Trade Agreements Finally Poised to Create Jobs

After almost 1,000 days of sitting on three job-creating Free Trade Agreements (FTAs) with Colombia, South Korea and Panama, President Obama finally submitted the FTAs to Congress on October 3rd.[1] Only two days after receiving the FTAs from the President, the House Ways and Means Committee passed all three with bipartisan majorities.[2] Less than a week later, the Senate Finance Committee also passed all three FTAs with bipartisan majorities,[3] and on October 12th, both the House and Senate are scheduled to vote on all three FTAs -- less than 10 days after presentation by the President.

 

Trade with our current FTA partners supports almost 18 million U.S. jobs.[4] When the U.S. enters into new trade agreements, exports to those countries have historically grown fourfold in the first five years.[5] With 80 percent of the world’s purchasing power outside the U.S.,[6] trade agreements are necessary for future U.S. growth. President Obama’s delay has cost Americans hundreds of thousands of good jobs during a time of economic hardship.[7]

 

Korea Free Trade Agreement

The Korea Agreement will increase U.S. exports by $10-11 billion per year.[8] In 2010, Korea was the fifth-largest market for U.S. agricultural goods. This FTA will eliminate most Korean tariffs and quota tariffs, and open many sectors to U.S. exports, including autos, which had limited market access traditionally.[9] Increased U.S. exports to Korea would vastly outweigh increased Korean imports.[10]

 

Colombia Free Trade Agreement

The Colombia Agreement will increase U.S. exports by more than $1.1 billion per year.[11] Currently, U.S. goods face an average 12.5 percent tariff going into Colombia; this FTA will eliminate the majority of those tariffs immediately and eventually remove 99 percent of the tariffs.[12] Historically, Colombia has been the largest U.S. agricultural market in Latin America; however, U.S. exports fell 50 percent between 2008 and 2010 as U.S. exporters waited for this FTA while other nations entered into agreements with Colombia.[13] The Colombia FTA will result in a $2.5 billion increase in the U.S. GDP.[14]

 

Panama Free Trade Agreement

The Panama Agreement will increase U.S. exports of grain to Panama by 61 percent, and exports of cars and light trucks by 43 percent.[15] This FTA will eliminate the majority of Panamanian tariffs on American products immediately and eventually remove 99 percent of the tariffs.[16] American agricultural exports to Panama will increase by 20-46 percent.[17]

 

These three trade agreements will provide American exporters the same benefits foreign competitors already possess. Korea and Colombia already have, or are negotiating, trade agreements with other nations, including the EU, Canada, and each other.[18] Failure to implement U.S. trade agreements could result in $40 billion worth of exports lost to our competitors.[19] We must act; on a level playing field, American can compete and win.

 

After fast action by Congress, we will be left with a lingering question: How many American jobs were lost in the nearly 1,000 days that the President played politics with the Free Trade Agreements?

 

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1 Statement from President Obama on the Submission of the Korea, Colombia, and Panama Trade Agreements, October 3, 2011, http://www.whitehouse.gov/the-press-office/2011/10/03/statement-president-obama-submission-korea-colombia-and-panama-trade-agr.

2 Camp Statement on Committee Approval of Free Trade Agreements, http://waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=263129.

3 The Colombia FTA passed Committee 18-6 and both the Panama and Korea FTAs passed by voice vote, http://finance.senate.gov/hearings/hearing/?id=611b68e1-5056-a032-52e9-e785d6525dd1 beginning at 74:30.

4 “Opening Markets, Creating Jobs: Estimated U.S. Employment Effects of Trade with FTA Partners,” by Laura M. Baughman and Joseph F. Francois, May 14, 2010, U.S. Chamber of Commerce, http://www.uschamber.com/sites/default/files/reports/100514_ftajobs_full_0.pdf.

5 “Myths and Facts: Trade Agreements, Deficits, Jobs and Growth,” http://www.chamberpost.com/2011/05/myths-and-facts-trade-agreements-deficits-jobs-and-growth.

6 Letter from National Association of Manufacturers to the President’s Council of Advisors on Science and Technology, April 20, 2010, http://www.nam.org/~/media/D3A22734DDDB4249AA61E6AD1A7B78E6/PCASTfinal.pdf.

7 “Trade Action – or Inaction: The Cost for American Workers and Companies,” by Laura M. Baughman and Joseph F. Francois, September 15, 2009, U.S. Chamber of Commerce, http://www.uschamber.com/sites/default/files/reports/uscc_trade_action_inaction_study.pdf.

