Capitol Comment - Free and Fair Trade

FREE AND FAIR TRADE

What do Chile and Singapore have in common? The first nation is in South America; the second is halfway around the globe in Asia. Chileans speak Spanish; the language of Singapore is Mandarin. Fifteen million people live in Chile, while Singapore has only four million. Until recently these countries shared little. But this summer they became the most recent countries to engage in free trade agreements with the United States, an exclusive group of nations destined for economic prosperity.

The agreements were the first to be signed under the Trade Promotion Authority (TPA) enacted by Congress last year.
TPA gives the president the ability to negotiate trade agreements Congress can accept or reject, but not modify.
Unfortunately, TPA lapsed in 1994 and was not renewed. As a result, trade negotiation has remained stagnant for nearly a decade. While other nations built partnerships, America largely sat on the sidelines as an observer. Foreign governments did not want to waste effort crafting a complex and far-reaching agreement, only to see it altered in the initial stages. Our economy - and our workers - suffered.

The Chile and Singapore agreements signaled an end to that era. This trade legislation was an important step to promote economic growth, bring lower prices to consumers and create jobs in America.

An Environment for Economic Growth

Trade is essential to our current and future prosperity. Texas exports everything from computer and electronic products to rice. The absence of favorable trade agreements imposes an invisible tax that Americans pay every time we shop, whether we buy tennis shoes or tractors. Economists predict that reducing tariffs by one-third would boost the U.S. economy by $177 billion each year. That's an average savings of $2,500 a year for a family of four.

Trade jobs are high paying jobs. One in 10 Americans work in industries that depend on the export of goods and services.
Accounting for more than one quarter of all U.S. economic growth in the 1990s, export jobs pay wages approximately 13 to 18 percent higher than the national average. Clearly, opening markets for American businesses creates employment here at home. And export opportunities are not only beneficial for large companies. Small business is the backbone of our nation's economy, creating three out of every four jobs and producing one-half of the U.S. gross domestic product. To stay at the forefront of innovation, small businesses need access to global markets and a level playing field. Free and fair trade provides that and more.

It also creates opportunities for farmers and ranchers - especially important for Texas, the nation's third largest agriculture exporting state. Texas' number one agricultural export is live animals and red meats, totaling more than $800 million annually. As the nation's number one cotton exporter, Texas exported 1.5 million bales in a single year to Mexico alone.
And when it comes to feed grains and products, Texas ranks seventh. One in three U.S. farmers plant for exports, and they will ship an estimated $54.5 billion overseas in agricultural products and crops this year. That means more jobs here at home and growing markets for our products.

Western Hemisphere

Our global standing is increasingly reliant on the economy of the Western Hemisphere, and political stability is largely dependent on economic factors as well. Unfortunately, the slowdown in the U.S. has trickled down throughout Central and South America, threatening fledgling democracies. Building and establishing trade relationships with our neighbors is critical.
If our Hemisphere is economically viable everybody wins. The North American Free Trade Agreement, NAFTA, opened the doors for free and fair trade in the northern part of our hemisphere. In fact, of the 233 destinations for Texas exports, more than half go to Canada and Mexico as a result of NAFTA. The agreement with Chile is our first with a South American country, but certainly not the last.

The Next Round

Free and fair trade agreements with Australia, the Dominican Republic, Bahrain, Morocco and a number of nations in
Central and South America, as well as in Southern Africa, are in the works. Soon, doors will be open a little wider on all the earth's continents, helping to expand foreign markets and strengthen our nation's economy. By extending our global reach, we will share the fruits of democracy and continue to be the beacon of freedom for the world. And our country and our people will be richer for it.