral sanctions that would cut off U.S. commercial engagement with industry sectors in Russia.
Unilateral sanctions have been tried before and have proven far less effective than other approaches. When the United States imposes unilateral economic sanctions, foreign industries quickly move in to fill the void in the wake of disengagement by U.S. industry. As a result, the pain imposed by such sanctions is much less, if at all, on the targeted country, but falls disproportionately on U.S. industry and workers. These effects usually continue for years, if not decades. For these reasons, the NAM has long opposed unilateral sanctions and continues to do so today.
In light of these concerns, the NAM has joined with the U.S. Chamber of Commerce in full-page ads that began running today in major newspapers stating our position.
In emphasizing these longstanding concerns, it is important for all to bear in mind that a U.S.-only approach is unlikely to increase security in the region or be effective in resolving this conflict. Our international partners have an obligation to step up and work jointly with the United States to develop the type of effective and multilateral approach that is required. We believe that longstanding bipartisan and business consensus for multilateral approaches calibrated to resolve this crisis remains strong.
To view the NAM and Chamber ads, click here.
Manufacturers in the United States are most successful when our trading partners play by the same basic trade rules, including treating our products on an equal basis and not providing their own industries with special advantages that tilt the playing field. While most countries have agreed to a basic set of trade rules, stronger rules as well as full enforcement of the rules already on the books are essential to ensuring the global competitiveness of manufacturers in the United States.
The basic rules of trade are found in three main sources:
- Agreements covering market access, trade barriers, intellectual property and other issues to which 159 countries have agreed as part of the World Trade Organization.
- Stronger and more detailed provisions that level the playing field for America’s manufacturers are found in our bilateral and plurilateral free trade agreements.
- U.S. laws and regulations that can be used to address unfair actions overseas, including trade remedy rules, safeguard rules, and intellectual property rules.
Effective enforcement of both international commitments and our domestic laws and regulations is critical to manufacturers big and small.
On the international side, the United States has worked to resolve a variety of disputes through negotiations and formal dispute settlement largely through the WTO. Victories in cases such as rare earths and raw materials are important for the global competitiveness of our manufacturers. Still, more attention is needed on addressing other governments’ failure to implement their trade commitments fully, including concerns that South Korea continues to erect barriers in several sectors that are not consistent with its own FTA obligations.
Similarly, the United States should uphold its end of its international agreements and remedy issues such as country-of-origin-labeling (COOL) that continue to put U.S. manufactured exports at risk of retaliatory duties.
Domestically, the NAM continues to be a strong supporter of the full and fair enforcement of our trade remedy laws that help manufacturers address government-subsidized and other unfair competition. These rules too are an essential part of a robust pro-growth and pro-manufacturing trade policy. It is vital that both the Commerce Department and U.S. International Trade Commission exercise their authority to counteract unfair practices overseas. Full, effective, timely and consistent enforcement by the U.S. government of these globally recognized rules is essential to ensure manufacturers can get a fair shake in the global economy.
These rules must also be enforced fully at our border, as Milton Magnus, M&B Metal Products Company testified today. His company, a 70-year old family-run business based in Leeds, Alabama, is the only full-line hanger manufacturer left in this country. M&B successfully employed U.S. trade remedy rules to secure orders to redress unfair trade practices from China, but has not seen the successful resolution of that issue as a result of the failure of Customs and Border Protection (CBP) to enforce trade remedy orders effectively. The Senate Customs reauthorization bill has an important fix to this problem and manufacturers continue to urge Congress to move forward on this important issue if CBP continues to refuse to fix it.
Growing Manufacturers’ Opportunities in the Asia Pacific: Boosting U.S. Opportunities in South Korea Requires Concrete Action
With President Obama visiting Seoul, South Korea, today, manufacturers’ minds turn readily to the two-year old Korea-United States Free Trade Agreement (KORUS FTA). With the 15th largest economy in the world and a $1.1 trillion economy of 49 million people, South Korea represents a growing market for U.S. manufactured goods. Overall, U.S. manufactured exports to South Korea reached $35.4 billion in 2013, the largest level ever, making South Korea the 10th largest global purchaser of U.S. manufactured goods.
