Category

Trade

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.

American Values, Manufacturing Have a Place in Cuba

By | Shopfloor Main, Trade | No Comments

Manufacturers in the United States produce great products desired across the globe each and every day. But our single greatest export remains America’s values—values which include free enterprise, competitiveness, individual liberty and equal opportunity as well as a willingness to lead by example.

That has never been clearer to me than it was during my recent trip to Cuba when I took eight manufacturers there to engage in discussions with government officials and engage in a dialogue with the Cuban people.

Times have changed. The tense days of Kennedy, Castro and the Cuban missile crisis are behind us. I witnessed a nation in transition, whose citizens want to adapt their economy and expand their opportunities.

The decision to normalize diplomatic relations with that isolated island was controversial in some quarters, but a recent national survey found that nearly three-quarters of U.S. adults favor ending the U.S. trade embargo against Cuba. They also favor lifting the restrictions on travel to the island. Based on what I saw during my visit, clearly the time is right for positive interactions between the United States and Cuba.

Cuba May 2017

Economic engagement will benefit both countries. But in the case of Cuba, it will launch its citizens on a trajectory of greater prosperity, opportunity and freedom.

To get there, we need to do more.

Just 90 miles from the United States, Cuba is well-positioned to become a market for U.S. goods and services. With normalized trade, American exports of goods to Cuba could reach an estimated $4 billion per year.

While the United States has eased some of the restrictions on travel, trade and investment, lifting them completely is up to Congress.

The U.S. government has made allowances for some exports to Cuba and issued changes to facilitate authorized travel to the island. There remains, however, a long road ahead for both countries to expand trade and investment opportunities.

Manufacturers are committed to sharing with the Cuban people American values that will enrich the lives of all. Congress needs to listen and to take action by repealing the trade embargo and lifting restrictions on travel once and for all.

The Cuban government should reciprocate by allowing U.S. companies to trade directly with the emerging Cuban private sector and by continuing market-oriented reforms that facilitate foreign investment.

I encourage you to communicate with your representatives in Washington. Expanded economic engagement means new opportunities for us and greater prosperity and freedom for Cubans. It is time to demonstrate our American values in action.

NAM Moves Forward a Positive Discussion on NAFTA

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On April 26, National Association of Manufacturers Vice President of International Economic Affairs Linda Dempsey participated on a Farm Foundation panel on the Future of the North American Free Trade Agreementat the National Press Club in Washington, D.C. Dempsey was joined by Bob Stallman, former president of the American Farm Bureau Federation, and Melissa San Miguel, senior director of global strategies at the Grocery Manufacturers Association.

In her remarks, Dempsey explained the importance of the existing North American market for manufacturers in the United States and how millions of manufacturing workers and thousands of manufacturing firms depend on exports to Canada and Mexico. Dempsey also outlined a number of key principles that are critical for manufacturers in renegotiated agreement, including strong rules that reflect U.S. principles, law and values; strong intellectual property and digital economy rules; updated provisions that promote growth and competitiveness; the need to help, not hurt, America’s industries and workers; and the importance of concluding any NAFTA renegotiations in a timely manner. 

NAM, UK Manufacturers Seek Greater Collaboration

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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.

Read More

New NAM Analysis Scrutiny Highlights Need for Strong Action to Address Global IP Challenges That Harm Manufacturing in the United States

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The National Association of Manufacturers (NAM) yesterday urged the U.S. government to boost its efforts to protect U.S. manufacturing innovation against the threat of intellectual property (IP) theft globally in a detailed submission to the Office of the U.S. Trade Representative (USTR). Innovation and IP remains the foundation for a globally competitive manufacturing sector in the United States. Yet, global infringement of IP, including patents, trade secrets, trademarks and copyrights, hurts the ability of manufacturers in the United States to not only innovate but also to sustain and create well-paying jobs. The NAM looks forward to working closely with the Trump administration on stepped-up and vigorous efforts to combat IP theft and to protect and secure strong enforcement of IP rights both at home and abroad. Read More

Business Community Unites Around Ross Nomination

By | Communications, Media Relations, Shopfloor Main, Trade | No Comments

Today more than 400 businesses and business organizations sent a letter to the U.S. Senate urging support for the confirmation of Wilbur Ross as secretary of commerce. Spearheaded by the National Association of Manufacturers (NAM), the letter urges swift action on Mr. Ross’ confirmation.

“We believe that Wilbur Ross will bring a unique understanding of what it takes to fuel manufacturing enterprises to this vital role,” the letter reads. “Mr. Ross has a firsthand understanding of the challenges manufacturers face to remain globally competitive in today’s economy.”

Read the full letter here.

NAM President and CEO Jay Timmons also sent a letter yesterday on behalf of the NAM offering his support for Ross’ confirmation.

