Tag: NAFTA

Trade Boosts New England Economy, Heartland Candidates

From The Associated Press, reporting its monthly analysis of conditions around the country.

Even as the national unemployment rate remained at 9.6 percent in September, New England states benefited from more hiring. Except for Rhode Island (Stress score: 12.08), New England has been recovering from the recession better than much of the nation.

The region has an educated work force in professional and high-tech jobs, it avoided the real estate boom and bust and it’s home to a high-end manufacturing sector. Manufacturers in New England export electronic parts and biomedical products to developing nations like China, India and Brazil, said Ross Gittell, an economist at the University of New Hampshire.

“New England is outperforming the rest of the country in many respects,” Gittell said.

Investor’s Business Daily editorial, “Free Trade Sweeps The Heartland“:

Elections: Among the biggest but least-noticed winners in last week’s election were free-trade supporters in, of all places, the industrial Midwest. And here we thought free trade was an electoral loser.

One of the sweetest victories for free-trade proponents was Ohio’s election of Republican Rob Portman to the U.S. Senate. Portman served as U.S. Trade Representative under President Bush from 2005 to 2006. During his short tenure, six of America’s 17 free-trade pacts were passed. Portman also valiantly tried to get the U.S. onboard for a global free-trade pact at Doha.

Organized labor hammered candidates all across the nation for supporting trade, IBD notes, and yet pro-trade Senate candidates Ron Kirk in Illinois and Pat Toomey in Pennsylvania won. The editorial concludes: “After four years of Democrat-led protectionism, unemployment in states like Ohio nears 10%. The incoming free-traders signal that it’s time Washington gave free trade a chance.”

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Manufacturers’ Message in Memphis: More Action on Exports

John Engler, president of the National Association of Manufacturers, addressed the Economic Club of Memphis Thursday, providing a broad overview of competitiveness issues. The Commercial Appeal reported. “Engler applauds emphasis on exports“:

Engler told members of the Economic Club of Memphis on Thursday that his organization hasn’t seen enough push by the administration to remove trade barriers, rein in regulatory overkill and create incentives to expand the manufacturing base.

“We applaud the goal of doubling exports,” he said.

“FedEx has outbound planes as well as inbound planes, and we want to see all those outbound planes full.”

The NAM has state-by-state data on trade, foreign investment and export-related manufacturing at the NAM website, here. For Tennessee:

Manufactured Exports Drive Tennessee’s Economy
• Manufacturing accounts for 93 percent of Tennessee’s exports (2009).
• Since 2003, Tennessee manufacturing exports grew 62 percent—2.4 times faster than the 26 percent rise in Tennessee’s overall economy.

Global Engagement Supports Tennessee Jobs
• Manufactured exports support 20 percent of Tennessee’s manufacturing jobs (U.S. average is 22 percent).
• Since 2003, Tennessee employment related to manufacturing exports grew 26 percent, while other private sector employment in the state fell by 0.3 percent.

Tennessee Manufacturers Are Engaged in Exporting around the World
• Top five U.S. export markets: 57 percent of Tennessee exports (2009).
• NAFTA (40%), China (5%), Japan (5%), UK (4%) and Germany (3%).

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The Impact of Mexican Tariffs on U.S. Manufacturing, Agriculture

Following up Monday’s announcement that the Mexican government would be “carousel-ing” some of the products targeted for retaliation under the cross-border trucking case, the official revised list was published this morning – and the new tariffs will take effect later this week.

The total value of the exports targeted by these tariffs is more than $2 billion in 2009 – which, you will note, was one of the worst years for American exports in a long time, given the impact of the recession. Based on 2008 figures, the value would be more than $2.5 billion.

In this spreadsheet we have highlighted the new products, the associated dollar value of Mexico’s imports from the U.S. for 2009, and listed the tariff percentage.

The biggest impact comes in new agricultural and processed food products. Manufacturing in America embraces many different sectors of production, and one of the largest and most important is the food processing industry. Here, we have seen the Mexican government impose tariffs of 10-20 percent on products like chocolate, ketchup, chewing gum and cheese — all products of the manufacturing sector, made in American factories by American workers.

