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President Issues Executive Order to start Trade Enforcement Center

Today, President Obama established an Interagency Trade Enforcement Center (ITEC) by Executive Order.  This is warmly welcomed by NAM as manufacturers suffer from significant barriers to U.S. trade and investment abroad.

Manufacturers are adversely affected by a wide variety of non-tariff barriers including standards and conformity assessment issues, import licensing, investment limits, onerous customs procedures, requirements to balance imports with exports, forced technology transfer, subsidies, favored companies or “national champions”, export bans, and other measures to restrict the fruits of American innovation around the world.  They can add significantly to the cost of an export, often a multiple of the tariff rate that is charged. 

We hope the ITEC will tackle these kinds of barriers as well as non-tariff trade barriers which may be illegal under international trade rules. The focus cannot be simply on filing cases and tallying a win/loss record, but also on getting fair market access for manufacturers.

There are many approaches governments can employ to resolve trade barriers, working one-one-one with trading partners, as part of a coalition of countries, through formal market opening trade negotiations like the TransPacific Partnership talks now underway in Melbourne, Australia, or through informal partnerships like the US-EU High Level Working Group on Jobs and Growth. The NAM has provided suggestions to the Administration, along with other trade associations, in recent months with respect to investor-state dispute settlement in the TPP, and European trade relations, and trade barriers in Argentina.

The Administration needs to deploy all the arrows in its quiver. ITEC is a good start.

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.

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U.S.-South Korea Free Trade Agreement to Take Effect in March

The National Association of Manufacturers is pleased by the news today that finally, the U.S.-Korea trade agreement will take effect on March 15, 2012. The United States has exchanged diplomatic notes with Korea in which each side confirmed that it had completed applicable legal requirements and procedures for the agreement’s entry into force.

According to the U.S. Government, on March 15, almost 80 percent of U.S. exports of industrial products to Korea will become duty-free, including aerospace equipment, agricultural equipment, auto parts, building products, chemicals, consumer goods, electrical equipment, environmental goods, all footwear and travel goods, paper products,  scientific equipment and shipping and transportation equipment. 

This matters because Korea offers U.S. manufacturers a growing opportunity for exports within a dynamic and expanding market. Korea is our seventh-largest trading partner and is a crucial export destination for U.S. manufacturing. Korea is one of the fastest-growing industrial economies in Asia, and its GDP has grown by 67 percent since 2000, according to the International Monetary Fund (IMF).

Small and medium-sized manufacturers will strongly benefit from the U.S.-Korea agreement: nearly 19,000 small and medium-sized companies export goods to Korea, representing 90 percent of total U.S. exporters. Manufactured goods are the vast majority of U.S. exports to Korea. In 2010, the U.S. exported $31.6 billion worth of manufactured goods to Korea, and Korea was our fastest-growing export destination in the world, with a 37 percent increase over 2009 exports. Manufactured goods make up over 75 percent of total U.S. merchandise exports to Korea. (continue reading…)

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Protecting Intellectual Property Critical to Manufacturers

The NAM submitted its comments to the United States Trade Representative on our priorities for intellectual property rights protections around the world. The NAM has long been a strong supporter of a proactive, aggressive U.S. Government approach to international intellectual property rights (IPR) protection.

IPR protection is truly a global concern for the NAM. This year we placed a special emphasis on addressing the increasing theft of trade secrets around the world, and the corrosive effect of the erosion of IP rights in international institutions like the World Health Organization and the World Intellectual Property Organization. 

Despite some activists views, the protection of the property of innovators and creators is not inconsistent with other social interests, internet freedom or access to information. It is about ensuring our creators and innovators receive the income from, and protection for, their creations and innovations and the jobs that flow from them. It is also about our democratic institutions and rule of law.

The American public, the Congress and the Administration need to understand the impact that IPR theft and erosion of IP protection has on manufacturing, broadly defined. For the United States to retain the manufacturing base that most of us believe we must, the protection of the intellectual assets of our innovators, including patents, trademarks, and trade secrets, is a critical component. (continue reading…)

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Time for China to Comply with WTO Rules

The National Association of Manufacturers (NAM) was pleased to learn yesterday that the World Trade Organization (WTO) agreed with U.S. complaints and found China’s export restraints on several industrial raw materials used as key components in the steel, aluminum, and chemicals industries to be inconsistent with China’s WTO obligations. 

We applaud U.S. Trade Representative Ambassador Kirk and his team for bringing the case before the WTO as companies need these materials to compete at home and abroad. When China withholds from the market these key materials in contravention of its WTO obligations, it artificially increases world prices while effectively subsidizing Chinese producers, while hiding behind specious claims of environmental protection and conservation.

