NAFTA and free trade agreements (FTAs), what do you think? Good or bad for manufacturers in United States? While a small group of anti-trade critics would have you believe lots of myths, in fact, NAFTA and past FTAs have been critical to the growth of U.S. manufacturing. Moreover, more market-opening trade agreements negotiated with Trade Promotion Authority (TPA) are even more critical to America’s manufacturing future. Read More
This week, over 400 manufacturers will be coming to Washington D.C. as a part of the NAM’s Manufacturing Summit. While in town, they will be meeting with leaders and policymakers to discuss key policy issues that are critical to the success of manufacturing, including the need for Trade Promotion Authority (TPA). But there are a lot of myths about manufacturing and trade. So let’s set the record straight: Read More
Much of the focus surrounding Trade Promotion Authority (TPA) has been on the two large regional free trade agreements being negotiated by the United States – the Trans-Pacific Partnership (TPP) with eleven Pacific Rim countries, and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. And with good reason: Taken together, the countries negotiating these agreements collectively account for more than 60 percent of global GDP, and if done right, TPP and TTIP would help level the playing field for U.S. goods and services, opening up major new commercial opportunities for manufacturers in the U.S. in a number of key export markets. Read More
Manufacturers cheered when the U.S.-South Korea Free Trade Agreement (KORUS FTA) entered into force three years ago yesterday. The deal aimed to open Asia’s fourth largest economy to U.S. exports of industrial goods and a wide array of other products and services. It established strong transparency rules, competition policy and intellectual property and other protections that sought to establish a level playing field.
While the KORUS FTA is still being implemented and challenges remain, manufacturers are seeing important gains. Roughly 80 percent of Korean tariffs on U.S. products have already been eliminated, helping to drive strong sales of plastics, processed foods, semiconductor equipment and many other manufactured products. Overall, U.S. manufactured good exports to South Korea increased $2.6 billion between 2012 and 2014, reaching a record high of $37.4 billion last year. Read More
Enough is enough. We’re all for an honest debate, but a small group of trade critics are putting out some whoppers in an effort to derail the momentum behind Trade Promotion Authority (TPA), a longstanding procedural partnership between Congress and the Administration that enables the United States to conclude and implement new Free Trade Agreements (FTA) that open markets for our manufacturers.
Groups like Public Citizen, however, are promoting distorted information about our country’s manufacturing trade surplus with its 20 FTA partners. Read More
This post was co-authored by NAM Senior Vice President and General Counsel Linda Kelly and NAM Vice President of International Economic Affairs Linda Dempsey.
Manufacturers are on the front lines of a highly competitive global economy. Manufacturers large and small in all sectors of the economy are seeking to access new markets and customers overseas to sustain and grow manufacturing here at home. Yet, each of our manufacturers faces a myriad of challenges in foreign markets, from tariffs and non-tariff barriers to discriminatory and unfair foreign government treatment overseas that protects home country industries to the detriment of manufacturers and workers here in the United States.
For decades, the United States has shown international leadership in promoting the rule of law, due process and fairness by pursuing trade and investment agreements to create a level playing field – to open markets, eliminate barriers and limit the ability of foreign governments to hinder America’s access and success overseas. These agreements are the strongest tools that the United States has to level the playing field and limit the barriers and unfair actions by other governments. The success of these agreements is shown in the simple fact that when markets are open, manufacturers in the United States succeed: In 2012, nearly half of U.S. manufactured good exports were sold to our 20 Free Trade Agreement partners, even though those countries represent merely six percent of world population and less than 10 percent of the world economy.
The principles on which our free trade agreements (FTAs) and bilateral investment treaties (BITs) are based are ones that all Americans know well:
- Non-discrimination or equal protection under the law
- Due process
- Recognition of private property rights through compensation for government takings
- Fair treatment by the government.
These basic principles are set forth in the U.S. Constitution and landmark pieces of U.S. law, starting with the Administrative Procedure Act. So when the United States enters into reciprocal agreements with other countries in which it insists on inclusion of these core rights, it is helping to export the time-tested values and principles on which our country is based.
Unfortunately, some in the United States would seek to erode the U.S. commitment to these rights in our trade agreements. One highly concerning example arose this week in a letter issued from the National Association of Attorneys General urging that U.S. trade agreements should start including product exceptions from basic rules seeking to limit discriminatory and unfair government action. The argument starts with a product about which it is easy for critics to raise concern –tobacco. This product, they and others argue, should be treated differently in trade agreements, despite the fact that it is not in fact treated differently in U.S. law. The United States has robust limits on tobacco use, advertising and access, but, in fact, has never prevented the core rules of our Constitution or legal system from being applied to that product or any other.
Seeking such a product or public welfare exception in our trade agreement will not limit anyone from challenging U.S. rules in these areas. The only major consequence will be to give fodder to foreign governments that want to restrict access of U.S. manufactured goods under the guise of some public welfare objective, be it food or pharmaceutical products to high-tech or environmental goods.
At a time when America is seeking to grow jobs and move its economy in high gear, manufacturers need to see new trade and investment agreements that will aggressively and fully tear down barriers, not create a roadmap for other countries to continue to discriminate and treat our producers unfairly. In short, if we are interested in sustaining and growing manufacturing in United States and being globally competitive, we need to export our basic principles, not lead the charge to undermine them.
Today our free trade agreement with Colombia, passed by Congress last October, goes into effect. This agreement allows manufacturers to begin reaping the benefits of the Colombian market. The implementation of this agreement presents a major opportunity for manufacturers in the U.S. to expand their exports to Colombia, whose products mostly enter the U.S. duty-free already.
