Earlier today, the Senate Finance Committee held a hearing on the Trade Facilitation and Trade Enforcement Act of 2013 (S. 662). The bill was introduced by Chairman Max Baucus and Ranking Member Orrin Hatch in March to help reduce costs and delays at the border by modernizing U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), two key trade-related agencies. CBP is charged with facilitating imported cargo through U.S. ports of entry, enforcing trade and customs laws at the border, collecting customs revenue and enforcing import security laws to prevent illicit shipments from entering the United States.

As Chairman Baucus noted in his opening statement, about 365,000 entries move through U.S. ports – including more than 3,000 express entries – on a typical day. These goods arrive in more than 66,000 truck, rail and sea containers as well as hundreds of aircraft. “American businesses, ranchers, farmers and consumers depend on the timely movement of all these goods across borders to remain competitive. In business, time is money. So CBP and ICE must facilitate trade expeditiously,” Chairman Baucus said. In his opening statement, Ranking Member Hatch reiterated the importance of international trade to the U.S. economy and highlighted the need to protect intellectual property rights.

Manufacturers were represented at the hearing by Chrysler, Procter & Gamble and the National Electrical Manufacturers Association (NEMA). William Cook, Director of Worldwide Logistics and Customs for Chrysler, described the impact of delays at the border on Chrysler’s bottom line in his testimony. (continue reading…)

Today South Korean President Park Geun-hye addressed a joint meeting of Congress as part of her visit to Washington. NAM Board Member and Quality Float Works CEO Sandra Westlund-Deenihan and company President Jason Speer attended the speech today as special guests of Speaker Boehner.

Quality Float Works CEO Sandra Westlund-Deenihan and President Jason Speer attend South Korean President Park Geun-hye's Speech before a joint session of Congress.

The South Korean market is extremely important to the Schaumburg, IL based Quality Float Works which manufactures metal floats and valves used for the gas, plumbing oil and agricultural industries. The trade agreements passed in 2011 with South Korea, Panama and Colombia have helped Quality Float Works and other small and medium-sized manufacturers expand into new markets which in turn supports economic growth and job creation here in America.

Free trade agreements are critical to our export growth. Exports to just our 20 FTA partners grew by more than $41 billion in 2012 and are up by nearly $230 billion since 2009. This makes up nearly 48 percent of all U.S. manufactured goods exports for 2012 and 60 percent of the increase in 2012 exports.

We must continue to do more to open new export markets for companies like Quality Float Works. With 95 percent of the world’s consumers outside our borders we rely on exports to grow our economy and jobs.

This morning, President Obama made it official this morning when he announced the nomination of Michael Froman to serve as United States Trade Representative (USTR).

Mr. Froman’s plate will be full as our global challenges mount with ongoing weakness in the global economy. However, these are issues that he has keenly been aware of in his position as deputy national security advisor for international economic affairs and in his prior work in and out of the government over the past two decades. Mr. Froman’s experience in international trade and with senior foreign government officials should be a strong asset as he becomes the lead trade official for the United States.

Trade is a vital issue for manufacturers as 95 percent of consumers live outside the United States. Opening new markets and leveling the playing field is critical for manufacturers’ success in creating more opportunities for the 12 million men and women who make things here, as well as for their communities and our economy.

Topping our list of action items:

First, market-opening trade and investment agreements. Recently, NAM President and CEO Jay Timmons laid out manufacturers’ goals for ongoing trade negotiations, and we remain hopeful that these talks can achieve the robust outcomes that are necessary to spur growth and innovation.

Second, the protection and enforcement of intellectual property (IP) rights globally. Manufacturers’ concerns over the theft of IP grow by the day. Challenges remain strong in India and China and in other parts of the world. If left unchallenged, these threats to IP protection will destroy manufacturers’ ability to compete—and compete fairly.

These are just two big issues that we must address as a nation. Manufacturers need action on a robust trade and investment agenda, and we stand ready to work with Mr. Froman to tackle these challenges in the days ahead.

