Message To Congress: Trade Pacts Create Jobs

The U.S. has been left behind as America’s trading partners continue to charge ahead with trade agreements. And much to the detriment of the American worker, the U.S. seems unwilling to catch up. American allies and competitors understand that to expand business opportunities abroad they must negotiate and enact bilateral and regional trade agreements, and are doing so at a record clip.

Earlier this month, Canada and Colombia put their free trade agreement into effect, allowing 80% of Canadian goods to enter Colombia tariff-free. Meanwhile, the price of U.S. goods en route to Colombia is inflated 15-50% at the border. Similarly, the European Union and South Korea’s FTA went in to effect at the beginning of July, amongst other examples.

Even the World Trade Organization (WTO) has begun to recognize that preferential trade agreements (PTAs) are the dominant factor in global trade. The WTO strongly preferred multilateral trade agreements and has viewed bilateral and regional agreements as discriminatory and detrimental to the global trade order. Tellingly, the WTO’s 2011 World Trade Report focused on synthesizing PTAs with multilateral trade rather than solely on promoting multilateral trade agreements. In the foreword to the World Trade Report, WTO Director-General Pascal Lamy wrote, “In the last two decades, the number of PTAs has increased more than four-fold, to around 300 active agreements today. There is no reason to assume that PTAs will cease to grow in number or that they will not form part of the long-term tapestry of international trade relations.”

Unfortunately, the world’s largest economy is locking itself out of those agreements. Congress does not seem to appreciate the importance of stimulating exports to job growth. The pending free trade agreements (FTAs) with Panama, Colombia (both signed in 2006), and South Korea (signed in 2007) remain unratified. The U.S. Trade Representative has made commendable progress in sending the agreements to Congress, but Congress has failed to move the bills forward, largely due to the insistence from congressional Democrats to tie the FTAs to the Trade Adjustment Assistance (TAA) jobs program. The FTAs are of too great importance to American job creation to let them get bogged down in political gamesmanship. It is no wonder U.S. exports fell 2.3% to $170.9 billion last month despite a weak U.S. dollar, contributing to the widest U.S. trade gap since October 2008.

As both parties try to convince American voters that they have a practical plan to shrink our nearly 10% unemployment rate, the voters should remember that 95% of the world’s consumers live outside our borders. PTAs, whether bilateral or regional, offer U.S. companies the opportunity to do what they do best – compete. There are significant opportunities for growing our share of international trade on the horizon. In addition to enacting the pending FTAs, we must continue to engage with the Trans-Pacific Partnership and other on-going negotiations, and then commit to ratifying those agreements. The American worker cannot afford to let Congress and the White House do otherwise.

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