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…)

This week the Senate Finance Committee holds two hearings on pending free trade agreements (FTAs).  Tomorrow, the committee will consider the Panama FTA, and Thursday the committee will turn to the South Korea agreement.

Ahead of those hearings, 25 governors have written congressional leaders urging them to pass the Colombia, Panama, and Korea FTAs.  The bipartisan group writes,

As the chief executives of our respective states and territories, we appreciate how important international trade and investment are to the economic vitality of our jurisdictions, presenting important opportunities for workers, and enhancing our overall competitiveness.  Export-related jobs pay better than non-exporting industries and, with nearly 95 percent of the world’s consumers living outside of the U.S., exports have been the focus of increased job growth in recent years.

These trade agreements have been awaiting congressional approval since 2007 (and 2006 for the Colombia deal).

Read the whole letter here.

The U.S. balance of trade in goods and services worsened by $3 billion in March, to a seasonally adjusted balance of $62 billion, an annual rate of $745 billion. The $3 billion change was almost totally in goods trade, the result of a $6 billion increase in the petroleum deficit and an improvement of $3 billion in non-petroleum trade.

Two-thirds of the improvement in non-petroleum trade was in manufactured goods, with the seasonally-adjusted trade balance of $40 billion being $2 billion smaller than in February.

March manufactured goods exports of $95.8 billion, seasonally-adjusted, represented a one-month jump of 4.5 percent, the highest one-month increase in three years – and setting a new record high, exceeding the previous peak of $94.2 billion in July 2008.

The growth in March compensated for the slow January and February growth and brought the year-over-year (March 2011 compared to March 2010) growth up to 14.5 percent, very close to the 15 percent annual growth path needed to double exports in five years.

The growth was paced by basic manufactured goods exports (other than advanced technology exports), which were up 17.5 percent over March 2010. Advanced technology export growth lagged, up only 6 percent. Basic manufactured goods are more sensitive to price changes and appear to be benefitting more from the appreciation of other currencies against the dollar – which makes price-sensitive U.S. exports more attractive in foreign currencies. Organic chemical exports, for example jumped 14 percent over February.

Manufactured goods imports grew as well, but considerably slower than exports in March, leading to the decline in the trade deficit.

Detailed data on the country distribution of U.S. manufactured goods trade will be available Tuesday afternoon, and will be reported on shortly in another post. 

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

We have some sense of optimism on the state of the U.S. trade agenda today. On Friday The New York Times ran an editorial urging the Administration to move quickly on all three pending free trade agreements (FTAs) with Colombia, Korea and Panama.

The Colombian government is facing the first of several deadlines as laid out in the “action plan” they reached with the Obama Administration recently – and I’m betting they’ll deliver completely and flawlessly. And when they do, we would argue that there should be no delay in beginning the approval process of that agreement in Congress. The Korea FTA is ready to go as well, and it can join the Colombian agreement in receiving quick Congressional consideration (they can share a cab to the Hill, perhaps).

But leave room in that cab for the Panama agreement. Today USTR Kirk sent a letter to Congress indicating that USTR “has completed its preparatory work on the Agreement and stands ready to begin technical discussions with Members of Congress on the draft implementing bill and draft Statement of Administrative Action.” That means, let’s get to work on Panama. USTR Kirk has already sent such a letter on Korea. Following the April 22 action plan efforts by Colombia, could we see such a letter on the Colombia FTA as well? Within a few days, all three free trade agreements could be able to begin the journey to Congress for approval. We think “should” rather than “could.”

And it should be swift and bipartisan approval – there is strong support for all three agreements in Congress. President Obama has spoken in support of Korea and Colombia, and we expect he might have something similar to say about Panama now that the Tax Information and Exchange Agreement (TIEA)  has been ratified. The longer we wait, the longer barriers to our manufactured goods exports remain in place, even as some of our competitors race to implement their own agreements that will give them preferential treatment. The U.S. International Trade Commission estimates that $13 billion annually in new exports will be the result of the three agreements. $9 billion or so of that will be in manufactured goods exports. That means jobs in factories all around the country.

As Ways and Means Chairman David Camp says in a news release today, “The more we delay, the more we lose. The time to act is now.” Ways and Means Trade Subcommittee Chairman Kevin Brady adds “We are on the home stretch, and I welcome the opportunity to show the world that we once again have a market-opening trade agenda that creates U.S. jobs.” The NYT editorial noted “[t]hese agreements are good for the American economy and good for national security. Congress should waste no more time and approve them.”

We couldn’t agree more. Congratulations to the Martinelli Administration in Panama for quickly moving the TIEA through its ratification process. They’ve delivered what they were asked to do. We fully believe the Santos Administration in Colombia will just as quickly deliver what they’ve been asked to do in the recent action plan before April 22. With these actions, they should join Korea and move to Congress, where they will have a warm reception. Chairman Camp has repeatedly called for passage of all three FTAs by July 1, a proposal we strongly endorse. Put all three FTAs in a cab and drive them straight to Capitol Hill. Because when it comes to removing foreign barriers to U.S. manufactured goods — the meter’s running.