Mr. President, I rise today to express my support for the free trade agreements with South Korea, Colombia, and Panama. These agreements will eliminate tariffs and nontariff barriers to U.S. exports and protect intellectual property and…
Mr. President, I rise today to express my support for the free trade agreements with South Korea, Colombia, and Panama.
These agreements will eliminate tariffs and nontariff barriers to U.S. exports and protect intellectual property and investment with three key trading partners.
At a time when the national unemployment rate stands at almost 10 percent--and tops 12 percent in my home State of California--I believe it is vital that we promote job growth by securing new opportunities for U.S. manufacturers, farmers and service providers in expanding foreign export markets.
These three agreements are a good place to start.
They are critical to the President's goal of doubling exports over 5 years, which could create 2 million new jobs. This is from a L.A. Times editorial of August 12, 2010.
It is simple: export growth as a result of these trade agreements will mean more jobs.
And we have no time to lose. Other trading partners have signed or are in the process of negotiating free trade agreements with South Korea, Colombia and Panama.
The European Union has already signed free trade agreements with South Korea, Colombia, and Panama. The EU-South Korea agreement came into effect in July.
Korea now has or is negotiating 13 free trade agreements involving 50 nations.
Canada concluded a trade agreement with Panama in 2010 and will gain preferential access to Colombia's market in August 2012.
Argentina and Brazil already have preferential access to the Colombian market.
We cannot afford to let our exporters lose market share to our competitors.
If we are left out, the U.S. Chamber of Commerce reports that we could lose up to 380,000 jobs and $40 billion in exports.
The best estimate is that these agreements will, in fact, create jobs.
According to the U.S. International Trade Commission, these agreements will create at least 70,000 U.S. jobs.
U.S. exports to South Korea will increase by $11 billion and raise U.S. GDP by $12 billion.
The Colombia trade agreement will increase U.S. exports by more than $1.1 billion and increase U.S. GDP by $2.5 billion.
U.S. exports to Panama grew by 41 percent in 2010 to $6.1 billion and will continue to rise with passage of the free trade agreement.
The Business Roundtable puts the number even higher at 250,000 jobs created with passage of the three agreements.
Let me speak to the effects these agreements would have on my home State of California.
As one of the 10 largest economic engines in the world with a $1.9 trillion economy, California is a leader in U.S. and global markets with products ranging from agriculture to high-tech products and manufacturing.
In 2008, approximately 60,000 California companies exported products abroad, with manufactured good exports supporting 738,000 California jobs.
South Korea, Colombia and Panama already represent growing markets for California exporters. In 2010, South Korea was California's fifth largest export market with exports totaling more than $8.1 billion, up from $5.9 billion in 2009. In 2010, Colombia was California's 34th largest export market with exports totaling $408.7 million--a 24- percent increase over the previous year.
In 2010, Panama, with a growth rate of 7.5 percent, was California's 42nd largest export market with exports totaling $252 million.
Passage of these agreements will provide important openings for California exports which will help create jobs.
According to Business Roundtable, more than 66 percent of California exports to Colombia will be duty-free after passage of this agreement, saving $27.2 million for California businesses and farmers, and more than 80 percent of California exports to South Korea will be duty free following implementation of the agreement, saving exporters $66 million.
In Panama, California high-quality beef, other meat and poultry products, soybeans, wines and most fresh fruit and tree nuts will become duty free upon enactment.
According to the California Chambers of Commerce Council for International Trade, California manufacturers will also gain significant access to the $5.25 billion Panama Canal expansion project as the agreement eliminates the 5 percent duty on construction equipment and infrastructure machinery. The project will ultimately reduce transportation costs for California exports.
Make no mistake, South Korea, Colombia and Panama represent significant opportunities for all U.S. exporters.
South Korea is our 7th largest trading partner, our 8th biggest export market and the 15th largest economy in the world.
The agreement represents the largest free trade agreement since the North American Free Trade Agreement, NAFTA.
While Colombia and Panama have smaller economies, they are both emerging trading partners. In 2010, U.S. exports to Colombia grew by 34 percent to $12 billion, while exports to Panama grew by 41 percent to $6.1 billion.
Again, export growth will lead to job growth.
Some critics of these agreements argue that benefits gained by lowering tariffs and nontariff barriers to U.S. exports will be offset by benefits gained by our trading partners.
The fact is, our trading partners already have substantial access to the U.S. market while our exports continue to face significant barriers.
Currently, the average Korean applied tariff on U.S. non-agricultural products is 7 percent. In contrast, the average U.S. tariff on Korean nonagricultural imports is 3.7 percent.
The average Korean applied tariff on U.S. agricultural products is 52 percent. The average U.S. tariff on Korean agricultural products is 12 percent.
Approximately 90 percent of Colombian exports and 98 percent of Panamanian exports enter the United States duty free under existing trade preference programs.
In contrast, over 90 percent of U.S. exports to Colombia face tariffs averaging 12.5 percent, and less than 40 percent of U.S. exports to Panama enter duty free with industrial exports facing an average tariff of 7 percent and agricultural exports facing an average tariff of 15 percent.
So, these agreements will only serve to enhance U.S. competiveness by leveling the playing field for our exporters and give them opportunities our trading partners already enjoy here in the United States.
And I know our manufacturers, farmers and service providers can compete and succeed against anyone.
Let me briefly discuss the key benefits of these agreements.
Upon enactment of the agreement with South Korea, approximately 95 percent of bilateral trade in industrial and consumer products will become duty-free within 5 years of the enactment of the agreement, including industrial and consumer electronic machinery, most chemicals, motorcycles and certain wood products. Most remaining tariffs will be eliminated within 10 years.
