Free Trade Economics
While analysis of the numbers makes a good economic case for
free trade, a look at the people and businesses behind those numbers can make an
even stronger argument. Across the country; hardworking Americans are making a
good living in jobs supported by exports.
In 1989, Seattle entrepreneurs William Cotter and Gregory
Davenport started a specialty business, Da Vinci Gourmet, which makes syrups
that flavor coffee drinks. Five people worked there then, including Cotter,
Davenport and their wives. Now, 81 people earn a good living at Da Vinci Gourmet
making and selling 120 flavors of syrup to markets in 50 nations. What started
as a strictly local business has grown into a successful exporter, creating jobs
and rewarding lives for many people.
And in Buena Park, California, there's Miguel Chavez, who was
a postman when he started a cleaning business out of his garage. Today, the
family-owned enterprise has grown into a multi-million dollar specialty chemical
business that sells its products in Mexico and ships to Australia. Chavez’s
company is one of California's nearly 40,000 exporting small businesses,
providing jobs and futures for many people who might not other-wise have these
opportunities.
Some companies might not actually export, but they provide
goods or services necessary to companies that do export. These indirect
exporters, firms like A-1 Production, Inc., located in Kendallville, Indiana,
also benefit from free trade. A-1, a family-owned producer of machined parts and
hydraulic fittings manufactures a crucial part for Case New Holland's (CNH)
Magnum Tractor. This part, the transmission spacer, a circular piece of metal
shaped like an "O," is no bigger than the palm of an adult's hand but
the Magnum tractor can't run.
These success stories are testament to the hard work and
abilities of the entrepreneurial spirit in America…and to today’s borderless
world.
It's also encouraging to know that the Cotters, Davenports,
Armstrongs and the Chavez family are making it possible for scores of people to
enjoy better lives both here at home and abroad. It's this kind of opportunity
that is creating more product choices for us all, better prices and making it
possible for many, many people to enjoy a better quality of life.
If global trade barriers were cut by one-third, the world
economy would increase by more than $600 billion a year. That's equal to twice
the value of rice, corn and wheat produced and consumed worldwide each year.
Benefits of Free Trade
- Eliminating all barriers would add $2 trillion to the global economy,
which is twice the size of the Chinese economy.
- Jobs supported by international trade pay up to 13 to 18 percent more than
the national average.
- Exports have accounted for almost one-quarter of U.S. economic growth
during the past decade.
- U.S. companies that invest overseas employ about 19 million U.S. workers,
who represent 15 percent of all private sector U.S. jobs.
Why we need TPA
- Around the world, there are more than 130 free trade agreements (FTAs).
The United States is party to only two (U.S.-Israel FTA, and NAFTA with
Mexico and Canada). Since 1990, the European Union has negotiated 20 free
trade agreements. Mexico is party to more than 28 FTAs, most negotiated
since 1990.
- About a third of total world exports are covered by European Union free
trade and customs agreements compared to only about 11 percent for US free
trade accords.
What TPA means to Michigan:
- Michigan produced more than $51.6 billion worth of exports that sold to nearly 200 foreign markets last year
- Michigan produced and exported about $50.8 billion worth of manufactured items such as computers and electronics, transportation equipment, machinery, fabricated metal products, plastic & rubber products, and chemical products
- Michigan is export-dependent, with export sales of $5,193 for every state resident
Trade Promotion Authority is Good News for Michigan's Entrepreneurs and Small Businesses:
- The number of Michigan companies exporting increased 65 percent from 1992 to 1998
- More than 86 percent of Michigan 10,482 companies that export are small and medium-sized businesses.
Trade Promotion Authority is Good News for Michigan's Farmers and Workers:
- An estimated 372,900 Michigan jobs depend on manufactured exports (1997)
- One in every five manufacturing jobs in Michigan - 191,000 jobs-- is tied to exports (1997)
- An estimated Michigan 181,900 jobs also support the manufactured-goods-for-export industry indirectly
- Wages of workers in jobs supported by exports are 13 to 18 percent higher than the national average
- Roughly 11,900 Michigan citizens hold jobs related to agriculture exports
- Michigan exported an estimated $782 million in agricultural products in 1999
- Demand is growing for the Top 5 agricultural products exported from Michigan:
- soybeans and products -- $176 million
- feed grains and products -- $151 million
- vegetables -- $133 million
- fruits -- $92 million
- live animals and red meats -- $66 million
Michigan Has Benefited From Previous Trade Agreements:
- Total exports from Michigan to NAFTA countries (Mexico and Canada) in 1999 were 74 percent higher than 1993, before NAFTA.
- Michigan benefits under the Uruguay Round agreement as South Korea reduces its tariffs on soybean oil by 14.5 percent from 1995 to 2004. The tariff reduction has supported a threefold increase in export volume, with total sales reaching $32 million in 2000.
- The Philippines is reducing its tariffs on soybean meal from 10 to 3 percent during the same period. This tariff reduction has supported a 40-percent increase in U.S. soybean meal exports that topped $160 million in 2000.
- Michigan benefited under the North American Free Trade Agreement when Mexico converted its import licensing system for corn to a transitional tariff rate quota that will remain in effect until 2008. Under this system, U.S. corn exports to Mexico have nearly tripled since 1994, reaching 197 million bushels, valued at $486 million in 2000.
- Under the Uruguay Round agreement, the Philippines converted its import ban on corn to tariffs, creating additional demand for 51 million bushels of U.S. corn from 1995 to 2000.
- Under the Uruguay Round agreement, Michigan benefits as Japan lowered its tariff on blueberries from 10 to 6 percent. As a result, U.S. exports of fresh wild and cultivated blueberries rose from zero to $6 million in 2000.
- As one of the nation's larger commercial apple producers, Michigan benefits under the U.S.-Israel Agreement on Trade in Agricultural Products as Israel expands access to its apple market from 1,600 tons (duty-free quota) in 1995 to 1,855 tons in 2001.
- Michigan benefited as Japan reduced its tariffs on chilled and frozen beef to 38.5
percent, a move that exceeded its Uruguay Round commitment. Japan's imports of U.S. beef rose from 274,000 tons valued at $1.3 billion in 1994 to 368,000 tons worth $1.5 billion in 2000.
- South Korea eliminated its chilled and frozen beef import quotas in 2001, and will reduce its tariffs to 40 percent by 2004. Supported in part by these changes, South Korea's imports of U.S. beef rose from 60,000 tons valued at $227 million in 1994 to 143,000 tons worth $506 million in 2000.
(Source: U.S. Department of Commerce, U.S. Department of Agriculture, United States Trade Representative)
To learn more about TPA:
For additional information about "Trade Promotion Authority" and
"Fast Track", please visit http://www.state.gov/g/oes/rls/fs/2002/12953.htm.
Webmasters note:
The Michigan District Export Council has endorsed "Fast Track"
trade negotiation granting the president expedited trade negotiation authority.
Date
Updated: March 27, 2007
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