The KORUS FTA lays out strong requirements for South Korea to open its market, eliminating tariff and non-tariff barriers and setting in place strong rules on issues from intellectual property to transparency and investment. Each of these commitments is backed up by binding dispute settlement provisions that ensure that commitments will be achieved. Given the strong market-opening provisions, high standards and strong enforcement mechanisms, it is an agreement that manufacturers strongly supported and the NAM worked hard for its approval by Congress.
During the last two years, many tariffs have been eliminated and barriers removed, helping to spur opportunities, new exports and new sales, promoting growth in manufacturing exports to Korea.
Reports from manufacturers across a broad range of industries indicate, however, that more work is needed to fully implement the KORUS FTA to ensure that key barriers to trade in a number of sectors are fully addressed and that new barriers being imposed are rescinded. The range of issues and sectors affected include:
- a range of new and modified non-tariff barriers on auto imports that are preventing the promised opening to Korea’s market;
- excessive verification requirements that are denying U.S. manufacturers access to the KORUS FTA tariff benefits;
- the imposition of non-scientific noise standards on motorcycles that limit the use of large motorcycles on Korean highways;
- lack of full implementation of transparency and due process provisions for pharmaceutical and medical devices, including but not limited to not appropriately rewarding innovation as set out in the agreement; and
- limits on cross-border data flows.
Many of these issues been raised by U.S. government and industry extensively and while some issues have been resolved, these remain outstanding and in some cases are getting worse.
Unlike barriers that manufacturers face in non-free trade agreement (FTA) countries, however, South Korea has committed to high standards of market-opening backed up by binding enforcement mechanisms. That is the strong value that FTAs provide in helping manufacturers secure a more level playing field in foreign markets.
South Korea’s desire to join the Trans-Pacific Partnership (TPP) talks adds new focus to its implementation of the KORUS FTA. It will be highly valuable for Korea to reaffirm concretely that these types of trade agreements represent more than words on a piece of paper.
Manufacturers appreciate the detailed discussions on the problematic issues in the U.S.-South Korea trading partnership, but urge that actions follow quickly and fully to address these issues effectively in the coming days and weeks so that the promised benefits of the KORUS FTA can be fully realized.
Over the last days and weeks, critics of the Export Import Bank (Ex-Im) have talked about lots of issues and attempted to smear lots of mud. Yet, they continue to ignore the crux of the Ex-Im issue: American jobs and American manufacturing competitiveness.
While critics may enjoy debates inside isolated ivory towers, our nation’s manufacturers have no such luxury. Manufacturers big and small, in communities across the country, face a highly competitive global economy every single day. Every sale made can mean jobs that are saved or new jobs are created. When they lose out to foreign competitors for sales, our nation’s manufacturers are faced with tough choices as they struggle to make payroll and keep their business on track.
Critics of Ex-Im’s reauthorization seem to ignore a basic fact of the global economy when complaining about sales of airplanes to foreign airlines or sales of capital equipment to foreign mining projects. The fact is that other countries are building up their infrastructure and striving to meet growing domestic demand for energy, transportation, water, crops and telecommunications. These projects are moving forward regardless of what the U.S. Congress does or doesn’t do on Ex-Im Bank reauthorization. The issue that Ex-Im reauthorization presents is whether those foreign projects will use products made in the United States by American workers or whether those sales will go to our competitors in Asia, Europe or elsewhere.
Outside the United States, at least 59 foreign export credit agencies (ECA) are working intensively to give our foreign competitors a leg up in sales in fast-growing overseas markets. Those ECAs do not hesitate to support all types of projects, with far less rigor than Ex-Im already places on the sales for which it provides financing, insurance, loan guarantees and other services.
The United States has led efforts to impose important disciplines on ECAs, particularly those for member countries of the Organization for Economic Cooperation and Development (OECD). In 2011, the United States negotiated a new Aircraft Sector Understanding to bring official ECA financing rates more in line with commercial rates, taking away incentives for credit-worthy airlines to use ECA financing. That new agreement went into effect in 2013, and we’ve seen the commercial markets respond by picking up more financing for aircraft. But U.S. leverage has waned as critics seek to have the United States unilaterally disarm its own Ex-Im activities.
While the critics focus on a few large companies that use Ex-Im services (which not only support jobs in their own companies but also in thousands of small and medium-sized companies throughout their supply chains), they ignore the nearly 90 percent of Ex-Im transactions in FY2013 – some 3,413 transactions – that directly supported small businesses. As the NAM’s new Exporters for Ex-Im blog post series will highlight in the days and weeks to come, small and medium-sized businesses make up the lion’s share of Ex-Im’s activities. Ex-Im’s support of dynamic small business exporters like Wallquest has helped small businesses enter and expand export sales – thereby growing not only their manufacturing production, but the number of their employees.