More than half of current U.S. agricultural exports to Korea will become duty free immediately, including wheat, feed corn, soybeans for crushing, hides and skins, cotton, almonds, pistachios, bourbon whiskey, wine, raisins, grape juice, orange juice, cherries, frozen French fries and pet food.
Approximately 80 percent of U.S. exports of consumer and industrial products to Colombia will be duty-free upon the enactment of the agreement. Most remaining tariffs will be removed after 10 years.
Both parties will grant certain farm products duty-free treatment immediately upon enactment of the agreement including high-quality beef, cotton, wheat, soybean meal, apples, pears, peaches, cherries and processed food products.
Colombia will phase out quotas and over-quota tariffs on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, soybean oil and rice within the next three to 19 years.
Over 87 percent of U.S. exports of consumer and industrial products to Panama will become duty free upon enactment of the agreement, with the remaining tariffs phased out within 10 years.
Panama will provide immediate duty-free access for more than half of U.S. agricultural exports including high-quality beef, poultry products, soybeans, cotton, wheat, fruits and vegetables, corn oil and many processed foods.
I understand the concern some of my colleagues have about the effects free trade agreements may have on domestic jobs.
While I firmly believe that past free trade agreements have an overall positive impact on the economy and job growth, there is no doubt that some Americans have lost jobs due to increased trade.
That is why I remain a strong supporter of the Trade Adjustment Assistance, TAA, Program, which has helped these American workers transition to new opportunities in emerging job markets.
TAA has proven to be a wise investment by ensuring that workers who lose their jobs remain productive and tax-paying members of our society, free of government assistance.
I am pleased that we voted to renew this critical program before the vote on the three trade agreements.
Now, I would like to address specific concerns raised about the agreements with Colombia and Korea.
Critics have argued that, given Colombia's weak labor laws and violence against labor leaders and union organizers, it should not be rewarded with a free trade agreement.
First, under the terms of the free trade agreement, Colombia has agreed to: reaffirm its obligations as a member of the International Labor Organization, ILO, and adopt and maintain in its laws and practice core labor rights and ILO labor standards; refrain from waiving or otherwise weakening the laws that implement this obligation in a manner affecting trade or investment; effectively enforce labor laws related to the fundamental rights, plus acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health; and ensure that workers and employers will have fair, equitable and transparent access to labor tribunals or courts.
All labor obligations are subject to the agreement's dispute settlement procedures.
Colombia in April also agreed to an action plan related to labor rights to prevent violence against labor leaders, prosecute antilabor violence and protect internationally recognized worker rights.
Among other things, this plan requires Colombia to: create a specialized Labor Ministry to improve the enforcement of labor rights; criminalize actions or threats that could affect fundamental workers' rights including the right to organize; eliminate the backlog of requests from union members for protection; expand the scope of a protection program for union leaders to additional labor activists and union organizers; assign 95 police investigators to support the prosecution of crimes against union members; double the number of labor inspectors by hiring 480 inspectors over the next 4 years including 100 new inspectors in 2011; and seek the assistance of the International Labor Organization to implement and enforce these pledges.
Colombia has met the first two deadlines for implementation of the action plan and I look forward to the successful completion of the remaining commitments.
There was also great concern about the auto provisions in the original 2007 U.S.-Korea Free Trade Agreement.
Currently, South Korea maintains an 8-percent tariff on U.S. autos. The United States maintains a 2.5-percent tariff on Korean autos and a 25-percent tariff on Korean trucks.
Under the 2007 agreement, South Korea and the United States agreed to eliminate their respective duties on priority passenger vehicles immediately, to phase out their duties on other cars over 3 years and to phase out their duties on trucks over 10 years. In addition, South Korea agreed to eliminate the discriminatory aspects of its special consumption and annual vehicle taxes; not impose any new engine displacement taxes and to maintain non-discriminatory application of its existing taxes; and address several other non-tariff barriers to ensure that they do not impede the market access of U.S. autos.
The U.S. auto industry and labor unions argued that the United States should not expand Korean access to the U.S. market until U.S. manufacturers are able to significantly increase their market share in South Korea and South Korea makes more concrete assurances that it will dismantle nontariff barriers.
President Obama responded to their concerns and secured additional concessions from Korea that will expand U.S. access to the Korean auto market.
Under the terms of the December, 2010 agreement the U.S. will keep its 2.5-percent tariff on Korean imports until the 5th year following enactment of the agreement while Korea will immediately cut its tariff on U.S. autos in half--from 8 percent to 4 percent--and fully eliminate the tariff in the fifth year; and the U.S. will keep its 25-percent tariff on trucks until the 8th year and eliminate it by year 10 while Korea will keep its original commitment to eliminate its 10 percent tariff on U.S. trucks immediately.
The agreement also contains new provisions to eliminate nontariff barriers to U.S. auto exports to Korea and increase protection against surges of Korean auto imports in the U.S.
I applaud the administration for listening to the concerns of U.S. automakers.
These additional provisions strengthen the overall agreement and will provide new benefits for U.S. autos in an expanding foreign market and create more jobs. Due to President Obama's efforts, the United Auto Workers union and U.S. automakers now support the Korea agreement.
In these difficult economic times, our constituents are sending us a clear message: they want Congress to focus on jobs.
In this effort, we should leave no stone unturned.
Expanding access for U.S. exports to the growing markets of Korea, Colombia and Panama will help create new jobs and increase economic growth.
I urge my colleagues to support these agreements.