This morning the NAM and the Global Business Dialogue hosted a discussion about the Environmental Goods Agreement (EGA) negotiations underway at the World Trade Organization (WTO). NAM’s Linda Dempsey, Vice President for International Economic Affairs, spoke about the benefits to manufacturing of a broad EGA, mentioning that, “increased trade and global engagement is vital for our manufacturers. With only a 9 percent share of the global $11 trillion market in manufactured goods trade outside our borders, manufacturers can and should be able to expand commercial opportunities.
Manufacturers continue facing congressional inaction on even the most bipartisan pieces of legislation that could help them create new opportunities for growth and jobs in the United States – the Miscellaneous Tariff Bill (MTB). For decades, the MTB has supported manufacturing jobs in the United States by cutting costs and strengthening manufacturers’ competitiveness. Under the MTB, manufacturers are permitted to import certain manufacturing inputs duty free when those products aren’t available in the United States. (continue reading…)
The United States and India announced today an agreement that paves the way for implementation of the World Trade Organization (WTO) to implement the Trade Facilitation Agreement (TFA), the first multilateral trade agreement to be concluded in the history of the WTO. Progress on the TFA was halted in July, when a small group of countries – led by India – blocked consensus on implementing the TFA and raised concerns about the status of the WTO’s work on food security issues. The new compromise included no major revision of the original WTO deal struck last December, which provided for India’s food stockpiling to be shielded from legal challenge by a “peace clause.” The compromise clarified, though, that the legal shield would remain until a permanent solution was found. (continue reading…)
As Members of the 114th Congress descend on Washington for orientation, and the 113th Congress convenes for the upcoming lame duck session, manufacturers stand ready to work with our leaders to advance policies that will enable us to continue to grow and create jobs. Manufacturers believe that now is the time to set aside the differences that have resulted in gridlock, and focus on the pro-growth policies that brought voters to the polls. Simply put, it is time to govern and grow. (continue reading…)
Manufacturers welcome the breakthrough in negotiations to expand the Information Technology Agreement (ITA) announced by the United States and China. Agreement between the United States and China will help move the ITA talks forward after being deadlocked for a year.
Ultimately, an expanded ITA could eliminate tariffs on about 200 additional technology products – or roughly $1 trillion in global sales each year, creating an estimated 60,000 new American jobs, enhancing innovation in the United States and increasing global GDP by roughly $190 billion. (continue reading…)
As the NAM’s Chief Economist, Chad Moutray, reports this morning, today’s jobs numbers were encouraging, showing an increase of 12,800 manufacturing employees on average each month so far in 2014. These numbers also underscore the importance of continued employment and manufacturing growth that relies in substantial part on improving exports and international sales.
Yet, our manufacturers are facing a daunting triple global threat to improved grow in manufacturing as a result of substantial downgrades in global economic and trade growth forecasts reported recently by the International Monetary Fund and the World Trade Organization: (continue reading…)
The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened somewhat, up from $39.99 billion in August to $43.03 billion in September. This was the highest deficit since May, and it mainly resulted from fewer goods exports (down from $138.65 billion to $136.07 billion). Service-sector exports were also off slightly, down from $59.92 billion to $59.51 billion. In contrast, imports of goods and services were little changed. (continue reading…)
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…)
Since Indian Prime Minister Modi took office in May, he has encouraged investor optimism at home and abroad by vowing to open greater opportunities to trade with and manufacture in India. The Prime Minister has outlined several bold pro-growth economic reforms, including a promising “Digital India” initiative, and recently met with President Obama on enhancing trade and investment ties.
Unfortunately, Modi’s pro-growth messages have yet to be translated into concrete actions in the telecommunications sector. (continue reading…)
Here is the summary for this month’s Global Manufacturing Economic Update:
The International Monetary Fund (IMF) slightly downgraded its global outlook earlier this week, with Asia, Europe and South America growing slower than expected three months ago. The IMF now expects world output to expand 3.3 percent and 3.8 percent in 2014 and 2015, respectively, down from 3.4 percent and 4.0 percent as estimated in its July report. One notable exception to this downward trend was the United States, with the IMF raising its 2014 forecast from 1.7 percent to 2.2 percent real GDP growth. This reflects recent strength in the U.S. economy, particularly when compared to other nations. To be fair, the IMF had more optimistic expectations for growth coming into this year, projecting 2.8 percent growth in 2014 in its January report. After disappointing growth in the first quarter, however, it lowered its outlook projections, much like everyone else.
One of the bigger challenges remains Europe. The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) continued to decelerate in September, with activity just shy of being stagnant. New orders contracted for the first time since June 2013, when the Eurozone was emerging from its deep two-year recession. Indeed, the fear is that Europe will once again sink back into recession, with contracting levels of activity seen in four nations in September: Austria, France, Germany and Greece. Of particular note on this list was Germany, the largest economy in Europe. Real GDP was unchanged in the second quarter, down from 0.2 percent growth in the first quarter. Meanwhile, both industrial production and retail sales were higher in August. We will get new production data next week, and it is expected to be softer. For its part, the European Central Bank kept its monetary policies unchanged, but there is an expectation of further stimulus in the coming months.
Meanwhile, Brazil, Russia, India and China also continue to experience softness. Brazil shifted into its fifth contraction so far this year, but investors are cautiously optimistic about the upcoming runoff election between incumbent President Dilma Rousseff and Aécio Neves, who is favored by business leaders. Russia, India and China are growing, but just barely. China’s manufacturing sector has shown signs of stabilization, but stronger growth remains elusive. A number of key economic indicators in China have continued to decelerate this year, including industrial production, and it is likely that real GDP will decline from 7.5 percent growth in the second quarter to 7.3 percent in the third quarter. India’s PMI figure in September was at its lowest point this year, and Russian exports continue to fall. Nonetheless, it was not all bad news in the emerging markets. For instance, Indonesia, Turkey and Vietnam had their paces of new orders shift from negative to positive for the month, which bodes well for them.
The U.S. trade deficit narrowed marginally in August, although export growth remains sluggish so far this year. Looking at the top 10 markets for U.S.-manufactured goods, four countries (Brazil, Germany, Hong Kong and South Korea) experienced contracting levels of activity in September, which hampers our ability to sell products there. In addition, Canada, Japan and the United Kingdom also had marginally deteriorated demand and output in September, even as each continues to grow modestly. In contrast, manufacturing activity in Mexico and the Netherlands accelerated slightly in September.
U.S. trade negotiations in the Asia Pacific are moving forward with major meetings in Australia and China later this month and next. United States–European Union negotiations face increased controversy and new leadership at the EU Commission and Parliament. And, with the World Trade Organization’s Trade Facilitation Agreement facing a continued stalemate, there are efforts to move the information technology talks to a conclusion and engage in the detailed environmental goods talks. The U.S. Export-Import Bank was granted a nine-month extension, but manufacturers remain highly concerned that continued uncertainty will put U.S. exporters at a disadvantage in global markets. Efforts continue to move forward on a host of trade legislation, including Trade Promotion Authority, the Miscellaneous Tariff Bill, customs reauthorization and the Generalized System of Preferences.
Chad Moutray is the chief economist, National Association of Manufacturers.