As the new Congress convened this week, the California Chamber of Commerce shared its international trade priorities for the 114th Congress with members of the California congressional delegation, the President, Secretary of Commerce and U.S. Trade Representative.
In letters to these policy leaders, CalChamber reiterated its support for renewing the President’s authority to negotiate trade agreements, pending agreements with Pacific nations and the European Union, and the reauthorization of the U.S. Export-Import Bank.
Trade Promotion Authority
The CalChamber supports the extension of trade promotion authority so that the President of the United States may negotiate new multilateral, sectoral and regional trade agreements ensuring that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.
U.S. standing as a world leader depends directly upon its competitive success in the global economy. For the past half century, the United States has led the world in breaking down barriers to trade and in creating a fairer and freer international trading system based on market economics and the rule of law. Increased market access achieved through trade agreements has played a major role in the nation’s success as the world’s leading exporter.
Trade Agreements
The CalChamber urges support regarding pending regional and multilateral trade agreements. It is critical to consumers, workers, businesses, farmers and ranchers in the state that these job-creating trade agreements are negotiated and approved at a time when they are needed more than ever.
Trade agreements ensure that the United States may continue to gain access to world markets, which will result in an improved economy and additional employment of Americans.
Trans-Pacific Partnership
Leaders of the current 12 Trans-Pacific Partnership (TPP) countries have announced the achievement of the broad outlines of an ambitious, high-standard, regional, 21st century TPP Trade Agreement, of which the CalChamber is supportive. The TPP countries are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
According to a 2013 analysis supported by the Peterson Institute, a TPP agreement provides global income benefits of an estimated $223 billion per year, by 2025. Real income benefits to the United States are an estimated $77 billion per year. The TPP could generate an estimated $305 billion in additional world exports per year by 2025, including an additional $123.5 billion in U.S. exports.
The market size is nearly 800 million consumers with a combined gross domestic product (GDP) of $28.1 trillion in 2012 (39% of world GDP). In 2013, U.S. exports with the TPP members topped $699 billion and California exports were approximately $70.4 billion, according to the U.S. Department of Commerce.
The TPP Agreement is important as a vehicle for Trans-Pacific-wide economic integration. This regional agreement sets a high standard that will enhance the competitiveness of the countries that are part of it and help facilitate trade and promote investment between them, increasing their economic growth and development. Moreover, the TPP is reinforcing the Asia-Pacific Economic Cooperation goal of promoting regional economic integration and could serve as a potential way to build toward the Free Trade Area of the Asia-Pacific.
Transatlantic Trade
The trans-Atlantic economic partnership is a key driver of global economic growth, trade and prosperity, and represents the largest, most integrated and longest-standing regional economic relationship in the world. Together, the European Union and the United States are responsible for 11.5% of the world’s population, nearly half of global GDP, 30% of global merchandise trade, and 40% of world trade in services.
The trans-Atlantic relationship defines the shape of the global economy as a whole; either the European Union or the United States also is the largest trade and investment partner for almost all other countries.
According to the World Bank, the EU market represents 506.7 million people, and has a total GDP of $17.4 trillion. The United States has more than 316.1 million people and a GDP of $16.8 trillion.
Total bilateral goods trade between the European Union and United States was nearly $650 billion in 2013, with the United States exporting $262 billion worth of goods to EU member nations.
California exports to the European Union in 2013 totaled $28.2 billion. California is one of the top exporting states to Europe, with computers, electronic products and chemical manufactures as the state’s leading export sectors to the region. EU countries purchase roughly 17% of all California exports. For California companies, the single market presents a stable market with huge opportunity.
Tariffs on goods traded between the U.S. and the EU average less than 3%, but even a small increase in trade could have major economic benefits. U.S. trade with Europe is much larger than with China. Although there are numerous issues such as agricultural subsidies, privacy and aircraft subsidies, obtaining agreements on issues such as uniform car safety testing could be a huge benefit.
A free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP), could increase economic output in the long term, benefiting industries ranging from chemicals to automakers. EU-U.S. commercial links are unrivaled. Total U.S. annual investment in the EU is higher than in all of Asia, while EU investment in the U.S. far outstrips EU investment in India and China combined.
The CalChamber is supportive of Europe and the United States launching trade talks to deepen the world’s largest trading relationship with focus on trade and investment initiatives including:
• eliminating tariffs on trans-Atlantic trade in goods;
• establishing compatible regulatory regimes in key sectors to address regulatory divergences that unnecessarily restrict trade;
• a bilateral investment agreement;
• liberalizing cross-border trade in services, without exclusions; and
• bilateral expansion of government procurement commitments.
Export-Import Bank
The CalChamber supports the renewal of the Export-Import Bank of the U.S. (Ex-Im Bank) designed to assist in financing the export of U.S. goods and services to international markets. Ex-Im Bank enables U.S. companies—large and small—to turn export opportunities into real sales that help maintain and create U.S. jobs and contribute to a stronger national economy.
With 80 years of experience, Ex-Im Bank has supported more than $567 billion of U.S. exports, primarily to developing markets worldwide. In the 2013 fiscal year, Ex-Im Bank approved more than $27 billion in total authorizations to support an estimated $37.4 billion in U.S. export sales and approximately 205,000 American jobs in communities across the country. According to the Ex-Im Bank, in 2013 alone it supported nearly 400 California exporters for a total of $5 billion in sales.
In addition to supporting U.S. jobs, the Ex-Im Bank is a self-sustaining agency that operates at no net cost to the taxpayers. Ex-Im Bank pays for itself by charging fees or interest to its customers for loans, credit insurance and loan guarantees that they receive. In the past fiscal year, the Ex-Im Bank has generated more than $1 billion in excess revenue for U.S. taxpayers.
Failure to reauthorize the Ex-Im Bank, which is set to expire on June 30, 2015, would amount to unilateral disarmament in the face of other nations’ aggressive trade finance programs, putting billions of dollars in U.S. exports and thousands of U.S. jobs at risk.
CalChamber Position
The CalChamber supports expansion of international trade and investment, fair and equitable market access for California products abroad, and elimination of disincentives that impede the international competitiveness of California business.
Detailed information vital to the businesses that make California one of the largest exporting states in the nation and one of the largest economies in the world is available on the international trade section of the CalChamber website: www.calchamber.com/international.
