Why We Need Fairer Trade: How Export Barriers Cost America Jobs - Third Way

Summary: This Report details some of the most egregious trade barriers that foreign countries use to block exports of iconic American goods and services, and recommends strong U.S. efforts to break down these barriers, including tough new trade deals and aggressive enforcement of U.S. rights under existing trade agreements.

Foreign governments use a variety of unfair practices — including high duties, discriminatory technical rules, customs red tape and theft of intellectual property — to keep out exports of American goods and services. If left unchecked, these barriers pose a significant threat to American economic growth and job creation. This report uses iconic American products and services — such as Harley-Davidson motorcycles, Washington apples, Campbell’s soup, Major League Baseball broadcasts, Windows software and FedEx deliveries — to illustrate how foreign trade barriers can rob American companies of new business and American workers of new jobs.
 
The Report urges the United States to fight back against unfair trade barriers by (i) pursuing tough new trade agreements, and (ii) stepping up trade enforcement under current rules. The Report stresses the importance of winning fairness for U.S. companies and U.S. workers in foreign markets, and emphasizes the risks to America’s economy of taking a “time out” from engagement on trade.
 
 
KORUS FTA-related section:
 
What follows is a three-step strategy for how we can ensure that America gets its fair share of the global economy and future growth.

STEP 1: RECOGNIZE THAT TRADE DEALS WORK

Trade deals stop bad foreign practices and make trade fairer for U.S. companies

In fact, the United States has had striking success in exporting to countries with which we have free trade deals. According to a U.S. Commerce Department analysis, U.S. trade agreement partners accounted for 7.5% of global GDP in 2006, but took in a whopping 42.6% of all U.S. exports during that year.98 Com­merce Department data also shows very substantial increases in U.S. exports after recent trade agreements entered into force:

BEFORE AND AFTER: Impact of Recent U.S. Trade Agreements on U.S. Exports and Imports

Trade Agreement

Change in U.S. Exports

Change in U.S. Imports

Australia (2004-2008)

+59%

+41%

Bahrain (Aug. 2006-July 2009)

+48%

-20%

CAFTA-DR (2005-2008)100

+50%

+7%

Chile (2003-2008)

+341%

+122%

Morocco (2005-2008)

+199%

+97%

Singapore (2003-2008)

+68%

+5%

One reason for the success of trade agreements in promoting U.S. exports is that American exporters often have comparatively more to gain because our partners frequently must eliminate many more trade barriers than the United States. For example, CAFTA-DR countries had to eliminate significant duties on goods from the United States, while most CAFTA-DR country exports to the United States were already duty free, even before the agreement.101 Similarly, in the pending U. S.-Korea Free Trade Agreement (“KORUS FTA”), Korea would eliminate duties that effectively average 9%, while the United States will elimi­nate duties that average only 3.5%.102

Trade agreements can also make trade more fair for the United States in other ways. For example, the pending KORUS FTA would eliminate many of the various kinds of tariff and non-tariff barriers discussed in this report.

Barrier

How the US-Korea Free Trade Agreement Would Help Fix This

#1 Technical barriers

• Make Korea’s rulemaking process more open; require greater justification for technical standards.

#2 Standards for farm and food exports

• Require Korea to recognize USDA certifications for meat and poultry safety and respect international rules for animal health.

#3 Tariffs and taxes

• Eliminate duties on 95% of U.S. consumer and industrial products exports within 3 years.

• Through duty eliminations, provide U.S. exporters with an average 9% price advantage over other foreign competitors without privileged access to the Korean market.

• Eliminate or reduce tariffs on foods like cherries, French fries, vegetable soups, and oranges.

#4 Customs red tape

• Require international best practices, such as electronic document submission and transparent rulemaking, to speed up document processing at Korean ports.

#5 Limits on services exports

• Open up Korea’s market for nearly all major service sectors.

• Permit U.S. financial institutions to establish or acquire financial institutions in Korea to supply a complete range of financial services.

#6 Intellectual property protection

• Provide strong, state-of-the-art IP protections for U.S. patents, copyrights and trademarks.

• Require strong Korean IP enforcement mechanisms and penalty provisions, including the criminalization of piracy.

#7 Government procurement

• Expand opportunities for U.S. firms in Korea’s government procurement process by creating a special working group to oversee the procurement process and assist U.S. companies.

#8 Pro-competition practices

• Promote greater transparency in Korea’s regulatory process and customs procedures.

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