Earlier today, Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers (NAM), testified at a public hearing on the modernization of the North American Free Trade Agreement (NAFTA), underscoring key areas to improve and modernize NAFTA in ways that will grow manufacturing and jobs in the United States.
For manufacturers throughout the United States, the North American commercial market is the most important market in the world, with Canada and Mexico alone purchasing one-fifth of all U.S.-manufactured goods production—more than the next 10 U.S. trading partners combined.
U.S. manufacturing output has nearly doubled since 1993, with U.S.-manufactured goods exports to Canada and Mexico alone supporting more than 2 million jobs in the United States and more than 43,000 manufacturing firms across the country. Partnerships among North American businesses have helped support this growth and the improved competitiveness of manufacturing in the United States.
NAFTA was negotiated before major technological and energy innovations helped transform what and how we manufacture in the United States. And furthermore, while U.S. negotiators sought to level the playing field fully in the original NAFTA negotiation, barriers and weaker standards remain in both Canada and Mexico.
In her comments today, Dempsey emphasized key points raised in the NAM’s June 12 public comments. Specifically, she focused on the need for a stronger NAFTA that grows American manufacturing, exports and jobs by:
- Eliminating remaining distortions and barriers in Canada and Mexico, including with respect to remanufactured goods and barriers on food product exports, particularly Canadian dairy tariffs and nontariff barriers;
- Raising standards to U.S. levels, including with respect to science-based regulatory practices, transparency, competition and state-owned enterprises, the protection of private property and investment overseas and intellectual property;
- Updating the agreement to include new digital trade provisions important to small manufacturers and those creating and relying on new technologies;
- Removing unnecessary red tape and duplicative regulations that are holding manufacturers back;
- Seeking greater collaboration by the United States, Canada and Mexico to take action to stop trade cheating from third countries; and
- Maintaining and improving neutral dispute settlement provisions.
The NAM and manufacturers embrace the opportunity to modernize NAFTA, and we are rolling up our sleeves to press for changes that further incentivize manufacturing in the United States and North America more broadly.
Manufacturers support efforts to achieve normal trade relations with Cuba and to share with the Cuban people the values that make, and keep, America exceptional: free enterprise, competitiveness, individual liberty and equal opportunity. While today’s announcement will add some hurdles for Americans interested in trade and travel to Cuba, manufacturers appreciate the president’s acknowledgment that our commercial and diplomatic engagement can support the ambitions of the Cuban people. We look forward to expanding investment and opportunity in Cuba.
Isolating the Cuban people has not yielded a new day for freedom and democracy in the island nation just miles from our shores. But eased restrictions on travel to Cuba and U.S. manufacturing exports to the Cuban private sector has made it simpler for Americans to engage with Cuban citizens, as it did when a group of National Association of Manufacturers leaders traveled to Cuba recently, and to support the growth of private enterprise in Cuba. We saw, in even a short time, the potential for normalized diplomatic relations not only to create economic benefits in both nations but also to bring freedom and democracy to Cuba and its people.
Most important in the near term is the strategic value of rapprochement with Cuba, to counter the growing influence of China and Russia in the region. During our visit, for example, a Russian oil tanker with 249,000 barrels of refined product arrived in Cuba for the first time this century. It brought back memories of when the Soviet Union supplied all of the communist country’s needs. Instead of allowing the hand of friendship to come from communist governments and those with a different set of values, we can demonstrate the strength of democratic values and the free market system through a robust trading partnership.
We look forward to the day, as much as anyone, when the Castro regime ends. But ultimately real change will only happen when the Cuban people can take charge of their own destinies and entrepreneurs can create their own opportunities.
As part of President Donald Trump’s March 31 executive order on trade, the Commerce Department and Office of the U.S. Trade Representative are examining the role trade deficits play in key trading relationships. The National Association of Manufacturers (NAM) provided this detailed submission last week, and I am testifying today about opportunities and challenges that trade presents for manufacturing in the United States.
For those seeking the Reader’s Digest version, consider the top four takeaways.
