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.
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.