At a time when the global economy is starting to show some growth, and we know our global competitors are seeking to win every sale, the question for lawmakers voting on Ex-Im reauthorization this year is actually quite simple: Do you want foreign purchasers to buy products manufactured in the United States with U.S. workers? If so, support Ex-Im reauthorization. Manufacturers do.
This week, the NAM’s President and CEO Jay Timmons and I are in Brussels, Belgium and Berlin, Germany to advance manufacturing priorities in the Transatlantic Trade and Investment Partnership (T-TIP) negotiations and to strengthen U.S.-European trade and investment ties.
Our first meeting on April 2 was with Member of the European Parliament Robert Sturdy, vice chair of the European Union (EU) Parliament’s International Trade Committee. We discussed ways to strengthen our collaboration in advocating for an ambitious, high-standard, comprehensive T-TIP agreement. Jay and I also discussed critical trade issues with U.S. Ambassador to the EU, Anthony Gardner, and EU Trade Commissioner Karel DeGucht. We also discussed manufacturers’ T-TIP priorities and opportunities to strengthen our partnership with Business Europe and other leading business organizations and manufacturers. In Berlin, we’ll be meeting with a range of government and business leaders as well as U.S. Ambassador to Germany John Emerson.
Throughout this trip we have been advocating for a T‑TIP agreement that will significantly expand trade and investment between the United States and the EU and address global issues of common concern. A comprehensive T-TIP would strengthen both our economies, which account for nearly half of global output of goods and services and 30 percent of global trade.
Jay has been emphasizing the importance of an agreement that further opens the transatlantic market, protects innovation and eliminates unnecessary barriers. He has also been identifying key priorities for manufacturers from regulatory coherence and transparency, to tariff elimination, intellectual property and investment protections and data flows, as well as highlighting opportunities for the EU and United States to work together to address common trade and investment challenges in markets around the world.
Next week, we head to Hannover, Germany, where Jay will speak at Hannover Messe 2014, the world’s largest industrial trade fair. In Hannover we will also meet with key policymakers and industry leaders to discuss the challenges and opportunities facing manufacturers on both sides of the Atlantic, including advanced manufacturing, export models and skills training.
Jay will continue strongly voicing the high priority that manufacturers place on expanding international trade and investment ties with the EU and U.S. government leaders, leading European business associations and NAM member companies that are key to shaping the T-TIP negotiations.
This week, the Obama Administration released its annual Trade Policy Agenda that highlighted the importance of trade and investment in promoting economic growth in the United States. This year’s report focused substantial attention on the Administration’s efforts to “open markets for U.S. exports and ensure a level playing field for U.S. producers and workers to compete,” including through seeking new Trade Promotion Authority legislation and negotiating substantial market-opening agreements in the Asia Pacific and with Europe that have the potential to eliminate major barriers to U.S. exports and set in place strong standards of key issues from intellectual property to investment and transparency. Manufacturers’ welcome these initiatives and are working with the Administration to secure successful outcomes that will grow manufacturers’ opportunities around the globe.
Missing from this extensive report on 2014 priorities and 2013 activities, however, is any focus on a growing area of American export strength – the export of our energy resources including coal and liquefied natural gas (LNG). America’s energy renaissance has changed the equation for manufacturers big and small, providing greater access to our nation’s manufacturers to affordable energy supplies. America’s abundance of energy resources is also an important export opportunity – but for the fact that the United States is putting its own restrictions on energy exports through slow approval and permitting processes that are limiting U.S. exports of LNG and coal. Those restrictions are out of line with America’s economic interests and, as detailed in a recent NAM-commissioned report by former WTO Appellate Body Chairman James Bacchus, out of line with the United States’ own international obligations in the World Trade Organization (WTO).
From the Constitutional ban on export taxes to the President’s 2014 Trade Policy Agenda, the value of exports to America is clear. Exports of energy and other goods support American jobs and economic growth. In the case of energy, exports also play a vital role in promoting broader global goals. Manufacturers continue to urge the Administration to stand up for exports – all exports including those from our energy sector – to advance America’s economic and broader interests.
