Free trade agreements mean jobs for NM

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Jamie P. Estrada

According to recent Commerce Department data, U.S. GDP grew at an anemic rate of 1.3 percent in the second quarter, and only 0.4 percent in the first – numbers that reveal the weakness in our economy and that we’re dangerously close to another recession.

So given that exports have contributed over 50 percent to U.S. GDP growth in the last four quarters, it makes you wonder why no action has been taken on free trade agreements (FTAs) with Colombia, Panama and South Korea that were negotiated several years ago. Passing these FTAs would be a boon for the U.S. economy because they open foreign markets for U.S. manufacturers, farmers and service providers – including those here in New Mexico.

However, if Congress doesn’t ratify them after they return from recess in September, many will wonder if our leaders are really serious about creating American jobs and getting our economy back on track.

NM has nothing to lose, but much to gain

The economic benefits to the U.S. economy of these agreements are clear, with several studies projecting them to create thousands of jobs and to generate billions of dollars in increased exports.

For example, an analysis by the U.S. International Trade Commission on the U.S.–Korea FTA estimates that at full implementation this agreement alone could generate nearly 280,000 new American jobs, including over 1,300 in New Mexico.

Because New Mexico has been losing jobs and currently ranks near the bottom in job creation, our entire congressional delegation should vote in both the national and state interest and support these agreements. Our leaders should make every effort to create positive conditions for private-sector job growth in our state.

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An example of how we can create jobs through exports is Miox Corporation, one of our state’s most promising exporters (full disclosure: I’m an advisor to Flywheel Ventures, an investor in Miox). Miox manufactures innovative water disinfectant systems in Albuquerque, and they are installing two of their largest systems in Bogotá, Colombia this month. These systems will replace about 40 percent of the extremely toxic and dangerous chemicals the city is using to treat their water. Once these are up and running, the opportunity exists to export even more systems to Colombia.

An FTA with Colombia would help companies like Miox sell their products duty free – and thus at a significant cost advantage over other international competitors – and, in turn, support hundreds of jobs here in New Mexico.

New Mexico lags behind our neighbors in merchandise exports, but we can do something about it by building ties with many of America’s new and existing FTA partners. This requires a continued effort by our leaders to adopt pro-business policies that will attract globally oriented industries to our state. If done right, New Mexico could catch-up with our neighbors and begin to grow the private sector – and our exports.

FTAs keep the United States competitive

However, while Congress has sat still by not passing these FTAs, the rest of the world has moved forward and taken advantage of the opportunities that come from eliminating trade barriers with these three countries. The European Union’s FTA with South Korea went into effect on July 1, making their exports more competitive than ours. Canada’s agreement with Colombia will go into effect on Aug. 15.

Congress’s inaction on these trade agreements comes at a cost to our economy. We’re losing the opportunity to increase American exports to South Korea by an estimated $10 billion each year. U.S. farmers have already lost over $1 billion due to agricultural sales that have gone to other nations that have signed agreements with Colombia. And U.S. exporters are paying billions of dollars in unnecessary tariffs to these countries since the agreements were signed – including over $3.7 billion so far to Colombia, which already receives preferential access to the U.S. market.

Bipartisan action is needed now

The perfect opportunity for members of Congress to show they are serious about working together to grow the economy and to keep American exporters from losing more ground to other countries is to pass these market-opening agreements with Colombia, Panama and South Korea – and to make it the first thing they do when they get back to Washington.

After the tough and protracted debate on how to reduce the nation’s heavy debt, Americans are looking to our leaders to put partisanship aside and come together to support commonsense legislation that will put people to work.

Estrada served as U.S. deputy assistant secretary of commerce for manufacturing in the George W. Bush administration and is a vice president at DW Turner.

22 thoughts on “Free trade agreements mean jobs for NM

  1. I always have to wonder at the left who love our jobs but despise our employers. And at the same time, they feel for the third world, but hate the idea of our employers giving them jobs.

  2. Great article Jaime, I appreciate the information and your desire to actually use facts instead of just opinion made to look like facts! Keep up the good work!

  3. stever

    I would postulate that the same could be said regarding the diversity of opinion represented by organized political parties in America, especially in regards to the fact that such an evolution predated capital compaction by about thirty years.

    Of course, admitting that our representative system was purchased and controlled prior to the downfall of domestic industrial capacity might be risky for progressives, but it is the very admission necessary to comprehend the inherent redundandcy of alternating between the two major compromised parties which promise “change.”

    Oh… and I forgot Studebaker and Avanti.

  4. Brad, I assume Mr Gessing’s point that is by the end of the 70s the American automotive industry was down to three major companies with AMC on the outside looking in. In spite of the brand names tell me any real difference between a 1980 Buick Regal, Chevrolet Monte Carlo or Olds Cutless. I make no comment as to the reason why.

  5. pgessing

    I am assuming that your comment about “one or two companies” dominating the market place supported by “(see the automoblile industry in the 1950s-1970s)” is some kind of sarcasm. Otherwise, why would one make such a spurious claim?

