1 Member Services University Trade Agreements: The Jobs & Economic Opportunities They Create for U.S. Workers Hosted by NRCC Chairman Pete Sessions Presentation by Ways & Means Committee Chairman Dave Camp Rules Committee Chairman David Dreier April 7, 2011

2 Role of Congress in Trade Policy Constitution gives Congress primary responsibility Constitution gives Congress primary responsibility Congress implements changes to U.S. law to be in compliance with trade agreements Congress implements changes to U.S. law to be in compliance with trade agreements Trade Promotion Authority Trade Promotion Authority Up-or-down vote on implementing bill without amendmentUp-or-down vote on implementing bill without amendment Deadlines for Congressional action once agreement is submittedDeadlines for Congressional action once agreement is submitted Consultations with Congress before, during, afterConsultations with Congress before, during, after Expired for new agreements in 2007Expired for new agreements in 2007 U.S. credibility: TPA needed to close out future negotiationsU.S. credibility: TPA needed to close out future negotiations

3 Trade is Vital to U.S. Economic Success and Job Creation 42% of all U.S. jobs are connected to international trade 42% of all U.S. jobs are connected to international trade 20% of all manufacturing jobs – almost 3 million – are dependent on U.S. exports20% of all manufacturing jobs – almost 3 million – are dependent on U.S. exports U.S. agriculture exports support nearly 3.9 million jobsU.S. agriculture exports support nearly 3.9 million jobs 90 million Americans in private service sector – majority of employment in every Congressional district90 million Americans in private service sector – majority of employment in every Congressional district Every $1 billion in exports generates 25,000 new jobs spanning all sectors of our economy: manufacturing, services incl. transportation and logistics, and agriculture Every $1 billion in exports generates 25,000 new jobs spanning all sectors of our economy: manufacturing, services incl. transportation and logistics, and agriculture Jobs related to exports pay 15-17% more Jobs related to exports pay 15-17% more Tariffs are a tax on U.S. consumers: trade has lowered prices and increased the purchasing power of an average American family of four by $10,000 Tariffs are a tax on U.S. consumers: trade has lowered prices and increased the purchasing power of an average American family of four by $10,000 Focus on trade deficit should be understood in context: oil and gas imports account for 43% of the deficit Focus on trade deficit should be understood in context: oil and gas imports account for 43% of the deficit

4 U.S. Exports Create Manufacturing Jobs

Trade Surplus with TPA Agreement Partners Staying Strong

Trade Agreements Improve Manufacturing Trade Balance

7 Trade Agreements Provide New Markets to U.S. Exporters Cover substantially all trade between the United States and its partner/partners Cover substantially all trade between the United States and its partner/partners Provide preferential access for each partner into the other market Provide preferential access for each partner into the other market Cut tariffs on goods deeply (manufacturing and ag) Cut tariffs on goods deeply (manufacturing and ag) Liberalize services trade (e.g., telecom, e-commerce, retail, financial) Liberalize services trade (e.g., telecom, e-commerce, retail, financial) Provide government procurement opportunities Provide government procurement opportunities Provide intellectual property rights protection Provide intellectual property rights protection Provide labor and environment protections Provide labor and environment protections Create dispute settlement mechanisms Create dispute settlement mechanisms

8 U.S. Trade Agreement Partners Israel (September 1, 1985) Israel (September 1, 1985) NAFTA (Mexico/Canada) (January 1, 1994) NAFTA (Mexico/Canada) (January 1, 1994) Jordan (December 7, 2001) Jordan (December 7, 2001) Chile (January 1, 2004) Chile (January 1, 2004) Singapore (January 1, 2004) Singapore (January 1, 2004) Australia (January 1, 2005) Australia (January 1, 2005) Morocco (January 1, 2006) Morocco (January 1, 2006) Bahrain (August 1, 2006) Bahrain (August 1, 2006) Oman (January 1, 2009) Oman (January 1, 2009) DR-CAFTA (between March 1, 2006 and January 1, 2009) DR-CAFTA (between March 1, 2006 and January 1, 2009) Peru (February 1, 2009) Peru (February 1, 2009) Colombia (awaiting Congressional action) Colombia (awaiting Congressional action) Panama (awaiting Congressional action) Panama (awaiting Congressional action) South Korea (awaiting Congressional action) South Korea (awaiting Congressional action) Trans-Pacific Partnership (Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam) (currently being negotiated) Trans-Pacific Partnership (Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam) (currently being negotiated)

