Great news about the Administration’s new export initiative! The National Association of Manufacturers has long been supportive of a significant effort to boost U.S. exports. Of the 15 major manufacturing nations the United States is dead last in the proportion of production that we export.

So how do we double exports in five years?

The dollar cannot be overvalued. Global currencies should reflect their actual market values.

Modernize export controls. Modernizing the export control system will strengthen national security, focus limited resources on truly sensitive technologies, promote U.S. technological and scientific leadership, and improve economic competitiveness. In addition, modernization creates more than 340,000 new jobs and increases exports by nearly $60 billion over the next 10 years.

Open access to markets. The United States enjoys a manufactured goods trade surplus with countries we have a free trade agreement with. We already have low tariffs, and FTAs work to lower the tariffs of other countries.

Export promotion. Thousands of U.S exporters export to only one or two countries. Adding one or two more to their markets would increase total exports by a third.

We applaud Secretary Locke’s new export initiative and look forward to work with Administration to increase manufacturing exports.

Frank Vargo is NAM’s vice president, international economic affairs.

From Bloomberg’s economic roundup story, “Recovery Accelerates as Company Spending Rises Most Since 2006“:

In his Jan. 27 State of the Union address, the president proposed extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment. The 50 percent write-off may give a boost to capital expenditures if approved by Congress.

“It will help companies to make capital investments, which is what you need in a weak economy,” Monica McGuire, senior policy director of taxation for the National Association of Manufacturers in Washington, said in a telephone interview.

Slack remains in the economy. About 68.6 percent of U.S. manufacturing capacity was in use in December, compared with an average of 81 percent since records began in 1948.

Major tax increases may counter the effect of the accelerated depreciation, however.

From Barron’s, “Girding for ‘Son of Stimulus’“:

Ironically, while Congress clashes over the proper proportions for the new stimulus, a growing numbers of interest groups are urging the president to throw caution to the wind and take far bolder action. A study prepared by the Milken Institute at the behest of the National Association of Manufacturers recommends $426 billion in new infrastructure projects over the next three years to create close to 11 million jobs. The same study recommends a lower corporate-tax rate and lifting some export controls on technology, moves that it estimates would create another three million jobs. The cost of these would amount to $43 billion. The thinking is that taxes paid by new hires would help defray the costs.

The study Jim McTague is referring to is “Jobs for America.”

The Hill, “Business wants U.S. action on China as tensions grow“

In November, China announced it would establish a national catalog of products that are to receive significant preference in government procurement decisions. To be registered, products must contain intellectual property that is developed and owned in China.

In a Jan. 26 letter, 19 U.S. trade associations labeled those rules “an unprecedented use of domestic intellectual property as a market-access condition” that makes it impossible for U.S. products to qualify unless they establish Chinese brands and transfer their research and development of new products to China.

The NAM is one of the trade associations that joined the letter.

The American people must prosper in the global economy. We’ve worked hard to tear down trade barriers abroad so that we can create good jobs at home. I am proud to say that today America is once again the most competitive nation and the number one exporter in the world.

Now we must act to expand our exports, especially to Asia and Latin America, two of the fastest growing regions on Earth, or be left behind as these emerging economies forge new ties with other nations. That is why we need the authority now to conclude new trade agreements that open
markets to our goods and services even as we preserve our values.

We need not shrink from the challenge of the global economy. After all, we have the best workers and the best products. In a truly open market, we can out-compete anyone, anywhere on Earth.

President Bill Clinton, State of the Union, Feb. 4, 1997.

From the President’s State of the Union:

[We] need to export more of our goods. (Applause.) Because the more products we make and sell to other countries, the more jobs we support right here in America. (Applause.) So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. (Applause.) To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security. (Applause.)

That’s a welcome target to achieve export-driven growth, and it’s notable that the President regards the export controls issue important enough to warrant a mention.

Correctly so, the NAM believes. The new Milken Institute study, “Jobs for America,” concludes “modernizing U.S. export controls could increase exports in high-value areas. By 2019, these policy adjustments could enhance real GDP by $64.2 billion (0.4 percent), create 160,000 manufacturing jobs, and heighten total employment by 340,000.” The in-depth analysis is here.

The President also reaffirmed the Administration’s oft-stated belief in the value of trade agreements.

We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. (Applause.) But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. (Applause.) And that’s why we’ll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia. (Applause.)

But let’s do more than “strengthen” — let’s ENACT. The President would have helped achieve the goal he had just set by calling on Congress to enact the U.S.-Colombia Free Trade Agreement, the U.S.-Panama Free Trade Agreement, and the U.S.-Korea Free Trade Agreement.

As NAM President John Engler said in a press briefing Monday, “”We believe we absolutely have the votes for the Panama and Colombia agreements.” And… “We think if they’re serious on the jobs front, they have to look at trade. We’ve got a lot of companies that send a big amount of their production abroad for sale.”