    Here is a short list of the American automobile manufacteres in existence in that time period, and it far exceeds “one or two companies.”

    AMC
    Apollo
    Arnolt
    Bricklin
    Buick
    Cadillac
    Checker
    Chevrolet
    Chrysler
    Citicar
    Comet
    Continental
    Crosley
    Darrin
    DeLorean
    Dodge
    Edsel
    Eshelman
    Ford
    Gaylord
    Glasspar
    GMC
    Hudson
    Imperial
    International Harvester
    Kaiser
    Keller
    Kurtis
    Lincoln
    Mercury
    Muntz
    Nash
    Nash-Healey
    Nu-Klea
    Oldsmobile
    Packard
    Playboy
    Plymouth
    Pontiac
    Powell
    Rambler
    Skorpion
    Studillac
    Willys
    Willys-Overland
    Woodill

    And to all of those who spent their lives building our manufacturing base, please forgive me if I have left anyone off of this list.

  6. Jamie,

    Thanks for the useful data in support of free trade. Left-wing liberals should actually love free trade because it is a great way to keep “big business” honest. After all, in a protectionist environment, only one or two companies will dominate a given domestic market (see the automobile industry in the 1950s-1970s). Free trade increases competition and makes all businesses more accountable to their customers. The proverbial win-win!

  7. Mr. Estrada.

    Although I am willing to admit that projections for growth and jobs are generally based upon the best data available and created through accurate simulations, they are wholly inadeqaute in an international economic climate that is in chaos. Depending on sources of statistics developed prior to the economic melt-downs in Iceland, Ireland, Greece, Portugal and other industrialized nations yet to be named, fails to take into account the fragile nature of an interconnected trade system that has the potential to founder should such instability reach the shores of this continent.

    With growing uncertainty within financial markets, and diminished availability of investment capital, it would appear prudent to revise these projections with a new data set before making such bold claims. Numbers that reinforce a position which you may find to be desirable in the short run, have a very real possibility of mutating into a future reality in which such projections turn out to be nothing more than propaganda.

  8. Jamie, nice commentary. This isn’t an easy message to sell to people on the far left of the spectrum who seem to be the most vocal on this blog. It isn’t an easy message to sell to those on the far right since they often look at foreigners with suspicion.

    Not one of these protectionists who have commented on the blog can back up their arguments with any data. Sure we’ve given up a lot of low skill manufacturing to other countries. But we’ve lost a lot more to technology and productivity. We’ve replaced those with service sector jobs and also those that require higher skills.

    But I know I’m speaking to the same people who buy into that ridiculous and ignorant rhetoric that the U.S. doesn’t manufacture anything anymore, regardless of what actual data show. I found an excellent commentary on this subject on this very blog: http://www.nmpolitics.net/index/2011/06/is-american-manufacturing-dead/

    And I’m sure additional data won’t convince any of these naysayers, but for those who want to be educated on the benefits of free trade, how about this one: the U.S. has maintained a trade SURPLUS in MANUFACTURED GOODS with our FTA partners for lhe last three years. This is according to Commerce Department data.

    “Since 2008, the United States has run a cumulative trade surplus of over $70 billion in manufactured goods trade with trade agreement partners, while running a cumulative deficit of more than $1.3 trillion with countries that are not trade agreement partners.”

    The “problem” if there is one is with countries who we don’t have FTAs with.

    Nonetheless, I’m sure people who think all of what Jamie and I are saying is “nutty” are the same people who think Jesse Jackson, Jr. is brilliant: http://www.huffingtonpost.com/2011/04/17/jesse-jackson-jr-ipad-unemployment_n_850227.html

  9. “Our new right wing government will “cut, cut, cut” and still there will be “no jobs, no jobs, no jobs” mostly due to unfair, unbalanced trade with our global competitor­s.
    Perhaps it’s by design: an opportunit­y to destroy organized labor, medicare, medicaid, social security and our educationa­l system and let our infrastruc­ture crumble so U.S. can “be more competitiv­e”
    losthope1

    http://www.huffingtonpost.com/ian-fletcher/its-the-free-trade-stupid_b_924003.html

    A prophetic interview with Sir James Goldsmith in 1994 Pt1
    http://www.youtube.com/watch?v=4PQrz8F0dBI

  10. It is not a question of extremes to the right or the left on the economic continuum as some would have us believe. It also depends on whose ox is being gored. Being the most expensive place to do business is not bad in and of itself. It is bad if one does not mind the human and environmental degradation that being the cheapest place to do business entails. Pick your poison. If one values the preservation of the human dignity of workplace safety, human rights and environmental safeguards then being the most expensive place to do business is good. There are usually two sides to any economic equation and offering only the one-sided argument that some have done here is too clever by half. There are balances that can be had if the extremists of both sides would give a little. We all breath the same air. Why allow a U.S. corporation to export jobs to countries who care nothing about air pollution so their goods can be produced cheaper yet they can enjoy the benefits of being an American corporation? Do we not have any responsibilities to the world other than profit?

