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Member Services UniversityMember Services University

Trade AgreementsTrade Agreements::

The Jobs & Economic Opportunities The Jobs & Economic Opportunities They Create for U.S. WorkersThey Create for U.S. Workers

Hosted by Hosted by

NRCC Chairman Pete SessionsNRCC Chairman Pete Sessions

Presentation byPresentation by

Ways & Means Committee Chairman Dave CampWays & Means Committee Chairman Dave Camp

Rules Committee Chairman David DreierRules Committee Chairman David Dreier

April 7, 2011April 7, 2011

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Role of Congress in Trade PolicyRole of Congress in Trade Policy Constitution gives Congress primary responsibilityConstitution gives Congress primary responsibility Congress implements changes to U.S. law to be in compliance Congress implements changes to U.S. law to be in compliance

with trade agreementswith trade agreements Trade Promotion AuthorityTrade Promotion Authority

• Up-or-down vote on implementing bill without amendmentUp-or-down vote on implementing bill without amendment• Deadlines for Congressional action once agreement is Deadlines for Congressional action once agreement is

submittedsubmitted• Consultations with Congress before, during, afterConsultations with Congress before, during, after• Expired for new agreements in 2007Expired for new agreements in 2007• U.S. credibility: TPA needed to close out future U.S. credibility: TPA needed to close out future

negotiationsnegotiations

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Trade is Vital to U.S. Economic Trade is Vital to U.S. Economic Success and Job CreationSuccess and Job Creation

42% of all U.S. jobs are connected to international trade42% of all U.S. jobs are connected to international trade• 20% of all manufacturing jobs – almost 3 million – are dependent on U.S. exports20% of all manufacturing jobs – almost 3 million – are dependent on U.S. exports• U.S. agriculture exports support nearly 3.9 million jobsU.S. agriculture exports support nearly 3.9 million jobs• 90 million Americans in private service sector – majority of employment in every 90 million Americans in private service sector – majority of employment in every

Congressional districtCongressional district Every $1 billion in exports generates 25,000 new jobs spanning all Every $1 billion in exports generates 25,000 new jobs spanning all

sectors of our economy: manufacturing, services incl. sectors of our economy: manufacturing, services incl. transportation and logistics, and agriculturetransportation and logistics, and agriculture

Jobs related to exports pay 15-17% moreJobs related to exports pay 15-17% more Tariffs are a tax on U.S. consumers: trade has lowered prices and Tariffs are a tax on U.S. consumers: trade has lowered prices and

increased the purchasing power of an average American family of increased the purchasing power of an average American family of four by $10,000four by $10,000

Focus on trade deficit should be understood in context: oil and Focus on trade deficit should be understood in context: oil and gas imports account for 43% of the deficitgas imports account for 43% of the deficit

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U.S. Exports Create U.S. Exports Create Manufacturing JobsManufacturing Jobs

Trade Surplus with TPA Agreement Trade Surplus with TPA Agreement

Partners Staying StrongPartners Staying Strong

Trade Agreements Improve Trade Agreements Improve Manufacturing Trade BalanceManufacturing Trade Balance

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Trade Agreements Provide New Trade Agreements Provide New Markets to U.S. ExportersMarkets to U.S. Exporters

Cover substantially all trade between the United Cover substantially all trade between the United States and its partner/partnersStates and its partner/partners

Provide preferential access for each partner into the Provide preferential access for each partner into the other marketother market

Cut tariffs on goods deeply (manufacturing and ag)Cut tariffs on goods deeply (manufacturing and ag) Liberalize services trade (e.g., telecom, e-commerce, Liberalize services trade (e.g., telecom, e-commerce,

retail, financial)retail, financial) Provide government procurement opportunitiesProvide government procurement opportunities Provide intellectual property rights protectionProvide intellectual property rights protection Provide labor and environment protectionsProvide labor and environment protections Create dispute settlement mechanismsCreate dispute settlement mechanisms

