Trans Pacific Partnership Archives - Shopfloor

Global Manufacturing Economic Update – April 12, 2013

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Here is the summary from this month’s Global Manufacturing Economic Update:

The global economy has seen some progress since last fall, but growth remains modest at best. There is also a “two steps forward, one step back” feel to some of the latest data. Six of the top 10 markets for U.S.-manufactured goods expanded in March, according to Markit. This is down from seven last month, but up from four last October. Canada, our largest trading partner, saw its manufacturing activity decline, with weaknesses in new orders, exports and hiring. Softness in the United States and Europe were cited as factors.

The other three markets with contracting sales, output and employment levels were in Europe, with its economic downturn widening. The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell from 47.9 in February to 46.8 in March. This index has now contracted for 20 straight months, with little hope of improving anytime soon. While many of the recent headlines have surrounded the failure of the banks in Cyprus or the inconclusive Italian elections, the challenges are ones that confront the entire continent. The unemployment rate has risen to 12 percent, with more than one-quarter of the working population in Greece and Spain out of work, and real GDP is expected to contract throughout the year. This morning, we should learn even more about the manufacturing sector in Europe when new data on industrial production will be released. The data are expected to show a slight decline. Read More

The 12th Round of TPP Negotiations Began this Week

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The 12th round of Trans Pacific Partnership (TPP) Negotiations began this week in Dallas, with a number of issues that remain unresolved, not the least of which is market access for American manufactured goods.   The broad consensus in the business community is that the final TPP deal should reflect the strongest elements of existing free trade agreements and should become the model for future market-liberalizing deals.

In addition to the U.S., there are eight other nations formally engaged in the current TPP talks: Australia, Brunei, Chile, Malaysia, New Zealand, and Peru, Singapore, and Vietnam.   U.S. manufacturers already enjoy duty free access to markets in Australia, Chile, Peru, and Singapore, which leaves negotiators vying for strong market access provisions with Malaysia, Vietnam, and Brunei, whose market is small compared with the others. 

Vietnam’s market, which comprises 86 million consumers – or three times the size of Malaysia’s – has been a focal point for many in the business community who remain concerned about Vietnam’s willingness to adhere to the same high standards as the other negotiating nations. 

The NAM’s goal for all TPP participants, including Vietnam, is to eliminate at least 90 percent of its tariffs on manufactured goods upon implementation of the TPP, and this week, the NAM sent a letter to Ambassador Ron Kirk to emphasize the importance of that position. 

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

TPP Negotiations Continue

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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.

President Supports Trade Agreements, Slams Those Who Agree

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A brief moment of odd policy disconnect showed up last week when President Obama spoke in Philadelphia at a finance reception for U.S. Rep. Joe Sestak (D-PA), who is running for the U.S. Senate seat against former Congressman Pat Toomey, a Republican.

In his rhetorical drubbing of candidate Toomey, the President said this:

This is somebody who, when he had a chance, voted to cut help for small businesses; who wants to make trade deals that send jobs out of Pennsylvania; who seems more concerned about the folks he used to trade with on Wall Street than the Pennsylvanians here on Main Street.

What? President Obama says he supports trade expansion, wants enactment of U.S. free trade agreements with Colombia, Panama and Korea, and touts negotiations toward a Trans-Pacific Partnership.

This is a President who has made doubling U.S. exports within five years – now four-and-a-half years — a top economic priority. And now he’s beating up candidates who support trade agreements, an necessary tool for achieving that goal?

Yes, a disconnect.

Exports: Maine, Performing. Manufacturers, Underperforming?

By | Energy, General, Regulations, Trade | No Comments

A round-up of trade related news that mentions the National Association of Manufacturers:

Pat Mears, NAM’s director for international commercial affairs, spoke at the 2010 Trade Conference in Rockport, Me. The Bangor Daily News reported, “Maine looking to Canada, Asia for growth“:

Domestic demand is going to be slow in the U.S. Real growth is outside of the U.S.,” she said during her talk. “Ninety five percent of the world’s consumers live outside the United States.”

As for Maine, Mears said it is in a unique position. Most states, she said, do not have an international view of the world, but because Maine shares a border with Canada, Maine companies tend to think out-side of country lines already.

“Maine should be doing what Maine is doing,” she said. This includes working on exporting natural resources, working on wood composites and creating international ties.

Gov. John Baldacci also spoke. From his office, “Governor Unveils New Investment Initiative“:

ROCKPORT – Governor John E. Baldacci today unveiled a new Foreign Direct Investment initiative at the 30th Maine International Trade Day event held at the Samoset Resort.

