Free Trade Does Not Cost American Jobs

0513_USTrade
President Barack Obama takes off his coat after his remarks on trade at Nike corporate headquarters in Beaverton, Oregon, on May 8, 2015. The U.S. enjoys a $55 billion trade surplus with its trade agreement partners, compared with a $579 billion deficit with other countries, the author writes. Jonathan Ernst/Reuters

Thanks to a new wave of investment, innovation and optimism, manufacturers in the United States are experiencing a renaissance. But sustaining this momentum hinges upon growing the manufacturing sector’s ability to compete in the global marketplace.

Last year, U.S.-manufactured exports topped $1.4 trillion, an all-time high, and the largest job gains in manufacturing have come in sectors that sell their products overseas. Exports now support more than 6 million manufacturing jobs across the country, as well as higher-paying jobs for an increasingly educated and diverse workforce.

Overall, the United States exports about 55 percent of its manufacturing output, with smaller manufacturers, many of them family-owned, accounting for more than 96 percent of all U.S. exporters.

Regrettably, export growth has slowed, dampening the demand for U.S. products. As a result, market-opening trade agreements that reduce artificial trade barriers, lower costs and broaden opportunities for American products become even more critical.

The U.S. remains largely open to the world, and manufacturers in the United States compete every day with overseas companies to sell their goods here at home. The U.S. has the lowest tariffs on manufactured goods of any G-20 country, and more than two-thirds of all manufactured-goods imports enter the U.S. duty-free.

But manufacturers in the United States face a very different situation abroad.

America’s access to global markets has largely been made possible by a series of trade agreements with countries such as Canada, Mexico, Chile and Australia. Taken together, America’s 20 existing trade agreement partners buy 13 times more manufactured goods from the United States than other countries.

Unfortunately, in countries where no such agreements exist, manufacturers in the United States face unfair trading practices, restrictive tariffs, cumbersome custom regulations and threats to intellectual property rights.

In Asian countries where the United States does not have free trade agreements, for example, U.S. manufacturers face tariffs as high as 83 percent on automotive products, 70 percent on machinery and capital equipment, and 30 percent or more on chemicals, health and medical equipment and infrastructure products.

Notable is the fact that America enjoys a $55 billion trade surplus with its trade agreement partners, compared with a $579 billion deficit with countries where such agreements are lacking. There is tremendous potential to be gained by lowering the barriers abroad for manufacturers by negotiating new trade agreements.

Too many people, however, still subscribe to the myth that free trade agreements result in job losses.

The economic impact of the North American Free Trade Agreement (NAFTA) remains a topic of debate two decades after it was ratified. But the official government numbers tell the truth: Manufacturing jobs actually grew by about 800,000 in the four years directly following NAFTA.

The reality is that protectionist policies do not work, and free trade does not kill jobs. It grows jobs and expands opportunities for manufacturers in the United States.

Time and again, history demonstrates that, when other countries lower tariffs, it makes our exports more competitive, gives us access to new markets, boosts demand for our products, increases jobs and drives economic growth.

For this reason, more than 75 manufacturing groups in industries throughout the sector wholeheartedly support the enactment of bipartisan trade promotion authority (TPA) legislation recently introduced in Congress.

TPA is a proven tool and partnership established between the executive branch and Congress. It is essential to conclude and implement promising trade agreements that provide access to new markets, level the playing field abroad and support good-paying jobs here at home.

Our manufacturing achievements today are dwarfed by tomorrow’s untapped possibilities. To achieve those possibilities, we need better access to the 95 percent of the world’s population and the more than 70 percent of the world’s purchasing power beyond our borders. TPA is what Congress needs to approve to help us achieve that.

It is time for manufacturers to rally around this important cause and take this message of jobs, growth and economic opportunity all the way to Washington.

Jay Timmons is president and CEO and Chad Moutray is chief economist of the National Association of Manufacturers.

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