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NAM’s President and CEO Jay Timmons Voices Manufacturers’ Priorities in Europe

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.

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Manufacturers Urge Administration to Include Energy Exports in 2014 Trade Agenda

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.

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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.Floatwork

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.

GreenblattIn 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.

 

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Standing Up for America’s Constitutional Ideals — and Jobs — in a Global Economy

This post was co-authored by NAM Senior Vice President and General Counsel Linda Kelly and NAM Vice President of International Economic Affairs Linda Dempsey.

Manufacturers are on the front lines of a highly competitive global economy.  Manufacturers large and small in all sectors of the economy are seeking to access new markets and customers overseas to sustain and grow manufacturing here at home.  Yet, each of our manufacturers faces a myriad of challenges in foreign markets, from tariffs and non-tariff barriers to discriminatory and unfair foreign government treatment overseas that protects home country industries to the detriment of manufacturers and workers here in the United States.

For decades, the United States has shown international leadership in promoting the rule of law, due process and fairness by pursuing trade and investment agreements to create a level playing field – to open markets, eliminate barriers and limit the ability of foreign governments to hinder America’s access and success overseas.  These agreements are the strongest tools that the United States has to level the playing field and limit the barriers and unfair actions by other governments. The success of these agreements is shown in the simple fact that when markets are open, manufacturers in the United States succeed:  In 2012, nearly half of U.S. manufactured good exports were sold to our 20 Free Trade Agreement partners, even though those countries represent merely six percent of world population and less than 10 percent of the world economy.

The principles on which our free trade agreements (FTAs) and bilateral investment treaties (BITs) are based are ones that all Americans know well:

  • Non-discrimination or equal protection under the law
  • Due process
  • Recognition of private property rights through compensation for government takings
  • Fair treatment by the government.

These basic principles are set forth in the U.S. Constitution and landmark pieces of U.S. law, starting with the Administrative Procedure Act. So when the United States enters into reciprocal agreements with other countries in which it insists on inclusion of these core rights, it is helping to export the time-tested values and principles on which our country is based.

Unfortunately, some in the United States would seek to erode the U.S. commitment to these rights in our trade agreements.  One highly concerning example arose this week in a letter issued from the National Association of Attorneys General urging that U.S. trade agreements should start including product exceptions from basic rules seeking to limit discriminatory and unfair government action. The argument starts with a product about which it is easy for critics to raise concern –tobacco. This product, they and others argue, should be treated differently in trade agreements, despite the fact that it is not in fact treated differently in U.S. law. The United States has robust limits on tobacco use, advertising and access, but, in fact, has never prevented the core rules of our Constitution or legal system from being applied to that product or any other.

Seeking such a product or public welfare exception in our trade agreement will not limit anyone from challenging U.S. rules in these areas.  The only major consequence will be to give fodder to foreign governments that want to restrict access of U.S. manufactured goods under the guise of some public welfare objective, be it food or pharmaceutical products to high-tech or environmental goods.

At a time when America is seeking to grow jobs and move its economy in high gear, manufacturers need to see new trade and investment agreements that will aggressively and fully tear down barriers, not create a roadmap for other countries to continue to discriminate and treat our producers unfairly.  In short, if we are interested in sustaining and growing manufacturing in United States and being globally competitive, we need to export our basic principles, not lead the charge to undermine them.

 

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Manufacturers Welcome President’s Comments on TPA and Market-opening Trade Agreements

Manufacturers welcome the President’s commitment to seek passage of Trade Promotion Authority and move forward on market-opening trade agreements in the Asia Pacific and with Europe.

For manufacturers, opening new markets overseas is critical. The NAM is working on both sides of Capitol Hill with both Democrats and Republicans to advance a robust trade agenda that will tear down barriers for U.S.-manufactured exports. For too many years, the United States has sat on the sidelines as other countries negotiated trade deals that put our manufacturers at an increasing competitive disadvantage.

We look forward to working with the administration on passage of the Bipartisan Congressional Trade Priorities Act, introduced earlier this month by Ways and Means Chairman Camp, Finance Chairman Baucus and Ranking Member Hatch, which sets forth strong negotiating objectives and the much-needed framework to put the United States in a strong negotiating position for market-opening trade agreements.

The NAM will continue to make the case for robust trade policies and agreements here in Washington and around the country, emphasizing the importance of the elimination of unfair barriers overseas and strong rules on intellectual property, investment, fair competition and other commercial outcomes in new agreements.

Manufacturers also need access to competitive export financing to take advantage of new market opportunities, and the NAM will continue to advocate for a strong U.S. Export-Import Bank that can back exporters when needed. Ex-Im Bank is the only tool American manufacturers have to counter the approximately $1 trillion in export financing that other governments provide their exporters, and Ex-Im Bank helps to level the playing field for exporters to compete on the basis of quality and price rather than on financing terms. The NAM is also working to enhance the competitiveness of manufacturers in the United States through global and national initiatives to cut cross-border transaction costs and address regulatory hurdles abroad.

