The Heritage Foundation, a conservative think tank, recently released three reports highlighting the economic benefits that the pending free trade agreements with Colombia, Panama and South Korea will provide. Below are key excerpts from the reports on each of the agreements, highlighting the importance of swift passage of all three agreements.
Advance U.S. Jobs and Exports
“Colombia has the third-largest economy in the Western Hemisphere south of Mexico. The FTA would quickly grow U.S. exports by $1.1 billion, adding thousands of new jobs, and give the U.S. enhanced access to Colombia’s services market and growing energy sector. It would allow the U.S. to remain competitive.
“In contrast, failure to pass the FTA for fear of endangering small producers in Colombia would merely allow other global competitors such as Canada, China, or the European Union to fill the void. Should Congress fail to act, U.S. exporters will continue to face an average tariff of more than 9 percent, while many products from other countries will enter duty-free. Our competitors will not face the same constraints.”
Stop Losing Opportunities
“The FTA with Panama was signed in 2007. For more than four years, it languished in the White House’s inbox. While it is difficult to determine the full amount of self-inflicted damage in terms of lost trade and jobs, it is widely agreed that with prompt implementation of the FTA, the U.S. would have enjoyed a more competitive position in Panama’s growing economy. While the U.S. has stood still, Canada, the European Union, and South Korea have actively moved to leverage trade agreements into increased market share at the expense of U.S. manufacturers and farmers.
“With an average of 7 percent in tariffs paid on manufactured imports and 15 percent on agricultural products into Panama, it is not difficult to see why U.S. firms have lost their competitive edge. Enactment of the FTA will remove the 7–15 percent tariff anchor holding back U.S. trade with Panama.”
KORUS Benefits the U.S.
“The trade accord would provide significant economic and geo-strategic benefits for both countries. It would be America’s largest FTA in Asia. KORUS expands U.S. business access to the $1 trillion South Korean market by reducing 95 percent of trade tariffs within five years and increasing regulatory transparency. South Korean manufacturing tariffs are double those of the U.S. Korean agricultural tariffs are 54 percent, compared with 9 percent in the U.S.”
The Cost of Failure
“While the U.S. sat on KORUS for four years, the European Union began and completed its own FTA negotiations. The Korea–EU agreement went into effect on July 1 of this year, and EU exports to Korea increased 16 percent within the first month. If Congress fails to approve KORUS, it would doom U.S. businesses to competing on an uneven playing field against European firms now exempt from South Korean tariff and non-tariff barriers.
“U.S. companies would continue to fall further and further behind. Since Seoul signed KORUS, it has begun negotiations and in some cases completed trade agreements with India, Australia, Canada, Japan, New Zealand, Colombia, Peru, and the Association of Southeast Asian Nations. China—South Korea’s largest trading partner—announced it will begin FTA talks with Seoul this year. The U.S. Chamber of Commerce estimates that not enacting the KORUS would lead to a loss of $35 billion in exports and 345,000 jobs.”