With a population of 46 million, Colombia represents a significant market for U.S. exports – the third largest in Latin America. Furthermore, Colombia’s GDP is $467 billion with expected growth of 4.7 percent this year. Until now the average tariff on U.S. products entering the Colombian market has been 15 percent, adding substantial cost to the purchase of U.S. goods in Colombia and therefore putting American goods at a severe disadvantage. With this FTA in force, U.S. competitiveness will be enhanced and our exports to Colombia will expand as a result of our new market access there.
Colombian duties on 80 percent of U.S. manufactured products will immediately be dropped to zero, with the remaining tariffs phased out over the next ten years. This means expected growth for manufacturers in the U.S. in the following key sectors: oil and gas machinery and services, plastics, construction and mining equipment, telecommunications equipment and services, information technology, safety and security, automotive parts and accessories, electrical power systems, building materials, food and beverage processing and packaging equipment, and medical and pollution control equipment.
We’re pleased that we now have a level playing field with Colombia but we can’t afford to just stop here. There are currently dozens of trade agreements being negotiated all over the world and we are party to only one. If we are going to meet the President’s goal of doubling exports then we need to do more. With 95 percent of the world’s consumers living outside of the U.S. we must continue to negotiate new free trade agreements to open new markets for manufacturers.
Jessica Lemos is director of international trade policy, National Association of Manufacturers.
The United States is negotiating its latest, and we hope state-of- the-art, 21st century, free trade agreement (FTA) with eight countries in the Pacific Rim. This TransPacific Partnership (TPP) brings together countries with which we have FTAs (Australia, Peru, Chile, Singapore) and countries with which we do not FTAs, yet have open access to their markets (New Zealand, Malaysia, Vietnam and Brunei). This constitutes our third largest export market.
Now that Congress has approved the Korea, Panama and Colombia FTAs, it is critical that the U.S. continue its efforts to expand market access for American companies. The National Association of Manufacturers today joined more than 40 other trade associations across the entire spectrum of U.S. industry to tell President Obama the United States must continue its longstanding and bipartisan approach of seeking a comprehensive agreement that covers every commercial sector and sub-sector of the U.S. economy. To do anything less is to diminish the commercial value of the resulting agreement, and diminish the prospects the TPP holds for enhancing America’s competitiveness in the global economy.
Especially in these challenging economic times, achieving a comprehensive agreement that provides full reciprocal market access and does not exclude any sector, sub-sector, product or service from the market-access provisions or core rules of the final TPP is vital. It is also just as vital to ensure that there is no exclusion from any core principles that protect our investors and our intellectual property rights.
The NAM calls 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 and sets the stage for future expansion of the TPP to additional markets in Asia. We at NAM know that trade liberalization that enhances access to markets for our manufacturers and workers produces high paying jobs—jobs we sorely need now.
Stephen Jacobs is senior director of international business development, National Association of Manufacturers.
The Canada-Colombia free trade agreement went into effect today. Canadian exports are now duty-free in Colombia. Since the effective duty on manufactured imports into Colombia is 15 percent, that gives Canadian manufacturers an attractive advantage.
This adds further to the imperative of passing and implementing the U.S. – Colombia trade agreement. Distributors, wholesalers, and retailers in Colombia may be willing to bear a 15 percent disadvantage in importing U.S. goods for a short time; but if they see that time difference persisting, many of them will consider shifting to Canadian suppliers wherever Canadian and American products compete with each other.
Passage of the U.S. – Colombia trade agreement by Congress does not mean the agreement goes into effect the next day. Some months are needed after passage to ensure that both governments have done what they said they would do, that customs officials have their procedures and systems in place, and that necessary regulations have been published. So every day of legislative delay pushes implementation of the U.S. – Colombian agreement one more day into the future – adding to the risk of losing U.S. business.
Also, every day the pending trade agreements with Colombia, Korea, and Panama languish, American workers lose another $8 million in wages and benefits. That adds up. As of the afternoon of August 15, 2011, their cumulative loss was a staggering $12 billion.
Opponents of trade agreements are badly mistaken in thinking they hurt our trade. Over the past three years, American manufacturers have enjoyed a cumulative surplus of over $70 billion with our existing trade agreement partners. During that same time, however, manufacturers faced a cumulative deficit of $1.3 trillion with countries that have not entered into trade agreements with us.
It is time to open more markets to American goods and services, starting with quick action by Congress to pass the three pending agreements.
The three trade agreements with Colombia, Korea, and Panama have been hanging around for four years. The U.S. Government has estimated that these three agreements could generate $13 billion in added exports on an annual basis. That’s a lot, especially when you add up the exports we could have been having over the past four years if these agreements had been in effect.
But it is not just the exporting companies that would have benefited. America’s workers would have benefited as well from the additional jobs, wages and benefits that would have been earned producing those exports.
How much has the delay cost American workers? The National Association of Manufacturers has calculated, based on Commerce Department data, that had those exports not been lost, by now American workers would have earned nearly $12 billion more in added wages and benefits. What’s worse — workers’ losses are mounting by nearly $8 million every day.
Click here to view our ticker and see and see how much more American workers are losing every day, every hour, every minute and every second.
One of the main reason’s American workers have lost this much in wages and benefits is because of the erroneous, though widely-held, view that trade agreements are the cause of the manufactured goods trade deficit. This is flat out wrong. In fact, the Commerce Department’s data show exactly the opposite — American manufacturers have a trade surplus with our trade agreement partners, a surplus that has cumulated to $70 billion over the past three years and so far this year is on track for a surplus close to $40 billion. Read More