President Obama’s FY2014 budget was released this morning, and it includes some mixed messages on trade. Perhaps most significantly, the budget proposal includes a plan to reorganize – and consolidate – the government’s trade functions. As outlined in the FY2014 budget proposal, the President would like to consolidate six primary business and trade agencies into a new Department. The new Department would include the Commerce Department’s core business and trade functions, the Small Business Administration (SBA), the Office of the U.S. Trade Representative (USTR), the U.S. Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the U.S. Trade and Development Agency. It would also incorporate related programs from a number of other departments, including the Agriculture Department’s business development programs, the Treasury Department’s Community Development Financial Institutions Fund program, the National Science Foundation’s (NSF) statistical agency and industry partnership programs, and the Bureau of Labor Statistics.

The President outlined a similar proposal in his 2012 State of the Union address, with a resoundingly negative reaction from the business community. In response to that plan, the NAM joined more than 80 other business groups in a letter arguing that subsuming USTR into a broader trade and business government department would severely harm its credibility and hamper USTR’s ability to play its unique coordinating role within the U.S. government. USTR is statutorily responsible for developing and coordinating U.S. international trade and direct investment policy as well as overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the President’s principal trade advisor, negotiator, and spokesperson on trade issues. The NAM continues to be troubled by this reorganization proposal, given the importance of trade to manufacturers in the United States.

In looking at the budget proposals for specific departments, the budget proposal would provide additional resources for trade promotion initiatives and agencies. The Commerce Department budget overview includes an increase for the International Trade Administration (ITA), with a proposed a budget of $520 – or a 14 percent increase over the 2012 enacted level. ITA helps promote U.S. trade and investment and also ensures fair trade through rigorous enforcement of trade laws and agreements. The agency is home to the U.S. and Foreign Commercial Service, which promotes U.S. exports and provides commercial diplomacy support for U.S. business interests around the world.

The Commerce Department’s budget proposal also supports the President’s Export Control Reform Initiative, with $112 million for the Bureau of Industry & Security (BIS) to help sustain export licensing and enforcement activities while moving toward a more predictable, efficient and transparent export control system. The proposal would give BIS an $11 million increase from the 2012 enacted level.

The State Department’s budget proposal includes $307 million for the U.S. Trade and Development Agency, USTR, U.S. International Trade Commission and OPIC – a combined $46 million increase over the 2012 enacted level. The President’s budget proposal also includes $131 million for the Ex-Im Bank’s administrative expenses and Inspector General, a $37 million increase over the 2012 enacted level.

The clock continues to tick and we are now more than three months pas the expiration of the Miscellaneous Tariff Bill (MTB) at the end of the 112th Congress and as a result, manufacturers both large and small have seen their costs spike substantially this year.  The 113th Congress must act quickly in order to reverse this tax increase on manufacturers in the United States.

Fans are assembled on the shopfloor at Lasko Products

Companies of all sizes benefit from the MTB to help level the playing field for manufacturers in the U.S. The MTB cuts costs by reducing or eliminating tariffs on critical manufacturing inputs that are not available in the United States. The lack of action by Congress on an MTB is hurting manufacturers’ cost-competitiveness, thereby threatening jobs and economic growth.

For Lasko Products in Pennsylvania, the MTB is a critical tool that helps them compete. In a challenging global market, the MTB helps Lasko stay competitive by reducing their costs.

“There are 675 American workers at Lasko facilities benefiting from the MTB program,” said Ed McAssey, Chief Operating Officer at Lasko. “The MTB allows Lasko to compete against low-cost imports of household electric fans from China. We are the last American producer of portable oscillating fans and have been able to stay in this business with the MTB program and heavy investment in capital equipment and tooling. If Congress fails to act quickly and renew the MTB, it will put American jobs in our factories at risk. We hope Congress will act expeditiously to preserve American jobs and our investment.”

Each day that passes without the MTB means higher tariffs for manufacturers in the United States – like Lasko. For three decades, Congress has acted in a bipartisan, bicameral fashion to pass this common-sense legislation.  The time for them to act on the MTB is now.

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit shrank to $42.96 billion in February from $44.46 billion in January. The lower deficit was the result of increased goods exports, up from $130.85 billion to $132.19 billion.

February’s goods exports figure was the second-highest level ever – second only to December 2012’s $132.82 billion. At the same time, goods imports were marginally lower in February, down from $192.55 billion to $192.41 billion. The service sector trade balance was largely unchanged, with the surplus up from $17.24 billion to $17.26 billion.

The petroleum trade balance helps to explain much of the change in the goods market. The petroleum trade deficit narrowed from $24.33 billion in January to $21.21 billion. Unlike the decline in the trade deficit in December, this narrowing did not correspond with a decrease in petroleum prices. The price of West Texas intermediate crude was $88.25 a barrel in December, and it was $95.32 in February. But, the February crude oil price was actually a slight increase from the $94.69 a barrel observed in January. This implies that the increase in petroleum exports and corresponding decrease in petroleum imports might be due to other factors, such as changes in global demand or seasonal adjustments in the data.

