bureau of economic, energy and business affairs
DESCRIPTION
Promoting Free Trade in a Challenging Time. Erik J. Magdanz East Asia Trade Policy Bureau of Economic, Energy, and Business Affairs U.S. Department of State. Bureau of Economic, Energy and Business Affairs. U.S. Department of State. Benefits of Free Trade Agreements. - PowerPoint PPT PresentationTRANSCRIPT
Page 1Bureau of Economic, Energy and Business Affairs U.S. Department of StateBureau of Economic, Energy and Business Affairs
Promoting Free Trade in a Challenging Time
U.S. Department of State
Erik J. MagdanzEast Asia Trade Policy
Bureau of Economic, Energy, and Business AffairsU.S. Department of State
Page 2Bureau of Economic, Energy and Business Affairs U.S. Department of State
Benefits of Free Trade Agreements
• Opening vital new export markets for American goods and services and level the playing field.
• Strengthening economic opportunity, prosperity, and security.
• Supporting democracy, good governance and rule of law.
• Promoting strong labor and environment standards.
U.S. Export Growth: 2003 - 2007
$725
$819
$906
$1,037
$1,163
$0
$200
$400
$600
$800
$1,000
$1,200
2003 2004 2005 2006 2007
(in
bil
lion
s)
(in billions)
Page 4Bureau of Economic, Energy and Business Affairs U.S. Department of State
No Correlation Between Imports & Unemployment
Page 5Bureau of Economic, Energy and Business Affairs U.S. Department of State
Michigan Exports by Country
2002 2007World Total $33,775,231,735 $44,371,424,346
Canada $19,801,301,639 $25,631,162,117Mexico $4,238,981,681 $5,206,616,785China $284,753,677 $1,313,226,255Japan $1,115,716,828 $1,308,229,791Germany $989,266,073 $1,267,110,357United Kingdom $778,451,179 $742,612,232Venezuela $221,964,413 $693,797,494France $335,243,504 $679,946,843South Korea $456,617,723 $627,222,754Saudi Arabia $384,066,816 $544,984,982
Page 6Bureau of Economic, Energy and Business Affairs U.S. Department of State
Michigan Exports by Product
2002 2007Total $33,775,231,735 $44,371,424,346
Transportation Equipment $19,582,756,000 $23,190,087,416Machinery Manufactures $3,583,611,733 $4,138,012,415Chemical Manufactures $2,822,618,232 $3,576,925,701Primary Metal Manufactures $838,154,156 $2,078,947,014Oil & Gas Extraction $319,305,219 $1,980,790,738Computers & Electronic Prod. $1,404,153,700 $1,798,129,711Fabricated Metal Products $1,219,239,358 $1,427,618,740Elec. Eq.; Appliances & Parts $645,309,646 $889,058,331Plastic & Rubber Products $592,710,743 $714,244,170Non-Metallic Mineral Mfgs. $474,409,941 $686,077,728Processed Foods $315,169,690 $647,631,255Furniture & Related Products $287,182,231 $429,642,457
Page 7Bureau of Economic, Energy and Business Affairs U.S. Department of State
U.S. Free Trade Agreements since 1994
• NAFTA – U.S./Canada/Mexico (1994)• U.S. – Jordan (2001)• U.S. – Australia (2001)• U.S. – Chile (2001)• U.S. – Singapore (2004)• U.S. – Bahrain (2006)• U.S. – Morocco (2006)• U.S. – Oman (2006)• U.S. – Peru (2007)Pending:• FTAs with Colombia / Panama / South
Korea
Page 8Bureau of Economic, Energy and Business Affairs U.S. Department of State
U.S. FTA Partners in the Global Economy
FTA Countries:7.5%
Non-FTA Countries:92.5%
To FTA Countries:42.6%
To Non-FTA Countries:57.4%
Percent of World GDP, 2006 Percent of U.S. Exports, 2006
Page 9Bureau of Economic, Energy and Business Affairs U.S. Department of State
U.S. Trade with South Korea
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
2002 2003 2004 2005 2006 2007
(in m
illio
ns)
Imports from Korea
U.S. Exports to Korea
$35 billion
$48 billion
Page 10Bureau of Economic, Energy and Business Affairs U.S. Department of State
The U.S.-Korea FTA (KORUS)
• Economic Opportunities: – Over the past 10 years, Korea’s average annual growth
rate for trade has been 12.5%. – U.S. exports to Korea grew to $35 billion in 2007, a
53% increase over 2002.
