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Public Statements

International Trade

Floor Speech

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Location: Washington, DC

Ms. LANDRIEU. Madam President, I come to the floor today to speak on an issue that is of great importance to my home State of Louisiana: international trade. From its founding, Louisiana has been a hub for trade and entrepreneurship. In fact, the French explorer Bienville chose the site for the city of New Orleans in 1718 because, at a crescent bend in the Mississippi River, it is close to the Gulf of Mexico but safe from tidal waves. President Thomas Jefferson later made the Louisiana Purchase in 1813 to increase opportunities for U.S. traders and protect U.S. access to the Port of New Orleans. Ever since then, Louisiana and the Mississippi River have been the gateway to the economic heartland of the United States. For example, 60 percent of all grain exported from the United States is shipped via the Mississippi River. It is also a little known fact that the Port of New Orleans imports more steel than any other port in the country. This crucial port sees more goods leave its docks each day than almost anywhere in the Nation. Studies have found that the Port of New Orleans pumps $882 million into the Louisiana economy and helps sustain more than 160,000 jobs. The reality is Louisiana's ports are America's ports and the gateway to the world. There are 31 ports in the State of Louisiana and some of the busiest in the world in terms of gross tonnage. Five of the 31 ports in Louisiana, from the Gulf of Mexico to Baton Rouge, are deepwater ports. We are home to 5 of the country's top 13 ports, exporting more than $40 billion in goods last year alone and making Louisiana the fourth largest exporting State in the country. Louisiana sends everything from sugar to oil to more than 200 countries worldwide. Port Fourchon supports infrastructure that provides 18 percent of the Nation's entire oil supply. The Port of South Louisiana exports more than any other port in the country. When combined with the nearby Port of New Orleans, these ports form the fourth largest port system in terms of volume handled. Today New Orleans hosts an Australian Trade Office, a Mexican Consulate, a French Consulate, and countless honorary consuls. For all of these reasons, I do all I can here in the U.S. Senate to promote exports from Louisiana. These exports mean jobs in my State--from the suppliers, to the manufacturers, to the shipping companies, to the port workers.

I support the trade promotion agreements with Colombia, South Korea, and Panama. This is because I believe that these agreements are fair and present excellent opportunities for Louisiana companies. Since coming to the Senate in 1996, I have been a strong supporter of free trade. However, my first priority is our local businesses and workers in Louisiana. For example, I voted against the Central American Trade Promotion Agreement in 2005. I voted against this agreement because I did not feel that the agreement was fair. Free trade requires that all players operate on as level a playing field as possible--accountable to the same labor laws, environmental standards, and governmental intervention.

A main reason that I am able to strongly support these three agreements is that the Congress just passed the extension of the Trade Adjustment Assistance, TAA, Program. Congress created TAA in 1962 to help workers and firms adjust to dislocation that may be caused by increased imports. The program assists workers who lose their jobs or whose hours of work and wages are reduced as a result of imports. In 2010 alone, 12 TAA petitions were certified in Louisiana, providing almost $5 million in Federal funds, and most importantly, assisting 1,309 workers.

An example of a key business that benefitted from TAA is the Georgia Pacific plywood plant in Logansport. Georgia Pacific was the largest employer in Logansport and in October 2007 it announced that it was immediately closing its local plywood operation, putting 280 employees out of work. The Department of Labor determined an increase in imports contributed to the plant closure, making these workers eligible for TAA benefits. Furthermore, in November 2008, over 500 workers in Bastrop were laid off because of the closure of the International Paper Mill. I worked closely with U.S. Representative Rodney Alexander to secure TAA assistance for these workers in 2009. These workers in Logansport and Bastrop are but two examples of how important this program has been in assisting workers in Louisiana impacted by increased imports.

In terms of the pending trade promotion agreements, in my view, Colombia presents the most economic opportunities for Louisiana businesses. Colombia is a fast-growing market of 45 million consumers. This makes it the second largest country in Latin America and the third largest economy in the region. It purchases more U.S. products than Russia, Spain, Indonesia, or Thailand. The United States is also Colombia's largest trading partner in terms of exports and imports. Two-way trade between the countries accounted for more than $28 billion.

