Kelsey Zahourek

Job-Creating Free Trade Agreements Sat on President's Desk While Unemployment Rose


Posted by Kelsey Zahourek on Monday, October 3rd, 2011, 6:02 PM PERMALINK

President Obama, after allowing the free trade agreements to languish for three years, formally submitted the pending accords with South Korea, Colombia, and Panama to Congress this afternoon.

These agreements are vital to economic growth and job creation in the U.S. According to the U.S. International Trade Commission, together the agreements will increase exports by $13 billion, which by Obama’s own measurements could create more the 250,000 jobs.

  • The U.S. International Trade Commission estimates passage of the US-Korea free trade agreement would increase U.S. exports by over $10 billion and create 70,000 American jobs.
  • Once the Colombian deal is enacted, the U.S. will have access to $4 billion in new markets and the American agricultural industry will see an estimated $1.1 billion dollar overall increase in their exports alone.
  • While more than ninety percent of imports from Panama are duty free, U.S. products still face tariffs when entering Panama. The Panama FTA will eliminate this trade barrier. Additionally, Panama is seeking to expand the Panama Canal, a project that could bring American contractors $5.25 billion if the U.S.-Panama Free Trade Agreement is enacted.

 

“I’m happy to finally see movement on the trade deals but it’s a disgrace that for three years the President chose to pander to his protectionist union allies rather than put the American economy and taxpayers first,” stated Grover Norquist, president of Americans for Tax Reform, “The benefits of the trade deals present real opportunities to boost economic growth and create jobs, just as they would have three years ago at the height on the economic downturn.”

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ATR Opposes Currency Legislation


Posted by Kelsey Zahourek on Friday, September 30th, 2011, 10:32 AM PERMALINK

Today, Americans for Tax Reform sent the following letter opposing the “Currency Exchange Rate Oversight Reform Act,” sponsored by Senator Sherrod Brown (D-OH) and Senator Chuck Schumer (D-NY). This bill would raise tariffs on imports from countries labeled currency manipulators with the stated goal of forcing China to allow its currency to appreciate.

While it is tempting to blame China for our ballooning deficit as well as our high unemployment levels, it would not be correct to do so. Recent analysis by Dr. Derek Scissors of the Heritage Foundation has revealed that fluctuation in China’s currency levels have had little to no correlation with changes in our deficit or our unemployment rate. In other words, China’s currency is not the cause of our problems. Rather than addressing these issues, this legislation would create new ones. By increasing tariffs on Chinese imports, and others deemed to have an undervalued currency, this bill could easily spark a trade war, hurting consumers at a time when disposable income is hard to come by. Even if other countries do not retaliate, consumers would face higher prices due to tariffs on imports at a time when inflation is rising and incomes are falling. We cannot afford to let this happen.

To increase our economic growth we should not become a more protectionist country but should increase our economic freedom by passing the president’s free trade agreements with Colombia, Korea and Panama. These agreements would achieve both of the goals of the currency manipulation bill without government intervention; they would create many new jobs and result in lower prices for consumers. According to the White House, passage of the US-Korea free trade agreement would increase U.S. exports by over $10 billion and create 70,000 American jobs. Passage of free trade agreements with Colombia and Panama will open up $4 billion in new markets and the American agricultural industry will see an estimated $1.1 billion dollar overall increase in their exports alone. All three of these agreements have the added benefit of strengthening, not weakening, our diplomatic ties in strategic regions.

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Buy American: Another Job Killer in the Jobs Bill


Posted by Kelsey Zahourek on Thursday, September 22nd, 2011, 12:41 PM PERMALINK

Included within the 2009 “stimulus” plan was the protectionist Buy American provision that required manufacturers to give preferential treatment to domestic producers of iron, steel and other manufactured goods in spending on infrastructure. Not only did this force taxpayers to pay more money for the same goods that could be purchased more cheaply from foreign manufacturers, additionally countries from Europe to Asia signaled their own buy domestic policy aspirations, hurting American exports and jobs in its wake.

I understand political motives behind these sorts of measures, but it makes horrible economic sense. Yet Obama has once again chosen politics over the economy. Within the President’s “American Jobs Act” lies a provision that mandates all iron, steel and other manufactured goods must be domestically produced as part of around $80 billion in infrastructure spending.

Such protectionist measures raise costs for consumers and businesses. When businesses are forced to pay more for products, that increase gets passed on to consumers, who are then forced to forgo spending elsewhere. In other words, by protecting one industry, countless others are losing billions of dollars in profits.
Not only do Buy American provisions restrict growth, but they inevitably cost more jobs than they purport to create. After the 2009 provision, employers across the country were forced to lay off workers as a direct result of Buy American requirements.  One factory in Pennsylvania let go 600 employees because some of its products include goods produced overseas.

