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Linda Dempsey

Manufacturing, Trade Deficits and Opportunities for Growth

By | Shopfloor Policy, Trade | No Comments

As part of President Donald Trump’s March 31 executive order on trade, the Commerce Department and Office of the U.S. Trade Representative are examining the role trade deficits play in key trading relationships. The National Association of Manufacturers (NAM) provided this detailed submission last week, and I am testifying today about opportunities and challenges that trade presents for manufacturing in the United States.

For those seeking the Readers Digest version, consider the top four takeaways.

    1. Exports are critical to today’s manufacturing success. Indeed, U.S.-manufactured goods exports now represent more than half of U.S.-manufactured output, supporting more than 6 million manufacturing job across the countryjobs that pay substantially more than non-export-related jobs. The U.S. manufacturing sector must have opportunities to expand salesat home and abroadto continue to add jobs.
    2. Manufacturing is growing around the world, creating new middle-class consumers and new partners, but also new competitors. More than $11 trillion in manufactured goods are traded annually as markets have been opened and trading costs reduced. In some cases, imports compete directly with manufacturers in the United States, just as U.S. exports compete with manufacturing overseas and many manufacturers require inputs not domestically available. Unfortunately, however, some import competition is fueled by foreign market-distorting and discriminatory trade practices that create unfair advantages for foreign manufacturing production at the expense of manufacturers, workers and communities in the United States. Under these circumstances, the NAM has long supported robust U.S. government action to address the underlying causes of the distortions and full enforcement of trade agreements and trade rules.
    3. The trade deficit arises as a result of several factors. Overall domestic economic conditions and standards of living, domestic consumption and purchasing compared with savings rates, the price of goods in the market, exchange rates, domestic structural issues (e.g., taxation, regulation) and openness to international trade all impact the trade deficit. In the United States, trade deficits expand as the U.S. economy grows and fall during periods of economic weakness. At the same time, however, when the U.S. economy expands, more workers are employed and unemployment falls, we see that the trade deficit actually increases.
    4. As manufacturers see it, many indicators are relevant in assessing the strength and weaknesses of U.S. trading relationships with particular markets. These factors include the existence and implementation of trade agreements, the size of the trading relationship compared to the size of the foreign economy, the growth of exports over time, the U.S. share of the country’s worldwide imports, foreign direct investment, U.S. content in imports into the United States and overall tariff rates. The chart below shows that Canada and Mexico are outsized purchasers of U.S.-manufactured goods compared to other sources of imports and given the size of the countries’ economies.

 

 

Conclusion:

As the administration considers next steps, the NAM urges that it prioritize work to address existing distortions and barriers to improve U.S. competitiveness globally through (1) the negotiation of advanced trade agreements that open markets and set strong rules; (2) the modernization of U.S. trade tools to boost U.S. global competitiveness, from improving export financing options to eliminating self-inflicted barriers that impede U.S. manufacturing; and (3) the implementation of more robust trade enforcement consistent with the international rules system to ensure that trade agreement commitments are honored, our innovative technologies are not stolen and U.S. trade rules are effectively enforced. Where trade agreement rules are not keeping up with new challenges and distortions, manufacturers urge U.S. leadership and efforts to develop new internationally agreed-upon rules and frameworks to raise standards and promote a more open and competitive market-driven global economy.

Learn more about manufacturers’ priorities for trade policy here.

NAM, UK Manufacturers Seek Greater Collaboration

By | Shopfloor Main, Shopfloor Policy, Trade | No Comments

Today, Jay Timmons, president and CEO at the National Association of Manufacturers (NAM), and Terry Scuoler, CEO at EEF, the UK-based manufacturers’ organisation, signed a Memorandum of Understanding that seeks to promote greater collaboration and partnerships between the two organizations and to promote the NAM and EEF’s respective missions to strengthen and grow manufacturing in the United States and the United Kingdom. The agreement sets forth a number of activities, ranging from information exchanges on policy, economics, business trends and government regulations to potential joint work on international trade, skills development and other issues.