The initiative will focus on increasing investments in Maine’s renewable energy and advanced materials fields, enhancing Maine’s capacity to be a center of excellence in wind energy, composites and advanced materials. The initiative will attract investments in business and R&D, further strengthening Maine’s internationally active, exporting companies and supporting the State’s universities.

Diagonally across the country in San Diego, Michele Nash-Hoff, president of ElectroFab Sales, reports on a speech by the Commerce Department’s point person for manufacturing. From “Can U. S. exports be doubled in five years?“:

Nicole Lamb-Hale, Assistant Secretary of Commerce for Manufacturing and Services, would answer “yes” to this question—if manufacturers diversify their sales in multiple markets and take advantage of the Department of Commerce’s International Trade Administration programs to help them.

“While the U.S. is a major exporter, we are underperforming,”  said Lamb-Hale at the Pathway to Manufacturing Prosperity conference held last week by Industry Week and New Equipment Digest. “Currently, less than one percent of American’s 30 million companies export outside the U.S.  There’s great potential for improvement.”

Before charging American manufacturers with “underperforming,” Lamb-Hale would do well to acquaint herself with her own department’s foreign trade regulations administered by the Bureau of Industry and Security (BIS).

We’ll assume the assistant secretary’s comments are not a shot at manufacturers, and we look forward to reading her speech for context. Suffice it to say, the Administration could help manufacturers perform if it submitted the pending free trade agreements with Colombia, Korea and Panama to Congress and pushed for their enactment. Those agreements have been negotiated, agreed to, are ready to go and could pass.

The pending FTA’s are certainly much further along than the Trans-Pacific Partnership, a worthy initiative from the Administration but still in its early stages. (Here’s a novel approach: A listening tour!) The Wall Street Journal covers the nascent TPP today, “US Tries To Build Consensus For Trans-Pacific Trade Talks.” The NAM’s Vice President for International Economic Affairs Frank Vargo is quoted.

Frank has recently been in an information-packed exchange with Global Trade Watch, a group that supports trade in theory but rarely in practice. Brad Peck covers the debate at the U.S. Chamber of Commerce’s blog, the Chamber Post, “Trade and Facts Win — Will the Economy?.” Brad tips his hat to GTW’s Todd Tucker for recent reasonable comments but then locates this paragraph from a 2004 essay Tucker wrote on “Chávez, Venezuela and US Reaction:”

The success of the global struggle against neo-liberalism and imperialism will depend on the ability of counter-hegemonic efforts to survive and present compelling alternatives to neo-liberal globalization. Part of this struggle necessarily involves defending state actors who are able to harness the power of the state apparatus for development and to show the possibility of pursuing more independent paths. Like other instances in the hemisphere’s history, the US Empire is most threatened by the power of example of successful, independent states. International solidarity is crucial to the ongoing success of this democratic, development-oriented example.

Hah! Since then Chavez’s counter-hegemonic efforts have produced 30 percent annual inflation and a wave of expropriations and human rights abuses.

U.S. Offers Trade Agenda, Other Countries — Trade Action

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U.S Trade Representative Ron Kirk appeared before the Senate Finance Committee Wednesday to formally present the President’s 2010 Trade Policy Agenda, and as expected, express support for passage of the three long-pending free trade agreements (FTAs) with Colombia, Korea and Panama were high on the agenda for Senators.

“The FTA’s are a priority,” Kirk told the lawmakers. “We have not given up on any of those.” (Kirk’s statement.)

The ambassador was challenged by both Chairman Baucus and Ranking Member Grassley, who warned him that the United States will lose out to our competitors in Europe and other nations if we don’t advance the pending FTAs with Colombia, Korea and Panama. The goal of doubling exports in five years will be strongly aided by passing these pending FTAs, Kirk heard more than once.

As far as that competition from Europe and other countries, the European Union is certainly not letting any grass grow under its feet. On Tuesday, the EU announced the start of FTA negotiations with Vietnam. On Wednesday, the EU announced the start of FTA negotiations with Singapore. And, of course, the EU is looking to enact its FTA with Korea in the next few months.

The U.S. has an FTA with Singapore, and Vietnam would be included in the Obama Administration’s proposed Trans-Pacific Partnership (TPP) FTA –- the first round of negotiations for the TPP begins in mid-March.

This news all comes on the heels of the announcement by the EU Tuesday that it has concluded its FTA negotiations with Colombia and Peru, and is looking to a May 2010 signing with entry into force by 2012.

