To grow and thrive in today’s economy, manufacturers in Texas are increasingly looking overseas to boost sales opportunities to sustain and grow their U.S. activities. The Trans-Pacific Partnership (TPP) is important to that growth strategy because it will strengthen manufacturers in the United States and level the playing field with 11 Asia-Pacific countries that boast over 490 million consumers. Read More
Trade critics continue to roll out the same tired arguments lashing out against trade deals that create critical opportunities for American businesses, workers and consumers, even though these arguments have been proven wrong time and time again.
The Sierra Club issued the latest salvo recently, with a new paper that repeats its typical criticisms of the investor-state dispute settlement (ISDS) provisions of the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). The paper seeks to present a stark picture of the future, warning of a pending “swell” of ISDS challenges to scare governments from moving forward on public interest regulations.
Sound familiar? It should. Anti-trade environmental groups have used these far-fetched arguments before, even though none of what they have predicted has ever come to pass. The Sierra Club’s claims about the United States’ free trade deal with South Korea is a good example where they warned that the deal would “significantly raise the likelihood of more costly investor-state cases targeting U.S. laws and regulations.”
These arguments are scare tactics, not grounded in facts. After four years, not a single ISDS case has been filed under the Korea-U.S. (KORUS) Free Trade Agreement (FTA). In fact, the United States has free trade agreements in force with 20 countries and bilateral investment treaties in place with approximately 40 countries, and yet has faced only a small number of ISDS cases: 18 cases over the past 25 years. The United States has a strong track record here, having won every single case that has been concluded.
The truth is that ISDS is all about fair play, making sure that governments keep their international commitments, respect private property and treat all companies fairly and without discrimination. Here are some of the key facts about ISDS: Read More
This week, the International Trade Commission (ITC) will begin a three-day-long hearing focusing on the economic impact of the Trans-Pacific Partnership (TPP). The TPP is the most complex free trade agreement the United States has negotiated since the Uruguay Round Agreements establishing the World Trade Organization. Once implemented, the TPP will provide an enormous boost to manufacturers’ business opportunities in the Asia-Pacific. Read More
Tonight’s debate took on a very different format, and a very different tone from the first debate. It was much more combative with the candidates painting very different pictures of their vision for economic recovery and manufacturing growth.
Both President Obama and Governor Romney spoke early and often in support of growing manufacturing jobs in the United States. While it’s good to hear the support, it is incredibly important to implement policies that will not just lead to recovery, but to sustained growth. The candidates spent much of the night discussing the elements that make it 20 percent more expensive to manufacture in the United States—taxes, regulation, energy and trade.
Time and again, the conversation returned to job creation—fundamentally the most significant issue in this election. Manufacturers couldn’t agree more, but we’d like to remind the candidates that it’s also essential that we fill the 600,000 job openings in the manufacturing sector that remain unfilled today because employers can’t find workers with skills that match the jobs.
Energy policy is an immediate pathway to jobs. President Obama spoke about increased oil production and a desire for an “all-of-the-above” energy strategy, but yet again, this debate came and went without the President mentioning the Keystone XL pipeline. Governor Romney had it absolutely right when he told the audience at Hofstra University that we need to “take advantage of energy resources we have and we’ll see manufacturing jobs come back.” Governor Romney advocated in favor of the Keystone XL pipeline again and also spoke of shale gas, a game-changer that would create 1 million manufacturing jobs. The President also supported shale gas efforts, but his endorsement of more federal regulation on shale will handcuff the growth opportunity that it represents.
Special attention was paid to trade tonight—a critical aspect of our economy for manufacturing growth. President Obama deserves credit for signing the Colombia, South Korea and Panama free trade agreements and increasing exports. But manufacturers need more—the United States has a trade surplus with nations with whom we have free trade agreements. Governor Romney is right in the need for expanded trade that will open up markets for manufacturers in the United States and level the playing field around the world.
As the debate repeatedly returned to jobs, tax policy and its impact on economic growth was a focal point. Tonight the candidates doubled down on their position—Governor Romney in his support for bringing down rates across-the-board and President Obama in his support for an increase in the top individual rate. Unfortunately, if the two-thirds of manufacturers who file at the individual rate are hit with the looming tax hike, they will see a continuation of the tough times they’ve experienced over the past four years. With energy and health care costs increasing and the fiscal abyss approaching, manufacturers are getting squeezed on both ends. That’s not a recipe for economic growth.
Getting the nation on track again and putting our fiscal house in order requires addressing the factors that make it 20 percent more expensive to manufacture in the United States. The moment that we put in effect the pro-growth policies that manufacturers are calling for is the moment our true recovery can begin.
The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit narrowed in June for the third month in a row. The trade balance improved from -$48.0 billion in May to -$42.9 billion in June. The gain was due to higher goods exports and lower goods imports.
The service sector trade balance edged slightly lower for the month. About 40 percent of the improvement in the trade balance was attributable to lower petroleum costs, thereby reducing the value of our energy imports.
Goods exports increased from $130.9 billion to $132.8 billion, an all-time high. Areas for growth for exports included consumer goods (up $865 million), automotive vehicles and parts (up $695 million), industrial supplies and materials (up $563 million), and non-automotive capital goods (up $168 million) sectors. One are of weakness was exports of foods, feeds and beverages (down $792 million, with the largest decline in soybeans).
Meanwhile, goods imports declined from $193.9 billion to $190.3 billion. The largest decreases were seen in the industrial supplies and materials (down $2.3 billion) and non-automotive capital goods (down $1.3 billion) sectors. Imports were also lower in the consumer goods (down $569 million) and foods, feeds and beverages (down $159 million) sectors. Automotive imports were up $608 million. Read More
This is my final blog, as I am retiring from the NAM as of 5pm today. I want to thank everyone for viewing the blog posts I have done over the years, and I hope you have found them useful.
