Want to boost the U.S. economy? Try a trade stimulus
The Sacramento Bee
By MYRON BRILLIANT
As both ends of Pennsylvania Avenue gear up for a bruising budget-driven federal spending debate, Congress and the president have an opportunity to deliver a bipartisan boost to U.S. job creation in the form of three bilateral Free Trade Agreements.
Without question, the American people are looking for action. According to a new Gallup poll, 35 percent of Americans believe that unemployment is the biggest problem facing the country, the highest percentage since October 1983. Their concern is well founded - it's been 21 months since unemployment was below 9 percent, and the job market isn't expected to recover overnight. While there is no silver bullet for this situation, there are things we can do to create jobs right now. At the top of the list: Passing free trade agreements with Colombia, Panama and South Korea.
In his State of the Union address, President Obama made the case for trade, saying: "The more we export, the more jobs we create here at home."
That's why the U.S. Chamber of Commerce welcomed his call to double U.S. exports in the next five years. Given that 73 percent of the world's purchasing power, 87 percent of its economic growth and 95 percent of its consumers exist beyond our borders, the president's plan makes perfect sense.
By concluding trade deals with three key allies, lawmakers can deliver the kind of immediate and tangible economic stimulus the American people are looking for. Let's take a look at each Free Trade Agreement:
SOUTH KOREA. Without the FTA, South Korea's tariff rate on U.S. businesses is double the global average. On agricultural products, the South Korean tariff today averages 54 percent, compared to 9 percent worldwide. Under the FTA, 95 percent of consumer and industrial goods will trade duty-free within five years, generating billions in additional sales for U.S. companies. With small- and medium-size enterprises accounting for 90 percent of current U.S. exports to South Korea, the benefits flowing from the FTA will reach every corner of our economy.
COLOMBIA. U.S. businesses and workers are similarly disadvantaged in Colombia. Today, Colombian goods can enter the United States nearly tariff free. In contrast American manufactured goods face a 14 percent tariff - for agricultural products, it's even higher. In the last four years, American exports to Colombia were assessed more than $3.2 billion in tariffs - this would go away once the FTA is passed. With a single stroke of the presidential signing pen, we'd see the end of the present tariff policy that leads to U.S. goods being artificially priced out of the Colombian market.
PANAMA. Like the South Korean and Colombian FTAs, the pending agreement with Panama will level the playing field for American workers, farmers and companies. Panama's average tariff on U.S. imports is 7 percent, compared to the virtual absence of tariffs for Panamanian products coming into the United States.
The timing for opening Panama's market to U.S. goods, services and know-how couldn't be better. With a $5.25 billion expansion of the Panama Canal moving forward, U.S. companies could participate in one of the largest public-works projects in the history of this hemisphere. Concerns about Panamanian labor standards have also been remedied, allowing the country's leading labor organization to give the FTA its endorsement.
The South Korea FTA seems to have been green-lighted for early action, and that's positive. But it's imperative that we not leave Colombia and Panama behind.
Speaking of the failure to move forward with these two trade pacts, Senate Finance Committee Chairman Max Baucus, D-Mont., is on the mark: "The delay has been costly for our ranchers, farmers and businesses, who are losing business to competitors from countries that have negotiated their own trade agreements with these fast-growing markets. ... It is time to quickly resolve any outstanding issues and send these agreements to Congress as soon as possible."
The global economy is dynamic: If we stand still on trade, we fall behind. Anything less than approval of all three FTAs risks allowing America to fall further behind and lose more jobs.
No priority facing our nation is more important than putting Americans back to work. We can send a strong signal of our commitment by passing the pro-growth Free Trade Agreements with South Korea, Panama and Colombia. Our standard of living and our standing in the world are both at stake.
ABOUT THE WRITER
Myron Brilliant is senior vice president for international affairs at the U.S. Chamber of Commerce, 1615 H Street NW, Washington, D.C. 20062; website: www.uschamber.com.