8 “The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications,” CRS Report RL34330, October 4, 2011, http://www.crs.gov/Products/RL/PDF/RL34330.pdf.

9 “Agriculture in Pending U.S. Free Trade Agreements with South Korea, Colombia, and Panama” CRS Report R40622, October 6, 2011, http://www.crs.gov/Products/R/PDF/R40622.pdf.

10 “U.S.-Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects” USITC Publication 3949, September 2007, http://www.usitc.gov/publications/docs/pubs/2104F/pub3949.pdf.

11 “Proposed U.S.-Colombia Free Trade Agreement: Background and Issues,” CRS Report RL34470, October 4, 2011, http://www.crs.gov/Products/RL/PDF/RL34470.pdf.

12 “U.S.-Colombia Trade Promotion Agreement: Potential Economy-wide and Selected Sectoral Effects” USITC Publication 3896, December 2006, http://www.usitc.gov/publications/docs/pubs/2104F/pub3896.pdf.

13 “AFBF Advocates Passing FTAs at World Trade Month Event,” American Farm Bureau Federation, May 24, 2011, http://www.fb.org/index.php?action=newsroom.news&year=2011&file=nr0524.html.

14 “U.S.-Colombia Trade Promotion Agreement: Potential Economy-wide and Selected Sectoral Effects” USITC Publication 3896, December 2006, http://www.usitc.gov/publications/docs/pubs/2104F/pub3896.pdf.

15 “The Proposed U.S.-Panama Free Trade Agreement” CRS Report RL32540, October 6, 2011, http://www.crs.gov/Products/RL/PDF/RL32540.pdf.

16 “U.S.-Panama Trade Promotion Agreement: Potential Economy-wide and Selected Sectoral Effects” USITC Publication 3948, September 2007, http://www.usitc.gov/publications/332/pub3948.pdf.

17 “Agriculture in Pending U.S. Free Trade Agreements with South Korea, Colombia, and Panama” CRS Report R40622, October 6, 2011, http://www.crs.gov/Products/R/PDF/R40622.pdf.

18 Information on Free Trade Agreements available at the World Trade Organization’s Regional Trade Agreements Information System, http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

19 “Trade Action – or Inaction: The Cost for American Workers and Companies,” by Laura M. Baughman and Joseph F. Francois, September 15, 2009, U.S. Chamber of Commerce, http://www.uschamber.com/sites/default/files/reports/uscc_trade_action_inaction_study.pdf.

Korea, Colombia and Panama Free Trade Agreements

Hillary Rodham Clinton

Secretary of State

The Free Trade Agreements that President Obama submitted to Congress today demonstrate our commitment to strengthen our economic leadership around the world. They are critical to building open, free, transparent, and fair economic platforms in the Asia Pacific and South America. Our foreign policy must deliver results for the American people. These agreements will make it easier for American companies to sell their products in South Korea, Colombia, and Panama, and that will create jobs here at home.

The stakes are not just economic. These are three important partners in strategically vital regions. Countries everywhere are watching. Passing these deals proves that America can deliver for our friends and allies. It strengthens our leadership around the world.

It’s time to put these trade deals to work on behalf of the American people. I urge Congress to approve these agreements as soon as possible. Our economic competitors are building trade relationships around the world and we cannot afford to be left behind.

Pending Free Trade Agreements Are Good for America’s Farmers and Ranchers

The three pending free trade agreements (FTAs) would greatly expand access for America’s agriculture producers in developing markets. Enacting the FTAs would create 18,000 new jobs in the agriculture sector alone.1 Unfortunately, three years after the agreements were negotiated, President Obama has yet to submit any of them to Congress. America’s farmers and ranchers continue to lose market share as the President and Senate Democrats further delay the agreements by insisting they be tied to spending increases.

