The National Association of Manufacturers is pleased by the news today that finally, the U.S.-Korea trade agreement will take effect on March 15, 2012. The United States has exchanged diplomatic notes with Korea in which each side confirmed that it had completed applicable legal requirements and procedures for the agreement’s entry into force.

According to the U.S. Government, on March 15, almost 80 percent of U.S. exports of industrial products to Korea will become duty-free, including aerospace equipment, agricultural equipment, auto parts, building products, chemicals, consumer goods, electrical equipment, environmental goods, all footwear and travel goods, paper products,  scientific equipment and shipping and transportation equipment. 

This matters because Korea offers U.S. manufacturers a growing opportunity for exports within a dynamic and expanding market. Korea is our seventh-largest trading partner and is a crucial export destination for U.S. manufacturing. Korea is one of the fastest-growing industrial economies in Asia, and its GDP has grown by 67 percent since 2000, according to the International Monetary Fund (IMF).

Small and medium-sized manufacturers will strongly benefit from the U.S.-Korea agreement: nearly 19,000 small and medium-sized companies export goods to Korea, representing 90 percent of total U.S. exporters. Manufactured goods are the vast majority of U.S. exports to Korea. In 2010, the U.S. exported $31.6 billion worth of manufactured goods to Korea, and Korea was our fastest-growing export destination in the world, with a 37 percent increase over 2009 exports. Manufactured goods make up over 75 percent of total U.S. merchandise exports to Korea. (continue reading…)

On Friday President Obama spoke at the Boeing Company’s facility in Everett, WA and called on Congress to reauthorize the Export-Import Bank of the United States. The President also rolled out several new initiatives to help companies grow exports.

The Ex-Im Bank plays an important role in our country’s ability to export. Thousands of small businesses all over the country benefit from the Bank, last year the Bank supported $41 billion in exports from 3600 companies, which supports tens of thousands of manufacturing jobs.

If Congress fails to reauthorize the Bank our competition will simply pass us by. We already trail many of our competitors by a large margin. Germany, France and India all provided at least seven times more export assistance as a share of GDP than the U.S. in 2010. If we don’t reauthorize Ex-Im and increase the current lending limit we simply won’t reach the goal of doubling exports by 2014 and jobs will be hurt.

It’s just not President Obama calling for the Banks reauthorization, in the past week a few conservative commentators have called for the Banks’s reauthorization.

Just today conservative talk show host Hugh Hewitt wrote a column for on the WashingtonExaminer.com titled “Right Should Support Export-Import Bank” stating that the Bank should be reauthorized as an enterprise the federal government ought to be doing and does well:

For nearly 80 years, Ex-Im has been contributing to that originalist policy, and it would be a terrible triumph of an absolutist ideological tilt to strike even partially at one of the things the federal government not only ought to be doing, but which it has been doing and doing well under both Republicans and Democrats.

Hewitt continues on the success of Ex-Im:

Ex-Im is a success, one which conservatives can support proudly and from which they can draw lessons on the right functioning of the federal power with which to argue against the abuses and distortions of that power.

And last week on Townhall.com George Landrith, president of Frontiers of Freedom, in a post titled “A Conservative’s take on the Ex-Im Bank” he talks about the benefits of the Bank and how doesn’t cost the taxpayers a dime:

The Ex-Im Bank does not compete with private financial institutions, but rather fills-in banking gaps so that U.S. goods can be exported to nations where commercial financing is insufficient. The Ex-Im Bank doesn’t cost taxpayers a dime. Rather, it makes money from the fees charged to foreign buyers which get pumped back into the U.S. Treasury and helps reduce the deficit. 

The Ex-Im Bank has a 75 year track-record and the Congressional Budget Office projects in the coming years, the Ex-Im Bank will pump $900 million into the U.S. Treasury – not to mention the hundreds of billions of dollars of U.S. made goods that will be exported and the hundreds of thousands of American jobs that will be supported. In 2011 alone, the bank facilitated sales abroad that supported 290,000 American jobs.

Landrith refutes the argument from critics that the Ex-Im Bank is government interference in the private sector or picking winners and losers

Virtually every other nation offers export loan assistance. In fact, China and many other nations actually offer aggressive, below market loans to induce foreign buyers to purchase their goods. When the U.S. competes on quality and price, it wins the competition. That is precisely why nations like China intervene and offer cut rate financing with very generous terms so that they can undercut U.S. firms. Europe does this as well.