9 To Move Agreements, Republicans Agreed to “May 10” Deal Bipartisan House deal with Bush Administration in 2007 covering labor, environment, investment, and IPR Bipartisan House deal with Bush Administration in 2007 covering labor, environment, investment, and IPR Application to Peru, Colombia, Panama, South Korea as reciprocal obligation (i.e., binding U.S. too) Application to Peru, Colombia, Panama, South Korea as reciprocal obligation (i.e., binding U.S. too)

10 But Three Agreements Still Pending Administration has resolved outstanding issues in South Korea agreement and has just negotiated an action plan with Colombia on labor; Administration has made no commitment when to send up Colombia and Panama Administration has resolved outstanding issues in South Korea agreement and has just negotiated an action plan with Colombia on labor; Administration has made no commitment when to send up Colombia and Panama Republican goal: Republican goal: Congressional consideration of all three agreements by July 1, when key agreements by the EU and Canada enter into effect and squeeze us outCongressional consideration of all three agreements by July 1, when key agreements by the EU and Canada enter into effect and squeeze us out Don’t slow down the South Korea agreement, but speed up Colombia and PanamaDon’t slow down the South Korea agreement, but speed up Colombia and Panama Bipartisan support for moving all three Bipartisan support for moving all three

11 Pending Agreements Make U.S. Exporters Competitive; Create U.S. Jobs Pending Agreements Make U.S. Exporters Competitive; Create U.S. Jobs Create good U.S. jobs without government spending Create good U.S. jobs without government spending President’s analysis shows three pending agreements could create 250,000 U.S. jobs President’s analysis shows three pending agreements could create 250,000 U.S. jobs ITC estimates that agreements would increase U.S. exports by $13 billion, adding a whopping $10 billion to GDP ITC estimates that agreements would increase U.S. exports by $13 billion, adding a whopping $10 billion to GDP Agreements lower barriers to U.S. manufactured goods, ag products, and services Agreements lower barriers to U.S. manufactured goods, ag products, and services Agreements help small and medium-sized companies, creating jobs Agreements help small and medium-sized companies, creating jobs America falling behind as other countries move ahead America falling behind as other countries move ahead

12 Colombia Agreement Concluded over 3 ½ years ago Concluded over 3 ½ years ago Submitted to Congress by Bush Administration in 2008; Pelosi rule vote shut off TPA clock Submitted to Congress by Bush Administration in 2008; Pelosi rule vote shut off TPA clock Administration/some Dems say Colombia has not done enough to address labor violence, impunity from prosecution, and labor rights Administration/some Dems say Colombia has not done enough to address labor violence, impunity from prosecution, and labor rights Administration has finally laid out a plan of action to be taken by Colombia on labor, but no timeline for Congressional consideration Administration has finally laid out a plan of action to be taken by Colombia on labor, but no timeline for Congressional consideration

13 Colombia Agreement Increases Opportunities for U.S. Exporters Colombia is key market; ITC estimates $1.1 billion growth Colombia is key market; ITC estimates $1.1 billion growth Traditionally one-way preferences, giving Colombia free access to U.S. market, but U.S. exporters have paid nearly $3.4 billion in duties since signing Traditionally one-way preferences, giving Colombia free access to U.S. market, but U.S. exporters have paid nearly $3.4 billion in duties since signing Agreement levels playing field Agreement levels playing field Average tariff paid by Colombians less than 1% in 2010Average tariff paid by Colombians less than 1% in 2010 But U.S. exporters pay over 11.2%But U.S. exporters pay over 11.2% 80% of U.S. exports of industrial/consumer goods would be duty-free immediately 80% of U.S. exports of industrial/consumer goods would be duty-free immediately U.S. services would enjoy preferential access U.S. services would enjoy preferential access Over 77% of ag tariff lines would be duty-free immediately; Colombia to recognize “equivalence” of U.S. food safety systems Over 77% of ag tariff lines would be duty-free immediately; Colombia to recognize “equivalence” of U.S. food safety systems

