What International Trade Agreements Mean for Your Business
TRADE AGREEMENTS UNDER NEGOTIATION
More than 70 percent of the world’s purchasing power and nearly 95 percent of its consumers are located outside the United States. Free trade agreements (FTAs) can open up new markets to exports. FTAs reduce trade barriers while also establishing common standards and protections for U.S. interests and laws. The U.S. has 14 FTAs with 20 countries, which accounted for over 45 percent of the country’s exports last year.
Currently, the Administration is negotiating two broad trade agreements: the Transatlantic Trade and Investment Partnership (T-TIP) with members of the European Union and the Trans-Pacific Partnership (TPP) with countries in the Asia-Pacific region. These two agreements would cover 60 percent of American exports and 84 percent of foreign direct investment (FDI), both expanding some existing trade agreements and creating opportunities for free trade with more countries.
TRADE PROMOTION AUTHORITY
For successful negotiations, Congress reauthorized Trade Promotion Authority (TPA) in June 2015. TPA allows the President to enter into reciprocal trade agreements and requires that legislation for implementing the agreement be considered on a defined timeline without amendments. In return, the President must keep Congress informed throughout the negotiations and abide by certain notification and consulting requirements. It improves the Administration’s position in the negotiations by ensuring the agreed-upon terms will be binding.
TRADE IN YOUR AREA
The benefits of trade extend far beyond the nation’s major ports. While the cities with the most exports are also America’s largest cities by population, many of the cities that are most dependent on exports for their livelihood are smaller and set away from the coast, like Youngstown, Ohio, or Odgen, Utah. The resources below show how exports currently affect specific states and metro areas and how they will benefit from the two trade agreements.
MACROECONOMIC EFFECTS FROM TRADE
Trans-Pacific Partnership: Approximately 44 percent of exported goods and 27 percent of exported services go to TPP countries. The Peterson Institute for International Economics estimates TPP could increase U.S. by 4 percent.
Transatlantic Trade and Investment Partnership: Though tariffs on EU goods are low, the volume of trade flows means that a tariff reduction could result in significant gains for businesses that export to the region. Reducing non-tariff barriers to trade will have an even greater effect. The Center for Economic Policy Research estimates that an FTA could increase U.S. GDP by 0.2 to 0.5 percent.
WHERE CAN I GET MORE INFORMATION?
Many federal agencies can help U.S. businesses that are currently exporting or looking to export for the first time. These agencies help businesses navigate the challenges of doing business in foreign countries and obtain financing needed for the business to expand. Here are some of the resources:
Export.gov: Export.gov is a collaboration among 19 federal agencies that provide export assistance. It offers resources for marketing, financing, logistics, market research, licenses, regulations, and many other needs. Learn more at > export.gov
U.S. Export Assistance Centers: These centers provide trade assistance in more than 100 U.S. cities across the U.S. For first-time exporters or business leaders who are currently exporting, these centers can offer trade counseling, market intelligence, business matchmaking, and other services. Find your local USEAC > export.gov/usoffices
Export-Import Bank: The Ex-Im Bank helps companies trying to export by providing financing assistance in cases where private-sector lenders would be unwilling to do so alone. The bank offers loan guarantees, export-credit insurance that protects against account receivable losses, and working capital guarantees that help businesses obtain short-term financing to purchase supplies and materials in advance of exporting. Learn more at > exim.gov