Outlook For U.S. Trade
U.S. Chamber Applauds Progress, Outlines Next Steps
November 23, 2011
For the first time in five years, the U.S. trade agenda is taking on a new focus.
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The shift comes after large bipartisan majorities in Congress approved the long-debated free trade agreements with South Korea, Colombia, and Panama on October 12, 2011, marking the successful culmination of a long fight by the U.S. Chamber and other supporters of the deals.
The three agreements are expected to boost U.S. exports to the three countries and create tens of thousands of new U.S. jobs by immediately eliminating nearly all tariffs on most U.S. goods and services. The agreement with South Korea, which is widely hailed as the most consequential trade pact in 15 years, is estimated to create as many as 280,000 American jobs and increase exports by more than $12 billion, according to the U.S. International Trade Commission.
A U.S. Chamber study estimated that failure to approve the accords could have threatened 380,000 U.S. jobs. “Passing these trade agreements represents a victory for American workers, American competitiveness, and American leadership,” says U.S. Chamber President and CEO Tom Donohue. “It means we will immediately stop losing jobs to our competitors that have cut their own deals and start creating hundreds of thousands of new jobs for Americans.”
John Schoch, president of Profile Products in Buffalo Grove, Illinois, says that the three trade agreements will make his company more competitive globally, especially in the Korean market where the European Union already has a trade deal in place. Exports of Profile Products’ erosion control, vegetation establishment, soil modification, and sports field renovation and maintenance products currently face a duty of 3% to 8% in South Korea.
“If we can lower costs, we can sell more products and create more employment in the United States,” Schoch says. “Increased volumes provide us with the opportunity to add shifts and personnel to our four manufacturing plants.”
Moving Forward on Trade
The business community, led by the Chamber, is now turning its attention to an aggressive new trade agenda, which includes an agreement with eight Asia-Pacific nations and exploration of possible trade agreements with other emerging markets.
“Let’s make the approval of the [South Korea, Colombia, and Panama] agreements a foundation for moving bipartisan, job-creating policies forward,” Donohue said at a joint press conference with U.S. Trade Representative Ron Kirk on October 26. “With the most productive workers and the most innovative companies in the world, the United States should look at these agreements not as the finish line but as the dawn of a new era for American companies to compete and win in global markets.”
The administration is also looking ahead and focusing on areas that the Chamber and its members say are high priorities. “The Chamber is always going to be at the front of the parade on trade agreements,” Kirk said. “We’re not stopping there [with the three FTAs]. We have to be linked to the world’s most dynamic economies.”
The trade agreement with the best chance of completion is the Trans-Pacific Partnership (TPP) Agreement, an economic alliance that would link the United States with Brunei, Malaysia, New Zealand, Vietnam, and four countries that already have free trade agreements with the United States—Australia, Chile, Peru, and Singapore.
“TPP is the only game in town from the U.S. perspective,” according to former USTR Susan Schwab, who finalized the Korea FTA and launched the TPP effort during her tenure in the Bush administration. “Internationally, one of the big concerns we have is that there are deals being negotiated around the world, and we’re on the outside. That’s worrying.”
Across the world, there are about 300 free trade agreements in force, and the United States is a party to only 14. The exclusion of the United States in free trade agreements increases pressure on U.S. manufacturers to move production outside the country and eliminates opportunities for small and medium-size producers to enter export markets, Schwab points out.
The Chamber is also calling for a renewed focus on trade with Europe. The elimination of all tariffs on transatlantic commerce could boost U.S. trade by more than $120 billion within five years. In addition, the Chamber suggests addressing regulatory issues and working with the European Union on ways to expand trade in services, government procurement, and investment opportunities.
Congressional renewal of presidential trade promotion authority (TPA) also appears on the list of trade priorities. TPA allows the president to “fast track” trade deals to Congress for an up-or-down vote free of amendments that can endanger any agreement. TPA expired in 2007. “I don’t care who the president is,” says Donohue. “The president needs trade promotion authority if we are going to play with the big boys. Potential partners will never negotiate if they think any agreement we put together can be picked apart piece by piece.”