U.S.-Korea Free trade agreement Archives - Shopfloor

Barriers in Colombia Fall, But Not to American Manufacturers

By | Economy, Trade | No Comments

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.

Colombia Free Trade Agreement Takes a Step Forward

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The Obama Administration continues to move forward on increasing its commitment to an ambitious trade agenda by announcing its support for the last of the three pending free trade agreements (FTAs) – the agreement with Colombia, which has long been the most contentious. This morning U.S. Trade Representative (USTR) Kirk sent a letter to Congress indicating that USTR “has completed its preparatory work on the Agreement and stands ready to begin technical discussions with Members of Congress on the draft implementing bill and draft Statement of Administrative Action.” That means, let’s get to work on Colombia. This is a another positive step forward for the U.S. trade agenda. For years, our mantra has been “we want all three as quickly as possible.” We appreciate the work of USTR and the Administration to get to this point and look forward to working with them on moving forward.

Now, we’ve got all three on the line. It’s time to move them through Congress as soon as possible.‪ In January, Ways and Means Chairman Camp told USTR Kirk at a hearing that he wanted to pass all three pending trade agreements by July 1. At the time, that seemed an impossible dream, we were certainly skeptical.

The NAM has been working for years to build support for these three pending FTAs – and we will double our efforts. Manufacturers know these preferential trade agreements – which open foreign markets to our exports — are key to economic growth and job creation in America. These agreements will mean $9 billion annually in increased manufacturing exports to these three trading partners, according to the USITC.‪

The Colombian government under President Santos should be congratulated for their efforts in addressing the issues raised in the action plan announced a few weeks ago – but also for their independent efforts on domestic reforms that go far beyond anything ever discussed with the United States. Their work builds on the foundation laid by former President Alvaro Uribe, who presided over the negotiation of the agreement and who, over his two terms, did so much to strengthen and preserve Colombia.‪

There is a great deal of work to be done if we are to pass all three agreements by July 1. That date was not plucked out of thin air – it is the day that the EU-Korea and Canada-Colombia trade agreements enter into force, and our competitors’ manufactured goods and agriculture products gain a preferential advantage over ours. Our competitors are moving forward, and are far ahead of us in many markets. With today’s notification of the Colombia FTA we’re finally moving in the race. All we need is a good finishing kick to get over the line.‪‪

Doug Goudie is director of international trade policy at the National Association of Manufacturers.

A Small Manufacturer Embraces the Opportunities of Trade

By | Taxation, Trade | 2 Comments

Drew Greenblatt, president of Marlin Steel Wire in Baltimore, testified on behalf of the National Association of Manufacturers today at a hearing before the House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, “Made in America: Innovations in Job Creation and Economic Growth.”

His prepared statement covers the wide range of issues facing manufacturing, drawing on the NAM’s Manufacturing Strategy for Jobs and Competitiveness. Highlights included his remarks on taxes and regulation, and Drew is always good on trade issues. He speaks from experience on small manufacturers can succeed by competiting in the global marketplace. From his comments:

In today’s global marketplace, manufacturers in Maryland are no longer just competing against Texas companies that compete against Georgia companies. We face competition from around the world. Foreign manufacturers often must comply with fewer regulations and have governments that use every tool at their disposal to give those companies a competitive edge, frequently at the expense of manufacturers in the United States. The solution is to increase access to foreign markets through trade agreements and to ensure the regulatory environment in the U.S does not put manufacturers at a disadvantage.

To do this, manufacturers need an international trade policy that opens global markets, reduces regulatory and tariff barriers and reduces distortions due to currency exchange rates, ownership restrictions and various “national champion strategies.” Congress must enact pending trade agreements, and the Administration must negotiate additional agreements in the Pacific area and elsewhere.

Again, speaking from my own experience, one of Marlin Steel’s core niches is selling custom stainless steel material-handling baskets to Japanese automakers. As we all know, Korean automakers have steadily increased their market share, and I want to sell our custom wire baskets to the Korean automakers as well as the Japanese like we did this week to Mazda. The U.S.-Korea Free Trade Agreement, if enacted, will help Marlin Steel compete on a level playing field with Korean wire basket suppliers.

EU Approves Free Trade Pact with Korea, Gains Edge over U.S.

By | Trade | No Comments

The European Parliament approved the EU-Korea trade agreement today, with 465 votes in favor, 128 against and 19 abstentions. The agreement will take effect on July 1, 2011, immediately removing the vast majority of Korea’s tariffs on manufactured goods (which average 8 percent) imported from European Union countries. You can read all about it here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=680

This approval is a notable development, because it is the first time that the European Parliament exercised co-decision powers on trade agreements. Prior to the Lisbon Treaty, approval of trade agreements rested entirely within the Council. Now, the European Parliament must approve all trade agreements signed by the EU – putting them much closer to the U.S. model, where Congress must approve our trade agreements. Many speculated that this agreement might face a closer vote for approval in the EU Parliament. Still, 76 percent voted to approve –- a percentage far higher than most agreements receive in the U.S. Congress. The European Parliament obviously knows what manufacturers in America know: Removing foreign trade barriers is a boon for exports, jobs and economic growth.

