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3 New Foreign Trade Pacts Are All About Jobs


Location: Washington, DC

In a significant long-term boost for the economy, Congress has just approved three free-trade agreements with Colombia, Panama and South Korea.

While the pacts were negotiated by the Bush administration, they were endorsed by President Obama and passed both the House of Representatives and Senate with strong bipartisan majorities.

It's all about jobs. The Obama administration estimates these agreements could result in the creation of 250,000 good-paying jobs for Americans.

Trade is not a zero-sum game. When two countries negotiate agreements to lower tariffs and reduce protectionist regulations, they expect to come out ahead as a result of the discipline that comes from vigorous competition and the efficiencies that come from nations concentrating on doing what they do best and then trading for the rest.

That's the theory, anyhow. But it's natural for people to worry about factories shutting down and jobs going abroad. And it's true that businesses that can no longer compete will ultimately fail.

But nearly one of five of our state's manufacturing jobs depend on exports. Since 2001, state companies have experienced export growth of 86 percent to $19.8 billion. Agricultural exports more than doubled over that time, reaching $2.12 billion in 2010.

We can build on that because our state has a well-trained and disciplined work force and a transportation and communications infrastructure approximately equal to or better than most foreign countries.

The other 49 states have advantages of their own, including those coming from ocean harbors and natural resources like coal, oil and natural gas.

Some of our trading partners have the advantage of abundant unskilled labor performing simple tasks for low wages, but we succeed by concentrating on jobs that require training, are highly productive, and pay well.

Of course, I know that a lot of people are hurting due to the recession and may be skeptical about allowing foreigners easier access to our markets. It's important, however, to remember that our employers gain access to foreign markets, and that supports jobs in the U.S.

Putting economic theories aside, let's consider the pacts individually:

U.S. exporters face an average tariff of more than 9 percent. We are being undercut by competitors like Argentina, which already has a free trade agreement with Colombia in place. The main effect of the new pact with Colombia will be to give our exporters the same access to Colombia's markets that we already give that country's exporters to our markets.

Panama levies an average 7 percent tariff on manufactured imports and 15 percent on agricultural products. Our trade agreement with that country will remove those tariffs, allowing us to compete with Canada, the European Union and South Korea, each of which has prior free trade treaties with the Central American country.

Currently, South Korean tariffs on American imports are double what we charge them. Their tariffs on our agricultural exports are six times the amount we charge them. Now, those imbalances are all going to go away -- assuming South Korea's National Assembly approves the pact, as expected.

But, if the trade deals are so good for Americans, why have Colombia, Panama and South Korean negotiators agreed to them?

Countries all over the world are negotiating these agreements so they can rely on stable, open relationships. They want to be sure that their trading partners won't raise tariffs or change regulations in ways that could freeze them out.

Guaranteed access to American markets is very important for other nations, which also want to strengthen ties with us since we continue to be the world's foremost nation both in terms of the size of our economy and the strength of our military.

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