The insistence on the Administration including time and again this protectionist provision proves they don’t know the first thing about economic growth and job creation. As pointed out on this site numerous times, there are many, many things wrong with Obama’s jobs legislation and the entire bill should be scrapped.

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Protecting One at the Expense of Many


Posted by Kelsey Zahourek on Monday, September 19th, 2011, 11:44 AM PERMALINK

Tonight, the Senate is scheduled to take up a procedural vote on the Generalized System of Preferences (GSP), a program that allows certain products from less developed countries to enter the U.S. duty-free. Beyond bringing new economic opportunities to more impoverished parts of the world; by eliminating tariffs, this program has also kept prices low for American consumers, reaping a cost savings of $580 million per year.

Unfortunately, the GSP expired in December 2010 and was never reauthorized due to the actions of one Senator. In February of this year, Alabama Senator Jeff Sessions, refused to lift a hold on the bill because he wasn’t able to insert a provision that would increase tariffs on Bangladeshi imports in order to protect Alabama sleeping bag manufacturers from competition. As a result of the Senator’s protectionist leanings, tariffs were raised on approximately 3,400 imports, affecting $23 billion in global trade.

Well, Sen. Sessions is at it again. According to Roll Call:

Sen. Jeff Sessions (R-Ala.) has enlisted the aid of an anti-free-trade group in his quixotic campaign to provide protections for an Alabama sleeping bag maker as part of a looming trade bill.

In an eleventh-hour bid to add an earmark to the Generalized System of Preferences measure, Sessions has called in the American Manufacturing Trade Action Coalition — despite the fact that he has long been a supporter of free-trade deals that AMTAC has vehemently opposed.

Luckily, it appears Sessions efforts will be in vain. However, it must be acknowledged, no matter how fruitless, his actions can be described as nothing more than reckless. Passage of GSP is an essential part of the delicate path to bringing the pending agreements with South Korea, Colombia, and Panama to a vote. These agreements are projected to bring hundreds of thousands of new jobs to America and countless cost savings for American consumers and businesses. With much of the focus in Washington on jobs and the economy, these agreements are more important than ever before. Yet, the Senator from Alabama apparently believes protecting a political ally is much more important than bringing lower prices to millions of Americans.

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Jobs Agenda Must Include Free Trade


Posted by Kelsey Zahourek on Wednesday, September 7th, 2011, 11:30 AM PERMALINK

As the President prepares to address a joint session of Congress to unveil his jobs plan, it would be wise to focus on what can be done immediately to spur economic growth and job creation. Passage of the pending trade agreements with South Korea, Colombia, and Panama would support thousands of jobs and provide new opportunities for American businesses abroad and workers at home. No small measure considering the U.S. is coming off of a month of zero job growth. Yet, the President has allowed these agreements to sit for nearly three years.

By Obama’s own admission, the pending FTAs will be a job creator. The South Korea agreement alone is estimated to create 70,000 jobs. However, Obama continues to play politics, accusing Congressional Republicans of standing in the way. With all due respect, it’s a bit difficult to stand in the way of legislation that has yet to be submitted to Congress. Additionally, once the agreements are submitted, they will almost assuredly pass with broad bi-partisan support. That’s something you rarely see in Washington these days. 

So what exactly is the hold up? As Minority Leader Mitch McConnell explains in the Washington Post:

For three years, the administration has delayed finalizing these deals because unions have been extracting concessions in exchange for their support. Early on, they demanded further concessions and political reforms from our trading partners, all of which have been satisfied. Now, they’re demanding taxpayer funds for worker training programs that many believe are not only duplicative and costly but may not even be effective. Still, I and others have told the president we are prepared to allow this program to move ahead for a vote as a sign of good faith and to move the trade deals forward.

As Administration continues to talk of the importance of job creation, its time to put their money where their mouth is. Enacting policies that will boost trade will do much more in the immediate and long term to grow the economy and create new jobs than any program that continues government spending programs.  Congress and the Administration should work to pass the pending free trade agreements with South Korea, Colombia, and Panama. Increasing trade by lowering tariffs and subsidies worldwide provides new markets for all sectors of the American economy and that’s good for jobs too.