The majority of the U.S. Congress knows this too, and wants to approve the three pending trade agreements we have with Korea, Colombia and Panama. Of course, before our Congress can approve trade agreements, they need the President to send them up. Our pending agreements have been awaiting Congressional approval since 2007. The President has indicated he will quickly transmit the U.S.-Korea FTA to Congress with an eye toward seeking approval in a matter of weeks – but that leaves Colombia and Panama languishing.

Together, the U.S. International Trade Commission (ITC) estimates the three agreements are worth more than $13 billion in new U.S. exports. The majority of those exports will be manufactured goods. Tens of thousands of American jobs will be created and sustained as a result of these trade agreements. They remove tariff and non-tariff barriers, open markets for our goods, give our manufactured products preferential treatment. The longer we hesitate, the more our competitors win our market share as they approve their own trade agreements. The time to move on trade is now.

To Export More Wisconsin Products, Paper, Enact U.S.-Korea Trade Pact

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Lori Wallach, of the Public Citizen group, has played a cruel trick-or-treat joke on Wisconsin coated paper workers. And for this reason, it deserves a response as Ms. Wallach is misleading these workers and tricking them into supporting her biased view of trade agreements –- agreements that have allowed more made-in-Wisconsin products to be sold around the world.

In an October 27th report on the website of the Green Bay station, News Talk Radio WTAQ, Ms. Wallach blames trade agreements for layoffs in Wisconsin’s paper mills and claims government researchers say the Korea trade agreement would create more jobs lost and a greater U.S. deficit.

This is simply not so. First, imports of coated paper into the United States are already duty-free –- meaning there is no tax on the product. Thus, there is no advantage with the Korean trade agreement for more Korean coated paper to be imported to the United States. And while Wallach claimed the U.S. Government said the agreement would cost jobs and increase the U.S. trade deficit — the “official” U.S. government International Trade Commission analysis says the Korea agreement will increase U.S. exports more than imports, shrink the trade deficit, and generate over $11 billion in added economic growth for the United States – thus creating most needed jobs.

The paper industry’s problem isn’t trade agreements – it is unfair imports from China. While coated paper imports from Korea are only half as large as five years ago, they have doubled from China because of unfair trade practices. Only last week, the U.S. Government put tariffs as high as 170 percent on dumped and subsidized exports from China. Had Wallach raised her voice against these unfair trade practices instead of misleading American workers about trade agreements maybe the government would have acted faster.

I hope these paper mill workers will not allow themselves to be tricked into supporting someone’s failed biases. They should demand the facts and decide for themselves what is needed to boost U.S. manufacturing. For example, consider NAFTA. It is now Wisconsin’s largest export market, buying over $8 billion of Wisconsin’s production in 2008 – more than twice as much as Wisconsin’s number two market, the European Union.

Korea’s import tariffs on U.S.-made manufactured goods average 8 percent, while U.S. import tariffs on Korean-made manufactured goods average 2 percent – and most U.S. manufactured imports from Korea are already duty-free. I think it is clear who will be the winner from the Korea trade agreement. Too bad Ms. Wallach can’t see it.

Frank Vargo is vice president for international economic affairs at the National Association of Manufacturers.

From Korea, Thoughts on Tariffs, Jets and Chilean Wine

By | General, Trade | One Comment

A blogging postscript from Doug Goudie of the National Association of Manufacturers, who completes his reporting from a U.S. business delegation’s trip to South Korea.

I suppose I could blog my 18 hour flight home tomorrow, but that probably won’t be very exciting for most readers. We’ll be on a Boeing aircraft, with American in-flight movies, American soft drinks, beer, snacks and wine, and an American flight crew. So hey, I guess I can work some trade-related content into my flight home!

In fact, Boeing, the American entertainment industry, American food and drink brands, and services industries will all benefit from the U.S.-Korean Free Trade Agreement. Removal of tariff and non-tariff barriers will benefit manufactured goods like aircraft and processed foods. IPR protections will benefit American movies, music and software and the FTA opens the Korean market more than any previous FTA that the United States has previously signed.

Strong services language in the FTA will ensure that American companies that provide services — financial, insurance, express delivery, professional services — have remarkable new access to the Korean market and strong guarantees that protect their participation.

And wine? Here’s a cautionary tale about what happens when you put trade agreements on pause:

Chilean wines on sale at the South Korean wine site, http://www.wine21.com/wine21_index.phpIn 2001 the U.S. had a 5 percent share of Korea’s wine market, and Chile had zero percent. In 2004, when Chile enacted its FTA with Korea, the U.S. and Chile both had 9 percent market share in Korea’s wine market.