- Exports are critical to today’s manufacturing success. Indeed, U.S.-manufactured goods exports now represent more than half of U.S.-manufactured output, supporting more than 6 million manufacturing job across the country—jobs that pay substantially more than non-export-related jobs. The U.S. manufacturing sector must have opportunities to expand sales—at home and abroad—to continue to add jobs.
- Manufacturing is growing around the world, creating new middle-class consumers and new partners, but also new competitors. More than $11 trillion in manufactured goods are traded annually as markets have been opened and trading costs reduced. In some cases, imports compete directly with manufacturers in the United States, just as U.S. exports compete with manufacturing overseas and many manufacturers require inputs not domestically available. Unfortunately, however, some import competition is fueled by foreign market-distorting and discriminatory trade practices that create unfair advantages for foreign manufacturing production at the expense of manufacturers, workers and communities in the United States. Under these circumstances, the NAM has long supported robust U.S. government action to address the underlying causes of the distortions and full enforcement of trade agreements and trade rules.
- The trade deficit arises as a result of several factors. Overall domestic economic conditions and standards of living, domestic consumption and purchasing compared with savings rates, the price of goods in the market, exchange rates, domestic structural issues (e.g., taxation, regulation) and openness to international trade all impact the trade deficit. In the United States, trade deficits expand as the U.S. economy grows and fall during periods of economic weakness. At the same time, however, when the U.S. economy expands, more workers are employed and unemployment falls, we see that the trade deficit actually increases.
- As manufacturers see it, many indicators are relevant in assessing the strength and weaknesses of U.S. trading relationships with particular markets. These factors include the existence and implementation of trade agreements, the size of the trading relationship compared to the size of the foreign economy, the growth of exports over time, the U.S. share of the country’s worldwide imports, foreign direct investment, U.S. content in imports into the United States and overall tariff rates. The chart below shows that Canada and Mexico are outsized purchasers of U.S.-manufactured goods compared to other sources of imports and given the size of the countries’ economies.
As the administration considers next steps, the NAM urges that it prioritize work to address existing distortions and barriers to improve U.S. competitiveness globally through (1) the negotiation of advanced trade agreements that open markets and set strong rules; (2) the modernization of U.S. trade tools to boost U.S. global competitiveness, from improving export financing options to eliminating self-inflicted barriers that impede U.S. manufacturing; and (3) the implementation of more robust trade enforcement consistent with the international rules system to ensure that trade agreement commitments are honored, our innovative technologies are not stolen and U.S. trade rules are effectively enforced. Where trade agreement rules are not keeping up with new challenges and distortions, manufacturers urge U.S. leadership and efforts to develop new internationally agreed-upon rules and frameworks to raise standards and promote a more open and competitive market-driven global economy.
Learn more about manufacturers’ priorities for trade policy here.
Manufacturers in the United States produce great products desired across the globe each and every day. But our single greatest export remains America’s values—values which include free enterprise, competitiveness, individual liberty and equal opportunity as well as a willingness to lead by example.
That has never been clearer to me than it was during my recent trip to Cuba when I took eight manufacturers there to engage in discussions with government officials and engage in a dialogue with the Cuban people.
Times have changed. The tense days of Kennedy, Castro and the Cuban missile crisis are behind us. I witnessed a nation in transition, whose citizens want to adapt their economy and expand their opportunities.
The decision to normalize diplomatic relations with that isolated island was controversial in some quarters, but a recent national survey found that nearly three-quarters of U.S. adults favor ending the U.S. trade embargo against Cuba. They also favor lifting the restrictions on travel to the island. Based on what I saw during my visit, clearly the time is right for positive interactions between the United States and Cuba.
Economic engagement will benefit both countries. But in the case of Cuba, it will launch its citizens on a trajectory of greater prosperity, opportunity and freedom.
To get there, we need to do more.
Just 90 miles from the United States, Cuba is well-positioned to become a market for U.S. goods and services. With normalized trade, American exports of goods to Cuba could reach an estimated $4 billion per year.
While the United States has eased some of the restrictions on travel, trade and investment, lifting them completely is up to Congress.
