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.

One of the big success stories in the trade world for 2011, other than passage of the FTAs, was success of the Export-Import Bank’s Global Access for Small Business program. Last year the Ex-Im Bank approved $6 billion in small business financing through this helpful new program which is supported by the National Association of Manufacturers.

It’s a little known fact that more than 85 percent of all the Bank’s transactions directly benefit small business exporters.

As you can see export financing is paramount to the ability of manufacturers to export and in turn grow jobs and invest. We have to remember that 95 percent of the world’s consumers are outside of the U.S. and our manufacturers need the tools to reach them, if not we will be eclipsed by our overseas competition.

The NAM is urging Congress to act as soon as possible to reauthorize the Ex-Im Bank and to increase the Bank’s lending capacity. If we are going to meet the goal of doubling exports by 2014 an improved Ex-Im Bank is going to play an important role and we can’t afford to wait to act until the temporary authorization expires.

Manufacturers are constantly planning for the future several months and years in advance which is why a multi-year extension is needed. 

Ex-Im Bank Chairman Fred Hochberg is also pushing for Congress to move quickly as CQ reported earlier this week.

In an interview, Ex-Im Bank Chairman Fred Hochberg said Congress needs to quickly assure businesses and foreign customers that it will have more financing authority. Hochberg called legislation to raise the bank’s lending limit a “jobs bill.”

Reauthorizing Ex-Im means more exports which translates to more jobs for American workers. We are hopeful Congress can come together to move forward soon before we lose out to the competition.

One story we haven’t heard much about so far this year is that of the Export-Import Bank. The Bank’s charter expired at the end of 2011 and it’s currently working off a temporary extension which is far from adequate.

Ex-Im plays an important role in manufacturers’ ability to export. If the Bank isn’t reauthorized the ripple effect will spread all the way down the supply chain to even the smallest companies.

Manufacturers are urging Congress to act now to reauthorize the Bank. Ex-Im will have to play an important role if we are going to meet the President’s goal of doubling exports by 2014. Reauthorization should be an easy decision for Congress as it doesn’t come with a large price tag, the Bank is funded through fees on its loans.

Loren Thompson a contributor for Forbes tells the story of Ex-Im in a recent column. Below is an excerpt. It’s time for Congress to move forward with reauthorization before we lose out to our competitors.

“The other, more recent, reason why the government needs to help U.S. exporters with financing is that other countries have greatly expanded their own financial assistance to exporters.  For instance, as a percentage of GDP, China extends 17 times more credit assistance to its exporters than America does, and other emerging countries like Brazil and India are not far behind.”

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…)

Today we heard from President Obama about his plan to reorganize several federal agencies – many of which are critical to manufacturers and their ability to create and retain jobs.

Changes would include combining the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency into a single department in an effort to improve government efficiency and to help promote business. The key question in reviewing this proposal is will it help manufacturers compete, export, invest and create jobs?

Any changes that are considered must focus on improving intellectual property protection, opening markets for exports, improving market access, and more. Additionally, while manufacturers have done well in leaning their processes to improve their competitiveness and would vigorously support the federal government doing the same in this difficult debt and deficit environment, the agencies affected must continue to have the necessary resources to meet their missions.

If the streamlining and efficiency undertaken in this proposed combination of agencies will mean that manufacturers will have less intellectual property protection, for example, it would be a devastating mistake. If, on the other hand, this leaning process will mean doing more with less, it would be a great step forward.

As policymakers respond to the President’s proposals today, we are hopeful that the discussion centers on the key question for manufacturers – will they be better able to compete, export, invest and create jobs as a result? With a 20 percent cost disadvantage already, manufacturers will deeply care about the impact these proposals will have on their ability to compete.

Aric Newhouse is senior vice president for policy and government relations, National Association of Manufacturers.

The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade balance in November widened to $47.8 billion from $43.3 billion in October. Americans imported $225.6 billion in goods and services for the month (up from $222.6 the previous month) and exported $177.8 billion (down from $179.4 billion).