The National Association and other major business and international trade groups have written the National Economic Council and the National Security Council detailing serious problems with two bills to impose global sanctions in an effort to prevent Iran from developing nuclear weapons technology.

Worthy goal, but an overreaching and damaging approach. Excerpt from the letter:

The undersigned business organizations are profoundly concerned that current legislative proposals to expand U.S. sanctions on Iran (H.R. 2194 and S. 2799) would significantly undermine the U.S. national interest. While we agree that preventing Iran from developing the capability to produce nuclear weapons is an urgent U.S. national security objective, the unilateral, extraterritorial, and overly broad approach of these bills would undercut rather than advance this critical objective.

The proposed sanctions would incite economic, diplomatic, and legal conflicts with U.S. allies
and could frustrate joint action against Iran. They could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed.

The proposals could have a large impact on the U.S. Export-Import Bank, precluding it from
partnering with counterpart agencies abroad to co-finance U.S. exports that have no relation to Iran’s energy sector. A significant portion of the bank’s portfolio could be impacted, compromising its ability to boost U.S. exports.

For links to the bills, click H.R. 2194 and S. 2799.

Other signers are the U.S. Chamber of Commerce, Business Roundtable, National Foreign Trade Council, Emergency Committee for American Trade, USA*Engage, U.S. Council for International Business, and the Coalition for Employment through Exports.

See also Politico, Laura Rozen’s blog.

UPDATE (10:40 a.m.): Reuters also reports, “U.S. business groups warned the White House on Tuesday that congressional plans to expand U.S. sanctions on Iran threaten to significantly undermine U.S. economic and security interests.”

John Engler, president of the National Association of Manufacturers, appeared on Hugh Hewitt’s radio program Tuesday to discuss “Jobs for America,” the new Milken Institute study that details the economic case for policies that will encourage competitiveness and growth of the U.S. manufacturing sector.

The program has posted a transcript of the interview — transcripts being one of the reasons we really like Hugh’s site, www.hughhewitt.com –and here’s an exchange.

HH: Now it’s a great report. It’s almost forty pages long, full of facts, full of details. What’s the key takeaway, Governor? I mean, people should go read it at the Milken Institute website, and I’m sure NAM’s got a link to it, too.

JE: We do, both Milken and NAM have links to this. We’re sending it all over Washington today to every member of Congress, to anybody that we think can influence Congress.

But bottom line, of course, it recognizes I think something your show knows well. Government doesn’t create jobs. Business creates the jobs, and we need to encourage that to happen.

And the report, I think, does something that we’ve needed to do for some time, and I’m just pleased that the NAM could have engaged the Milken Institute to get this done. We really go into the numbers. We dive deeply and say look, if you reduce corporate tax rates, if you make the R & D credit better, make it permanent, if you modernize our system of export controls, guess what’s going to happen? You’re going to create jobs, if we do all three of those things, nearly a million new manufacturing jobs, and nearly three million total jobs right there. And we’re going to add significantly to GDP. This is over a ten year period.

But the implications of this are very clear for Congress. What we need to do is encourage this investment, and get the private sector working. That’s how we get the economy moving.

Thanks, Hugh.

From Reuters, reporting on remarks by House Majority Leader Steny Hoyer after his speech today at the National Press Club. “We ought to pass them,” he said of the still-pending Free Trade Agreements with Colombia and Panama. The deal with South Korea needs more work.

“Basically, however, I believe that America can compete with the rest of the world if we have a level and fair trading field. So I’m one of those that believes that trade is helpful and creates jobs over the long run.”

Yes, Hoyer said pretty much the same thing when he spoke to the National Association of Manufacturers last September, but he was right then and he’s right now.

Reporters asked NAM President John Engler about trade today on a conference call about the Milken Institute study, “Jobs for America.” Engler said any discussion about jobs in the President’s State of the Union should embrace trade expansion: “We think if they’re serious on the jobs front, they have to look at trade. We’ve got a lot of companies that send a big amount of their production abroad for sale.”

More on Hoyer’s remarks, with a strangely inclusive lead, from AFP.

Earlier today, Bloomberg moved a larger piece about the Obama Administration’s pallid trade agenda, reporting the disappointment of major exporters like Caterpillar. Also, the following seems like a fair assessment:

[Obama’s] trade agenda remains modest, said William Reinsch, president of the Washington-based National Foreign Trade Council, which represents exporters such as Boeing Co.

There’s a split in the administration between economic advisers who support more trade pacts and political operatives who say doing so would enrage Democratic lawmakers and their union supporters, Reinsch said in an interview.

“So far the political people are winning,” he said.

Yeah. Jobs or politics, politics or jobs.

Today yet one more anti-competitive cost is being imposed on American manufacturing by the U.S. government. U.S. Customs and Border Protection (CBP) is starting its full-scale enforcement of the new customs rule, 10+2, even though businesses have struggled to meet the requirements during a one-year phase-in period.

Manufacturers have spent the last year diligently developing the compliance systems to meet the law’s requirements, and yet only 50 percent of all submissions have managed to meet the standards. Indeed, very few companies are able to comply 100 percent of the time. Yet despite the good-faith efforts to comply with these burdensome demands, companies now face financial penalties.