Linda Dempsey is vice president of international economic affairs, National Association of Manufacturers.

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit fell from $43.63 billion in February to $38.83 billion in March. This is the second-lowest level since January 2010, almost equaling the trade deficit of $38.14 billion of December 2012.

This was a significant and unexpected narrowing in our trade position, resulting from a sharp drop in goods imports which exceeded the decline in goods exports. Goods exports decreased from $132.18 billion to $130.35 billion; whereas, goods imports went from $192.93 billion to $186.49 billion.

Unlike the changes seen in the past couple months, the narrowing in March was due mostly to non-petroleum factors. The petroleum trade balance eased marginally from $21.45 billion to $21.13 billion, with the non-petroleum trade balance dropping from $38.62 billion to $34.76 billion. With that said, petroleum exports and imports were lower, with cost mostly likely helping to reduce these values by almost equal amounts. The average price of West Texas intermediate crude in March was $92.94 per barrel, down from $95.31 a barrel in February.

There were declines across-the-board in goods exports categories. The largest decrease was in foods, feeds, and beverages, which were down $1.05 billion. This was followed by lower exports for the following major groups: motor vehicles and parts (down $331 million), non-automotive capital goods (down $269 million), consumer goods (down $260 million), and industrial supplies and materials (down $288 million). There were some exceptions, with the most notable being increases in exports for civilian aircraft (up $582 million) and pharmaceuticals (up $441 million).

Meanwhile, goods imports were also lower, as noted above. These declines were as follows: consumer goods (down $3.41 billion), non-automotive capital goods (down $1.51 billion), industrial supplies and materials (down $1.42 billion), and motor vehicles and parts (down $771 billion). This suggests that U.S. consumers have slowed their purchases of foreign goods, much as we have seen with the recent easing in the pace of retail sales data. (continue reading…)

Today USTR released its annual Special 301 Report on Intellectual Property Rights. The report highlights countries of concern with regard to intellectual property (IP) protections and enforcement and examines market access issues. This report is of great interest to the NAM, as manufacturers increasingly rely on robust protection and vigorous enforcement of IP rights.

Most notably, the report underscores serious concerns with China’s misappropriation of trade secrets and other issues; adds Barbados, Bulgaria, Paraguay and Trinidad and Tobago to the Watch List; and, designates Ukraine a Priority Foreign Country (PFC). In addition, manufacturers note that Canada was upgraded in this year’s report.

While USTR praises the progress that Canada has made in a number of IP areas in the last year, the NAM would be remiss if we failed to note that the pharmaceutical IP situation in Canada, particularly patent utility, remains a serious concern to manufacturers. Canadian courts have invalidated pharmaceutical patents for major products based on a heightened standard for what is useful under patent law. This makes Canada unique among developed countries – and not in a positive way. Our hope is that USTR will continue working with Canada to address this, as all pharmaceutical patents, and potentially those in other industries, are now seriously under threat.

This year’s Priority Watch List includes the following nations: Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand, and Venezuela.  While manufacturers face serious challenges in many of those countries, we are particularly concerned by India’s recent actions.  Manufacturers have seen firsthand the situation in India deteriorating over the last year and a half as India has taken a number of deeply troublesome actions, particularly through the rejection of legitimate patent applications, the issuance of compulsory licenses in flagrant disregard of international rules, and the implementation of India’s preferential market access (PMA) policy.

The NAM’s statement for a recent House Trade Subcommittee hearing summarizes some of the key barriers in India as follows: “Manufacturers face persistent challenges in India, including tax and market access issues, localization barriers to trade, lack of or inadequate protections for intellectual property rights and other investment or trade-restrictive policies.” IPR protection and enforcement challenges in India are indeed mounting, raising serious questions about India’s business and innovation climate and undermining the business community’s confidence in India.

