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Trade groups say U.S. falling behind

Point to foreign competitors benefiting from Obama’s slow pace on agreements

- The Washington Times - Monday, March 28, 2011

The White House's better-late-than-never approach to three trade agreements doesn't cut it for trade groups that say American businesses are quickly losing ground to global competitors.

Within months, the Obama administration could complete free trade deals with South Korea, Colombia and Panama. But conservatives argue they are five years overdue and the delays paved the way for the growing economies in China, Brazil, Argentina and Canada to cut their own deals with these nations and leapfrog the United States.

"Time is of the essence," said Chuck Dittrich, vice president of the National Foreign Trade Council. "Once a trade agreement with another country kicks in, then products from that country become cheaper, and even cheap enough that they replace us and American companies lose out."

To make matters worse, even if these trade deals pass and U.S. companies lower their prices, it won't necessarily convince customers in these countries to do business with them because they may choose to stick with the supplier they already found, said Eric Farnsworth, vice president of the Council of the Americas.

Nevertheless, Mr. Farnsworth said these agreements should help level the playing field.

Under the South Korea agreement, nearly 95 percent of bilateral trade in consumer and industrial products would become duty-free within three years. Most remaining tariffs would be eliminated within 10 years, according to the Office of the United States Trade Representative.

The Colombia deals would meet those standards, but also eliminate tariffs for more than 80 percent of U.S. exports of consumer and industrial goods from the get-go. The Panama deal is similar.

Former President George W. Bush originally negotiated and signed free trade deals with all three countries in 2006 and 2007. The Democrat-controlled House at the time blocked a vote, in large part because of human rights and labor issues, but those concerns appear to have eased.

That sent the bills to the backburner until last year when President Obama picked up the cause. He successfully renegotiated with South Korea, and is doing the same thing with Colombia and Panama. The White House has yet to send any of the bills, which would likely receive bipartisan support in both the House and Senate, to Congress. The new delays continue to irritate trade groups.

In Colombia, more than $3.4 billion in tariffs have been levied against American exporters since the agreement was signed five years ago, according to the Latin America Trade Coalition.

American farmers are handicapped with an average 16.8 percent tariff there, according to the Colombian Government Trade Bureau. During the last three years, these tariffs have been reduced for other countries like Argentina and Brazil. But, in a period of expansion where Colombia has doubled its agricultural imports, the U.S. market share has been cut from 46 percent to 21 percent.

"There's no question we're losing ground," Mr. Farnsworth said. "We have significant market share that's being eroded."

In a March 17 hearing, the U.S. Grains Council offered a glimmer of hope when it told the House Committee on Ways and Means its members might be able to regain lost market share, but only if the measure passed by July 1. Otherwise, they could miss Colombia's January and February ordering season as the deals are being implemented, according to committee spokesman Jim Billimoria.

He said, however, that the market for a share of the build up of the nation's infrastructure wouldn't be so forgiving to U.S. businesses. Right now, Colombia is embarking on massive overhauls for roads, ports, airports, energy fields and industrial plants. But "unlike ag, infrastructure projects have to be won now, or they're lost for decades."

The South Korea agreement also is coming to the forefront as it prepares to start another deal with the European Union on July 1, said Tami Overby, vice president of Asia for the U.S. Chamber of Commerce. Because American businesses "compete head-to-head" with European companies in so many different industries, this could be a "game changer," she added.

"That's why the pressure is on America," she said. "The clock is ticking."

The agreement with Panama will provide a number of opportunities for service companies in the United States, particularly those that cater to the Panama Canal, Mr. Farnsworth said. That could mean ship maintenance, loading and unloading, and fueling.

"Frankly, I think we need to do all of them," Miss Overby said. "While America has taken a time out on trade, the rest of the world has moved forward. We need to get them all done, and we need to get them all done yesterday."

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