Testimony by the U.S. Trade Representative before congressional finance committees reveals points of agreement with California Chamber of Commerce international trade goals.
“It’s clear, more exports means more good jobs and more jobs are dependent upon exports than ever before,” U.S. Trade Representative (USTR) Michael Froman told the U.S. Senate Finance Committee and the U.S. House Ways and Means Committee.
2015 Trade Agenda
As Ambassador Froman explained to the Senate Finance Committee, the Obama administration’s 2015 trade agenda is focused on expanding opportunities to export more Made-in-America products, support jobs at home and create economic growth by opening overseas markets and leveling the playing field for American workers, farmers and businesses.
In the last four years, the increase in U.S. exports has supported 1.6 million more good jobs, which typically pay 13%–18% more on average than jobs not related to exports.
Main priorities for the USTR are to:
• Lead the administration’s effort to secure Trade Promotion Authority (TPA) with bipartisan support;
• Make significant progress to bring home high-standard trade agreements, including the successful conclusion of the Trans-Pacific Partnership (TPP); and
• Advance the Transatlantic Trade and Investment Partnership Agreement (TTIP).
CalChamber Trade Priorities
Earlier this month, the CalChamber sent a letter to President Barack Obama, Secretary of Commerce Penny Pritzker, the U.S. Trade Representative Froman, and the California congressional delegation reiterating CalChamber support for the same priorities Ambassador Froman mentioned in his testimony.
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.
Renewing TPA “makes it clear to our trading partners that the Administration and Congress are on the same page negotiating high standards in our trade agreements,” Ambassador Froman said.
Leaders of the current 12 Trans-Pacific Partnership countries—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam—have announced the broad outlines of an ambitious, high-standard, regional, 21st century Trans-Pacific Partnership Trade Agreement, of which the CalChamber is supportive.
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 Trans-Pacific Partnership 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.
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 could increase economic output and GDP 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.
Building on U.S. Exports
In 2014, the USTR built on record-breaking exports, market opening initiatives, intensive engagement, and trade enforcement to achieve strong results for America’s economy, according to Froman. He cited data such as the unemployment rate dipping to 5.6% and the creation of more than 200,000 jobs per month. Those jobs include a gain of 786,000 new manufacturing jobs over the last five years. Manufacturing exports have grown by 9% a year on average. Total U.S. exports have grown by nearly 50% and contributed nearly one-third of economic growth since the second quarter of 2009.
“Done right, trade policy unlocks opportunities for Americans,” Ambassador Froman said. “Done right, trade policy promotes not only our interest, but our values. And it gives us the tools to make sure others play by the same values as we do. The United States is an open economy and our borders are already open to trade. But other countries still erect real barriers to our exports.”