“Wilbur is a businessman with extensive experience in a wide range of industries who knows firsthand what policies it takes to promote competitiveness, investment, job creation and durable economic growth,” Timmons wrote. “In particular, Wilbur has extensive experience in the manufacturing sector and understands the critical need for pro-growth trade, tax and other economic policies.”

Timmons’ letter is available in its entirety here.

For Manufacturers, Trade Must Be Open and Fair

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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.

Timmons: Terry Branstad Will Not Settle for Anything Less Than a Level Playing Field

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Iowa Governor Has Been a Longtime Champion of Manufacturing

National Association of Manufacturers (NAM) President and CEO Jay Timmons and the NAM’s former Board Chair and current Chair of the Board of Vermeer Corporation in Iowa, Mary Andringa, released the following statements after the nomination of Gov. Terry Branstad (R-IA) to serve as the ambassador to China:

“Terry Branstad is the perfect pick for this important position. Working closely with Gov. Branstad and his outstanding team for many years, I know he is a man true to his word and has been tested over and over again as Iowa’s chief executive,” said Timmons. “From leading his state out of tough economic times to balancing Iowa’s budget, he understands what manufacturers and businesses need to invest and grow—and has a proven record of results.

“The governor’s deep understanding of China, and close relationship with Chinese President Xi Jinping, uniquely qualifies him for this vital post. For manufacturers, China stands as one of our largest trade and investment partners, but it is also a major challenge, imposing a range of market-distorting policies and practices that impact manufacturers in the United States,” said Timmons. “I have full confidence that Gov. Branstad will help forge a strong U.S.–China relationship that is based on the principles of fairness, respect and, most importantly, the rule of law. He understands that manufacturers are committed to building meaningful ties with China—but will not settle for anything less than a free and fair competitive landscape where both countries are playing by the same rules.”

“As the leader of an Iowa-based equipment manufacturer, I have worked closely with Gov. Branstad over the course of his many years of service to the state of Iowa,” said Andringa. “The governor is a pragmatic and inclusive leader who knows how to bring people together to solve problems and pursue opportunities. He has more than 30 years of experience working closely with Chinese leaders and has proudly hosted them in Iowa on numerous occasions. The governor knows the importance of a strong and constructive relationship with one of our largest trading partners, and he has the experience needed to represent us effectively in Beijing.”

CONTACT: Jennifer Drogus (202) 637-3090

U.S., China Talk Results in Broad Commitments, Few Concrete Policy Changes on Manufacturing Issues in Final Commercial Dialogue

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The Obama administration closed the book on engagement with China last week with the annual meetings of the Joint Commission on Commerce and Trade (JCCT). These meetings, which ran from November 21 to 23 in Washington, D.C., pushed for full implementation of previous commitments and some new language on manufacturing-relevant issues, such as new commitments on China’s trade secrets and online anti-counterfeiting efforts, industrial policy issues in cybersecurity and competition and specific policy concerns in sectors like semiconductors, medical devices, pharmaceuticals and food processing. However, the session still focused more on statements of broad principle and extended dialogue, such as on overcapacity, versus the types of specific, concrete policy changes that are needed to address significantly the many longstanding issues facing the U.S. manufacturing sector in China.

At the end of the day, manufacturers need to see progress on these issues, and it is that concrete progress that manufacturers view as the benchmark for the U.S. approach to China. China stands as one of the United States’ largest commercial relationships, with more than $560 billion in bilateral trade and $3 billion in bilateral investment. While the third largest market for U.S.-manufactured goods exports, China also persistently ranks as one of the most frequently cited trouble spots for manufacturers in the United States, with a range of market-distorting policies and practices, such as industrial overcapacity, insufficient intellectual property infringement and protectionist industrial policies. All of these policies harm the ability of manufacturers to open new or expand U.S. factories, sell more at home and abroad and provide good-paying manufacturing jobs here in the United States.

Heading into the next administration, the U.S. government must strengthen U.S. efforts, working with the industry and global trading partners, to hold China accountable to both global trading rules and China’s own trade commitments so that China does not continue to advance its domestic industry at the expense of ours. Such efforts must produce smart, practical outcomes that hold China accountable, while also ensuring that manufacturers in the United States and their workers that depend on a rules-based trading relationship with China are not put at risk. Commercial dialogues like the JCCT are an important part of the toolkit to address those barriers alongside other bilateral and multilateral dialogues, work within the World Trade Organization and the robust use of trade enforcement tools both domestic and international as well as trade and investment negotiations that address additional market-distorting activities.

Manufacturers in the United States are committed to building a robust trading relationship with China but will not settle for anything less than a free and fair competitive landscape where both countries are playing by the same rules.