October 13, 2011

October 13, 2011 | Factsheet on Free Trade Agreements


Sitting on the Shelf

  • For Years: The U.S.–Colombia free trade agreement (FTA) was signed in 2006, and the agreements with Panama and South Korea were completed in 2007.
  • The U.S. Dithered: While the United States dithered, our potential partners sought and concluded agreements with others. The Korea–European Union FTA took effect on July 1 and the Canada–Colombia FTA took effect in August 2011.

Good for the Economy

  • Economic and Environmental Benefits: Based on data from The Heritage Foundation’s Index of Economic Freedom, countries with low trade barriers have less poverty, higher average incomes, lower incidence of hunger, and cleaner environments than countries with high trade barriers.
  • Expanding Access: The South Korea–U.S. FTA (KORUS) expands U.S. business access to the $1 trillion South Korean market. Korean manufacturing tariffs are double those of the U.S., while Korean agricultural tariffs are 54%, compared with 9% in the U.S. Nearly 95% of tariffs on consumer and industrial products will be eliminated within three years after the agreement takes effect, and nearly two-thirds of Korean agricultural tariffs will immediately drop to zero.
  • Chart - Nations with More Trade Freedom Have Less Poverty Billions in New Exports: According to the U.S. International Trade Commission (ITC), KORUS will generate an estimated $10–11 billion in new U.S. exports annually, increase U.S. gross domestic product by $11 billion, and add at least 70,000 new U.S. jobs—all without adding a dime in government spending. Those estimates do not even include the benefits arising from the reduction of tariffs on service industries.
  • Cheaper Flowers: The ITC estimates that the U.S.–Colombia FTA will boost exports by over $1.1 billion. Americans who buy poinsettias for Christmas or roses for Valentine’s Day will benefit from the permanent removal of the U.S. tax on Colombian plants and flowers, which has cost consumers $13 million so far this year.
  • Protecting America’s Farmers: The Agriculture Department estimated that the lower duties Colombia negotiated in a trade deal with its neighbors led to a $1 billion loss in U.S. farm exports to Colombia since 2008.
  • Panama on the Move: From the expansion of the Panama Canal to the soaring Donald Trump Tower in Panama City to construction of a transit system and the restoration of old Panama, one sees a nation on the move. In 2010, the U.S. sold $210 million in construction equipment to Panama. The U.S.–Panama FTA, once operative, will remove an average 5 percent tariff, making U.S. manufacturers even more competitive.

United States Hurt by Needless Delays

  • Lost Market Share: Exports from the European Union to South Korea shot up 16 percent within the first month after their FTA took effect, taking market share from the United States.
  • Struggling Farmers: The Canada–Colombia FTA is allowing Canadian farmers to displace U.S. agricultural exports. According to the president of the National Association of Wheat Growers, Wayne Hurst: “Delaying these free trade agreements isn’t just a political game, it’s messing with real lives, here and abroad. And, it’s doing harm that can’t be easily undone.”
  • Job Losses: The U.S. Chamber of Commerce estimates that failure to pass all three of these FTAs would cost the U.S. economy in total over $48 billion and 383,400 jobs.

For more information, please visit http://heritage.org.

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