  11. Dr. J is clearly on to something here. It’s clear he understands a thing or two about economics, unlike the other people commenting. It would be nice to have someone explain exactly how it benefits the United States to be the most expensive place in the world to do business. It’s a little boring to hear all these people whine about free trade being the cause of all our problems.

    We’re chasing jobs out of this country for one reason: because we make it too expensive to do business here. What’s “nutty” is to naively believe that we can compete with the rest of the world when we are turning ourselves into a European style welfare state.

  12. qofdisks asks a very good question here: ” Sure, NAFTA type trade policies create jobs where wages and are lowest and labor and environmental standards do not exist. Is that the kind of nation that we want to live in?” I could also ask, should the country with the highest wages and most enviro-regs and labor restrictions, that therefore has the highest costs of producing goods and services, be the one you want to buy your goods and services from? Maybe, but the laws of economics would say otherwise I believe. That seems to be why China is cooking our goose on these things.

  13. Everyone here is aware that our Right wing President of the United States is pushing these trade deals under the nefarious logic that that this is the policy that will create jobs. Sure, NAFTA type trade policies create jobs where wages and are lowest and labor and environmental standards do not exist. Is that the kind of nation that we want to live in?

  14. Right. Mr.Estrada, Americans got fooled by the myth that exempting the rich from taxes would create jobs and that NAFTA and FTAs would create jobs. Don’t expect too much buy-in from the millions who have lost their jobs to these myths. If 10% of the claims made by you and your ilk over the past 15 years regarding globalization were true we would not be in nearly the financial stress we are at this point.

  15. Amen to “That One”!

    Show me all the jobs created in New Mexico by NAFTA. If there were any they were probably filled by Mexicans fleeing the economic and social disintegration created by NAFTA there.

  16. The argument that this measure will create jobs probably deserves the same cynicism with which I suspect it was made. Certainly the free trade agreements made while the author was in office did not appear to me to create jobs; quite the contrary.

    It sounds good 😉 If we make stuff, this will make it easier to sell that stuff, is what I hear him saying. But wasn’t the argument back in the Bush administration that we’d be a knowledge economy and somebody *else* would do the boring making of stuff? Let’s not even get into how that whole knowledge economy thing worked out for the US.

    Possibly there’s an argument to be made that a specific proposal might help a specific manufacturing sector. But this article doesn’t make it and it triggers in me an urge to look for the fine print, in which is says oh, but AHA, it will also make it a lot easier to import all those good we are manufacturing elsewhere these days.

  17. “An FTA with Colombia would help companies like Miox sell their products duty free – and thus at a significant cost advantage over other international competitors – and, in turn, support hundreds of jobs here in New Mexico.”

    This should read,”An FTA with Colombia would help companies like Miox relocate to Colombia – and thus at a significant cost advantage over other international competitors – and, in turn, export hundreds of JOBS from New Mexico.”

  18. DontTaxMeBro:

    For someone with a snarky screenname based on a wild misunderstanding of how this country operates, you’re certainly quick to accuse others of bias, which isn’t half as funny as your apparent inability to glean anything from the actual content of the column, or from the commentary of your fellow posters. Instead, you seem to have based your entire personal attack on the headline. This does not speak favorably for your attention span or willingness to grasp nuance…

  19. wedum59 says:

    What do we manufacture that they would want?

    Um…..did you not get past the headline and read the actual article? Probably not since your always so biased with your comments anyway.

  20. Not so fast. The term “free trade” is misleading. “Job Outsourcing” agreement is closer to the truth. Any idea why we can’t find jobs for out of work Americans? The so-called free trade (aka deregulation) movement made it easier for American companies to relocate to other countries were labor is cheap, political corruption is rampant, and health and welfare regulations non existent. Not only have we given away our job base to other countries for the sake of a quick windfall for a privileged few, we’ve allow those same countries to impose tariffs on products we produce here at home. We’ve bought into the free trade myth that imposing tariffs is protectionism at its worse so we don’t do it here, while everyone else in the world does. Chinese and Indian products appear to be cheaper for this very reason. Products we produce here at home are made more expensive abroad by the tariffs being imposed on those products by foreign governments. But do we do the same to their products? Of course not. Corporate America would never allow that, since Corporate America is now producing those products overseas. If you’re vested in the stock market you might make some money (assuming you survive the wild swings in the stock market these days). Certainly the corporate executives responsible for ship our jobs overseas have made a bundle on their stock options, and those inside the Washington beltway aren’t doing so badly either. So long as they keep giving these corporate thugs free reign to run rampant on the world scene, they themselves get big fat campaign contributions to ensure their perpetual reelection. If any one thing has destroyed the world’s faith in us its this incestuous relationship between corporations and those we assume are in office to serve we the people. Our corporate controlled U.S. Supreme court doesn’t help matters either. Free trade? That’s just a polite way of saying bend over, grab your ankles and kiss you job goodbye.