14 Failure to Implement Allows Others to Seize Our Market Share Argentina’s agreement with Colombia gave Argentina’s farmers an advantage over U.S. farmers Argentina’s agreement with Colombia gave Argentina’s farmers an advantage over U.S. farmers U.S. market share for corn, wheat, and soy plunged from 71% in 2008 to 38% in 2009, to 27% in first ten months of 2010 U.S. market share for corn, wheat, and soy plunged from 71% in 2008 to 38% in 2009, to 27% in first ten months of 2010 Argentina took up that slack Argentina took up that slack Canada implementing deal; EU deal ready for implementation; China signed investment treaty Canada implementing deal; EU deal ready for implementation; China signed investment treaty China is now Colombia’s third largest trading partner and is making significant new investments China is now Colombia’s third largest trading partner and is making significant new investments

15 Colombia Agreement Vital for U.S. National Security Colombia is a valued ally and an important counterweight to Venezuela’s Chavez Colombia is a valued ally and an important counterweight to Venezuela’s Chavez Colombia’s progress against narco-cultivation and trafficking would be undermined without agreement Colombia’s progress against narco-cultivation and trafficking would be undermined without agreement Administration’s Latin American foreign policy is missing as influence of China and others grows Administration’s Latin American foreign policy is missing as influence of China and others grows Colombia enhances U.S. energy security as a friendly, democratic, stable, close energy source Colombia enhances U.S. energy security as a friendly, democratic, stable, close energy source

16 Colombia Has Made Colombians Safer and Improved Labor Conditions Homicides against unionists has declined by 83% since 2002 (from 196 to 33 cases) Homicides against unionists has declined by 83% since 2002 (from 196 to 33 cases) Colombia provides security for 10,000, and union homicide rate lower than general population Colombia provides security for 10,000, and union homicide rate lower than general population Colombia has increased convictions; increased funding for prosecutions Colombia has increased convictions; increased funding for prosecutions Colombia has implemented all 8 ILO core labor conventions (U.S. only 2); improved labor laws Colombia has implemented all 8 ILO core labor conventions (U.S. only 2); improved labor laws ILO has removed Colombia from labor watch list ILO has removed Colombia from labor watch list Colombia agreement labor provisions identical to Peru, which had broad bipartisan support Colombia agreement labor provisions identical to Peru, which had broad bipartisan support Colombia just this week has agreed to an action plan to take a series of additional aggressive steps to curb violence, increase prosecutions, and strengthen its labor laws Colombia just this week has agreed to an action plan to take a series of additional aggressive steps to curb violence, increase prosecutions, and strengthen its labor laws

17 Panama Agreement Concluded over 3 ½ years ago Concluded over 3 ½ years ago Not yet submitted to Congress Not yet submitted to Congress Administration/Democrats seek additional labor law reforms before consideration Administration/Democrats seek additional labor law reforms before consideration Administration/Democrats allege Panama is a tax haven; in response Panama signed a Tax Information Exchange agreement, but Administration still stalls Administration/Democrats allege Panama is a tax haven; in response Panama signed a Tax Information Exchange agreement, but Administration still stalls

18 Panama Agreement Increases Opportunities for U.S. Exporters Today, Panama enjoys duty-free access into U.S. market for over 90% of its products, but U.S. exporters pay duties on their exports into Panama, averaging 7.8% for consumer/industrial products and 20% for agriculture Today, Panama enjoys duty-free access into U.S. market for over 90% of its products, but U.S. exporters pay duties on their exports into Panama, averaging 7.8% for consumer/industrial products and 20% for agriculture Panama would give U.S. exporters immediate duty-free treatment on 88% of Panama’s tariff lines for manufactured goods Panama would give U.S. exporters immediate duty-free treatment on 88% of Panama’s tariff lines for manufactured goods Panama would give U.S. exporters immediate duty-free treatment on over half of Panama’s agriculture tariff lines; Panama to recognize “equivalence” of U.S. food safety system for meat, poultry, and processed foods Panama would give U.S. exporters immediate duty-free treatment on over half of Panama’s agriculture tariff lines; Panama to recognize “equivalence” of U.S. food safety system for meat, poultry, and processed foods Expands access for U.S. services; opens sectors now restricted to Panamanians only, e.g., retail trade and professional services Expands access for U.S. services; opens sectors now restricted to Panamanians only, e.g., retail trade and professional services Increases U.S. access to Canal expansion; $5.25 billion project Increases U.S. access to Canal expansion; $5.25 billion project