While these figures sound promising for U.S. exports to Colombia, they do not tell the whole story. In order to keep competing for Colombia's consumers, we must view trade with Colombia as a marathon, not a sprint. The United States is Colombia's top supplier today but China is closing fast on our heels. China has increased its share of the Colombian market sixfold in the last 10 years. Imports from China increased 47 percent in 2010, compared to the previous year. At the current pace, China will displace the United States as Colombia's main trading partner in less than a decade. For my part, I do not intend to concede the race before it is won. Colombia has long been one our closest allies in South America and is making great strides in curbing decades of violence caused by drug cartels, paramilitaries. To concede the Colombian market to China after years of cooperation on economic and strategic interests is unwise. It is particularly unwise and shortsighted as Colombia is an emerging market close to our shores. Colombia has also recently signed agreements with Canada, the European Union, and South Korea that present challenges to U.S. companies competing in the country. Other countries are not standing still on trade opportunities with Colombia and neither should the United States.

As of 2010, Colombia was Louisiana's 12th largest export market with $727 million in exported goods. This is down from highs of $856 million in 2007 and $1.5 billion in 2008. The decline in exports is attributed in large measure to a reduction in U.S. agricultural market share in Colombia since 2008. U.S. farmers saw their market share decrease from 46 percent in 2008 to 21 percent in 2010. The reduction stems in part from Colombian agreements with other countries, such as Argentina and Brazil as well as tariffs on U.S. goods as high as 20 percent. Tariffs result from the absence of a bilateral trade promotion agreement, TPA, between the United States and Colombia. That is a major reason I believe the Colombian Trade Promotion Agreement can benefit Louisiana.

According to the U.S. Department of Agriculture, Louisiana is currently the third largest exporter of rice in the United States with $136 million in total rice exports. However, U.S. rice exports to Colombia currently face tariff rates from 5 to 20 percent. Under the TPA, Colombia will establish a 79,000-ton, zero-duty rice tariff rate quota, TRQ, that will grow 4.5 percent annually for 19 years. Louisiana rice exports to Colombia could increase by more than $3.2 million per year. Funds from companies bidding on rights to export rice to Colombia duty free will go to research boards in the six biggest rice production States, including Louisiana. This is estimated to be as much as $10 to 12 million per year.

As with other agricultural products, since 2008, U.S. soybean exports were down significantly to Colombia as the United States lost market share in the country and tariffs ran as high as 20 percent. In 2010, the United States exported $103 million of soybeans and soybean products. This was a 21-percent drop in U.S. soybean exports from 2009 to 2010 and followed a 51-percent drop from 2008 to 2009. Under the TPA, Colombia will immediately eliminate duties on soybean imports from the United States. Colombia will also establish a 31,200-ton, zero-duty rice tariff rate quota for crude soybean oil that will grow 4.5 percent annually. Louisiana soybean exports to Colombia could increase by more than $600,000 per year. Lastly, the country will also phase out its 24-percent tariff for refined soybean oil over 5 years.

Furthermore, in 2010, the United States exported $100 million of cotton to Colombia. Under the TPA, Colombia will immediately eliminate duties on cotton. Louisiana cotton exports to Colombia could increase by more than $710,000 per year. This provides duty-free opportunities for Louisiana cotton producers to gain a new partner to spin, cut, and sew our Louisiana cotton for textiles instead of exporting raw cotton to China. This could provide a double benefit to the U.S. economy as our cotton exports to Colombia are used in many apparel items that Colombia then exports back to the U.S. market.

