Though many differences remain between President Barack Obama and congressional Republicans, one potential area of cooperation is international trade. Georgia needs the president to push Congress to pass Trade Promotion Authority legislation that gives him authority to negotiate free trade agreements.
According to the U.S. Chamber of Commerce, 38 million American jobs depend on trade. Roughly one in three manufacturing jobs depends on exports, while one in three acres of American farmland produces exported crops. In addition, jobs related to exports pay wages averaging 13 percent higher than jobs with no connection.
International trade will only become more important to America’s economy. Already, 95 percent of the world’s consumers and 80 percent of the world’s purchasing power lay outside the United States’ borders. With an additional 1.2 billion people expected to join Asia’s middle class by 2020, these numbers will continue to increase.
Global growth will increase demand for quality American goods and services, but our exports are much more competitive in countries with which we have trade agreements. Although U.S. free trade partners account for only 10 percent of global GDP, they purchase almost half of total U.S. exports. In countries where we do not have trade agreements, high tariffs prevent foreign consumers from purchasing more quality Georgia products.
Business Roundtable, an association of CEOs from leading American companies, found Vietnam applies tariffs of 30 percent and 20 percent to nuts and chicken cutlets, respectively. Malaysia applies tariffs of 50 percent to golf carts, and New Zealand applies 10 percent tariffs to carpets. These tariffs restrict Georgia’s ability to export to these markets, but would be eliminated by successful implementation of the Trans-Pacific Partnership agreement.
A report commissioned by the British Embassy in Washington estimates the successful implementation of the Transatlantic Trade and Investment Partnership would increase Georgia’s exports to the European Union by 31.5 percent, mainly in the automobile, paper products, chemicals, transportation equipment and aerospace sectors. The same report predicts that agreement would lead to the net creation of 24,000 jobs in Georgia.
Congressional passage of the trade authority bill would allow Obama to conclude negotiations on the Trans-Pacific and Transatlantic partnerships, leading to decreased trade barriers and increased exports for Georgia.
Unfortunately, many countries not party to trade agreements with the U.S. lack level playing fields. International trade critics often state lax labor and environmental standards in foreign countries reduce production costs and encourage firms to outsource American jobs. This is a valid criticism and perfect example why Obama needs trade promotion authority.
When it writes authority legislation, Congress identifies goals it needs the executive branch to achieve in potential trade agreements, such as guaranteeing that trade partners abide by internationally accepted labor and environmental standards. Trade agreements force foreign countries to raise their standards, which levels the playing field and better protects American jobs.
In an unprecedented move, Obama is negotiating several trade agreements without trade promotion authority. Congress allowed the previous version to expire in 2007 and has not renewed it. This makes Obama the first president since Franklin Roosevelt to not have this crucial negotiating tool. American industry should applaud Obama for not allowing this setback to deter his trade agenda.
While congressional Republicans largely favor authority renewal, it will require a personal plea from the president to convince congressional Democrats to support this legislation. If Obama moves quickly on this issue at the beginning of the 114th Congress, he can boost exports, create jobs and secure an important achievement for his legacy. Important trade agreements like the Trans-Pacific and Transatlantic partnerships will lay the foundation for future American prosperity.
Jack Herron is director of international trade policy for the Embassy of Israel.