Korea’s tariffs on wine went to zero for Chile but remain very high for the United States. And last year, Chile has 30 percent of Korea’s wine market, the U.S. only 15 percent.

Time out on trade means time out on exports, jobs, growth, and new opportunities.

Earlier posts:

In Korea: Trade Pact’s Strong Defense of Intellectual Property Rights

By | intellectual property, Trade | No Comments

The National Association of Manufacturers’ Doug Goudie has been reporting from a business and trade mission to South Korea.

Our delegation had a long day of back-to-back high level meetings with a variety of senior officials today, as well as a tour of a GM-Daewoo auto assembly facility. Many of the meetings are off-the-record and I won’t abuse the trust. I will say we served American beef at all our meals with senior Korean officials.

Suffice to say, the U.S. business community is still sounding our strong support and outlining the strong benefits manufacturers in America will see from the market-opening provisions in this agreement (as I outlined in my initial post for Monday).

Rather than end there, we’ve seen and done a lot here so far, and I thought I’d look at a few specific examples and thoughts that have come up so far.

Intellectual Property Rights:  The NAM takes a strong stand on robust protection of intellectual property rights (IPR). IPR protection extends far beyond counterfeiting or piracy, of course – innovation is one of America’s greatest competitive advantages and is our key to remaining the cutting-edge manufacturing center in the world.

In discussions with Korean officials this week, we’ve heard them express the same fears about Chinese IPR violations that we hear in America. In the 1980s, Korea had a reputation for lax IPR protections, particularly in counterfeiting and piracy. This is no longer the case – China and some other Asian nations are the offenders now- but if anyone is still concerned, the Korean-U.S. Free Trade Agreement (KORUS FTA) has extremely strong IPR language written into it. (Chapter 18)

I went shopping first day into some of the markets, looking for counterfeit consumer goods. Not to buy, mind you!  Knock-offs still abound in handbags and luggage at the market I visited — I won’t deny that fact — but they are obvious knockoffs that wouldn’t fool my 3 year old daughter, let alone a Real Housewife. For example, “Conch” bags bear a resemblance to “Coach”.

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U.S.-Korea Ties Build on Trade, Trust and Defense of Freedom

By | General | One Comment

The National Association of Manufacturers’ Doug Goudie has been reporting from his travels on  a business and trade mission to South Korea. Earlier posts: Day One, Day Two.

A U.S. business delegation to Korea stopped at the DMZ on Oct. 13, as part of trip meant to promote U.S. trade opportunities in South Korea.

Looking north into North Korea from the South Korean side of the Demilitarized Zone. Photo: Doug Goudie

The focus of today’s meetings and trip makes me consider the national security aspect of the U.S.-Korea FTA. We have a unique and strong bond with Korea, having led the United Nations Joint Combined Forces that fought in the Korean War. After 1953, when the truce agreement was signed, the United States has remained in the Republic of Korea, jointly guaranteeing the peace and securing the nation alongside the ROK military.

I think about this because, for about 5 minutes today, I stood in North Korea. We visited the DMZ this morning, and each mile that brought us closer to the border reinforced how important the U.S.-Korea national security relationship is to both nations,and how the trade agreement is about more than just expanding commerce and removing trade barriers – it is also a sign of trust, mutual dependence and mutual appreciation.

I would be remiss in not noting -at least in passing – that among the 17 or so nations that make up the U.N. joint command still in operation at the DMZ is Colombia. Troops from Colombia fought in the Korean War, and Colombian officers still fill slots in the U.N. command at the DMZ, along with officers from Australia, New Zealand, Great Britain, Turkey and other nations.

For miles before you reach the border, you drive on a highway bordering the Han River, and you can’t help but notice the side of the road is blockaded by rolls of barbed wire and interspersed with guard houses. As you get closer to the DMZ, of course, security grows tighter until you need to be on an official escorted tour to proceed. But it is the fact that for miles and miles before the border – Seoul lies only 50 kilometers from North Korea, and is well within range of 20,000 artillery and missile tubes that could turn the city into rubble – you are reminded that North Korea has an army of 1.6 million, positioned mostly within 90 km of the border. This is a real and active threat – it is a far cry from the undefended borders of the EU or U.S.-Canada. And the United States has guaranteed the security of the border since 1953.

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In Korea, Infrastructure, Consumer Spending, and Opportunities

By | Infrastructure, intellectual property, Trade | 5 Comments

The National Association of Manufacturers’ Doug Goudie is on a business and trade mission to South Korea. This is the second of his reports. Earlier, here.