 

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Free Trade Stabilizes Nations, Promotes Economic Growth


Posted by Kelsey Zahourek on Tuesday, June 14th, 2011, 1:38 PM PERMALINK

Yesterday, it was announced that Colombia has moved forward with additional measures to improve labor laws, a required by deal with the Obama Administration in order to implement the US-Colombia Free Trade Agreement.  The Colombian governments efforts include implementing legislation to create a separate Labor Ministry, moving legislation to increase criminal penalties to those who violate workers’ rights, and accelerating the timetable in which to establish additional laws that with strengthen the country’s labor environment.

It’s wonderful to see Colombia continuing to make strides in stopping union violence and improving the overall labor situation, but this is something the country has been doing for quite sometime now. Since 2002, homicides of union members have gone down by 90 percent. Additionally, the International Labor Organization has found Colombia to be in compliance with international labor standards. This issue is just another in a long list of excuses Obama has put forth as reasons to stall pending trade agreements.

The fact is, stalling the Colombia FTA is doing more harm to the very workers Obama is purportedly trying to protect. Legitimate economic opportunities resulting from trade liberalization stabilize nations plagued by narcotics trafficking, organized crime, and terrorism. Colombia is a prime example of how open markets have led to better paying jobs and less violence.

But let’s not forget that trade is a two way street that benefits both parties. When enacted, U.S. exports will increase $1.1 billion annually and the U.S. GDP is expected to grow by $2.5 billion per year. Passage of the US-Colombia FTA will create thousands of additional American jobs.

Whether it’s the issue of the Korean auto market or expanding the Trade Adjustment Assistance program, President Obama has proven time and again that the only constituency he cares about benefiting is American organized labor at the expense of the entire U.S. and Colombian economies. 

 

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Pending Trade Agreements Key to Job Creation


Posted by Kelsey Zahourek on Thursday, May 26th, 2011, 12:55 PM PERMALINK

The House Republicans unveiled their jobs agenda today and beyond the expected calls for overhauling Medicare and lowering taxes, the proposal also focuses on the need to pass the pending trade agreements with Colombia, South Korea, and Panama. These agreements are long overdue and as the proposal highlights will lead to the creation of 250,000 jobs.

For months now, the Obama administration has touted the importance of the FTA’s to job creation and has promised action on all three agreements. But last week, the Administration took a step back and announced that any FTA must be coupled with unemployment assistance or what is known as Trade Adjustment Assistance. Last February, legislation to extend an expanded version of TAA that was included in the 2009 stimulus plan stalled due to Republican opposition to the cost of extension. (Pre-stimulus TAA, which continues to cost over $1 billion annually, remains in place.)

Over the last few years, millions of jobs have disappeared and in the never-ending search for whom to blame, foreign competition tends to be the scapegoat. Job creation and job loss is an endless cycle. Just as some have lost their job due to new technological competition, so too does job loss occur when there is increased competition through foreign trade. Yet, as James Sherk, Senior Policy Analyst at the Heritage Foundation points out in a policy brief, the number of unemployed due to import competition is relatively small—just one percent of all jobs lost in mass layoffs—while the cost of assisting this category of unemployed is staggering—estimated at $2.4 billion in 2011.  Moreover, unemployment assistance already exists outside a special designation for trade, so this program is nothing more than duplicative spending.

While holding the agreements hostage may secure some Democrat votes, this tactic could lead to a loss in support from Republicans still concerned about additional spending measures. When passed, the three trade deals will yield a $13 billion increase in economic revenue for U.S. businesses, as well as the hundreds of thousands of jobs highlighted above. If President Obama were serious about economic growth, he would stop pandering to his union allies and submit the trade agreements to Congress, with or without TAA.
 

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Coming Closer to a Colombian Trade Deal


Posted by Kelsey Zahourek on Wednesday, April 6th, 2011, 2:53 PM PERMALINK

Today, the Obama administration announced that the Colombian government has agreed to do more to crackdown on violence against union leaders in an effort to move forward on the U.S.-Colombian free trade agreement. This is welcome news for supporters of the long-stalled agreement, originally negotiated under the Bush Administration.

As noted in a Wall Street Journal op-ed by Senators Baucus and Kerry, failure to move forward on this agreement has placed the U.S. further behind countries in South America, Asia, and Europe as those regions continue to expand exports to Colombia, as the U.S. loses its share of the Colombian market.

Immediately after approval and enactment of the U.S.-Colombia Free Trade Agreement, over 80% of U.S. exports to Colombia would enter Colombia duty-free and remaining tariffs would be phased out within a decade. The U.S. International Trade Commission estimates this would increase U.S. exports by $1 billion. American farmers and ranchers in particular will benefit from the abolition of Colombian duties on agricultural and meat products.