At the same time, we see new tariffs imposed on other manufactured goods, including industrial polishes, adhesives, trench diggers, rubber gloves, floor coverings, stainless steel containers, and gas masks.

While the NAM is pleased to see a number of industrial products removed from the revised list – including carpets, telephones, metal furniture, and various paper products – the list of manufactured goods facing tariffs as a result of the Obama Administration’s lack of progress on resolving the cross-border trucking dispute remains long. Mexican school children will be paying more for their education this fall, given that printed exercise books, paints, ballpoint pens and pencils are on the list, facing 15 percent duties. Also still on the list are key home products like refrigerators, coffeemakers and dishwashers; consumer goods like toothpaste, deodorants, aftershave, and suntan lotion (and toilet paper); home furnishing goods including curtain rods and desks, and industrial goods including gas filtering machines.

All in all, it’s a cornucopia of American-made products facing punitive tariffs in Mexico this week. Not just manufacturing but farmers will feel the pain as well – the significant addition of pork, apples, oranges, sweet corn and grapefruits total well over $700 million in U.S. exports. But manufactured goods are hit, and hit hard. And hit just as hard are the American factory workers who make these products – most of which have a significant export market in Mexico, our second largest trading partner.

It’s past time to fix this problem and get our goods moving back over the border that we made duty-free in 1994 with NAFTA.

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U.S. Manufacturing Affected by Mexico’s Retaliatory Tariffs

From Bloomberg, “Mexico Puts Tariffs on Some U.S. Pork Cuts in Truck Program Retaliation“:

Mexico will impose import tariffs on some U.S. pork cuts, ketchup, cheeses, sweetcorn and some fruits because of the U.S. government’s failure to restore a program allowing Mexican trucks to operate north of the border, the nation’s official gazette said.

The list includes a tariff of 5 percent on some cuts of pork and as much as 25 percent on fresh white cheese, according to the notice. Onions, apples, pears, oranges, cherries, soy sauce, mineral water and sunglasses are also on the list.

Mexico’s official gazette lists all the products in Spanish. Media reports focus on the agricultural and retail products because consumers/readers can easily grasp the impact. The economic on manufactured goods could be as great or greater, however. Here’s Google’s translation of part of the list, including the percentage tariffs applied. Most of it reflects the original list of products announced in March 2009.

 We note the addition of heavy machinery, such as trenchers (8429.59.01), hit with a 15 percent tariff.  That’s a big ticket item which other countries such as Canada are more than eager to supply.

 

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In Seattle, a Topic Not Addressed: Cross-Border Trucking

Surprisingly, this week’s hot issue of retaliatory tariffs imposed by Mexico against U.S. farmers and manufacturers appears not to have been mentioned during the President’s trip to Seattle on Tuesday. At least the issue does not appear in any of the public comments.

Washington State agricultural producers have lost millions of dollars worth of sales because of Mexico’s tariffs against U.S. products imposed in retaliation for U.S. refusal to establish the cross-border trucking program required by NAFTA. Sen. Patty Murray (D-WA), for whom President Obama raised campaign funds on Tuesday, is leading the Congressional call for resolving the dispute.

Commerce Secretary Gary Locke, the former Governor of Washington, was also on hand.

But nothing in any of the public comments we see.

Well, maybe the issue arose in private conversations.

Earlier Shopfloor.org posts.

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Cross-Border Trucking: Mexico Retaliates with Tariffs on Pork

The President is expected to highlight export issues in Seattle today when he speaks with small business owners at 11:40 a.m. and then makes a statement to the press. (White House schedule.)

We’d be very surprised if he does not comment on Mexico’s announcement Monday of retaliatory tariffs being imposed on additional U.S. products because the United States is violating NAFTA provisions requiring regulated cross-border trucking.

The issue is especially timely because the President follows his meeting with business owners by attending a campaign fundraiser with Sen. Patty Murray (D-WA), one of the most vocal critics of U.S. inaction on the issue. Murray has demanded a solution to the problem by Oct. 1.

