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Guest Blogger: Wally Herger (R-CA) on Maintaining U.S. Competitiveness

Posted By Rep. Wally Herger On October 30, 2009 @ 8:40 am In Economics | Comments Disabled

Three years ago the U.S. finished negotiating a free trade agreement (FTA) with Colombia that would have given American businesses reciprocal access to the Colombian market that Colombian companies have been receiving for years. Two years later, in an unprecedented move, Speaker Pelosi denied the FTA an up or down vote in the House, stripping the agreement’s “fast track” procedural protections under the law. Despite calls for action, the Obama Administration has followed suit by failing to push the agreement forward. Now Canada has swooped in to lock in an agreement with Colombia that will give their farmers, in particular, the benefits that should have gone to American farmers. And the result: the loss of millions of dollars in U.S. agricultural exports to Colombia.

I wish this was the only example of how our inaction on trade is causing the U.S. to fall behind, but it gets worse. While the U.S. has been sitting on yet another free trade agreement with South Korea (which was anticipated to be the gateway agreement to the East Asia region), the EU has finalized negotiations on their own FTA with Korea. Again, the U.S. will not only lose opportunities to grow our economy and create jobs through increased exports of American made goods and services, but also will actually see a reduction in exports.

This time, however, the cost to the U.S. economy will be more substantial. South Korea is our seventh largest trading partner, the fifth largest market for U.S. agricultural goods, and the third largest services market in Asia. The U.S. International Trade Commission estimated that the reduction of Korean tariffs on goods included in the FTA would add $10 to $12 billion to our economy each year and approximately $10 billion to annual merchandise exports to Korea. Rather than see that gain, our nation would suffer a $1.1 billion decline in U.S. exports if the EU acts first, according to analysis by the Ways and Means Committee Republican staff. In other words, South Koreans will start doing more business with EU companies and less with American companies – our businesses will see our market share erode as EU goods and services become more competitive in the Korean market.

Meanwhile, China is angling for a regional East Asia free trade agreement that will exclude the United States. Asian nations are increasingly reliant on China for trade, and China has been using commercial diplomacy more and more to gain influence and leadership in the region. The United States should be working to counterbalance China’s influence through economic engagement of our own. If we don’t, our workers and companies will be left out. Unfortunately, by postponing the South Korea FTA indefinitely, the Administration is sending the wrong message to the region.

The reality is that while the U.S. sits on the sidelines, waiting for the Obama Administration to lay out a trade agenda, other nations are forging ahead to open-markets for their own goods and services that will put American businesses and workers at a disadvantage. Soon our challenge will not be expanding market access, but rather maintaining it.

We still have the opportunity to correct our course on trade and solidify U.S. competitiveness and leadership by rigorously pursuing market-opening agreements, starting with passing the three pending FTAs with Colombia, South Korea, and Panama. I hope President Obama uses his upcoming speech at the Asian-Pacific Economic Cooperation leaders’ summit to commit to this proactive trade agenda and announce a strategy for greater engagement in the Asia-Pacific region to protect future U.S. interests. American businesses and their workers should not be left behind as the rest of the world moves forward.

The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.


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