Outside of agricultural products, there are also benefits to other industries in Louisiana from increased opportunities in Colombia. For example, according to the U.S. International Trade Commission, the TPA will result in an annual increase of 23 percent, to $1.9 million, in U.S. exports in chemical, rubber, and plastic goods to Colombia. Why is this important to Louisiana? As you may know, Louisiana hosts 90 major chemical plants and 300 petrochemical manufacturers that directly employ 27,000 skilled workers. The State supplies infrastructure required for world-class manufacturing combined with the necessary service providers--more than 1,000 Louisiana service companies support the petrochemical industry. From 2008 to 2010, 15 percent of the $937 million in goods exported to Colombia consisted of chemical products. Colombian tariffs on Louisiana chemical exports range as high as 20 percent. Under the TPA, 86 percent of U.S. chemical exports would immediately receive duty-free treatment. This will significantly help Louisiana chemical companies looking to export to Colombia.

Next, under the TPA, Colombia will immediately eliminate its tariffs on 75 percent of U.S. plastics exports. An example of how this benefits one Louisiana product is that the State exported almost $6 million worth of polyethylene, a plastic widely used in packaging materials, to Colombia in 2010. This product would see almost $900,000 in duty savings.

Louisiana companies in the oil and gas machinery and services industries also stand to benefit greatly from the TPA. According to the ``Oil and Gas Journal,'' Colombia has 1.9 billion barrels of proven crude oil reserves in 2011, the fifth largest in South America. These reserves are expected to increase with the exploration of several new blocks that were auctioned in 2010. The Energy Information Administration projects that Colombian oil production will surpass the 1 million barrel per day mark during the third quarter of 2012. Also, as of 2010, there were natural gas reserves in Colombia of 4 trillion cubic feet. Because of the huge potential of these reserves, the Colombian Government has made oil and gas exploration and production a top priority.

Currently, Louisiana companies exporting oilfield equipment to Colombia face tariffs of 10 percent or higher. They also face growing competition, with 11 percent of the market in 2009 from Chinese companies at lower costs, but lower quality and reliability in relation to U.S. products. Under the TPA, Colombia will immediately eliminate tariffs on 52 percent of U.S. energy equipment exports. Tariffs on an additional 6 percent of exports would be eliminated after 5 years and the remaining 42 percent would be eliminated after 10 years. This allows our highly skilled oilfield companies in Louisiana to get more of their quality products into the Colombian market at lower prices.

I also understand that the U.S.-Colombia Trade Promotion Agreement includes strong protections for workers rights. These protections were strengthened further this year by a labor action plan agreement between President Obama and President Santos. The concerns this plan addresses are: violence against Colombian labor union members, inadequate efforts to bring murder suspects to justice, and insufficient protection of workers rights in Colombia. The action plan included major steps that the Colombian Government had to undertake before the trade promotion agreement would enter in force. Key to these reforms included the creation of three ministries: Labor, Justice and Housing. The new Labor Ministry will be responsible for implementing programs to protect labor rights. I also believe that the Colombian Government's efforts to turn the tide on the long-running terrorist insurgency will promote long-term stability in Colombia and the region. This is because a great deal of the violence seen in Colombia over the past decades was fueled by drug money funneled to paramilitary groups and criminal organizations. As the Colombian Government has recovered more control over its territory and demobilizing these groups, it is seeing increased security, social progress and economic growth.

I have presented facts and figures, but let me give you an example of a Louisiana company that has already had success in Colombia. Textron Marine and Land Systems, based in New Orleans, manufactures armored personnel carriers and armored security vehicles. They are four-wheeled vehicles that have multiple layers of armor to defend against small arms fire, land mines, and explosive devices. Both of these vehicles have an impressive track record around the world and are vital to the U.S. and coalition forces in Iraq and Afghanistan. Textron builds these vehicles for the U.S. Army at their plants in eastern New Orleans and Slidell.