The non-petroleum goods trade balance actually widened from $36.97 billion to $38.30 billion. Looking specifically at areas of strength in the goods export market, the largest gains were in the industrial supplies and materials (up $1.83 billion), other goods (up $463 billion, and automotive vehicles (up $169 million). The industrial supplies and materials figure was boosted by an additional $1.08 billion in fuel oil and other petroleum products exports. These gains, though, were counteracted by decreases of non-automotive capital goods (down $758 million), consumer goods (down $312 million), and foods, feeds, and beverages (down $101 million).

In terms of goods imports, industrial supplies and materials were down $2.59 billion, but as we saw in the exports numbers, almost the entire decline stemmed from reduced crude and fuel oils imports. The other major import categories were mostly higher, including increased imports for automotive vehicles and parts (up $1.10 billion), consumer goods (up $695 million), non-automotive capital goods (up $348 million), and foods, feeds, and beverages (up $238 million). (continue reading…)

On Monday, the Office of the United States Trade Representative (USTR) released its 28^th annual National Trade Estimate (NTE) report on trade barriers to U.S. exports in virtually every country around the world.  In addition, USTR issued its fourth annual report on two specific types of barriers – sanitary and phytosanitary barriers to our food and agricultural exports and technical barriers to trade that impose non-tariff barrier standards, testing requirements and technical specifications.  A fourth report – on threats to intellectual property protection globally – will be released at month’s end.

The three reports released on April 1 provide a sobering reality to efforts to achieve our national goal of doubling exports between 2009 and 2014. Substantial and, in many countries, growing barriers limit greater U.S. sales and access to foreign markets. And while some of these issues can be addressed through existing international obligations under trade agreements, many of these countries are not part of agreements with the United States that would discipline such unfair barriers.

For manufacturers, these reports reinforce the importance of a robust trade agenda that is focused on opening new markets and setting in place strong disciplines on a host of unfair trade and investment barriers. For our nation’s manufacturers, trade and investment agreements are an export driver. The United States’ 20 Free Trade Agreement partner countries accounted for 48 percent of total U.S. manufactured goods exports in 2012. And looking at these reports on international barriers helps explain why.  Let’s make these opportunities a reality for growing manufacturing.

The newly announced Transatlantic Trade and Investment Partnership (TTIP) negotiations that will begin this summer with the EU and the ongoing Trans-Pacific Partnership (TPP) negotiations with 10 of our Asia-Pacific trading partners represent huge opportunities for the United States and our manufacturers to secure stronger rules that will break down many of the barriers identified in these reports. Investment treaty negotiations with China, India, and potentially several countries in Africa are also important to set in place basic rules of fairness for U.S. property – including intellectual property – located overseas.  Multilateral negotiations to expand customs rules and facilitate trade, to expand the Information Technology Agreement and to develop a stronger international services framework all would address many of the barriers identified in these reports. (continue reading…)

Earlier today, the NAM sent a letter to the Senate expressing NAM policy positions on the budget resolution (S. Con. Res. 8 ) and its associated amendments. In particular, manufacturers support amendments offered by Senators Orrin Hatch (R-UT), Rob Portman (R-OH) and Ron Wyden (D-OR) to renew trade promotion authority (TPA) and enable the United States to negotiate and implement trade agreements that eliminate barriers to greater market access overseas. TPA, which used to be called fast-track authority, would allow Congress to accept or reject – but not amend – trade deals the Administration negotiates with other countries. Acting U.S. Trade Representative Demetrios Marantis, in testimony before the Senate Finance Committee on March 19, said the Administration was looking forward to working with Congress on TPA. The United States is currently engaged in negotiation on a Trans-Pacific Partnership (TPP) agreement and will be launching Transatlantic Trade and Investment Partnership negotiations with the European Union later this year.

The NAM also supports amendments offered by Senator Hatch to maintain a strong U.S. Trade Representative office and to strengthen U.S. government efforts promoting innovation and protecting intellectual property rights worldwide.

The NAM opposes S.Amdt.374 offered by Senator Mike Lee (R-UT) to defund the Export-Import Bank. Ex-Im Bank authorized more than $35 billion in financing in FY 2012, supporting more than 255,000 American jobs. The Bank worked with more than 3,400 U.S. companies, 85 percent of which were small businesses. Ex-Im is a vital tool in leveling the global playing field, helping manufacturers to offset the financing support our foreign competitors receive from their governments, and in securing new customers in emerging markets. As the “lender of last resort,” Ex-Im has experienced unprecedented demand in the past few years while banks have been hesitant or unable to extend competitive terms on some transactions. The Ex-Im Bank also generates enough fees to offset its costs, contributing the remaining surplus to the U.S. Treasury to help to offset the budget deficit. The 2012 Annual Report outlines the Bank’s accomplishments last year.

In today’s Politico former Senator Blanche Lincoln penned and op-ed on the importance of energy exports and the need for government to help industry, hurt it.

In the piece Sen. Lincoln discusses the importance of the pending permits for coal export terminals in the Pacific Northwest. Exports are essential to our competitiveness and it is important that these projects be allowed to move forward without onerous delays such as a one-size fits all environmental review.