The U.S. government has made allowances for some exports to Cuba and issued changes to facilitate authorized travel to the island. There remains, however, a long road ahead for both countries to expand trade and investment opportunities.
Manufacturers are committed to sharing with the Cuban people American values that will enrich the lives of all. Congress needs to listen and to take action by repealing the trade embargo and lifting restrictions on travel once and for all.
The Cuban government should reciprocate by allowing U.S. companies to trade directly with the emerging Cuban private sector and by continuing market-oriented reforms that facilitate foreign investment.
I encourage you to communicate with your representatives in Washington. Expanded economic engagement means new opportunities for us and greater prosperity and freedom for Cubans. It is time to demonstrate our American values in action.
The Office of the U.S. Trade Representative (USTR) focused attention on the significant challenges that manufacturers in the United States face around the world in protecting their intellectual property (IP) today with the release of this year’s Special 301 report. IP protection is a top issue for manufacturers in the United States: innovation drives U.S. global leadership and high-paying jobs in manufacturing. Foreign governments and competitors, however, often seek to appropriate American IP or fail to protect it fully, endangering American jobs, innovation and competitiveness. Read More
Today, Jay Timmons, president and CEO at the National Association of Manufacturers (NAM), and Terry Scuoler, CEO at EEF, the UK-based manufacturers’ organisation, signed a Memorandum of Understanding that seeks to promote greater collaboration and partnerships between the two organizations and to promote the NAM and EEF’s respective missions to strengthen and grow manufacturing in the United States and the United Kingdom. The agreement sets forth a number of activities, ranging from information exchanges on policy, economics, business trends and government regulations to potential joint work on international trade, skills development and other issues.
Remarks as prepared for delivery.
Well, good afternoon. Thank you, Scott [Schloegel] for the introduction.
And most importantly, thank you to everyone who’s here today. Your support for the Export-Import Bank is support for American workers and manufacturers in the United States.
U.S. manufacturers are strong advocates for the Ex-Im Bank because we see firsthand the difference it makes in people’s lives and livelihoods.
I’m proud to be here today not only to say “thank you,” but also to urge the administration and Congress to come together and move forward soon. Manufacturers want to see the agency fully operational again. There are jobs to create and business to win—and we don’t want to wait any longer.
So, let’s get to work.
Now, I’m honored to be joined today by a great manufacturing leader, Chuck Wetherington, president of BTE Technologies. He’s also the vice chair of our Small and Medium Manufacturers Group at the NAM.
We’re going to have a conversation, and Chuck, you’ll see, is a great champion of the Ex-Im Bank.
Let me just set the stage a little for that conversation.
As manufacturers, our message is straightforward: we need a fully operational export credit agency to level the playing field. We’re in a global economy, and 95 percent of the world’s customers live outside our borders. Our competitor nations have robust export credit agencies, and they’re beating us as a result.
If you want to make manufacturing in the United States even greater, we can’t start from a competitive disadvantage.
And we must keep in mind that it’s small businesses that are losing while we’re in a holding pattern. Some small businesses, in fact, have big deals on hold right now because the Ex-Im Bank can’t process them. And small businesses stand to lose much more the longer we wait to act. Year after year, 90 percent of Ex-Im transactions directly support small businesses.
Moreover, the deals with larger companies that the agency can’t make right now…they would also support small companies that are the suppliers for those bigger brands. And I don’t want anyone to lose sight of that as well.
The Ex-Im Bank is a great success story. And at a time when manufacturing has captured the imagination of our leaders and the American people, I know our policymakers are eager to implement a strategy that will make our companies as competitive as possible in every market. I see the Ex-Im Bank as a vital component of that strategy.
Now, even with the Ex-Im Bank in the situation that it is, we have reason to be optimistic. In fact, our recent Manufacturers’ Outlook Survey revealed that manufacturers are feeling more positive about the future of their companies than at any time in the survey’s 20-year history.
So the state of manufacturing is strong. Our industry is diversifying, increasing output and bringing us transformative technologies.
We are charting new frontiers and supporting new jobs. But we could be doing so much more.