19 Panama Resolved Outstanding Issues Labor Laws Improved Labor Laws Improved Panama has made key changes to labor laws; expected to pass additional legislation this springPanama has made key changes to labor laws; expected to pass additional legislation this spring Panama is signatory to all 8 ILO Conventions; U.S. only 2Panama is signatory to all 8 ILO Conventions; U.S. only 2 Labor provisions in Panama agreement identical to Peru agreement, which had broad bipartisan supportLabor provisions in Panama agreement identical to Peru agreement, which had broad bipartisan support Tax Haven Allegations Resolved Tax Haven Allegations Resolved Panama has signed a Tax Information Exchange Agreement with the United States and passed all implementing legislation; formal ratification shortlyPanama has signed a Tax Information Exchange Agreement with the United States and passed all implementing legislation; formal ratification shortly As such, Panama has increased transparency and effectiveness of information exchangeAs such, Panama has increased transparency and effectiveness of information exchange

20 South Korea Agreement Concluded over 3 ½ years ago Concluded over 3 ½ years ago Not yet submitted to Congress Not yet submitted to Congress In December, deal improved to expand access for U.S. autos; supported by Big 3 and UAW In December, deal improved to expand access for U.S. autos; supported by Big 3 and UAW Administration eager to move forward Administration eager to move forward S. Korea agreement with EU to enter into effect July 1 S. Korea agreement with EU to enter into effect July 1

21 South Korea Agreement Increases Opportunities for U.S. Exporters Today, average S. Korean tariff for U.S. exporters is more than four times the average tariff that Korean exporters face into the U.S. market Today, average S. Korean tariff for U.S. exporters is more than four times the average tariff that Korean exporters face into the U.S. market S. Korea would give U.S. exporters immediate duty-free treatment on 80% of S. Korea’s tariff lines S. Korea would give U.S. exporters immediate duty-free treatment on 80% of S. Korea’s tariff lines Agriculture exports could increase by $1.8bn per year Agriculture exports could increase by $1.8bn per year Agreement would open South Korea’s $560 billion services market to U.S. service-providers in key sectors (financial, insurance, telecom, AV, and express delivery) Agreement would open South Korea’s $560 billion services market to U.S. service-providers in key sectors (financial, insurance, telecom, AV, and express delivery) S. Korea would open its historically opaque regulatory process, including in autos S. Korea would open its historically opaque regulatory process, including in autos S. Korea would treat U.S. companies equally in application of product standards S. Korea would treat U.S. companies equally in application of product standards ITC estimates U.S. exports would grow by $10-12 billion; would increase U.S. exports by nearly 30% more than imports from Korea would increase ITC estimates U.S. exports would grow by $10-12 billion; would increase U.S. exports by nearly 30% more than imports from Korea would increase

22 While U.S. Delays, Others Conclude Agreements Without Us While U.S. Delays, Others Conclude Agreements Without Us EU has 25; implementation with S. Korea expected July 1; negotiating with India EU has 25; implementation with S. Korea expected July 1; negotiating with India Canada has 3; implementation with Colombia expected July 1 Canada has 3; implementation with Colombia expected July 1 China has 8; negotiating with Australia China has 8; negotiating with Australia Mexico has 10; negotiating with S. Korea Mexico has 10; negotiating with S. Korea More than 180 agreements in force with Asia- Pacific countries; about 90 awaiting implementation or being negotiated More than 180 agreements in force with Asia- Pacific countries; about 90 awaiting implementation or being negotiated

23 Trade Agreements in Asia-Pacific ● - In Force or Negotiations Complete ○ - Under Negotiation Source: USTR

24 Conclusion: Create Jobs Through New Markets Conclusion: Create Jobs Through New Markets Consideration of Colombia, Panama, and South Korea agreements by July 1 Consideration of Colombia, Panama, and South Korea agreements by July 1 Levels playing field and creates jobsLevels playing field and creates jobs Delay costs jobs as competitors move aheadDelay costs jobs as competitors move ahead Key Democrats agree on urgent need to pass all three (Baucus, Hoyer) Key Democrats agree on urgent need to pass all three (Baucus, Hoyer)