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The Pending Trade Agreements: More American Jobs, Faster Economic Recovery Through Exports
Every $1 billion in new exports of American goods supports more than 6,000 additional jobs here at home. Every billion dollars of services exports supports more than 4,500 jobs. The Korea, Colombia, and Panama trade agreements will open markets for U.S. firms, increasing trade and exports. Increasing U.S. exports through these agreements will support additional jobs for American workers who produce Made-in-the-USA goods and services.
THE U.S.-KOREA TRADE AGREEMENT:
With the U.S. International Trade Commission (USITC) estimating that tariff cuts in the U.S.- Korea trade agreement will increase exports of American goods to Korea alone by $10 billion to $11 billion, the Obama Administration is moving to seize the potential to support as many as 70,000 additional jobs for workers producing Made in America goods and services here at home. And by breaking down non-tariff barriers that are currently keeping U.S. exports out of Korea, and by requiring stronger protection and enforcement of intellectual property rights in Korea, the agreement will support significantly more exports – and even more American jobs. Perhaps most importantly, the U.S.- Korea trade agreement will also open Korea’s $580 billion services market to even more highly competitive American companies – creating additional jobs for American workers in sectors from delivery and telecommunications services to distribution, and energy and environmental services.
THE U.S.-COLOMBIA TRADE AGREEMENT:
Colombia’s economy is the third largest in Central and South America. The International Trade Commission (ITC) has estimated that the tariff reductions in the Agreement will expand exports of U.S. goods alone by more than $1.1 billion, and support thousands of additional American jobs. The Agreement will provide significant new access to Colombia’s $166 billion services market, supporting increased opportunities for U.S. service providers. Over 80 percent of U.S. exports of industrial goods to Colombia will become duty free immediately, including almost all products in agriculture and construction equipment, aircraft and parts, auto parts, fertilizers and agro-chemicals, and information technology equipment. Remaining industrial tariffs will be phased out over 10 years which will substantially increase U.S. exports as average tariffs on U.S. industrial exports range from 7.4 to 14.6 percent. More than half of U.S. farm exports to Colombia will become duty-free immediately including wheat, barley, soybeans, high-quality beef, bacon, almost all fruits and vegetables, cotton, and processed products. Virtually all remaining tariffs will be eliminated within 15 years.
THE U.S.-PANAMA TRADE AGREEMENT:
The U.S.-Panama agreement guarantees American companies access to Panama’s $21 billion services market, including in priority areas such as financial, telecommunications, computer, distribution, express delivery, energy, environmental, and professional services. U.S. products that will gain immediate duty-free access include information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals, fertilizers, and agro-chemicals. U.S. agricultural exports will also benefit. Panama will immediately eliminate duties on high-quality beef, frozen turkeys, most oilseeds and products, almost all fruit and fruit products, wheat, and many processed products. The Agreement provides duty-free access for specified volumes of standard grade beef cuts, chicken leg quarters, pork, corn, and dairy products through tariff rate quotas. American firms producing all of these goods and services, including agricultural goods, will be better positioned to export more and hire more workers here at home.
HOW TRADE AND JOBS REALLY RELATE
Recent analysis claiming that these trade agreements would cause net job losses is just plain wrong. Some studies do not even directly examine the pending trade agreements – instead, they analyze implementation of different, older trade agreements, and then make broad predictions based on the incorrect idea that all imports cause job losses. In many cases, American businesses large and small use imports to create or support U.S. jobs, relying on those imports for inputs to build our sophisticated manufactured goods, make processed foods, and create other job-supporting American goods. It’s also not true that the U.S. trade deficit costs Americans their jobs. While it’s very important to bring the trade deficit down, history shows that unemployment has actually often been low when trade deficits have been large – for instance, in the 1990’s. Conversely, the United States ran trade balances and surpluses when unemployment peaked at 25 percent during the Great Depression.