A widening of the deficits for goods and petroleum led to this month’s larger overall deficit. Exports of industrial supplies and materials fell from $43.1 billion to $41.4 billion, with smaller declines observed in the export of food products, automobiles and capital goods. There was, however, a net gain in exports for consumer goods. The trade balance for petroleum, meanwhile, fell from $24.2 billion to $27.6 billion, largely on higher imports.

Looking geographically, exports to Europe have slowed somewhat, as you might expect given challenges in the Eurozone area. Exports of goods and services to Europe fell from $28.4 billion in October to $26.8 billion in November. Note that Europe accounts for over 20 percent of U.S. manufactured goods exports, so any stalling in the region for sales of our products can have an impact. Nonetheless, slower exports were not just a phenomenon of Europe, as few exports were also observed across-the-board in other regions, as well.

The value of U.S. manufactured goods exported in November was $81.9 billion, down from $86.2 billion in October. Still, there have been $889.3 billion in manufactured goods exports year-to-date in 2011 (through November); that represents an 11.8 percent increase on the $795.4 billion at the same point in 2010. Note that these numbers are not seasonally adjusted.

Manufactured goods account for 60 percent of our total exports. With that in mind, we will depend heavily on the manufacturing sector if we are to make the President’s goal of doubling exports by 2015. Hopefully, global economic growth can pick up in the coming month, helping to provide a boost to our trade numbers. Economic weaknesses in Europe and elsewhere, though, could hinder this goal.

Chad Moutray is chief economist, National Association of Manufacturers.

The evidence keeps rolling in about the value of having free trade agreements (FTAs) that open up foreign markets to American exports.  The Commerce Department data on FTAs that the International Trade Administration just posted shows that we are on track for a fourth straight year of manufactured goods trade surpluses with our FTA partners.

Moreover, based on their data through October, that surplus has already reached a record $40 billion.  If that rate continues for November and December, the U.S. manufactured goods trade surplus with FTA partners will be $46 billion in 2011 – double the 2010 surplus of $23.4 billion.

The manufactured goods surplus with NAFTA is running at a $12 billion annual rate, and with CAFTA at a $3 billion annual rate. 

The record with FTA partners is in sharp contrast to U.S. manufactured goods trade with countries that do not have FTAs with us.  Based on January-October data, it looks like U.S. manufactured goods trade with non-FTA partners will register a deficit of close to $500 billion in 2011. 

The facts are clear -  we need more FTAs to let our manufactured goods into more foreign markets – and we need them as fast as we can get them.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

A lot of public opinion polls over the last year or so have shown the American public believes free trade agreements (FTAs) are harmful to American manufacturing and jobs because they open the U.S. market to foreign competition. This view is one reason why it took so long to gather sufficient support in the Administration and the Congress to pass the FTAs with Colombia, Korea, and Panama.

 The general public, unfortunately, seems unaware that the United States is already a very open market, while American manufacturers frequently face much higher barriers trying to sell abroad. So FTAs don’t open our market so much as they open foreign markets. 

How open are we? The Commerce Department trade figures through October 2011 released last week show that so far this year, the average U.S. import duty (tax on imports) on foreign manufactured goods brought to the United States was only 1.6 percent – $23.8 billion of import duties on $1,467.4 billion of imports. 

Moreover, half of those import duties, $12 billion, were assessed on imports of only two sectors that accounted for only seven percent of U.S. imports of manufactured goods – apparel and leather products.

The average import duty for the 93 percent of the rest of U.S. manufactured goods imports was less than one percent – 0.9 percent, to be more precise. Far from being a barrier, that is barely a speed bump. Is the American public aware of this? I think not. In fact, I think it would be eye-opening for pollsters to ask the public just what they would guess our import duties are.

But when American manufacturers try to sell abroad, they encounter significant import barriers. For example, right now, the average import duty manufacturers in America have to pay to sell their products in Colombia (which imports $35 billion of manufactured goods a year) is effectively 15 percent. That’s a real barrier. 

When the U.S.-Colombia FTA goes into effect next year, Colombia’s duties on products made in the U.S. will go to zero. That’s what I call leveling the playing field. Far from opening up our market – which is already wide open in most industries – FTAs open our trading partners’ markets and level the playing field for us so our manufacturers export more and generate more jobs. That’s why we need more of these agreements. 

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

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…)