Furthermore, a U.S.-Colombia Free Trade Agreement will strengthen an already close relationship with a reliable ally of the United States. The Colombian House and Senate have overwhelmingly endorsed this agreement, and popular support runs high. Legitimate economic opportunities stabilize nations plagued by narcotics trafficking, organized crime, and terrorism like Colombia.

This agreement has broad bipartisan support and with Colombian President Juan Manuel Santos set to meet with Obama on Thursday to hash out an agreement, there is no excuse for further delay in enacting this trade pact.

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Big Sugar's Sweet Deal Leaves a Bitter Economic Aftertaste


Posted by Kelsey Zahourek on Thursday, March 31st, 2011, 10:59 AM PERMALINK

Senator Lugar has set his sights on repealing one of Washington’s most indefensible programs—the sugar baron welfare program. This week, Lugar introduced the “Free Sugar Act of 2011,” designed to repeal the sugar program that has kept sugar prices artificially high through price manipulation, import quotas, and tariffs.

If on any given day you find yourself walking through the hallowed halls of ATR, you will find the staff pining away for the sweet taste of “Mexican Coca-Cola” or any other bottle of Coke not produced in the U.S. and thus not tainted with sticky un-refreshing taste of corn syrup. The reason for the difference lies in the U.S. Government’s efforts to keep sugar prices artificially high by restricting the amount of sugar that can be imported to the U.S. This results in the price of sugar in the U.S. being one-half to two-thirds higher than in other countries and thus too expensive to use in domestically produced Coke products.

This policy is not only bad for American taste buds, but also American consumers. As stated in a letter sent by ATR in support of Lugar’s legislation, the program has worked to the advantage of a few farmers (the largest 1% of growers claimed 42% of the program’s benefits) and to the expense of the rest (the General Accounting Office estimated that the program cost sugar consumers a grand total of $2 billion annually at the point of purchase).

Additionally, the U.S. International Trade Administration estimates that for every job held up by the program, three jobs are lost as manufacturers in the confectioner industry move their facilities to countries such as Canada and Mexico where sugar is cheaper.

In an op-ed for the Washington Times, Sen. Lugar sums up the program pretty nicely:

“A complicated system of marketing allotments, price supports, purchase guarantees, quotas and tariffs that only a Soviet apparatchik could love, the U.S. sugar program has actually lasted longer than the Soviet Union itself.

“It imposes a hidden tax of billions of dollars annually on consumers and businesses and has destroyed thousands of U.S. manufacturing jobs. It substitutes the federal government for the private sector in basic decisions about buying and selling, supply and price.”

Its time to get the government out of the sugar business and let the market determine the cost of sugar.

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State of the Union Trade Talk: Obama Needs to Put Words into Action


Posted by Kelsey Zahourek on Wednesday, January 26th, 2011, 1:18 PM PERMALINK

On Tuesday evening, President Obama delivered his annual “State of the Union” address. In his speech, Obama reiterated his goal of doubling U.S. exports by 2014 and called for quick passage of the free trade agreement with South Korea, but failed to set a timetable for the agreements with Colombia and Panama.

While his conclusion regarding the importance of trade and exports is not misguided, his record does not instill much hope in his trade agenda.

Passage of the US-Korea free trade agreement would increase U.S. exports by over $10 billion and create 70,000 American jobs. This agreement would abolish 95 percent of tariffs on all industrial and consumer goods within three years.

Passage of free trade agreements with Colombia and Panama would open up new markets for U.S. manufacturing and agricultural products while provide consumers with lower priced products at home. Immediately after approval and enactment of the U.S.-Colombia Free Trade Agreement, over 80% of U.S. exports to Colombia would enter Colombia duty-free and remaining tariffs would be phased out within a decade. The U.S. will have access to $4 billion in new markets and the American agricultural industry will see an estimated $1.1 billion dollar overall increase in their exports alone.

While more than ninety percent of imports from Panama are duty free, U.S. products still face tariffs when entering Panama. The Panama FTA will eliminate this trade barrier. Additionally, Panama is seeking to expand the Panama Canal, a project that could bring American contractors $5.25 billion if the U.S.-Panama Free Trade Agreement is enacted.

The focus should not be on exports alone. Increasing trade by removing tariffs and subsidies provides lower prices for American consumers. Tariffs are taxes and any increase in the price of imports is immediately passed on to consumers. While, protectionist measures are often enacted for the purpose of shielding domestic industries from "unfair trade practices," all indications are that they instead punish the multiple industries that rely on imports for their material inputs such as steel and raw materials. When input costs increase as a result of a rise in import tariffs, industries must cut costs elsewhere, the most likely being labor costs, meaning jobs.

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