Moving Towards Doubling Exports in Five Years

“In a time when millions of Americans are out of work, boosting our exports is a short-term imperative,” said President Obama at the recent Export-Import Bank annual conference. “We shouldn’t assume that our leadership is guaranteed,” he continued. “When other markets are growing, and other nations are competing, we’ve got to get even better. We need to secure our companies a level playing field. We need to guarantee American workers a fair shake. In other words, we need to up our game.”

Doubling exports is not an impossible goal. This occurs every so often when the “stars” align: the U.S. dollar’s strength declines, global markets are strong, and the U.S. is able to develop innovative and entrepreneurial ideas turning them into sellable products and services.

At a time when the United States’ global competitiveness is perceived by many people around the globe as declining, a push to focus outside of our borders makes a lot of sense. That being said, the U.S. government and Congress have a number of key issues that must be addressed in order to accomplish the ambitious goal to double U.S. exports in the next five years.

In order to remove the most basic barriers to reaching these export goals, the Dallas Regional Chamber sees the following as key current issues that must be addressed in a timely fashion:

• Pass and implement the negotiated free-trade agreements, Colombia, Panama and South Korea, already presented to the U.S. Congress
• Resolve the U.S.-Mexico trucking dispute and end the retaliatory tariffs implemented by Mexico
• Resolve the long-standing cotton dispute with Brazil and preemptively stop the pending tariffs on nearly 100% of U.S. exports to Brazil and the pending patent-protection violations in retaliation against the U.S. cotton policy
• Settle escalating trade and currency tensions with China
• Follow through on announced plan to overhaul the export-control system, making it easier for companies to comply with regulations and more readily access markets while maintaining our homeland security
• Participate in the World Trade Organization’s “Doha Round” negotiations with sincerity and onus to achieve real results for the global trade system; U.S. must be a leader in ensuring results are seen
  

Free Trade Agreements (FTA) – Colombia, Panama, South Korea

The already negotiated FTAs, Colombia, Panama and South Korea, were finalized in November 2006, June 2007 and June 2007 respectively.

Colombia
The U.S.-Colombia TPA furthers the U.S. trade and policy objectives in the South American region and provides substantial reforms in Colombia to support U.S. exporters in the region.

Panama
The U.S.-Panama TPA promises to be interesting for U.S. exporters and service providers. As Panama is implementing a $5.25 billion expansion of the Panama Canal, the opportunities for U.S. involvement are tremendous.

South Korea
The KORUS FTA is the most “commercially significant” FTA since the North American Free Trade Agreement (NAFTA). Three years after implementation, 95% of goods will be duty-free. In 10 years, the agreement promises to see 100% free trade between the U.S. and South Korea.

U.S. – Mexico Trucking Dispute

After a decade of negotiations between Mexico and the U.S. to implement a trucking program under the North American Free Trade Agreement (NAFTA), a solution was implemented and abruptly, in 2008, the U.S. Congress canceled the pilot program. Mexico retaliated within their rights granted by a NAFTA arbitration panel. Dallas based company Mary Kay, Inc. recently told members of the Dallas Regional Chamber’s International Business Council that as a result, they now must pay $450,000 a month in added tariffs.

This begs the question as to whether Congress wishes to push U.S.-based manufacturing to other countries, thus cutting significant jobs and economic impact on our communities.

U.S. – Brazil Cotton Dispute

Emerging markets around the world often believe that the developed countries will always win in trade disputes. About eight years ago, a WTO arbitration panel ruled in favor of Brazil in a case against U.S. cotton subsidies. In these cases, as in the Mexican trucking program case, the winning country has the right to retaliate. Brazil found a significant list of products to levy additional tariffs. However, in an effort to dramatically impact the negotiations, Brazil threatened to break patent agreements on U.S. products. For example, pharmaceutical patents and other licensing agreements would no longer be protected in Brazil.

Brazil’s move worked. In early April, both countries announced that they had agreed to a process that would settle the dispute. Now it is up to Ambassador Kirk and Secretary Vilsack to make sure the U.S. holds up its end of the bargain on this issue and protects the IP of hundreds of U.S. companies doing business in Brazil.

Escalating Trade Tensions with China

U.S.-Chinese relations have become tense in recent months. Every few years, often coinciding with election years, the U.S. Congress begins to make noise about the Chinese currency. This year is no exception.

This issue is not a simple one – The Chinese government is protecting their exporters by keeping the price low and making their products more attractive than, say, U.S.-made products, which cost significantly more. China had allowed its currency to slowly rise against the dollar a few years before this most recent economic crisis and when it became clear that the economy was tanking, China pegged the RMB against the U.S. Dollar once again. Secretary Geithner traveled to Beijing in early April to ease tensions between the two countries and continue negotiations on the currency issue. The issue has not yet been resolved though it is widely believed that China will begin to allow its currency to strengthen slightly in the coming months.

If the goal is to increase U.S. exports in the next five years, we must find a way to work collaboratively with China so that U.S. products can be sold to the world’s largest population with an increasing demand for consumer products.

Overhaul of the Export-Control System

Understanding the Export Administration Act (EAA) and export controls on dual-use technologies and products takes days of training – just ask our friends at the International Trade Center and District Export Council, who every year host seminars on this issue. As technology has become integrated in almost all products U.S. manufacturers export, the dual-use rule has become more of a burden on the exporter. There must be a compromise on this issue and we encourage a serious attempt at finding ways to allow our companies greater access to overseas markets while protecting our security.

U.S. Leadership in WTO’s Doha Round Trade Negotiations

Concluding the negotiations of the Doha round means leading an effort to compromise developed and developing nations towards economic prosperity. Developed nations need to look through their political and economic policies and promote the Doha negotiations and benefits to their voters. Developing nations need to find policies that will make them better execute the Doha regulations paired with competitive economic policies that will drive their economic growth. The U.S. must prove that we are serious about trade, otherwise nations like China, India, Brazil, Russia, Germany, France and many others will be more than happy to take our role as the world’s leader in trade policy.

For more information on the status of the negotiations, recent news and information of the parties involved in the Doha round of negotiations, visit www.oecd.org/doha.

We look forward to hearing from you on these issues.  To comment or for additional information on the Chamber’s international business activities, visit www.dallaschamber.org/global or contact us at global@dallaschamber.org.