This beggar thy neighbor trade policy is what China must reverse and it is time it complies with the spirit as well as the letter of the international trading system rule book that has benefited from much since 2001. Other countries that have similar protectionist policies, like Argentina, should take note.

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.

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Argentina’s Protectionist Policies are Harming U.S. Exports

President Obama last week said, “I don’t want America to be a nation that’s primarily known for financial speculation and racking up debt buying stuff from other nations.  I want us to be known for making and selling products all over the world stamped with three proud words:  “Made in America.” 

Contrast that with President of Argentina Cristina Fernandez de Kirchner, who has been quoted as saying she doesn’t want “a single nail” to be imported into Argentina. She also said “We are doing these things so that those who imported can now produce in Argentina”.  Replacing imports “is not only an economic transformation but also cultural. Its embarrassing that 78%% of the books we read in Argentina are imported.” The United States, while promoting exports, remains open to fairly-traded imports because we recognize the value to manufacturers and to consumers who benefit from greater choice and good prices. 

However, Argentina, according to The Global Trade Alert in the third quarter of 2011 took 25 protectionist actions, double that of China. In the last three months, it took more than Brazil, India and China combined. This has a profound and negative impact on U.S. exports to Argentina. Now, last week, the Argentine federal tax agency (AFIP) announced it will require from February 1 that all importers file a sworn statement to the AFIP, informing the agency of their future import plans.

Each transaction must be approved by the Interior Commerce Secretariat, the same agency that has been behind most of the protectionist measures taken to date. This requirement is the latest effort by Argentina to improve its trade balance and boost its domestic manufacturing sector at the expense of its trading partners by reducing imports while benefiting from access to open markets like the United States. Brazilian industry has raised concerns about this measure noting its impact on their companies and supply chains and is asking governments of both countries to find common solutions. (continue reading…)

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TPP Negotiations Continue

The United States is negotiating a state of the art, twenty-first Century, Free Trade Agreement with eight countries in the Pacific Rim. This “TransPacific Partnership” or TPP, brings together countries with which we have free trade agreements (Australia, Peru, Chile, Singapore) and countries with which we do not yet have open access to their markets (New Zealand, Malaysia, Vietnam and Brunei).

The NAM believes that the TPP should be the beginning of the Free Trade Area of Asia and the Pacific– which would include Japan.  Asia is the fastest-growing area of the world, and American manufacturers need to have open access to that market. 

Yesterday, the United States Trade Representative published Federal Register notices requesting comments on the expression of interest that Canada, Japan and Mexico have shown in potentially joining TPP negotiations in light of the TPP’s high standards for liberalizing trade. It also asked for specific issues of concern to the United States regarding barriers to manufacturing trade, including non-tariff measures. 

The NAM has called on the Administration to negotiate the broadest and deepest agreement and work with negotiating partners and domestic stakeholders to address sensitivities and concerns in a way that ultimately ensures the most comprehensive outcome possible. 

We welcome the interest of Canada, Japan and Mexico but the negotiations cannot go back to the starting place and begin all over again.  All three will need to eliminate non-tariff barriers which are still significant impediments to American exports given that Japan’s tariffs are very low, and Canadian and Mexican tariffs have been eliminated under NAFTA. A key question is how this can be done without delaying the conclusion of the agreement, at least among the original participants.

We hope that the consultations with the three governments will address quickly any issues that arise as a result of this request for comments so that the three can join the negotiations as soon as possible in 2012 and truly make the TPP the pathway to a Free Trade Area of the Asia-Pacific.

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.

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NAM, 40 Other Trade Associations Push TPP Agreement

The United States is negotiating its latest, and we hope state-of- the-art, 21st century, free trade agreement (FTA) with eight countries in the Pacific Rim. This TransPacific Partnership (TPP) brings together countries with which we have FTAs (Australia, Peru, Chile, Singapore) and countries with which we do not FTAs, yet have open access to their markets (New Zealand, Malaysia, Vietnam and Brunei). This constitutes our third largest export market.

Now that Congress has approved the Korea, Panama and Colombia FTAs, it is critical that the U.S. continue its efforts to expand market access for American companies. The National Association of Manufacturers today joined more than 40 other trade associations across the entire spectrum of U.S. industry to tell President Obama the United States must continue its longstanding and bipartisan approach of seeking a comprehensive agreement that covers every commercial sector and sub-sector of the U.S. economy.  To do anything less is to diminish the commercial value of the resulting agreement, and diminish the prospects the TPP holds for enhancing America’s competitiveness in the global economy.

