Picking up from where I left off: We are a week closer to the return of Congress from its August break and the level of anxiety is rising. President Obama is to make a speech next month presenting a jobs initiative. Meanwhile, we wait for the White House to send implementing legislation to Congress for 3 free trade agreements (FTAs) that will help support U.S. job creation and retention. This blog entry is the second in a series on the U.S. FTAs with South Korea, Colombia and Panama and why their approval by Congress in September matters for the electroindustry.
Regarded as the least commercially meaningful of the 3 agreements based on size of economy, nevertheless the U.S.-Panama FTA stands on its own as a path to new sales opportunities and as an commitment to a country that has been the crossroads of the Western Hemisphere since at least the early 1900s. Both the U.S. and Panama are trade dependent but in different ways — you may have heard of the Panama Canal, which is now undergoing expansion? Trade experts believe the new canal will have significant effects on how goods travel from Asia to the eastern U.S. But it won't be operational until at least 2014, after all of the new infrastructure there and in some east coast ports has been put in place.
In 2010, the U.S. electroindustry exported over $87 million worth of equipment to Panama: leading categories were electrical cable and electrical converters, power supplies and panels and switchgear for less than 1,000 volts. According to U.S. government estimates, customs duties paid on exports of U.S. electrical equipment to Panama from 2008 to 2010 were over $13 million. But once the agreement is approved and enters into force, over 91 percent of U.S. electroindustry exports to Panama will face ZERO duties. Other benefits to U.S. exporters, inlcuding protection of intellectual property rights, government procurement access and better customs procedures, are discussed in this Commerce Department handout. Plus, if the agreement can be passed soon it will give the U.S. a leg up on Canada, which has also negotiated an FTA with Panama but is dragging its feet in giving the deal final approval.
If you are looking for more information about the export-intensity of your local business community, check out this great new website by the U.S. Chamber of Commerce that features export data by state and congressional district. For example, according to U.S. data on which the site relies, Arkansas as a whole exported over $296 million worth of electrical equipment in 2010, which supported over 1,000 jobs in the state. The site also includes lists of some of the companies that accounted for foreign sales and where the products were sent.
What it comes down to is that sales, including exports, means jobs. More next week.