Republican Women Reach Out

Since 95 percent of the world’s consumers live outside the U.S., international markets present important growth opportunities for American companies.  Implementing effective trade policies that foster global trading relationships is, therefore, imperative.  The U.S. Department of Commerce estimated that more than 10 million U.S. jobs were supported by exports in 2008.[1]   Continued growth in exports as well as imports will provide an effective job creation engine in the current economic environment.  To maximize the benefits of trade, the U.S. should promptly implement the three pending free trade agreements (FTAs).  Other strategies include avoiding protectionism and developing sensible export policies.   

Implement Pending Free Trade Agreements

Recent efforts to double U.S. exports within five years, to negotiate a new Trans-Pacific Partnership, and to protect U.S. positions in World Trade Organization (WTO) negotiations overlook the benefits already available from FTAs negotiated and signed more than three years ago but denied implementation. 

The pending FTA between the U.S. and Korea would affect a higher value of trade than any other U.S. FTA except NAFTA.  Bilateral trade between the U.S. and Korea already exceeded $75 billion in 2006.[2]  The U.S. International Trade Commission estimates that the FTA would increase U.S. merchandise exports to Korea by $10 billion annually.[3]  Despite skepticism about U.S. access to Korean markets, the FTA would make both the U.S. and Korea better off than they would be in the absence of the FTA.[4]

Similarly, the pending FTA with Colombia offers significant opportunity for U.S. producers.  Over 90 percent of imports from Colombia already enter the U.S. without duty, pursuant to existing unilateral preference programs.  In contrast, U.S. products entering Colombia are subject to duty of as much as 20 percent, so the net impact of the agreement for the U.S. economy would be positive.[5]

Trade volume with Panama may seem small relative to trade with NAFTA countries or Korea, but 2008 exports to Panama from Texas alone were valued at over $1.2 billion.  Ninety-six percent of U.S. imports from Panama are also already duty-free, while U.S. products entering Panama are more often subject to duty.[6]  This lack of reciprocity shows how delay in implementing pending FTAs deprives U.S. businesses of opportunities for beneficial trade opportunities.  At the same time, Korea, Colombia, and Panama are concluding similar agreements with and extending reciprocal benefits to other countries. 

Failure to honor U.S. commitments to implement these FTAs also tarnishes U.S. credibility.  Prompt approval of all three FTAs is imperative from an economic and geopolitical perspective.  Once pending agreements are implemented, the executive branch also needs renewed Trade Promotion Authority to conclude ongoing regional and multilateral negotiations and to seek new candidates for bilateral FTAs.

Avoid Protectionism

While securing access for U.S. products and investment in foreign markets is important, reciprocity is fundamental to achieving our trade policy goals.  Trade-restrictive policies may appear to protect U.S. jobs, but the negative consequences of protectionism outweigh its benefits.  WTO Director General Pascal Lamy has emphasized that, especially as world economies struggle to emerge from a global recession, “an open, fair, and transparent trading environment is vital for the economic recovery.”[7]

Proposed legislation to impose punitive duties on imports, require foreign manufacturers to register U.S. agents, or mandate that government contractors buy American products risks imposing costs on the same U.S. businesses and consumers that the laws are designed to protect.   Additionally, such regulation invites other countries to erect barriers for U.S. businesses seeking access to foreign markets.  Legislators must strike a careful balance between the desired safety and accountability benefits of new regulation and the economic costs of government interference with free trade.

In conclusion, effective trade policy retains an open regulatory environment that does not overburden U.S. companies or foreign companies seeking to do business with the U.S.  Export-oriented policies are commendable, but it is important to implement such policies without unnecessarily increasing the size of or costs borne by the federal government.  Trade is by definition reciprocal.  Trade policy that supports export growth also recognizes the importance of imports to economic growth, and it honors U.S. commitments to remain open to market-driven trade. 

[2] Jeffrey J. Schott, “The Korea-US Free Trade Agreement: A summary Assessment,” PB07-7 (Aug. 2007), available at http://www.petersoninstitute.org/publications/pb/pb07-7.pdf. 

[3] Office of the U.S. Trade Representative, “Korea-U.S. Free Trade Agreement” (viewed July 26, 2010), available at http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta.

[4] Schott, PB07-7.

[5] “No Cost Stimulus? Approve the U.S.-Colombia Trade Agreement: Democrat Congress Still Sitting on a Proven Job Creator” (Dec. 10, 2009) (citing a Congressional Research Service report), available at http://www.gop.gov/policy-news/09/12/10/no-cost-stimulus.

[6] “Position on the U.S.-Panama Trade Promotion Agreement” (viewed July 26, 2010), available at http://www.freetradealliance.org/commondetail.asp?id=3802.

[7] Pascal Lamy, “Keeping Trade Open: Resisting Isolationism,” Seoul, Korea (Feb. 23, 2009), speech reprinted at http://www.wto.org/english/news_e/sppl_e/sppl115_e.htm.

America has many friends and admirers around the world, but RWRO members are realistic. We recognize that America also has many enemies.  Protection of our land and our citizens must always be the highest priority of the federal government.  In addition to a strong defense, we support a vibrant homeland security effort which includes border protection and a robust and well-coordinated intelligence gathering system.  

We honor our military.  Its members are America’s heroes.  They need and deserve the full support of our government not only when on duty but also when they return to private life. 

The families of our servicemen and women also deserve our highest praise and thanks.  Their contributions and sacrifices, though frequently unheralded, are critical to our military’s success.  By enabling, supporting and providing comfort to our troops, they play a pivotal role in the defense of our freedoms.

RWRO believes that national security should be defined broadly.  In addition to the defense of the homeland and its citizens, national security includes developing new sources of energy, maintaining a vibrant economy and protecting our borders.