IP rights are the lifeblood of the U.S. economy, and the protection of those rights assures manufacturers that their innovations will be secure as build industries around them and create jobs. Manufacturers in every U.S. state rely on IP rights as an integral part of business both domestically and globally. As the U.S. Department of Commerce found in its April 2012 report, IP-intensive industries accounted for $775 billion, or 60.7 percent, of total U.S. merchandise exports in 2010.  For all these reasons, manufacturers will continue to be vigilant in their work with the Administration and Congress to address serious IP violations and lack of enforcement in numerous countries.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

This past Tuesday was National Golf Day, making this a fitting week to bring you the story of PING and how policies in Washington, particularly the miscellaneous tariff bill, are impacting golf equipment manufacturers.

In 1959, Karsten Solheim, a Norwegian immigrant and engineer, designed and manufactured a putter in his garage to address his frustration with putting, dubbing the new putter the PING putter because of the unique sound made when it struck the ball. A local golf professional was so impressed by the accuracy of the putter that he suggested Karsten make his invention available to other golfers.  Soon after, Karsten transformed the family garage into a miniature manufacturing and assembly facility.

By 1966, Karsten Manufacturing Corporation became his full time job. Karsten pioneered the idea of custom fitting each golfer for golf clubs with specifications to fit each golfer’s characteristics and swing. Now PING manufactures and delivers premium, custom fit golf clubs to its customers within 48 hours of receiving an order.

Manufacturing workers assemble golf equipment at a PING facility in Arizona

Karsten’s youngest son, John Solheim, assumed leadership of the company in 1995 and has overseen its growth while building on the foundation of innovation, quality and integrity established by his father over 50 years ago. (continue reading…)

Today Toyota Motor Manufacturing announced that the company plans to begin manufacturing the Lexus ES 350 in Kentucky. Production will take place at the company’s Georgetown plant and will create 750 new jobs. The company is investing $360 million in the facility and will start producing vehicles in 2015. This will be the first time Toyota has manufactured Lexus vehicles in the United States.

This is positive news for manufacturing in the United States and also shows the benefits of direct foreign investment for job creation. One of the top goals of the NAM which is laid out in our Growth Agenda is to make the United States the best place in the world to manufacture and attract direct foreign investment.

Just yesterday the NAM’s Vice President of International Economic Affairs Linda Dempsey testified before the House Energy & Commerce Subcommittee on Commerce, Manufacturing and Trade hearing about global investment in America. She discussed the economic impact of foreign investment on manufacturing in the United States.

“Foreign Direct Investment (FDI) plays a critical role in manufacturing. Based on data from the Commerce Department’s Bureau of Economic Analysis, FDI inflows in manufacturing equaled nearly $83.4 billion in 2012, accounting for almost 50 percent of total FDI inflows. FDI in manufacturing has shown substantial growth since 2003 and is showing a rebound from the weakness in 2008 and 2009. About 95 percent of all FDI in the United States comes from developed countries, starting with the United Kingdom. While the share fluctuates yearly, a substantial portion of such investment since 2005 has been in the manufacturing sector. The most recent data from 2012, which are still preliminary, show that FDI in manufacturing accounts for nearly 50 percent of total FDI that year.”

With the global competition growing there is clearly more room for growth in FDI. It currently remains 20 percent more expensive to manufacture in the United States compared to our largest trading partners.  To make America the best place for foreign direct investment policymakers must move forward with pro-growth policies laid out in the NAM’s Growth Agenda.

Today marks 100 days since the Miscellaneous Tariff Bill (MTB) expired. The MTB cuts costs for manufacturers in the United States by eliminating or reducing import tariffs on necessary manufacturing inputs that are not produced domestically.  The 112^th Congress failed to act on the MTB by December 31^st, resulting in a substantial tax hike on manufacturers, both large and small.

Unfortunately, the MTB has been mired in inside-the-beltway politics, damaging manufacturers’ competitiveness and threatening jobs.  Job creators in the United States, like BASF and Lasko Products, rely heavily on the MTB to keep their costs down, make investments in their facilities and in R&D, and better compete in a challenging global economy.  The lack of action by Congress is significantly hurting manufacturers and each day that passes without action means higher costs for manufacturers in the United States.

