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.

Commerce Department trade data released today show that overall U.S. exports of goods and services in July were up 15 percent over July 2010, still on track for doubling in five years.  However, this was due to a 30 percent increase in exports of industrial supplies and raw materials and a 22 percent increase in agricultural exports.

Manufactured goods, by far the largest U.S. export category, lagged behind, up 11 percent over July 2010.  Services exports also lagged, up 10 percent over last July.  Both of these vital categories of U.S. export have fallen below the 15 percent annual rate of growth path necessary for doubling in five years.

Capital goods exports, which comprise nearly half of manufactured goods exports, rose only 9 percent over last July. 

The slowing rates of growth for these important exports indicate that renewed attention is needed to spur U.S. export growth.  Importantly, greater access to foreign markets is needed, beginning with the need to pass and implement the three pending bilateral trade agreements with Colombia, Korea, and Panama.

The importance of bilateral agreements is evident in the Commerce Department’s figures www.trade.gov/fta  that show a large and rising U.S. trade surplus in manufactured goods.  That surplus has cumulated to over $20 billion for the first half of this year.

That surplus contrasts with the large manufactured goods deficit with the rest of the world.  For the first seven months of this year, the total manufactured goods deficit was $255 billion, up from $214 billion for the comparable period of 2010.

The U.S. deficit in petroleum and products was $194 billion for the first seven months of the year, compared to $157 for the first seven months of 2010.  This figure continues to underscores the urgency of taking additional steps to develop additional domestic sources of energy. 

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

The Commerce Department, on its excellent website on Free Trade Agreements (FTAs), now lists exports, imports, and trade balances with our FTA partners.  Their FTA trade tables show that, contrary to anti-trade allegations, the United States has a manufactured goods trade surplus with our FTA partners.

The FTA trade tables show both total trade and trade in manufactured goods.  While total trade with FTA partners is in deficit, manufactured goods (shown on page two of the FTA Trade Tables) are in surplus.  Oil imports from NAFTA are the reason why total trade is in deficit – but oil imports don’t affect U.S. jobs negatively.  The United States needs more oil from friendly sources right next door, and NAFTA is our largest supplier of oil.

When anti-trade elements attack FTAs as costing U.S. manufacturing jobs, they are implying that the United States has a large and growing deficit in manufactured goods trade with FTAs.  This alleged deficit implies that imports from FTA partners grew faster than exports, hurting job opportunities.

But that is absolutely false, as the International Trade Administration’s FTA Trade Tables show.  The truth is that when it comes to manufactured goods, the United States has had a trade surplus with FTA partners for several years: $27 billion in 2009, $23 billion in 2010, and $21 billion for the first half of this year – implying a $42 billion annual rate of surplus for 2011.

The data show that manufactured goods exports to FTA partners have been growing faster than imports from them, which makes sense since our trade agreements have cut their trade barriers to us much more than we have cut our trade barriers to them.

The FTA Trade Tables show that we have a manufactured goods surplus with NAFTA so far this year amounting to $4.1 billion – a $8.2 billion annual rate; and a manufactured goods surplus with CAFTA of $2 billion – a $4 billion annual rate. (continue reading…)

The April U.S. foreign trade data released by the Department of Commerce today show some positive news for manufacturers. U.S. manufactured goods trade in April recorded a second favorable month in a row, with a strong increase in exports and a decline in the manufactured goods deficit. The important category of capital goods showed particularly strong export growth.

Manufactured goods exports in April stood at a seasonally-adjusted $97.2 billion, up 1.2 percent over March – an annual rate of increase of 16 percent.  This continues the generally strong pattern of the last year, and April manufactured goods exports were 15 percent larger than in April 2010. Fifteen percent a year is what is needed to meet the goal of doubling exports in five years, so manufactured goods are still on that path.

Manufactured goods imports in April were $134 billion, down one percent from March. Part of the reason for the drop was a 19 percent one-month drop in imports from Japan, reflecting the results of the disruption caused by the tsunami and nuclear disasters that affected Japan.

The U.S. balance of trade in manufactured goods declined in April as a result of the stronger export growth and slight decline in imports. The seasonally-adjusted deficit of $36.8 billion was the lowest so far this year, but that deficit implies an annual rate of $442 billion. (continue reading…)