In his weekly radio address last Saturday, President Obama listed several things that Congress can do to help American workers as soon as it returns from an August break: extend tax breaks for middle class and low income families, extend unemployment benefits, and approve three market-opening free trade agreements. This item is the first in a weekly series leading into September on those free trade agreements, why you should support them, and why you should let your members of Congress know.
You may have read that the political and therefore procedural reality here in Washington is that before approving the FTAs with South Korea, Colombia and Panama, the House and Senate must make progress in reauthorizing a Labor Department program known as Trade Adjustment Assistance (TAA). In a nutshell, TAA is meant to provide benefits to workers who have been certified as having lost their jobs due to foreign competition. Many in the business community support renewal of TAA even when it is not tied to consideration of FTAs, such as the most recent extension in December 2010, since it is one of many federal workforce training and support programs. But due to the perception that opening U.S. markets endangers U.S. workers, TAA and trade agreements frequently find themselves riding the same bus route to passage, with TAA's bus arriving just prior to the FTA's. Many on the Republican side do not support TAA for various reasons, but support fhe FTAs. The White House, however, needs to send the FTAs to Capitol Hill very soon so that they can be considered and approved.
In later postings I will discuss the benefits to NEMA industries augured by the 3 FTAs, but today I want to highlight some more general points.
First, due to our generally low tariffs and some specific market access programs for developing countries, the U.S. market is already largely open to Korean, Colombia and Panamanian exporters. The FTAs provide much greater market opportunities and access to U.S. companies prepared to take advantage and grow their export business.
Second, Korea, Colombia and Panama are not standing still waiting for Uncle Sam, but instead are opening their markets to our major competitors and doing it faster:
- the European Union-Korea FTA entered into force on July and in little more than two weeks trade between the two jumped ahead almost 20 percent;
- a Colombia-Canada FTA is to enter into force next week, on August 15.
- a Panama-Canada FTA has already been negotiated and could be approved this fall.
So, in other words, international competition is putting U.S. companies and workers at a disadvantage due to the U.S. failure to put its 3 FTAs into force. But no U.S. worker would be eligible for TAA benefits because of this inaction. This is because TAA eligibility is tied to increased U.S. imports, not decreased U.S. exports and market share tied to the lack of an FTA.
Finally, the longer the three FTAs languish between the White House and Congress, the greater potential losses to U.S. exporters and workers while EU and Canadian firms get the contracts and orders.
U.S. firms exported over $45 billion in NEMA-type products from January 2010 through May 2011, more than half (over $24 billion) to countries with which we have an FTA in force. If you see your Senators and Representative while they are home this month, take a moment to bend their ear on why trade agreements support jobs and competitiveness.