Korea: Korea is the fifth largest market for U.S. agriculture products and accounted for $5.3 billion in U.S. agriculture exports in 2010. According to the U.S. International Trade Commission, U.S. agriculture exports would increase by approximately $2 billion to $4 billion if this trade agreement were enacted.2 In addition, implementing the U.S.-Korea FTA would create 9,000 new agriculture jobs in the United States.3 Other highlights include:

·         Elimination of Korea’s 40 percent tariff on beef in equal installments over a 15-year period. Beef exports to Korea would likely increase by as much as $1.8 billion.4

·         Elimination of the 25 percent tariff on 90 percent of pork products by 2016, and elimination of the 22.5 percent tariff on other pork products within 10 years.5

If the U.S.-Korea agreement is further delayed, U.S. agriculture producers will continue to lose market share to foreign competitors such as the E.U. The E.U.-Korea trade agreement, which would phase out 94 percent of Korea’s tariffs on E.U. products, took effect on July 1st.6

Colombia: Since the U.S.-Colombia FTA was negotiated in November 2006, U.S. agriculture exports to Colombia have dropped by 50 percent due to delays in implementing this agreement.7 Meanwhile, the Canada-Colombia trade agreement is scheduled to take effect on August 15, 2011, which will further reduce the already diminished U.S. share of the Colombian market.8

While most of Colombia’s agriculture exports to the U.S. already enter duty-free through the Andean Trade Preferences Act, most U.S. agriculture exports to Colombia face stiff tariffs. If the FTA were enacted, many of these tariffs would be immediately eliminated, and U.S. agriculture exports to Colombia could increase by $370 million per year.9 Other highlights include:

·         Immediate elimination of tariffs on 77 percent of agriculture exports to Colombia; and most other tariffs on agriculture exports will be reduced over a 15-year period.10

·         Immediate elimination of the 5 to 20 percent tariff on most vegetables, wheat, barley, and soybeans, plus a 12-year phase out of the maximum 25 percent tariff on corn.11

·         Immediate elimination of the 80 percent tariff on prime and choice cuts of beef, and a five-year phase out the 20 to 30 percent tariff on most pork products.12 Beef and pork exports to Colombia would increase by an estimated 46 percent and 72 percent, respectively.13

Panama: Enacting this agreement would result in $195 million in increased annual U.S. agriculture exports to Panama, which already account for over half of Panama’s agriculture import market.14 On average, a 15 percent tariff is currently applied to most U.S. agriculture exports to Panama while most of Panama’s exports to the U.S. enter duty-free.15 Other highlights include:

·         Immediate duty-free access for two-thirds of U.S. agriculture exports including high quality beef, soybeans, poultry products, most fresh fruits, and most processed foods.16

·         In general, most of the remaining tariffs would be phased out over 17 years.17

·         Immediate duty-free access for a set amount of corn, and elimination of the out-of-quota 40 percent tariff over 15 years.18

·         Elimination of the 90 percent rice tariff over 20 years.19

·         President Obama continues to delay these common-sense trade agreements for his own political gain, and America’s agriculture producers are paying the price.

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1 “Ag groups: Three pending free trade agreements need action,” Jennifer Latzke, High Plains Journal, http://goo.gl/sXb74.

2 “The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications,” Congressional Research Service, May 2, 2011, http://goo.gl/7LNzf.

3 Supra Note 1, http://goo.gl/sXb74.

4 Supra Note 2, http://goo.gl/7LNzf.

5 Ibid

6 “Pending Free Trade Agreements,” American Farm Bureau Federation, June 2011, http://goo.gl/xhN0H.

7 “AFBF Advocates Passing FTAs at World Trade Month Event,” American Farm Bureau Federation, May 24, 2011, http://www.fb.org/index.php?action=newsroom.news&year=2011&file=nr0524.html.

8 “As trade pact with US sits, Colombia looks to China, others,” Howard LaPranchi, Christian Science Monitor, June 18, 2011, http://goo.gl/TzVyf.

9 Supra Note 6, http://goo.gl/xhN0H.

10 “Fact Sheet: U.S.-Colombia Trade Promotion Agreement Overall Agriculture Fact Sheet,” United States Department of Agriculture (USDA), Foreign Agricultural Service, September 2009, http://goo.gl/RxiyK.

11 Ibid

12 “Trade Agreement Would Promote U.S. Exports and Colombian Civil Society,” Juan Carlos Hidalgo, Cato Institute, February 15, 2011, http://www.cato.org/pub_display.php?pub_id=12783.

13 Ibid

14 “Agriculture in Pending U.S. Free Trade Agreements with Colombia, Panama, and South Korea,” Congressional Research Service, February 14, 2011, http://goo.gl/qEP02.

15 “The Proposed U.S.-Panama Free Trade Agreement,” Congressional Research Service, May 23, 2011, http://goo.gl/i9E3s

16 Supra Note 14, http://goo.gl/qEP02.

17 Ibid

18 “U.S.-Panama Trade Promotion Agreement,” the White House, http://goo.gl/paE9Q.

19 Ibid