I wanted to conclude by ending on good news, but also issuing a caution. The good news is that once again, for the month of April 2012, manufacturers continued to run a trade surplus with our Free Trade Agreement – FTA – partners (including Korea). The Commerce Department’s data showed a $14 billion surplus for the year to date (January-April) – that is an annual rate of $42 billion. This year marks the fifth year in a row of a manufactured goods surplus with FTA partners, cumulating to nearly $100 billion.
Our FTA partners account for a little under 13 percent of global GDP outside the United States. Yet they account for over half of our manufactured goods exports. But note that leaves about 87 percent of the global GDP outside the United States as countries not yet having an FTA with the United States – countries that maintain trade barriers to our exports that could disappear if we had FTAs with them. During the five-year period when we were running a manufactured goods surplus with FTA partners, with these other countries we ran an amazing $2.1 trillion cumulated manufactured goods deficit.
Since the United States has lower tariffs and trade barriers than just about every other country, the fact is that virtually every FTA we can negotiate is a plus for the United States – lowering the other country’s barriers much more than ours. Read More
The Senate Finance Committee is holding a hearing this morningto examine “Russia’s WTO Accession: Administration’s Views on the Implications for the United States.” The hearing panel includes U.S. Trade Representative Ron Kirk, Secretary of Agriculture Tom Vilsack and Deputy Secretary of State William Burns.
In his testimony, Mr. Kirk emphasized that the Russia will become a member of the WTO no later than August 22. Further, he said
“Since we concluded the 18-years long multilateral negotiations on Russia’s WTO accession package last year, the President and members of the Administration have repeatedly urged Congress to terminate application of the Jackson-Vanik amendment and authorize the President to provide Permanent Normal Trade Relations (PNTR) to Russia before it joins the WTO later this summer.” Read More
Today USTR released the Interim Report to Leaders from the Co-Chairs from the EU-U.S. High Level Working Group on Jobs and Growth. Manufacturers welcome this step forward and the findings in the report which reflects many of the recommendations laid out by the National Association of Manufacturers earlier this year. This is an important step on the way to initiating the negotiation of a free trade agreement between the EU and United States.
The United States and the EU already have the world’s largest commercial relationship but major opportunities for increased trade and cooperation remains. U.S. and EU leaders established the High Level Working Group on Jobs and Growth in November 2011 to identify policies and measures that would lead to increased trade, investment, job growth and enhanced competitiveness.
U.S. and EU companies already enjoy low tariffs across the Atlantic, but the NAM supports total elimination of tariffs, and even more importantly, seeks continued progress towards eliminating non-tariff barriers (NTBs). Most NTBs come in the form of different standards, regulations, certification procedures, and conformity assessment procedures. Read More
Yesterday we learned that Mexico has been invited to join the Trans-Pacific Partnership (TPP) talks, and now today Canada has also been formally invited to join. Other members of the TPP group include the United States, Australia, New Zealand, Peru, Chile, Singapore, Malaysia, Vietnam and Brunei.
Much like the inclusion of Mexico this is welcome news for manufacturers. Canada is our largest trading partner totaling $596.2 billion in goods last year.
This expanded agreement would be the largest trade pact for the U.S. by joining the NAFTA partners with the current partipants in the TPP. This is an important step forward for the TPP and most importantly – manufacturing jobs. Exports are essential to manufacturing in the U.S. and we need to continue to find ways to lower barriers to reach new markets throughout the world.
The next round of negotiations for the TPP takes place in a few weeks in San Diego. It is our hope that the negotiators will make additional progress in moving us closer to the TPP becoming reality.
On the memorable day that the U.S.– Colombia Trade Promotion Agreement has at long last gone into effect – eight years after its negotiation started, it is useful to recall how beneficial Free Trade Agreements (FTAs) are, and have been, for America’s manufacturers. Far from being the drag on the U.S. economy claimed by many detractors of our trade agreements, these agreements have been a boon for manufacturers in the U.S. and factory workers – as well as for farmers and service providers.
Accounting for just 12.5 percent of Gross Global Product outside the United States, America’s FTA partners (counting Korea, the agreement with which went into effect last year) have accounted for a remarkable 52 percent of the growth of U.S. manufactured goods exports so far this year.
Exports to them are growing faster than to non-FTA partners. Through March, U.S. manufactured goods exports to FTA partners were 13 percent larger than for the same period of 2011. Our manufactured goods exports to non-FTA partners during the same time grew 10 percent – meaning that exports to FTA partners grew one-third faster!
And, confounding trade critics, manufactured goods trade with FTA partners has been in surplus for several years – meaning we sell them more manufactured goods than they sell us. According to the U.S. Department of Commerce’s International Trade Administration FTA report, counting Korea our manufactured goods surplus with FTA partners was $7.5 billion in 2010, $29 billion in 2011, and so far in 2012 was at an annual rate of $47 billion. In the coming months, the new Colombian agreement will add even more to that figure.
Counting the newly-implemented Colombian agreement, the proportion of Gross Global Product outside the United States accounted for by our FTA partners rises from 12.5 percent to 13.1 percent – but that leaves 86.9 percent of World GDP outside the United States as markets without FTAs with us, markets with trade barriers limiting our exports. It is high time to open those markets so more American workers can be employed producing high-quality U.S. products to be sold around the world.
Frank Vargo is vice president for international economic affairs, National Association of Manufacturers.