For three decades, Congress has passed this commonsense legislation with broad bipartisan support. The 113^th Congress must act quickly in order to reverse this damaging tax increase on manufacturers in the United States. Manufacturers can’t wait any longer and are calling on Congress to act now on this critical job-supporting, export-enhancing legislation.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

The clock continues to tick and we are now more than three months pas the expiration of the Miscellaneous Tariff Bill (MTB) at the end of the 112th Congress and as a result, manufacturers both large and small have seen their costs spike substantially this year.  The 113th Congress must act quickly in order to reverse this tax increase on manufacturers in the United States.

Fans are assembled on the shopfloor at Lasko Products

Companies of all sizes benefit from the MTB to help level the playing field for manufacturers in the U.S. The MTB cuts costs by reducing or eliminating tariffs on critical manufacturing inputs that are not available in the United States. The lack of action by Congress on an MTB is hurting manufacturers’ cost-competitiveness, thereby threatening jobs and economic growth.

For Lasko Products in Pennsylvania, the MTB is a critical tool that helps them compete. In a challenging global market, the MTB helps Lasko stay competitive by reducing their costs.

“There are 675 American workers at Lasko facilities benefiting from the MTB program,” said Ed McAssey, Chief Operating Officer at Lasko. “The MTB allows Lasko to compete against low-cost imports of household electric fans from China. We are the last American producer of portable oscillating fans and have been able to stay in this business with the MTB program and heavy investment in capital equipment and tooling. If Congress fails to act quickly and renew the MTB, it will put American jobs in our factories at risk. We hope Congress will act expeditiously to preserve American jobs and our investment.”

Each day that passes without the MTB means higher tariffs for manufacturers in the United States – like Lasko. For three decades, Congress has acted in a bipartisan, bicameral fashion to pass this common-sense legislation.  The time for them to act on the MTB is now.

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit shrank to $42.96 billion in February from $44.46 billion in January. The lower deficit was the result of increased goods exports, up from $130.85 billion to $132.19 billion.

February’s goods exports figure was the second-highest level ever – second only to December 2012’s $132.82 billion. At the same time, goods imports were marginally lower in February, down from $192.55 billion to $192.41 billion. The service sector trade balance was largely unchanged, with the surplus up from $17.24 billion to $17.26 billion.

The petroleum trade balance helps to explain much of the change in the goods market. The petroleum trade deficit narrowed from $24.33 billion in January to $21.21 billion. Unlike the decline in the trade deficit in December, this narrowing did not correspond with a decrease in petroleum prices. The price of West Texas intermediate crude was $88.25 a barrel in December, and it was $95.32 in February. But, the February crude oil price was actually a slight increase from the $94.69 a barrel observed in January. This implies that the increase in petroleum exports and corresponding decrease in petroleum imports might be due to other factors, such as changes in global demand or seasonal adjustments in the data.

The non-petroleum goods trade balance actually widened from $36.97 billion to $38.30 billion. Looking specifically at areas of strength in the goods export market, the largest gains were in the industrial supplies and materials (up $1.83 billion), other goods (up $463 billion, and automotive vehicles (up $169 million). The industrial supplies and materials figure was boosted by an additional $1.08 billion in fuel oil and other petroleum products exports. These gains, though, were counteracted by decreases of non-automotive capital goods (down $758 million), consumer goods (down $312 million), and foods, feeds, and beverages (down $101 million).

In terms of goods imports, industrial supplies and materials were down $2.59 billion, but as we saw in the exports numbers, almost the entire decline stemmed from reduced crude and fuel oils imports. The other major import categories were mostly higher, including increased imports for automotive vehicles and parts (up $1.10 billion), consumer goods (up $695 million), non-automotive capital goods (up $348 million), and foods, feeds, and beverages (up $238 million). (continue reading…)