• KORUS FTA Eliminates Tariffs and Increases Access:
– Nearly 95% of trade on consumer/industrial products duty-free within 3 years. Korea’s current applied tariffs on industrial goods average 6.2 percent while the U.S. is at 2.8 percent.
– More than two-thirds ($1.9 billion) of U.S. farm exports duty-free immediately.
– Increased access for U.S. autos
• Geopolitical: Korea is a vital regional ally. The FTA would underscore the United States commitment of promoting strong economic growth in the region.
Page 11Bureau of Economic, Energy and Business Affairs U.S. Department of State
The KORUS FTA and Autos• Eliminates Korea’s 8% tariff on U.S. vehicles,
reducing price of the average U.S. car in Korea by $4,000 to $7,500.
• Eliminates discriminatory aspects of Korean auto taxes on the basis of engine size that disproportionately affect U.S. autos.
• Ensures Korea will not adopt technical regulations that create unnecessary barriers to trade and will harmonize standards.
• Creates an expedited dispute settlement mechanism, under which the U.S. tariffs on Korean cars – about $220 million in 2006 – will snap back if Korea violates any FTA provision.
• In response to U.S. automakers, addresses several specific non-tariff barriers including vehicle emissions and safety standards.
Page 12Bureau of Economic, Energy and Business Affairs U.S. Department of State
Auto Imports See Significant Growth in Korea
2000 2001 2002 2003 2004 2005 2006 2007 2008U.S. Big Three 1,268 1,638 3,283 3,549 3,910 4,251 4,556 6,235 N/A
Other Foreign Autos 3,146 6,109 12,836 15,912 19,435 26,650 35,974 47,155 N/A
Total Auto Imports 4,414 7,747 16,119 19,461 23,345 30,901 40,530 53,390 80,000Market Share (%) 0.42% 0.53% 0.99% 1.48% 2.13% 2.70% 3.68% 4.85% 7.27%
Other Auto-Related Information:
• GM-Daewoo currently has 14% of the domestic auto market in Korea (approx. 140,000 autos/year).
• Hyundai and Kia Motors investing $2 billion to build auto plants in Alabama and Georgia. Each plant to employ 2,000 workers and produce 300,000 cars/year.
Page 13Bureau of Economic, Energy and Business Affairs U.S. Department of State
Trans-Pacific Economic Partnership
Singapore
Brunei
New Zealand
Chile
United States
• TransPac Negotiations to Launch in early 2009
Page 14Bureau of Economic, Energy and Business Affairs U.S. Department of State
U.S. Trade with China
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2002 2003 2004 2005 2006 2007 2008 (est)
U.S. Trade with China(in
mill
ions
)
Imports from China
U.S. Exports to China
$330*
$78*
$321
$65$55
$288
-$233
-$256 -$253*
Growing Exports Positively Impacting Trade Deficit
* estimated
$243
$41
$197
$34
-$204
-$163
(in billions)
Page 16Bureau of Economic, Energy and Business Affairs U.S. Department of State
South Korea’s KOSPI Stock Index
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
10/1/07 11/1/07 12/1/07 1/1/08 2/1/08 3/1/08 4/1/08 5/1/08 6/1/08 7/1/08 8/1/08 9/1/08 10/1/08
Page 17Bureau of Economic, Energy and Business Affairs U.S. Department of State
China’s Shanghai Composite Index
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
10/1/07 11/1/07 12/1/07 1/1/08 2/1/08 3/1/08 4/1/08 5/1/08 6/1/08 7/1/08 8/1/08 9/1/08 10/1/08
Page 18Bureau of Economic, Energy and Business Affairs U.S. Department of StateBureau of Economic, Energy and Business Affairs
Promoting Free Trade in a Challenging Time
U.S. Department of State
Erik J. MagdanzEast Asia Trade Policy
Bureau of Economic, Energy, and Business AffairsU.S. Department of State