"We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores."
--President Obama, State of the Union 2010
In his State of the Union address, President Obama set an ambitious goal of doubling exports over the next five years. According to the President, this could support two million jobs here in the United States.
While I don't always see eye to eye with the President about how to create jobs, I agree with him that we need to break down barriers and encourage American farmers and businesses to send more of our goods abroad. Freer trade isn't the sole solution for our economic problems, but it is an important part of getting Americans working again.
We can start with ratifying trade agreements with the three nations President Obama mentioned in his State of the Union: South Korea, Colombia and Panama.
As the President noted, our competitors are not sitting idle, they are looking to break down barriers and get into markets before the United States acts. The European Union and South Korea have initialed a trade agreement that could be approved later this year. This agreement could create more than $20 billion in new trade for European Union countries.
In 2007, the United States concluded its agreement with South Korea, but Democratic Congressional leaders have refused to bring the agreement to a vote. This agreement could create $10 billion in new trade for the United States.
If the European Union approves its agreement first, their industries will have an early advantage. Waiting for another three years could significantly decrease the impact of signing a free trade agreement with South Korea.
Locally, a free trade agreement would be good news for dairy farmers. The U.S. Trade Representative estimates that the three agreements waiting in Congress could mean 100 million new customers for dairy farmers. The National Milk Producers Federation estimates that the deal with South Korea could be worth an average of $380 million a year. Even for the much smaller nation of Colombia, a trade deal would bring an additional $25 million to the dairy industry.
There are always concerns that reduced trade barriers could lead to a net loss of jobs. However, analysis of these specific trade deals shows that the United States would benefit. The U.S. International Trade Commission estimated that U.S. exports of goods to South Korea would increase by nearly $10 billion, while imports would increase by approximately $6.4 billion. We would be selling more goods than we would be buying, reducing our overall trade deficit.
Our hard hit car industry would benefit from greatly reduced tariffs on autos. Currently, very few American cars are sold in Korea, while Korean producers such as Kia and Hyundai have made major moves into the U.S. market. Leveling the playing field will help make up that current imbalance.
The USITC estimates that both the Panama and Colombia free trade deals would also be a net benefit to the United States economy, increasing exports more than imports. At the same time, the Colombia agreement could assist a country that is partnered with us in the fight against drugs and which has made great strides in defeating the communist insurgency in their country.
Each of these three bills is currently awaiting Congressional approval. I hope President Obama will soon make a decision on whether to push for the current agreements. If he has concerns, he should act quickly to modify the agreements.
As he noted in the State of the Union, we must be aggressive in opening up new markets. I think he will find bipartisan support for these agreements, and we should not pass up this opportunity to create new jobs.