Pending Free Trade Agreements Could Be Harmful To Economy

Robert Pore, The Grand Island Independent At the Export 2011 Trade Seminar in Grand Island last Wednesday, speakers touted the benefits of pending free trade agreements with Panama, Columbia and South Korea as helping Nebraska agriculture. That view is supported by major agricultural groups, such as the National Corn Growers Association. However, the Coalition for a Prosperous America is on the opposite end of the spectrum, seeing a misguided trade course. “NCGA is greatly encouraged by the movement on the pending FTAs,” NCGA President Bart Schott said. “The United States is the largest corn producer and exporter in the world and developing new markets for our country’s agricultural products will help our sector lead the nation in economic growth and international competiveness.” Last year the United States exported 50.4 million metric tons of corn worldwide. Corn co-products such as distillers grains also represent a growing export market for domestic producers. “As a producer, it is frustrating to watch other nations achieve preferential access to markets and secure a competitive advantage over U.S. corn and corn products,” Schott said. “NCGA strongly supports the pending FTAs with Korea, Colombia and Panama, and we look forward to working with Congress to ensure swift passage.” Last week Bob Stallman, president of the American Farm Bureau Federation, said the combined three FTAs represent nearly $2.5 billion in new agriculture exports and could generate support for up to 22,500 U.S. jobs. “Further, passing these trade agreements would immediately eliminate most trade tariffs that have continued to plague U.S. farmers and ranchers,” Stallman said. But Michael Stumo, CEO of the Coalition for a Prosperous America (CPA), is urging a no vote from Congress on the trade agreements and said lawmakers must craft a national trade strategy to achieve a “positive trade balance (net exports) and re-evaluate past trade agreements to determine whether they advance that goal, along with directing the administration to amend or alter past agreements and future trade negotiations to achieve that goal.” Currently, Stumo said, the U.S. is pursuing a course that reaps trade deficits and job losses through international trade policy. Stumo listed a number of reasons CPA opposes the three pending trade agreements include: — Trade deficits — The trade agreements will cause worsening trade deficits. Trade deficits depress GDP growth and increase unemployment because U.S. facilities are offshored, or because components and subassemblies are procured offshore. Any foreign market share gained is overwhelmed by domestic market share lost. — Job loss — The trade agreements will cause job losses. Government data show no support for a net job gain argument. Third-party studies, supported by historical trade agreement data, conclude that net job losses will result from these trade agreements. — Non-tariff barriers — The trade agreements fail to address foreign non-tariff barriers practiced by trade rivals. These non-tariff barriers eviscerate hoped-for U.S. net export gains even after tariff are reduced. Currency manipulation, border adjustable taxes and state subsidies are prime examples. Stumo said South Korea is a known currency manipulator. He said South Korea has a 10 percent value added tax that is charged to virtually all imports, and can increase that import charge without restriction. “Like China, South Korea practices a form of state managed capitalism,” he said. “South Korea is not a “free trading nation” and this agreement does not change that fact. Any concessions by South Korea are easily negated by its pre-existing non-tariff tactics. Indeed, the NAFTA and CAFTA countries all used currency devaluation and/or the addition of border adjustable taxes on U.S. exports to negate the tariff concessions they made.” — Sovereignty loss — The U.S. will be handicapped in domestic trade law enforcement. South Korea, Colombia and Panama will have special rights in our trade law systems. Stumo said under these agreements, the U.S. will be prevented from enacting tough financial industry reform, despite the need shown in the Great Recession. “Further, hundreds of foreign companies will receive special standing to challenge U.S. laws which they can claim interfere with those companies’ investment expectations, and which claims are judged in unaccountable foreign tribunals,” he said. — Gateway from China/Trans-shipment through Korea — The South Korea trade agreement allows Chinese companies to produce 65 percent of a products’ value, with only 35 percent South Korean content, and still qualify for low U.S. tariff rates. Stumo said China is South Korea’s largest trading partner and has proven particularly aggressive in routing its products through third countries to either avoid antidumping duties or to achieve lower tariff rates. “The volume of future Chinese trans-shipments must not be underestimated,” he said. — Food and product safety — The U.S. border control, food safety and product safety agencies will be hampered in verifying that imported food and other products are safe. The inspections of imported products are nearly non-existent. Yet Stumo said U.S. companies must fully comply with food and product safety rules. “Proponents of the trade agreements mislead the public and legislators with a selective focus on exports (without imports) and ‘export supported’ jobs (without import-caused job losses),” he said. “That approach has devastated our economy and has caused record trade deficits in high technology, manufacturing and (among bilateral trade agreement countries) agriculture sectors. Policy leaders must focus upon the net impact on jobs and the economy.” Stumo said the U.S. needs a national trade and economic strategy that centers on investment and production in the United States and rebalances our international trade. “We must recognize and neutralize the challenges of state managed capitalism,” he said. “We must produce more of what we consume in the U.S. rather than facilitate the offshoring of innovation, production and jobs.” Read original post here.