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New Report on Trade Barriers Shows Path for Stronger Trade Enforcement

By | Shopfloor Policy | No Comments

China, India, Indonesia and the European Union were among the top targets in a new Office of the U.S. Trade Representative (USTR) report that identifies top trade barriers facing U.S. companies around the worlda report that could support greater action from the Trump administration to boost trade enforcement. In an increasingly competitive global economy, the National Association of Manufacturers (NAM) calls on the Trump administration to use this report to target market-distorting practices by other countries that harm manufacturers and workers in the United Statesand on the Senate to confirm Ambassador Robert Lighthizer as USTR to ensure that the administration has the personnel in place to advance that agenda. Read More

Manufacturers Disappointed by U.S.–Canada Investment Ruling That Sidesteps Core IP Questions to the Detriment of U.S. Manufacturing

By | Shopfloor Legal, Shopfloor Policy | No Comments

Co-authored by Patrick Forrest, NAM Vice President of Litigation and Deputy General Counsel

Manufacturers in the United States are deeply disappointed by an international panel decision that ruled in Canada’s favor purely on a threshold issue, sidestepping core investment and intellectual property (IP) issues at the heart of the case. In so doing, the panel failed to provide relief from Canada’s actions that undermine innovation and IP protection to the detriment of U.S. manufacturing and jobs. Read More

New Strategy Needed to Address Foreign Price Controls, Other Localization Barriers

By | Shopfloor Policy | No Comments

Manufacturers and workers in the United States are competing to win in the global economy. Battling substantial and growing market-distorting practices by other countries that tilt the playing field in their favor is but one of many challenges. These types of practices harm manufacturers and workers here in the United States not only by creating protected foreign markets that spur unfair trade by our competitors but also by blocking access by U.S. exports to the 95 percent of consumers living outside U.S. borders.

The National Association of Manufacturers (NAM) has long been a leading voice calling on U.S. and foreign government officials to address unfair trade practices and barriers. In its October 2016 submission to the Office of the U.S. Trade Representative for its National Trade Estimate Report (NTE), the NAM urged the U.S. government and other stakeholders to address a wide variety of foreign trade barriers faced by manufacturers in the United States in nearly 50 countries and regions. Unsurprisingly, Brazil, China, India, Indonesia and Russia lead the way as challenging markets with high barriers for manufacturers in the United States. These practices come in a variety of forms, including import and export restrictions, weak intellectual property enforcement, investment caps, technical barriers to trade and a wide array of localization barriers that explicitly or implicitly discriminate directly against foreign manufacturers, products, intellectual property or data.

As recently noted by President Donald Trump, one illustrative example of foreign localization that harms not only manufacturers in the United States but also U.S. consumers is the use of foreign price controls. Over many years, many foreign governments have shrunk the market for U.S. exports of innovative health products by instituting strict price caps in their government-run health systems. Their targets have largely been innovative pharmaceutical, medical devices and other health products that exist thanks to American ingenuity, research and development and strong U.S. intellectual property protections. Localization measures such as price controls chill the innovative life cycle, harming the U.S. economy, jobs and the patients who are waiting for the next generation of cutting-edge cures. While successive U.S. administrations have recognized and sought to curb these unfair localization barriers, including through recognition in the Medicare Modernization Act of 2003, more concrete action is needed to not just identify but also to address and stop the proliferation of foreign price controls.

As the Trump administration charts its path for trade policy that seeks to grow manufacturing and innovation in the United States in part through eliminating market-distorting actions overseas, the NAM strongly encourages the U.S. government to address foreign price controls and other localization barriers as a priority, including through the release of its annual trade barriers report slated by March 31.

It is time for a new strategy on these issues that will create a more fair and level playing field globally to grow the competitiveness of manufacturing in the United States. Such a strategy must include a robust enforcement agenda and ensure that new and ongoing trade negotiations reward the value of innovation. At a time when the global economy is performing well below expectations, now is the time to tear down the barriers that are holding back manufacturing in the United States from growing opportunities around the world for the benefit of jobs and growth here at home.