The Mexican government has imposed its tariffs with a keen political sense, hitting U.S. farm products in states like Washington, Idaho and California, and many manufactured goods — obviously the major concern of the National Association of Manufacturers. News accounts today highlight the additional tariffs on pork and pork products. From The Des Moines Register, Irritated Mexico increases tariffs on U.S. pork“:

Mexico added pork to a list of 99 U.S. products on which it is raising tariffs under the North American Free Trade Agreement, the National Pork Producers Council said Monday.

“Mexico’s retaliation against U.S. pork will have negative economic consequences for America’s pork producers,” said Sam Carney, a producer from Adair who is president of the pork council. “We are extremely disappointed that our top volume export market has taken this action, but we’re more disappointed that the United States is not living up to its trade obligations.”

The actual list of affected products won’t be known until its published in the government’s Official Gazette, but Bloomberg reports: “Fifty-four of the products that will be subject to tariffs will be agricultural and the rest will be manufactured goods, said the Mexican official who can’t be identified.

U.S. Trade Representative Ron Kirk expressed disappointment in a statement. The gist: We’re working on it.

(continue reading…)

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Cross-Border Trucking: Manufacturers Face Additional Mexican Tariffs

Mexico’s minister for the economy, Bruno Ferrari, has just announced the Mexican government will be adding to its list of U.S. products subject to retaliatory tariffs resulting from the United States’ failure to address the cross-border trucking dispute. While the exact products and changes aren’t official and won’t be for several days, the basic issue here is unchanged: The United States has violated the terms of a trade agreement, NAFTA, and thousands of U.S. manufacturing jobs are at risk because the Administration and Congress won’t take the necessary steps to put us in compliance.

President Obama and President Calderon met back in May and discussed this issue. I am certain at that time that President Calderon told Mr. Obama that, if this issue were not resolved in a timely fashion, additional tariff retaliation would be forthcoming. Now, almost two months later, we see that the retaliation is here. More manufacturing and farm products will be added to the list, which already impacts billions in dollars in U.S. exports. Some products will come also off the list — but the very fact that we are facing retaliation on American manufacturing firms and their exports is unacceptable. This issue can be resolved through careful cooperation between the Administration and Congress, and between the United States and Mexico. Transportation Secretary LaHood told Sen. Patty Murray (D-WA) more than two months ago that a solution was “closer than soon.” The only thing “closer than soon” now is additional tariff retaliation on more U.S. manufacturing.

Some of those manufacturers have already shut down U.S. assembly lines and moved their production to Canada, Mexico or other countries – exporting jobs instead of products. Others are still paying the tariffs to maintain their market share in Mexico – money that could be far better spent on creating new jobs, increasing investment in their business, or expanding to other markets. Many of those manufacturers have indicated that, 15 months after the tariffs were first imposed, they will now begin to shut down U.S. production rather than continue to pay the tariffs –- so we can expect the pain to spread from their bottom line to the unemployment line.

It doesn’t have to be like this. There is no reason under the sun why we continue to face the tariff retaliation we’ve faced since 2009 — and certainly no reason for facing additional products being targeted. This new action should spur to Congress and the Administration to turn to negotiations and a solution as soon as the August recess ends. Manufacturing wants to double exports, increase jobs, and lead the economic recovery. Pursuing policies that do the opposite by leaving trade disputes unsettled are the wrong road to travel.

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Happy Fifth Birthday, CAFTA!

The Central-American Free Trade Agreement, or CAFTA, was signed into law five years ago today, August 2, 2005, (later expanded to include the Dominican Republic to become CAFTA-DR). Facing vicious opposition from labor, the anti-trade Global Trade Watch, and others, the agreement had passed Congress by just two votes. Opponents vilified the agreement, predicting it would hurt American manufacturing.

