The evidence keeps rolling in about the value of having free trade agreements (FTAs) that open up foreign markets to American exports.  The Commerce Department data on FTAs that the International Trade Administration just posted shows that we are on track for a fourth straight year of manufactured goods trade surpluses with our FTA partners.

Moreover, based on their data through October, that surplus has already reached a record $40 billion.  If that rate continues for November and December, the U.S. manufactured goods trade surplus with FTA partners will be $46 billion in 2011 – double the 2010 surplus of $23.4 billion.

The manufactured goods surplus with NAFTA is running at a $12 billion annual rate, and with CAFTA at a $3 billion annual rate. 

The record with FTA partners is in sharp contrast to U.S. manufactured goods trade with countries that do not have FTAs with us.  Based on January-October data, it looks like U.S. manufactured goods trade with non-FTA partners will register a deficit of close to $500 billion in 2011. 

The facts are clear -  we need more FTAs to let our manufactured goods into more foreign markets – and we need them as fast as we can get them.

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

A lot of public opinion polls over the last year or so have shown the American public believes free trade agreements (FTAs) are harmful to American manufacturing and jobs because they open the U.S. market to foreign competition. This view is one reason why it took so long to gather sufficient support in the Administration and the Congress to pass the FTAs with Colombia, Korea, and Panama.

 The general public, unfortunately, seems unaware that the United States is already a very open market, while American manufacturers frequently face much higher barriers trying to sell abroad. So FTAs don’t open our market so much as they open foreign markets. 

How open are we? The Commerce Department trade figures through October 2011 released last week show that so far this year, the average U.S. import duty (tax on imports) on foreign manufactured goods brought to the United States was only 1.6 percent – $23.8 billion of import duties on $1,467.4 billion of imports. 

Moreover, half of those import duties, $12 billion, were assessed on imports of only two sectors that accounted for only seven percent of U.S. imports of manufactured goods – apparel and leather products.

The average import duty for the 93 percent of the rest of U.S. manufactured goods imports was less than one percent – 0.9 percent, to be more precise. Far from being a barrier, that is barely a speed bump. Is the American public aware of this? I think not. In fact, I think it would be eye-opening for pollsters to ask the public just what they would guess our import duties are.

But when American manufacturers try to sell abroad, they encounter significant import barriers. For example, right now, the average import duty manufacturers in America have to pay to sell their products in Colombia (which imports $35 billion of manufactured goods a year) is effectively 15 percent. That’s a real barrier. 

When the U.S.-Colombia FTA goes into effect next year, Colombia’s duties on products made in the U.S. will go to zero. That’s what I call leveling the playing field. Far from opening up our market – which is already wide open in most industries – FTAs open our trading partners’ markets and level the playing field for us so our manufacturers export more and generate more jobs. That’s why we need more of these agreements. 

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

While overall U.S. exports of goods and services are still on track to double in five years, the Commerce Department trade figures released today show that both manufacturing and services exports have dropped below the 15 percent annual growth path needed to double in five years. 

Overall exports of goods and services through October were 15.5 percent larger than in January-October 2010. Manufactured goods exports, however, were up by a lesser amount – a 12.7 percent increase over the year earlier period.  While that is still a good growth rate, it is below the path needed to double in five years.

Services exports are also below the 15 percent path, being up 10.6 percent over the year-earlier period, barely into double digit growth. The manufacturing and services export figures are troublesome, as these two sectors account for over 80 percent of overall U.S. exports of goods and services.

The overall export growth rate is being sustained by agricultural exports, up 24 percent, and mineral fuels exports, up 62 percent.  It is doubtful whether the 15 percent overall figure can be sustained into the future unless the growth rates for the huge manufactured goods and services sectors pick up.

Manufactured goods imports through October grew at exactly the same rate as exports – 12.7 percent.  However, since imports are significantly larger than exports, an identical growth rate produces a larger dollar growth figure for imports than for exports.  Year-to-date growth was $382 billion for exports, $339 billion for imports, and $43 billion for the trade deficit. (continue reading…)

The United States is negotiating a state of the art, twenty-first Century, Free Trade Agreement with eight countries in the Pacific Rim. This “TransPacific Partnership” or TPP, brings together countries with which we have free trade agreements (Australia, Peru, Chile, Singapore) and countries with which we do not yet have open access to their markets (New Zealand, Malaysia, Vietnam and Brunei).