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U.S. Trade Agreement PartnersU.S. Trade Agreement Partners Israel (September 1, 1985) Israel (September 1, 1985) NAFTA (Mexico/Canada) (January 1, 1994)NAFTA (Mexico/Canada) (January 1, 1994) Jordan (December 7, 2001)Jordan (December 7, 2001) Chile (January 1, 2004)Chile (January 1, 2004) Singapore (January 1, 2004)Singapore (January 1, 2004) Australia (January 1, 2005)Australia (January 1, 2005) Morocco (January 1, 2006)Morocco (January 1, 2006) Bahrain (August 1, 2006)Bahrain (August 1, 2006) Oman (January 1, 2009)Oman (January 1, 2009) DR-CAFTA (between March 1, 2006 and January 1, 2009)DR-CAFTA (between March 1, 2006 and January 1, 2009) Peru (February 1, 2009)Peru (February 1, 2009) Colombia (awaiting Congressional action) Colombia (awaiting Congressional action) Panama (awaiting Congressional action)Panama (awaiting Congressional action) South Korea (awaiting Congressional action)South Korea (awaiting Congressional action) Trans-Pacific Partnership (Australia, Brunei, Chile, Malaysia, New Zealand, Trans-Pacific Partnership (Australia, Brunei, Chile, Malaysia, New Zealand,

Peru, Singapore, and Vietnam) (currently being negotiated)Peru, Singapore, and Vietnam) (currently being negotiated)

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To Move Agreements, Republicans To Move Agreements, Republicans Agreed to Agreed to ““May 10May 10”” Deal Deal

Bipartisan House deal with Bush Bipartisan House deal with Bush Administration in 2007 covering labor, Administration in 2007 covering labor, environment, investment, and IPRenvironment, investment, and IPR

Application to Peru, Colombia, Panama, South Application to Peru, Colombia, Panama, South Korea as reciprocal obligation (i.e., binding Korea as reciprocal obligation (i.e., binding U.S. too)U.S. too)

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But Three Agreements Still PendingBut Three Agreements Still Pending

Administration has resolved outstanding issues in Administration has resolved outstanding issues in South Korea agreement and has just negotiated an South Korea agreement and has just negotiated an action plan with Colombia on labor; Administration action plan with Colombia on labor; Administration has made no commitment when to send up Colombia has made no commitment when to send up Colombia and Panamaand Panama

Republican goal: Republican goal: • Congressional consideration of all three agreements by Congressional consideration of all three agreements by

July 1, July 1, when key agreements by the EU and Canada enter when key agreements by the EU and Canada enter into effect and squeeze us outinto effect and squeeze us out

• DonDon’’t slow down the South Korea agreement, but speed up t slow down the South Korea agreement, but speed up Colombia and PanamaColombia and Panama

Bipartisan support for moving all threeBipartisan support for moving all three

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Pending Agreements Make U.S. Exporters Pending Agreements Make U.S. Exporters Competitive; Create U.S. JobsCompetitive; Create U.S. Jobs

Create good U.S. jobs without government spendingCreate good U.S. jobs without government spending PresidentPresident’’s analysis shows three pending agreements could s analysis shows three pending agreements could

create 250,000 U.S. jobscreate 250,000 U.S. jobs ITC estimates that agreements would increase U.S. exports ITC estimates that agreements would increase U.S. exports

by $13 billion, adding a whopping $10 billion to GDPby $13 billion, adding a whopping $10 billion to GDP Agreements lower barriers to U.S. manufactured goods, ag Agreements lower barriers to U.S. manufactured goods, ag

products, and servicesproducts, and services Agreements help small and medium-sized companies, Agreements help small and medium-sized companies,

creating jobscreating jobs America falling behind as other countries move aheadAmerica falling behind as other countries move ahead

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Colombia AgreementColombia Agreement

Concluded over 3 ½ years agoConcluded over 3 ½ years ago Submitted to Congress by Bush Administration in Submitted to Congress by Bush Administration in

