By FRANCISCO SANCHEZ
Businesses in Houston, and all across America, got some good news last week: Congress approved trade agreements with Korea, Panama and Colombia. These measures will provide a boost to our economy, support quality American jobs and create opportunities for U.S. firms.
Why? Because the words “made in America” mean something special; products stamped with that phrase represent quality and value, which is why they are in great demand all over the world. Last year, exports of goods and services reached $1.84 trillion, the second highest annual total on record. They also supported more than 9 million jobs. And because 95 percent of the world’s customers live overseas, it’s clear: U.S. exports will continue to be a key to the nation’s economic recovery.
Certainly this is no surprise to the city of Houston. In the first half of 2010, its metropolitan area was the second largest export market in the U.S., with sales of $37.5 billion. This success is a tribute to the ingenuity and work ethic of the Houston business community, which has helped the city emerge as a leader in global commerce.
But we must also recognize the role that trade agreements have played in helping to level the playing field so that U.S. firms can compete. Consider that since the 2004 U.S.-Chile trade agreement, Texas’ exports to Chile have grown an incredible 746 percent. This shows that when barriers abroad are removed, American businesses thrive. That’s what makes the three trade deals just approved by Congress so significant; they present new opportunities for U.S. firms to do business.
Take Korea: Right now, U.S. exporters pay a 6.2 percent average tariff, amounting to $1.3 billion a year, for industrial goods. Meanwhile, Korean exporters to the United States only face an average 2.8 percent tariff. Obviously, these are unequal terms. Yet, despite these conditions, Texas firms still exported $6.4 billion in merchandise to Korea in 2010.
Now, thanks to the Korea–U.S. agreement (KORUS), there is potential to do so much more. KORUS will help level the playing field by eliminating tariffs for more than 95 percent of U.S. exports within five years. And with the removal of these tariffs, the potential for U.S. companies to do business will grow because their goods and services will be more affordable. In total, the removal of barriers is expected to increase U.S. goods exported to Korea by roughly $11 billion and support more than 70,000 good American jobs.
That’s just one of the agreements. Consider the others: Colombia is the third- largest economy in South America; the trade agreement would provide significant new access to a $166 billion services market. Panama is one of the fastest-growing economies in Latin America; according to the latest numbers, it expanded 7.5 percent in 2010, with annual growth of more than 5 percent expected through 2015. The agreement will help U.S. businesses take advantage of this growth.
These are exciting developments. President Obama deserves a lot of credit for obtaining the best possible deal for Americans. And Congress members from both sides of the aisle should also be recognized for their support of the agreements and a balanced trade agenda.
Of course, with growth come growing pains, and some Americans, through no fault of their own, have lost their jobs because of foreign competition. That’s why Congress’ renewal of the Trade Adjustment Assistance program is so important; it will help people retrain and retool for success in the 21st century economy.
The world is rapidly changing, and we must change with it to compete in the global economy. Trade is an instrumental part of this work, which is why, nearly two years ago, President Obama launched the National Export Initiative with the goal of doubling exports by the end of 2014. This is the first government-wide export promotion strategy with focused attention from the president and his Cabinet, and we stand ready to help workers and businesses seize the new commercial opportunities available to them.
Getting the three agreements approved was an important step in this effort. Now, it’s time do business.
Sanchez is undersecretary of commerce for international trade