This morning we had a breakfast meeting with Kang Man-soo, Chairman of the Presidential Council on National Competitiveness (PCNC) and a senior economic advisor to Korean President Lee. The PCNC – created by President Lee after he took office – is a unique advisory body in Korea, perhaps roughly equivalent to the U.S. Council of Economic Advisors (CEA), with an important difference: foreign business representatives have a place in at the table in the PCNC, while the U.S. CEA is entirely an inter-governmental body. Also, CEA has a wide mandate, while the PCNC is focused on ways Korea’s government can improve competitiveness in the country. Given the neighborhood –- a robust, competitive and fast-growing group of Asia-Pacific economies –- having a body like the PCNC seems a smart move.

It was a very good meeting to begin our visit, and the U.S. delegation utilized the Chairman’s time with us to highlight the benefits of the U.S.-Korea FTA for both American and Korean businesses, farmers, and service providers. The Chairman noted an op-ed in The Wall Street Journal last week stating that Democrats in the U.S. Congress ARE in fact promoting free trade – by not acting on the pending U.S. FTAs with Korea (and Colombia and Panama), Congress is promoting the European Union’s increased free trade with Korea (and Colombia and Panama), as the EU enters and completes more and more bilateral FTAs – first up, with Korea.

Korea forms a strategic “bridge” between Japan and China, and the rest of the Asian economies. As noted earlier, the Korean economy is growing quickly, showing good recovery from the 2008 global recession. I can attest that a great deal of infrastructure work is under way in Seoul and elsewhere – bridges are being built, rail lines being extended, new high-rises are rising high. I can also attest – after strolling through some of the largest markets in Seoul this afternoon – the Korean people are out in droves buying lots of consumer goods. This market is an excellent place for U.S. manufactured goods exports. Read More

In Korea, Business and Manufacturing Delegation Seeks Trade Opportunities

By | Trade | 8 Comments

Doug Goudie, Director of International Trade Policy of the National Association of Manufacturers, is representing manufacturing in America and NAM’s member companies and associations on a U.S. business delegation to Korea this week. The delegation is in Seoul to meet with senior Korean government officials and private sector representatives to demonstrate the commitment of the U.S. business community for passage of the U.S.-Korea FTA. He’ll be posting updates to the Shopfloor blog.

Monday, 6:45 P.M. Seoul (5:45 A.M. in DC)

We’ve arrived in Seoul on a very smoggy day. Not much on tap for this afternoon/evening – recovering from the long flight seems to be first order of business. This week-long visit by a strong representative group of U.S. companies and trade associations will be meeting with very senior Korean government and private-sector officials to show our support for passage of the U.S.-Korea Free Trade Agreement.

Our message is simple and direct – this agreement will benefit both countries, in all sorts of ways. It will drive growth in U.S. exports, it will drive employment growth, it will benefit manufacturing in America. It is a very strong agreement, especially for manufacturing (it is our largest agreement since NAFTA in terms of two-way trade and projected export growth). Nearly 90 percent of all U.S. exports to Korea are manufactured goods. The U.S. International Trade Commission forecasts a growth of $10 billion annually in U.S. exports after the KORUS agreement takes effect.

President Obama has been clear since his statement at the G20 meeting in Canada in June — and the Coalition supports his position — that outstanding issues in automotive and beef provisions must be addressed before this agreement can be sent to Congress for approval. The NAM has been clear from signing of this agreement in June 2007 that there are automotive issues, particularly in the non-tariff area of standards and regulatory actions, which need to be addressed before the agreement can pass Congress. President Obama has set a deadline of the G20 meeting in Seoul on November 11-12 (which he will attend) for resolution of outstanding issues. We are here to ensure that the Korean negotiators are fully aware that the U.S. business community supports this position.

However, first thing tomorrow, we begin bright and early with a breakfast with Kang Man-soo, Chairman of the Korean President’s Council on Competitiveness, some orientation meetings with some of the AmCham Korea company members, and a dinner with the Executive Board of the AmCham Korea. Wednesday we visit the DMZ during the day, among other activities and meetings.

I must say again, we have an excellent and diverse group represented in this U.S. business delegation, organized by the U.S.-Korea Business Coalition for Free Trade. The U.S. Chamber of Commerce serves as the secretariat of the coalition and is represented here, led by Tami Overby, who headed up the AmCham Korea before joining the Chamber. NAM is the Chair of the Manufacturing Committee for the Coalition.

As Bill Lane of Caterpillar has noted on earlier U.S. business delegation visits to Colombia and Panama: Manufacturers represent two-thirds of U.S. exports – and we’ve got the NAM here. Services represent two-thirds of U.S. jobs – and we’ve got the Coalition of Services Industries here. And Agriculture – well, the farmers represent two-thirds of the votes in Congress – and the Farm Bureau is here. All three pillars are represented, as are our member companies.

Tomorrow, I’ll look at why this agreement is so important to U.S. manufacturers and look at how we’re falling behind on trade – and what might happen if we don’t get back in the car and put our foot on the gas.