News Content

US manufacturers defend free trade against 'bad rap' from politicians

A NATIONAL Association of Manufacturers (NAM) panel says free trade is getting a "bad rap" from politicians and being unfairly blamed for job losses in US manufacturing.

Voters need to understand that trade has produced a net benefit for the United States for the past 20 years, they argued, reported American Shipper.

The US benefit more from free trade because its economy is mostly open to foreigners, while overseas markets are often closed to American firms, according to the panel discussion broadcast live on Twitter and Periscope.

The average import tariff in the United States is two per cent compared to much higher tariffs in the 11 other countries that are signatories to the Trans-Pacific Partnership.

In a recent NAM survey, 36 per cent of manufacturers said exports make up at least 10 per cent of sales, nearly 20 per cent said exports make up a quarter of sales, and for some, exports represent more than half their revenues.

"It's very tough to be competitive when you have a 59 per cent tax on your products, said Carla Hills, the US Trade Representative under former President George Herbert Walker Bush and now head of her own international consulting company.

US manufacturing output is at its highest level ever, and world trade in manufactured goods provides huge opportunities for American companies to grow, they said.

Global trade in manufactured goods has increased to US$12.3 trillion from $1.1 trillion in 1980 and the US quadrupled exports in that sector to $1.4 trillion as of 2013. Overall, the United States has about a nine per cent share of the global market in manufactured goods trade.

The United States has 14 free trade agreements covering 20 countries, but is not keeping up in taking advantage of trade deals so companies can more easily reach customers around the world, Ms Hills said.

Mexico, for example, has 44 free trade agreements. The European Union has almost three dozen bilateral and regional FTAs, and recently inked a new deal with Vietnam.

"I'm very worried that if the EU is able to move first and implement that agreement with Vietnam they are going to get a piece of that market and our manufacturers are going to lose in terms of high tariffs," NAM vice president Linda Dempsey.

That's exactly what happened after the US struck a deal with the Republic of South Korea in 2007, said Chuck Wetherington, president of medical device maker BTE Technologies.

Congress didn't ratify the US-Korea FTA until 2012. The European Union, however, signed and implemented a trade deal with Korea by 2009 that lowered tariffs for BTE's German competitors.

"We saw sales drop 40 per cent during that lull period," before they increased 130 per cent back to base-year levels following implementation, Mr Wetherington said.

"The reduction of tariffs going into that country played a major impact in our ability to increase sales. The market is being defined by the world. If other countries are getting together and defining these marketplaces, and we're not participating in it, we'll be cut out of that," he said.