2008; Pelosi rule vote shut off TPA clock2008; Pelosi rule vote shut off TPA clock Administration/some Dems say Colombia has not Administration/some Dems say Colombia has not

done enough to address labor violence, impunity done enough to address labor violence, impunity from prosecution, and labor rightsfrom prosecution, and labor rights

Administration has finally laid out a plan of action to Administration has finally laid out a plan of action to be taken by Colombia on labor, but no timeline for be taken by Colombia on labor, but no timeline for Congressional considerationCongressional consideration

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Colombia Agreement Increases Colombia Agreement Increases Opportunities for U.S. ExportersOpportunities for U.S. Exporters

Colombia is key market; ITC estimates $1.1 billion growthColombia is key market; ITC estimates $1.1 billion growth Traditionally one-way preferences, giving Colombia free Traditionally one-way preferences, giving Colombia free

access to U.S. market, but U.S. exporters have paid nearly access to U.S. market, but U.S. exporters have paid nearly $3.4 billion in duties since signing$3.4 billion in duties since signing

Agreement levels playing fieldAgreement levels playing field• Average tariff paid by Colombians less than 1% in 2010Average tariff paid by Colombians less than 1% in 2010• But U.S. exporters pay over 11.2%But U.S. exporters pay over 11.2%

80% of U.S. exports of industrial/consumer goods would be 80% of U.S. exports of industrial/consumer goods would be duty-free immediatelyduty-free immediately

U.S. services would enjoy preferential access U.S. services would enjoy preferential access Over 77% of ag tariff lines would be duty-free immediately; Over 77% of ag tariff lines would be duty-free immediately;

Colombia to recognize Colombia to recognize ““equivalenceequivalence”” of U.S. food safety of U.S. food safety systemssystems

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Failure to Implement Allows Others to Failure to Implement Allows Others to Seize Our Market ShareSeize Our Market Share

ArgentinaArgentina’’s agreement with Colombia gave s agreement with Colombia gave ArgentinaArgentina’’s farmers an advantage over U.S. farmerss farmers an advantage over U.S. farmers

U.S. market share for corn, wheat, and soy plunged U.S. market share for corn, wheat, and soy plunged from 71% in 2008 to 38% in 2009, to 27% in first ten from 71% in 2008 to 38% in 2009, to 27% in first ten months of 2010months of 2010

Argentina took up that slackArgentina took up that slack Canada implementing deal; EU deal ready for Canada implementing deal; EU deal ready for

implementation; China signed investment treatyimplementation; China signed investment treaty China is now ColombiaChina is now Colombia’’s third largest trading partner s third largest trading partner

and is making significant new investmentsand is making significant new investments

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Colombia Agreement Vital for U.S. Colombia Agreement Vital for U.S. National SecurityNational Security

Colombia is a valued ally and an important Colombia is a valued ally and an important counterweight to Venezuelacounterweight to Venezuela’’s Chavezs Chavez

ColombiaColombia’’s progress against narco-cultivation and s progress against narco-cultivation and trafficking would be undermined without agreement trafficking would be undermined without agreement

AdministrationAdministration’’s Latin American foreign policy is s Latin American foreign policy is missing as influence of China and others growsmissing as influence of China and others grows

Colombia enhances U.S. energy security as a Colombia enhances U.S. energy security as a friendly, democratic, stable, close energy sourcefriendly, democratic, stable, close energy source

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Colombia Has Made Colombians Safer Colombia Has Made Colombians Safer and Improved Labor Conditionsand Improved Labor Conditions

Homicides against unionists has declined by 83% since 2002 Homicides against unionists has declined by 83% since 2002 (from 196 to 33 cases)(from 196 to 33 cases)

Colombia provides security for 10,000, and union homicide Colombia provides security for 10,000, and union homicide rate lower than general populationrate lower than general population

Colombia has increased convictions; increased funding for Colombia has increased convictions; increased funding for prosecutionsprosecutions