And for the first time in a long time, that’s achievable. In addition to making progress on the Ex-Im Bank, we could see bold action on tax reform, infrastructure investment and regulatory reform.
The landscape is tough. But I believe it can be done—and it must be done.
The last major overhaul of the U.S. tax code was in 1986. Think about it: in 1986, there wasn’t internet in every home, never mind in every pocket. Fax machines were the hot technology at six minutes per page to transmit. Forget 3-D printing; we barely had color printing. And there were 86 million fewer people in the country.
Manufacturers have innovated over the past 30 years, the country and economy have transformed, but the U.S. tax system, well, it hasn’t kept pace.
To spur job creation, business tax reform must have a few essential goals:
Reduce the corporate tax rate to 15 percent, which is what the president has proposed.
Small businesses and pass-throughs should see taxes reduced as well.
We want to shift to a modern territorial international tax system.
And we want to strengthen R&D incentives and see faster deductions for capital investments.
On the regulatory front, we’ve seen many positive developments in recent weeks. But we have a long way to go. A recent NAM study found that manufacturers are subject to 297,696 federal regulations. And the cost of regulatory compliance for small manufacturers is nearly $35,000 per employee per year.
Regulatory reform—making regulations smarter, simpler and streamlined—is one of the quickest ways to create jobs and give manufacturers the confidence to expand.
We know it’s possible to have safe workplaces and environmental stewardship at the same time our economy is experiencing robust growth. If we can work together, from the Department of Labor to the EPA, we can achieve those goals.
Now on the infrastructure front, I like to think the NAM got out ahead on this one. We saw over the summer that both candidates were hot on infrastructure investment. So we said we don’t want these good intentions to devolve into the disappointments of the 2009 stimulus bill.
We released an infrastructure plan of our own, called “Building to Win.” It certainly wasn’t exhaustive, but it did point out the big problems, the economic opportunities and even the price tag and pay-fors.
I’m proud to say that the Trump campaign cited our plan favorably when laying out their vision for infrastructure last fall. Administration officials have cited it publicly since taking office. And we hear public statements from leading Democrats—and Republicans—about the type of modernization we’re calling for. So I think we have a good foundation to build on.
You really can’t overstate the urgency of the need here. Our infrastructure is not what a 21st-century economic powerhouse needs. It’s crumbling, it’s outdated, and frankly, it’s dangerous.
Millions of jobs are at stake. Without immediate action on the infrastructure crisis, the United States will lose more than 2.5 million jobs by 2025 and more than 5.8 million by 2040.
If we invest now, we will put America on a stronger foothold, better able to compete in the global marketplace for at least the next generation.
Now, ultimately, this all comes back to the same theme: competitiveness. We must be competitive in the global economy.
Advances in technology and transportation over recent decades have created substantial new opportunities for manufacturers in the United States to reach millions of foreign consumers.
In fact, we have seen world trade in manufactured goods quadruple over the past quarter century. Trade has never been more important to manufacturers.
Manufacturers in the United States need robust trade policies and agreements that open markets, protect U.S. property and standards and ensure strong enforcement of core rules of fairness in the global economy. We’re working on NAFTA and other issues right now so that we can make sure that our trade agreements and trade rules work as effectively as possible to grow U.S. manufacturing and jobs.
I know in this room, I’m preaching to the choir. But for all of you who are working to make the case for the Ex-Im Bank or for any of these other policy priorities, know this: the NAM is on your side. We will not back down. We will continue to lead. And if you need resources, facts or real-world stories, we can work with you.
This is our time. Manufacturing animated the presidential race. Manufacturers propelled a change election. And the president of the United States has made manufacturing in the United States his signature issue. We intend to seize the moment.
So, thank you, and Chuck, let’s have a conversation.
Media Contact: Jennifer Drogus, (202) 637-3090
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Manufacturers thrive on technological change, integrating new and disruptive technologies in products and operations ranging from smart factories to autonomous vehicles, from Internet of Things platforms to biometrics. They know that innovation and emerging technologies play a critical role in promoting manufacturing growth and investment, allowing them to maintain their competitive edge in a challenging global marketplace and support high-paying jobs in the United States. Read More