WHY FREE TRADE AGREEMENTS

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WHY FREE TRADE AGREEMENTS?
Greater Ozarks International Trade
Association ANNUAL MEETING John Andersen Senior
Director for Western Hemisphere Affairs U.S.
Department of Commerce October 22, 2008
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DISCUSSION TOPICS

• Free Trade Agreements (FTAs) Beyond tariffs
• Why FTAs with Peru, Colombia Panama?
• Missouri and Exports
• Resources How Commerce can help U.S. exporters
  succeed?

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FREE TRADE AGREEMENTSMore Than Tariff Reductions

• Domestic legal and business environment
• Government procurement
• Customs facilitation
• Worker rights and protection of the environment
• Services sector
• Benefit small and medium sized exporters

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IMPORTANCE OF EXPORTS

• 95 of the world's consumers live outside of the
  United States
• Exports support 12 million American jobs
• 1 in 5 manufacturing jobs supported by exports
• Jobs supported by exports create 13-18 higher
  wages than average
• International trade accounts for 33 of U.S. GDP
• 97 of U.S. exporters are small or medium-sized
  businesses
• This is 1 of small businesses in the United
  States
• 63 export or sell in only one market

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U.S. EXPORTS TO THE WESTERN HEMISPHERE - 2007
Source U.S. Bureau of Census
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Free Trade in the Western Hemisphere

• gt 90 percent of U.S. trade with the Western
  Hemisphere
• 14 FTAs 9 in the Western Hemisphere
• 7 percent of the worlds population
• 41 percent of total U.S. exports (2007)
• Since 1994, U.S. exports to FTA partners have
  grown at a faster pace than exports to the rest
  of the world

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NAFTA TRADE IN PERSPECTIVE

• Comprehensive Regional Trade Agreement
• Exports to NAFTA outpacing rest of world
• NAFTA trade up more than 633 billion since 1993
• Combined trade is 2.5 billion a day
• 1.8 million a minute

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U.S. TRADE IN PERSPECTIVE U.S. Merchandise Trade
with NAFTA 2007
Source U.S. Bureau of Census
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UNITED STATES-CHILE

• 17 billion, a 170 percent increase since 2004
• US exporters winning back market share
• Chiles top source of imports
• Gained market share a fourth year in a row in 2007

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Central America-Dominican Republic

• Rolling implementation began in 2006
• U.S. exports reached 22.4 billion in 2007, a
  14.4 percent increase
• Machinery, cotton yarns, grains (wheat, corn,
  rice), plastics, motor vehicles, and medical
  instruments
• U.S. trade surplus of 3.7 billion with CAFTA-DR
  in 2007

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PERU

• Stable democracy with strong economic growth
• Strategic ally terrorism, drugs
• 4.1 billion market
• Heavy equipment (mining, construction, oil/gas),
  pumps, chemicals, safety equipment, food
  processing equipment

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COLOMBIA AS AN FTA PARTNER

• 45 million people
• Committed to open markets and rule of law
• Latin Americas oldest and most stable democracy
• Largest Buyer in South America of U.S.
  Agricultural and Livestock Products (1.2 billion
  in 2007)
• Strong strategic ally terrorism, drugs
• Over 5 billion in U.S. foreign aid since 2000

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Why a Colombia Trade Agreement?

• Improve competitiveness in a fast-growing market
• Provide clear rules for doing business
• Make free trade a two-way street
• Promote economic development
• Strengthen our national security
• Bolster our friendship with a like-minded country
  committed to democracy, rule of law, open markets

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THE COLOMBIAN TARIFF TICKER

• 702 days counting U.S.-Colombia FTA signed
  (November 22, 2006)

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THE CASE FOR COLOMBIA
Colombian Coffee comes into the United States
duty free
But this bottle of Pepsi, made in the U.S., pays
a stiff 20 tax when sold in Colombia.
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THE CASE FOR COLOMBIA
These beautiful Colombian flowers a major
Colombian export come into our market and pay
zero tariffs
But this box of U.S.-made fertilizer, which helps
those flowers grow, is charged up to 15 duty
when exported to Colombia.
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THE CASE FOR COLOMBIA
These baby carrots come into the United States
and onto your dinner table without paying any
U.S. tariffs.
But this tractor, made by Caterpillar in East
Peoria, Illinois, faces a 10 percent duty when
sold to a Colombian carrot farmer.
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THE CASE FOR COLOMBIA
This Washington State apple pays a 15 percent
tariff when sold in Colombia
Meanwhile, this Colombian banana enters the
United States duty-free. 
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PANAMA

• Strategic Ally terrorism, drugs, port security
• Important financial and commercial crossroads
• Maritime shipping and air transport hub
• International trading, banking, and services
  center
• Business-friendly legal and regulatory regimes
• Stable, democratic, and reform-minded government

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TIMELINE ON FTASColombia, Panama and Peru

• November 8, 2007, U.S. House of Representatives
  approved the Peru TPA and on December 4, 2007,
  U.S. Senate approved Peru FTA.
• June 14, 2007, Colombias Congress approved. U.S.
  Congress has not yet approved it.
• July 11, 2007, Panamas Congress approved the
  Panama FTA . U.S. Congress has not approved it.

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MISSOURI AND EXPORTS

• Exports sustain thousands of Missouri businesses
• SMEs generated over one-quarter total exports
• 2007 export shipments totaled 13.5 billion
• Exported to 193 destinations
• Largest markets - Canada, Mexico, South Korea,
  China, and Japan.

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MISSOURI EXPORTS AND JOBS

• Exports support jobs for Missouris workers
  export supported jobs linked to manufacturing
  account for an estimated 4.7 percent of
  Missouris total private sector employment
• Over one-sixth (17.2 percent) of all
  manufacturing workers in Missouri depend on
  exports for their jobs

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MISSOURI LEADING EXPORTS

• Transportation equipment accounted for 35
  percent, or 4.7 billion of Missouris exports in
  2007.
• Other top export categories are chemical
  manufactures (2.2 billion) machinery
  manufactures (1.2 billion) and process foods
  (733 million).

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MARKET ACCESS AND COMPLIANCE

• Ensuring our trading partners live up to their
  commitments.
• Helping U.S. companies who encounter trade
  barriers.

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WHAT BARRIERS DO U.S. COMPANIES FACE?

• Tariff and customs barriers
• Rules of origin, certificates of origin
• Import licensing
• Standards, testing, labeling or certification
• Lack of Intellectual Property Rights protection
• Government procurement contracts

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USEFUL LINKS

• More Background on Trade Agreements
• http//www.tradeagreements.gov
• Country Commercial Guides
• http//www.buyusa.gov
• Market Access or Compliance problems
• http//www.trade.gov/mac/
• Intellectual Property Protection
• http//www.stopfakes.gov

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• U.S. Department of Commerce
• Senior Director for Western Hemisphere Affairs
• E-Mail John.Andersen_at_mail.doc.gov
• THANK YOU!