The NAM believes that the TPP should be the beginning of the Free Trade Area of Asia and the Pacific– which would include Japan.  Asia is the fastest-growing area of the world, and American manufacturers need to have open access to that market. 

Yesterday, the United States Trade Representative published Federal Register notices requesting comments on the expression of interest that Canada, Japan and Mexico have shown in potentially joining TPP negotiations in light of the TPP’s high standards for liberalizing trade. It also asked for specific issues of concern to the United States regarding barriers to manufacturing trade, including non-tariff measures. 

The NAM has called on the Administration to negotiate the broadest and deepest agreement and work with negotiating partners and domestic stakeholders to address sensitivities and concerns in a way that ultimately ensures the most comprehensive outcome possible. 

We welcome the interest of Canada, Japan and Mexico but the negotiations cannot go back to the starting place and begin all over again.  All three will need to eliminate non-tariff barriers which are still significant impediments to American exports given that Japan’s tariffs are very low, and Canadian and Mexican tariffs have been eliminated under NAFTA. A key question is how this can be done without delaying the conclusion of the agreement, at least among the original participants.

We hope that the consultations with the three governments will address quickly any issues that arise as a result of this request for comments so that the three can join the negotiations as soon as possible in 2012 and truly make the TPP the pathway to a Free Trade Area of the Asia-Pacific.

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.

Back in October Congress passed the three free trade agreements with Colombia, Panama and South Korea. Manufacturers have been anticipating and eagerly awaiting passage of the agreements so they can begin to have a level playing field in these important markets.

Today, we are already starting to see the benefits. Toyota has announced they will begin exporting Camrys to South Korea in January. The cars are manufactured at their 7,000 employee assembly plant in Georgetown, Kentucky.  The company expects to ship about 6,000 Camrys to South Korea at an annual rate.

This is just the beginning of the benefits manufacturers will see from the trade agreements which equates to more jobs here in the U.S. Manufacturers will continue to call for additional trade agreements to be negotiated and implemented to help increase exports. Right now dozens of free trade agreements are being negotiated throughout the world and our nation is party to only one, it’s time for that to change.

Exports of manufactured goods continued to dominate total U.S. exports in September, per the Commerce Department trade data released today.  Manufactured goods accounted for 80 percent of goods exports and nearly 60 percent of overall exports of goods and services in September.

Manufactured goods exports in September were $100 billion — 15 percent larger than in September 2010, exactly the growth rate needed to double in five years – the Administration’s export goal.  Manufactured goods imports in September were $140 billion — up 9.5 percent, considerably more slowly than exports. 

But because of the larger size of imports, the slower growth rate of imports generated about the same dollar increase as exports – so the manufactured goods trade deficit for September remained unchanged from a year ago, at $40 billion.

The important sector of capital goods, accounting for over 40 percent of manufactured goods exports, showed a warning flag. September capital goods exports were up 11 percent over the year-earlier period, a significantly slower growth rate than for overall manufactured goods. The slow economic growth of major U.S. customers, particularly in Europe, is holding back demand for machinery and other capital goods. In fact, 19 of the 32 capital goods categories showed export declines in September compared to last month.

On the import side, consumer goods imports registered much lower growth than in earlier periods, with September consumer goods imports up only 3.6 percent over September last year – reflecting the slow growth in U.S. consumer purchases.

The latest Commerce Department data for free trade agreement (FTA) partners shows they continue to be the brightest part of manufactured goods trade. The manufactured goods trade balance with FTA partners so far this year is on track to register a record surplus of $40 billion or more for 2011, compared to the huge deficit with countries that have not opened their markets to U.S. exports through free trade agreements.

