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Net Net: Promoting innovation and managing change

Rep. Brady: Why We Need New Trade Agreements

Free trade agreements with South Korea, Colombia and Panama are scheduled for a vote Wednesday, and both sides of the trade aisle are in high gear. While some Democrats like Representative Linda Sanchez (D-CA) told me she wished the White House was not "pushing ahead" on the Free Trade Agreements, Congressman Kevin Brady (R-TX), the Deputy Whip and Senior member of the Ways and Means Committee, counters her argument that the agreements will cost jobs and are not good business.


Rep. Brady: That couldn’t be further from the truth. These trade agreements will open new markets for workers, farmers and small businesses to sell their goods and services to new customers and will create hundreds of thousands of new jobs in the United States. Currently, U.S exporters face unfair restrictions in other countries – either in the form of high tariffs or discriminatory regulations that put us at a significant disadvantage. These agreements help address these imbalances and level the playing field. For example, the average South Korean tariff for U.S. exporters is more than four times the average tariff that South Korean products face in the U.S. market.

Passing the U.S.-South Korea trade agreement will correct this imbalance by reducing South Korean tariffs for our products. Other countries realize this unfairness and are addressing it. I’m troubled by the fact that the EU trade agreement with South Korea entered in to force on July 1st of this year, reducing those high South Korean duties on European products. This agreement was negotiated AFTER the U.S.-South Korea agreement was signed. As a result of the President’s delay in sending up our agreements to Congress, EU competitors now face significantly lower tariffs than U.S. exporters.

Providing American businesses with new sales opportunities are what these trade agreements are all about. The facts are undeniable:

According to the International Trade Commission, these agreements are worth $13 billion in increased sales opportunities for manufacturers, farmers, and the service industry and would add $10 billion to our gross domestic product. By President Obama’s own calculation, these agreements could support up to 250,000 new American jobs.

LL: What can we do to get back on the field on free trade?

Rep. Brady: We need to pass these agreements immediately – and the President needs to promptly allow these agreements to enter into force. These agreements have sat on the President’s desk for too long. The longer that the President delayed sending the agreements to Congress, the further we watched our competitive advantage slip away. Passing these agreements will go a long way to help the United States re-gain credibility as a leader on trade, but we cannot stop there. We must seek 21st century solutions to facilitate trade, end non-tariff barriers, and promote regulatory coherence.

Nearly 300 free trade agreements are in force around the globe today, but the United States has trade agreements with just 17 countries.

Hundreds of additional agreements are currently under negotiation among our foreign competitors, but the United States is participating in just one of these.

LL:Have companies lost contracts because of the President’s delay in sending the Agreements to Congress?

Rep. Brady: Unfortunately, yes. While we were waiting for years for this Administration to send these agreements to Congress, our foreign competitors created and enacted new agreements that benefit them and leave us in the cold. America lost out on new business and lost existing business as a result. As you know, regaining market share in any industry is a tough fight, and this is no different. A distressing example comes from Colombia. U.S. Wheat Associates, an association of wheat growers, estimates that the United States could lose $100 million in wheat sales because Colombia has signed agreements with Canada and Argentina. Making this even more concrete, the President of Nutresa, Colombia’s largest manufacturer of food products, announced in April that it would begin sourcing Canadian wheat in place of U.S. wheat because of the tariff reductions under the Canada-Colombia trade agreement. Nutresa accounts for over 50 percent of Colombia’s wheat imports.

LL: Rep. McDermott is opposing the Columbia FTA because he says the "Administration’s efforts have fallen short and failed to address the union violence and impunity, as well as the workers’ rights issues". What do think about his concerns?

Rep. Brady: Colombia has gone above and beyond to address these concerns. Colombia has made incredible strides in addressing labor violence. For example homicides against union members have declined by over 80% over the last decade – from 196 in 2002 to 50 in 2010 and 22 thus far in 2011. Of course, we want to prevent any violence, but we must look at this in context. The unionist murder rate is lower than the murder rate for the general population in Colombia, which has itself dropped to levels below many major U.S. cities. This impressive progress is now being built upon by the Action Plan Related to Labor Rights that Presidents Obama and Santos agreed in April. As a result, conviction rates are set to exceed 400 this year, up from only 16 in 2006. Colombia has massively expanded the scope of its protection program for labor union leaders and activists and instituted an unprecedented Victims & Land Restitution Law, which will compensate over four million Colombian victims of the decades-long civil conflict.

The desire of many House Democrats to further delay enacting this trade agreement is unacceptable to me. This trade agreement is critical for maintaining our leadership in our hemisphere. And I’m not alone in saying so. The President believes that Colombia has done its part to reduce labor violence, or else he wouldn’t have sent Congress the three trade agreements last week.

LL: Some of your Democratic colleagues like Rep. Sanchez spoke with me saying she wished the White House was not pushing the Free Trade Agreements so hard and that American jobs will be lost as a result of these agreements. What do you say to those who may not feel the same way you do about trade?

Rep. Brady: Texas exports more than any other state in the United States. Last year, Texas exported $192.2 billion worth of goods, which supported 3 million jobs. The strength of these numbers proves just how vital free trade is to our economy and its direct correlation to job creation.

These agreements are really sales agreements. They allow our companies, farmers, ranchers, and workers to Sell American. Key Democrats and the President agree that these agreements are critical for American job growth. In fact, the President’s own metrics show that these agreements will create 250,000 new jobs. These agreements will help businesses of all sizes: small, medium, and large, grow their work force. From large companies such as Caterpillar, which plans to expand manufacturing facilities in America’s heartland, to smaller companies such as Paulson Manufacturing based out of California, which can grow its workforce by 50 percent, these agreements will provide further evidence that when America competes, America wins.

LL: How long will it take to start seeing some economic benefit from the agreements?

Rep. Brady: Once the agreements pass the House and Senate, which we hope will happen this week, these tariffs can be lifted as soon as January 1st, which is good for everyone involved. But in order for this to happen, the President needs to certify the agreements to enter into force. I hope he does so promptly, and I can promise Congress will be watching closely.

These agreements will provide our farmers, manufacturers, and service companies with the immediate certainty they need to invest in their businesses and expand their workforce. Additionally, these agreements are critical to strengthening our relationships with our trading partners and providing us with credibility on the world stage and in the global economy. We have been out of the game for the past five years — these agreements provide us with the opportunity to jump back in. We should seize it.

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."