Colombia has implemented all 8 ILO core labor conventions Colombia has implemented all 8 ILO core labor conventions (U.S. only 2); improved labor laws(U.S. only 2); improved labor laws

ILO has removed Colombia from labor watch listILO has removed Colombia from labor watch list Colombia agreement labor provisions identical to Peru, which Colombia agreement labor provisions identical to Peru, which

had broad bipartisan supporthad broad bipartisan support Colombia just this week has agreed to an action plan to take a Colombia just this week has agreed to an action plan to take a

series of additional aggressive steps to curb violence, increase series of additional aggressive steps to curb violence, increase prosecutions, and strengthen its labor lawsprosecutions, and strengthen its labor laws

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Panama AgreementPanama Agreement

Concluded over 3 ½ years agoConcluded over 3 ½ years ago Not yet submitted to CongressNot yet submitted to Congress Administration/Democrats seek additional Administration/Democrats seek additional

labor law reforms before considerationlabor law reforms before consideration Administration/Democrats allege Panama is a Administration/Democrats allege Panama is a

tax haven; in response Panama signed a Tax tax haven; in response Panama signed a Tax Information Exchange agreement, but Information Exchange agreement, but Administration still stallsAdministration still stalls

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Panama Agreement Increases Panama Agreement Increases Opportunities for U.S. ExportersOpportunities for U.S. Exporters

Today, Panama enjoys duty-free access into U.S. market for Today, Panama enjoys duty-free access into U.S. market for over 90% of its products, but U.S. exporters pay duties on their over 90% of its products, but U.S. exporters pay duties on their exports into Panama, averaging 7.8% for consumer/industrial exports into Panama, averaging 7.8% for consumer/industrial products and 20% for agricultureproducts and 20% for agriculture

Panama would give U.S. exporters immediate duty-free Panama would give U.S. exporters immediate duty-free treatment on 88% of Panamatreatment on 88% of Panama’’s tariff lines for manufactured s tariff lines for manufactured goodsgoods

Panama would give U.S. exporters immediate duty-free Panama would give U.S. exporters immediate duty-free treatment on over half of Panamatreatment on over half of Panama’’s agriculture tariff lines; s agriculture tariff lines; Panama to recognize Panama to recognize ““equivalenceequivalence”” of U.S. food safety system of U.S. food safety system for meat, poultry, and processed foodsfor meat, poultry, and processed foods

Expands access for U.S. services; opens sectors now restricted Expands access for U.S. services; opens sectors now restricted to Panamanians only, to Panamanians only, e.g.e.g., retail trade and professional services, retail trade and professional services

Increases U.S. access to Canal expansion; $5.25 billion projectIncreases U.S. access to Canal expansion; $5.25 billion project

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Panama Resolved Outstanding IssuesPanama Resolved Outstanding Issues Labor Laws ImprovedLabor Laws Improved

• Panama has made key changes to labor laws; expected to Panama has made key changes to labor laws; expected to pass additional legislation this springpass additional legislation this spring

• Panama is signatory to all 8 ILO Conventions; U.S. only 2Panama is signatory to all 8 ILO Conventions; U.S. only 2

• Labor provisions in Panama agreement identical to Peru Labor provisions in Panama agreement identical to Peru agreement, which had broad bipartisan supportagreement, which had broad bipartisan support

Tax Haven Allegations ResolvedTax Haven Allegations Resolved• Panama has signed a Tax Information Exchange Panama has signed a Tax Information Exchange

Agreement with the United States and passed all Agreement with the United States and passed all implementing legislation; formal ratification shortlyimplementing legislation; formal ratification shortly

• As such, Panama has increased transparency and As such, Panama has increased transparency and

effectiveness of information exchangeeffectiveness of information exchange

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South Korea AgreementSouth Korea Agreement