With the help of the U.S. Foreign Commercial Service, Textron was able to secure a $45.6 million contract in 2009 to provide 39 armored personnel carriers for the Colombian Army. These vehicles were delivered to the Colombian Army and see daily service throughout the country protecting their soldiers. Not only did these exports help promote peace and security in Colombia, but they allowed Textron to maintain its workforce and continue the vehicle line into the future. Textron was so successful with this first order that Colombia has requested another 38 armored security vehicles. The combined value of both contracts is more than $80 million. In addition to these vehicles, Textron is working closely with the Colombian Government to create a Center of Excellence for vehicle maintenance in the country. This center would develop maintenance and supply systems to cover all the Colombian armored security vehicles with the potential to cover all other vehicle fleets owned by the government. The company also helped lead a 2009 trade mission of 12 Louisiana companies to Colombia. I applaud Textron, as well as our local U.S. Foreign Commercial Service staff in New Orleans, for promoting these exports in Colombia. Textron is a great example of a Louisiana company that has not just succeeded in tapping this market--they continue to succeed in Colombia. Under the trade promotion agreement, I am optimistic that more Louisiana companies will be able to follow in Textron's successful footsteps.

In regards to the South Korea Trade Promotion Agreement, this is another promising, high-growth market for U.S. companies. Korea has an economy at close to $1 trillion and is the eighth largest trading partner of the United States. Korea's economy grew 5.8 percent in the second quarter of 2010 and the International Monetary Fund expects it to grow by 6.1 percent in 2010. There also is currently a trade deficit between Korea--$11 billion in 2009. The trade promotion agreement is estimated by the International Trade Commission to improve the trade balance with Korea by $3.3 billion to $4 billion. Lastly, I am aware that as in Colombia, the European Union, EU, signed a trade promotion agreement with South Korea on July 1, 2011. This agreement eliminated 98.7 percent of the Korean tariffs on EU products. U.S. companies are now at a sharp competitive disadvantage in this growing market. We used to be Korea's top trading partner but now have taken a backseat to China, Japan, and the EU. Over the last decade, China's market share increased in Korea from 7 percent to 18 percent alone while U.S. market share flipped from 21 percent to 9 percent. So this is another instance where inaction on a bilateral agreement could cost the United States dearly on Korean market share, missed export opportunities, and most importantly, lost job opportunities here at home.

Overall, I note that Korea bought $3.9 billion in agricultural products in 2009, making Korea our fifth largest agricultural export destination. This is despite the fact that Korea's tariffs on imported agricultural products average 54 percent, compared to the average 9 percent levied by the United States on the same type of imports. According to the American Farm Bureau Federation, exports by American's ranchers and farmers to Korea will increase by almost $1.8 billion every year under the agreement. This is attributed to increases in exports of grain, oilseed, fiber, fruit, vegetable, and livestock products.

Louisiana farmers stand to benefit greatly from these reductions in agricultural tariffs in Korea. For example, as the agreement eliminates tariffs and other barriers on most agricultural products, this increases export opportunities for Louisiana cotton, beef and soybeans. I have heard from my soybean farmers in Louisiana that they have tried in the past to develop a market in Korea, but have had difficulty. They are optimistic that the agreement will help efforts to establish a market in Korea--particularly with getting soybean products into Korea's livestock industry.

One company that should benefit from the Korea Trade Promotion Agreement is Pontchartrain Blue Crab. As you know, Korea is the fifth largest market for U.S. fish and fish product exports. Gary Bauer, owner of Pontchartrain Blue Crab, PBC, has been in the blue crab fishery for nearly 29 years. He began working in the industry as a commercial fisherman in 1979, where he worked part time to support his family. Mr. Bauer then established a seafood dock to service fishermen from Lake Pontchartrain. Pontchartrain Blue Crab has grown from 4 employees to now more than 70 employees.

In 2002, PBC was able to create a blue crab processing plant located in Slidell, LA, which then allowed the company to pasteurize crab into exportable containers. Like other businesses in south Louisiana, however, it had to rebuild its facilities following Hurricane Katrina. With assistance from the Small Business Administration, SBA, Mr. Bauer and his company were able to export into the Korean market. Their success in Korea has encouraged PBC to also look into expanding into the European market in the near future. So although PBC is already in the Korean market, reductions in Korean tariffs offer new opportunities for the company.