As a conservative, I would like to see free markets expanded. We should enter into more free market reform agreements with our trading partners. We should reform our tax code and our regulatory regime to ensure we are competitive.

But nixing the Ex-Im Bank now without international financing reform agreements does nothing to promote free markets. It merely undermines U.S. manufacturing, kills high-paying American jobs, and erodes our ability to compete in a worldwide marketplace

We urge Congress to reauthorize the Bank and increase its lending limit as soon as possible, without the Bank we will be left behind by our competition and manufacturers across the country will suffer the consequences.

We urge Congress to reauthorize the Bank and increase its lending limit as soon as possible, without the Bank we will be left behind by our competition and manufacturers across the country will suffer the consequences.

The full-year 2011 trade figures released today by the Commerce Department showed that the overall deficit in Goods and Services trade grew to $558 billion, up $58 billion from 2010.  The manufactured goods deficit was $450 billion.  Petroleum trade was also in deficit, by $150 billion.  These deficits were partially offset by surpluses in services trade and agriculture.

As has been the case for the past three years, manufactured goods trade was remarkably different with U.S. Free Trade Agreement (FTA) partners and non-partners.  Manufacturers in the U.S. racked up a $50 billion trade surplus with FTA partners – more than doubling the 2010 surplus of $21 billion.

Manufactured goods trade with non-partners, unfortunately was in deficit by $500 billion.  Over the past three years, the manufactured goods surplus with FTA partners cumulated to $100 billion.  During that same three year period, the manufactured goods trade deficit with non-partners totaled to $1.3 trillion.

Manufactured goods exports to the world reached $1.26 trillion in 2011, up 15 percent over 2010.  FTA partners were the highlight, with exports to them growing one-fourth faster than to non-partners.

The rate of growth for the whole year was on the 15 percent annual growth track needed to double in five years, but a troublesome sign was that the growth fell to an annual rate of 12.5 percent in the fourth quarter – the first quarter to be below the needed path.  An important part of the reason was that manufactured goods export growth to the important European Union market (second only to NAFTA) slipped dramatically, to only 6.6 percent in the fourth quarter.  This shows that the European economic difficulties are already impacting the United States. (continue reading…)

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.

The Bureau of Economic Analysis announced that real gross domestic product (GDP) rose 2.8 percent in the fourth quarter. This was mostly in line with forecasts of 3 percent for the quarter. For 2011, real GDP increased 1.7 percent, down from the 3 percent growth rate of 2010.

This quarter’s growth was led by strong increases in fixed investment (including residential), with healthy gains in consumption, inventories and exports. Specifically, consumers contributed 1.45 percentage points (or roughly half) to GDP, with 1.07 percent from durable goods consumption and another 0.27 percent from nondurables. Gross private domestic investment contributed 2.35 percentage points to growth, with the bulk of that coming from the replenishment of inventories. Both residential and nonresidential spending made positive contributions, as well.

Contributions from net exports were slightly negative, with higher imports offsetting the rise in exports. The largest drag on growth, though, came from government contributions. With defense and state and local government spending cuts, government reduced GDP by 0.93 percentage points.

Overall, these numbers reflect the stronger rebound in economic growth at the end of 2011 that many other indicators have reported earlier. Manufacturing activity, in particular, appeared much healthier in November and December than in the mid-months. With moderate growth in consumer and business spending, the economy turned in its fastest growth pace since the second quarter of 2010.

Moving ahead, manufacturers are optimistic about production, employment and capital spending for 2012, and yet, a number of significant headwinds (particularly from Europe) persist. Moreover, the government sector – which is already providing a drag – will continue to dampen GDP, especially as more austerity measures (including defense and other nondiscretionary spending cuts) start to have real effects on the manufacturing community.

Despite the concerns, we are seeing some positive news and reports that manufacturing is strengthening as seen in this report from the Financial Times. While growth may be slow, it is on the rise and it is expected to continue.

Chad Moutray is chief economist, National Association of Manufacturers.

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…)

Yesterday, Under Secretary of Commerce for International Trade, Francisco Sanchez spoke at the NAM’s Council of Manufacturing Associations (CMA) winter meeting.

Under Secretary Sanchez reiterated calls that we are at the beginning of a “manufacturing renaissance” and talked about the number of quality jobs created in the industry over the course of the last two years. He highlighted a Department of Commerce report which said that in 2009 alone, manufacturing made up more than 11 percent of GDP.