Concluded over 3 ½ years agoConcluded over 3 ½ years ago Not yet submitted to CongressNot yet submitted to Congress In December, deal improved to expand access In December, deal improved to expand access

for U.S. autos; supported by Big 3 and UAWfor U.S. autos; supported by Big 3 and UAW Administration eager to move forwardAdministration eager to move forward S. Korea agreement with EU to enter into S. Korea agreement with EU to enter into

effect July 1effect July 1

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South Korea Agreement Increases South Korea Agreement Increases Opportunities for U.S. ExportersOpportunities for U.S. Exporters

Today, average S. Korean tariff for U.S. exporters is more than four Today, average S. Korean tariff for U.S. exporters is more than four times the average tariff that Korean exporters face into the U.S. times the average tariff that Korean exporters face into the U.S. marketmarket

S. Korea would give U.S. exporters immediate duty-free treatment on S. Korea would give U.S. exporters immediate duty-free treatment on 80% of S. Korea80% of S. Korea’’s tariff liness tariff lines

Agriculture exports could increase by $1.8bn per yearAgriculture exports could increase by $1.8bn per year Agreement would open South KoreaAgreement would open South Korea’’s $560 billion services market to s $560 billion services market to

U.S. service-providers in key sectors (financial, insurance, telecom, U.S. service-providers in key sectors (financial, insurance, telecom, AV, and express delivery)AV, and express delivery)

S. Korea would open its historically opaque regulatory process, S. Korea would open its historically opaque regulatory process, including in autosincluding in autos

S. Korea would treat U.S. companies equally in application of product S. Korea would treat U.S. companies equally in application of product standardsstandards

ITC estimates U.S. exports would grow by $10-12 billion; would ITC estimates U.S. exports would grow by $10-12 billion; would increase U.S. exports by nearly 30% more than imports from Korea increase U.S. exports by nearly 30% more than imports from Korea would increasewould increase

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While U.S. Delays, Others Conclude While U.S. Delays, Others Conclude Agreements Without UsAgreements Without Us

EU has 25; implementation with S. Korea EU has 25; implementation with S. Korea expected July 1; negotiating with Indiaexpected July 1; negotiating with India

Canada has 3; implementation with Colombia Canada has 3; implementation with Colombia expected July 1expected July 1

China has 8; negotiating with AustraliaChina has 8; negotiating with Australia Mexico has 10; negotiating with S. KoreaMexico has 10; negotiating with S. Korea More than 180 agreements in force with Asia-More than 180 agreements in force with Asia-

Pacific countries; about 90 awaiting Pacific countries; about 90 awaiting implementation or being negotiatedimplementation or being negotiated

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Trade Agreements in Asia-PacificTrade Agreements in Asia-Pacific

Japan Korea China India Australia New Zealand EUUnited States

China ○ ●Korea ○ ○ ○ ●Japan ○ ○ ○Brunei ● ● ● ● ● ● ○Indonesia ● ● ● ● ● ● ○Malaysia ● ● ● ● ● ● ○ ○Philippines ● ● ● ● ● ● ○Singapore ● ● ● ● ● ● ○ ●Thailand ● ● ● ● ● ● ○ ○Vietnam ● ● ● ● ● ● ○Canada ○ ●Chile ● ● ● ● ● ● ● ●Mexico ● ○ ● ●Peru ○ ○ ●

Americas

Asia

● ● - In Force or Negotiations Complete- In Force or Negotiations Complete○ ○ - Under Negotiation- Under Negotiation

Source: USTR

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Conclusion: Create Jobs Through Conclusion: Create Jobs Through New MarketsNew Markets

Consideration of Colombia, Panama, and Consideration of Colombia, Panama, and South Korea agreements by South Korea agreements by July 1July 1• Levels playing field and creates jobsLevels playing field and creates jobs• Delay costs jobs as competitors move aheadDelay costs jobs as competitors move ahead

Key Democrats agree on urgent need to pass Key Democrats agree on urgent need to pass all three (Baucus, Hoyer)all three (Baucus, Hoyer)