SOTU Growth Agenda = U.S. Trade Agenda
If jobs and the economy are the focus of the President’s State of the Union Address and U.S. Senator Marco Rubio’s Republican response, then trade and exports should receive prime-time attention. Senior Administration officials recently have said the President will use his Tuesday night’s speech to zero in on jobs and the economy. In fact, the President told the House Democratic caucus late last week he was going to propose “a growth agenda” focused on job creation.
Any economic growth and job-creating agenda must include a heavy dose of policy proposals to expand international trade. After all, roughly 95 percent of our consumers live beyond our borders, making access to foreign markets critical to our own economy. While the President may give a nudge to begin talks on a U.S.-EU trade agreement and may mention the recently notified International Services Agreement, two other trade initiatives -- the Information Technology Agreement (ITA) and the Trans-Pacific Partnership (TPP) -- are within more immediate reach and would provide a major boost to the United States and economies around the world. Both initiatives would secure significant numbers of new jobs across the country, major new investments in innovative products and businesses, and fresh opportunities for the United States to regain positive economic momentum.
Expanding the Information Technology Agreement
With leadership from the President and his Administration, ITA expansion could be completed this summer and provide a major lift to the U.S. economy.
The original ITA is completing its 16th year, and has proved to be one of the most successful trade agreements ever. Originally an agreement for 29 countries (now 75), the ITA cut tariffs on a broad swath of technology products, leading to increased trade, the creation of new manufacturing, and major job expansion. From 1996 to 2008, total two-way global trade in information and communications technology (ICT) products increased more than 10 percent annually, from $1.2 trillion to $4.0 trillion.
But the ITA has so much more potential, if we can let it grow. Dozens of new ICT products have been introduced since the original ITA was completed. Everyday consumer products such as audio speakers, DVD players, and video cameras, as well as technologies like GPS systems and flat-screen televisions aren’t covered. Nor are video game consoles such as Microsoft’s Xbox and Sony’s PlayStation. In fact, there’s an entirely new class of semiconductors that are not included in the ITA. If the agreement is expanded and improved to include products like these, the resulting economic growth in the United States and globally would be enormous. For the United States, the Information Technology & Innovation Foundation (ITIF) has reported:
[A]n expanded ITA could remove tariffs on at least an additional $800 billion in ICT trade globally, a 20 percent increase over the $4 trillion now covered annually. Moreover, ITIF estimates that ITA expansion would increase U.S. exports of ICT products by $2.8 billion, boost revenues of U.S. ICT firms by $10 billion, and support creation of approximately 60,000 new U.S. jobs throughout the economy.
ITA expansion is economic and job expansion, plain and simple.
Since last spring, negotiators in Geneva have been pressing forward with the talks to expand the ITA. There is growing support among key ITA member economies to get the talks wrapped up by the end of July. But to get these negotiations across the finish line, we need the United States to ramp up its political focus, commitment, and leadership. We need an unequivocal signal from the White House that this is a priority for the Administration. This can be a big trade win for the United States this year.
Advancing the Trans-Pacific Partnership
Similarly, the Trans-Pacific Partnership (TPP) is a regional free trade agreement among nations on both sides of the Pacific Ocean that, if negotiated effectively, would be a major boost for the U.S. economy. Eleven nations are involved in the talks including the United States, Australia, Canada, Chile, Mexico, New Zealand, Singapore, and Vietnam. Together, they represent more than 40 percent of global trade. Strengthening trade ties and reducing economic barriers would build on that success. The cooperative relationships that already exist among these nations would grow and prosper with the TPP.
Consider these statistics from the USTR:
The TPP countries are the largest goods and services export market of the United States. U.S. goods exports to the broader Asia-Pacific totaled $895 billion in 2011, representing 60 percent of total U.S. goods exports. U.S. exports of agricultural products to the region totaled $98 billion in 2011, 72 percent of total U.S. agricultural exports. U.S. private services exports totaled $205 billion in 2009 (latest data available), 39 percent of total U.S. private services exports to the world. America’s small- and medium-sized enterprises alone exported $219 billion to the Asia-Pacific in 2010.
These are impressive stats, and they would only grow with the TPP in place.
It’s as simple as this: expanding the market for innovative U.S. products, as the TPP would do, will increase capital investments by businesses, spur R&D and cutting-edge innovation, and create jobs. The United States and our trading counterparts in the region stand to gain substantially from a high-quality, comprehensive TPP. There is enormous potential in a free trade agreement that is economically significant, cross cutting, and addresses next-generation trade issues.
It’s critical to continue to pursue the highest standard agreement possible and to maintain momentum and ensure timely conclusion, even as new countries seek to join the negotiations. The next round of TPP negotiations -- the 16th in the series of discussions -- is slated for Singapore in early March.
Muscling up to get the ITA completed this year and the TPP wrapped up shortly thereafter are two strong items for a U.S. economic growth agenda. We look forward to helping advance them.