Manufacturers are pleased to see legislation introduced this Congress that would expedite processing of our LNG exports. Such legislation would put America’s actions in line with its international obligations and advance America’s exports and economic interests.
2013 Trade Numbers Tell Only Part of the Story: Why America Needs to Care about Trade and Trade Promotion Authority
Today, is a day on which we usually focus on numbers – in particular, the full country- and product-specific data on U.S. trade flows for all of 2013 released by the U.S. Department of Commerce’s Bureau of Economic Analysis. While relevant, these data tell just a sliver of the real story.
Today’s trade numbers show a modest overall increase in U.S. exports of manufactured goods as explained by NAM’s Chief Economist Chad Moutray. Yet, these numbers set a new high in manufactured goods exports – over $1.38 trillion which is important for manufacturers and the nearly 300,000 small and medium sized firms that count themselves as U.S. exporters. Notably, U.S. manufactured exports have more than doubled since 2002, the last time that Trade Promotion Authority (TPA) was enacted.
Today’s trade numbers also show that the biggest market for our manufactured goods exports are those 20 countries where barriers are lowest and where the basic rules of fairness and property protection apply – the 20 countries with which the United States has in place free trade agreements (FTA) Consider that 47.5 percent of all U.S. manufactured exports in 2013 – $656 billion in goods made in America — were sold to just those 20 countries in 2013, while those countries represent a mere six percent of world population and less than 10 percent of the world economy.
All too often criticized in the blogosphere , U.S. trade agreements have been highly successful in expanding markets for exports of manufactured goods that in turn helps sustain and grow manufacturing and manufacturing jobs throughout our 50 states. Notably, the United States has an overall manufacturing trade surplus with our 20 FTA partners.
While posts abound about what is wrong with trade, the fundamental fact is manufacturers need a much more robust trade policy to sustain and grow their business and jobs here in the United States. Manufacturers face steep competition from private and state-owned firms overseas, where pennies may determine whether U.S. goods win or lose a sale. Except for our FTA partners, most other countries have done the least they can to open up their markets and eliminate the tariffs, non-tariff barriers and other forms of discriminatory and unfair treatment that undermines U.S. competitiveness globally. On the other hand, the United States has one of the most open markets in the world. We need other countries to follow our lead.
But trade is about a lot more than numbers. Consider the stories of small and medium manufacturers across our nation. Sandra Westlund-Deenihan, CEO and Design Engineer of Quality Float Works, Inc. in Schaumberg, Ill., told her story in January’s Member Focus cover story, explaining how her 24-person company was able to quadruple sales overseas in the past 10 years, with major markets including in key U.S.-free trade agreement countries as Australia, Canada, Mexico, Oman and Singapore. Sandra explained: “Where’s there’s a level playing field abroad, we are winning sales and supporting jobs here at home.
In Baltimore, Maryland, Marlin Steel President Drew Greenblatt recently penned an op-ed in the Baltimore Sun on the power of trade and Trade Promotion Authority to grow manufacturing in the United States. Drew explained to me that “Marlin Steel is using American steel and fabricating wire racks, material handling baskets and other products to sell to more than 36 countries around the world, generating more than 20 percent of Marlin Steel’s total sales. We need more prospects so we can grow revenue and grow jobs.” The packages of material handling racks below are destined to leave the Port of Baltimore for Colombia, another FTA partner, where Marlin’s sales have increased substantially since the U.S-Colombia FTA entered into force.
But America’s hands have been tied by the failure of Congress and the Administration to enact new Trade Promotion Authority legislation that will enable both branches of government to do their part, to work together and to advance a growth agenda for the United States through strong new trade agreements. Trade Promotion Authority legislation, particularly the recently introduced Bipartisan Congressional Trade Priorities Act of 2014 lays out key negotiating objectives for the United States and sets forth a process for Congress and the Administration to work together to get and implement the best possible trade deals for the United States
Growing manufacturing requires the United States to tear down barriers overseas, to set in place basic rules of fairness and openness, all subject to strong enforcement. That is precisely what U.S. trade agreements do and why manufacturers are leading the fight here in Washington to ensure that America can again lead on trade through Trade Promotion Authority and new trade agreements in the Asia Pacific and with Europe that will create opportunities to grow manufacturing and grow jobs throughout the United States.