Colombia is also nearly finished negotiating an FTA with Canada.

Canada, by the way, is negotiating an FTA with the European Union. And, of course, Canada and Korea are negotiating an FTA too.

There seems to be a trend here: Strong manufacturing countries, whose industries compete with manufacturing in America for exports to these markets, are all fiercely pursuing trade deals with the same group of nations. If past trends continue, once they conclude negotiations, Europe and Canada will move quickly to enact these agreements. So will Peru, Colombia, and Korea. Read More

President Again Urges Action on Free Trade Agreements

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President Obama on Wednesday spoke to the Business Roundtable, the trade association that represents the largest corporations in the United States (and with which the NAM shares many members). In his remarks, the President expressed support for the pending free trade agreements with Panama, Colombia and South Korea.

Now, I know that trade policy has been one of those longstanding divides between business and labor, between Democrats and Republicans. To those who would reflexively support every and any trade deal, I would say that our competitors have to play fair and our agreements have to be enforced. We can’t simply cede more jobs or markets to unfair trade practices. At the same time, to those who would reflexively oppose every trade agreement, they need to know that if America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. In other countries, whether China or Germany or Brazil, they’ve been able to align the interests of business, workers, and government around trade agreements that open up new markets for them and create new jobs for them. We must do the same. And I’m committed to making that happen.

That’s why we launched the Trans-Pacific Partnership to strengthen our trade relations with Asia, the fastest-growing market in the world. That’s why we will work to resolve outstanding issues so that we can move forward on trade agreements with key partners like South Korea and Panama and Colombia. And that’s why we will try to conclude a Doha trade agreement –- not just any agreement, but one that creates real access to key global markets.

Reuters reported on the speech and reaction, “Obama trade talk cheers business groups,” citing one of the NAM’s specialists in the area:

Doug Goudie, director of international trade policy with the National Association of Manufacturers, said he took seriously the Obama administration’s new focus on trade and much appreciated the goal of doubling exports.

“Moving forward on those three FTAS as soon as possible is going to be the best way to jumpstart the rest of their plan,” such as increasing the number of small- and medium-sized U.S. companies that export, he said.

The Business Roundtable issued a statement summarizing the meeting, with President John Castellani also highlighting trade issues:

We agreed with the President that the United States cannot sit on the sidelines while our competitors negotiate trade agreements that benefit their companies and workers over ours; we discussed the need for Congress to pass the pending free trade agreements as a first step toward the enhanced international trade and investment that is essential to growing the U.S. economy and creating more and better-paying jobs.

The next step for the President is to stop talking about “moving forward” on the FTAs and instead say, “Congress should now enact the pending Free Trade Agreements.”

Embracing the Opportunities in Trans-Pacific Trade

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President Obama gave a speech in Tokyo Saturday announcing the Administration’s plans to engage with the Trans Pacific Partnership countries to shape a regional agreement, an engagement that could produce real benefits for U.S. exporters and manufacturers. The Asia-Pacific region is the world’s fastest growing both in terms of trade and in the number of trade agreements being negotiated.  The NAM has long called for a trans-pacific trade agreement that would open up the region to U.S. exports.  America’s manufacturers cannot afford to be on the outside of an Asian trade wall looking in.

Reacting to the President in a statement, U.S. Trade Representative Ron Kirk made the case that a high-standard regional trade agreement under the Trans Pacific Partnership could help generate American jobs and economic prosperity.  (USTR fact sheet.) Exports will be the driver of U.S. economic recovery, but only if they have open access to world markets.

Strong U.S. leadership will be necessary to achieve a regional Pacific agreement that includes the highest standards already incorporated in U.S. bilateral agreements.  The United States currently has bilateral agreements with four of the seven Trans Pacific partners – Australia, Chile, Peru, and Singapore. (The others are New Zealand, Brunei, and Vietnam.) None of the gains for American manufacturers that were negotiated in those agreements should be abridged in any way, including intellectual property and investment protections and market access commitments. 

We were also pleased to see President Obama’s urging other nations to join the United States in demanding an ambitious and balanced Doha agreement, “not any agreement, but an agreement that will open up markets and increase exports around the world.”  This is the only road to success for the Doha Round.

The President’s focus on trade and trade agreements highlighted in his Asian trip should not, however, push other trade priorities off the table. On the contrary, they should produce a concerted effort to resolve any last issues with the three pending trade agreements – Colombia, Korea, and Panama – so these can be sent to Congress for approval.

News coverage…

Frank Vargo is Vice President, International Economic Affairs, National Association of Manufacturers