There are also benefits to nonagricultural businesses from this trade promotion agreement. One area that will greatly assist Louisiana companies is reductions on tariffs on chemical exports. Currently chemical product exports accounted for an average of $360 million per year of Louisiana's exports to Korea between the years of 2008 to 2010. However, Korean chemical tariffs average 6 percent but can run as high as 50 percent. As such, U.S. exporters of chemicals and related products, including chemicals, organic chemicals, plastics, and fertilizers will see significant reductions in tariffs on their exports to Korea. First, 50 percent of U.S. chemical exports will receive duty-free treatment immediately after the agreement enters into force. The remaining tariffs will be phased out over 10 years. Tariffs on such products as silicon and plastics will also be eliminated immediately.

The third trade promotion agreement is with Panama. It is my understanding that Panama is already a great market for U.S. exports, even with an uneven playing field. U.S. products entering Panama are subject to tariffs, but most products from Panama receive duty-free treatment when entering the United States. The trade promotion agreement will encourage further expansion and diversification of U.S. exports in the country. With a major expansion of the Panama Canal, a huge subway project in Panama City and development of the world's fifth largest copper mine underway, the opportunities ahead for U.S. companies in Panama are significant. By entering into a bilateral agreement with Panama, the United States also ensures that our companies can compete for contracts on the $5.25 billion Panama Canal expansion project. EU and Canadian companies currently have the inside track on these contracts because of their bilateral agreements with Panama.

In terms of Louisiana, agricultural exports to Panama stand to benefit greatly from the trade promotion agreeement. While the benefits for the Louisiana rice industry as not as great as with Colombia, duties on U.S. rice exports will be phased out over 20 years. There will also be two separate tariff rate quotas established--one for rough rice and one for milled rice. The milled rice TRQ in year one of the agreement is 4,240 metric tons and will increase 6 percent each year before becoming duty free in year 20. This TRQ qill allow for improved access for Louisiana milled rice starting in the agreement's first year of implementation. As I have indicated before, in 2010 Louisiana exported $427 million in soybeans and soybean products abroad. The Louisiana soybean industry will also see Panama lock in its current zero-tariff treatment for soybeans and soybean meal after the agreement is implemented. Panama is a smaller market than Korea or Colombia but the country's geographic proximity to Louisiana presents unique opportunities for our companies.

With that in mind, let me give you an example of a Louisiana company currently working in Panama. Baker Sales Inc. of Slidell, LA, is a small business that distributes imported steel tubing and fencing. When construction slumped during the recession, so did demand for steel products. They saw their sales drop 20 percent last year when oil/gas contractors pulled orders after the Deepwater Horizon disaster. For 30 years, Baker Sales has imported steel products and sold them to customers largely within a 200-mile radius of Slidell. The company has always wanted to export--particularly recently as they identified opportunities in Panama, where South American immigrants are moving in, necessitating new housing developments and high-rises.

President Robert Baker paid $800 for U.S. Commercial Service's Gold Key Service last March. He met with a dozen potential clients in Panama over 2 days and one developer he met is interested in ordering $100,000 aluminum fencing. Thanks to the higher loan limits authorized by the Small Business Jobs Act passed by Congress last year, Baker Sales Inc. received a $3 million U.S. Small Business Administration 7(a) loan that will help them expand their business by facilitating export transactions with buyers in Panama. They immediately hired two more employees because of the loan. As sales to Panama increase--and potential sales to South Korea materialize--the company expects to hire more employees.

In closing, as chair of the U.S. Senate Committee on Small Business and Entrepreneurship, I am aware that cash registers are not ringing like they used to for our small businesses around the country. For this reason, exporting has become a practical solution for small businesses looking to survive and grow. Small businesses across the country have not only used exporting to weather the economic storm, they have proven that what helps our entrepreneurs helps our entire economy. According to the U.S. Department of Commerce, U.S. exports supported an estimated 9.2 million jobs in 2010--up from 8.7 million in 2009. Furthermore, for every billion dollars of exports, over 5,000 jobs are supported. As our country digs out of the economic crisis, helping more small businesses export for the first time and current exporters reach new countries, should be a top priority. I believe that small businesses can lead us out of this recession by creating new and higher paying jobs and lessening this trade deficit. These three trade promotion agreements will further promote small business exports and help our companies compete in these growing markets.


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