The Ex-Im Bank and Trade Promotion Authority are essential for U.S. global competitiveness. Congress and the administration need to recognize it, and act.
The more than 256,000 manufacturers in the United States increasingly participate and compete in a global economy that presents enormous opportunities for new growth. But they’re also confronted with big challenges that are accentuated by foreign governments that don’t always play by the rules and are much more active in seeking to open markets for their industries.
It’s no secret that to reach their full potential and create and sustain jobs here at home, manufacturers in the United States need better access to the 95 percent of the world’s population and the more than 70 percent of the world’s purchasing power beyond our borders. Global trade in manufactured goods is enormous — reaching nearly $12 trillion in 2013, nearly three times the amount of U.S. consumption of manufactured goods.
There’s tremendous untapped opportunity for our manufacturers in overseas markets — from infrastructure, machinery and transportation equipment to food, personal care, pharmaceutical and other consumer products. Growing economies around the world, particularly in Asia, are providing fresh new opportunities for our manufacturers to invest and engage in growth-producing activities that support a strong U.S. manufacturing base and jobs that are higher-paying, particularly when connected to exports.
Yet America only supplies 9 percent of the manufactured goods traded overseas. Most foreign markets are much more closed to U.S. products than the generally open U.S. market. And many governments are much more aggressively negotiating trade agreements and providing their exporters with export credit assistance and other tools that are increasingly disadvantaging and harming manufacturers in the United States.
At the National Association of Manufacturers, we are calling on the Obama administration and Congress to embrace a robust manufacturing U.S. trade policy that will open markets, level the playing field overseas, improve the competitiveness of manufacturers in the United States and ensure all countries play by the rules.
Two of the greatest competitive imbalances in the global economy could and should each be addressed early this year by Congress and the administration working together on the long-term reauthorization of the Export-Import (Ex-Im) Bank and the renewal of Trade Promotion Authority (TPA) legislation that is critical for the United States to reach strong new trade agreements.
The Ex-Im Bank helps small businesses grow — and add American jobs – by helping them get a foothold in emerging markets. It also bolsters the country’s global competitiveness by financing U.S. exports from thousands of largely small businesses in the United States, often as a partner to private sector lenders.
Last year, Congress passed an extension of the Ex-Im Bank’s charter through June. But this short-term solution is not sufficient. U.S. exporters and their customers need more certainty to operate effectively and competitively in the global economy — especially when more than 60 foreign export credit agencies from other countries are working every day to win sales for their domestic producers.
As our research shows, just nine of our major trading partners are providing nearly half a trillion dollars annually in official export credit support — more than 18 times the level of Ex-Im financing — to our competitors overseas. Without the long-term reauthorization of the Ex-Im Bank, U.S. manufacturers will be forced to forfeit opportunities for substantial growth to competitors from these countries.
Also critical is the enactment of new TPA legislation. This longstanding and proven cooperation between Congress and the executive branch enables the United States to conclude and implement trade agreements that open new overseas markets and level the playing field abroad for manufacturers and their employees in the United States.
Since TPA was last renewed in 2002, U.S. manufactured goods exports have more than doubled. But time is of the essence. Other major economies are negotiating dozens of agreements that could put manufacturers and workers in the United States at a significant competitive disadvantage. Manufacturers in the United States now face steeper trade barriers abroad than our competitors in most major countries — largely because we have taken a back seat to concluding new trade deals.
U.S. trade agreements include strong commitments that eliminate barriers, ensure fairness and help manufacturers better compete overseas. Taken together, America’s 20 existing free trade agreement partners buy 13 times more manufactured goods from the United States than other countries. While these countries represent just 6 percent of the world’s consumers and less than 10 percent of the global economy, they purchased nearly half of all U.S. manufactured goods exports in 2014. But if Congress does not move expeditiously to pass TPA, our manufacturers and workers will be forced to sit on the sidelines while other countries negotiate deals that exclude us.
The United States achieved a record level of $1.38 trillion in manufactured exports last year and also reached an all time high in manufacturing output of $2.08 trillion. But we can and must do much better if America is going to expand manufacturing and jobs here at home over the long term. The administration and Congress must make a robust, pro-growth trade agenda a priority. Sitting on the sidelines is simply not an option.
Watch Wednesday’s Ex-Im Bank event, Keeping Our Edge: Jobs, Exports and Global Competitiveness, here.
(Top image: Courtesy of Thinkstock)
This piece also appears in Republic 3.0.
Linda Dempsey is the Vice President of International Economic Affairs at the National Association of Manufacturers (NAM).