Manufacturers in the United States Depend on Strong Global Intellectual Property Protections to Compete and Win

By | Shopfloor Policy | No Comments

Manufacturers in the United States know that innovation and intellectual property (IP) are crucial for their economic success and that their competitiveness depends on continual innovation: creation of new products, technologies and more efficient processes that meet customer needs. While the United States provides strong IP protections and enforcement, that is too often not the case in overseas markets where IP theft and infringement jeopardizes the innovation and competitiveness of manufacturers in the United States, costing jobs and economic growth here at home. Read More

Manufacturers Hopeful New Administration, Congress Will Reinvigorate Efforts to Strengthen U.S.–India Economic Relationship

By | Shopfloor Policy | No Comments

As a new Congress kicks off, and as the new administration takes the reins with stated priorities of boosting manufacturing in the United States, now is the right time to assess the state of the U.S.India economic relationship. The National Association of Manufacturers (NAM) joined 21 other trade associations in a letter today to congressional leadership urging them to work to support a robust, reciprocal U.S.India economic relationship that creates commercial opportunities in both countries and meaningfully addresses outstanding issues impacting manufacturers in the United States. Read More

For Manufacturers, Trade Must Be Open and Fair

By | Shopfloor Main, Shopfloor Policy, Trade | No Comments

A highly interconnected global economy is a fact for manufacturers big and small throughout the United States. Advances in technology and transportation over recent decades have created substantial new opportunities for manufacturers in the United States to reach millions of foreign consumers. That interconnection has also brought increased competition from growing manufacturing sectors around the world, in some cases fueled by market-distorting and discriminatory trade practices that put our manufacturers, workers and communities at an unfair disadvantage.

When markets are open and rules of fairness and equal opportunity are enforced for all, manufacturers in the United States can and do succeed. Consider the following:

  • More than half of the U.S. manufacturing workforce depends on exports for their jobs, and nearly half of all U.S.-manufactured goods exports are sold just to the 20 countries that have eliminated barriers through free trade agreements.
  • Employees in the “most trade-intensive industries” earn an average compensation of nearly $94,000, or more than 56 percent more than those in manufacturing companies that were less engaged in trade.

With the world’s most productive manufacturing sector in the world, but a domestic market that represents only 10 percent of global consumption and growing global competition, manufacturers in the United States need more robust trade policies and agreements to grow. To be part of the solution, the National Association of Manufacturers (NAM) has shared with the Trump transition team our Competing to Win” agenda, which includes a blueprint for a winning trade policy.

The NAM is calling on the new administration to focus on three key elements to ensure an open and fair trading system:

  1. Strong enforcement of global trade rules to crack down on cheating.
  2. Negotiation of new bilateral and other trade agreements to expand market access, raise standards, ensure fairness and equal opportunity and eliminate foreign market-distorting practices.
  3. Adoption of customs, financing, export control and other policies to make manufacturers in the United States more globally competitive.

Manufacturers are committed to working domestically and internationally to tap growth beyond our borders and eliminate foreign trade abuses to continue to expand a highly productive and innovative U.S. manufacturing sector that can continue to sustain and increase good-paying American jobs.

 

This blog is part of the NAM’s 12 Days of Transition” series, an effort to provide the presidential transition team and other Washington policymakers with a roadmap to bolster manufacturing in the United States. Read the other blogs in the series here.

Manufacturers Welcome WTO Solar Panel Decision

By | Shopfloor Policy, Trade | No Comments

Manufacturers welcome today’s U.S. victory on solar energy with the World Trade Organizations (WTO) rejection of India’s appeal and urge the Indian government to move quickly to dismantle its discriminatory domestic content requirements that have blocked access for U.S. solar cell modules. As each and every previous ruling in this case has shown, India’s domestic content requirements are a clear violation of core WTO rules, and today’s victory will give an important boost to manufacturing in the United States. This decision also demonstrates why the strong rules-based WTO system and trade agreements with binding and strong enforcement rules are critical to open markets and eliminate unfair barriers overseas. The National Association of Manufacturers (NAM) congratulates Ambassador Michael Froman and the United States Trade Representative (USTR) for their successful efforts. Read More