Here is an excerpt from Politico:

This expansion, supported by private investment, would allow for the increased export of bulk commodities like coal, agricultural products and other materials. If allowed to move forward, such expansion would lead to more jobs and tax revenue for the entire region — and the nation. But it, and countless other infrastructure projects, could be permanently stalled by an onerous review that would attempt to analyze the cumulative regional environmental impact of these facilities and for every use of everything that is shipped from them: a virtually impossible task that, if followed to its logical end, could result in findings conceivably so inaccurate that they would be utterly useless. This effect, on top of possible reductions in resources to agencies, could produce a real roadblock at a time when we need all hands on deck to help us grow our economy.

Sen. Lincoln hits the nail on the head when she says “we need all hands on deck to help us grow our economy.” Additional reviews and red tape will bog down projects like the coal export terminals and set us further behind our global competitors while we lose out on valuable export opportunities.

As the last Miscellaneous Tariff Bill (MTB) package expired at the end of the 112th Congress, manufacturers began to see their costs go up. Congress failed to pass a new package which lead to the expiration of duty suspensions on more than 600 products critical to manufacturers in the United States.

Ron Eva Speaks During an NAM Shopfloor Event on the MTB

The MTB provides manufacturers a duty suspension on inputs not available in the U.S. that are critical to the manufacturing process. In its simplest terms, it helps to level the playing field for manufacturers and supports jobs. Currently, it is 20 percent more expensive to manufacture in the U.S. compared to our major trading partners, this is why a tool like the MTB, which lowers costs, is critical to our competitiveness.

One company that sees the MTB as essential to competitiveness is BASF. BASF is the world’s leading chemical company – The Chemical Company. Its portfolio ranges from chemicals, plastics,  and performance products to crop protection products.  BASF has more than 100 facilities in 31 states across the country and more than 15,000 employees in the U.S. alone. The MTB is critical to BASF’s competitiveness in the automotive, printing, packaging, telecommunications and agriculture markets.

“The MTB helps BASF remain competitive in the agriculture market which continues to see increased competition and more choices for customers,” said Ron Eva, BASF global sourcing and contracting manager. (continue reading…)

The Miscellaneous Tariff Bill (MTB) expired on December 31, 2012, causing taxes to increase on more than 600 products critical to manufacturers. Today a group of manufacturing CEOs and senior executives sent a letter to congressional leaders urging action on a new MTB package to boost manufacturers’ competitiveness. The MTB is a tariff suspension on hundreds of inputs and products that are essential to the manufacturing process but not available in the United States.

Every day that passes without congressional action on a new MTB results in manufacturers costs going up, making it more expensive to manufacture in the United States. The longer we go without an MTB, the further it sets us back and puts manufacturing jobs at risk. The MTB levels the playing field for manufacturers and helps spur innovation and development of new products.

It’s time for the House and Senate to move forward with a new MTB.  Manufacturers in America can’t afford to wait any longer.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

Today the House Ways and Means Trade Subcommittee held a hearing on U.S-India trade issues. India represents a large market for U.S. manufactured goods exports and it’s important that India is playing by the rules.

The hearing today really looked at how we can strengthen and expand trade and investment with India, as well as what can be done to better protect investors and manufacturers who export and sell in India. It is important to enforce existing disciplines on intellectual property (IP) in the WTO and continually make progress in improving those disciplines. We have yet to reach our full potential for U.S. exports to India and there are several intellectual property risks which need to be resolved.

Testifying on these issues from a manufacturing perspective today was Roy Waldron, senior vice president and chief intellectual property counsel for Pfizer. Mr. Waldron’s duties include protecting the company’s intellectual property portfolio throughout the world. The pharmaceutical industry supports more than 4 million jobs in the United States and exports $46 billion in goods. (continue reading…)

The President released an Executive Order today and an accompanying Fact Sheet outlining a crucial step toward implementing changes to the U.S. Munitions List (USML) as part of the President’s Export Control Reform Initiative.

On March 7, the Administration notified Congress – as required by Section 38(f) of the Arms Export Control Act – of the intended changes to USML Category VIII (Aircraft) and USML Category XIX (Gas Turbine Engines). Congress was reportedly given “pre-notification” in February, including text of the intended rule changes, and now has 30 days to review the modifications before the final rules will be published. The Administration has outlined a 180-day transition period that would follow the final rule.

The NAM has long advocated for a more predictable, efficient and transparent export control system. A study by the Milken Institute in partnership with the NAM previously estimated that modernizing export controls could boost real U.S. economic output by $64 billion and create 160,000 manufacturing jobs. Today’s news is a positive step to modernizing our export control system to keep us from falling behind our global competition.

Public comments on the State Department’s proposed rule for USML Category VIII are online here. Public comments on the Commerce Department’s proposed rule for control of items that no longer warrant control under the USML are onlinehere. Public comments on the State Department’s proposed rule for USML Category XIX are online here. Public comments on the Commerce Department’s proposed rule for control of items that no longer warrant control under the USML are online here. A full listing of proposed rules for USML Categories, and their accompanying Commerce Control List (CCL) categories, is online here.

Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.