 

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NAFTA’s Boost to Manufacturing – 20 Years in the Making

Expanded manufacturing. Increased exports. Improved competitiveness, integration and partnership. That is the NAFTA story for U.S. manufacturers.

January 1, 2014 marks the 20-year anniversary of the North American Free Trade Agreement’s (NAFTA) implementation and there is strong evidence of the pact’s positive impact on manufacturing in the United States. Since 1993, value-added manufacturing in the United States has expanded from $1.06 trillion to $1.87 trillion in 2012. The increased exports, improved competitiveness and greater industry integration helped contribute to this 76 percent expansion in manufacturing output.

As U.S. manufactured exports more than doubled since 1993, the largest growth market for our manufactured exports has been our two NAFTA partners – Canada and Mexico, which purchase more from the United States than any other country. U.S. manufactured goods to Canada and Mexico more than tripled since 1993, growing some $173 billion through 2012 and accounting for over 18 percent of the total growth in U.S. manufactured exports over that period.

NAFTA Graph 01 01 14NAFTA’s impact on U.S. competitiveness in an increasingly challenging global economy has also been powerful. NAFTA has promoted greater integration, new partnerships and improved connectivity between our economies. U.S. cross-border investment grew five-fold to $453 billion in 2012, while Canadian and Mexican investment into the United States increased nearly six-fold, expanding to $240 billion. Underneath this investment are cross-border supply and production chains that are improving North American competitiveness, innovation and efficiency.  Notably, the Wilson Center estimates that some 40 percent of the content of U.S. imports from Mexico and 25 percent of the content of U.S. imports from Canada represents U.S. value-added manufacturing, meaning that imports from our neighboring countries actually support U.S. manufacturing jobs.

As we all take stock of NAFTA at 20, manufacturers are also looking forward. We are working with government officials in all three countries to expand efforts to reduce regulatory barriers and improve trade flows and cross-border mobility. All three countries are also back at the negotiating table as part of the Trans-Pacific Partnership (TPP) negotiations, which provide an important opportunity to improve the rules that govern trade between our countries.  And finally, manufacturers are working diligently to support Trade Promotion Authority so that new agreements that eliminate barriers and put in place even stronger rules can be completed and help level the playing field for America’s manufacturers.

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TPP Talks Go into 2014; Manufacturers Continue to Urge Ambition and a Level Playing Field

Trade Ministers from the twelve Trans-Pacific Partnership (TPP) countries announced today their renewed commitment to an “ambitious, high standard and comprehensive” TPP agreement with continuing negotiations into 2014, as they closed the TPP Ministerial meeting in Singapore.  Manufacturers are encouraged that the TPP Ministers‘ will continue negotiating and keep their focus on achieving outcomes that will spur economic and jobs growth, rather than close a less than ambitious deal.

As manufacturers pointed out most recently in our Trading Up blog post series, the TPP presents an unprecedented opportunity to open large new markets to U.S. manufactured goods and set strong rules that will enhance the competitiveness of our nation’s manufacturers. To reach that potential, the TPP must be done right and achieve major new market access through the elimination of tariff and non-tariff barriers, and set in place high-standard rules on intellectual property, enforcement, investment, trade facilitation rules, data flows and other key issues. Manufacturers look forward to working with U.S. negotiators in achieving those objectives so that a final TPP will create economically meaningful new opportunities for America’s manufacturers with the 800 million consumers that are part of the $28 trillion TPP market.

Manufacturers are also working intensively to support legislative movement on the Executive-congressional partnership known as Trade Promotion Authority that is vital to America’s success in advancing a robust trade agenda that will eliminate barriers overseas.  NAM’s Board recently approved a unanimous resolution highlighting the importance of and our commitment to this fundamental tool in U.S. trade policy and manufacturers are working with the Administration and the Hill on this top priority.

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A Trade Facilitation Win for Manufacturers and the WTO

Just hours ago in Bali, Indonesia, trade ministers from across the globe approved on a package of multilateral trade agreements. In the final hours of the Ninth Ministerial Conference of the World Trade Organization (WTO), negotiators found consensus on customs, agricultural and development issues. Linda Dempsey, NAM’s Vice President of International Economic Affairs, applauded the strong and binding trade facilitation agreement while underscoring manufacturers’ frustration with an open-ended “peace clause” for agricultural subsidies and the WTO’s failure to secure expansion of the Information Technology Agreement (ITA).  The dedication and persistence of U.S. Trade Representative Michael Froman, Deputy U.S. Trade Representative Michael Punke and WTO Director-General Roberto Azevêdo were critical to this outcome.

Predictable, efficient and transparent customs procedures will help manufacturers in the United States access more effectively and efficiently the 95 percent of global customers that live outside our borders. Director-General Azevêdo reminded delegates that removing barriers to trade and cutting red tape in half, as part of a multilateral Trade Facilitation Agreement, could stimulate the world economy by more than $1 trillion. With support for capacity building in development and least-developed countries, this agreement is likely to have significant and far-reaching economic benefits.