In order to build off the successes of manufacturing, and to really enter into a manufacturing renaissance, we have released our own four-point plan to guide the process. A Manufacturing Renaissance: Four Goals for Economic Growth addresses both the areas where we are thriving and the areas that need more attention.

Among those issues are exports. The NAM has been a strong supporter of the president’s goal to double exports by 2015. Manufacturers play an imperative role in that effort and Under Secretary Sanchez says “the correlation between jobs, exports and manufacturing is clear.” We agree.

Under Secretary Sanchez also spoke about the New Market Exporter Initiative. This initiative helps U.S. businesses find new markets, opportunities for export training and new contacts with distributors and representatives to expand their business.

The topic of manufacturing has been at the forefront of the Republican presidential debates and recent remarks by President Obama. It is encouraging to see so much attention on the industry that has led our economic recovery and continues to do so.

“U.S. manufacturers are vital to our economy and future growth.  It’s work that I’ve always valued.  My father ran a candy factory.  He had to make payroll.  He had to monitor inventory.  He had to sell and market products.  From his experience, I know how a strong manufacturing sector benefits workers, communities and our nation.” – Under Secretary Sanchez

No, Not China!  Chile!

Of the 25 largest markets for U.S. exports of manufactured goods, so far this year the title of fastest-growing goes to Chile, where U.S. exports of manufactured goods are up 41.9 percent through August, two and a half times as fast as the 16 percent increase in U.S. exports to the world. Exports to Chile have been spurred particularly by a 70 percent increase in exports of construction equipment and a 46 percent increase in exports of motor vehicles.

Hong Kong and Israel are the second and third fastest-growing markets, with U.S. exports of manufactured goods to both economies up more than 30 percent so far this year.

Four of the top ten fastest-growing major markets are free-trade partners: Chile, Israel, Australia, and Mexico. Soon-to-be free trade partner Colombia also made the top 10, with U.S. manufactured goods exports up 18.8 percent.

Where’s China?  Didn’t make the top 10.  With U.S. manufactured goods exports to China up 12.8 percent through August, China ranked 14^th out of the top 25 markets, between #13 United Kingdom and #15 Italy.

In terms of the dollar growth of exports, Canada is in first place, with U.S manufactured goods exports up $21 billion. Mexico is second, with U.S. manufactured goods exports up $20 billion.  China is third, with $5.3 billion growth, followed by Hong Kong, up $5.1 billion and the Netherlands, up $5.0 billion.

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

The U.S. economy picked up the pace in the third quarter, growing 2.5 percent in advance estimates released this morning from the Bureau of Economic Analysis. This represents the fastest pace this year, with the economy only growing 0.4 and 1.3 percent, respectively, in the first two quarters of this year.

Healthy increases in personal consumption, fixed investment and net exports accounted for the bulk of the real GDP rise. In fact, consumption alone contributed 1.72 percent of real GDP’s growth in the quarter; however, all but 0.35 percent of that was from services.

Manufactured goods did provide a positive contribution both from the sale of more durable goods (contributing 0.31 percent to real GDP) and increased goods exports (contributing 0.45 percent). Meanwhile, inventory reductions subtracted a percentage point from real GDP as businesses moved to reduce their supplies.

Looking at the percentage changes in various components of the GDP release, durable goods consumption was up 4.1 percent in the third quarter, compared to an increase of 0.2 percent for nondurables. The contributions from trade were positive, with goods exports (up 4.7 percent) outpacing goods imports (up 1.8 percent).  (continue reading…)

The Senate Banking Committee approved legislation today to reauthorize the U.S. Export-Import Bank through 2015. The reauthorization measure, which was approved by a voice vote, would gradually increase the loan ceiling to $140 billion. In addition to increasing the Bank’s exposure cap, the bill would also direct the Bank to review its current domestic content requirements, with due consideration for maintaining and creating jobs in the United States, and encourage the Bank to increase financing of exports for renewable energy and energy efficient technologies.

Ex-Im Bank, which is self-sustaining, provides financing to U.S. exporters through direct loans, guarantees and payment insurance. Last year alone, Ex-Im authorized more than $26 billion in exports that supported an estimated 230,000 jobs at more than 3,300 companies across the country. 

Additionally, more than 80 percent of Ex-Im Bank’s transactions directly involve small businesses. Congress must swiftly move to reauthorize the Ex-Im Bank before it expires on September 30.

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