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

The House Ways & Means Committee marked up legislation for the pending trade agreements with Colombia, Panama and South Korea this morning. This is the opening act of the closing chapter, so to speak, and we hope it will not be too long before President Obama is signing the agreements into law. Next up – the House will vote on the 3 agreements next Wednesday and send them to the Senate. Senator Reid has promised rapid action over on his side of the Capitol once he receives the bills.

Had anyone forecasted, in late January, that we’d have these long-languishing job-creating agreements completed – potentially by Halloween – the remark would have been met with derisive laughter. Colombia was signed in November 2006; Panama and Korea in June 2007. They have faced strong opposition, fueled by outrageous claims that they will hurt American jobs and the economy.

Nothing is further from the truth. In fact, lack of action on these agreements over the last 5 years is what has caused harm to our economic recovery and manufacturing jobs. Multiple studies produced by U.S. Government agencies, including the U.S. International Trade Commission (ITC) and the Commerce Department show these agreements will create as much as $13 billion in new exports, and tens of thousands of new jobs. Given manufactured goods are the majority of U.S. exports to Colombia, Panama and South Korea, these trade agreements are really manufacturing agreements. (continue reading…)

The NAM has been making the point for some time now that manufactured goods trade with current Free Trade Agreement (FTA) partners is in surplus.  Our manufactured goods trade deficit is with countries that DON’T have FTAs with us.  It is amazing how many people have fallen for the myth that trade agreements are bad for us without bothering to seek the facts.

Third Way has just made understanding the facts easier.  They have come out with a terrific “infographic,” titled “Black is the New Red,”  that nails down the point that oil imports drive trade deficits: trade deals don’t.

Third Way’s graphic makes this point in an outstanding and instantly recognizable way. Everyone should look at it.  It reinforces what pro-trade agreement advocates know, and should be a real eye-opener for those who oppose trade deals because they think they are bad for American manufacturing and jobs.

Thanks, Third Way!

Also, it is important to know that the Commerce Department has begun posting the trade statistics with FTAs on their website www.trade.gov/fta .  Click on Trade Tables, at the left of the page.  The lower left hand part of page two of the trade tables shows clearly that we have a manufactured goods trade surplus with our current FTA partners.  As Third way points out, the overall balance with FTA partners is in deficit because of all the oil we get from NAFTA.

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

Today’s vote by the U.S. Senate to pass the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA) is a major step forward in finally moving the stalled free trade agreements with Colombia, Korea and Panama. Those agreements — and new opportunities for growth of American manufacturing exports — have languished since 2006.

Meanwhile, our competitors in Europe, Canada, Japan, and other manufacturing powerhouses have continued to negotiate, sign and implement bilateral trade agreements that gain them preferential access to growing markets around the globe. Their manufacturing exports supplant and replace ours in market after market.

For a lasting economic recovery and job creation, increasing our manufacturing exports will be a key factor. The single easiest way to increase our exports is to lower tariff and non-tariff barriers in other countries. Trade agreements promote jobs and exports. President Obama has touted the job-creating nature of trade agreements repeatedly in recent weeks. He has asked Congress to pass the pending trade agreements with Colombia, Panama and South Korea.

Now that the Senate has passed TAA, it is imperative that President Obama send the trade agreements to the House for approval. There is bipartisan support for all three in the House and Senate, and leadership has vowed to move quickly on passage. All we need is for the agreements to be transmitted. They should be sent immediately.

Doug Goudie is director of international trade policy, National Association of Manufacturers.

Today the Senate is continuing debate on legislation to extend the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA) programs.  We expect the Senate to wrap up debate later today and then vote on final passage which will move us another step closer to being able to pass the three pending free trade agreements.

This morning the National Association of Manufacturers sent a Key Vote letter on the GSP/TAA bill to Senators urging them to support the bill.

Manufacturers support the extension of GSP, which provides preferential access to certain imports from selected developing countries. Last year, $23 billion of imports came into our nation duty-free under GSP, nearly three-quarters of which were raw materials, components, parts, or other inputs used to manufacture goods here in the United States. GSP reduces these companies’ input costs, making their products more competitive with their global counterparts. Moreover, it is estimated that nearly 82,000 U.S. jobs are directly or indirectly associated with the importation and use of GSP-eligible imports.