The agreement approved today includes many of the provisions that the NAM has supported, including increased transparency and accountability in global customs rules and regulations—with requirements for advance rulings and appeal procedures—that will greatly facilitate trade around the world. Further, the agreement highlights the value of pre-arrival customs processing, risk-management systems, trusted trader programs and single window document submissions. Separating the release of goods from final determination of customs duties, taxes and fees will also streamline trade flows.

Manufacturers had also been advocating, though, for the first significant expansion of the ITA since it came into effect in 1996. The current ITA has helped generate significant economic benefits, but a significant expansion would bring the agreement into the 21st century and boost high-tech trade.  Manufacturers are urging that all countries come back to the table to get this important deal done.

Further, manufacturers are disappointed by the “Peace Clause” outcome that further extends exceptions to the binding nature of existing WTO rules, without addressing effectively the underlying food security issues. Manufacturers want to see strong negotiations move forward that recognize, as the Asia Pacific Economic Cooperation forum has, that market-based outcomes and trade liberalization are best able to promote food security worldwide.

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New Momentum for Those Who Seek Fair and Enforceable Rules for Investment Overseas

In announcing the conclusion of the Korea-Australian Free Trade agreement today, Australia also indicated that both countries agreed to include investor-state dispute settlement provisions that would promote “investor confidence and certainty in both countries.”  While the text of the agreement is not yet available, this announcement is a major step forward for manufacturers and other businesses, policymakers and all that seek strong enforcement of international obligations and outcomes that promote basic rules of fairness and economic growth.

Today’s move is highly noteworthy because it is the first time in recent years that Australia has included investor-state dispute settlements in an agreement, although it is not really surprising given Australia’s long history in support of such rules and strong enforcement.  Since at least its investment treaty with Vietnam was concluded in 1991, Australia had long included broad investor-state coverage in its treaties and trade agreements.  Indeed, Australia has accorded investor-state rights not just to Vietnam, but to an additional six countries that are currently part of the Trans-Pacific Partnership (TPP) negotiations: Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

Australia’s rejection of this basic enforcement provision in the U.S-Australia Free Trade Agreement and by the former Gillard government more broadly over the last several years was, we hope, a disappointing anomaly for a country that has long been respected for its leadership role in international trade and its strong embrace of binding and enforceable rules.

With today’s announcement, manufacturers see new momentum to achieve strong outcomes on investment and investor-state in the TPP negotiations.  As noted in NAM’s Trading Up TPP blog post series here, manufacturers are seeking strong and comprehensive outcomes across the board, based on the Obama Administration’s 2012 Model Bilateral Investment Treaty (BIT) text. The application of investor-state to all sectors and for breaches of concession and other investment contracts and authorizations, as well as for the core investment chapter provisions, is absolutely critical to ensure that manufacturers’ investments overseas promote new export opportunities and support substantial research and development and capital investment here in the United States.

Manufacturers seek major progress in the TPP talks next week and will be watching closely for pro-growth outcomes on investment, as well as the other core provisions such as concrete new market access that are priorities for growing manufacturing here in the United States.

 

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India takes the low road, dragging down the WTO and the developing world with it

The Economist appropriately dubbed it “The Indian Problem” to explain why the World Trade Organization (WTO) has been unable to reach a deal that would help the world’s poorest countries by cutting red tape at the border. In its Nov. 23rd issue, the Economist lays the blame squarely at India’s door:  “Opposition to a global trade deal risks hurting the very countries India claims it is trying to protect… [India’s] stubborn opposition could deliver a serious blow to the poorest countries in the emerging world.”

India’s machinations to seek yet another exemption from the international trading system  agricultural rules was a prime cause of the demise of the Trade Facilitation negotiations– negotiations that the Organization for Economic Cooperation and Development (OECD) estimates would reduce total trade costs by 10 percent annually in advanced economies and by 13 percent to 15.5 percent in developing countries, helping to boost worldwide income more than $40 billion – with most of the benefits going to developing countries.

Sadly, no one should be surprised by India’s approach.  It is the same approach India is using more broadly in its trade relations.  Flouting the basic rules of the global trading system it helped create more than sixty years ago, India’s manufacturing policy seeks to force Indian production of a wide range of products, from solar and power generation equipment to pharmaceutical and other medical equipment,  at the expense of global producers everywhere.  The United States has already filed a WTO cases against India’s requirement that Indian developers of solar photovoltaic projects use Indian-only solar cells.

And there is no end in sight as India’s Commerce Minister, Anand Sharma, emphasized just yesterday that his government is “committed . . . to protect Indian generics” and grow its own pharmaceutical industry.  He failed to mention that this policy, like Indian policies on manufacturing broadly, is based on forcing local production of as many products as possible, even as basic protections for intellectual property are broken again and again.

India’s actions are unfair and violate the basic rules of the global trading system. Not only are they hurting manufacturers in the United States, they are hurting India and as importantly developing countries that are trying to grow their economies through increased trade and investment. The Economist urges the Indian government to make the “hard choice” to embrace the global trading system which will “likely pay dividends over time.” We agree.

 

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