Global Trade Watch’s Lori Wallach, for instance, called CAFTA a “catastrophe”, “a moldering corpse waiting to be buried,” and confidently predicted U.S. deficits and job losses. The U.S. International Trade Commission, the National Association of Manufacturers and other responsible organizations, on the other hand, predicted the agreement would spur U.S. exports and result in significantly stronger growth.

The record shows how wrong Wallach and other trade detractors were. As is clearly shown in the inserted graph, far from greater deficits, the CAFTA-DR agreement has changed deficits to surpluses. In the years prior to CAFTA, American manufacturers ran deficits with the CAFTA countries averaging $1.1 billion a year. After CAFTA went into effect, those deficits quickly turned to surpluses that have averaged $3.5 billion a year.

The improvement in the trade balance with CAFTA-DR occurred because the dollar value of U.S. manufactured goods exports grew faster than imports. In the years prior to the agreement, U.S. manufactured goods exports to the region grew less than 5 percent a year. In the years immediately after the agreement, they soared almost 14 percent a year.  And even after the global trade collapse in 2009, manufactured goods exports to CAFTA-DR so far this year have boomed 30 percent, much faster than the 22 percent increase of U.S manufactured goods globally.

It is time for Lori Wallach to stop talking about a “failed CAFTA trade policy.”  The only thing that is failing here is her rhetoric.

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Mexican Trucks, an Update (But Not Much of One)

Will Mexican President Felipe Calderon mention the cross-border trucking dispute at his 11 a.m. speech to a joint session of Congress? If he does, it will be the first specific reference to the issue we’ve seen from Mexico’s President and President Obama thsi week.

Yes, there are many, many important bilateral issues that President Obama and President Calderon needed to discuss —  the illegal drug trade, border violence, immigration. But it would have been nice if the word “trucking” had come up at least once, that is,  if there had been a straight-forward acknowledgement of the impact of the Mexican tariffs imposed on U.S. manufacturing and agricultural products in retaliation for the U.S. violation of NAFTA on cross-border trucking.

TruckingInfo.com, the website of the Heavy Duty Trucking Magazine, reported:

Although observers had widely expected the issue of cross-border trucking to be addressed this week during Mexican President Felipe Calderon’s visit to Washington, D.C., the issue was only alluded to in remarks and statements by Calderon and President Obama following yesterday’s meetings.

Instead, immigration reform and Mexico’s battle against drug gangs seemed to dominate.

Presidents Obama and Calderon issued a joint statement after their meeting Wednesday that did not specifically mention cross-border trucking but did talk about the importance of “creating a border for the Twenty-First Century” and to look at ways to “facilitate the secure, efficient, and rapid flows of goods and people and reduce the costs of doing business between our two countries.”

The Washington Times reported in the last paragraph of its story:

While the leaders alluded to ongoing trade disputes – such as the U.S. refusal to allow Mexican trucks on American roads, despite the North American Free Trade Agreement – no resolution was announced. Instead, they promised to continue to work through economic sticking points.

Businesses have closed and U.S. exporters have lost market share in the 13 months since Mexico imposed tariffs on U.S. products — $2.4 billion worth of products. Before you can solve this problem, you need to acknowledge it as a priority. So far, that hasn’t happened during President Calderon’s state visit.

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At the White House, Remarks about Cross-Border Trucking Issue

President Obama and President Calderon of Mexico released a joint statement after their meeting today, and they also held a media availability. The most direct reference we find to the cross-border trucking and tariffs issue came in the availability from President Calderon:

Together, we should increase our exporting capacity in a contest of growing competitiveness among different regions of the world.  We talked about the different obstacles that are there for complying with transportation obligations that have been established at NAFTA, a situation that impacts jobs, companies and consumers in Mexico and in the United States.  And we shall work in order to achieve a quick solution with a constructive, creative solution in the long term in this and many other areas. 

The joint statement also had this diplomatic language:

The Presidents agreed that safe, efficient, secure, and compatible transportation is a prerequisite for mutual economic growth.  They committed to continuing their countries’ cooperation in system planning, operational coordination, and technical cooperation in key modes of transportation.

So that’s it.

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