Burdensome is a mild description. The new regulation requires importers to submit 10 types of detailed information to the customs agency 24 hours before U.S.-bound cargo is loaded at a foreign port. (The submissions are known as ISFs, or Import Security Filings.) The NAM and our allies in the Customs and Border Coalition surveyed its members and found serious disruptions of supply chains caused by the regulation’s requirements:

• The effort has imposed additional permanent operational costs on firms and will continue to do so: An estimated $3.5 billion additionally every year.
• Also, the effort is expected to add on average 2.8 days of permanent delay to the importing process, with a total estimated cost of $17.2 billion a year.
• The annual cost of the ISF requirements will total more than $20 billion a year.

Another study by a group of business associations and organizations came to the same conclusions: 10+2 disrupts supply chain.

The NAM has offered viable alternatives such as the Universal Importer Profile (UIP) that would improve national security without unduly burdening legitimate trade. Unfortunately, save for a few additional flexibilities, the Customers and Border Protection agency has ignored the concerns voiced by industry on the cost, impact to supply chains, and difficulties in collecting the information.

The National Association of Manufacturers today released a major economic analysis documenting the impact on the economy and jobs creation of several policy changes. The report was conducted by the Milken Institute, a nonpartisan and independent think tank in Santa Monica, that used respected and rigorous economic models to assess the impact of proposals.

The report is “Jobs for America,” and the Milken Institute has put up a website with the full study, explanatory slides, and other material: http://www.milkeninstitute.org/jobsforamerica/

“Jobs for America” concludes that proposed corporate tax cuts, export control reforms and key infrastructure investments could create more than 11 million jobs in the U.S. by 2019.

Specifically:

• Reducing the U.S. corporate income tax to match the average of other industrial countries (OECD nations) would boost total employment by 2.1 million jobs.
• A permanent R&D tax credit, increased by 25 percent, could generate 510,000 jobs within a decade.
• Modernizing U.S. export controls would expand exports in high-value areas, increasing total employment by 340,000.
• Investing $425.6 billion across 10 infrastructure categories (including highway and transit, energy efficiency, wastewater treatment, Smart Grid, nuclear, etc.) would generate 10.7 million jobs over three years.

“Jobs for America” provides the substantive economic analysis that should guide policymakers with a clear course of action if, as many assert, jobs is the No. 1 facing the country.

See also NAM release, “New Study Gives Roadmap for U.S. Job Creation and Long-Term Growth”

Gov. Jack Markell of Delaware, a Democrat, delivered his State of the State address on Thursday, Jan. 21, and he used the word “manufacture” in his speech (transcript).

We’ve been search for references to “manufacturing” and “industry” in governors’ speeches this month, and Markell’s mention certainly qualifies. His reference comes as he describes a multifaceted policy and spending approach toward economic growth in Delaware, using as a starting point the announcement by Fisker Automotive that the company will manufacture a plug-in hyrid sedan at the former GM plant.

Fisker also received support from federal taxpayers via the Obama Administration, including a $528.7 million dollar loan from the Department of Energy. Vice President Biden traveled back to Wilmington to announce Fisker’s siting choice.

The governor did not discuss the federal funding, but he plugged the state’s company recruitment and regulatory reform initiatives, thanked the congressional delegation, lauded the state’s workforce and praised the UAW. He also put Fisker in a larger policy context:

Fisker’s decision to locate in Delaware will only be a success when the cars produced here get sold in showrooms across the world. Fisker has announced an extensive dealer network and their business plan calls for them to export half the cars produced here. One of the most attractive aspects of Delaware was our easy access to, and high-quality workforce at, the Port of Wilmington. Businesses like Fisker need to efficiently get products to the market. That is why I am recommending $10 million in bond bill funding for the Port of Wilmington and that we move forward with the Northeast Corridor Rail project and the Route 301 bypass project – all important infrastructure projects that will make Delaware more competitive.

To restore Delaware’s promise and prosperity, we should not only build, assemble and distribute the next generation of cars in Delaware. We should invent and manufacture the technology for the cars – as well the technology for other industries of tomorrow. …

That is why I am supporting in this year’s bond bill plans to provide a center for high-tech laboratories, health sciences, alternative energy research and development, and other emerging industries at the old Chrysler site.

Global trade, infrastructure and R&D are powerful tools to encourage economic growth.

Education is also a prerequisite. A section of Gov. Markell’s speech was entitled, “A Great Economy Demands Great Schools.” Earlier in the week, he joined Sen. Ted Kaufman and DuPont to announce  a Statewide Council to Improve  Science, Technology, Engineering and Math (STEM) Education.

All in all, Gov. Markell’s State of the State address presented the big picture of how to achieve economic growth and jobs for the state, one that embraced the important elements for a strong manufacturing sector. It’s appreciated.

For earlier posts on other governors’ state of the state addresses, go here.