Especially in these challenging economic times, achieving a comprehensive agreement that provides full reciprocal market access and does not exclude any sector, sub-sector, product or service from the market-access provisions or core rules of the final TPP is vital. It is also just as vital to ensure that there is no exclusion from any core principles that protect our investors and our intellectual property rights.

The NAM calls on the Administration to negotiate the broadest and deepest agreement and work with negotiating partners and domestic stakeholders to address sensitivities and concerns in a way that ultimately ensures the most comprehensive outcome possible and sets the stage for future expansion of the TPP to additional markets in Asia. We at NAM know that trade liberalization that enhances access to markets for our manufacturers and workers produces high paying jobs—jobs we sorely need now.

Stephen Jacobs is senior director of international business development, National Association of Manufacturers.

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Anti-counterfeiting Agreement Signed in Tokyo

Today in Tokyo the United States signed the Anti-Counterfeiting Trade Agreement and the NAM applauds this decision.

This milestone achievement in IPR protection will enhance criminal enforcement and the seizure and destruction of fake goods, provide new authority for customs to act against import and exports of fake goods and cooperate on transshipment, create new cooperation and information sharing among ACTA signatories and the private sector, and promote best practices that result in better IPR protection.

IPR protection and enforcement is an issue for virtually all manufacturers. Manufacturing is as dependent on intellectual property like patents, trademarks, trade secrets, trade dress and copyright as copy-based industries that receive somewhat more attention. Counterfeiting and piracy are existential threats to manufacturers, the people they employ, and the consumers who come in contact with their products and services.

Theft is theft no matter if it is called “counterfeit” or “piracy”.  The trade in fake products supplants legitimate markets, steals our workers’ jobs and puts American and other consumers needlessly at risk as counterfeit pharmaceuticals, unsafe products and even hazardous materials are put into the stream of commerce on a daily basis. 

IPR theft is an impediment to economic recovery.  Markets once lost through counterfeiting and/or damaged brands are not readily and easily recovered. As cities and states face unprecedented budget shortfalls and deficits, it is important to note that IPR thieves don’t generally pay taxes and maintain books. (continue reading…)

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The Facts Behind the Dodd-Frank Conflict Minerals Requirement

There has been a lot of chatter in the blogosphere recently about David Aronson’s op-ed “How Congress Devastated Congo,” in the New York Times on Monday concerning the impact that the Dodd-Frank legislation provision (Section 1502) on conflict minerals is having on the economy and workers of the Democratic Republic of the Congo (DRC).  

Many activists claim that the Dodd-Frank requirement that companies disclose their use of conflict minerals (tin, tungsten, tantalum and gold) in their products is essential to ending the horrific violence taking place there, even though there is relatively little evidence that will be the case.  What is of concern to many stakeholders across the spectrum is the potential for the provision creating an embargo on minerals from the DRC and surrounding countries, causing further economic devastation. 

Paul Kavanaugh, writing for Bloomberg BusinessWeek, reported July 28, “The new rules left tens of thousands of people out of work, according Paul Yenga Mabolia, head of Promines, a World Bank program assisting Congo’s mining industry. ‘Nobody was prepared and there was no program to alleviate the impact of the law,’ he said by phone from Kinshasa, Congo’s capital, yesterday. ‘Almost everything came to a standstill.’” (continue reading…)

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President Obama Makes Commitment to Open Investment Policy

The National Association of Manufacturers is pleased to see President Obama’s commitment to an open investment policy that invites foreign companies to do business in the United States, employ Americans and contribute to our economic growth.  It is an important signal to the rest of the world that the United States spruces up its “welcome” mat for foreign investors every so often, and such statements have been issued by Republican and Democratic presidents in a reaffirmation that Foreign Direct Investment (FDI) is a non-partisan issue. 

Foreign companies employ more than 5 million Americans and pay above-average wages. These companies contribute to the U.S. research and development base and export their products around the world.  Having ties to other markets helps companies weather difficult economic conditions, and is another reason to welcome FDI in the United States. We should be aggressively courting international investors, which is why the NAM welcomed the Administration’s SelectUSA initiative last week.

Equally important to our economic success is investment by U.S. companies abroad. A commonly held misperception that U.S. manufacturing companies investment abroad necessarily means the loss of jobs here in the United States. This misperception fails to understand the nature of U.S. foreign direct investment abroad, which is mostly to serve the local market.  (continue reading…)

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